Interim Results - Replacement

RNS Number : 4834E

Mercantile Investment Trust(The)PLC

26 September 2008

 



The following replaces announcement 3677E released to the London Stock Exchange at 17.43 p.m. on Thursday 25th September 2008.

Please note that a second interim dividend of 6.00 pence per share will be payable on 31st October 2008 to shareholders on the register as at the close of business on 3rd October 2008, not 6th October as previously stated. 

All other details remain unchanged. 

STOCK EXCHANGE ANNOUNCEMENT

THE MERCANTILE INVESTMENT TRUST PLC

HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 31st JULY 2008 (UNAUDITED)

Interim Management Report

Performance and Market Review

The Company's net asset value total return for the six months to 31st July, 2008 was -10.4%, 0.2% behind our benchmark.

The decline in the level of the stockmarket which began in July 2007 has continued despite some rallies throughout the period under review. Stockmarket volatility has increased as economic growth has slowed sharply and analysts' earnings projections for companies have been cut. The inability of banks to lend money due to the losses they have sustained and a lack of liquidity in the inter-bank market has exacerbated problems in the housing and some other markets. Economic activity is expected to continue to slow as the Bank of England remains constrained in its ability to cut interest rates due to inflation being above target.

During September, prior to the sign off of this Report, the authorities in the United States and in the United Kingdom and Europe have announced measures to free up liquidity within the global financial system. However, the effect that such measures may have on financial markets in the medium term is still unclear. 

Since our year end we have, therefore, moved the portfolio so that at 31st July 2008, after offsetting the Company's long-term debenture, the Company held approximately 10% of its assets in cash on deposit. In order to protect the portfolio we have also bought a small position in a put option on the FTSE 100 index enabling us to sell at a set value should the stockmarket fall significantly.

Dividends

A second interim dividend of 6.00 pence per share has been declared by the board, payable on 31st October 2008 to shareholders on the register as at the close of business on 3rd October 2008. Together with the first interim dividend of 6.00 pence paid on 1st August 2008, this brings the total dividend for the year to date to 12.00 pence (2007: 11.00 pence). The board has again increased the level of the first two interim dividends in order to distribute income to shareholders more evenly throughout the year.

Share Repurchases

The Board has maintained its active approach towards share repurchases in order to enhance the net asset value and minimise the absolute level and volatility of the discount on the Company's shares. In the six months to 31st July 2008, 1,692,401 shares were repurchased for cancellation at a total cost of £15.4 million. Those purchases added approximately 2.2 pence to the net asset value per share. The discount, with debt at fair value, has ranged between 10.5% and 15.0% in the period from 1st February 2008 to 19th September 2008, with the average discount during the period 13.3%.

VAT Repayment

The position with regard to repayment of VAT remains as described in the Chairman's Statement in the Annual Report & Accounts 2008. We continue to work towards a settlement with the Manager and have retained Noble Grossart to act on our behalf to achieve the best result possible for our shareholders.

Principal Risks and Uncertainties

The principal risks and uncertainties faced by the Company fall into five broad categories: investment and strategy; accounting, legal and regulatory; corporate governance and shareholder relations; operational; and financial. Information on each of these areas is given in the Business Review within the Annual Report and Accounts for the year ended 31st January 2008.

Related Parties Transactions

During the first six months of the current financial year, no transactions with related parties have taken place which have affected the financial position or the performance of the Company during the period.

Directors' Responsibilities

The Board of Directors confirms that, to the best of its knowledge:

(i)    the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with the UK Accounting Standards Board's Statement 'Half-Yearly Financial Reports' and gives a true and fair view of the assets, liabilities, financial position and net return of the Company as required by the UK Listing Authority Disclosure and Transparency Rules ('DTR') 4.2.4R; and

(ii)    the interim management report includes a fair review of the information required by DTR 4.2.7R and 4.2.8R.

Outlook

The portfolio is conservatively positioned with £216 million of cash and gearing available to invest. Our Managers anticipate the current uncertainties will lead to substantial opportunities where companies with sound balance sheets and good future earnings visibility are undervalued by the market.

For and on behalf of the Board 

Hamish Leslie Melville 

Chairman                                    25th September 2008

The Mercantile Investment Trust plc (formerly JPMorgan Fleming Mercantile Investment Trust plc)

