REG - Merchants Trust. - Final Results
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RNS Number : 1590Z Merchants Trust PLC 01 April 2026
1 April 2026
THE MERCHANTS TRUST PLC
LEI: 5299008VJFXCUD2EG312
FINAL RESULTS FOR THE YEAR ENDED 31 JANUARY 2026
The following comprises extracts from the company's Annual Report for the year
ended 31 January 2026. The full Annual Report is being made available to be
viewed on or downloaded from the company's website at
www.merchantstrust.co.uk. Copies will be posted to shareholders shortly.
MANAGEMENT REPORT
Highlights:
· Merchants achieved an 18.9% absolute return* for the year
and 31.1% over three years.
· Total dividend for the year: 29.5p, up 1.4%. This marks
the 44th consecutive year of dividend increases.
* Net Asset Value Total Return with debt at fair value (2025: 13.5%)
Benchmark Total Return (FTSE All-Share Index) 21.1% (2025: 17.1%)
Chairman's Statement
A strong year for UK equities
After a long period of negative sentiment and underperformance relative to
many markets, during the Merchants financial year ended January 2026 the UK
stock market experienced a notable resurgence, and delivered a very strong
return of 21.1%. By comparison, the US market (as exemplified by the S&P
500 Index) rose a more modest 5.7% in sterling terms. The past year has
provided something of a vindication for those who have maintained conviction
that the UK market as a whole was undervalued and that there were well managed
businesses with attractive valuations listed in the UK which could offer
strong positive returns.
This resurgence in the UK stock market is welcomed by your board. In various
reports to shareholders over the past few years, we have emphasised the need
for patience and our manager has spoken of maintaining discipline in our
investment style, confident that it would be rewarded in due course by strong
returns. Our portfolio managers' investing approach is based on the belief
that they can create a portfolio for shareholders of good companies which are
undervalued and which can provide sustainable and growing income alongside
capital growth. During this recent year, we have seen the beginning of a
recognition of the genuine value available in UK equities, by both domestic
and international investors, and capital has finally started to identify at
least certain areas of the UK market. The Board is pleased to report that
against this background Merchants has benefitted from the renewed interest in
the market and delivered strong absolute returns while continuing to grow the
dividend - something that has been central to our appeal to investors for over
four decades.
A twenty-year perspective
It is always valuable to place any single year's performance in a longer-term
context. Our investment manager at Allianz Global Investors, Simon Gergel,
this year celebrates his twentieth as the lead manager of The Merchants Trust.
A shareholder who invested at the beginning of his tenure in January 2006
would have seen significant share price appreciation and consistently growing
dividends, which when combined, exceeded the value of their initial
investment. In other words, Merchants shareholders today who have held their
initial shares for twenty years effectively now have this shareholding for
free! You can read more on this in the Portfolio Managers' Report on pages 13
to 14 of the Annual Report.
Such portfolio manager longevity is not unique, but it is unusual, and it is
of enormous value in creating stability and consistency for the Company. The
Board would like to thank Simon for the past twenty years' service to
Merchants' shareholders, and recognise his insight, skill and dedication to
managing the portfolio which has provided such strong long-term returns for
the benefit of our shareholders.
Strong absolute returns in a polarised market
Merchants delivered absolute returns of 18.9% during the financial year to 31
January 2026, with three-year cumulative returns of 31.1%.
We acknowledge that in a highly polarised market environment, where returns
have generally been concentrated in a narrow band of stocks such as
technology, defence and banks, Merchants' relative performance has lagged the
exceptionally strong index return (21.1% over the year). Whilst we have to
monitor short term performance against the index and hold the manager to
account, we also expect there will be periods like this from time to time. The
Board continues to support our manager's commitment to a consistent,
value-oriented investment approach that avoids over concentration, speculative
bubbles or growth or momentum style runs. The Portfolio Managers' Report
provides a more detailed explanation of the drivers of relative performance
against the index, and the Board remains confident that this disciplined
value-led approach, generally avoiding highly rated 'growth' stocks will
deliver sustainable, long-term capital growth and income to our shareholders.
