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LMI Income & Growth (LIG)

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Thursday 16 January, 2003

LMI Income & Growth

Interim Results

Leggmason Inv Inc & Grwth Tst PLC
16 January 2003



Chairman's Statement

for the half year ended 31 October 2002

Overview

Your Company was launched during a period in which your Board, the Manager and
most expert commentators considered market conditions to be favourable. Four
months prior to launch the FTSE 100 Index had reached 6930.20 and this proved to
be the all time peak in the stock market. Today the FTSE 100 Index stands at
3887.75, a fall of 43.9%. The depth and length of the current 'bear market' has
rivalled if not exceeded the stock market declines of the 1970s.

Such sustained falls have had a profound bearing on the balance sheet of your
Company. At the beginning of the period the assets of the Company stood at £99.6
million. After repaying £30.8 million of debt - and incurring £2.7 million of
associated costs - the value of the assets of the Company fell at the end of
October 2002 to £18.3 million valued at mid-market prices. On a bid valuation,
the assets would be £14.0 million, but it should be noted that amongst certain
shares in the portfolio, liquidity - the ability to sell the shares - remains
very poor. With the fall in value of the portfolio compounded by the gearing of
the Company, the net asset value attributable to each share declined to nil.

Against assets of £18.3 million, outstanding bank debt at the end of October
2002 was of £21.2 million (excluding interest swap breakage costs associated
with any early repayment). Since the end of October the sale of assets has
funded a further repayment of bank debt which now stands at £18.8 million.

Debt repayment

Following the radical change in the market precipitated by the September 11
terrorist attacks, your Board resolved to make various changes to the asset
allocation. This involved holding above average cash positions that had a
positive but limited effect on the health of the Company. As markets continued
to decline and as this continued to take its toll on the values of the split
capital shares held by the Company, it became clear that a permanent reduction
in debt - with the resulting reduction in interest costs - would be prudent. At
the beginning of August 2002 as a consequence of the Company breaching its bank
covenants, it was required to sell the most readily realisable holdings of the
growth portfolio in order to reduce the bank debt further. As a result of this,
the Company's principal holdings now consist of split capital shares.

The following repayments have been made to your Company's bankers:

                                   Debt repayment                Repayment Costs
                                   £                             £

29 May 2002                        5,000,000                     299,225
10 July 2002                       5,000,000                     308,255
09 August 2002                     19,612,725                    1,587,275
18 October 2002                    1,200,000                     517,774
Total to end October               30,812,725                    2,712,529

21 November 2002                   2,400,000                     210,567

Discussions with banks and fee waiver

The lending banks have been supportive throughout this difficult period and
there has been a constructive dialogue focusing on extracting the maximum amount
of value from the portfolio and expending the minimum amount of costs in running
the Company. To this end both the Manager and the Directors elected to waive all
entitlement to fees whilst the Company remains in breach of its banking
covenants. With the liabilities of the Company exceeding the current value of
its assets the Board has entered into further discussions with the banks
regarding the capital and cash flow position of the Company. Shareholders will
of course be informed as soon as there are any further developments.

Share suspension

The assets of the Company fell to below the value of the outstanding loans on 8
October 2002. This prompted the Directors to resolve to suspend the shares from
trading. This action, although very disappointing, was necessary in order to
prevent a disorderly market from existing in the Company's shares.

Dividend

Continuing on from the statement made in the previous report, your Company is
unable to pay dividends on both its classes of shares due to the assets being
less that the amount prescribed by section 265 of the Companies Act 1985. It is
not anticipated that any dividends will be paid for the foreseeable future.

Outlook

Both the Board and the Manager continue to work towards providing the best
solution for both shareholders and creditors. As markets continue to remain
depressed and with an equally poor outlook for the future, the prospect of
producing a capital return to shareholders is extremely remote. Only a very
significant increase in equity values can provide any possibility of providing a
return to shareholders. This comes as a great sadness to your Board, however,
the Board believes that all reasonable steps have been taken in the face of such
appalling market circumstances. As before, the Board and Manager are committed
and continue to work in the best interests of all parties.

Ken Greatbatch

Chairman

15 January 2003









Group statement of total return (unaudited)

(incorporating the revenue account)

for the half year ended 31 October 2002
                                                             (Unaudited)                          (Unaudited)
                                                 For the half year ended              For the half year ended
                                                         31 October 2002                      31 October 2001

                                       Revenue      Capital        Total      Revenue     Capital       Total
                                         £'000        £'000        £'000        £'000       £'000       £'000

Total capital losses on                      -     (51,402)     (51,402)            -    (41,571)    (41,571)
investments
Income from fixed asset                  2,558            -        2,558        5,652           -       5,652
investments
Other interest receivable and              177            -          177          211           -         211
similar income
                                   -----------  -----------  -----------  ----------- ----------- -----------
Gross revenue and capital losses         2,735     (51,402)     (48,667)        5,863    (41,571)    (35,708)
Investment management fee                 (94)         (32)        (126)        (192)       (449)       (641)
Other administrative expenses            (178)            -        (178)        (193)           -       (193)

                                   -----------  -----------  -----------  ----------- ----------- -----------
Net return/(loss) on ordinary
activities before interest
payable and taxation                     2,463     (51,434)     (48,971)        5,478    (42,020)    (36,542)
Interest payable                       (1,003)        (335)      (1,338)        (607)     (1,416)     (2,023)

