Interim Results

Manchester & London Inv Tst PLC 18 February 2003 Manchester & London Investment Trust plc Announcement of the interim group results The Directors announce the unaudited interim figures For the six months ended 31st January 2003 Consolidated Statement of Total return (incorporating the revenue account) For the six months ended 31st January 2003 (unaudited) Six months ended 31st January 2003 Six months ended 31st January 2002 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Profit on sale of investments - 2,503 2,503 - 213 213 Decrease in unrealised - (3,818) (3,818) - (131) (131) appreciation Investment income 546 - 546 482 - 482 Investment management fee (24) (46) (70) (29) (54) (83) Other expenses (105) - (105) (81) - (81) Return on ordinary activities 417 (1,361) (944) 372 28 400 before taxation Taxation (6) 6 - - - - Return on ordinary activities 411 (1,355) (944) 372 28 400 after taxation Dividends in respect of non-equity (28) - (28) (28) - (28) shares Return attributable to equity shareholders 383 (1,355) (972) 344 28 372 Dividends in respect of equity (188) - (188) (188) - (188) shares Transfer to (from) reserves 195 (1,355) (1,160) 156 28 184 Return per ordinary share (pence) Basic 5.11 (18.07) (12.96) 4.59 0.37 4.96 Fully diluted 3.92 (12.93) (9.01) 3.55 0.27 3.82 The revenue column of this statement is the consolidated profit and loss account of the group. All revenue and capital items in the above statement derive from continuing operations. The statement for the period ended 31st January 2003 is unaudited and is not the Company's statutory statement. Dividends per preference share accrue at the rate of 7.6% p.a. Interim dividend proposed per 25p ordinary share 2.5p (2002: 2.5p) The ordinary interim dividend is payable on 17th April 2003 to shareholders on the Register at the close of business on 21st March 2003. Manchester & London Investment Trust plc Consolidated Balance Sheet At 31st January 2003 (unaudited) As at 31st January 2003 As at 31st January 2002 £'000 £'000 £'000 £'000 Fixed Assets Investments 14,169 20,622 Current Assets Debtors 134 358 Cash and short term deposits 13,697 9,269 13,831 9,627 Creditors Amounts falling due within one year (5,981) (5,953) Net Current Assets 7,850 3,674 Total assets less current liabilities 22,019 24,296 Capital and Reserves Called-up Share Capital 2,619 2,619 Capital reserves 16,691 19,090 Revenue reserve 2,709 2,587 Total shareholders' funds 22,019 24,296 Equity interests - Ordinary shares 21,275 23,552 Non-equity interests - Preference 744 744 shares 22,019 24,296 Net Asset Value per share Ordinary shares - basic 283.7p 314.0p Ordinary shares - fully diluted 210.2p 231.9p Notes : The accounts at 31st January are unaudited and are not the Company's statutory accounts. The information for the period ended 31st January 2002 does not constitute statutory accounts but has been extracted from the latest published audited accounts which have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under Section 237(2) or (3) of the Companies Act 1985. Manchester & London Investment Trust plc Consolidated Cash Flow Statement For the six months ended 31st January 2003 (unaudited) Six months ended Six months ended 31 January 2003 31 January 2002 £'000 £'000 £'000 £'000 Operating activities Net dividends and interest received from investments 1,027 313 Other income 95 190 Investment management fees paid (66) (99) Other cash payments (101) (102) Net cash inflow from operating activities 955 302 Servicing of finance Preference dividend paid (28) (28) Net cash outflow from servicing of finance (28) (28) Financial investment Purchase of investments (2,520) (3,534) Sale of investments 15,332 2,740 Net cash inflow (outflow) from financial investment 12,812 (794) Equity dividend paid (450) (142) Increase (Decrease) in cash 13,289 (662) Reconciliation of net cash flow to movement in net debt Increase (Decrease) in cash in period 13,289 (662) Net funds at beginning of the period 408 9,931 Net funds at end of the period 13,697 9,269 Manchester & London Investment Trust plc Major Holdings At 31st January 2003 Holding Market Value £'000 % of Portfolio PZ Cussons Ordinary and 'A' Ordinary 10p 475,250 3,304 11.84 TDG Ordinary 1p 1,875,000 3,188 11.43 BAE SYSTEMS Ordinary 2.5p 1,500,000 1,706 6.12 Scottish & Newcastle Ordinary 20p 400,000 1,644 5.89 Parkman Group Ordinary 1p 1,470,000 1,639 5.88 Pilkington Ordinary 50p 1,475,000 1,007 3.61 Largest 6 Holdings 12,488 44.77 Short term cash deposits and dealing debtor 13,725 49.20 26,213 93.97 Manchester & London Investment Trust plc Chairman's Statement In last year's Annual Report, I expressed our opinion