Earnings and dividend
Revenue earnings per share for the year were 30.6p, compared to 29.4p in the
previous year. The Board is proposing a final dividend of 7.5p per share,
payable on 27 May 2026 to shareholders on the register on 17 April 2026. The
ex-dividend date is 16 April 2026 and the last date for election for the
Dividend Reinvestment Plan (DRIP) will be 5 May 2026. This final dividend,
together with the interim dividends already paid, will bring the total
dividend for the year to 29.5p per share. This represents an increase of 1.4%
on the previous year and marks the 44th consecutive year of dividend growth
for Merchants, which therefore also retains its place in the AIC's prestigious
list of 'Dividend Heroes' - those investment trusts which have consistently
delivered a rising dividend stream to shareholders for over twenty years. The
total dividend for the year is fully covered by revenue earnings, allowing
reserves to be further rebuilt. At the end of the financial year, revenue
reserves stood at 20.3p per ordinary share.
Discount/premium and share buybacks
Shareholders will be aware that, like all investment trusts, Merchants' shares
trade at either a premium or a discount to its Net Asset Value (NAV). The
board has an active programme to consider the issuance of new shares when our
shares trade at a premium to NAV and a programme of share buy backs when they
trade at a discount to NAV.
After many years of issuance, during this year, Merchants' shares traded at an
average discount of 5.7% to the net asset value per share. The discount ranged
from a high of 8.7% in September 2025 to a low of 1.2% in April 2025. During
the year, the board monitored this situation closely and Merchants performed a
modest aggregate buyback of 792,017 shares at a total cost of £4.4 million to
help reduce the discount when the UK market was particularly out of favour.
Merchants ended the financial year with a discount of 5.4%, which compares
favourably with many of our peers.
The resurgence of the UK market
The UK market's performance over the past year should be viewed within the
context of a significant global rotation in investor sentiment. UK and
European equities led global markets in early 2025, with the outperformance in
the first calendar quarter marking the strongest relative performance in 25
years. International equities in aggregate significantly outperformed the
United States over the reporting period, with the MSCI All Country World
ex-USA Index gaining 23.3% compared to the S&P 500's 5.7% return, and this
represents a notable shift after years of US market dominance. This also
reflects a fundamental shift away from the heavy concentration of returns in a
small number of US technology stocks that has characterised recent years, as
investors became increasingly nervous about the lofty valuations and
concentrations of returns in a few companies, largely around the single
central theme of AI.
Importantly though, despite this strong performance, our manager believes that
the UK market continues to be significantly cheaper than its US counterpart.
The valuation gap between the two markets has begun to narrow, but, as many
market observers have noted, there remains a long way to go. The rotation
towards value-oriented markets may have further to run, and this represents a
compelling opportunity for Merchants.
The portfolio manager has long maintained that concerns about the UK's
political and economic background are frequently overstated. In a market
dominated by large multinational companies generating substantial revenues
overseas, UK-specific issues often have less impact on underlying business
performance than market pricing might suggest. This pattern was evident again
over the past year. Despite the market's strong overall performance, sentiment
weakened sharply in the run-up to - and immediate aftermath of - the UK's
Autumn Budget, prompting a broad retreat from UK equities on a scale not seen
for some time. For disciplined value investors such periods of indiscriminate
selling can create compelling opportunities. As the portfolio managers
highlight in their review, markets have become increasingly short-term and
momentum-driven, a dynamic that can give rise to pronounced valuation
anomalies. Our strategy is specifically designed to identify and capitalise on
this mispricing.
Our portfolio managers have moved more of the portfolio into mid-cap stocks
than has been the case before (though Merchants remains predominantly invested
in large cap stocks). This move reflects his view of "a once in a generation
opportunity", with the mid-cap index now yielding more than large caps,
something that hasn't happened within the past twenty years, and that is an
unusual scenario given the typically more growth-oriented business models of
mid-caps vs. more mature large-caps. This is an interesting signal of
potential under-valuation. In the short term this has been an additional
headwind to Merchants' relative performance against the index, as these
mid-cap stocks in general have still not gained substantial investor
attention. However, our manager remains convinced this is where the most
significant value in the UK market currently lies, and therefore we are
confident that this positioning is a strong one for the future success of the
Merchants portfolio.
