Interim Results

Shires Income PLC
13 December 2002

News Release

13 December 2002

Shires Income plc
Interim Results for the six months to 30 September 2002


Shires Income plc, with total assets of £103.2 million, aims to provide
shareholders with a high level of income together with growth of both income and
capital from a portfolio substantially invested in UK equities.


                                                          30 September           31 March
                                                          2002                   2002

Total assets less current liabilities                     £103.2m                £148.1m
Ordinary shareholders' funds                              £63.9m                 £108.9m
Net asset value per ordinary share                        215.2p                 366.9p
Ordinary share price                                      233.5p                 332.5p
Premium/(Discount)                                        8.5%                   (9.4)%
Revenue return per ordinary share                         8.17p                  8.11p*
Dividends per ordinary share                              8.80p                  8.80p*

*Half year to 30 September 2001





•         Total return on net assets over the period under review was -38.9%,
          well below the return of -28.4% on the FTSE All-Share Index.

•         The level of equity gearing had an adverse impact in a weak
          stockmarket.  At 30 September 2002 exposure to equities was 129.2% of
          net assets, investments in fixed income securities 26.5% and total 
          gearing 55.7%. Net sales of equities of £13.2 million were made to 
          restrict the rise in gearing.

•         The return on investments in ordinary shares, at -26.3%, was better
          than benchmark, largely due to the performance of the holding in
          Shires Smaller Companies.

•         The Revenue Return per ordinary share was 8.17p, marginally higher
          than last year.  A second interim dividend of 4.4p has been declared
          for payment on 31 January 2003.  Dividends paid and declared to date
          total 8.8p, the same level as last year.

•         In the period of stockmarket weakness in September 2002, the value of
          invested assets fell to slightly below the joint asset cover required 
          by the trust deed of the RPI-linked debentures.  The Board believes it
          is appropriate to reduce gearing, using existing cash resources, to 
          ensure that adequate headroom exists under the current borrowing 
          facilities and is in contact with the lenders.

•         Martin Haldane will succeed John Izat as Chairman on 1 January 2003.

•         In the current environment, with investors cautious, it is possible to
          invest in well-financed companies on undemanding ratings and offering
          attractive yields.



For further information please contact:



David Williams, Managing Director
Glasgow Investment Managers
0141 572 2700




Shires Income plc
Interim Report 30 September 2002
Chairman's Statement



Background

Investor sentiment in the six months to 30 September 2002 appeared to be
influenced more by the misdemeanours of corporate leaders in the USA and fears
of military action in the Middle East than by the gradual economic recovery
developing in the course of the year.  While consensus forecasts suggest that
the UK economy will grow by 1.5% in 2002 and 2.5% in 2003, the FTSE All-Share
Index had on 30 September 2002 fallen by 44.8% from its peak two years earlier.



Investment Returns

The total return on net assets over the period under review was -38.9%, well
below the return of -28.4% on the FTSE All-Share Index.  While the return on
investments in ordinary shares, at -26.3%, was better than benchmark largely due
to the good performance of the holding in Shires Smaller Companies, the return
at the net asset level was depressed by a number of other factors.



The geared exposure to equities, which averaged 125% of net assets, made the
largest adverse impact, -7.8%, on total return over the six month period.  Other
negative contributions came from falls in the prices of some convertible
securities, the effect on the value of the residual liability of the hedging
structure of the unusually high volatility in the UK equity market and the
reduction in the valuation of the Company's shareholding in Glasgow Investment
Managers, reflecting lower ratings of comparable listed companies and the impact
on investment management fee earnings of the falls in share prices.



The UK stockmarket has begun to recover since the end of the third quarter and
the total return on the Company's net assets was 9.3% over the two months to 30
November 2002.



Returns to Shareholders

The total return to shareholders over the half year under review was -27.1%,
better than the return on net assets because the relationship of the ordinary
share price to underlying net asset value per ordinary share moved from a
discount of 9.4% at 31 March 2002 to a premium of 8.5% at 30 September 2002.



Since 30 September, however, the share price has moved to a discount to net
asset value per share, which stood at 9.8% at 30 November 2002.  At the share
price of 208.5p at that date, the yield on the Company's ordinary shares was
9.2%, compared with a yield of 3.4% on the FTSE All-Share Index.



Earnings and Dividends

The Revenue Return per ordinary share was 8.17p, marginally higher than last
year.



The Board has declared a second interim dividend of 4.4p per ordinary share, to
be paid on 31 January 2003 to shareholders on the register at close of business
on 10 January 2003.  A first interim dividend of 4.4p was paid on 31 October
2002.  Dividends paid and declared to date for the current year total 8.8p, the
same level as paid last year.


Chairman's Statement

(Continued)



Portfolio Profile

The exposure to equities rose from 125.2% to 129.2% of net assets over the six
months to 30 September 2002.  At that date, a further 26.5% of net assets
represented investments in corporate fixed interest and convertible securities
which contribute a large proportion of the income which the Company distributes,
bringing net total gearing to 55.7% of net assets.



During the period under review, net sales of £13.2 million of ordinary shares
were made to restrict the rise of equity gearing.  This programme of equity
disinvestment was completed in October and at 30 November net total gearing had
been reduced to 43.7% of net assets.



