Final Results
Merchants Trust PLC
16 March 2007
For Immediate Release
16 March 2007
THE MERCHANTS TRUST PLC
ANNOUNCEMENT OF PRELIMINARY RESULTS
For the year ended 31 January 2007
Highlights
• Total return was 16.4%, compared with 11.3% for the FTSE 100 Total Return
index.
• The Net Asset Value per share rose by 12.6% compared with a rise of
7.7% in the FTSE 100 Price Index.
• Net dividends were 20.0p per share in 2006/07, an increase of 5.8%,
the twenty-fifth consecutive annual increase.
• Ordinary shares yield 3.9% at 500p, compared with 3.1% on the FTSE
100 Index at the close of business on 15 March 2007.
Net Asset Value
The Net Asset Value per ordinary share at 31 January 2007 was 567.5p compared
with 504.1p at 31 January 2006, an increase of 12.6%. This compares with an
increase of 7.7% recorded by the FTSE 100 Price Index and one of 6.7% recorded
by the FTSE 350 Higher Yield Price Index.
Ordinary Dividend
The Board has declared a final dividend of 5.1p per share, payable on 16 May
2007 to shareholders on the register at the close of business on 13 April 2007.
This gives a total of 20.0p for the year ended 31 January 2007, an increase of
5.8% when compared with the total distribution of 18.9p paid in respect of the
previous year. The Trust has now recorded an unbroken record of dividend
increases over the last twenty-five years.
Total Return and Earnings
The Net Asset Value total return, reflecting both the increase in capital values
and dividends paid to Ordinary Shareholders in the last financial year, was
16.4%. The equivalent return recorded by the FTSE 100 Total Return Index was
11.3%. Net earnings per share rose from 19.44p to 22.17p or by 14.0%.
Page 2
Share Buy Backs
The Board will recommend to shareholders that the Company takes renewed powers
to buy back its Ordinary Shares. Full details will be sent to shareholders in
the forthcoming Annual Report and Accounts.
Prospects
Notwithstanding recent market volatility, the corporate sector is continuing to
perform well and the outlook for profits and dividends growth, at least in the
short term, is promising. However, the UK economy is likely to be sensitive to
any further interest rate rises. Market valuations in aggregate are reasonable
although dividend yields are less supportive than a year ago, especially for
medium sized companies. As long as bond yields and credit spreads remain
relatively low, corporate activity and share buy-backs should provide further
support to the equity market.
Sir John Banham
After over 14 years as a Director of the Trust, Sir John Banham will be retiring
from the Board after the AGM in May this year. During his career Sir John has
been the Chairman of a number of FTSE 100 companies, Controller of the Audit
Commission and Director General of the Confederation of British Industry. He
has been able to bring a unique insight to our deliberations over the years and
we will miss his contribution and experience enormously.
Annual General Meeting
The Annual General Meeting of the Company will be held on Monday 14 May 2007 at
12.00 noon.
Hugh Stevenson
Chairman
155 Bishopsgate
London EC2M 3AD
For further information, please contact:
RCM (UK) Ltd
Simon White
Head of Investment Trusts
RCM (UK) Limited
Tel: 020 7065 1539
Page 3
Unaudited preliminary results for the year ended 31 January 2007 were approved
for immediate release as undernoted:
RESULTS
INCOME STATEMENT
for the year ended 31 January 2007
2007
Revenue Capital Total Return
Return Return
(£000s) (£000s) (£000s)
(Note 3)
Net gains on investments at fair value - 71,441 71,441
Income 27,750 - 27,750
Investment management fee (961) (1,786) (2,747)
Administration expenses (488) (3) (491)
Net return before finance costs and taxation 26,301 69,652 95,953
Finance costs: interest payable and similar charges (3,447) (6,321) (9,768)
Net return on ordinary activities before taxation 22,854 63,331 86,185
Taxation - - -
Net return attributable to Ordinary Shareholders 22,854 63,331 86,185
Return per Ordinary Share (Note 1) 22.17p 61.44p 83.61p
(basic and diliuted)
2007
BALANCE SHEET as at 31 January 2007 (£000s)
Investments held at fair value through profit or loss 695,770
Net Current Assets 6,613
702,383
Creditors : Amounts falling due after more than one year (113,548)
Total Net Assets 588,835
Called up Share Capital 25,940
Share Premium Account 7,527
Capital Redemption Reserve 56
Capital Reserves : Realised 401,296
: Unrealised 131,247
Revenue Reserve 22,769
Equity Shareholders' Funds 588,835
Net asset value per Ordinary Share (Note 2) 567.5p
Page 4
RESULTS
INCOME STATEMENT
for the year ended 31 January 2006
2006
Revenue Capital Total Return
Return Return
(£000s) (£000s) (£000s)
(Note 3)
Net gains on investments at fair value - 96,792 96,792
Income 24,714 - 24,714
Investment management fee (824) (1,530) (2,354)
Administration expenses (622) (6) (628)
Net return before finance costs and taxation 23,268 95,256 118,524
Finance costs: interest payable and similar charges (3,414) (6,219) (9,633)
Net return on ordinary activities before taxation 19,854 89,037 108,891
Taxation - - -
Net return attributable to Ordinary Shareholders 19,854 89,037 108,891
Return per Ordinary Share (Note 1) 19.44p 87.20p 106.64p
(basic and diliuted)
2006
BALANCE SHEET as at 31 January 2006 (£000s)
Investments held at fair value through profit or loss 621,948
Net Current Assets 6,118
628,066
Creditors : Amounts falling due after more than one year (113,353)