The UK government has taken steps to make the London Stock Exchange (LSE) more
attractive. Recently introduced capital market reforms include simplified
listing procedures, faster Initial Public Offering (IPO) timelines, and new
initiatives to broaden retail investor participation. These reforms, described
by the LSE as "the biggest in a generation", are already showing some early
signs of success. When combined with the global reassessment of the appeal of
US assets, it suggests that investor interest in UK equities may be entering a
new, more positive phase.
The Merchants Trust proposition: a compelling case for income and growth
The Merchants Trust offers shareholders a distinctive proposition, built on
several enduring strengths.
The dividend: 44 years of unbroken growth
At the heart of Merchants' appeal is our dividend policy. Subject to
shareholder approval of our proposed final dividend, we will have now achieved
44 consecutive years of dividend growth which is a remarkable testament to the
quality and resilience of our portfolio companies. Merchants' yield is
substantially higher than the broad market average, yet the dividend is
typically fully covered by the income generated by our holdings. This is not a
yield built on capital depletion; it is backed by genuine earnings growth.
A consistent and disciplined approach
Merchants' investment philosophy is built on consistency and discipline. We
adopt a value-oriented, long-term focused, and high-conviction approach to
stock selection. The portfolio management team is highly experienced and
backed by the considerable resources of Allianz Global Investors, ensuring
world-class investment infrastructure, research, and risk management.
Scale and liquidity
Merchants' portfolio now exceeds £1 billion in value, providing the scale and
liquidity necessary to serve even the largest institutional investors. Our
Ongoing Charge Figure (OCF) of 0.54% is highly competitive for an actively
managed equity portfolio.
The investment trust advantage
The investment trust structure provides The Merchants Trust with distinctive
advantages that are particularly suited to a value-oriented strategy.
A differentiated portfolio
The permanent capital structure allows us to maintain a portfolio that could
be difficult to fully replicate within an open-ended fund. Whilst the majority
of our holdings are in large-cap stocks, Merchants also has a significant
exposure to medium and smaller companies, which our manager believes are
particularly undervalued. This part of the market is often overlooked by
global investors and only modestly invested in by passive funds, creating
opportunities for an active manager able to benefit from conviction. The
takeovers of portfolio companies Dowlais and Assura during the year are clear
examples of how this strategy can unlock value as external parties awaken to
the significant value available. We also encourage the manager to invest
selectively in international stocks - allowing access to themes
under-represented in the UK market, or where there may simply be better
opportunities available.
Enhancing returns and income
Merchants employs gearing - in the form of long-term, fixed-rate bonds and
loan notes - as a tool to enhance both returns and income. When deployed
prudently, gearing amplifies the returns available to shareholders. Merchants
also maintains revenue reserves, which are used to smooth dividend payments,
providing a predictable income stream even when underlying portfolio income
fluctuates. Of course, this leverage can also exacerbate losses in a falling
market but, over the long term, when the performance from the portfolio
exceeds the cost of debt, the strategy is accretive to shareholder value.
Steady and increasing dividend stream
As already noted, we approach a 44-year record of consecutive dividend
increases. This is a record we are proud of, both for ourselves, but also on
behalf of the Board members, managers and support teams that have gone before
us and contributed to this substantial achievement. It is another factor that
would be largely impossible to replicate in an open-ended fund or exchange
traded fund, particularly during periods like the pandemic, when market
dividends were slashed. Investment trusts though can utilise revenue reserves,
squirreling away small amounts of income in bountiful years, to enhance income
when there is more of a drought of income from the portfolio's investments. It
is this mechanism and a continual balancing act which has enabled us to
achieve this outcome.
Governance and engagement
The Board takes its responsibilities to shareholders seriously, including
evaluating the performance of the Manager and the wider AIFM function. In
February 2026, just after the financial year end, the Board travelled to
Frankfurt to meet with members of the investment and infrastructure teams
(including the central trading desk, economics & strategy research,
marketing, cyber security and AI) at Allianz Global Investors. This engagement
allows the Board to maintain close oversight of the investment process and the
considerable resources supporting Merchants.