Index-Linked Debenture Stocks

At 30 September 2002, the Company's total secured indebtedness was represented
by two index-linked debenture stocks, the 5% 2008/2010 and the 3.4375% 2017/
2019.  The joint covenants in respect of these stocks include the requirement
that the Company maintain total assets to a value greater than three times the
aggregate current value of the two debenture stocks.  In the period of
stockmarket weakness in September this year, the value of the Company's invested
assets fell to slightly below the joint asset cover covenant.  In the light of
this, the Board believes it would be appropriate to reduce gearing, using
existing cash resources, to ensure that adequate headroom exists under the
current borrowing facilities.  Accordingly, the Company is in contact with the
lenders.



Outlook

It appears that the progress of UK ordinary share prices is being restrained by
concern that the current gradual recovery in aggregate output, which consensus
forecasts indicate will persist through 2003, may not be accompanied by a
significant improvement in corporate profitability because of excess capacity
and price competition.  Investors' caution is reflected in the yields on UK
equities, which have risen by more than half over the last two years.  In the
current environment, therefore, it is possible to invest in the shares of
well-financed companies on undemanding ratings and offering attractive yields.



Board

This year I have attained the age of seventy and, in accordance with the
Company's Articles of Association, shall retire from the Board after the next
Annual General Meeting.  The Board has asked Martin Haldane to succeed me as
Chairman and he will take over on 1 January 2003.  I congratulate Martin on his
appointment and extend my best wishes to him for a successful tenure.



Annual Report

The Interim Report will be mailed to shareholders on 13 December 2002.  Copies
may be obtained from the managers, Glasgow Investment Managers Limited,
Sutherland House, 149 St Vincent Street, Glasgow, G2 5DR after that date.



A J R Izat
Chairman






Consolidated Statement of Total Return
(incorporating the Revenue Account)
for the half year ended 30 September 2002


                                                        Half year to 30 September 2002
                                                        (unaudited)
                                                        Revenue        Capital          Total
                                                        £000           £000             £000

Net losses on investments                               -              (44,595)         (44,595)
Income                                                  3,632          -                3,632
Investment management fee                               (138)          (138)            (276)
Other administrative expenses                           (185)          -                (185)
Net return before finance
costs and taxation                                      3,309          (44,733)         (41,424)
Finance costs of borrowings                             (902)          (112)            (1,014)
Return on ordinary activities
before taxation                                         2,407          (44,845)         (42,438)
Taxation                                                20             -                20
Return on ordinary activities
after taxation for the period                           2,427          (44,845)         (42,418)
Preference dividend                                     (1)            -                (1)
Return attributable to
equity shareholders                                     2,426          (44,845)         (42,419)
Dividends on equity shares                              (2,612)        -                (2,612)
Transfer (from)/to reserves                             (186)          (44,845)         (45,031)

Returns per ordinary share                              8.17p          (151.11)p        (142.94)p
Dividends per ordinary share                            8.80p








Consolidated Statement of Total Return
(incorporating the Revenue Account)
for the half year ended 30 September 2002

                                      Half year to 30 September 2001    Year to 31 March 2002
                                      (unaudited)                       (audited)
                                      Revenue     Capital    Total      Revenue     Capital     Total
                                      £000        £000       £000       £000        £000        £000

Net losses on investments             -           (30,495)   (30,495)   -           (16,046)    (16,046)
Income                                3,679       -          3,679      8,246       -           8,246
Investment management fee             (157)       (157)      (314)      (309)       (309)       (618)
Other administrative expenses         (156)       -          (156)      (309)       -           (309)
Net return before finance
costs and taxation                    3,366       (30,652)   (27,286)   7,628       (16,355)    (8,727)
Finance costs of borrowings           (988)       (328)      (1,316)    (1,975)     (937)       (2,912)
Return on ordinary activities
before taxation                       2,378       (30,980)   (28,602)   5,653       (17,292)    (11,639)
Taxation                              27          -          27         88          -           88
Return on ordinary activities
after taxation for the period         2,405       (30,980)   (28,575)   5,741       (17,292)    (11,551)
Preference dividend                   (1)         -          (1)        (2)         -           (2)
Return attributable to
equity shareholders                   2,404       (30,980)   (28,576)   5,739       (17,292)    (11,553)
Dividends on equity shares            (2,612)     -          (2,612)    (5,713)     -           (5,713)
Transfer (from)/to reserves           (208)       (30,980)   (31,188)   26          (17,292)    (17,266)


Returns per ordinary share            8.11p       (113.44)p  (105.33)p  19.35p      (58.29)p    (38.94)p
Dividends per ordinary share          8.80p                             19.25p






Group Balance Sheet as at 30 September 2002



                                  30 September 2002   30 September 2001   31 March 2002
                                  (unaudited)         (unaudited)         (audited)
                                  £000                £000                £000

