Annual Financial Report

RNS Number : 9127D

Mercantile Investment Trust(The)PLC

02 April 2014

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

THE MERCANTILE INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 31ST JANUARY 2014

Chairman's Statement

Over the year to 31st January 2014, the Company delivered a positive share price return of 36.6%. The Managers marginally outperformed the Company's benchmark with a return of 27.7% against 27.5% for the benchmark. The discount narrowed significantly during the year from 15.3% to 9.8%.

Returns and Dividends

Earnings per share increased by 48.0% for the year, from 32.1p to 47.5p, assisted by 10.3p of special dividend income.

The Company has paid three interim dividends of 8.0p per ordinary share, and the Directors have declared a fourth quarterly interim dividend of 16.0p, giving a total dividend of 40.0p for the year, an increase of 11.1% on last year's dividend of 36.0p. The yield continues to compare favourably with the Company's peers.

The Board intends to continue to pay the three interim dividends of 8.0p per ordinary share during the current year ending 31 January 2015. The level of the fourth interim dividend will be determined by the Board towards the end of the financial year and will depend on the level of dividends received and anticipated by the Company. The Board is of the view that the importance of a strong revenue reserve in protecting the dividend flow for shareholders has been amply demonstrated in recent years. The Company has seen an inflow of special dividends and these will assist in the rebuilding of revenue reserves for the future.

Share Buy backs

During the year under review a total of 215,000 shares were repurchased for cancellation, amounting to 0.22% of issued share capital at the beginning of the year, at a total cost of £2.74 million. Share buy backs during the year under review have added approximately 0.4p to the net asset value per share.

The Board's objective continues to be 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 8.9%. During the year the gearing varied between 3.0% and 11.1%. It is the Board's intention to continue to operate within the range of 10% cash to 20% geared, under normal market conditions. Gearing is regularly discussed between the Board and the Investment Manager. In addition to the Company's debenture gearing, the Company took out a bank facility on 6th November 2013 of £50,000,000, with Scotiabank Ireland. This will allow the Company to make use of gearing to an appropriate extent in relation to total assets.

Board

In the Half Year Report published in September, I announced the retirement of Sir Richard Beckett which will become effective at the end of the forthcoming Annual General Meeting. He has made a very positive contribution to our Company's affairs. I am pleased to announce that the Board has agreed to appoint Harry Morley as a Director with effect from the close of the forthcoming Annual General Meeting. As CEO of Armajaro Asset Management LLP, with a legal and finance background, he will be a strong addition to the Board.

Other than Sir Richard, all current Directors will stand for annual re-election. I refer you to the Directors' biographies in the Annual Report & Accounts for the year ended 31^st January 2014 (the "Annual Report") for further details.

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

Investment Managers

As intimated in previous reports, the Board has taken an active role in discussing with JPMAM the management of the Company's assets. This process continued during the year and with a review being carried out in early 2014. The move to add resources to the investment management team, together with better defined sectoral, analytical and management responsibilities is beginning to bear fruit, and the Board looks forward to this trend continuing in the future.

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

Share Register

In common with other listed companies, the Company's share register is showing an increase in retail investment, driven partly by increased private client ownership. Retail holdings totalled 63.1% of the register as at 31st January 2014 against 61.4% as at 31st January 2013.

Alternative Investment Fund Managers Directive (the 'AIFMD')

Under the AIFMD the Company has the option of being self-managed or alternatively must appoint a manager authorised under the AIFMD. The Board has been advised by solicitors Dickson Minto. The Board has concluded that the appropriate route forward is to appoint a J.P. Morgan ('JPM') company as our manager. However, the AIFMD regulations do not permit JPMAM to be appointed as our manager as it is a 'MIFID' registered company. Accordingly, the Company will enter into a new Investment Management Agreement ('IMA') with another JPM company, namely J.P. Morgan Funds Limited ('JPMF'). JPMF will then delegate the actual management of the Company's portfolio to JPMAM and the Investment Managers will continue to manage the portfolio in the same way.

The documentation to put this change into effect is in the process of being agreed and is expected to be signed off by the Board very soon. In addition the Company is forced to appoint a Depositary in addition to our current Custodian, J.P. Morgan Chase Bank, and has resolved to appoint Bank of New York Mellon. This appointment is required to be made before 22nd July 2014.

