LONDON STOCK EXCHANGE
ANNOUNCEMENT
THE MERCANTILE INVESTMENT
TRUST PLC
FINAL RESULTS FOR THE YEAR
ENDED 31ST JANUARY 2024
Legal Entity Identifier:
549300BGX3CJIHLP2H42
Information disclosed in accordance with the DTR
4.1.3
The Mercantile Investment Trust plc
(the 'Company') has today announced its annual financial results
for the period ended 31st January 2024.
Highlights
·
The Company's net asset total return, based on
debt at par value, was +4.5%; with the debt at fair, the return for
the year was +5.4%; and the total return to shareholders was +6.1%.
The Company outperformed its benchmark, which returned
+1.8%.
·
In the ten years ended 31st January 2024, the
Company has generated an average annualised return of +6.1% per
annum on a net asset total return par value basis, and +6.4% in
share price terms, comfortably ahead of the benchmark's average
annual return of +4.5%.
·
The Board has declared a fourth quarterly interim
dividend of 3.30p per share. This brings the total dividend for the
year to 7.65p per share, an increase of 7.0% over last year. On an
annualised basis the dividend has grown by 6.7% per annum over the
last ten years.
·
The Company's discount fluctuated between 9.7% and
16.7% during the period under review, but ended the year at 12.6%,
in-line with where it began a year ago.
Angus Gordon Lennox, Chairman, commented:
"Despite [a] generally unsupportive
environment, most of the Company's portfolio holdings continued to
do well at an operational level, and I am pleased to report a
positive performance from the Company over the year under review,
on both an absolute and relative basis.
Existing portfolio holdings have
been performing well despite the challenging conditions of the past
year and should do even better as and when the economy
strengthens. In addition, the current very attractive valuations
mean new investment opportunities among mid and smaller cap stocks
are numerous, and the Portfolio Managers' track record attests to
their ability to identify and capitalise on the most compelling of
these opportunities."
Guy
Anderson and Anthony Lynch, Portfolio Managers,
commented:
"This has been a rather testing year
for the UK market, with the direction of travel being driven to
a major extent by the path of inflation, the actions of the
Bank of England, and the impact of these upon expectations of
future economic growth.
Performance this year was aided by a
strong outturn from several of our longer-standing investments, led
by our substantial holdings in the investment banking and brokerage
services sector.
Portfolio turnover has remained
somewhat lower than long-term averages, reflecting what we believe
to be a resiliently positioned portfolio and our clear focus on the
long-term prospects of holdings.
We are excited by the investment
opportunities that [a] combination of low valuations, improving
economic indicators, and strong performing portfolio companies
yields. This backdrop explains our elevated level of gearing, which
at the date of this report is approximately 15%. This is the
highest level of gearing that we have applied in over a decade,
which hopefully demonstrates most clearly our assessment of the
opportunity before us."
CHAIRMAN'S
STATEMENT
Market Background
UK equity markets spent most of the
past year worrying about stubbornly high inflation, the Bank of
England's determination to restrain inflation pressures by
tightening the monetary policy reins, and the risk this posed to
economic activity. However, market sentiment improved somewhat
towards the end of the year as inflation began to slow and
investors started to foresee interest rate cuts during 2024.
Nonetheless, there remains a degree of negativity priced into the
market at current levels. A lack of clarity about the path of
interest rates and economic outlook weighed more heavily on medium
and smaller cap companies than on larger cap stocks, given that
smaller businesses are usually more vulnerable to rising interest
rates and economic downturns. As a result, mid and small cap stocks
are trading at historically wide discounts to larger caps, giving
rise to opportunities for your Company.
Performance
Despite this generally unsupportive
environment, most of the Company's portfolio holdings continued to
do well at an operational level, and I am pleased to report a
positive performance from the Company over the year under review,
on both an absolute and relative basis. For the financial year
ended 31st January 2024 (FY24), the Company's net asset total
return, based on debt at par value, was +4.5%; with the debt at
fair, the return for the year was +5.4%; and the total return to
shareholders was +6.1%. The Company showed good outperformance
against its benchmark, which returned +1.8%.
The Company's average annualised
return over ten years ended 31st January 2024 was +6.1% per annum
on a net asset total return par value basis, and +6.4% in share
price terms, comfortably ahead of the benchmark's average annual
return of +4.5%. This long-term track record of high absolute
returns and outperformance of the broader small and medium cap
market attests to your Portfolio Managers' skill at identifying
this sector's future market leaders and outperformers.
The Portfolio Managers' Report below
discusses recent performance and portfolio changes in more detail,
as well as considering their outlook for the coming
year.
Returns and Dividends
The Company aims to provide
shareholders with long term dividend growth at least in line with
the rate of inflation over a five-to-ten-year period, as detailed
in the table below. The Company has paid three interim dividends of
1.45p per ordinary share in respect of the year to 31st January
2024 and the Board has declared a fourth quarterly interim dividend
of 3.30p per share. This brings the total dividend for the year to
7.65p per share, an increase of 7.0% over last year.
|
CPI
|
Mercantile Dividend
Growth
|
|
(% per
annum)
|
(% per
annum)
|
Three Years
|
6.0%
|
4.5%
|
Five Years
|
4.1%
|
4.0%
|
Ten Years
|
2.8%
|
6.7%
|
Source: Office of National
Statistics/J.P. Morgan.
In deciding the Company's dividend
payments during normal market conditions, the Board looks to pay
dividends that are at least covered by current year earnings, while
also allowing the Company to build revenue reserves. However, it is
a great advantage of the investment trust structure that the
Company has the option to partially fund dividend payments from
revenue reserves, when necessary, to bolster the dividend during
challenging times. The Company utilised this option in the three
financial years FY20, FY21 and FY22. Then, having weathered these
'COVID years', total dividends for FY23 were fully covered by
earnings, and I am pleased to report this remains the case again in
FY24. Revenues per share over the past year increased by 25.3%, to
9.01p, from 7.19p in the previous year. This means that the Company
has been able to increase the FY24 total dividend by a healthy
margin, while also adding a meaningful amount to its reserves, to
support dividends in any future lean years. After payment of the
fourth interim dividend, the Company will have revenue reserves of
more than 6.5p per share (2023: 4.9p).
Discount
Although it fluctuated between 9.7%
and 16.7% during the period under review, the Company's discount of
12.6% at year end was largely the same as where it began a year
ago. Your Directors recognise that it is in the interests of
shareholders that the Company's share price does not differ
excessively from the underlying NAV under normal market conditions.