Total Net Assets 514,713
Called up Share Capital 25,526
Share Premium Account 40
Capital Redemption Reserve 56
Capital Reserves : Realised 351,108
: Unrealised 118,104
Revenue Reserve 19,879
Equity Shareholders' Funds 514,713
Net asset value per Ordinary Share (Note 2) 504.1p
Page 5
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended 31 January 2007
Called up Share Capital Capital Capital Revenue Total
Share Premium Redemption Reserve Reserve Reserve
Capital Account Reserve Realised Unrealised
(£000s) (£000s) (£000s) (£000s) (£000s) (£000s) (£000s)
Net Assets at 31
January 2006 25,526 40 56 351,108 118,104 19,879 514,713
Revenue Return - - - - - 22,854 22,854
Dividends on Ordinary - - - - - (19,964) (19,964)
Shares
Capital Return - - - 50,188 13,143 - 63,331
Shares issued during 414 7,487 - - - - 7,901
the year
Net Assets at 31
January 2007 25,940 7,527 56 401,296 131,247 22,769 588,835
Net Assets at 31 25,526 40 56 322,240 57,963 18,686 424,511
January 2005
(restated)
Adjustment to record - - - - (28) - (28)
investments at bid
value
Revenue Return - - - - - 19,854 19,854
Dividends on Ordinary - - - - - (18,661) (18,661)
Shares
Capital Return - - - 28,868 60,169 - 89,037
Net Assets at 31
January 2006 25,526 40 56 351,108 118,104 19,879 514,713
Page 6
CASH FLOW STATEMENT
For the years ended 31 January 2007 and 2006
2007 2007 2006
(£000s) (£000s) (£000s)
Net cash inflow from operating activities 28,262 22,806
Servicing of Finance
Interest paid (9,530) (9,557)
Dividends on Preference Stock (43) (64)
Net cash outflow from servicing of finance (9,573) (9,621)
Investing Activities
Purchases of fixed asset investments (236,518) (139,141)
Sales of fixed asset investments 238,513 146,799
Net cash inflow from investing activities 1,995 7,658
Equity dividends paid (19,964) (18,661)
Net cash inflow before financing 720 2,182
Financing
Cash transferred from Allianz Dresdner Income Growth 908 -
Investment Trust Plc in relation to the issue of
1,655,941 shares
Increase in cash 1,628 2,182
During the year, investments and cash amounting to £7m and £0.9m respectively
were transferred into the Company following the reconstruction of Allianz
Dresdner Income Growth Investment Trust plc, as consideration for 1,655,941 new
Ordinary Shares issued at 477.1p.
Page 7
Note 1
The Returns per Ordinary Share have been calculated using a weighted average
number of shares in issue during the year of 103,083,890 shares (2006 -
102,103,936).
Note 2
The net asset value is based on 103,759,877 Ordinary Shares in issue at the
year-end (2006 - 102,103,936).
Note 3
The total column of this statement is the profit and loss account of the
Company.
All revenue and capital items derive from continuing operations. No operations
were acquired or discontinued in the year.
A Statement of Total Recognised Gains and Losses is not required as all gains
and losses of the Company have been reflected in the Income Statement.
Included in the cost of investments are transaction costs on purchases amounting
to £1,502,518 (2006: £888,492) and transaction costs on sales amounting to
£369,855 (2006: £302,257).
Note 4
Dividends paid on Ordinary Shares in respect of earnings for each period are as
follows:
Year to Year to
31 January 2007 31 January 2006
£'000s £'000s
Third Interim dividend 4.8p paid 17 February 2006 (2005 4,901 4,595
- 4.5p)
Final dividend 4.8p paid 10 May 2006 (2005 - 4.5p) 4,901 4,594
First Interim dividend 4.9p paid 17 August 2006 - 4.6p) 5,084 4,697
Second Interim dividend - 4.9p paid 14 November 2006 5,084 4,799
(2005 - 4.7p)
Unpaid dividends from prior years (6) (24)
19,964 18,661
Dividends payable at the period end are not recognised as a liability under FRS
21 'Events after the Balance Sheet Date'. Details of these dividends are set
out below.
Year to Year to
31 January 2007 31 January 2006
£'000s £'000s
Third Interim dividend 5.1p payable 16 February 2007 5,292 4,901
(2006 - 4.8p)
Final proposed dividend 5.1p payable 16 May 2007 (2006 - 5,292 4,901
4.8p)
10,584 9,802
The total cash cost of the proposed final dividend is based on the number of
shares in issue at the period end. However, the dividend payable will be based
on the number of shares in issue on the record date and will reflect any
purchases and cancellations of shares by the Company settled subsequent to the
year end.
Note 5
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the years ended 31 January 2007 or 31 January
2006. The financial information for the year ended 31 January 2006 has been
extracted from the audited statutory accounts for that year. The auditors report
on those accounts was unqualified and did not contain a statement under either
Section 237(2) or Section 237(3) of the Companies Act 1985. The statutory
accounts for the year ended 31 January 2007 will be finalised on the basis of
the financial information presented by the directors in this preliminary
announcement and will be delivered to the Registrar of Companies following the
Company's Annual General Meeting.
Note 6
The annual report will be sent to shareholders in mid April 2007 and will be
available to members of the public on the website www.merchantstrust.co.uk or
from the Company's registered office at 155 Bishopsgate, London EC2M 3AD.
This information is provided by RNS
The company news service from the London Stock Exchange
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