Income Statement

For the six months ended 31st July 2008

	(Unaudited)			(Unaudited)			(Audited)
	Six months ended			Six months ended			Year ended
	31st July 2008			31st July 2007			31st January 2008
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains from investments held at fair value through profit or loss	-	(158,315)	(158,315)	-	8,187	8,187	-	(271,045)	(271,045)
Net foreign currency losses	-	(21)	(21)	-	(15)	(15)	-	(42)	(42)
Income from investments	22,829	-	22,829	28,656	-	28,656	43,948	-	43,948
Other interest receivable and similar income	6,105	-	6,105	2,538	-	2,538	7,736	-	7,736
Gross return/(loss)	28,934	(158,336)	(129,402)	31,194	8,172	39,366	51,684	(271,087)	(219,403)
Management fee	(1,260)	(1,260)	(2,520)	(2,269)	(2,269)	(4,538)	(3,900)	(3,900)	(7,800)
Other administrative
expenses	(397)	-	(397)	(504)	-	(504)	(842)	-	(842)
VAT recoverable	-	-	-	-	-	-	2,921	2,922	5,843
Net return / (loss) on ordinary activities before finance costs and taxation	27,277	(159,596)	(132,319)	28,421	5,903	34,324	49,863	(272,065)	(222,202)
Finance costs	(2,756)	(2,756)	(5,512)	(2,763)	(2,763)	(5,526)	(5,518)	(5,518)	(11,036)
Net return/(loss) on ordinary activities before taxation	24,521	(162,352)	(137,831)	25,658	3,140	28,798	44,345	(277,583)	(233,238)
Taxation (note 4)	(21)	-	(21)	-	-	-	-	-	-
Net return/(loss) on ordinary activities after taxation	24,500	(162,352)	(137,852)	25,658	3,140	28,798	44,345	(277,583)	(233,238)
Return/(loss) per share
(note 5)	23.60p	(156.41)p	(132.81)p	21.97p	2.69p	24.66p	39.79p	(249.10)p	(209.31)p

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period. 

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.

  The Mercantile Investment Trust plc (formerly JPMorgan Fleming Mercantile Investment Trust plc)

Reconciliation of Movements in Shareholders' Funds

For the six months ended 31st July 2008 (unaudited)

	Called up		Capital
	share	Share	redemption	Capital	Revenue
	capital	premium	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31st January 2008	26,075	23,459	10,695	1,090,587	57,334	1,208,150
Shares bought back and cancelled	(422)	-	422	(15,438)	-	(15,438)
Total (loss)/return from ordinary activities	-	-	-	(162,352)	24,500	(137,852)
Dividends appropriated in the period	-	-	-	-	(28,601)	(28,601)
At 31st July 2008	25,653	23,459	11,117	912,797	53,233	1,026,259

Six months ended 31st July 2007 (unaudited)

	Called up		Capital
	share	Share	redemption	Capital	Revenue
	capital	premium	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31st January 2007	31,264	23,459	5,506	1,639,238	44,381	1,743,848
Shares bought back and cancelled	(4,350)	-	4,350	(233,601)	-	(233,601)
Total return from ordinary activities	-	-	-	3,140	25,658	28,798
Dividends appropriated in the period	-	-	-	-	(19,776)	(19,776)
At 31st July 2007	26,914	23,459	9,856	1,408,777	50,263	1,519,269

Year ended 31st January 2008 (audited)

	Called up		Capital
	share	Share	redemption	Capital	Revenue
	capital	premium	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31st January 2007	31,264	23,459	5,506	1,639,238	44,381	1,743,848
Shares bought back and cancelled	(5,189)	-	5,189	(271,068)	-	(271,068)
Total (loss)/return from ordinary  activities	-	-	-	(277,583)	44,345	(233,238)
Dividends appropriated in the year	-	-	-	-	(31,392)	(31,392)
At 31st January 2008	26,075	23,459	10,695	1,090,587	57,334	1,208,150

  The Mercantile Investment Trust plc (formerly JPMorgan Fleming Mercantile Investment Trust plc)

Balance Sheet

as at 31st July 2008

	(Unaudited)	(Unaudited)	(Audited)
	31st July	31st July	31st January
	2008	2007	2008
	£'000	£'000	£'000
Fixed assets
Investments at fair value through profit or loss	903,748	1,624,441	1,145,680
Current assets
Debtors	40,127	4,779	7,798
Derivative financial instruments	3,064	-	-
Cash and short term deposits	263,619	88,719	287,985
	306,810	93,498	295,783
Creditors: amounts falling due within one year	(7,542)	(22,009)	(56,604)
Net current assets	299,268	71,489	239,179
Total assets less current liabilities	1,203,016	1,695,930	1,384,859
Creditors: amounts falling due after more than
one year	(176,757)	(176,661)	(176,709)
Total net assets	1,026,259	1,519,269	1,208,150
Capital and reserves
Called up share capital	25,653	26,914	26,075
Share premium	23,459	23,459	23,459
Capital redemption reserve	11,117	9,856	10,695
Capital reserve	912,797	1,408,777	1,090,587
Revenue reserve	53,233	50,263	57,334
Shareholders' funds	1,026,259	1,519,269	1,208,150
Net asset value per share (note 6)	1,000.1p	1,411.2p	1,158.3p

  The Mercantile Investment Trust plc (formerly JPMorgan Fleming Mercantile Investment Trust plc)

