Interim Results for the period ended 31st Janua...
Manchester & London Investment Trust plc
ANNOUNCEMENT OF THE UNAUDITED INTERIM GROUP RESULTS
For the six months ended 31st January 2008
Attached pages 1-7
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
Brokers:
Fairfax I.S.
S J Greatrex
Tel: 020-7598-5368
Manchester & London Investment Trust plc 22nd February 2008
Announcement of the interim group results Page 1 of 7
The Directors announce the unaudited interim figures
For the six months ended 31st January 2008
Highlights
Net asset value per share has increased from 376.8p to 382.9p, an increase of
1.6% which compares with a fall of 8.8% in our benchmark FTSE All-Share Index
from 3,289.1 to 3,000.1 over the corresponding period.
The Directors have declared an unchanged Interim Dividend of 2.5p per share
which will be paid on the 25th April 2008 to all shareholders on the Register
at the close of business on 26th March 2008
Consolidated Income Statement
For the six months ended 31st January 2008
(Unaudited) (Unaudited) (Audited)
6 months ended 6 months ended Year ended
31st January 2008 31st January 2007 31st July 2007
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investment Income 1,149 - 1,149 631 - 631 1,322 - 1,322
Gains
Gains on - 1,192 1,192 - 6,262 6,262 - 5,233 5,233
investments at
fair value
Total Income 1,149 1,192 2,341 631 6,262 6,893 1,322 5,233 6,555
Expenses
Investment (59) (121) (180) (55) (116) (171) (122) (266) (348)
management fee
Cost of - (107) (107) - (124) (124) - (223) (223)
investment
transactions
Other operating (104) - (104) (82) - (82) (185) - (185)
expenses
Finance costs (55) - (55) - - - - - -
Total expenses (218) (228) (446) (137) (240) (377) (307) (449 (756)
Profit before tax 931 964 1,895 494 6,022 6,516 1,015 4,784 5,799
Taxation - - - - - - - - -
Profit
attributable to
equity
shareholders 931 964 1,895 494 6,022 6,516 1,015 4,784 5,799
Earnings per 6.67 6.91 13.58 3.54 43.18 46.72 7.28 34.30 41.58
ordinary share
(p)
The total column of this statement represents the Group's Income Statement,
prepared in accordance with 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.
Manchester & London Investment Trust plc 22nd February 2008
Announcement of the interim group results Page 2 of 7
Consolidated Statement of Changes in Equity
For the six months ended 31st January 2008
Unaudited
Six months ended 31st January 2008
Capital Capital Retained Total
Share Share Other reserve reserve earnings
capital Premium reserves unrealised realised
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1st 3,487 9,921 (79) 12,485 23,169 3,571 52,554
August 2007
Profit for the - - - - - 1,895 1,895
period
Transfer of - - - 533 431 (964) -
capital
profits
Ordinary - - - - - (1046) (1046)
dividend paid
Issue of share - - - - - - -
capital
3,487 9,921 (79) 13,018 23,600 3,456 53,403
Unaudited
Six months ended 31st January 2007
Capital Capital Retained Total
Share Share Other reserve reserve earnings
capital Premium reserves unrealised realised
Balance at 1st 1,875 - (22) 8,837 22,033 3,384 36,107
August 2006
Profit for the - - - - - 6,516 6,516
period
Transfer of 4,999 1,023 (6022) -
capital
profits
Ordinary - - - - - (525) (525)
dividend paid
Issue of share 1612 9,921 (57) - - - 11,476
capital
3,487 9.921 (79) 13,836 23,056 3,353 53,574
Audited
Year ended 31st July 2007
Capital Capital Retained Total
Share Share Other reserve reserve earnings
capital Premium reserves unrealised realised
Balance at 1st 1,875 - (22 8,837 22,033 3,384 36,107
August 2006
Profit for the - - - - - 5,799 5,799
period
Transfer of - - - 3,648 1,136 (4784) -
capital
profits
Ordinary - - - - - (828) (828)
dividend paid
Issue of share 1,612 9,921 (57) - - - 11,476
capital
3,487 9,921 (79) 12,485 23,169 3,571 52,554
Manchester & London Investment Trust plc 22nd February 2008
Announcement of the interim group results Page 3 of 7
Consolidated Balance Sheet
As at 31st January 2008
(Unaudited) (Unaudited) (Audited)
31st 2008 31st 2007 31st July
January January 2007
£'000 £'000 £'000
Non-current assets
Investments held at fair
value through profit or 48,702 52,853 49,514
loss
Current Assets
Trade and other 2,315 107 108
receivables
Cash and cash equivalents 3,073 756 3,669
5,388 862 3,777
Current Liabilities
Trade and other payables (687) (142) (737)
Net current assets 4,701 720 3,040
Net Assets 53,403 53,574 52,554
Capital and Reserves
Called-up Share Capital 3,487 3,487 3,487
Share Premium 9,921 9,921 9,921
Capital reserve - 23,600 23,056 23,169
realised
Capital reserve - 13,018 13,836 12,485
unrealised
Goodwill reserve (79) (79) (79)
Retained earnings 3,456 3,353 3,571
Total equity 53,403 53,574 52,554
shareholders' funds