Listed investments
  Ordinary shares                 86,209              120,854             133,062
  Convertibles                    9,746               9,335               12,162
  Other fixed interest            7,164               7,465               8,019
                                  103,119             137,654             153,243
Unlisted investments              4,557               5,940               6,770
                                  107,676             143,594             160,013
Hedge instruments                 (8,140)             70                  (3,448)
                                  99,536              143,664             156,565
Net current assets/(liabilities)  3,655               (9,939)             (8,423)
Total assets (less current
liabilities)                      103,191             133,725             148,142
Index-Linked Debenture Stocks     (39,290)            (38,715)            (39,210)
Net assets                        63,901              95,010              108,932
Capital and Reserves
Called up share capital           14,888              14,888              14,888
Share premium account             20,285              20,348              20,317
Other capital reserves
  Realised                        70,419              73,644              71,895
  Unrealised                      (45,363)            (17,494)            (2,026)
Revenue reserves
  Realised                        3,396               3,348               3,582
  Unrealised                      276                 276                 276
                                  63,901              95,010              108,932

Net asset value per
ordinary share                    215.2p              320.0p              366.9p



Note: These are not statutory accounts under section 240 of the Companies Act
1985 ('the Act') and are unaudited.  The information relating to the year ended
31 March 2002 is extracted from the latest audited accounts which have been
delivered to the Registrar of Companies; the report of the auditors on these
accounts was unqualified and did not contain a statement under section 237(2) or
(3) of the Act.


Consolidated Cash Flow Statement
for the half year ended 30 September 2002


                                                        Half year to      Half year to    Year to
                                                        30 September      30 September    31 March
                                                        2002              2001            2002
                                                        (unaudited)       (unaudited)     (audited)
                                                        £000              £000            £000

Net cash inflow from operating activities               4,119             4,202           7,360
Servicing of finance                                    (967)             (1,289)         (2,385)
Taxation                                                97                -               129
Investing activities
Purchases of investments                                (19,201)          (24,131)        (58,289)
Sales of investments                                    33,313            21,587          56,023
Net cash (outflow)/inflow from hedge instruments        (443)             11,340          (223)
                                                        13,669            8,796           (2,489)
Equity dividends paid                                   (3,101)           (3,054)         (5,666)
Net cash inflow/(outflow) before financing              13,817            8,655           (3,051)
Financing
Issues of ordinary shares                               -                 117             117
Debt due within one year
- (decrease)/increase in short-term borrowings          (10,000)          4,000           5,500
- decrease in bank overdrafts                           -                 (1,677)         (1,679)
Increase in cash                                        3,817             11,095          887


Reconciliation of net revenue before finance costs and taxation to net cash inflow from operating
activities

Net revenue before finance costs and taxation           3,309             3,366           7,628
Investment management fee charged to capital            (138)             (157)           (309)
Repayment of UK income tax                              -                 50              50
Changes in working capital items                        948               943             (9)
Net cash inflow from operating activities               4,119             4,202           7,360




Analysis of Changes in Net Debt


                                              At                                         At
                                              31 March     Cash           Non-cash       30 September
                                              2002         flows          changes        2002
                                              (audited     (unaudited)    (unaudited)    (unaudited)
                                              £000         £000           £000           £000

Cash at bank and in hand                      1,038        3,817          -              4,855
Short-term borrowings                         (10,000)     10,000         -              -
5% Index-Linked Debenture 2008/10             (23,651)     -              (74)           (23,725)
3.4375% Index-Linked Debenture 2017/19        (15,559)     -              (6)            (15,565)
                                              (48,172)     13,817         (80)           (34,435)



Distribution of Assets


                                Valuation at Movements during the period                Valuation at
                                31 March                          Apprecia-             30 September
                                2002         Purchases   Sales    tion                  2002
                      £m        %            £m          £m       £m          £m        %
LISTED INVESTMENTS
Ordinary shares       133.1     122.2        8.6         (21.8)   (33.7)      86.2      134.9
Convertibles          12.2      11.2         -           -        (2.5)       9.7       15.2
Other fixed interest  8.0       7.3          10.6        (10.3)   (1.1)       7.2       11.3
Hedge instruments     (3.5)     (3.2)        5.6         (5.1)    (5.1)       (8.1)     (12.7)
                      _____     _____        ____        ___      ___         ____      _____
                      149.8     137.5        24.8        (37.2)   (42.4)      95.0      148.7

UNLISTED INVESTMENTS  6.7       6.2          -           -        (2.2)       4.5       7.0
                      _____     _____        ____        ___      ___         ____      ____
                      156.5     143.7        24.8        (37.2)   (44.6)      99.5      155.7
                                             ____        ___      ___
Net current           (8.4)     (7.7)                                         3.7       5.8
(liabilities)/assets
                      _____     _____                                         ____      ____
TOTAL ASSETS
 (less current        148.1     136.0                                         103.2     161.5

  liabilities)
Index-Linked          (39.2)    (36.0)                                        (39.3)    (61.5)
Debenture Stocks
                      _____     _____                                         ____      ____
NET ASSETS            108.9     100.0                                         63.9      100.0
                      _____     _____                                         ____      ____
NET ASSET VALUE PER
ORDINARY SHARE        366.9p                                                  215.2p




                      This information is provided by RNS
            The company news service from the London Stock Exchange