Final Results

Manchester & London Investment Trust plc ANNOUNCEMENT OF THE AUDITED GROUP RESULTS For the year ended 31st July 2008 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 15th October 2008 ANNOUNCEMENT OF THE AUDITED GROUP RESULTS The Directors Announce the Audited Figures For the year ended 31st July 2008 Consolidated Income Statement 2008 2008 2008 2007 2007 2007 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 (Losses) / Gains on - (4,407) (4,407) - 5,233 5,233 investments at fair value 576 - 576 - - - Trading income 1,244 - 1,244 1,322 - 1,322 Investment income (note 1) (78) (146) (224) (122) (226) (348) Investment management fee - (382) (382) - (223) (223) Cost of investment transactions (175) - (175) (185) - (185) Other operating expenses (5) - (5) - - - Finance costs 1,562 (4,935) (3,373) 1,015 4,784 5,799 Return before tax (117) - (117) - - - Taxation 1,445 (4,935) (3,490) 1,015 4,784 5,799 Return attributable to equity holders Return per ordinary share 10.36 (35.38) (25.02) 7.28 34.30 41.58 (pence) Basic Fully diluted 10.36 (35.38) (25.02) 7.28 34.30 41.58 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 (2007 - 2.5p) Final dividend proposed per each 25p ordinary share 7.5p (2007 - 7.0p) The ordinary dividend is payable on 25th November 2008 to shareholders on the Register at the close of business on 24th October 2008. Manchester & London Investment Trust plc 15th October 2008 ANNOUNCEMENT OF THE AUDITED GROUP RESULTS Consolidated Balance Sheet At 31st July 2008 2008 2007 £'000 £'000 £'000 £'000 Non-current assets 812 31,246 108 49,514 Investments at fair value 15,836 3,669 through profit or loss Current assets Trade and other receivables Cash and cash equivalents Current liabilities 16,648 3,777 Trade and other payables (225) (737) Net current assets 16,423 3,040 Net assets 47,669 52,554 Equity attributable to equity 3,487 3,487 holders 9,921 9,921 Ordinary share capital - - Share premium 24,035 23,169 Own shares 6,684 12,485 Other reserves (79) (79) Capital reserve - realised 3,621 3,571 Capital reserve - unrealised Goodwill reserve Retained earnings Total equity 47,669 52,554 Net asset value per share 341.8p 376.8p Ordinary shares - basic Ordinary shares - fully diluted 341.8p 376.8p Manchester & London Investment Trust plc 15th October 2008 ANNOUNCEMENT OF THE AUDITED GROUP RESULTS For the year ended 31st July 2008 Consolidated Cashflow Statement 2008 2007 £'000 £'000 Operating activities (3,490) 5,799 (Loss) / Profit after tax 4,407 (5,233) Losses / (Gains) on investments 5 - Financing costs (704) 3 (Increase) / decrease in receivables (512) 650 (Decrease) / increase in payables Net cash (outflow) / inflow from operating activities (294) 1,219 Investing activities (48,939) (37,143) Purchase of investments 62,800 23,306 Sale of investments Net cash inflow / (outflow) from investing activities 13,861 (13,837) Financing activities - 868 Equity shares issued - 9,921 Share premium (5) - Interest paid on borrowings (1,395) (828) Equity dividends paid Net cash (outflow) / inflow from financing activities (1,400) 9,961 Net increase / (decrease) in cash and cash equivalents 12,167 (2,657) Cash and cash equivalents at beginning of year 3,669 6,326 Cash and cash equivalents at end year 15,836 3,669 Manchester & London Investment Trust plc 15th October 2008 ANNOUNCEMENT OF THE AUDITED GROUP RESULTS For the year ended 31st July 2008 Note 1 2008 2007 £'000 £'000 Trading income 576 - Income from investments 983 1,039 UK dividends - 31 Government securities Other income 983 1,070 Deposit interest 261 252 Investment income 1,244 1,322 Total income 1,820 1,322 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 2007. 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 2008 will be delivered to the Registrar. Manchester & London Investment Trust plc 15th October 2008 ANNOUNCEMENT OF THE AUDITED GROUP RESULTS CHAIRMAN'S STATEMENT Results for the year ended 31st July 2008 Although there has been a decline in the net asset value during a tumultuous financial year ended 31st July 2008, the Directors are pleased to report that this has been contained to 9.3 per cent, mainly as a result of the decision to dispose of certain holdings which appeared to be vulnerable to the deteriorating conditions (which started to affect markets in January this year). Consequently, cash balances