Final Results

RNS Number : 2039A

Mercantile Investment Trust(The)PLC

27 March 2012

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

THE MERCANTILE INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 31ST JANUARY 2012

Chairman's Statement

Performance and Manager Review

Over the year to 31st January 2012, the Company's total return on net assets (ie with net income reinvested) was -7.2%, which compares with a return of -4.1% from the Company's benchmark index, the FTSE All-Share (excluding FTSE 100 constituents and investment trusts).

The share price fell by 15.2% during the year and, including dividends paid, the total return to shareholders was -12.2%. The discount to net asset value at year end was 13.6% compared to 10.3% (with debt at fair value) the previous year. The average daily discount, with debt at fair value, during the year, was 11.4%.

Performance and Manager Review

The Company's failure to outperform the benchmark over the financial year to 31st January 2012, and over the longer term, is extremely disappointing.

The Board is fully aware that this result is unacceptable and is working hard with the Manager to ensure that the Company's investment performance is improved.

Returns and Dividends

Earnings per share increased by 18.6% for the year, from 26.9p to 31.9p, largely due to a special dividend received from Stagecoach which increased earnings per share by 3.0p.

The Company has paid three interim dividends of 6.0p per ordinary share, and the Directors have declared a fourth quarterly interim dividend of 18.0p, giving a total dividend of 36.0p for the year, maintaining last year's dividend of 36.0p. The Board recognises, as in previous years, that it is essential to make an appropriate distribution, which both meets shareholders' legitimate expectations, and is prudent in the light of what may be continuing difficult times ahead.

The Board intends therefore to continue to pay three interim dividends at the current rate of 6.0p per ordinary share throughout the year ending 31st January 2013. The level of the fourth quarterly interim dividend will be determined by the Board based on the level of income received by the Company during the year and taking account of the Company's revenue reserve of 15.8p per share.

Share Repurchases

During the year under review a total of 325,000 shares were repurchased for cancellation, amounting to 0.33% of issued share capital at the beginning of the year, at a total cost of £2.98 million. Share repurchases during the year under review have added approximately 0.5 pence to the net asset value per share.

The Board's objective remains 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 115%. During the year the gearing varied between 99% and 115%. It is the Board's intention to continue to operate within the range of 90% to 120% invested, under normal market conditions, and at the present time, the Board is maintaining gearing in the centre of the range. Gearing is regularly discussed between the Board and the Investment Manager. Where gearing is used, proceeds from the debenture issued provide the necessary funding. In addition, the Board will consider using a bank facility should the need arise.

Board

Charles Peel and Peter Halifax are not seeking re-election at this year's AGM. Since 2005 and 2007, respectively, the Board has benefited from their wise counsel and I would like to express the Board's appreciation and thanks for their great contributions. Jeremy Tigue joined the Board yesterday. His experience and knowledge of the sector will be an asset to the Company.

The UK Corporate Governance Code introduced in June 2010 requires all directors of companies within the FTSE 350 Index to offer themselves for annual re-election, and with this in mind all of the Company's Directors stand for re-election, with the exception of the retiring Directors. I refer you to the Directors' biographies on pages 17 and 18 of 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. The Chairman reports the findings of the Nomination Committee to the Board, which considers these findings. During 2011 this process was assisted by an externally facilitated Board Review, which the Board intends to commission every third year going forward.

Investment Managers

During the year under review, the Company's investment management team comprised Martin Hudson, who was appointed in 1993, and Jane Lennard, who was appointed in 2006. Jane has left to pursue an alternative career. On behalf of the Board, I wish her well and thank her for her considerable contribution to the Company. The composition of the Investment Management Team will be announced in due course.

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

Brokers

The Company continues to retain Cenkos Securities plc and Oriel Securities Limited as its joint brokers.

VAT

Last year I reported on two ongoing issues relating to VAT. The potential claim for recovery of VAT paid over the years 1997 to 2000 has now been considered by the High Court in relation to three parties (unconnected to the Company). This claim was not successful, although the court also considered whether there should be reimbursement by HMRC of amounts withheld when the main VAT repayment was made in 2008, which the court upheld. The net effect, once expenses are offset, is a small receivable to the Company. The claim for compound interest on VAT already recovered continues. As I wrote last year, the outcome of this matter is uncertain.