With market conditions continuing to be challenging, in an effort
to equalise supply and demand and support the share price, during
FY24 the Board utilised the Company's authority to buy back shares,
repurchasing a total of 8,024,097 shares, at a cost of £16.5
million. These shares were purchased at an average discount to NAV
of 12.7%, producing a modest accretion to the NAV for continuing
shareholders.
The Board closely monitors the
discount and market conditions and will continue to undertake share
buybacks when it deems such action to be appropriate. My fellow
directors and I therefore recommend that shareholders approve the
renewal of the authority to repurchase up to 14.99% of the
Company's shares at the forthcoming Annual General Meeting, with
repurchased shares to be cancelled or held in Treasury. The Board
is again seeking shareholder approval to issue shares at
a premium to NAV and to disapply pre-emption rights on any
such issues. As with buying shares at a discount, issuing new
shares at a premium to NAV enhances returns to existing
shareholders and improves liquidity.
Gearing
It is the Board's intention that the
Company continues to operate within the range of 10% net cash to
20% geared, under normal market conditions. The Company ended the
year with gearing of 13.4%, up from 9.5% at the same time last
year. This is the highest level of gearing in over ten years,
reflecting the Portfolio Managers' positive outlook as discussed in
their report.
Having gone into the downturn
modestly geared - positioning which detracted from performance -
the Board is especially keen to ensure that the level of gearing
enhances the Company's exposure to a market upturn.
The Company's balance sheet and
levels of gearing are regularly discussed by the Board and the
Portfolio Managers. Gearing is achieved via the use of long-dated,
fixed-rate financing, from several sources, consistent with the
Board's aim to ensure diversification of the source, tenure and
cost of leverage available to the Company. The Company has in place
a £3.85 million perpetual debenture and a £175 million debenture
repayable on 25th February 2030, together with £150 million of
long-term debt raised in September 2021 via the issuance of three
fixed rate, senior unsecured, privately placed notes (the 'Notes').
These Notes mature between 2041 and 2061 and were secured at a
blended rate of 1.94%, at a time when interest rates were near
their lows.
Marketing, Promotion and Shareholder
Interaction
The Company continues to raise its
profile with investors and potential investors, via targeted media
and promotional campaigns, and ongoing interaction with national
and investment industry journalists. It is the Board's view that
enhancing the Company's profile will benefit all shareholders, by
creating sustained demand for its shares, particularly from retail
investors, where demand has grown steadily in recent years. We seek
to undertake this promotional activity in the most cost-effective
manner.
To further promote the Company to
the broader investment community, the Manager follows an
established marketing and investor relations programme targeting
wealth managers, institutions and private client stockbrokers via
video conferences, podcasts and in-person meetings.
The Board and the Investment
Managers also maintain a dialogue with the Company's shareholders
via regular email updates, which deliver news and views, and
discuss the latest performance. If you have not already signed up
to receive these communications and you wish to do so, you can opt
in via www.Mercantile-Registration.co.uk or by
scanning the QR code in Company's Annual Report & Financial
Statements for the Year Ended 31st January 2024 ('2024 Annual
Report').
It is the Board's hope that these
initiatives will give many more of the Company's investors and
potential investors the opportunity to interact with the Board and
Portfolio Managers.
Board Succession
The Board comprises six Directors.
There were some changes during the 2023 calendar year, as we
welcomed Julia Goh on 1st January 2023, and said goodbye to Harry
Morley, who retired from the Board in May 2023.
The Board can confirm that its
current composition is compliant with all applicable diversity
targets for UK companies listed on the premium segment of the
London Stock Exchange. It is the Board's intention that this will
continue to be the case.
The
Manager
The Board, through its Management
Engagement Committee, monitors the performance of the Manager,
JPMorgan Funds Limited ('JPMF') on an ongoing basis. It is the
Board's opinion that the Manager's performance remains strong.
Based upon this, having taken all factors into account, including
other services provided to the Company and its shareholders, the
Board is satisfied that JPMF should continue as the Company's
Manager and that its ongoing appointment remains in the best
interests of shareholders.
Annual General Meeting
The Company's one hundred and thirty
eighth Annual General Meeting will be held at Trinity House, Tower
Hill, London EC3N 4DH on Wednesday 29th May 2024 at 12.00 noon. In
addition to the formal part of the meeting, there will be a
presentation from the Portfolio 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 Portfolio Managers and representatives of the
Manager.
Outlook
Interest rates are expected to begin
falling sometime soon, and leading indicators are pointing to some
strengthening in activity, so corporate earnings are also likely to
improve over the coming year. These developments should add
momentum to the recent upturn in market sentiment. The Board
therefore shares the Portfolio Managers' confidence in the
prospects for mid and smaller cap stocks during 2024 and
beyond.
The Company's prospects are equally
bright in our view. Existing portfolio holdings have been
performing well despite the challenging conditions of the past year
and should do even better as and when the economy strengthens.
In addition, the current very attractive valuations mean new
investment opportunities among mid and smaller cap stocks are
numerous, and the Portfolio Managers' track record attests to their
ability to identify and capitalise on the most compelling of these
opportunities. All this suggests that the scene is set for the
Company to deliver further capital and dividend growth to
shareholders as we head into the future.
We thank you for your ongoing
support.
Angus Gordon Lennox
Chairman
11th April 2024
PORTFOLIO MANAGERS'
REPORT
Setting the scene: inflation and central
banks
This has been a rather testing year
for the UK market, with the direction of travel being driven to
a major extent by the path of inflation, the actions of the
Bank of England, and the impact of these upon expectations of
future economic growth.
With high inflation and rapid, if
belated, tightening of monetary policy, a deep and painful domestic
recession was widely predicted. Confounding this almost uniformly
negative sentiment, the economy continued to demonstrate more
resilience than feared, leading the market to oscillate between
bouts of optimism and then pessimism, although overall languishing
for most of the year as we waited for the inevitable to
bite.
While inflation in the UK had proven
to be stickier than in most countries, some of this was simply
mechanical due to time lags, and it began to moderate more
substantially towards the end of 2023. This, combined with
weakening economic indicators, gave the market a glimpse that
perhaps the monetary tightening cycle could be nearing a turn,
which then drove a sharp rally in UK assets through November and
December. Despite this double-digit final quarter, for the year as
a whole our target market of UK medium and smaller companies (the
'Benchmark') only managed a small positive return, of
+1.8%.
