Final Results

Manchester & London Investment Trust plc ANNOUNCEMENT OF THE AUDITED GROUP RESULTS For the year ended 31st July 2007 Attached pages 1-6 Enquiries: Manchester & London Investment Trust plc B S Sheppard Tel : 0161-228 1709 Investment Manager: Midas Investment Management Limited M B B Sheppard Tel : 0161-228-1709 Manchester & London Investment Trust plc 17th October 2007 ANNOUNCEMENT OF THE AUDITED GROUP RESULTS Page 1 of 6 The Directors Announce the Audited Figures For the year ended 31st July 2007 Consolidated Income Statement 2007 2006 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments at fair - 5,233 5,233 - 2,673 2,673 value Income (note 1) 1,322 - 1,322 1,084 - 1,084 Investment management fee (122) (226) (348) (88) (165) (253) Other operating expenses (185) (223) (408) (240) (58) (298) Profit before tax 1,015 4,784 5,799 756 2,450 3,206 Taxation - - - - - - Profit attributable to 1,015 4,784 5,799 756 2,450 3,206 equity holders Earnings per ordinary share (pence) Basic 7.28 34.3 41.58 10.08 32.67 42.75 Fully diluted 7.28 34.3 41.58 7.76 23.38 31.14 The total column of this statement represents the Income Statement of the Group prepared in accordance with International Financial Reporting Standards (IFRS). The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. Equity dividends Interim dividend paid per each 25p ordinary share 2.5p (2006 - 2.5p) Final dividend proposed per each 25p ordinary share 7.5p (2006 - 7.0p) The ordinary dividend is payable on 4th December 2007 to shareholders on the Register at the close of business on 26th October 2007. Manchester & London Investment Trust plc 17th October 2007 ANNOUNCEMENT OF THE AUDITED GROUP RESULTS Page 2 of 6 Consolidated Balance Sheet At 31st July 2007 2007 2006 £'000 £'000 £'000 £'000 Non-current assets Investments at fair value through 49,514 30,444 profit or loss Current Assets Receivables 108 111 Cash and cash equivalents 3,669 6,326 3,777 6,437 Current Liabilities Trade and other payables (737) (87) Net Current Assets 3,040 6,350 Total assets less current 52,554 36,794 liabilities Non-current liabilities Preference shares - (687) Net Assets 52,554 36,107 Equity attributable to equity holders Ordinary share capital 3,487 1,875 Share premium 9,921 - Equity conversion reserve - 57 Other reserves Capital reserve - realised 23,169 22,033 Capital reserve - unrealised 12,485 8,837 Goodwill reserve (79) (79) Retained earnings 3,571 3,384 Total equity 52,554 36,107 Net Asset Value per share Ordinary shares - basic 376.8p 481.4p Ordinary shares - fully diluted 376.8p 351.2p Manchester & London Investment Trust plc 17th October 2007 ANNOUNCEMENT OF THE AUDITED GROUP RESULTS Page 3 of 6 Consolidated Cashflow Statement For the year ended 31st July 2007 2007 2006 £'000 £'000 £'000 £'000 Operating activities Operating profit 5,799 3,206 Gains on investments (5,233) (2,673) Financing costs - 57 (Increase) decrease in 3 (47) receivables (Decrease) increase in payables 650 (49) Net cash inflow from operating 1,219 494 activities Investing activities Purchase of investments (37,143) (11,643) Sale of investments 23,306 14,054 Net cash inflow from investing (13,837) 2,411 activities Financing activities Equity shares issued 868 - Share premium 9,921 - Interest paid on borrowings - (57) Equity dividends paid (828) (713) Net cash outflow from financing 9,961 (770) Net increase in cash and cash (2,657) 2,135 equivalents Net increase in cash and cash (2,657) 2,135 equivalents 6,326 4,191 Cash and cash equivalents at beginning of year Cash and cash equivalents at end 3,669 6,326 of year Manchester & London Investment Trust plc 17th October 2007 ANNOUNCEMENT OF THE AUDITED GROUP RESULTS Page 4 of 6 For the year ended 31st July 2007 Note 1 2007 2006 £'000 £'000 Income Income from investments UK dividends 1,070 929 Other income Deposit interest 252 155 Total income 1,322 1,084 The above financial information does not constitute statutory financial statements as defined in Section 240 of the Companies Act 1985. The comparative financial information is based on the statutory financial statements for the year ended 31st July 2006. Those financial statements, upon which the auditor issued an unqualified opinion, have been delivered to the Registrar of Companies. Statutory financial statements for the year ended 31st July 2007 will be delivered to the Registrar. Manchester & London Investment Trust plc 17th October 2007 ANNOUNCEMENT OF THE AUDITED GROUP RESULTS Page 5 of 6 CHAIRMAN'S STATEMENT Results and Dividend The net asset value per share, fully diluted, at the Company's year end on 31st July 2007, was 376.8p which compares with a figure of 384.1p at 31st January 2007 (the date of the Company's half year) and 351.2p at the end of the previous year. In percentage terms, this represents an annual increase of 7.3 per cent in the fully diluted net asset value per share, which compares with an increase of 9.5 per cent in the FTSE All-Share index. On a total return basis (i.e. including the reinvestment of dividends and adjusting for the placing discount) the adjusted net asset value per share rose by 14.1% against a FTSE All-Share index rise of 12.3% on the same basis. At the interim stage, we paid a dividend of 2.5p per share, and I am now pleased to confirm that the Directors propose a final dividend of 7.5p, making a total for the year of 10.0p per share, an increase of 5.3 per cent. The dividend is payable on 4th December 2007 to shareholders on the Register at the close of business on 26th October 2007. In my 2006 Statement I referred to the fact that the increase in ordinary shares would dilute the amount available for distribution to shareholders but, taking into account the ample revenue reserves, the Directors consider that a total distribution of 10p per share for the year is fully justified. In making this decision, and notwithstanding the fact that distributions made by some of our investments have been classified as capital rather