Interim Results

Mercury Grosvenor Trust PLC 14 August 2001 FOR IMMEDIATE RELEASE 14 August 2001 MERCURY GROSVENOR TRUST plc Interim Results for the six months ended 30 June 2001 * Net asset value per share down 0.2% in the six months to 30 June 2001 from 411.0p to 410.2p, compared with falls in the FTSE All-Share Index of 7.3% and in the FTSE SmallCap Index of 6.8%. * Earnings per share of 6.9p compared with 11.4p for the corresponding period last year. * During the period, the Company committed £9.5 million to four new investments, these being Raymarine Ltd, Comnitel Technologies, Acuid Ltd and Burns e-Commerce Solutions. A further £1.4 million was committed to follow-on investments. * Realisations yielded £16.0 million. * Mercury Private Equity, the Company's Investment Manager, changed its name to HgCapital in June 2001. The Chairman, David Bucks, comments: 'Volatility of markets and trading conditions during the period under review has had both a direct and indirect effect on the value of the portfolio. Over the six months to 30 June 2001, the net asset value per share fell by 0.2%, from 411.0p to 410.2p. This performance compares with a fall of 7.3% in the FTSE All-Share Index and a decrease of 6.8% in the FTSE SmallCap Index, both in capital only terms. 'Earnings per share for the period are 6.9p, compared with 11.4p in the same period of 2000. Both these figures were affected by material non-recurring items: in the current year by the receipt on listing of Patientline of accrued interest on its loan stock amounting to approximately 7.0p per share, and in the previous year by the release of a provision against accrued loan interest on the sale of Priory Healthcare amounting to 9.2p per share. 'Piers Brooke, formerly a senior executive with National Westminster Bank, was appointed as a director of the Company with effect from 1 May 2001. We are delighted to welcome him to the Board. 'Finally, Mercury Private Equity, which manages the investments of the Company under a delegation agreement with Merrill Lynch Investment Managers, changed its name to HgCapital in June 2001. ' Commenting on the outlook for the Company, Ian Armitage of HgCapital, the Fund Manager, notes: 'General economic conditions deteriorated marginally over the period and, in some sectors, notably the manufacture and sale of computers, peripheral equipment and telecommunications hardware, demand patterns changed markedly for the worse. The pressure on prices, which has been a feature of the economy for several years, continues while, at the same time, cost increases are occurring, particularly in energy and Government charges and duties. This is leading to a pressure on margins which, together with some sector-specific volume reductions, explains the raft of profit warnings in the market and ultimately the negative returns from equities. 'Softening demand has also, in some companies, exposed weaknesses in market position and management. Some management teams will exploit the opportunities offered by recessionary forces to expand at the expense of weaker competitors, whereas others will struggle. Our job remains to support the stronger teams and supplement or replace the weaker ones. 'It is our belief that, in general, company values are vulnerable to further falls. The Company retains significant financial flexibility, in the form of cash and undrawn borrowing facilities, amounting to over £50 million. However, we will be very selective in deploying this capital over the next six months.' For further information please contact: Ian Armitage - Chief Executive, HgCapital Tel: 020 7743 5666 Nigel Webb - Corporate Communications, Merrill Lynch Investment Managers Tel: 020 7743 2302 Fergus Wylie - Cubitt Consulting Tel: 020 7367 5100 REVENUE STATEMENT for the six months ended 30 June 2001 Six months Six months Year ended ended ended 30 June 30 June 31 December 2001 2000 2000 Note £'000 £'000 £'000 (unaudited) (unaudited) (audited) Income 5 2,885 4,639 7,332 Investment management fees 6 (233) (221) (453) Other expenses 7 (162) (172) (368) -------- -------- -------- Net return before finance costs and taxation 2,490 4,246 6,511 Interest payable and similar charges (11) (21) (32) -------- -------- -------- Return on ordinary activities before taxation 2,479 4,225 6,479 Taxation on ordinary activities (741) (1,264) (1,856) -------- --------- --------- Return on ordinary activities after taxation 1,738 2,961 4,623 Dividend in respect of equity shares 3 - - (3,652) -------- -------- --------- Transfer to reserves 1,738 2,961 971 ==== ==== === Return per ordinary share Calculated on weighted average shares 6.90p 11.42p 17.89p Calculated on actual shares 6.90p 11.42p 18.35p ==== ===== ===== Dividend per ordinary share - - 14.50p ==== ===== ===== STATEMENT OF TOTAL RETURN PER ORDINARY SHARE Six months Six months Year ended ended ended 30 June 30 June 31 December 2001 2000 2000 (unaudited) (unaudited) (audited) Earnings per ordinary share 6.90p 11.42p 17.89p Capital return per ordinary share (7.67p) 50.77p 59.07p --------- -------- -------- Total return per ordinary share (0.77p) 62.19p 76.96p ===== ===== ===== BALANCE SHEET as at 30 June 2001 30 June 30 June 31 December 2001 2000 2000 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Fixed assets Investments at valuation 72,621 78,875 79,124 --------- --------- --------- Current assets Debtors 4,616 4,297 4,555 Government