Mercantile performance
Against this somewhat uninspiring
backdrop, for the year to 31st January 2024 the Company delivered a
return on net assets of +4.5% with debt valued at par, and +5.4%
with debt at fair value, in both cases ahead of the Benchmark's
+1.8% return. This outperformance was driven by stock selection.
Gearing, which averaged 12% over the year, was additive to
performance on a gross basis but not quite enough to offset its
costs, which are thankfully fixed in nature. This recent
performance extends the Company's track record of outperformance
over the long-term: in the ten years to end January 2024, its NAV
delivered an annualised total return of +6.1% with debt valued at
par, and +6.6% with debt at fair value, again both ahead of the
benchmark annualised return of +4.5%.
Performance attribution
For the year ended 31st January
2024
Performance attribution analyses how
the Company achieved its recorded performance relative to its
benchmark index.
|
%
|
%
|
Contributions to total return
|
|
|
Benchmark total return
|
|
1.8%
|
Allocation/Stock/Sector
Effect
|
3.2%
|
|
Effect of Cash &
Gearing
|
0.5%
|
|
Cost of Debentures and Senior
Unsecured Privately Placed Loan Notes
|
-0.6%
|
|
Portfolio Total Return
|
|
4.9%
|
Management Fees/Other
Expenses
|
|
-0.5%
|
Share Buy-Back/Issuance
|
|
0.1%
|
Cum
Par Net Asset Value Total ReturnAPM
|
|
4.5%
|
Impact of Debt Valuation
|
|
0.9%
|
Cum
Fair Net Asset Value Total ReturnAPM
|
|
5.4%
|
APM Alternative Performance Measure
('APM').
Source: JPMAM and Morningstar. All
figures are on a total return basis.
Contributions calculated using an
Arithmetic methodology.
A
glossary of terms and APMs is provided in the 2024 Annual
Report.
Spotlight on stocks
Winners
Performance this year was aided by a
strong outturn from several of our longer-standing investments, led
by our substantial holdings in the investment banking and brokerage
services sector. Private equity group 3i continued to deliver better than
expected sales growth thanks to Action, a retailer that now
accounts for close to two thirds of its net assets, while the
fund-raising and financial performance of Intermediate Capital, an alternative
asset manager, remained strong despite a well-reported
industry-wide softening in demand for such strategies.
Other portfolio highlights this year
included our significant holdings in the software and computer
services sector, in companies such as Bytes Technology, Softcat and Computacenter, which have benefitted
from robust corporate demand for IT infrastructure. These companies
have also seen gains in market share and there is scope for revenue
to accelerate further as customers begin to adopt generative AI
solutions.
Given the overwhelmingly bearish
views of the prospects for the domestic economy, it was
particularly pleasing to see a strong contribution to returns from
our holdings in the household goods and home construction sector,
led by our longstanding investment in Bellway but also from Redrow. The market had been quick to
mark down these shares aggressively given their high economic
sensitivity, but valuations had reached extreme levels, hence we
increased our holdings materially, which was then well rewarded
once the shares repriced more favourably as the probability of the
most negative scenarios diminished through the year.
Losers
It is inevitable that not all our
investments will be winners, and while this is a fact of life, it
does not diminish from the frustration at times. Our holding in
Watches of Switzerland, a
luxury watch retailer, was our largest detractor this year by some
margin. We had reduced our position size somewhat on the back of a
moderating growth profile, but a move by their key supplier Rolex
into retail, via the succession-driven acquisition of Bucherer,
exacerbated market concerns. This was then compounded by a material
profit warning, following weaker than expected trading over the
Christmas period. While this is the first profit warning that the
company has issued since its listing in 2019, it raises significant
questions over the deliverability of their long-range growth
targets, so we have exited the investment in full, preferring to
reallocate the capital elsewhere while continuing to monitor their
progress.
Our investment in Future, the specialist media platform,
also came under pressure as audience figures and thus revenue -
particularly in their important consumer technology products
offering - declined, leading to a reduction in expected earnings.
In addition, fears around the potential impact of AI and
third-party cookies changes, combined with a management transition,
placed further downward pressure on the company's share price.
However, with the shares at an extreme valuation, which we do not
believe gives fair credit to their Go-Compare price comparison
website business, we remain shareholders, and with the new CEO now
in place, we are monitoring progress closely.
Positioning the portfolio for future success
We target UK companies outside of
the FTSE 100 Index that have significant opportunities for growth
and which may be overlooked by other investors. We invest in the
shares of companies that we believe possess the characteristics
that may facilitate this growth, for example nimble business models
that can innovate or disrupt their industries, or companies that
occupy prime positions in rapidly growing markets.
Through the course of any individual
year there are adjustments to the portfolio to reflect the changing
environment, as investment hypotheses run their course or are
proved invalid, or as share price moves present better
opportunities elsewhere. Over the past few years there have been
multiple turning points for markets as well as numerous changes to
the operating environments of our portfolio companies. Despite
this, portfolio turnover has remained somewhat lower than long-term
averages, reflecting what we believe to be a resiliently positioned
portfolio and our clear focus on the long-term prospects of
holdings.
Furthermore, we have been operating
in a volatile environment, with a pandemic and associated
restrictions, supply chain challenges, surging then falling
inflation, a drastic shift in monetary policy, war in Europe and
the Middle East and an evident souring of East-West relations. We
believe that this backdrop has made it even more important to focus
on well-positioned and well-managed businesses that have the
resilience to cope and even thrive in a variety of situations, and
which may ultimately emerge with stronger competitive
positions.
Over the last year there have been
various changes to the portfolio's constituents and thus its
overall shape, and while some of these are reasonably material, it
should also be read in the context of a portfolio in which
over 80% remains unaltered. While these changes are all based on
single stock investment or divestment decisions, from a top-down
perspective these could be summarised by stating that the portfolio
today has an increased exposure to domestic compared to
international end markets versus one year ago, with even more
technology-related holdings, and with an increased amount of
capital invested in the housebuilders and in real estate more
broadly.
In the software and computer
services sector, we added to our investment in Bytes Technology, the aforementioned
value-added technology reseller. We also made a new investment in
Moneysupermarket.com, a
price comparison business seeing increased demand due to higher
insurance prices and where, now that their technology
re-platforming is complete, there is scope to improve profitability
by increasing direct-to-site traffic and cross-sell in place of
pay-per-click.
As already explained above, we made
additions to our housebuilding positions through the year, adding
to the pre-existing positions in Bellway and Redrow, while also adding a new
investment in Vistry.