The Board is also committed to enhancing shareholder engagement. The Annual
General Meeting will once again be held in a hybrid format, and Merchants has
expanded its marketing efforts, including additional webinars, videos and
other activity, with a planned expansion into a wider set of distribution
channels, aiming to reach a wider audience of shareholders.
Annual General Meeting (AGM)
The Annual General Meeting will be held at Grocers' Hall on 19 May 2026 at 12
noon. The Board encourages all shareholders to attend and participate. Held in
a hybrid format, shareholders will be welcome to attend and vote either in
person or to participate and vote electronically. Further details can be found
in the Notice of Meeting on page 87 of the Annual Report.
Outlook: confident in the quality of the portfolio
Looking ahead to the remainder of 2026 and beyond, the Board remains confident
in the investment approach and quality of the portfolio and the prospects for
Merchants. The portfolio managers continue to believe that, despite the strong
performance in 2025, many individual stocks remain significantly undervalued.
The global reassessment of valuations, the recognition of the risks inherent
in excessive concentration in a small number of US technology stocks, and the
supportive policy environment in the UK all suggest that the conditions which
have created the opportunity in UK equities may continue, although we have to
be mindful of the potential impact from the evolving situation in the Middle
East.
For a more detailed discussion of the market environment and portfolio
positioning, I would refer you to the Portfolio Managers' Report starting on
page 11 of the Annual Report.
2025/6 has been a year of strong absolute returns and of vindication for
Merchants' investment philosophy. The Board is confident that The Merchants
Trust remains an attractive proposition for investors seeking a combination of
income, growth, and exposure to the large value opportunity available in the
UK equity market.
We are grateful for the continued support of our shareholders and for the
dedication of the investment team and we look forward to the year ahead with
confidence and optimism.
Colin Clark
Chairman
1 April 2026
Risk policy
The board operates a risk management policy to ensure that the level of risk
taken in pursuit of the board's objectives and in implementing its strategy is
understood. The principal risks identified by the board are listed below,
together with the actions taken to mitigate them, and set out in the Risk Map
on page 33 of the Annual Report.
A more detailed version of the chart is reviewed and updated by the audit
committee at least twice yearly. This sets out risk types, key risks
identified and their status, the controls and mitigation in place to address
these risks, together with the evidence of controls and gives an assessment of
the risk using a traffic-light system, as shown at the bottom of the chart, to
confirm the outcome of the assessment of the risk.
The board has carried out a robust assessment of the principal and emerging
risks facing the company, including those that would threaten its business
model, future performance, solvency or liquidity and emerging risks and how
they monitor and manage them and disclose them in the Annual Report. The
process by which the directors monitor risk is described in the Audit
Committee Report on page 55 of the Annual Report.
Principal risks
The principal risks are now considered to be risks relating to investment
strategy and investment performance. Those identified as having the highest
impact and the greatest likelihood are the following:
· Geopolitical
· Climate
Some principal risks have been assessed as being as likely to occur as last
year.
· Investment strategy: for example, asset allocation or the level
of gearing may lead to a failure to meet the company's objectives, such as
income generation and dividend growth.
· Investment performance: for example, poor stock selection for the
portfolio leads to a decline in the rating and attraction of the company.
Risk appetite
The board identifies risks, considers controls and mitigation, the probability
of the event, and assesses residual risk. It then evaluates whether its risk
appetite is satisfied. The board confirms for the year ended 31 January 2026
that its assessment of risk is in line with its risk appetite for all key
risks.
Statement of Directors' Responsibilities
The directors are responsible for preparing the Annual Report, the Directors'
Remuneration 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 prepared the financial
statements in accordance with United Kingdom Generally Accepted Accounting
Practice including FRS 102 'The Financial Reporting Standard applicable in the
UK and Republic of Ireland' (UK Accounting Standards and applicable law).
Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the company and of the profit of the company for that period. In
preparing these financial statements, the directors are required to:
· select suitable accounting policies and then apply them
consistently;
· state whether applicable UK Accounting Standards have been
followed, comprising FRS 102, subject to any material departures disclosed and
explained in the financial statements;
· make judgements and accounting estimates that are reasonable and
prudent; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will continue in
business.
The directors confirm that they have complied with the above requirements in
preparing the financial statements.
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
enable them to ensure that the financial statements and the Directors'
Remuneration Report 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.
The directors each have a duty to make themselves aware of any 'relevant audit
information' and ensure that the Auditor has been made aware of that
information. A disclosure stating that each director has complied with that
duty is given in the Directors' Report on page 44 of the Annual Report.
The directors are responsible for ensuring that the Annual Report, taken as a
whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the company's position and performance,
business model and strategy.
The financial statements are published on www.merchantstrust.co.uk, which is a
website maintained by the company's investment manager, AllianzGI. The
directors are responsible for the maintenance and integrity of the company's
website. The work undertaken by the Auditor does not involve consideration of
the maintenance and integrity of the website and, accordingly, the Auditor
accepts no responsibility for any changes that have occurred to the financial
statements since they were initially presented on the website. Visitors to the
website need to be aware that legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Statement under Disclosure and Transparency Rule 4.1.12
The directors at the date of approval of this report, each confirm to the best
of their knowledge that:
· the financial statements, prepared in accordance with applicable
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit of the company;
· the Strategic Report includes a fair review of the development
and performance of the business and the position of the company, together with
a description of the principal risks and uncertainties that they face; and
· 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.
For and on behalf of the board
Colin Clark
Chairman
1 April 2026
PORTFOLIO BREAKDOWN at 31 January 2026
Name Principal activities Value % of listed Benchmark weighting
holdings
£'000s
Lloyds Banking Group Banks 65,643 6.2 2.3
GSK Pharmaceuticals & Biotechnology 47,932 4.5 2.7
Rio Tinto Industrial Metals & Mining 39,411 3.7 2.5
British American Tobacco Tobacco 38,290 3.6 3.3
Shell Oil, Gas & Coal 37,042 3.5 5.7
Barclays Banks 31,360 3.0 2.4
DCC Industrial Support Services 30,621 2.9 0.1
Legal & General Life Insurance 30,515 2.9 0.5
BP Oil, Gas & Coal 29,855 2.8 2.6
National Grid Gas, Water & Multiutilities 29,502 2.8 2.2
Tate & Lyle Food Producers 27,774 2.6 0.0
Whitbread Travel & Leisure 27,094 2.6 0.2
Reckitt Benckiser Group Personal Care, Drug & Grocery Stores 26,826 2.5 1.5
SSE Electricity 26,631 2.5 1.0
Inchcape Retailers 25,026 2.4 0.1
Man Group Investment Banking & Brokerage 23,781 2.3 0.1
IG Group Investment Banking & Brokerage 23,322 2.2 0.2
Barratt Redrow Household Goods & Home Construction 23,238 2.2 0.2
RS Group Industrial Support Services 23,061 2.2 0.1
