LONDON STOCK EXCHANGE ANNOUNCEMENT
THE MERCANTILE INVESTMENT TRUST PLC
FINAL RESULTS FOR THE YEAR ENDED 31ST JANUARY 2026
Legal Entity Identifier: 549300BGX3CJIHLP2H42
Information disclosed in accordance with the DTR 4.1.3
The Mercantile Investment Trust plc (‘The Mercantile’ or the ‘Company’) announces its full year results for the 12-months ended 31st January 2026.
Highlights
- NAV total return of +12.3% (with debt at fair value*) for the year ended 31 January 2026, compared with a +15.8% return for the Company’s benchmark (FTSE All-Share Index, ex-FTSE 100, ex-investment trusts, with net dividends reinvested). Share price total return for the period was +12.5%.
- Three-year cumulative NAV total return of +35.1% compared with +32.4% for the Benchmark; three-year share price cumulative total return of +41.9%.
- Five-year cumulative NAV total return of +42.5% compared with +39.0% for the Benchmark; five-year share price cumulative total return of +36.9%.
- Ten-year cumulative NAV total return of +109.3%, comfortably ahead of the benchmark’s +85.1%; ten-year share price cumulative total return of +111.3%.
- The year’s performance was supported by strong stock selection in industrials and select financials, while investment banking and brokerage services and consumer discretionary detracted. While the Company benefitted from takeovers in Alpha Group International and Just Group, there were a greater number where the Company had no holding, which detracted from relative returns.
- The Company remains competitively priced, with an Ongoing Charges Ratio (‘OCR’) for the year of 0.49% (2025: 0.48%).
- During the year, the Company repurchased 63,799,708 shares into Treasury at an average discount to NAV of 9.9%, adding 0.9% to the NAV total return.
- A total dividend of 8.20p per share was declared for the year (2025: 7.90p), an increase of 3.8%. This comprised three interim dividends of 1.55p per share and a fourth quarterly interim dividend of 3.55p per share. The dividend was fully covered by earnings, with revenue per share of 9.25p (2025: 8.96p).
- The Company’s dividend has grown for over 12 consecutive years, with ten-year annualised dividend growth of 6.7% compared to CPI inflation of 3.4%.
* Morningstar/J.P. Morgan, using cum income net asset value per share. APM Alternative Performance Measure (‘APM’).
Rachel Beagles, Chairman, commented:
Dealing with geopolitical events has, unfortunately, in recent years, become ‘business as usual’ for our Portfolio Managers. The recent war in Iran raises the spectre of heightened oil prices, and if prolonged, threatens the downward trend of inflation and interest rates in the UK. However, levels of corporate and personal sector debt are historically low; valuations of medium and smaller companies remain attractive relative to history and larger peers.
Your portfolio is invested in high quality companies, with conservative balance sheets and strong market positions. Further, increased levels of market volatility should offer opportunities for active stock pickers. My fellow Directors and I remain confident in your Portfolio Managers’ ability to guide the portfolio through any challenges, whilst taking advantage of emergent investment and valuation opportunities. This should ensure that the Company continues to deliver both positive real returns and outperformance over the long term.
Guy Anderson & Anthony Lynch, Portfolio Managers, commented:
The outlook is always uncertain, and this year is no different: the international geopolitical landscape appears primed for generating unanticipated shocks; …a war is just unfolding in the Middle East, and it is too early to be definitive about its implications; domestic economic growth is low, and the government’s ability to deliver productive change appears limited; the rapid pace of technological development will both create and destroy industries, and thus create both winners and losers. As always, we will endeavour to invest in more of the former, and to avoid the latter.
While this was a year of underperformance, the Company has sustained its track record of outperformance over the long-term… Looking ahead, 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 while being able to 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.”
CHAIR’S STATEMENT
Market Background
After a turbulent first half, UK equities recovered strongly in the latter half of the year, consistent with the upbeat mood of global markets over that period. These gains were made despite persistent geopolitical tensions and a protracted period of uncertainty leading up the UK Government’s November 2025 Budget. Support came from a surge in interest from international investors, including a rise in mergers and acquisition (M&A) activity, further interest rate cuts from the Bank of England, and some gradual improvement in the UK economy. Investors were also relieved to learn that the Budget proved less onerous than feared for both businesses and households.