Having previously had a very bearish
view on the outlook for real estate more broadly, this has become
more nuanced over the year, as many of the negative factors that we
anticipated have played out and driven share price falls:
valuations came under downward pressure through an environment of
rapid increases to interest rates and thus the discount rates upon
which property valuations are based. While we still maintain a
significant overall underweight in this sector relative to the
benchmark, we have moderated its size, and last year we started our
initial foray back into this space, taking positions in some of the
most attractive propositions, with investments in LondonMetric Property, Shaftesbury Capital and Tritax Big Box REIT, each of which we
believe to be exposed to end markets that will deliver robust
rental growth in coming years.
Other stock specific changes include
a large increase in the size of our position in Hill & Smith, an infrastructure
engineer. This comes in response to the company's improving growth
opportunity, driven primarily by an expansion of US infrastructure
spending. We also made a new investment in Bodycote, an industrial engineer which
should benefit from the continued post-pandemic recovery of the
aerospace industry, and in Jet2, the airline and package holiday
provider, which has benefitted from robust consumer demand, and
which continues to generate market share gains.
These purchases were funded by
various sales, including the previously mentioned Watches of Switzerland, a substantial
reduction in the size of our position in RS Group, a distributor of electronics
and industrial products, and exits from Pets At Home, a pet product retailer
and services provider, and from Spirax-Sarco, our longstanding
investment in a supplier of specialist industrial machinery, now
a FTSE 100 company.
Outlook for the coming year
Financial markets continue to be
heavily influenced by the inter-connected forces of inflation,
monetary policy, and the impact of these upon economic growth
expectations. While the domestic economy through the end of last
year was undoubtedly lacklustre, and the UK may have experienced a
recession, evidence thus far would suggest that this is more likely
behind than ahead of us, and if so, it will have proven to have
been far briefer and shallower than most were anticipating. Indeed,
employment levels have remained resilient and following 13
consecutive months of real wage declines, the average consumer has
now experienced over ten months of real wage growth. Coincident
with this, consumer and business confidence indicators are pointing
to an improving picture, which could lay the foundations for
greater consumer demand, more business investment, and thus lead to
a better environment for corporate earnings growth.
Any improvement in such prospects
could yield healthy market gains, as the prevailing negative
sentiment and uncertainty over the outlook is evidently reflected
in valuations, with the UK market trading at a steep discount to
both its own history and relative to other developed markets.
Within the UK, given their greater economic cyclicality and
sensitivity to interest rates, mid-and small-caps are trading at a
discount relative to their usual level versus large caps.
Furthermore, portfolio companies have, for the most part, been
performing well at an operational level, as demonstrated by
a gradual, but notable, increase in earnings estimates over
the year. Notwithstanding the obvious geopolitical risks that
surround us, or those associated with around half of the world's
population - including the UK - voting in elections in the coming
year, we are excited by the investment opportunities that this
combination of low valuations, improving economic indicators, and
strong performing portfolio companies yields. This backdrop
explains our elevated level of gearing, which at the date of this
report is approximately 15%. This is the highest level of gearing
that we have applied in over a decade, which hopefully demonstrates
most clearly our assessment of the opportunity before
us.
We will maintain our focus on
investing in structurally robust businesses that operate in growing
end markets and possess the ability to invest capital at attractive
returns and which can also adapt to the changing environments in
which they operate. We believe that a portfolio of such investments
offers the best prospect of delivering compelling returns and
outperformance for our shareholders over the long-term, just as
they have done in the past.
Guy
Anderson
Anthony Lynch
Portfolio Managers
11th April 2024
PRINCIPAL & EMERGING
RISKS AND UNCERTAINTIES
The Board, through delegation to the
Audit Committee, has undertaken a robust assessment and review of
the principal risks facing the Company, together with a review of
any new and emerging risks that may have arisen during the year to
31st January 2024, including those that would threaten its business
model, future performance, solvency or liquidity.
With the assistance of the Manager,
the Audit Committee has drawn up a risk matrix, which identifies
the key risks to the Company, as well as emerging risks. The risk
matrix, including emerging risks, are reviewed formally by the
Audit Committee every six months or more regularly as appropriate.
At each meeting, the Committee considers emerging risks which it
defines as potential trends, sudden events or changing risks which
are characterised by a high degree of uncertainty in terms of
occurrence probability and possible effects on the Company. As the
impact of emerging risks is understood, they may be entered on the
Company's risk matrix and mitigating actions considered as
necessary. In assessing the risks and how they can be mitigated,
the Board has given particular attention to those risks that might
threaten the viability of the Company. The principal risks fall
broadly into the following categories:
Principal risk
|
Description
|
Mitigating activities
|
Movement from prior year
|
Investment
Underperformance
|
Poor implementation of the
investment strategy, for example as to thematic exposure, sector
allocation, stock selection, undue concentration of holdings,
factor risk exposure or the degree of total portfolio risk, may
lead to failure to outperform the Company's benchmark index and
peer companies, and could result in the Company's shares trading at
a wider discount.
|
The Board manages these risks by
examining the Manager's investment process, which integrates
financially material ESG considerations, and by ensuring
a diversification of investments through its investment
restrictions and guidelines, which are monitored and reported on by
the Manager. The Manager provides the Directors with timely and
accurate management information, including performance data and
attribution analysis, revenue estimates, liquidity reports and
shareholder analysis. The Board monitors the implementation and
results of the investment process with the Investment Manager,
whose representatives attend all Board meetings, and reviews data
which show statistical measures of the Company's risk profile. The
Board holds a separate meeting devoted to strategy each
year.
|
The risk remains high but unchanged
from 2023 as geopolitical tensions and global economic pressures
continue to have an unfavourable impact on global
markets.
Concentration risk, as measured by
the proportion of the portfolio made up by the largest ten holdings
is broadly unchanged compared with the prior year (see the
Portfolio Information section in the 2024 Annual
Report).
|
Geopolitical Instability
|
Geopolitical Risk is the potential
for political, socio-economic and cultural events and developments
to have an adverse effect on the value of the Company's
assets.
The Company and its assets may be
impacted by geopolitical instability, in particular concerns over
global economic growth. The war in Ukraine immediately affected
energy and commodity markets and the conflict in the Middle East as
well as heightened tensions in other parts of the world may cause
further damage to the global economy.
These risks represent the potential
loss the Company might suffer through holding investments in the
face of negative market movements.
|
This risk is managed to some extent
by diversification of investments and by regular communication with
the Manager on matters of investment strategy and portfolio
construction which will directly or indirectly include an
assessment of these risks. The Board receives regular reports from
the Manager regarding market outlook and gives the Portfolio
Mangers discretion regarding acceptable levels of gearing and/or
cash. Currently the Company's gearing policy is to operate within a
range of 10% net cash to 20% geared.