Primary Health Properties Real Estate Investment Trusts 22,632 2.1 0.1
Land Securities Group Real Estate Investment Trusts 22,260 2.1 0.2
Unilever Personal Care, Drug & Grocery Stores 21,928 2.1 3.8
Grafton Group Industrial Support Services 21,780 2.1 0.1
Hikma Pharmaceuticals Pharmaceuticals & Biotechnology 21,652 2.0 0.1
Harbour Energy Oil, Gas & Coal 17,759 1.7 0.0
Atalaya Mining(1) Precious Metals & Mining 17,596 1.7 -
Serco Group Industrial Support Services 17,100 1.6 0.1
Sirius Real Estate Real Estate Investment & Services 16,930 1.6 0.1
Unite Group Real Estate Investment Trusts 16,725 1.6 0.1
OSB Group Finance & Credit Services 16,278 1.5 0.1
Energean Oil, Gas & Coal 16,018 1.5 0.0
Michelin(1) Automobiles & Parts 15,628 1.5 -
B&M Retailers 15,184 1.4 0.1
Bellway Household Goods & Home Construction 14,721 1.4 0.1
Sodexo(1) Travel & Leisure 14,298 1.4 -
Lancashire Holdings Non-Life Insurance 14,289 1.4 0.1
Morgan Advanced Electronic & Electrical Equipment 14,248 1.3 0.0
Pets at Home Group Retailers 13,920 1.3 0.0
Marshalls Construction & Materials 12,741 1.2 0.0
MONY Group Software & Computer Services 12,539 1.2 0.0
DFS Furniture Retailers 12,514 1.2 0.0
Norcros Construction & Materials 10,199 1.0 0.0
SCOR(1) Non-Life Insurance 9,254 0.9 -
Conduit Holdings Non-Life Insurance 9,077 0.9 -
Entain Travel & Leisure 8,658 0.8 0.1
Burberry Group Personal Goods 8,242 0.8 0.1
PZ Cussons Personal Care, Drug & Grocery Stores 7,897 0.7 0.0
SThree Industrial Support Services 7,302 0.7 0.0
XP Power Electronic & Electrical Equipment 5,783 0.5 0.0
Begbies Traynor Group Investment Banking & Brokerage 4,922 0.5 -
CLS Holdings Real Estate Investment & Services 4,507 0.4 0.0
Duke Royalty Finance & Credit Services 3,902 0.4 -
Magnum Ice Cream Food Producers 959 0.1 -
Total invested funds 1,056,366 100.0
(1) International stock
Written call options
As at 31 January 2026, the market value of the open option positions was
£668,000 (2025: £(238,500)), resulting in an underlying exposure to 2.6% of
the portfolio (valued at strike price).
Income Statement
for the year ended 31 January 2026
2026 2026 2026 2025 2025 2025
Revenue
Capital
Total Return
Revenue
Capital
Total Return
£'000s
£'000s
£'000s
£'000s
£'000s
£'000s
Gains on investments held at fair value through profit or loss - 123,695 123,695 - 66,566 66,566
Losses on derivatives - (438) (438) - (202) (202)
(Losses) gains on foreign currencies - (91) (91) - 43 43
Income 50,245 - 50,245 48,482 - 48,482
Investment management fee (1,212) (2,251) (3,463) (1,160) (2,153) (3,313)
Administration expenses (1,240) (5) (1,245) (1,108) (4) (1,112)
Profit before finance costs and taxation 47,793 120,910 168,703 46,214 64,250 110,464
Finance costs: interest payable and similar charges (2,098) (3,816) (5,914) (2,009) (3,648) (5,657)
Profit on ordinary activities before taxation 45,695 117,094 162,789 44,205 60,602 104,807
Taxation (381) - (381) (534) - (534)
Profit after taxation attributable to ordinary shareholders 45,314 117,094 162,408 43,671 60,602 104,273
Earnings per ordinary share (basic and diluted) 30.58p 79.01p 109.59p 29.43p 40.84p 70.27p
Dividends in respect of the financial year ended 31 January 2026 total 29.50p
(2025: 29.10p), amounting to £43,667,000 (2025: £43,184,000). Details are
set out in Note 6 on page 73 of the Annual Report.
The total return column of this statement is the profit and loss account of
the company. The supplementary revenue return and capital return columns are
both prepared under the guidance published by the Association of Investment
Companies.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the year.
The net profit for the year disclosed above represents the company's total
comprehensive income.