that there appeared to be no immediate prospect of any improvement in the outlook for the share market, and events since then have confirmed this gloomy prediction. During the six months to 31st January 2003, our net asset value has declined from 221.2p to 210.2p (-4.97%), which compares to a fall of 328.5 points in the FT Actuaries All Share Index from 2050.8 to 1722.3, a decline of 16%. Again, this not unsatisfactory performance under the circumstances has been achieved by continuing to hold a substantial percentage of our assets in cash. Indeed, we have recently increased our cash resources to 49% of our gross assets by disposing of the holding in Andrews Sykes Group plc which, for some time, had been a disproportionately large constituent of our portfolio. The share price had improved by 24% since the 31st July 2002 year end and, at 140p, we considered the valuation to be sufficiently full to justify a disposal. This has been our most successful investment, showing an appreciation of 526% since the initial acquisition in 1995. Assuming redemption of the £5.4m loan from our parent company when this becomes due for repayment immediately after the end of the current financial year, the balance of the cash held within the company would represent 37% of gross assets. During the six months under review, we have made a modest investment in the software group, Cedar Ltd. which, although speculative, could prove to be interesting. Our 1.1% minority investment was made at the time the company averted administration by recommending an offer from the venture capital group, Alchemy Partners LLP, who have already reorganised Cedar into profitability. Shareholders can obtain further details from the Cedar Web Site www.cedar.com. Amongst all the uncertainties facing the UK stock market is the vulnerability of sterling and its seemingly precarious valuation relative to the other major global currencies, in particular, the US dollar and the Euro. The continuing boom in UK mortgage lending and credit card financing is reflected in a huge trade deficit which, despite the positive impact of invisible earnings still being generated in the City, is running at a level which may have to be corrected by a downward revaluation in the currency markets. For some years sterling and the US dollar have tended to move in tandem, but the US currency is now weakening particularly against the Euro. Although official US policy is to maintain a strong dollar, this seems unlikely to be achievable especially as the US economy is suffering from excesses similar to those being indulged in the UK. From the US standpoint, benign neglect of the dollar could be the most convenient way to restore economic growth, albeit if this means exporting their problems elsewhere, particularly Europe. Retention of our cash resources in Euros rather than sterling is, therefore, potentially another protective option. Weaker sterling could suit the UK Government, which is openly in favour of UK entry into the Euro at a level which would necessitate a fairly sharp fall in the value of sterling in order to meet one of the Chancellor's self imposed tests. The Euro issue has, however, moved to the back burner as other more pressing issues move centre stage as the house and consumer credit booms start to cool. The slack is being taken up by a huge expansion in public spending, sparking fears that yet further increases in taxation are in prospect despite the Chancellor's assurances. In the meantime, the beleaguered manufacturing sector continues to suffer from intense global competition, thus making it very difficult to maintain profitability. We believe it is this factor which is the principal cause of the fall in the major stock markets although the Iraqi factor clearly does not help, and the only corrective action which appears likely is for the currency to take the strain and devalue against the Euro. This is not yet the longest nor the steepest bear market ever recorded, but the end does not seem to be in sight, although further dollar devaluation could gradually stabilise the all important US stock market. There will, of course, be rallies and whilst we will attempt to benefit from such movements, we intend to remain substantially in cash until a clearer picture emerges. The Directors have today declared an unchanged Interim Dividend of 2.5p per share which will be paid on 17th April 2003 to shareholders on the Register at the close of business on 21st March 2003. P.H.A. Stanley F.C.A. Chairman 18th February 2003 This information is provided by RNS The company news service from the London Stock Exchange

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