The Board considers thematic and
factor risks, stock selection and levels of gearing on a regular
basis and has set investment restrictions and guidelines which are
monitored and reported on by the Manager.
The Board can, with shareholder
approval, look to amend the investment policy and objectives of the
Company to gain exposure to or mitigate the risks arising from
geopolitical instability.
|
The risk remains high but unchanged
from 2023.
|
Cyber Crime
|
The threat of cyber attack, in all
its guises, is regarded as at least as important as more
traditional physical threats to business continuity and
security.
|
The information technology controls
around the physical security of J.P. Morgan Chase & Co's data
centres, security of its networks and security of its trading
applications are tested by an independent third party and reported
every six months against the AAF Standard.
The Board has received the cyber
security policies for its key third party service providers and
JPMF has assured Directors that the Company benefits directly or
indirectly from all elements of J.P. Morgan Chase & Co's
Cyber Security programme.
|
The risk remains high but unchanged
from 2023. The cyber threat landscape is rapidly changing, with
cyber-attacks growing ever more sophisticated and their increasing
frequency and scale is well publicised.
To date the Manager's cyber security
arrangements have proven robust and the Company has not been
impacted by any cyber attacks threatening its
operations.
|
Discount Control
|
Investment trust shares often trade
at discounts to their underlying NAVs; they can also trade at a
premium. Discounts and premiums can fluctuate considerably leading
to volatile returns for shareholders.
|
The Board monitors the Company's
premium/discount at which the share price trades to NAV on both an
absolute level and relative to its peers and the wider investment
trust sector.
The Board reviews sector relative
performance and sales and marketing activity (considered the
primary drivers of the relative discount level). The Company also
has authority to repurchase its existing shares to enhance the NAV
per share for remaining shareholders and to reduce the absolute
level of discount and discount volatility.
|
The risk remains high but unchanged
from 2023.
The Board regularly reviews and
monitors the Company's objective and investment policy and
strategy, the investment portfolio and its performance, the level
of discount/premium to net asset value at which the shares trade
and movements in the share register.
During the year the Company
significantly increased the rate of buyback activity.
|
Legal and Regulatory
Change
|
The Company's business model could
become non-viable as a result of new or revised rules
or regulations arising from, for example, policy change or
financial monitoring pressure.
|
The Board receives regular reports
from its broker, depositary, registrar and Manager as well as its
legal advisers and the Association of Investment Companies on
changes to regulations which could impact the Company and its
industry. This year the Board invited an external legal firm to
attend a Board meeting for a deep dive into regulatory matters and
developments.
|
The risk remains high but unchanged
from 2023.
|
Corporate Strategy
|
The corporate strategy, including
the investment objectives and policies, may not be of sufficient
interest to current or prospective shareholders. Other factors,
such as the Company not being classified as an ESG integrated
investment vehicle, may also deter shareholder interest.
The attractiveness of investment
vehicles, including investment trusts, could be impacted by
structural changes to the way investors access the market,
including changes within the platform channels.
|
Our investment strategies aim to
position The Mercantile as a clear and core investment choice
available for investment through a number of channels. The Manager
continues to deliver on the Company's objective and integrates ESG
considerations into its investment process. The Board regularly
reviews its strategy, and assesses, with its brokers, shareholder
views.
Marketing and investor relations
campaigns continued throughout the year and we have identified
appropriate promotional opportunities for the Company (including
advertising, events and research coverage) in order to maintain a
strong platform presence. A Mercantile 'Preference Centre' provides
the Company with the ability to communicate directly and more
effectively with investors.
|
The risk is medium and remains
unchanged from 2023.
|
Mid and Smaller Company Investment
(Liquidity risk)
|
Investing in mid and smaller sized
companies is inherently more risky and volatile, partly due to
a potential lack of liquidity in the shares, which could lead
to the Portfolio Managers obtaining a lower market price in
the extremely rare event of them being forced sellers.
|
The Board discusses these risk
factors at each Board meeting with the Portfolio Managers. The
Board has placed investment restrictions and guidelines to limit
these risks. Ultimately the Company is protected to some extent
given its closed end structure.
|
The risk remains medium and remains
unchanged from 2023.
|
Emerging Risks
The Board has considered and kept
under review emerging risks, including but not limited to the
impact of climate change, geopolitical conflict, inflationary
pressures, social dislocation and conflict and technological
advances. The key emerging risks identified are as
follows:
Artificial Intelligence ('AI')
While it could be a great
opportunity and force for good, there is an increasing risk to
business and society more widely from AI. Advances in computing
power means that AI has become a powerful tool that will
impact a huge range of areas and with a wide range of applications
that include the potential to disrupt and even to harm. In addition
the use of AI could be a significant disrupter to business
processes and whole companies leading to added uncertainty in
corporate valuations.
Pandemics
The emergence of COVID-19
illustrated the speed and extent of economic damage that can arise
from a pandemic.
Whilst the impact of COVID-19 has
now subsided, pandemics in general remain an emerging risk.
Evidence suggests that the likelihood of pandemics has increased
over the past century due to increased global travel and
integration, urbanisation, changes in land use, and greater
exploitation of the natural environment.
TRANSACTIONS WITH THE MANAGER
AND RELATED PARTIES
Details of the management contract
are set out in the Directors' Report in the 2024 Annual Report. The
management fee payable to the Manager for the year was £6,903,000
(2023: £6,907,000) of which £nil (2023: £nil) was outstanding at
the year end.
Included in administration expenses
in note 6 in the 2024 Annual Report are safe custody fees amounting
to £32,000 (2023: £32,000) payable to JPMorgan Chase Bank N.A. of
which £7,000 (2023: £7,000) was outstanding at the year
end.
The Manager may carry out some of
its dealing transactions through group subsidiaries. These
transactions are carried out at arm's length.
During the year, brokerage
commission on dealing transactions amounting to £nil (2023: £1,000)
was payable to JPMorgan subsidiaries of which £nil (2023: £nil) was
outstanding at the year end.
The Company also holds cash in the
JPMorgan GBP Liquidity LVNAV Fund, managed by JPMorgan. At the year
end this was valued at £89.2 million (2023: £157.2 million).
Interest income amounting to £5,691,000 (2023: £3,036,000) was
receivable during the year of which £nil (2023: £nil) was
outstanding at the year end.