Statement of Changes in Equity
for the year ended 31 January 2026
Called up Share Capital redemption reserve Capital Revenue reserve Total
share
premium account
£'000s
reserve
£'000s
£'000s
capital
£'000s
£'000s
£'000s
Net assets at 1 February 2025 37,106 228,726 293 555,757 27,940 849,822
Revenue profit - - - - 45,314 45,314
Dividends on ordinary shares - - - - (43,340) (43,340)
Capital profit - - - 117,094 - 117,094
Shares repurchased into treasury during the year - - - (4,426) - (4,426)
Net assets at 31 January 2026 37,106 228,726 293 668,425 29,914 964,464
Net assets at 1 February 2024 37,081 228,174 293 495,155 26,819 787,522
Revenue profit - - - - 43,671 43,671
Dividends on ordinary shares - - - - (42,576) (42,576)
Unclaimed dividends - - - - 26 26
Capital profit - - - 60,602 - 60,602
Shares issued during the year 25 552 - - - 577
Net assets at 31 January 2025 37,106 228,726 293 555,757 27,940 849,822
Balance Sheet
at 31 January 2026
2026 2026 2025
£'000s £'000s £'000s
Fixed assets
Investments held at fair value through profit or loss 1,056,366 954,514
Current assets
Other receivables 1,463 1,891
Cash at bank and in hand 26,079 15,604
27,542 17,495
Current liabilities
Other payables (1,930) (5,167)
Derivative financial instruments (668) (239)
(2,598) (5,406)
Net current assets 24,944 12,089
Total assets less current liabilities 1,081,310 966,603
Creditors: amounts falling due after more than one year (116,846) (116,781)
Total net assets 964,464 849,822
Capital and reserves
Called up share capital 37,106 37,106
Share premium account 228,726 228,726
Capital redemption reserve 293 293
Capital reserve 668,425 555,757
Revenue reserve 29,914 27,940
Equity shareholders' funds 964,464 849,822
Net asset value per ordinary share 653.3p 572.6p
The financial statements of The Merchants Trust PLC on pages 64 to 67 of the
Annual Report were approved and authorised for issue by the board of directors
on 1 April 2026 and signed on its behalf by:
Colin Clark
Chairman
Cash Flow Statement
for the year ended 31 January 2026
2026 2025
£'000s £'000s
Operating activities
Profit before finance costs and taxation(1) 168,703 110,464
Less: gains on investments held at fair value (123,695) (67,746)
Add: losses on derivatives 429 182
Proceeds from special dividend credited to capital(2) - 565
Add (less): losses (gains) on foreign currency 91 (43)
Purchase of fixed asset investments held at fair value through profit or loss (287,031) (221,421)
Sales of fixed asset investments held at fair value through profit or loss 306,614 212,511
Transaction costs (1,319) (1,180)
Decrease in other receivables 388 72
Increase (decrease) in other payables 382 (184)
Less: overseas tax suffered (381) (534)
Net cash inflow from operating activities 64,181 32,686
Financing activities
Interest paid (5,806) (5,845)
Issue costs in relation to the 5.91% Fixed Rate Notes 2040 - (150)
Proceeds from 5.91% Fixed Rate Notes 2040 A - 25,000
Proceeds from 5.91% Fixed Rate Notes 2040 B - 25,000
Repayment of Revolving Credit Facility - (42,000)
Dividend paid on cumulative preference stock (43) (43)
Dividends paid on ordinary shares (43,340) (42,576)
Unclaimed dividends over 12 years - 26
Shares repurchased into treasury during the year (4,426) -
Share issue proceeds - 577
Net cash outflow from financing activities (53,615) (40,011)
Increase (decrease) in cash and cash equivalents 10,566 (7,325)
Cash and cash equivalents at the start of the year 15,604 22,886
Effect of changes in foreign exchange rates (91) 43
Cash and cash equivalents at the end of the year 26,079 15,604
Comprising:
Cash at bank and in hand 26,079 15,604
(1) Cash inflow from dividends was £47,898,000 (2025: £46,700,000) and cash
inflow from interest was £403,515 (2025: £280,000).
(2) Tyman dividend paid in relation to the acquisition by Quanex Building
Products.
Notes
Note A
The financial statements have been prepared under the historical cost
convention, except for the revaluation of financial instruments held at fair
value through profit or loss and in accordance with applicable United Kingdom
law and UK Accounting Standards (UK GAAP), including Financial Reporting
Standard 102 - the Financial Reporting Standard applicable in the United
Kingdom and Republic of Ireland (FRS 102) and in line with the Statement of
Recommended Practice 'Financial Statements of Investment Trust Companies and
Venture Capital Trusts' issued by the Association of Investment Companies (AIC
SORP) in July 2022.
