Source - Alliance News

Merchants Trust PLC on Tuesday said net asset value fell in its latest half year amid a climate of ‘aggressive’ rate hikes, but increased its dividends and reaffirmed its focus on long-term gains.

The London-based investment trust, which mainly backs large higher-yielding UK companies, said NAV at July 31 was 549.8 pence, down from 565.2p at the same time one year prior.

Merchants Trust shares were up 0.2% at 543.20p in London on Tuesday.

The investor’s NAV total return for the six months ended July 31 was negative 2.2%, down from positive 1.3% the year before. Its benchmark, the FTSE All-Share index, rose to positive 0.8% from negative 0.1%.

‘Shareholders will recall that in the Full Year report to 31 January 2023 I was able to reflect on a period in 2022 where Merchants had thrived,’ said Chair Colin Clark.

‘The first half of this year has been more difficult. As anticipated, central banks around the world employed aggressive interest rate hikes to cool rising inflation...[this has] kept central bank rhetoric on the side of potential further rises, even if they are equally mindful of not driving the economy into recession.’

Merchants Trust however also said earnings per share in the first half of financial 2024 rose above pre-pandemic levels to 17.4 pence from 16.0p, which Clark said was ‘very pleasing’ in light of Covid’s ‘profound’ impact on UK companies.

The firm also declared a dividend of 7.1p per share for the second quarter, up from 6.85p. It said that the total dividend for the first half would be 14.2p, up 3.6% from 13.7p the prior year.

Merchants Trust said that going forward it remains focused on long-term fundamentals, regardless of ‘distraction from short term news flow and stock market momentum.’

‘Merchants is positioned with a long-term focus and a clear emphasis on the value provided by the companies we invest in,’ said Clark. ‘We will maintain this focus in order to pursue continuing growth in income together with above-market total returns for Merchants’ shareholders.’

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