Handling charges on dealing
transactions amounting to £14,000 (2023: £14,000) were payable to
JPMorgan Chase Bank N.A. during the year of which £3,000 (2023:
£2,000) was outstanding at the year end.
At the year end, total cash of
£351,000 (2023: £386,000) was held with JPMorgan Chase Bank N.A. A
net amount of interest of £26,000 (2023: £113,000) was receivable
by the Company during the year from JPMorgan Chase Bank N.A. of
which £nil (2023: £nil) was outstanding at the year end.
Full details of Directors'
remuneration and shareholdings can be found in the 2024 Annual
Report.
STATEMENT OF DIRECTORS'
RESPONSIBILITIES
The Directors are responsible for
preparing the Annual Report and the Financial Statements in
accordance with applicable law and regulations.
Company law requires the Directors
to prepare financial statements for each financial year. Under that
law, the Directors have elected to prepare the financial statements
in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising Financial
Reporting Standard 102, the Financial Reporting Standard applicable
in the UK and Republic of Ireland ('FRS 102'), and applicable law).
Under Company law the Directors must not approve the financial
statements unless they are satisfied that taken as a whole, the
Annual Report and Financial Statements are fair, balanced and
understandable, provide the information necessary for shareholders
to assess the Company's position and performance, business model
and strategy and that they give a true and fair view of the
state of affairs of the Company and of the total return or loss of
the Company for that period. In order to provide these
confirmations, and in preparing these financial statements, the
Directors are required to:
• select suitable
accounting policies and then apply them consistently;
• make judgements and
estimates that are reasonable and prudent;
• state whether applicable UK
Accounting Standards, comprising FRS 102, have been followed,
subject to any material departures disclosed and explained in the
financial statements;
• prepare the financial
statements on a going concern basis unless it is inappropriate to
presume that the Company will continue in business; and
• notify the Company's
shareholders in writing about the use, if any, of disclosure
exemptions in FRS 102 in the preparation of the financial
statements
and the Directors confirm that they
have done so.
The Directors are responsible for
keeping adequate accounting records that are sufficient to show and
explain the Company's transactions and disclose with reasonable
accuracy at any time the financial position of the Company and to
enable them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding
the assets of the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other
irregularities.
Under applicable law and regulations
the Directors are also responsible for preparing a Directors'
Report and Directors' Remuneration Report that comply with that law
and those regulations.
Each of the Directors, whose names
and functions are listed in the 2024 Annual Report confirms that,
to the best of his/her knowledge, the financial statements, which
have been 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 net return or loss of the
Company.
The Board confirms that it is
satisfied that the Annual Report and Financial Statements taken as
a whole are fair, balanced and understandable and provide the
information necessary for shareholders to assess the Company's
position and performance, business model and strategy.
The Board also confirms that it is
satisfied that the Strategic Report and Directors' Report include a
fair review of the development and performance of the business, and
the Company, together with a description of the principal risks and
uncertainties that it faces.
The Financial Statements are
published on the www.mercantileit.co.uk website, which
is maintained by the Manager. The maintenance and integrity of the
website maintained by the Manager is, so far as it relates to the
Company, the responsibility of the Manager. The work carried out by
the Auditor does not involve consideration of the maintenance and
integrity of this website and, accordingly, the Auditor accepts no
responsibility for any changes that have occurred to the accounts
since they were initially presented to the website. The accounts
are prepared in accordance with UK legislation, which may differ
from legislation in other jurisdictions.
For and on behalf of the
Board
Angus Gordon Lennox
Chairman
11th April 2024
STATEMENT OF COMPREHENSIVE
INCOME
For
the year ended 31st January
|
2024
|
2023
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Gains/(losses) on investments held at
fair value
|
|
|
|
|
|
|
through profit or
loss
|
-
|
18,706
|
18,706
|
-
|
(317,548)
|
(317,548)
|
Net foreign currency gains
|
-
|
2
|
2
|
-
|
64
|
64
|
Income from investments
|
73,269
|
-
|
73,269
|
61,589
|
-
|
61,589
|
Interest receivable
|
5,717
|
-
|
5,717
|
3,149
|
-
|
3,149
|
Gross return/(loss)
|
78,986
|
18,708
|
97,694
|
64,738
|
(317,484)
|
(252,746)
|
Management fee
|
(2,071)
|
(4,832)
|
(6,903)
|
(2,072)
|
(4,835)
|
(6,907)
|
Other administrative
expenses
|
(1,536)
|
-
|
(1,536)
|
(1,413)
|
-
|
(1,413)
|
Net
return/(loss) before finance costs and taxation
|
75,379
|
13,876
|
89,255
|
61,253
|
(322,319)
|
(261,066)
|
Finance costs
|
(4,172)
|
(9,734)
|
(13,906)
|
(4,245)
|
(9,906)
|
(14,151)
|
Net
return/(loss) before taxation
|
71,207
|
4,142
|
75,349
|
57,008
|
(332,225)
|
(275,217)
|
Taxation
|
(141)
|
-
|
(141)
|
(128)
|
-
|
(128)
|
Net
return/(loss) after taxation
|
71,066
|
4,142
|
75,208
|
56,880
|
(332,225)
|
(275,345)
|
Return/(loss) per share
|
9.01p
|
0.53p
|
9.54p
|
7.19p
|
(42.02)p
|
(34.83)p
|
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.
Net return/(loss) after taxation represents the profit/(loss) for
the year and also total comprehensive income/(loss).
STATEMENT OF CHANGES IN
EQUITY
For
the year ended 31st January
|
Called up
|
|
Capital
|
|
|
|
|
share
|
Share
|
redemption
|
Capital
|
Revenue
|
|
|
capital
|
premium
|
reserve
|
reserves1
|
reserve1
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
At
31st January 2022
|
23,612
|
23,459
|
13,158
|
2,076,379
|
61,603
|
2,198,211
|
Repurchase of shares into
Treasury
|
-
|
-
|
-
|
(2,623)
|
-
|
(2,623)
|
Net (loss)/return
|
-
|
-
|
-
|
(332,225)
|
56,880
|
(275,345)
|
Dividends paid in the year (note
3)
|
-
|
-
|
-
|
-
|
(54,567)
|
(54,567)
|
At
31st January 2023
|
23,612
|
23,459
|
13,158
|
1,741,531
|
63,916
|
1,865,676
|
Repurchase of shares into
Treasury
|
-
|
-
|
-
|
(16,474)
|
-
|
(16,474)
|
Net return
|
-
|
-
|
-
|
4,142
|
71,066
|
75,208
|
Dividends paid in the year (note
3)
|
-
|
-
|
-
|
-
|
(58,791)
|
(58,791)
|
At
January 2024
|
23,612
|
23,459
|
13,158
|
1,729,199
|
76,191
|
1,865,619
|
1 These reserves form the distributable
reserves of the Company and may be used to fund distributions to
shareholders.