Note B
Earnings per ordinary share is based on a weighted number of Ordinary shares
in issue of 148,198,321 (2025: 148,372,564).
Note C
In order to better reflect the activities of an investment trust company, and
in accordance with guidance issued by the AIC, supplementary information which
analyses the Income Statement between items of revenue and capital nature has
been presented alongside the Income Statement. In accordance with the
company's Articles of Association, net capital returns may be distributed by
way of dividend.
Note D
The directors believe that it is appropriate to continue to adopt the going
concern basis in preparing the financial statements as the assets of the
company consist mainly of securities, which are readily realisable and
significantly exceed liabilities. Accordingly, the directors believe that the
company has adequate financial resources, to continue in operational existence
for the foreseeable future. The directors have also considered the risks and
consequences of unanticipated shocks on the company, including geopolitical
and macroeconomic events and have concluded that the company has the ability
to continue in operation and meet its objectives for twelve months after the
approval of the financial statements.
Note E
As the company's business is investing in financial assets with a view to
profiting from their total return in the form of increases in fair value,
financial assets are designated as held at fair value through profit or loss
in accordance with FRS 102 Section 11: 'Basic Financial Instruments' and
Section 12: 'Other Financial Instruments'. The company manages and evaluates
the performance of these investments on a fair value basis in accordance with
its investment strategy, and information about the investments is provided on
this basis to the board.
Investments held at fair value through profit or loss are initially recognised
at fair value. After initial recognition, these continue to be measured at
fair value, which for quoted investments is either the bid price or the last
traded price depending on the convention of the exchange on which the
investment is listed. Gains or losses on investments are recognised in the
capital column of the Income Statement. Purchases and sales of the financial
assets are recognised on the trade date, being the date which the company
commits to purchase or sell the assets.
Note F
2026 2025
£'000s
£'000s
Dividends paid on ordinary shares
Third interim dividend 7.3p paid 19 March 2025 (2024: 7.1p) 10,835 10,531
Final dividend 7.3p paid 29 May 2025 (2024: 7.1p) 10,835 10,531
First interim dividend 7.3p paid 22 August 2025 (2024: 7.2p) 10,835 10,679
Second interim dividend 7.3p paid 20 November 2025 (2024: 7.3p) 10,835 10,835
43,340 42,576
Dividends payable at the year end are not recognised as a liability under FRS
102 Section 32 'Events After the End of the Reporting Period' (see page 69 -
Statement of Accounting Policies). Details of these dividends are set out
below.
2026 2025
£'000s
£'000s
Third interim dividend 7.4p paid 19 March 2026 (2025: 7.3p) 10,925 10,835
Final proposed dividend 7.5p payable 27 May 2026 (2025: 7.3p) 11,072 10,835
21,997 21,670
The declared final dividend accrued is based on the number of shares in issue
at the year end. However, the dividend payable will be based on the number of
shares in issue on the record date and will reflect any changes in the share
capital between the year end and the record date.
All dividends disclosed in the tables above have been paid or are payable from
the revenue reserves.
Note G
Post Balance Sheet events:
As at 30 March 2026, no further shares have been issued or brought back since
the year end. The escalating conflict in the Middle East has impacted global
economies and heightened stock market volatility. Since the year end,
Merchants' NAV has decreased by 7.9% as at close of business on 30 March 2026.
Note H
The full annual report will shortly be available to be viewed or downloaded
from the company's website at www.merchantstrust.co.uk. 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.
The financial information for the year ended 31 January 2026 has been
extracted from the statutory accounts for that year. The auditor's report on
these accounts was unqualified and did not contain a statement under either
Section 498(2) or (3) of the Companies Act 2006. The annual report has not yet
been delivered to the Registrar of Companies.
The financial information for the year ended 31 January 2025 has been
extracted from the statutory accounts for that year which have been delivered
to the Registrar of Companies. The auditor's report on these accounts was
unqualified and did not contain a statement under either Section 498(2) or (3)
of the Companies Act 2006.
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. END FR EAFLFEDXKEAA
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