Interim Results

Manchester & London Inv Tst PLC
26 February 2002


Chairman's Statement

Since reporting to shareholders in October last year, the market has staged a
significant recovery from the low point established 10 days after the terrorist
attack on New York and indeed, the consensus forecast of leading analysts for
2002 is for a year end FTSE 100 Index in the region of 5800, with the main
thrust of recovery occurring in the second half. Meanwhile, the year has started
in a subdued manner, with further evidence of chickens coming home to roost
after the excessive exuberance indulged by markets towards the end of the last
decade.

Our fully diluted net asset value per share at 31st January 2002, was marginally
higher at 231.9p (230.1p at 31st July 2001) which compares with a fall of 6.3%
in the FTSE All Share Index over the same period (from 2663.9 to 2496.0)
 
We still retain 31% of our funds in cash as we are not convinced that the
current bear market, which has now lasted some 3 years, has yet exhausted
itself. Historical precedent dictates that such a period is long enough to purge
all the excesses in the system, but there now seems to be a new factor which
complicates and possibly invalidates the recovery argument. For the first time
in thirty years there is virtually no inflation in the principal economic
regions of the world and indeed, in some areas there is deflation. This recent
phenomenon is severely cramping corporate profitability and, without some growth
in profits, it seems dangerous to anticipate a sound and well based economic
recovery. Particularly in the US there is much talk of a W shaped (or double-
dip) recession and, here in the UK, serious recession has so far been avoided by
undue reliance on a seemingly endless consumer and housing boom. Time will tell
whether this can continue to insulate the UK economy from recent shocks such as
the knock on effects of the Enron accounting scandal in the US, insurance
deficits, the adverse effect of FRS 17 on corporate pension funds, profit
warnings, excessive corporate debt and prospects of yet higher levels of
taxation; all this against a continuing worry of further terrorist activity.
Despite the uncertainty we continue to search for value in the stock market and
are well aware that it is frequently darkest just before the dawn. In the
meantime we intend to reduce the amount of un-invested cash in the remaining
half of the year.
 
As a consequence of the Company's intention to re-attain investment trust status
under the provisions of Section 842 of the Income and Corporation Taxes Act 1988
it is only permitted to retain a maximum of 15% of gross income from shares and
securities. It is principally for this reason that the interim dividend has been
increased from 0.6p to 2.5p. 

Notwithstanding the taxation reasons for a substantial increase in the Interim
dividend and the shocks being administered to the capitalist system, the
Directors remain cautiously optimistic that the fundamental investment climate
should start to improve in due course. Our income flow continues to be assisted
by the zero cost of the £5.4m loan from our parent company which has confirmed
that this loan will be extended on similar terms for a further twelve months
period from 1st August 2002.
 
We have now achieved a greater degree of diversification within the Portfolio,
although it is still our policy to continue this process which will be partially
self-fulfilling as and when we feel sufficiently confident to invest our cash
resources. 

During the half year under review, we have added to our holding in Paterson
Zochonis at a considerably lower level than the current market price, at which
our total investment in the company is now valued at approximately £2.7m. We
have also benefited from a foray into Woolworth where we purchased 4m shares and
subsequently now hold 1.5m, having taken a profit of £380,000 on the balance.
Another new addition to our Portfolio is Parkman, a young company operating in
the outsourcing field which came to the market at 125p via a placing in which we
participated to the extent of 800,000 shares. We believe that current Government
policy of involving the private sector in the operation of public services will
continue to be favourable to this type of operation. 

Mindful of the share price discount to net asset value, our stockbrokers,
Galleon Assets Management Ltd, are now administering a cost free Manchester &
London Investment Trust ISA, details of which are enclosed with this Statement.
We are hopeful that this will help to improve liquidity in the shares and
provide new investors with the opportunity to learn more about the Company and
its record during the last 20 years. 


P.H.A. Stanley F.C.A
Chairman                                                  26th February 2002


Announcement of the interim group results

The Directors announce the unaudited interim figures
For the six months ended 31st January 2002

Consolidated Statement of Total Return (incorporating the revenue account) 
For the six months ended 31st January 2002              (unaudited) 

                                      Six months ended 31st January 2002    Six months ended 31st January 2001
                                          Revenue      Capital      Total        Revenue      Capital      Total
                                            £'000        £'000      £'000          £'000        £'000      £'000
                                                                                   
Profit/(loss) on sale of investments            -          213        213              -         (190)      (190)    
(Decrease) in unrealised appreciation           -         (131)      (131)             -       (6,223)    (6,223)  
Negative goodwill realised                      -            -          -              -          307        307      
Investment income                             482            -        482            318            -        318      
Investment management fee                     (29)         (54)       (83)           (31)         (57)       (88)     
Other expenses                                (81)           -        (81)          (114)           -       (114) 

Net return before finance costs               372           28        400            173       (6,163)    (5,990)  