Annual General Meeting

The Company's one hundred and twenty sixth Annual General Meeting will be held at Trinity House, Tower Hill, London EC3N 4DH on Wednesday, 23rd May 2012 at 12 noon. 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.

Please submit, via the Company's website (www.mercantileit.co.uk and click on the Investment Trust Information link) or in writing (to the Company Secretary at Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ) any detailed questions that you wish to raise at the AGM. Shareholders who are unable to attend the AGM in person are encouraged to use their proxy votes. Shareholders are now able to lodge their proxy votes electronically, whether their shares are held through CREST or in certificate form, and full details are set out on the form of proxy.

Outlook

Despite the ongoing challenges faced by European political leaders in relation to the economic imbalances within the Euro zone, equity markets have improved since October last year. Policy responses from both Governments and Central Banks around the World have demonstrated that key decision makers are not willing to put the global financial system in danger and will go to great lengths to avoid a collapse in financial markets, by focusing on counterparty risk and the injection of liquidity. Markets have continued to be strong in our current financial year and the Company's performance is ahead of the benchmark.

At present valuations, UK mid and small cap equities are attractive on a medium term investment horizon. Many mid and small cap stocks have good growth prospects, strong balance sheets and compelling business models. It is however, likely that markets will continue to be volatile until the macroeconomic outlook is more certain, however, we believe that equities, and in particular UK mid and small cap equities, will provide investors with solid returns over the long term.

Hamish Leslie Melville

Chairman                                                                                                                     27th March 2012

For further information, please contact:

Juliet Dearlove

For and on behalf of

JPMorgan Asset Management (UK) Limited - Secretary

020 7742 4000

Investment Managers' Report

Market Background

Mid and small sized UK equities suffered a negative return for the year ended 31st January 2012, following two very strong years of recovery.

Investors were concerned by the reduced prospects for growth and by the interminable political wrangling in Europe which was failing to deliver a path to either debt reduction or growth. Markets in 2011 were characterised by periods of intense volatility. Risk aversion increased as Europe's debt crisis worsened and the stockmarket began to fear the return to recession in the US and a dramatic slowing in China. This was against a background of an already heightened level of anxiety due to the overturn of three regimes in North Africa and major earthquakes in New Zealand and Japan and also serious flooding in Thailand.

Performance

The net asset value total return for the year ended 31st January 2012 was -7.2% which was behind the Company's benchmark index, the FTSE All-Share excluding FTSE 100 constituents and investment companies, which returned -4.1%. Within the stockmarket there were more big fallers than risers last year as perceived safe, low risk, high quality stocks re-rated in response to the anxiety and fear generated by persistent volatility. These high quality stocks became increasingly more expensive as the year progressed and as the cautiousness of investor behaviour became more extreme.

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.

This shows that the most positive contributor was the Gas, Water and Multiutilities sector where we benefited from an agreed takeover of Northumbrian Water by CKI and also from our holding in another water company, Pennon, which performed well as the market found its inflation linked characteristics attractive. Home Construction was our second best contributor; expectations for the sector at the beginning of the year were low but as the year progressed trading stabilised and profit margins improved as the companies began to build on newer, less expensive land. The sector began to outperform as cash flow turned positive and balance sheets were no longer seen to be problematic. Cove Energy was again a strong performer in the Oil and Gas Sector as it continued to discover substantial gas reserves in offshore Mozambique and since our year end Cove has received a takeover approach at a substantial premium. The worst contributing sector was Software and Computer Services where we suffered from a takeover bid for Misys failing when its Board could not agree a price with the bidder, Fidelity National Information Services. However, since our year end Misys has received new merger and takeover approaches. Elsewhere in the sector, Logica underperformed when it suffered from profit estimate downgrades as its European and UK customers reduced their information technology expenditure. The Fixed Line Telecommunications sector suffered particularly from big profit estimate downgrades to Cable & Wireless Worldwide as its UK Government and retail sector customers cut back on their telecoms expenditure. A new Chairman, Chief Executive and Finance Director were appointed, and the Company is working to execute a strategic plan which will generate an improved performance from its substantial network of cable, fibre, data centre and unbundled telephone exchange assets. Since our year end Cable & Wireless Worldwide received preliminary takeover interest from both Vodafone and Tata Communications.