Net Asset Value per share
(pence)
Ordinary shares 382.9 384.1 376.8
Manchester & London Investment Trust plc 22nd February 2008
Announcement of the interim group results Page 4 of 7
Consolidated Cash Flow Statement
For the six months ended 31st January 2008
(Unaudited) (Unaudited) (Audited)
6 months 6 months Year ended
ended ended
31st January 31st January 31st July
2008 2007 2007
£'000 £'000 £'000
Operating activities
Operating profit 1,950 6,516 5,799
Gains on investments (1,192) (6,262) (5,233)
Financing costs (55) - -
(Increase) decrease in (2,207) 5 3
receivables
(Decrease) increase in payables (50) 55 650
Net cash (outflow) inflow from
operating activities (1,554) 314 1,219
Investing activities
Purchase of investments (13,687) (23,063) (37,143)
Sale of investments 15,691 6,916 23,306
Net cash inflow (outflow) from 2,004 (16,147) (13,837)
investing activities
Financing activities
Equity shares issued - 868 868
Share premium - 9,921 9,921
Equity dividends paid (1,046) (525) (828)
Net cash (outflow) inflow from (1,046) 10,263 9,961
financing
(Decrease) in cash and cash (596) (5,570) (2,657)
equivalents
Cash and cash equivalent at start 3,669 6,326 6,326
of period
Cash and cash equivalent at end 3,073 756 3,669
of period
Manchester & London Investment Trust plc 22nd February 2008
Announcement of the interim group results Page 5 of 7
Notes to the Group Results
Six months ended 31st January 2008
1 Accounting policies
The interim report has been prepared in accordance with International Financial
Reporting Standards (IFRS).
The accounting policies are consistent with the preceding annual accounts.
The results are based on unaudited Group consolidated accounts prepared under
the historical cost basis except where IFRS require an alternative treatment.
2 Comparative information
The financial information contained in this interim report does not constitute
statutory accounts and that relating to the six month periods to 31st January
2008 and 31st January 2007 has not been audited.
The financial information for the year ended 31st July 2007 has been extracted
from the latest published audited accounts which have been filed with the
Registrar of Companies and prepared under IFRS. The report of the auditors on
those accounts contained no qualification or statement under Section 237 (2) or
(3) of the Companies Act 1985.
3 Significant accounting policies
Investments held at fair value through profit or loss are initially recognised
at fair value. As the entity's business is investing in financial assets with a
view to profiting from their total return in the form of interest dividends or
increases in fair value, listed equities and fixed income securities are
designated as fair value through profit or loss on initial recognition. The
entity manages and evaluates the performance of these investments on a fair
value basis in accordance with its investment strategy, and information about
the group is provided internally on this basis to the entity's key management
personnel.
After initial recognition, investments, which are classified as at fair value
through profit and loss, are measured at fair value. Gains or losses on
investments designated as at fair value through profit or loss are included in
net profit or loss as a capital item, and material transaction costs on
acquisition and disposal of investments are expensed and included in the
capital column of the income statement. For investments that are actively
traded in organised financial markets, fair value is determined by reference to
the Stock Exchange quoted market bid prices or last traded prices, depending
upon the convention of the exchange on which the investment is quoted, at the
close of business on the balance sheet date.
In respect of unquoted investments, or where the market for a financial
investment is not active, fair value is established by using an appropriate
valuation technique. Where no reliable fair value can be estimated for such
unquoted equity instruments, they are carried at cost, subject to any provision
for impairment.
Investments in subsidiary companies are held at directors' valuation.
All purchases and sales of investments are recognised on the trade date i.e.
the date that the group commits to purchase or sell an asset.
Dividend income from investments is recognised as income when the shareholders'
rights to receive payment has been established, normally the ex-dividend date.
When special dividends are received, the underlying circumstances are reviewed
on a case by case basis in determining whether the amount is capital, or
income, or a mixture of both, in nature. Amounts recognized as income will form
part of the company's distribution.