Annual General Meeting

The Company's one hundred and twenty eighth Annual General Meeting will be held at Trinity House, Tower Hill, London EC3N 4DH on Wednesday 21st May 2014 at 12noon. 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.

Outlook

The last two years have provided exceptional returns for investors in small and medium sized UK companies, as the market rerated in anticipation of an improving economic environment. We are now seeing signs of such improvements, and the market commentary has moved from the threat of a 'triple dip' recession just 12 months ago, to broad based domestic economic recovery, as evidenced by The Bank of England forecasting UK real GDP growth of 3.4% in 2014, the fastest rate of growth since 2007. The more domestically exposed small and medium sized companies should benefit from this growth, as they derive a significantly greater proportion of revenue from the UK than their larger counterparts.

As investor focus shifts from the expectation towards the required delivery of improved financial performance, we expect higher volatility in the market, particularly when combined with external factors such as emerging market worries, political tensions concerning the future of Ukraine, or the Scottish referendum. Whilst such conditions may present threats, there will also be opportunities.

The new financial year has begun satisfactorily, and the Investment Managers will provide investors with a performance update at the Annual General Meeting on 21st May 2014.

Hamish Leslie Melville

Chairman                                                                                                                                             2nd April 2014

For further information, please contact:

Juliet Dearlove

For and on behalf of

JPMorgan Asset Management (UK) Limited - Company Secretary

020 7742 4000

Investment Managers' Report

Market Background

Last year shares in the advanced world continued to deliver strong performance, responding in part to quantitative easing by the Central Banks in Japan and the USA and also to the improving economic backdrop. Towards the end of the year, the Federal Reserve Bank in the USA announced that growth was robust enough for it to begin reducing its economic stimulus and gave forward guidance that interest rates would remain low for some time.

Similarly, the combination of greater than expected economic growth in the UK and the reassurance from the Governor of the Bank of England that interest rates would remain low underpinned strong performance from the UK equity market.

The UK economy is now expected to be the fastest growing of the developed economies: around one million new jobs have been created in the UK since unemployment peaked in the second half of 2011; the UK Purchasing Managers' Index, a measure of corporate confidence, was at an all time high in the fourth quarter of 2013; the number of new car sales in the UK increased by more than 10% in 2013 and new mortgage approvals were up by around 40%.

Mid and small sized companies performed more strongly than large companies reflecting the fact that they are generally more exposed to a strengthening domestic economy.

Performance

Your Company has produced a total return on net assets for the last 5 years of 202.1% with a total return to shareholders of 213.9% for that period. For the year ended 31st January 2014 the total return on net assets was 27.7% which compares to the Company's benchmark, the FTSE All-Share index excluding FTSE 100 constituents and investment companies, return of 27.5%, as the table on page 5 of the Annual Report illustrates. The Company's discount to its net asset value continued to narrow, resulting in a return to shareholders of 36.6%. The FTSE 100 index rose by 7.6% for the period reflecting the lower growth prospects for larger companies relative to mid and small sized companies.

The bar chart on page 6 of the Annual Report shows the relative contributions to performance for the year for the five best and five worst sectors within the portfolio. The green bars to the right show positive contributors relative to the benchmark index and reflect both sector weighting and stock selection. The blue bars to the left show the negative relative contributors.

This shows that the largest positive contributor to performance was our overweight position in the Household Goods and Home Construction sector. Housebuilders performed strongly last year as they continued to recover from their very deep recession and benefited from recent Government policy initiatives aimed at increasing the number of new houses being built, most notably the Help to Buy scheme. Persimmon and Barratt Developments were the two largest contributors to performance in the portfolio last year. Our position in Software and Computer Services performed relatively well as a number of companies which we do not hold, such as Telecity, Aveva and Anite suffered reduced growth prospects and a relatively recent new issue, Fusionex, did well from growing uptake of its software for analysing consumer data. Your Company's Media sector performance was also strong last year, in particular benefiting from an increasing appreciation of the strong non-newspaper growth prospects within the Daily Mail & General Trust group, which was the third largest contributor to performance in the portfolio last year.

The largest negative relative performance last year was suffered by the Food Producers sector where our holdings in palm oil companies, such as New Britain Palm Oil and MP Evans, cost us performance in a rising stock market as they failed to show any strength against a background of a relatively flat palm oil price. We continue to hold these stocks because we believe that their longer term prospects are good. The oil and gas sector, which has been a strong contributor to performance for Mercantile over recent years, was a detractor last year as a number of our holdings suffered from substantial delays in developing their exploration assets, most notably at Providence Resources offshore Southern Ireland and at Bowleven, in Cameroon.

