Interim Results

MERCHANTS TRUST PLC 14 September 1999 THE MERCHANTS TRUST PLC Announcement of Unaudited Interim Results For the six months ended 31st July 1999 HIGHLIGHTS * Dividends per share up 5.3% at 7.90p * Underlying Revenue per share up 5.9% (20.5% including special dividends) * NAV per share up 7.9% from 31st January 1999 at 447.9p * Prospective net yield of 3.7% at 424.5p share price INTERIM RESULTS Interim Dividend The Board is recommending a second quarterly net dividend of 3.95p net per share, payable on 10th November 1999 to shareholders on the register at the close of business on 8th October 1999. The total for the first half of the current financial year is 7.90p net, representing an increase of 5.3% over the same period last year. The Board have forecast a total dividend of not less than 15.75p net per ordinary share for the year ended 31st January 2000, an increase of 5.0% on the underlying total dividend of 15.00p in respect of the year ended 31st January 1999. Earnings Per Share Earnings per share have grown 20.5% to 10.83p in the first half of 1999/2000, including the benefit of special dividend receipts totalling £1,483,999 before tax. If these receipts are excluded, the underlying growth in earnings per share is 5.9%. Net Asset Value The net asset value per ordinary share was 447.9p at 31st July 1999, an increase of 7.9% when compared with the equivalent figure at the end of the last financial year. This rate of growth compares favourably with the 5.7% growth recorded by the FTSE 100 Index. In contrast to recent experience, the FTSE 350 Higher Yield Index rose by 18.5% over the last six months reflecting the weighting of oil shares and 'mid-cap' companies. Taking account of the revenue received in the first half of the current financial year, the total return to ordinary shareholders was 9.8%. YEAR 2000 Dresdner RCM have instigated a programme to establish the risks posed to the Company by the consequences of the Year 2000 date change and to address those risks. Dresdner RCM's objective is to ensure business continuity through the Year 2000 date change and for all internal systems to be Year 2000 compliant. Dresdner RCM will also require both its suppliers and the suppliers to the Trust to ensure that their systems achieve the same or equivalent standard. Costs relating to the Year 2000 programme are to be borne by Dresdner RCM. OUTLOOK With UK economic activity expanding once again and company finances remaining robust, the outlook for the Trust's dividend income in the second half of the year is encouraging. Although there are some fears of a rise in inflation, and further increases in UK interest rates, there appears to be little likelihood of a return to the sharp rises in wages and consumer prices seen in the past. This relatively benign background is supportive of security values and the Board and the Managers look forward with confidence. BOARD CHANGES On 13th September 1999 Sir Derek Birkin retired from the Board and Mr Hugh Stevenson, Chairman of Equitas Limited, was appointed a director and Chairman designate. Mr Colin Black will retire as Chairman and from the Board at the Annual General Meeting on 8th May 2000. By Order of the Board 10 Fenchurch Street P L Longcroft London EC3M 3LB Company Secretary For further information, please contact:- Dresdner RCM Global Investors Simon White or Nigel Lanning Tel: 0171 475 2700 or Lansons Communications Shirley Hatherton Tel: 0171 490 8828 SUMMARY OF UNAUDITED RESULTS STATEMENT OF TOTAL RETURN For the six months ended 31st July 1999 1999 (£'000) (£'000) (£'000) Revenue Capital Total Net gains on investments - Realised - 25,635 25,635 - Unrealised - 7,856 7,856 ---------------------------------- - 33,491 33,491 Income from fixed asset investments 14,256 - 14,256 Other income 129 - 129 Investment management fee (406) (753) (1,159) Other expenses (174) - (174) ---------------------------------- Net return before finance costs and taxation 13,805 32,738 46,543 Finance costs of borrowings (1,286) (2,367) (3,653) ---------------------------------- Return before taxation 12,519 30,371 42,890 Taxation UK corporation tax and tax credits (1,415) 72 (1,343) ---------------------------------- Return after taxation 11,104 30,443 41,547 Dividends on Preference Stock (22) - (22) ---------------------------------- Return attributable to Ordinary Shareholders 11,082 30,443 41,525 Dividends on Ordinary Shares (see below) (8,084) - (8,084) ---------------------------------- Transfer to Reserves 2,998 30,443 33,441 ---------------------------------- Return per Ordinary Share 10.83p 29.75p 40.58p ---------------------------------- The revenue column of this statement is the profit and loss of the Company. Dividends on Ordinary Shares:- 1999 (£'000) First Interim 3.95p 4,042 Second Interim 3.95p 4,042 ----- ----- 7.90p 8,084 ----- ----- NET ASSET STATEMENT at 31st July 1999 1999 (£'000) Fixed asset investments 550,175 Net current liabilities (7,550) --------- 542,625 Long term borrowings (83,147) Preference share capital (1,178) --------- Net assets attributable to Ordinary Shareholders 458,300 --------- Net asset value per Ordinary Share 447.9p The net asset value is based on 102,328,936 Ordinary Shares in issue. SUMMARY OF UNAUDITED RESULTS STATEMENT OF TOTAL RETURN For the six months ended 31st July 1998 1998 (£'000) (£'000) (£'000) Revenue Capital Total Net gains on investments - Realised - 17,378 17,378 - Unrealised - 18,224 18,224 ------------------------------------ - 35,602 35,602 Income from fixed asset