Final Results

Mercury Grosvenor Trust PLC 27 February 2001 MERCURY GROSVENOR TRUST plc Preliminary announcement of results in respect of the year ended 31 December 2000 HIGHLIGHTS - Net assets per share rose by 18.6% to 411.0p compared with a fall of 8.0% in the FTSE All-Share Index and an increase of 2.8% in the FTSE SmallCap Index. - Total additional investments of £17.1 million (£14.4 million to new investments and £2.7 million to existing investments) (1999: £28.5 million). - Realisations of £24.6 million (1999: £39.6 million). - Profit before taxation of £6.5 million (1999: £3.3 million restated). - Earnings per share of 17.89p (1999: 9.57p). - Increased dividend of 14.50p per share (1999: 8.00p). David Bucks, the Chairman, comments: 'The Board is recommending a final dividend for the year ended 31 December 2000 of 14.50p per ordinary share (1999: 8.00p). This rise in dividend reflects an increase in revenue in the year which resulted in the main from the release of a provision against interest of £1.9 million on the loan stock of Priory Healthcare, which was received on the sale of that investment in February 2000. 'The Company committed £14.4 million to eight new investments and realisations totalled £24.6 million. 'In November 2000, the Company bought back and cancelled 746,415 ordinary shares, these being the balance not placed with other investors of a holding arising from a change in investment strategy of a major shareholder. Continuation of the power to buy-back shares will be sought at the forthcoming Annual General Meeting. 'Change in status of Mercury Private Equity, foreshadowed in the interim report, took effect in December 2000, when it became an independent management company owned by its managers and staff. Under a delegation agreement with Merrill Lynch Investment Managers, Mercury Private Equity will continue to manage the investments of the Company. 'As, at the year end, the Company had liquid resources of £24.5 million and a borrowing facility amounting to £25 million, it is well placed to take advantage of opportunities as they arise.' Commenting on the outlook for the Company, Ian Armitage, Chief Executive of Mercury Private Equity, the Investment Manager, notes: 'Economic forecasts are beginning to show a wider spread of outcomes for GDP growth than has been the case for some years. The cause of this divergence is a need to factor in the effect of falling equity prices on consumer spending in the USA, Europe and the UK. 'At the same time, deflation, i.e., falling prices, remains a feature or threat to most parts of the 'old economy'. Few companies have pricing power and hence they find it harder to increase profits and cash flow. The risks to growth that we identified in our last report appear to be turning into reality and, accordingly, we are more bearish about the economy. 'Against this economic backdrop we believe that the Company's portfolio of investments provides a balanced exposure to several growth markets and interesting restructuring opportunities. 'Conditions for making new investments should improve as some of the more ill-disciplined investors in both the private and public markets pull out. There is already evidence that investors are either biding their time or actively pushing prices down in buy-outs and, more particularly, in technology investments. It is too early to state that the market as a whole has entered the realms of rational valuation, but it is certainly the case that in public markets the technology bubble has burst. 'We have made a significant investment in our business over the last year, increasing our team of professionals from 23 to 31. We remain confident that our disciplined approach to investment will continue to produce attractive returns from the portfolio.' For further information please contact: Ian Armitage Mercury Private Equity* 020 7743 5666 Mark Johnson Merrill Lynch Investment Managers 020 7743 2300 *Mercury Private Equity is a trade mark of Merrill Lynch Investment Managers Limited and has been licensed for use by MPE Investment Managers Limited. REVENUE STATEMENT for the year ended 31 December 2000 Year ended Year ended 31 December 31 December 2000 1999 £'000 £'000 (audited) (audited) (restated) Note Income 4 7,332 3,901 Expenses: Investment management fees 6 (453) (360) Other expenses (368) (236) ----- ----- Net return before finance costs and taxation 6,511 3,305 Interest payable and similar charges (32) - ----- ----- Revenue on ordinary activities before taxation 6,479 3,305 Taxation on ordinary activities (1,856) (824) ----- ----- Return on ordinary activities after taxation 4,623 2,481 Dividend 5 (3,652) (2,075) ----- ----- Transfer to reserves 971 406 ===== ===== Earnings per ordinary share: - calculated on weighted average shares 17.89p 9.57p - calculated on actual shares 18.35p 9.57p ===== ==== Dividend per ordinary share 5 14.50p 8.00p ===== ==== TOTAL RETURN PER ORDINARY SHARE - calculated on weighted average shares for the year ended 31 December 2000 Year ended Year ended 31 December 31 December 2000 1999 (audited) (audited) (restated) Earnings 17.89p 9.57p Capital return 59.07p 87.17p ----- ----- Total return per ordinary share 76.96p 96.74p ===== ===== BALANCE SHEET as at 31 December 2000 31 December 31 December 2000 1999 £'000 £'000 (audited) (audited) Fixed assets Investments Listed 16,452 7,990 Unlisted at directors' valuation 62,672 66,491 ------ ------ 79,124 74,481 Current assets Debtors 4,555 3,458 Government securities 15,508 14,363 Cash at bank 9,039 163 ------ ------ 29,102 17,984 Creditors - amounts falling due within one year 4,705 2,602 ------ ------ Net current assets 24,397 15,382 ------ ------ Net assets 103,521 89,863 ======= ====== Capital and reserves Called up share capital 6,296 6,483 Share premium account 14,123 14,123 Capital reserves Capital redemption reserve 1,248 1,061 Capital reserve - realised 