Cash Flow Statement

for the six months ended 31st July 2008

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st July	31st July	31st January
	2008	2007	2008
	£'000	£'000	£'000
Net cash inflow from operating activities (note 7)	23,971	27,236	45,371
Net cash outflow from servicing of finance	(5,457)	(5,472)	(10,927)
Taxation recovered	16	-	-
Net cash inflow from capital expenditure and
financial investment	574	190,943	430,199
Dividends paid	(28,601)	(19,776)	(31,392)
Net cash outflow from financing	(14,844)	(233,926)	(274,953)
(Decrease)/increase in cash for the period	(24,341)	(40,995)	158,298
Reconciliation of net cash flow to movement in
net funds/(debt)
(Decrease)/increase in cash for the period	(24,341)	(40,995)	158,298
Exchange Movements	(25)	(19)	(46)
Other Movements	(48)	(48)	(96)
Changes in net (debt)/funds arising from
cash flows	(24,414)	(41,062)	158,156
Net funds/(debt) at the beginning of
the period	111,276	(46,880)	(46,880)
Net funds/(debt) at the end of the period	86,862	(87,942)	111,276
Represented by:
Cash and short term deposits	263,619	88,719	287,985
Debt due after more than five years	(176,757)	(176,661)	(176,709)
Net funds/(debt)	86,862	(87,942)	111,276

The Mercantile Investment Trust plc (formerly JPMorgan Fleming Mercantile Investment Trust plc)

Notes to the Accounts

for the six months ended 31st July 2008

1. Financial Statements

The information contained within the accounts in this half-yearly report has not been audited or reviewed by the Company's auditors.

The figures and financial information for the year ended 31st January 2008 are extracted from the latest published accounts of the Company and do not constitute statutory accounts (as defined in section 434(3) of the Companies Act 2006) for that year. Those accounts have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 237(2) or 237(3) of the Companies Act 1985 (as amended).

2. Accounting policies

The accounts have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' dated 31st December 2005.

All of the Company's operations are of a continuing nature.

The accounting policies applied to these interim accounts are consistent with those applied in the accounts for the year ended 31st January 2008.

3. Dividends

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st July 2008	31st July 2007	31st January 2008
	£'000	£'000	£'000
Unclaimed dividends refunded to the Company	(10)	(5)	(38)
Fourth quarterly dividend of 17.5p paid 1st May
(2007: 11.5p)	18,253	13,742	13,742
Special dividend 4.0p paid 1st May (2007: nil)	4,172	-	-
First quarterly dividend of 6.0p paid 1st August
(2007: 5.5p)	6,186	6,039	6,039
Second quarterly dividend of 5.5p paid
1st November 2007	n/a	n/a	5,881
Third quarterly dividend of 5.5p paid
1st February 2008	n/a	n/a	5,768
	28,601	19,776	31,392

A second quarterly dividend of 6.0p per share, amounting to £6,156,000, has been declared payable in respect of the six months ended 31st July 2008. 

4. Effective Tax Rate 

 The Company's effective tax rate is nil, as deductible expenses exceed taxable income. 

5. Return/(loss) per share

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st July 2008	31st July 2007	31st January 2008
	£'000	£'000	£'000
Return/(loss) per share is based on the following:
Revenue return	24,500	25,658	44,345
Capital (loss)/return	(162,352)	3,140	(277,583)
Total (loss)/return	(137,852)	28,798	(233,238)
Weighted average number of shares in issue	103,793,098	116,758,372	111,433,402
Revenue return per share	23.60p	21.97p	39.79p
Capital (loss)/return per share	(156.41)p	2.69p	(249.10)p
Total (loss)/return per share	(132.81)p	24.66p	(209.31)p

6. Net asset value per share

Net asset value per share is calculated by dividing shareholders' funds by the number of shares in issue as at 31st July 2008 of 102,610,765 (31st July 2007: 107,659,958; and 31st January 2008: 104,303,166). 

7. Reconciliation of net (loss)/return on ordinary activities before finance costs and taxation to net cash inflow from operating activities

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st July 2008	31st July 2007	31st January 2008
	£'000	£'000	£'000
Net (loss)/return before finance costs and taxation	(132,319)	34,324	(222,202)
Add back capital loss/(return) before finance costs
and taxation	159,596	(5,903)	272,065
(Increase)/decrease in net debtors and accrued
income	(1,541)	1,082	1,898
VAT recoverable	-	-	(5,843)
(Decrease)/increase in accrued expenses	(505)	2	431
Expenses charged to capital	(1,260)	(2,269)	(978)
Net cash inflow from operating activities	23,971	27,236	45,371

JPMORGAN ASSET MANAGEMENT (UK) LIMITED

Please note that up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can be found at www.mercantileit.co.uk.

For further information please contact:

Juliet Dearlove

For and on behalf of

JPMorgan Asset Management (UK) Limited, Secretary

020 7742 6000

 

END

 

 

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