Performance
During the 12 months to the end of January 2026, the Company made strong total returns on net assets* of +12.3% and +12.5% on a share price basis. This performance lagged the benchmark, which rose +15.8% over the period. This underperformance is disappointing, but the Portfolio Managers adopt a long-term view when implementing investment decisions, so it is meaningful to assess the Company’s performance on the same basis. The Company’s longer term track record of attractive absolute returns and outperformance remains intact. Over the ten years to 31st January 2026, the Company’s NAV* delivered a cumulative total return of +109.3% comfortably ahead of the benchmark’s +85.1%; over five years, the Company’s cumulative return of +42.5% also exceeded the benchmark’s +39.0%.
The Portfolio Managers’ Report below provides details of the Company’s recent performance and portfolio changes implemented over the past year. Their report also discusses the market outlook for 2026 and beyond.
* With debt at fair value.
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. The table below illustrates how the Company has fulfilled this commitment, as well as over more recent time periods.
| CPI* | Mercantile Dividend Growth | |
| (% per annum) | (% per annum) | |
| One Year | 3.2% | 3.8% |
| Three Years | 3.8% | 4.7% |
| Five Years | 5.0% | 4.1% |
| Ten Years | 3.4% | 6.7% |
* Consumer Price Index (CPI). Source: Office for National Statistics.
The Company’s dividend has now grown for 13 consecutive years, which has earned it a place among the AIC’s next-generation dividend heroes. During the financial year ended 31st January 2026, the Company paid three interim dividends of 1.55p per ordinary share and the Board has declared a fourth quarterly interim dividend of 3.55p per share. This brings the total dividend for the year to 8.20p per share, an increase of 3.8% over the previous year’s dividend payment of 7.90p per share and provides a historic yield of 3.2% based on the share price as at close of business on 8th April 2026.
In deciding our dividend payments, we look to pay dividends that are at least covered by current year earnings, while also allowing us to build revenue reserves. I am pleased to be able to report that during the financial year, all declared dividends were fully covered by earnings, with revenue per share during the year of 9.25p (31st January 2025: 8.96p). After payment of the fourth interim dividend, the Company will have revenue reserves of 10.20p per share (2025: 8.00p). It is a great advantage of the investment trust structure that the Company is able to partially fund dividend payments from revenue reserves when necessary, to bolster the dividend during challenging times. This capability should provide shareholders with confidence in the Company’s ability to maintain its dividend growth objective throughout investment cycles.
Discount and Share Repurchases
The discount at which the Company’s shares trade versus its NAV with debt at fair value remained virtually unchanged over the review period, finishing the year at 9.4% (2025: 9.2%). The Board is cognisant that it is in shareholders’ interests that the Company’s share price should not differ excessively from the underlying NAV under normal market conditions. In the Board’s view, the level of the share price’s discount to NAV is unwarranted, so during the financial year the Company repurchased 63,799,708 shares. These shares are held in Treasury and were purchased at an average discount to NAV of 9.9%, which added 0.9% to the NAV total return. Since the financial year end, the Company has purchased a further 21,340,443 shares, and the share price discount stood at 10.7% as at close of business on 8th April 2026.
The Board believes that the Company’s share buyback facility is an important tool in the management of discount volatility. Therefore, my fellow Directors and I recommend that shareholders approve the renewal of the authority to repurchase up to 14.99% of the Company’s shares at the Company’s forthcoming Annual General Meeting (‘AGM’), with repurchased shares to be cancelled or held in Treasury. The Board is also, once 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 also improves liquidity.
Gearing
It is the Board’s intention that the Company maintains its current gearing policy, which is to operate within the range of 10% net cash to 20% geared, under normal market conditions. The Company ended the financial year with gearing at 14.4% (compared to 14.1% on 31st January 2025). Over the year under review, gearing (net of costs) added 1.8% to the Company’s relative performance against its Benchmark.
Gearing is regularly discussed by the Board and the Portfolio Managers and is implemented via the use of long-dated, fixed-rate financing, from several sources, consistent with the Board’s aim to ensure a diversification of source, tenure and cost of leverage available to the Company. Full details of these instruments can be found on page 27 of the Annual Report.