Activity

The investment managers have the flexibility to operate within a gearing range of 90% to 120% invested and a more specific tactical range is agreed regularly with the Board.

Gearing was reduced from 109% to 100% in the first half of the year to reflect reduced economic growth prospects and seemingly intractable Sovereign debt problems. As market volatility increased, reflecting doubts about politicians' willingness and ability to tackle large budget deficits in Europe and in the United States of America, gearing was reduced further to around 99% over the summer, but, as investor anxiety reached its peak at the beginning of October, gearing was increased to around 110%, reaching 115% by the Company's year end. The use of the gearing range allows the investment managers to take advantage of opportunities in a volatile market. The types of shares acquired when the gearing was increased generally had either good growth or value characteristics in anticipation of stockmarket performance broadening away from the small group of low risk, high quality stocks which had become so dominant during times of extreme uncertainty. The portfolio continues to retain its style of broad diversification across all sectors, comprising 135 stocks of which 80 are FTSE mid 250 index stocks and 55 are smaller companies.

Portfolio Size Distribution
	Benchmark
	index	Fund	Relative
Market	weighting	weighting	weighting
capitalisation	%	%	%
More than £1.5bn	34.4	32.6	-1.8
£1.0bn to £1.5bn	26.4	26.0	-0.4
£500m to £1.0bn	22.4	23.2	0.8
£300m to £500m	7.5	5.8	-1.7
£100m to £300m	8.1	6.9	-1.2
£50m to £100m	1.1	2.5	1.4
Less than £50m	0.1	3.0	2.9
Total	100.0	100.0	0.0

As at 31st January 2012

The table above shows that our holdings in companies which have a market capitalisation of more than £1 billion account for more than half of the portfolio. We focus on those successful larger companies which are progressing towards promotion into the FTSE 100 index and also on some relatively small companies, capitalised at less than £100 million, which can present outstanding growth opportunities.

Of the ten largest investments at the year end, which are shown on page 13 of the Annual Report, five were in the top ten a year ago and a further four were already substantial holdings within the portfolio. One, Laird, is a new holding acquired during the year. Of those remaining five stocks which were in the top ten one year ago but which are not in the top ten this year, smaller positions in three are still held in the portfolio and two, ITV and Tate and Lyle, have been sold, having been promoted into the FTSE 100 index.

At the sector level the portfolio is overweight in: Consumer Goods, reflecting our holdings in housebuilders; Financials, reflecting our holdings in non-life insurance companies and insurance brokers; Oil and Gas, with our largest position in the sector being in Cove Energy; and in Technology and Telecommunications reflecting our holdings in software companies and in Cable & Wireless Communications and Cable & Wireless Worldwide. The portfolio is underweight in: Basic Materials, not holding many chemicals companies; Consumer Services, not holding many retail stocks; and Industrials, being underweight in support services and engineering companies which we believe are generally too highly rated.

Many UK quoted mid and small sized equities offer exposure to growing economies and one third of the revenue generated by companies held in the portfolio is from outside the UK and Continental Europe. Of the remaining two thirds of revenues generated by invested companies, 57% comes from the UK and only 10% is generated in Continental Europe. We remain underweight in companies with significant European exposure because we believe growth prospects will remain subdued as the impact of austerity measures is felt especially in the southern countries within the Euro zone.

During the year we held more than 250 meetings with companies and this remains an important component of our investment process when evaluating companies. We believe that properly targeted company meetings can help us to analyse smaller companies that are often overlooked by the mainstream, evaluate managers and resolve issues. Our fundamental analysis of companies is aided by JPMorgan's in-house proprietary screening process which helps us to identify companies that exhibit the best value and growth characteristics.

Outlook

Mid and small sized UK equities have recovered strongly from a low point in October when investor anxiety peaked and volatility increased as markets focussed on short term newsflow and the increased likelihood of a recession in Europe.