Manchester & London Investment Trust plc 22nd February 2008
Announcement of the interim group results Page 6 of 7
Chairman's Statement
Results and Dividends
Since the end of our financial year as at July 2007, events have developed more
or less along the lines I predicted in my Statement accompanying last year's
Accounts, namely, that we are entering a period in which credit conditions are
tightening as the impact of the "sub-prime" mortgage lending crisis makes
itself felt in the U.S.
The crisis has subsequently spread to the U.K. and, to a lesser extent, Europe,
principally because of the curious make-up of a new investment vehicle which
participating lenders did not appear to have fully comprehended, particularly
the fact that the ultimate guarantor could not be clearly defined. What was not
fully understood, however, was the illusory profitability of this new
investment vehicle, an illusion which precipitated the current crisis.
Accompanying these problems are growing fears that the U.S. is heading for a
recession, resulting in a series of cuts in lending rates from 5.25 per cent to
3.0 per cent and the implied promise of more to come if necessary. In the U.K.
the Bank of England is expressing grave concern about the threat of inflation
as commodities, oil and our dependence upon imports will soon be reflected in
an increasing balance of payments deficit, compounded by a weakening economy.
Not surprisingly, share prices have been volatile during the period under
review but, despite the adverse conditions, I am pleased to report a modest
increase in the net asset value per share from 376.8p to 382.9p, an increase of
1.6 per cent which compares with a fall of 8.8 per cent in our benchmark FTSE
All-Share Index from 3,289.1 to 3,000.1 over the corresponding period.
Additionally, as at 31st January 2008, the Company held a total of £12.8m cash
or near cash (Swiss francs, Euros, Sterling and monies due from the recommended
acquisition of Scottish and Newcastle plc and Biffa plc) representing liquidity
of approximately 24 per cent.
Income received during the period under review remained satisfactory and
accordingly, the Directors have declared an unchanged Interim Dividend of 2.5p
per share which will be paid on the 25th April 2008 to all shareholders on the
Register at the close of business on 26th March 2008.
The Portfolio
Our continuing policy to hold approximately 25 investments has enabled us to
achieve a satisfactory balance of risk and cash at the same time as deploying
our invested funds into areas which are becoming integral to the global
portfolio. Approximately, 51.3 per cent of the value is represented by
companies whose sales are predominantly overseas, whilst the balance is held in
Utilities, Financials and miscellaneous.
There is a gradual shifting of influence and power from west to east, and this
is frequently manifested in the global financial markets under the guise of
take-over bids. We have successfully deployed some of our funds and achieved
useful gains from our holdings in Scottish and Newcastle plc and more recently
Biffa plc. Other holdings which could benefit in the future from acquisitive
overseas investors are SSL, Smiths Group, Prudential and, on a longer time
scale, Costain.
One of our most successful "reverse" investments has, however, been cash which
has kept its value, particularly if held in Swiss francs, Euros and latterly
U.S. dollars.
Manchester & London Investment Trust plc 22nd February 2008
Announcement of the interim group results Page 7 of 7 Chairman's statement
continued
Outlook
The immediate outlook remains bleak; hence our intention to maintain a
reasonably high level of liquidity for the foreseeable future. We are aware,
however, that trends can change quickly in an increasingly digital world, and
the emergence of the U.S. economy from its impending recession will probably
lead the way in due course: the American economy will not surrender its
dominance over the world just yet. Indeed, the U.S. dollar policy adopted as
long ago as early 2006 has been one of benign neglect with the object of
regaining its competitive position in world trade. This policy is now meeting
with some success, as the trade deficit shows signs of narrowing with the
economy moving towards restoration of its position as the global trade
dictator.
Alas, the recovery process of the U.K. economy is lagging a long way behind
that of the U.S.; the trade deficit continuing to widen, Government borrowing
out of control and rising inflation; hence the Bank of England's high interest
rate policy. The liquidity problem gripping the U.S., and, to an extent, the
U.K. (where the malaise seems to be at least partially Government induced) is
not global. Indeed, far from it, as is witnessed by the arrival on the
international financial stage of the new phenomena, Sovereign Wealth funds.
These are Government vehicles which have been spawned in the Middle East and
Western Asia, with the apparent objective of financing huge commercial
acquisitions or developments not necessarily in the geographical area of their
base. Investment in struggling U.S. banks (Merrill Lynch & Co. Inc and Citi
Group Inc are just two examples) is a clear indication of their global
ambitions and the shifting of influence and power from west to the east.
Investors could shortly be faced with even more problems if the Asiatic
economies start to overheat, as is expected by many analysts who are wary of
the de-coupling theory, which argues that the old adage, "when the U.S. sneezes
the world catches a cold", no longer holds good.
P H A Stanley
Chairman
22nd February 2008
END
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