investments 12,925 - 12,915 Other income 214 - 214 Investment management fee (391) (727) (1,118) Other expenses (198) - (198) Net return before finance 12,550 34,875 47,425 costs and taxation Finance costs of borrowings (1,220) (2,266) (3,486) ------------------------------------ Return before taxation 11,330 32,609 43,939 Taxation UK corporation tax and tax credits (2,105) 382 (1,723) ------------------------------------ Return after taxation 9,225 32,991 42,216 Dividends on Preference Stock (22) - (22) ------------------------------------ Return attributable to Ordinary Shareholders 9,203 32,991 42,194 Dividends on Ordinary Shares (see below) (7,675) - (7,675) ------------------------------------ Transfer to Reserves 1,528 32,991 34,519 ------------------------------------ Return per Ordinary Share 8.99p 32.24p 41.23p ------------------------------------ The revenue column of this statement is the profit and loss of the Company. Dividends on Ordinary Shares:- 1998 (£'000) First Interim 3.75p 3,837 Second Interim 3.75p 3,838 ----- ----- 7.50p 7,675 ----- ----- NET ASSET STATEMENT as at 31st July 1998 1998 (£'000) Fixed asset investments 540,736 Net current liabilities (1,561) ------------ 539,175 Long term borrowings (83,152) Preference share capital (1,178) ------------ Net assets attributable to Ordinary Shareholders 454,845 ------------ Net asset value per Ordinary Share 444.5p The net asset value is based on 102,328,936 Ordinary Shares in issue. SUMMARY OF UNAUDITED RESULTS STATEMENT OF TOTAL RETURN for the year ended 31st January 1999 1999 (£'000) (£'000) (£'000) Revenue Capital Total Net gains on investments - Realised - 15,024 15,024 - Unrealised - (4,866) (4,866) ----------------------------------- - 10,158 10,158 Income from fixed asset investments 22,575 - 22,575 Other income 486 - 486 Investment management fee (763) (1,417) (2,180) Other expenses (427) - (427) ----------------------------------- Net return before finance costs 21,871 8,741 30,612 and taxation Finance costs of borrowings (2,385) (4,428) (6,813) ----------------------------------- Return on ordinary activities before 19,486 4,313 23,799 taxation Taxation (3,876) 606 (3,270) ----------------------------------- Return on ordinary activities after taxation for the financial year 15,610 4,919 20,529 Dividends on Preference Stock (43) - (43) ----------------------------------- Return attributable to Ordinary Shareholders 15,567 4,919 20,486 Dividends on Ordinary Shares (see below) (15,953) - (15,953) ----------------------------------- Transfer (from) to reserves (386) 4,919 4,533 ----------------------------------- Return per Ordinary Share 15.21p 4.81p 20.02p ----------------------------------- The revenue column of this statement is the profit and loss account of the Company. Dividends on Ordinary Shares:- 1999 (£'000) First Interim 3.75p 3,837 Second Interim 3.75p 3,837 Third Interim - Ordinary Dividend 1.36p 1,392 - Foreign Income Dividend 2.98p 3,050 Final 3.75p 3,857 ------ ------ 15.59p 15,953 ------ ------ NET ASSET STATEMENT as at 31st January 1999 1999 (£'000) Fixed asset investments 508,503 Net current assets 686 ------- 509,189 Long term borrowings (83,152) Preference share capital (1,178) ------- Net assets attributable to Ordinary Shareholders 424,859 ------- Net asset value per Ordinary Share 415.2p The net asset value is based on 102,328,936 Ordinary Shares in issue. This interim statement has been neither audited nor reviewed by the Company's auditors. The interim statement has been prepared using the same accounting policies as those adopted in the annual accounts for the year ended 31st January 1999. Expenses and finance costs have been allocated to capital and revenue on the basis of 65%/35% respectively. The Statement of Total Return for the year to 31st January 1999 has been extracted from the published accounts of the Company at that date which have been delivered to the Registrar of Companies. The Auditors' opinion on those accounts was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. The Return per Ordinary Share is based on revenue or capital return to Ordinary Shareholders, as appropriate, and on 102,328,936 Ordinary Shares, being those in issue throughout the period. The Interim Report will be sent to Shareholders shortly and made available to the public at the Registered Office of the Company, 10 Fenchurch Street, London, EC3M 3LB. THE MERCHANTS TRUST PLC Twenty Largest Equity Holdings as at 31st July 1999 Valuation % of Total 31.7.1999 Investments £'000) BT 26,875 4.9 Glaxo Wellcome 21,651 3.9 Shell Transport & Trading 20,140 3.7 Barclays 18,686 3.4 BP Amoco 18,105 3.3 Scottish & Southern Energy 16,025 2.9 Lloyds TSB 16,001 2.9 National Westminster 14,628 2.7 HSBC 13,293 2.4 Imperial Tobacco 13,251 2.4 Norwich Union 12,075 2.2 BG 11,130 2.0 AstraZeneca 11,021 2.0 Wimpey (George) 10,920 2.0 Abbey National 10,670 1.9 Halifax 10,655 1.9 British Aerospace 7.75p (N) CCRP 10,606 1.9 Boots 10,577 1.9 Alliance & Leicester 10,325 1.9 United News & Media 10,125 1.8 Gallaher 9,802 1.8 Scottish & Newcastle 9,536 1.7 Woolwich 9,457 1.7 Prudential 9,190 1.7 P & O 8,991 1.6 -------- ------ 333,735 60.5 --------- ------ Portfolio Analysis as at 31st July 1999 North UK America Total % % % Listed Equities 96.4 0.0 96.4 Unlisted Equities 0.0 0.1 0.1 ----------------------------------------- 96.4 0.1 96.5 Fixed Interest 3.5 0.0 3.5 ----------------------------------------- 99.9 0.1 100.0 -----------------------------------------

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