securities 25,090 23,825 15,508 Cash 1,905 147 9,039 --------- --------- -------- 31,611 28,269 29,102 Creditors - amounts falling due within 904 1,153 4,705 one year --------- --------- --------- Net current assets 30,707 27,116 24,397 --------- --------- --------- Net assets 103,328 105,991 103,521 ====== ====== ====== Capital and reserves Called up share capital 6,296 6,483 6,296 Share premium account 14,123 14,123 14,123 Capital reserves Capital redemption reserve 1,248 1,061 1,248 Capital reserve - realised 68,769 63,668 63,914 Capital reserve - unrealised 8,542 16,054 15,328 Revenue reserve 4,350 4,602 2,612 -------- -------- -------- Total equity shareholders' funds 103,328 105,991 103,521 ====== ====== ====== Net asset value per ordinary share 410.2p 408.7p 411.0p ===== ===== ===== CASH FLOW STATEMENT for the six months to 30 June 2001 Six months Six months Year ended ended ended 30 June 30 June 31 December 2001 2000 2000 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Net cash inflow from operating 1,557 2,402 3,517 activities Returns on investment and servicing of 93 (7) 51 finance Taxation (186) 8 (163) Capital expenditure and financial investment Purchase of fixed asset investments (10,900) (7,539) (13,008) Proceeds from the sale of fixed asset investments 15,715 16,820 24,645 Equity dividends paid (3,652) (2,075) (2,075) Financing (9,761) (9,625) (4,091) --------- --------- --------- Net cash (outflow)/inflow (7,134) (16) 8,876 ===== ==== ==== Reconciliation of net return before finance costs and taxation to net cash flow from operating activities Six months Six months Year ended ended ended 30 June 30 June 31 December 2001 2000 2000 £'000 £'000 £'000 (unaudited) (unaudited)(audited) Net income before interest payable and 2,490 4,246 6,511 taxation Fees capitalised (731) (726) (1,455) Interest receivable (93) (16) (51) Decrease/(increase) in accrued income 214 (831) (1,198) Increase in creditors 6 100 188 Effective yield adjustment 174 162 371 Tax on investment income included within gross income (503) (533) (849) ------- ------- ------- Net cash inflow from operating activities 1,557 2,402 3,517 ==== ==== ==== NOTES TO THE INTERIM ANNOUNCEMENT 1. Principal activity The principal activity of the Company remains that of an investment company within the meaning of section 266 of the Companies Act 1985. 2. Basis of preparation The interim financial statements have been prepared on the basis of the accounting policies set out in the Company's financial statements at 31 December 2000. Income and operating expenses have been recognised in accordance with the same principles used in the preparation of the annual financial statements. The taxation charge has been calculated by applying an estimate of the annual effective tax rate to the profit for the period. 3. Dividend It is intended that dividends will be declared and paid annually in respect of each accounting period. A dividend of 14.50p per share, declared as a final dividend, was paid on 23 April 2001 in respect of the year ended 31 December 2000. 4. Issued share capital There were 25,186,755 ordinary shares in issue for the six months to 30 June 2001 (31 December 2000: 25,186,755). 5. Income Six months Six months Year ended ended ended 30 June 30 June 31 December 2001 2000 2000 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Income from investments: UK dividends 10 12 19 UK unfranked investment income 2,355 3,826 5,570 Stock dividends - 22 22 Overseas dividends - 16 43 -------- -------- -------- 2,365 3,876 5,654 ==== ==== ==== Other income: Gilt interest 426 659 1,534 Deposit interest 93 16 51 Other fees 1 88 93 ------ ------ ------- 520 763 1,678 ------ ------ ------- Total income 2,885 4,639 7,332 ==== ==== ==== 6. Investment management fees Revenue Capital Six Six Year Six months Six months Year months months ended ended ended ended ended ended 31.12.00 30.06.01 30.06.00 31.12.00 30.06.01 30.06.00 £'000 £'000 £'000 £'000 £'000 £'000 (unaudited) (unaudited) (audited) (unaudited)(unaudited)(audited) Investment 198 188 386 594 564 1,158 management fees Irrecoverable 35 33 67 105 99 201 VAT thereon ----- ----- ----- ----- ----- ------ 233 221 453 699 663 1,359 === === === === === ==== 7. Other expenses Six months Six months Year ended ended ended 30 June 30 June 31 December 2001 2000 2000 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Custodian and administration fees 63 62 127 Other administration costs 99 110 241 ---- ----- ----- 162 172 368 === === === 8. Capital commitments As at 30 June 2001 the Company was committed to further investments of £8,228,000 (31 December 2000: £8,055,000). 9. 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 Companies Act 1985. The financial information for the six months ended 30 June 2000 and 2001 has not been audited. The information for the year ended 31 December 2000 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 sections 237(2) or (3) of the Companies Act 1985. 10. Annual results The Board expects to announce the results for the year ending 31 December 2001 at the end of February 2002; copies of the preliminary announcement can be obtained from the Secretary on 020 7743 3000. The annual report should be available by mid-March 2002, with the Annual General Meeting being held in mid-April 2002. 33 King William Street London EC4R 9AS 14 August 2001

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