STATEMENT OF FINANCIAL
POSITION
At
31st January
|
2024
|
2023
|
|
£'000
|
£'000
|
Fixed assets
|
|
|
Investments held at fair value through profit or
loss
|
2,115,714
|
2,042,758
|
Current assets
|
|
|
Debtors
|
7,557
|
2,737
|
Cash and cash equivalents
|
89,530
|
157,606
|
|
97,087
|
160,343
|
Current liabilities
|
|
|
Creditors: amounts falling due
within one year
|
(19,248)
|
(9,599)
|
Net
current assets
|
77,839
|
150,744
|
Total assets less current liabilities
|
2,193,553
|
2,193,502
|
Non
current liabilities
|
|
|
Creditors: amounts falling due
after more than one year
|
(327,934)
|
(327,826)
|
Net
assets
|
1,865,619
|
1,865,676
|
Capital and reserves
|
|
|
Called up share capital
|
23,612
|
23,612
|
Share premium
|
23,459
|
23,459
|
Capital redemption reserve
|
13,158
|
13,158
|
Capital reserves
|
1,729,199
|
1,741,531
|
Revenue reserve
|
76,191
|
63,916
|
Total shareholders' funds
|
1,865,619
|
1,865,676
|
Net
asset value per share
|
238.6p
|
236.1p
|
STATEMENT OF CASH
FLOWS
For
the year ended 31st January
|
|
|
|
2024
|
2023
Restated1
|
|
£'000
|
£'000
|
Cash
flows from operating activities
|
|
|
Net return/(loss) before finance
costs and taxation
|
89,255
|
(261,066)
|
Net (gains)/losses on investments
held at fair value through profit or loss
|
(18,706)
|
317,548
|
Net foreign currency gains
|
(2)
|
(64)
|
Dividend income
|
(73,269)
|
(61,589)
|
Interest income
|
(5,717)
|
(3,149)
|
Realised loss on foreign exchange
transactions
|
2
|
46
|
Decrease in accrued income and other
debtors
|
36
|
9
|
Increase in accrued
expenses
|
116
|
93
|
Net
cash outflow from operations before dividends and
interest
|
(8,285)
|
(8,172)
|
Dividends received
|
72,142
|
62,063
|
Interest received
|
5,717
|
3,149
|
Overseas withholding tax
recovered
|
129
|
604
|
Net
cash inflow from operating activities
|
69,703
|
57,644
|
Purchases of investments
|
(428,193)
|
(507,308)
|
Sales of investments
|
378,822
|
612,839
|
Net
cash (outflow)/inflow from investing activities
|
(49,371)
|
105,531
|
Equity dividends paid
|
(58,791)
|
(54,567)
|
Repurchase of shares into
Treasury
|
(15,819)
|
(2,623)
|
Interest paid
|
(13,798)
|
(14,058)
|
Net
cash outflow from financing activities
|
(88,408)
|
(71,248)
|
(Decrease)/increase in cash and cash
equivalents
|
(68,076)
|
91,927
|
Cash and cash equivalents at start of
year
|
157,606
|
65,661
|
Exchange movements
|
-
|
18
|
Cash
and cash equivalents at end of year
|
89,530
|
157,606
|
Cash
and cash equivalents consist of:
|
|
|
Cash and short term
deposits
|
351
|
386
|
Cash held in JPMorgan GBP Liquidity
LVNAV Fund
|
89,179
|
157,220
|
Total
|
89,530
|
157,606
|
1 The accounting policy of the Company
changed in respect of the presentation of the Statement of Cash
Flows, as permitted under FRS 102, to present the reconciliation of
'net return/(loss) before finance costs and taxation' to 'net cash
inflow from operating activities' on the Statement of Cash Flows.
Previously, this was shown by way of a note. Interest paid has also
been reclassified from operating activities to financing activities
as it relates to interest paid on the overdraft, bank loan,
debentures and loan notes. Other than changes in presentation of
certain cash flow items from the previously shown 'reconciliation
of net return/(loss) before finance costs and taxation to net cash
outflow from operations before dividends and interest', there is no
change to the cash flows as presented in previous
periods.
ANALYSIS OF CHANGES IN NET
DEBT
|
As at
|
|
Interest
and
|
As at
|
|
31st
January
|
|
amortisation
|
31st
January
|
|
2023
|
Cash flows
|
charges
|
2024
|
|
£'000
|
£'000
|
£'000
|
£'000
|
Cash
and cash equivalents
|
|
|
|
|
Cash and short term
deposits
|
386
|
(35)
|
-
|
351
|
Cash held in JPMorgan GBP Liquidity
LVNAV Fund
|
157,220
|
(68,041)
|
-
|
89,179
|
|
157,606
|
(68,076)
|
-
|
89,530
|
Borrowings:
|
|
|
|
|
Debentures falling due after more
than five years
|
(178,157)
|
10,882
|
(10,979)
|
(178,254)
|
Private Placement due after more than
five years
|
(149,669)
|
2,910
|
(2,921)
|
(149,680)
|
Bank loan and overdraft
|
-
|
6
|
(6)
|
-
|
|
(327,826)
|
13,798
|
(13,906)
|
(327,934)
|
Net
debt
|
(170,220)
|
(54,278)
|
(13,906)
|
(238,404)
|
NOTES TO THE FINANCIAL
STATEMENTS
For
the year ended 31st January 2024
1. Accounting policies
Basis of accounting
The financial statements have been
prepared in accordance with the Companies Act 2006, FRS 102 'The
Financial Reporting Standard applicable in the UK and Republic of
Ireland' of the 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 July 2022.
All of the Company's operations are
of a continuing nature.
The financial statements have been
prepared on a going concern basis. The disclosures on going concern
in the Directors' Report within the 2024 Annual Report form part of
these financial statements.
As permitted under FRS 102, the
presentation of the Statement of Cash Flows was changed during the
year so as to present the reconciliation of 'net return/(loss)
before finance costs and taxation' to 'net cash inflow from
operating activities' on the Statement of Cash Flows. Previously
this was shown by way of note to the financial statements. As a
result the comparative year to 31st January 2023 has been restated
accordingly and further details of this change are shown on the
Statement of Cash Flows above.