than income, we have taken into account the changing pattern of corporate policies with regard to dividend payments and the trend towards a greater retention of profits in order to strengthen balance sheets. We anticipate a continuation of this policy as pressure starts to grow on profit margins with interest rates rising and global inflation showing signs of awakening from its slumbers. Post Balance Sheet events As our year end was drawing to a close, there were already signs that share prices were under pressure as the US "subprime mortgage crisis" began to unfold. Uncertainty is now gripping the banking industry worldwide and this has been exacerbated by the Northern Rock debacle. As a result, the current year has started with a baptism of fire which is rapidly spreading to Europe and the UK. Whilst it has startled most outside observers to learn that reputedly respectable banks have lent vast sums of money by way of housing mortgages (many in excess of 100 per cent valuation) to borrowers of little or no creditability, the consequences of their actions may not yet be fully apparent. Pundits are clamouring for a cut in interest rates but, if borrowers are already breaching their agreements, a fall in interest rates is no help. Against this background, bank loans exceeding the value of assets held as security are leaving net liabilities on their balance sheets. Furthermore, it seems unlikely that this crisis can be resolved in the short term and, although sectors, such as manufacturing, engineering and industries not heavily dependent upon consumer spending, are unlikely to suffer too badly, it seems inevitable that there will be some serious knock-on effects during the next few months. Furthermore, there will no doubt be serious lobbying for a more disciplined approach to lending policy by banking authorities worldwide, particularly if the crisis deepens and casualties increase, thus decreasing the room for manoeuvre by the central banks. Opinions are divided as to whether the crisis in the financial sector will precipitate recession or be softened by the continuing demand for mineral resources supplied from emerging countries, in particular Asia, Africa and South America. It will take time to resolve the problems or indeed, to contain them, and the jury is still no doubt musing over the added possibility of a cooling in the booming Asian economy. Manchester & London Investment Trust plc 17th October 2007 ANNOUNCEMENT OF THE AUDITED GROUP RESULTS Page 6 of 6 CHAIRMAN'S STATEMENT CONTINUED The Portfolio Resulting from the influx of funds after the placing of shares in August 2006, the Portfolio of investments has been considerably expanded. It is now our continuing policy to hold approximately 25 investments, thereby creating a greater spread than in previous years, as indicated in the Placing document. We are retaining our flexible investment policy which gives the Manager scope for investing the Company's assets in areas and sectors which appear to offer the best prospects for capital and income growth at any particular time. Included in our current Portfolio are several, as yet unconcluded, bid/merger situations, two of which now appear to be reaching a satisfactory outcome, namely ABN Amro Holding N.V. and Imperial Chemical Industries, both of which will add to our liquidity to the extent of £5.1 million, assuming completion. Other substantial holdings, which appear to be potential bid situations, are Smiths Group, SSL International and Scottish & Newcastle. PZ Cussons, Mouchel Parkman and Standard Chartered are our largest holdings with a combined value of £16.8 million at the year end, resulting from continuing growth since purchase; we believe that these key holdings are well positioned to benefit further from their respective trading situations in a changing commercial world. Outlook Whilst we remain confident that the constituents of the Portfolio will continue to perform satisfactorily, there seems to be little doubt that commercial storm clouds are gathering as the era of ultra cheap money comes to an end in an atmosphere of increased banking suspicion, particularly in the US, UK and Europe. In the long term, it may well be better if there is a cleansing by crisis rather than a fudging by continuing manipulation of interest rates, the creation of financial bubbles, and accompanying inflation. It is impossible to forecast when, and how, the "subprime" crisis will be resolved, but we are not convinced that all share prices will necessarily suffer. The debt crisis will take time to be resolved and there will doubtless be casualties, but global trade is still robust and markets are, by their very nature, always looking optimistically forward rather than gloomily backwards. Financial and retail sectors apart, we remain reasonably confident that investment opportunities will continue to present themselves, particularly in the spheres of international trading and emerging markets. During the year under review, the Company purchased a minimal number of its own shares and transferred them into treasury. The Directors are requesting shareholders to approve the necessary resolution to continue their authority to buy such shares for a further twelve months. On the subject of shareholders' interests, it is pleasing to report the recent judgement of the European Court of Justice that listed investment companies should be subject to the same tax rules on their management fees as Unit Trusts and open-ended investment companies, which have been VAT exempt since 1990. Assuming the rule is enacted in due course, this should result in financial benefits accruing to the Company. Annual General Meeting I look forward to welcoming shareholders to our Thirty Fifth Annual General Meeting to be held in the Lancaster Suite, The Midland, Peter Street, Manchester M60 2DS, at 12.45pm on Wednesday, 28th November 2007. P H A Stanley Chairman 16th October 2007

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