The recovery in markets came when the European Central Bank announced a new three year loan deal for the commercial banks which effectively removed the systemic risk of a series of European bank bankruptcies destabilising the economy. The recovery in the stockmarket then gathered pace as it became clear that the extreme pessimism on US growth was beginning to look misplaced. The stockmarket continues to be dominated by macroeconomic developments and we should expect some volatility to persist, with markets generally rising in response to looser monetary policy from central banks and falling in response to bad news from the Euro zone or to deteriorating macroeconomic data. Because investor sentiment and positioning in equities is generally still negative we expect that there will be a tendency for equities to rise in the absence of further bad news. Having the flexibility to operate within a gearing range of 90% to 120% invested is a great advantage in these volatile market conditions enabling the investment managers to take the opportunity to increase their investment in the stockmarket when pessimism is high and valuations are low. Some profits have been taken following the strong recovery since October 2011, during which time Mercantile's benchmark index, the FTSE All-Share excluding FTSE 100 constituents and investment trusts, has risen by more than 20%. Gearing has been reduced to 101% invested since the Company's year end. Nevertheless, the valuations of many mid and small sized UK equities are still attractive on a medium term view. Companies have generally improved their balance sheets since the credit crisis, many are exploring acquisition opportunities or share buybacks and the outlook for dividend growth is good.

Martin Hudson

Investment Manager                                                                                                    27th March 2012

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 'Business of the Company' in the Annual Report. 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 Acts 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 23 to 28 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 internal control are included within the Internal Control section of the Corporate Governance report on pages 26 and 27 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 47 to 51 of the Annual Report.

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 includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it face.

Hamish Leslie Melville

Chairman

27th March 2012

Income Statement

for the year ended 31st January 2012

	2012			2011
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments held at fair value
through profit or loss	-	(108,508)	(108,508)	-	249,190	249,190
Net foreign currency (losses)/gains	-	(6)	(6)	-	26	26
Income from investments	36,700	-	36,700	30,631	-	30,631
Other interest receivable and similar income	684	-	684	1,606	-	1,606
Gross return/(loss)	37,384	(108,514)	(71,130)	32,237	249,216	281,453
Management fee	(1,496)	(3,492)	(4,988)	(1,407)	(3,282)	(4,689)
Other administrative expenses	(900)	-	(900)	(723)	-	(723)
Net return/(loss) on ordinary activities before finance
costs and taxation	34,988	(112,006)	(77,018)	30,107	245,934	276,041
Finance costs	(3,389)	(7,907)	(11,296)	(3,320)	(7,748)	(11,068)
Net return/(loss) on ordinary activities before taxation	31,599	(119,913)	(88,314)	26,787	238,186	264,973
Taxation	(44)	-	(44)	(18)	-	(18)
Net return/(loss) on ordinary activities after taxation	31,555	(119,913)	(88,358)	26,769	238,186	264,955
Return/(loss) per share (note 2)	31.88p	(121.13)p	(89.25)p	26.91p	239.48p	266.39p

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 2012

	Called up		Capital
	share	Share	redemption	Capital	Revenue
	capital	premium	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31st January 2010	25,487	23,459	11,283	928,785	46,362	1,035,376
Repurchase and cancellation of
the Company's own shares	(728)	-	728	(27,273)	-	(27,273)
Net return on ordinary activities	-	-	-	238,186	26,769	264,955
Dividends appropriated in the year	-	-	-	-	(35,792)	(35,792)
At 31st January 2011	24,759	23,459	12,011	1,139,698	37,339	1,237,266
Repurchase and cancellation of
the Company's own shares	(81)	-	81	(2,976)	-	(2,976)
Net (loss)/return on ordinary activities	-	-	-	(119,913)	31,555	(88,358)
Dividends appropriated in the year	-	-	-	-	(35,571)	(35,571)
At 31st January 2012	24,678	23,459	12,092	1,016,809	33,323	1,110,361