Except for the change in the
Statement of Cash Flows as noted above, the policies applied in
these financial statements are consistent with those applied in the
preceding year.
2. Return/(loss) per share
|
2024
|
2023
|
|
£'000
|
£'000
|
Revenue return
|
71,066
|
56,880
|
Capital return/(loss)
|
4,142
|
(332,225)
|
Total return/(loss)
|
75,208
|
(275,345)
|
Weighted average number of shares in
issue during the year
|
788,846,061
|
790,696,064
|
Revenue return per share
|
9.01p
|
7.19p
|
Capital return per share
|
0.53p
|
(42.02)p
|
Total return/(loss) per share
|
9.54p
|
(34.83)p
|
The total return/(loss) per share
represents both basic and diluted return per share as the Company
has no dilutive shares.
3. Dividends
(a) Dividends paid and
declared
|
2024
|
2023
|
|
£'000
|
£'000
|
Dividends paid
|
|
|
2023 fourth quarterly dividend of
3.10p (2022: 2.85p) paid to shareholders
|
|
|
in May 2023
|
24,493
|
22,558
|
First quarterly dividend of 1.45p
(2023: 1.35p) paid to shareholders in
|
|
|
August 2023
|
11,456
|
10,677
|
Second quarterly dividend of 1.45p
(2023: 1.35p) paid to shareholders in
|
|
|
November 2023
|
11,451
|
10,666
|
Third quarterly dividend of 1.45p
(2023: 1.35p) paid to shareholders in
|
|
|
February
20241
|
11,391
|
10,666
|
Total dividends paid in the year
|
58,791
|
54,567
|
|
2024
|
2023
|
|
£'000
|
£'000
|
Dividend declared
|
|
|
Fourth quarterly dividend declared of
3.30p (2023: 3.10p) payable to
|
|
|
shareholders in May 2024
|
25,808
|
24,493
|
1 The Company irrevocably transfers the
funds to its Registrar in the month prior to which the dividend is
paid to shareholders. The third quarterly dividend in February 2024
is therefore recognised as paid prior to the year end.
All dividends paid and declared in
the period have been funded from the Revenue Reserve.
The fourth quarterly dividend has
been declared in respect of the year ended 31st January 2024. In
accordance with the accounting policy of the Company, this
dividend will be reflected in the financial statements for the year
ending 31st January 2025.
(b) Dividends for the purposes of Section
1158 of the Corporation Tax Act 2010 ('Section
1158')
The requirements of Section 1158 are
considered on the basis of dividends declared in respect of the
financial year as shown below. The revenue available for
distribution by way of dividend for the year is £71,066,000 (2023:
£56,880,000).
The maximum amount of income that
the Company is permitted to retain under Section 1158 is
£11,848,000 (2023: £9,711,000), calculated as 15% of gross revenue.
Therefore the minimum distribution required by way of dividend is
£59,218,000 (2023: £47,169,000).
|
2024
|
2023
|
|
£'000
|
£'000
|
First quarterly dividend of 1.45p
(2023: 1.35p) paid to shareholders in August 2023
|
11,456
|
10,677
|
Second quarterly dividend of 1.45p
(2023: 1.35p) paid to shareholders in November 2023
|
11,451
|
10,666
|
Third quarterly dividend of 1.45p
(2023: 1.35p) paid to shareholders in February
20241
|
11,391
|
10,666
|
Fourth quarterly dividend declared of
3.30p (2023: 3.1p) payable in May 2024
|
25,808
|
24,493
|
|
60,106
|
56,502
|
1 The
Company irrevocably transfers the funds to its Registrar in the
month prior to which the dividend is paid to shareholders and the
dividend is therefore recognised as paid prior to the year
end.
4. Net asset value per share
The net asset value per Ordinary
share and the net asset value attributable to the Ordinary shares
at the year end are shown below. These were calculated using
782,056,565 (2023: 790,080,662) Ordinary shares in issue at the
year end (excluding Treasury shares).
|
2024
|
2023
Net asset value
attributable
|
|
Net asset value
attributable
|
|
£'000
|
pence
|
£'000
|
pence
|
Net
asset value - debt at par
|
1,865,619
|
238.6
|
1,865,676
|
236.1
|
Add: amortised cost of £175 million
6.125%
|
|
|
|
|
debenture stock 25th February
2030
|
174,404
|
22.3
|
174,307
|
22.1
|
Less: fair value of £175 million
6.125%
|
|
|
|
|
debenture stock 25th February
2030
|
(193,665)
|
(24.7)
|
(201,864)
|
(25.5)
|
Add: amortised cost of £3.85 million
4.25%
|
|
|
|
|
perpetual debenture
stock
|
3,850
|
0.5
|
3,850
|
0.5
|
Less: fair value of £3.85 million
4.25%
|
|
|
|
|
perpetual debenture
stock
|
(3,150)
|
(0.4)
|
(3,791)
|
(0.5)
|
Add: amortised cost of senior
unsecured
|
|
|
|
|
privately placed loan
notes
|
149,680
|
19.1
|
149,669
|
18.9
|
Less: fair value of senior unsecured
privately
|
|
|
|
|
placed loan notes
|
(82,601)
|
(10.6)
|
(93,602)
|
(11.8)
|
Net
asset value - debt at fair value
|
1,914,137
|
244.8
|
1,894,245
|
239.8
|
5. Status of results
announcement
2023 Financial Information
The figures and financial
information for 2023 are extracted from the Annual Report and
Financial Statements for the year ended 31st January 2023 and do
not constitute the statutory accounts for the year. The Annual
Report and Financial Statements include 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.
2024 Financial Information
The figures and financial
information for 2024 are extracted from the published Annual Report
and Financial Statements for the year ended 31st January 2024 and
do not constitute the statutory accounts for that year. The Annual
Report and Financial Statements include the Report of the
Independent Auditors which is unqualified and did not contain a
statement under either section 498(2) or section 498(3) of the
Companies Act 2006. The Annual Report and Financial Statements for
the year ended 31st January 2024 will be delivered to the Register
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.
11th April 2024
For further information:
Alison Vincent,
JPMorgan Funds Limited
020 7742 4000
ENDS
A copy of the annual report will
shortly be submitted to the FCA's Electronic
Submission System and will be available for
inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The annual report will 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.
Stay Informed
To receive targeted email updates on
The Mercantile Investment Trust, to include occasional news and
views, as well as performance updates, you can sign up and 'keep in
the know', by opting in here:
tinyurl.com/MRC-Sign-Up
JPMORGAN FUNDS LIMITED