at the year end were £15.8m representing 33.2 per cent of the Company's assets. Whilst there was a loss on the capital account of 35.4p, the revenue earnings per share were 10.4p which enables the Directors to propose a maintained Final Dividend of 7.5p making an unchanged total payment for the year under review of 10.0p. Payment will be made on the 25th November 2008 to shareholders on the Register at the close of business on 24th October 2008. Second half and post balance sheet events Since reporting in February to shareholders on events during the first six months of the trading year, our worst fears have been confirmed as the grim revelation of the sub-prime mortgage fiasco has been gradually revealed. It is not only the US and UK banks which have, one by one, revealed their involvement in the financing of "toxic" loans knowingly lending excessively to risky customers with inadequate or unsatisfactory security; the folly also seems to have spread to Europe. Additionally, it has become apparent that nearly all the UK banks have been hugely geared in a lending spree to finance secondary commercial property, consumer spending and house mortgaging. Inevitably, chickens came home to roost as signs of an economic slowdown began to emerge during the summer months and realisation that Northern Rock was not the only casualty. This, and other breaches of sound banking principles, have drained the system of liquidity to such an extent that credit markets have dried up and appear likely to stay that way for some considerable time. Against this background we have continued to hold a fairly substantial percentage of our assets in cash (27.6 per cent over the last three months). This policy mitigated the decline in our net asset value to 341.8p, a fall of 9.3 per cent which compares with a fall of 16.4 per cent in the FTSE All-Share Index. Whilst this policy has alleviated the damage inflicted upon the market, we are very much aware that whilst there is a risk in being too liquid simply because when the storm abates, recovery is likely to occur. In turn, this raises the question as to what the future holds. The FTSE All-share Index shows that share prices have fallen approximately 39 per cent from their peak on 12th October 2007; a period of some twelve months. There are no golden rules which dictate the periods of rises and falls on stock markets, as movements are obviously dependent upon events, but it will be a little time before there is a restoration of healthy markets. There is a reasonably established pattern of cycles which indicates that bear markets are usually of twelve to eighteen months duration with prices tending to fall about thirty per cent; there have also been rare occasions when prices have fallen by around seventy five per cent (1929-32 and 1972-74). Hopefully, excluding the latter, a similar pattern is likely to emerge in the UK and indeed, globally, in which case there is reason to believe that the crisis will gradually die and evolve into a new upswing, with new rules, new hopes and new expectations. Outlook There does not yet appear to be any sign of stability returning to the financial systems. It is important to understand that this is first and foremost a banking crisis caused by reckless lending superimposed upon a global weakening of trade. There is no comparable post war precedent of such a risky mix, but it would now seem to be a dangerous presumption that normality, as we understand it, will return in the short term. The banking world will continue to contract as a result of necessary mergers. There will also need to be a return of confidence in the global banking system which can now only recover with massive financial support from Governments, accompanied by a tightening of trading practices. A serious downturn in world trade would further postpone the building of a sound recovery base. Against this background, markets may fall further, but a recovery there will be. In the meantime, we continue to retain some thirty per cent of our assets in cash. Annual General Meeting I look forward to welcoming shareholders to our thirty sixth Annual General Meeting to be held in the Lancaster Suite, The Midland Hotel, Peter Street, Manchester M60 2DS, at 12.45pm on Tuesday, 18th November 2008. P H A Stanley Chairman 14th October 2008

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