Balance Sheet

at 31st January 2012

	2012	2011
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	1,276,856	1,347,562
Current assets
Debtors	2,115	4,030
Cash and short term deposits	18,447	89,530
	20,562	93,560
Creditors: amounts falling due within one year	(9,963)	(26,859)
Net current assets	10,599	66,701
Total assets less current liabilities	1,287,455	1,414,263
Creditors: amounts falling due after more than
one year	(177,094)	(176,997)
Net assets	1,110,361	1,237,266
Capital and reserves
Called up share capital	24,678	24,759
Share premium	23,459	23,459
Capital redemption reserve	12,092	12,011
Capital reserves	1,016,809	1,139,698
Revenue reserve	33,323	37,339
Total equity shareholders' funds	1,110,361	1,237,266
Net asset value per share (note 4)	1,124.9p	1,249.3p

Company registration number 20537

Cash Flow Statement

for the year ended 31st January 2012

	2012	2011
	£'000	£'000
Net cash inflow from operating activities	30,632	26,671
Servicing of finance
Interest paid	(11,216)	(10,954)
Net cash outflow from servicing of finance	(11,216)	(10,954)
Taxation
Overseas tax recovered	30	-
Financial investment
Purchases of investments	(956,066)	(1,154,341)
Sales of investments	918,124	1,236,936
Other capital charges	(20)	(31)
Net cash (outflow)/inflow from financial investment	(37,962)	82,564
Dividends paid	(35,571)	(35,780)
Net cash (outflow)/inflow before financing	(54,087)	62,501
Financing
(Repayment)/drawdown of short term loan	(15,000)	15,000
Repurchase and cancellation of the Company's own shares	(1,990)	(28,222)
Net cash outflow from financing	(16,990)	(13,222)
(Decrease)/increase in cash in the year	(71,077)	49,279

Notes to the Accounts

for the year ended 31st January 2012

1.    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.

2.         Return/(loss) per share

The revenue return per share is based on the revenue earnings attributable to the ordinary shares of £31,555,000 (2011: £26,769,000) and on the weighted average number of ordinary shares in issue during the year of 98,998,335 (2011: 99,461,672).

The capital loss per share is based on the capital loss attributable to the ordinary shares of £119,913,000 (2011: £238,186,000 return) and on the weighted average number of ordinary shares in issue during the year of 98,998,335 (2011: 99,461,672).

The total loss per share is based on the total loss attributable to the ordinary shares of £88,358,000 (2011: £264,955,000 return) and on the weighted average number of ordinary shares in issue during the year of 98,998,335 (2011: 99,461,672).

	2012	2011
	£'000	£'000
3. Dividends
Dividends paid and declared
Unclaimed dividends refunded to the Company¹	(70)	-
2011 fourth quarterly dividend of 18.0p (2010: 18.0p) paid to shareholders
in May	17,826	17,961
First quarterly dividend of 6.0p (2011: 6.0p) paid to shareholders in August	5,942	5,945
Second quarterly dividend of 6.0p (2011: 6.0p) paid to shareholders
in November	5,942	5,944
Third quarterly dividend of 6.0p (2011: 6.0p) paid to shareholders
in February²	5,931	5,942
Total dividends paid in the year	35,571	35,792

¹Represents dividends which remain unclaimed after a period of 12 years and thereby become the property of the Company.

²Paid to the Registrars in January.

	2012	2011
	£'000	£'000
Fourth quarterly dividend declared of 18.0p (2011: 18.0p) payable to
shareholders in May	17,768	17,826

The fourth quarterly dividend has been declared in respect of the year ended 31st January 2012. In accordance with the accounting policy of the Company, this dividend will be reflected in the accounts for the year ending 31st January 2013.

4.   Net asset value per share

      Net asset value per share is based on the net assets attributable to the ordinary shareholders of £1,110,361,000 (2011: £1,237,266,000) and on the 98,710,719 (2011: 99,035,719) shares in issue at the year end.

5. Status of announcement

2011 Financial Information

The figures and financial information for 2011 are extracted from the published Annual Report and Accounts for the year ended 31st January 2011 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.

2012 Financial Information

         The figures and financial information for 2012 are extracted from the Annual Report and Accounts for the year ended 31st January 2012 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

27th March 2012

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.hemscott.com/nsm.do

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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