Interest payable and similar charges            -            -          -             (4)          (8)       (12)
     
Return on ordinary activities                 372           28        400            169       (6,171)    (6,002)

Dividends in respect of non-equity 
shares - preference shares                    (28)           -        (28)           (28)           -        (28)

Return attributable to equity shareholders    344           28        372            141       (6,171)    (6,030)

Dividends in respect of equity shares        (188)           -       (188)           (45)           -        (45)

Transfer to (from) reserves                   156           28        184             96       (6,171)     (6,075)

Return per ordinary share (pence) 
Basic                                        4.59         0.37       4.96           1.88       (82.28)     (80.40)

Fully diluted                                3.55         0.27       3.82           1.61       (58.90)     (57.29) 


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 2002 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 (2001: 0.6p)  

The ordinary interim dividend is payable on 19th April 2002 to shareholders on 
the Register at the close of business on 22nd March 2002. 



Consolidated Balance Sheet
At 31st January 2002          (unaudited)
                                                As at 31st January 2002       As at 31st January 2001
                                                £'000          £'000              £'000         £'000
Fixed Assets

Investments                                                   20,622                           29,080 

Current Assets

Debtors                                           358                                88 
Cash and short term deposits                    9,269                                 3 
                                                9,627                                91 

Creditors

Amounts falling due within one year            (5,953)                           (1,914)
 
Net Current Assets/(Liabilities)                               3,674                           (1,823)


Total assets less current liabilities                         24,296                           27,257

Creditors

Amounts falling due after more than one year                       -                           (5,413)

Net Assets                                                    24,296                           21,844

Capital and Reserves

Called-up Share Capital                                        2,619                            2,619
Capital reserves                                              19,090                           16,983
Revenue reserve                                                2,587                            2,242

Total shareholders' funds                                     24,296                           21,844

Equity interests - Ordinary shares                            23,552                           21,100
Non-equity interests - Preference shares                         744                              744

                                                              24,296                           21,844

Net Asset Value per share            

Ordinary shares - basic                                        314.0p                           281.3p

Ordinary shares - fully diluted                                231.9p                           208.5p


Notes : 

The accounts at 31st January are unaudited and are not the Company's statutory
accounts. The information for the period ended 31st January 2001 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. 



Consolidated Cash Flow Statement

For the six months ended 31st January 2002       (unaudited)
                                                                   Six months ended          Six months ended
                                                                   31 January 2002            31 January 2001
                                                                £'000          £'000        £'000         £'000

Operating activities 

Net dividends and interest received from investments              313                         265
Deposit interest received                                         190                          59
Other income                                                        -                          23
Investment management fees paid                                   (99)                        (94)
Other cash payments                                              (102)                        (50)

Net cash inflow from operating activities                                        302                        203

Servicing of finance

Interest paid                                                       -                          (8)
Preference dividend paid                                          (28)                        (28)

Net cash outflow from servicing of finance                                       (28)                       (36)

Taxation 

UK taxes recovered                                                                 -                          -

Financial investment                                           
                                                               
Purchase of investments                                        (3,534)                     (8,135)
Sale of investments - (2001: Includes the redemption of 
 Toronto - Dominion Bank loan notes acquired with the 
 purchase of Galleon Securities Limited)                        2,740                      11,298  
  
Net cash inflow from financial investment                                       (794)                     3,163

Acquisition of subsidiary undertaking

Purchase of Galleon Securities Limited - repayment of 
 indebtedness to Manchester & Metropolitan Investment 
 Limited and acquisition costs                                      -                      (5,997)
Overdraft acquired with subsidiary                                  -                        (480)

                                                                                   -                     (6,477)

Equity dividend paid                                                            (142)                      (112)

Decrease in cash                                                                (662)                    (3,259)

Reconciliation of net cash flow to movement in net debt 

Decrease in cash in period                                                      (662)                    (3,259)
Non cash loan transaction - loan note issued on 
 acquisition of Galleon Securities Limited                                         -                     (5,413)
Net funds at beginning of the period                                           9,931                      1,512

Net funds (debt) at end of the period                                          9,269                     (7,160)


Major Holdings

At 31st January 2002

                            Holdings      Market Value £'000      % of Portfolio

Andrews Sykes Group 
Ordinary 20p               5,193,945                   4,856               16.10

BAE SYSTEMS 
Ordinary 2.5p              1,050,000                   3,570               11.84

TDG Ordinary 1p            1,875,000                   3,497               11.59

Paterson Zochonis Ordinary 
and 'A' Ordinary 10p         467,250                   2,893                9.59

Parkman Group 
Ordinary 1p                1,470,000                   2,477                8.21

AEA Technology 
Ordinary 10p                 800,000                   2,080                6.90

Largest 6 Holdings                                    19,373               64.23

Short term cash deposits 
and dealing debtor                                     9,540               31.63

                                                      28,913               95.86


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