Last year saw a revival of the Initial Public Offering (IPO) market, with the fourth quarter of 2013 being the third largest IPO quarter for a decade. We are actively involved in analysing and meeting companies in some cases as much as 18 months before they are offered in the stockmarket. Last year we met 21 such companies and invested in six of them. Each of these added to the performance of Mercantile and we are continuing to research a number of companies which may come to the stockmarket over the next 18 months.

Portfolio

Your Company benefited from being geared throughout the year. The investment managers have the flexibility to operate within a gearing range of 10% net cash to 20% geared and a more specific tactical range is agreed regularly with the Board.

The portfolio continues to be diversified across all sectors, comprising around 140 stocks of which 95 are mid sized and 45 are smaller companies. The ten largest holdings represent 24% of the net assets.

Of the ten, which are shown on page 13 of the Annual Report, Persimmon, Jardine Lloyd Thompson, Bovis Homes, Barratt Developments, Berkeley Group, Bellway and Cable & Wireless Communications were all in the top ten a year ago and the other three stocks were already substantial holdings within the portfolio. Turning to the three largest investments of one year ago which are no longer in the top ten: Phoenix Holdings failed to agree merger terms with Admin Re which would have generated substantial synergies and so we reduced the size of our holding; Mondi was sold on its promotion into the FTSE 100 Index; and the size of our position in Hiscox was reduced in response to the weakening outlook for insurance rates.

The pie chart on page 7 of the Annual Report shows, by geography, where the revenues of the companies in which we are invested are generated. Whilst more than half of this revenue is derived from the UK, we still have a good level of exposure to international growth opportunities that are available to us as investors in UK quoted mid and small sized companies. So whilst, for example, the focus of the housebuilders is in the UK domestic market our interests in insurance, manufacturing, telecommunications, food ingredients and oil and gas companies provide international exposure.

Portfolio Size Distribution

	Benchmark	Fund	Relative
Market	weighting %	weighting %	weighting %
Capitalisation	31st Jan 2014	31st Jan 2014	31st Jan 2014
More than £2.5 billion	25.0	26.7	1.7
£1.5 billion to £2.5 billion	28.4	25.9	-2.5
£1.0 billion to £1.5 billion	18.2	18.0	-0.1
£500 million to £1.0 billion	19.0	14.9	-4.1
£300 million to £500 million	5.5	7.1	1.6
£100 million to £300 million	3.7	5.6	1.9
£50 million to £100 million	0.2	0.6	0.5
Less than £50 million	0.0	1.2	1.2
Total	100.0	100.0	0.0

The above table shows that more than 70% of our portfolio comprises companies with a market capitalisation of more than £1 billion. We focus on those successful growing mid sized companies which are progressing towards promotion into the FTSE 100 index and also on value opportunities presented by companies being demoted from the FTSE 100 index which may have fallen out of favour but offer good opportunities for recovery. We also focus on smaller companies which may be less well known but which can offer the potential for superior growth. Our intensive research process is designed to identify the winners of tomorrow before they become better known. During the year we held more than 300 research meetings with companies and this remains an important part of our investment process when evaluating companies.

Outlook

The last two years have provided exceptional returns for investors in small and medium sized UK companies, as the market re-rated in anticipation of an improving economic environment. We are now seeing signs of such improvements, and the market commentary has moved from the threat of a 'triple dip' recession just 12 months ago, to broad based domestic economic recovery, as evidenced by The Bank of England forecasting UK real GDP growth of 3.4% in 2014, the fastest rate of growth since 2007. The more domestically exposed small and medium sized companies should benefit from this growth, as they derive a significantly greater proportion of revenue from the UK than their larger counterparts.

Martin Hudson

Guy Anderson

Anthony Lynch

Investment Managers                                                                                                                                                                                                                                                                                                  2nd April 2014

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 1158 of the Corporation Tax Act 2010 ('Section 1158'). Details of the Company's approval are given under 'Structure of the Company' above. Were the Company to breach Section 1158, 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 1158 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 Act and, since its shares are listed on the London Stock Exchange, the UKLA Listing Rules and Disclosure & Transparency Rules ('DTRs'). A breach of the Companies Act could result in the Company and/or the Directors being fined or the subject of criminal proceedings. Breach of the UKLA Listing Rules or DTRs could result in the Company's shares being suspended from listing which in turn would breach Section 1158. The Board relies on the services of its Company Secretary, JPMAM, to ensure compliance with The Companies Act 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 on pages 27 to 32 of 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 risk management and internal control are included within the Risk Management and Internal Control section of the Corporate Governance report on pages 30 and 31 of the Annual Report.