63,914 60,882 Capital reserve - unrealised 15,328 5,673 Revenue reserve 2,612 1,641 ------ ------ Total equity shareholders' funds 103,521 89,863 ======= ====== Net asset value per ordinary share 411.0p 346.5p ===== ===== CASH FLOW STATEMENT for the year ended 31 December 2000 Year ended Year ended 31 December 31 December 2000 1999 £'000 £'000 (audited) (audited) Net cash inflow from operating activities 3,517 828 ----- --- Returns on investments and servicing of finance Interest received 51 52 ----- --- Taxation (163) (38) ----- --- Capital expenditure and financial investment Purchase of fixed asset investments (13,008) (29,360) Proceeds from the sale of fixed asset investments 24,645 40,487 ------ ------ Net cash inflow for capital expenditure and financial investment 11,637 11,127 ------ ------ Equity dividends paid (2,075) (1,284) ------ ------ Financing Purchase of ordinary shares (2,575) - ------ ------ Net cash outflow from financing (2,575) - ------ ------ Net cash inflow before management of liquid resources 10,392 10,685 ------ ------ Management of liquid resources Purchase of Government securities (48,994) (55,968) Sale/redemption of Government securities 47,478 45,463 ------ ------ Net cash outflow from management of liquid resources (1,516) (10,505) ------ ------ Increase in cash 8,876 180 ====== ====== RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES Year ended Year ended 31 December 31 December 2000 1999 £'000 £'000 (audited) (audited) (restated) Income before interest payable and taxation 6,511 3,305 Fees capitalised (1,455) (1,080) Interest receivable (51) (50) Increase in accrued income (1,198) (939) Increase/(decrease) in creditors 188 (12) Effective yield adjustment 371 117 Tax on investment income included within gross income (849) (513) ----- ----- Net cash inflow from operating activities 3,517 828 ===== ===== GEARING The Company had nil gearing at 31 December 2000 (1999: nil). NOTES ON THE PRELIMINARY RESULTS 1. Principal activity The principal activity of the Company is that of an investment trust within the meaning of section 842 of the Income and Corporation Taxes Act 1988. 2. Basis of preparation The preliminary financial statements have been prepared on the basis of the accounting policies set out in the Company's financial statements as at 31 December 2000. Income and operating expenses have been accrued in accordance with the same principles used in the preparation of the previous year's financial statements, subject to note 3 below. 3. Taxation The financial information contained in this preliminary statement follows the requirements of Financial Reporting Standard (FRS) 16 'Current Tax' to show franked investment income net of the related tax credits. The figures for income and taxation in respect of the year to 31 December 1999 have been restated accordingly. This change has no effect on the net income or net asset values previously reported for that period, although franked investment income and the tax charge have both decreased by £40,000. 4. Income 2000 1999 £'000 £'000 Income from investments Franked investment income 19 350 UK unfranked investment income 5,570 3,108 Stock dividends 22 - Overseas dividends 43 - ----- ----- 5,654 3,458 ----- ----- Other income Gilt interest 1,534 375 Deposit interest 51 50 Other fees 93 18 ----- ----- 1,678 443 ----- ----- Total income 7,332 3,901 ===== ===== Total income comprises: Dividends 84 350 Interest 7,155 3,533 Other income 93 18 ----- ----- 7,332 3,901 ===== ===== Income from investments comprises: Listed UK 19 134 Overseas dividends 43 - Unlisted 5,592 3,324 ----- ----- 5,654 3,458 ===== ===== 5. Dividend The directors have declared a final dividend of 14.50p per share (1999: 8.00p). The dividend will be paid on 23 April 2001 to shareholders on the register of members at the close of business on 9 March 2001. The shares will be quoted ex-dividend on 7 March 2001. 6. Investment management fees Year ended Year ended 31 December 31 December 2000 1999 £'000 £'000 (audited) (audited) Revenue Capital Total Revenue Capital Total ----------------------- ------------------------ Investment management fee 386 1,158 1,544 306 919 1,225 Irrecoverable VAT thereon 67 201 268 54 161 215 --- ----- ----- --- ----- ----- 453 1,359 1,812 360 1,080 1,440 === ===== ===== === ===== ===== Investment management fees are charged 25% to the revenue account and 75% to capital reserve. 7. Ordinary shares 31 December 31 December 2000 1999 The weighted number of ordinary shares in issue during each period, on which the return per ordinary share was calculated, was: 25,837,319 25,933,170 The number of ordinary shares in issue at the end of the period was: 25,186,755 25,933,170 Share price 356.5p 289.0p 8. 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. 9. The figures set out above have been reported upon by the auditors. The comparative figures are derived from the audited financial statements of Mercury Grosvenor Trust plc for the year ended 31 December 1999. The reports of the auditors for the years ended 31 December 1999 and 2000 contain no qualification or statement under section 237(2) or (3) of the Companies Act 1985. 10. The full annual report and financial statements for the year ended 31 December 2000 will be filed with the Registrar of Companies after the Annual General Meeting. 11. The Annual General Meeting of the Company will be held at 33 King William Street, London EC4R 9AS on Tuesday 10 April 2001 at 12.00 noon. 12. Copies of the annual report will be sent to members shortly and will be available from the registered office, c/o The Company Secretary, Mercury Grosvenor Trust plc, 33 King William Street, London EC4R 9AS. This report will also be available on the Merrill Lynch Investment Managers' website at www.mlim.co.uk/its 27 February 2001 33 King William Street London EC4R 9AS

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