Since the year end, the Company has entered into an agreement to partially repurchase £2.77 million of its £3.85 million 4.25% perpetual debenture stock, which will leave £1.08 million outstanding.
Annual General Meeting
The Company’s one hundred and fortieth AGM will be held at Trinity House, Tower Hill, London EC3N 4DH on Thursday, 21st May 2026 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. The Board and I look forward to seeing a number of you then.
Marketing, Promotion and Shareholder Interaction
The Company continues its efforts to raise its profile among investors and potential investors through focused media and promotional efforts, as well as via ongoing engagement with national and investment industry journalists. During the year this included the Company’s very first on-screen advertising (out-of-home campaign) in busy locations such as train stations. The Board believes that boosting the Company’s profile will be advantageous for all shareholders by generating consistent demand for its shares, especially from retail investors, who over the last few years have made up an increasing percentage of the share register. We aim to carry out these promotional activities in the most cost-effective way possible.
To further enhance the Company’s presence within the broader investment community, the Manager implements a well-established sales and investor relations programme. This programme targets wealth managers, institutions, and private client stockbrokers through video conferences and in-person meetings. In addition, the Portfolio Managers attend and present at retail events.
The Board and Portfolio Managers maintain regular dialogue with shareholders through email updates that share news, insights, and the latest performance, along with invitations to webinars hosted by the Portfolio Managers. The webinars provide portfolio updates and give shareholders the opportunity to ask questions. 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 on page 13 of the 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 remain well-informed about its progress and to interact with the Board and Portfolio Managers.
Joint Broker
During the year, following a broker review and evaluation of proposals from several firms, the Board appointed Peel Hunt LLP as joint broker alongside Winterflood, replacing Cavendish. This combination was chosen to best support the Company’s market presence, investor relations, and strategic objectives. On behalf of the Board I would like to thank Cavendish for its service to the Company over many years.
Board
I became Chair of the Board and the Nomination Committee after the AGM in May 2025, having joined the Board in June 2021. I succeeded Angus Gordon Lennox, who retired after nine years on the Board, including seven as Chairman. On behalf of the Board and shareholders, I would like to take this opportunity to thank Angus for his sound counsel and wise leadership during this period. Following my appointment as Chair, Graham Kitchen became the Senior Independent Director.
The Board reviews its composition on a regular basis, taking account of the need to maintain a wide and relevant range of experience and expertise and to refresh its membership regularly. I can confirm that the Board’s current composition remains compliant with all targets applicable to a company listed on the London Stock Exchange. It is the Board’s intention that this will continue to be the case going forward.
The Board supports the annual re-election for all Directors, as recommended by the AIC Corporate Governance Code, and therefore all the Directors will stand for re-election at the forthcoming AGM.
The Manager
The Board, through its Management Engagement Committee, monitors the performance of the Manager, JPMorgan Funds Limited (‘JPMF’), on an ongoing basis. Given the Manager’s long term performance track record, the Company’s competitive management fee and the depth and quality of resource offered by the Manager to the Company and its shareholders, the Board is satisfied that JPMF’s ongoing appointment as the Company’s Manager remains in the best interests of shareholders.
Outlook
Dealing with geopolitical events has, unfortunately, in recent years, become ‘business as usual’ for your Portfolio Managers. The recent war in Iran raises the spectre of heightened oil prices, and if prolonged, threatens the downward trend of inflation and interest rates in the UK. However, levels of corporate and personal sector debt are historically low and valuations of medium and smaller companies remain attractive relative to history and larger peers. Your portfolio is invested in high quality companies, with conservative balance sheets and strong market positions. Further, increased levels of market volatility should offer opportunities for active stock pickers. A combination of cheap underlying markets and astute stock selection could prove very rewarding should a solution to the conflict in Iran be found, the oil price normalise and UK interest rates continue their downward trajectory. My fellow Directors and I remain confident in your Portfolio Managers’ ability to guide the portfolio through any challenges, whilst taking advantage of emergent investment and valuation opportunities. This should ensure that the Company continues to deliver both positive real returns and outperformance over the long term.
Rachel Beagles
Chair