•   Going concern: Pursuant to the Sharman Report, Boards are now advised to consider going concern as a potential risk, whether or not there is an apparent issue arising in relation thereto. Going concern is considered rigorously on an ongoing basis and the Board's statement on going concern is detailed on page 25 of 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 23 on pages 56 to 60 of the Annual Report.

Directors' Responsibilities

Related Parties Transactions

During the year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company.

Directors' Responsibilities

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

(a) the financial statements, prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and Applicable Law), give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

(b) the annual report and accounts taken as a whole are fair, balanced and understandable and provide the information necessary for shareholders to assess the strategy and business model of the Company.

Financial Statements

Income Statement

for the year ended 31st January 2014

	2014			2013
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at fair value through
profit or loss	-	336,198	336,198	-	269,028	269,028
Net foreign currency losses	-	(13)	(13)	-	(136)	(136)
Income from investments	52,385	-	52,385	36,200	-	36,200
Other interest receivable and similar income	719	-	719	1,247	-	1,247
Gross return	53,104	336,185	389,289	37,447	268,892	306,339
Management fee	(1,986)	(4,633)	(6,619)	(1,494)	(3,485)	(4,979)
Other administrative expenses	(859)	-	(859)	(985)	-	(985)
Net return on ordinary activities before finance
costs and taxation	50,259	331,552	381,811	34,968	265,407	300,375
Finance costs	(3,301)	(7,703)	(11,004)	(3,293)	(7,685)	(10,978)
Net return on ordinary activities before taxation	46,958	323,849	370,807	31,675	257,722	289,397
Taxation	(312)	-	(312)	(32)	-	(32)
Net return on ordinary activities after taxation	46,646	323,849	370,495	31,643	257,722	289,365
Return per share (Note 3)	47.46p	329.52p	376.98p	32.09p	261.34p	293.43p

Dividends declared in respect of the financial year ended 31st January 2014 total 40.0p (2013: 36.0p) per share amounting to £39,296,000 (2013: £35,469,000). Further information on dividends is given in note 8 on page 49 of the Annual Report.

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 2014

	Called up	Share	Capital
	share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31st January 2012	24,678	23,459	12,092	1,016,809	33,323	1,110,361
Repurchase and cancellation of
the Company's own shares	(64)	-	64	(2,790)	-	(2,790)
Net return on ordinary activities	-	-	-	257,722	31,643	289,365
Dividends paid in the year	-	-	-	-	(35,503)	(35,503)
At 31st January 2013	24,614	23,459	12,156	1,271,741	29,463	1,361,433
Repurchase and cancellation of
the Company's own shares	(54)	-	54	(2,739)	-	(2,739)
Net return on ordinary activities	-	-	-	323,849	46,646	370,495
Dividends paid in the year	-	-	-	-	(41,279)	(41,279)
At 31st January 2014	24,560	23,459	12,210	1,592,851	34,830	1,687,910

Balance Sheet

at 31st January 2014

	2014	2013
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	1,831,759	1,417,228
Current assets
Derivative financial instruments	1	-
Debtors	16,925	2,723
Cash and short term deposits	27,211	139,879
	44,137	142,602
Creditors: amounts falling due within one year	(10,699)	(21,207)
Net current assets	33,438	121,395
Total assets less current liabilities	1,865,197	1,538,623
Creditors: amounts falling due after more than
one year	(177,287)	(177,190)
Net assets	1,687,910	1,361,433
Capital and reserves
Called up share capital	24,560	24,614
Share premium account	23,459	23,459
Capital redemption reserve	12,210	12,156
Capital reserves	1,592,851	1,271,741
Revenue reserve	34,830	29,463
Total equity shareholders' funds	1,687,910	1,361,433
Net asset value per share (Note 4)	1,718.1p	1,382.8p

Company registration number 20537

Cash Flow Statement

for the year ended 31st January 2014

	2014	2013
	£'000	£'000
Net cash inflow from operating activities	44,648	31,897
Servicing of finance
Interest paid	(10,892)	(10,882)
Net cash outflow from servicing of finance	(10,892)	(10,882)
Taxation
Overseas tax recovered	-	52
Financial investment
Purchases of investments	(876,282)	(729,134)
Sales of investments	775,371	867,478
Other capital charges	(24)	(21)
Net cash (outflow)/inflow from financial investment	(100,935)	138,323
Dividends paid	(41,279)	(35,503)
Net cash (outflow)/inflow before financing	(108,458)	123,887
Management of liquid resources
Net sales of Term Deposits	112,800	-
Net cash inflow from management of liquid resources	112,800	-
Financing
Repurchase of ordinary shares and cancellation of the
Company's own shares	(4,196)	(2,319)
Net cash outflow from financing	(4,196)	(2,319)
Net increase in cash for the year	146	121,568

Notes to the Accounts

for the year ended 31st January 2014

1.         Accounting Policies

(a)        Basis of accounting

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 and Venture Capital Trusts' (the 'SORP') issued by the Association of Investment Companies in January 2009. All of the Company's operations are of a continuing nature.

The accounts have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of investments at fair value through profit or loss.

The policies applied in these accounts are consistent with those applied in the preceding year.

	2014	2013
	£'000	£'000
2.          Dividends
Dividends paid and declared
Unclaimed dividends refunded to the Company1	(8)	(6)
2013 fourth quarterly dividend of 18.0p (2012: 18.0p) paid to shareholders
in May	17,710	17,762
First quarterly dividend of 8.0p (2013: 6.0p) paid to shareholders in August	7,859	5,917
Second quarterly dividend of 8.0p (2013: 6.0p) paid to shareholders
in November	7,859	5,915
Third quarterly dividend of 8.0p (2013: 6.0p) paid to shareholders
in January2	7,859	5,915
Total dividends paid in the year	41,279	35,503

¹Represents dividends which remain unclaimed after a period of six years and thereby become the property of the Company.

²Paid to the Registrars in January.

The fourth quarterly dividend declared in respect of the year ended 31st January 2013 amounted to £17,722,000. However, the actual payment amounted to £17,710,000 due to share repurchase and cancellation after the Balance Sheet Date, but prior to the share register Record Date.

	2014	2013
	£'000	£'000
Fourth quarterly dividend declared of 16.0p (2013: 18.0p) payable to
shareholders in May	15,719	17,722

The fourth quarterly dividend has been declared in respect of the year ended 31st January 2014. In accordance with the accounting policy of the Company, this dividend will be reflected in the accounts for the year ending 31st January 2015.

3.         Return per share

The revenue return per share is based on the revenue earnings attributable to the ordinary shares of £46,646,000 (2013: £31,643,000) and on the weighted average number of ordinary shares in issue during the year of 98,277,527 (2013: 98,614,681).

The capital gain per share is based on the capital gain attributable to the ordinary shares of £323,849,000 (2013: £257,722,000) and on the weighted average number of ordinary shares in issue during the year of 98,277,527 (2013: 98,614,681).

The total gain per share is based on the total gain attributable to the ordinary shares of £370,495,000 (2013: £289,365,000) and on the weighted average number of ordinary shares in issue during the year of 98,277,527 (2013: 98,614,681).

4.         Net asset value per share

The net asset value per share is based on the net assets attributable to the ordinary shareholders of £1,687,910,000 (2013: £1,361,433,000) and on the 98,240,719 (2013: 98,455,719) shares in issue at the year end.

5.        Status of announcement

2013 Financial Information

The figures and financial information for 2013 are extracted from the published Annual Report and Accounts for the year ended 31st January 2013 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 498(2) or section 498(3) of the Companies Act 2006.

2014 Financial Information

         The figures and financial information for 2014 are extracted from the Annual Report and Accounts for the year ended 31st January 2014 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.

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement

JPMORGAN ASSET MANAGEMENT (UK) LIMITED

2^nd April 2014

For further information:

Juliet Dearlove,

JPMorgan Asset Management (UK) Limited                           020 7742 4000

ENDS

A copy of the annual report will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM

The annual report will also shortly be available on the Company's website at www.mercantileit.co.uk where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

JPMORGAN ASSET MANAGEMENT (UK) LIMITED

 

END

 

 

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