                                   ----------- ------------  -----------  ----------- ----------- -----------
Net return/(loss) on ordinary            1,460     (51,769)     (50,309)        4,871    (43,436)    (38,565)
activities before taxation
Tax on net return/(loss) on                  3            -            3         (25)           -        (25)
ordinary activities
                                   -----------  -----------  -----------  ----------- ----------- -----------
Net return/(loss) on ordinary            1,463     (51,769)     (50,306)        4,846    (43,436)    (38,590)
activities after taxation
Capital losses attributable to               -        4,820        4,820            -           -           -
the bank loan
Provision for redemption of ZDP              -        (688)        (688)            -       (296)       (296)
shares in subsidiary
Capital loses attributable to ZDP            -       16,633       16,633            -           -           -
shares in subsidiary
                                   -----------  -----------  -----------  ----------- ----------- -----------
                                         1,463     (31,004)     (29,541)        4,846    (43,732)    (38,886)
Dividends and other
appropriations:
Redeemable preference shares
Compounding entitlement                      -        (310)        (310)            -       (142)       (142)
Capital losses                               -       28,732       28,732            -           -           -
First interim dividend of 0.3p               -            -            -        (300)           -       (300)
Second interim dividend of 1.8p              -            -            -            -           -           -
Third interim dividend of 1.8p               -            -            -            -           -           -

                                   -----------  -----------  -----------  ----------- ----------- -----------
                                             -       28,422       28,442        (300)       (142)       (442)

                                        ======       ======       ======      =======      ======      ======
Net return/(loss) attributable to        1,463      (2,582)      (1,119)        4,546    (43,874)    (39,328)
ordinary shares

Ordinary shares
First interim dividend - nil                 -            -            -      (1,928)           -     (1,928)
(2001: 2.25p)
Second interim dividend - nil                -            -            -      (1,928)           -     (1,928)
(2001: 2.25p)
Third interim dividend - 2.25p               -            -            -            -           -           -
Fourth interim dividend - nil                -            -            -            -           -           -

                                   -----------  -----------  -----------  ----------- ----------- -----------
                                             -            -            -      (3,856)           -     (3,856)

                                   -----------  -----------  -----------  ----------- ----------- -----------
Transfer to/(from) reserves              1,463      (2,582)      (1,119)          690    (43,874)    (43,184)

                                        ======       ======       ======       ======      ======     =======

                                         Pence        Pence        Pence        Pence       Pence       Pence
Return/(loss) per ordinary share          1.71       (3.02)       (1.31)         5.30     (51.19)     (45.89)
(Loss)/return per redeemable                 -      (28.42)      (28.42)         0.30        0.14        0.44
preference share
(Loss)/return per ZDP share in               -     (106.30)     (106.30)            -        1.97        1.97
the subsidiary

The revenue columns of this statement represent the revenue accounts of the
Group

All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the year.






                                                               (Audited)
                                                      For the year ended

                                                           30 April 2002
                                       Revenue      Capital        Total
                                         £'000        £'000        £'000

Total capital losses on                      -     (77,111)     (77,111)
investments
Income from fixed asset                 10,867            -       10,867
investments
Other interest receivable and              623            -          623
similar income
                                   -----------  -----------  -----------
Gross revenue and capital losses        11,490     (77,111)     (65,621)
Investment management fee                (358)        (836)      (1,194)
Other administrative expenses            (377)            -        (377)

                                   -----------  -----------  -----------
Net return/(loss) on ordinary
activities before interest
payable and taxation                    10,755     (77,947)     (67,192)
Interest payable                       (1,194)      (2,785)      (3,979)

                                   -----------  -----------  -----------
Net return/(loss) on ordinary            9,561     (80,732)     (71,171)
activities after taxation
Tax on net return/(loss) on               (54)            -         (54)
ordinary activities
                                   -----------  -----------  -----------
Net return/(loss) on ordinary            9,507     (80,732)     (71,225)
activities after taxation
Capital losses attributable to               -            -            -
the bank loan
Provision for redemption of ZDP              -        (945)        (945)
shares in subsidiary
Capital loses attributable to ZDP            -            -            -
shares in subsidiary
                                   -----------  -----------  -----------
                                         9,507     (81,677)     (72,170)
Dividends and other
appropriations:
Redeemable preference shares
Compounding entitlement                      -        (444)        (444)
Capital losses                               -       22,022       22,022
First interim dividend of 0.3p           (300)            -        (300)
Second interim dividend of 1.8p        (1,800)            -      (1,800)
Third interim dividend of 1.8p         (1,800)            -      (1,800)

                                   -----------  -----------  -----------
                                       (3,900)       21,578       17,678

                                       =======      =======      =======
Net return/(loss) attributable to        5,607     (60,099)     (54,492)
ordinary shares

Ordinary shares
First interim dividend - nil           (1,928)            -      (1,928)
(2001: 2.25p)
Second interim dividend - nil          (1,928)            -      (1,928)
(2001: 2.25p)
Third interim dividend - 2.25p           (857)            -        (857)
Fourth interim dividend - nil                -            -            -

                                   -----------  -----------  -----------
                                       (4,713)            -      (4,713)

                                   -----------  -----------  -----------
Transfer (from)/to reserves                894     (60,099)     (59,205)

                                       =======      =======      =======

                                         Pence        Pence        Pence

(Loss)/return per ordinary share          6.54      (70.13)      (63.59)
(loss)/return per redeemable              3.90      (21.58)      (17.68)
preference share
(Loss)/return per ZDP share in               -         6.30         6.30
the subsidiary






The revenue columns of this statement represent the revenue accounts of the
Group

All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the year.









Group balance sheet (unaudited)

as at 31 October 2002


                                                        (Unaudited)          (Unaudited)        (Audited)
                                                              As at                As at            As at

                                                    31 October 2002      31 October 2001    30 April 2002
                                                              £'000                £'000            £'000

Fixed asset investments
Listed in United Kingdom                                     15,099              115,453           74,217
Current assets
Debtors                                                         970                1,717            1,089
Cash at bank                                                  2,191               20,101           24,255

                                                        -----------          -----------      -----------
                                                              3,161               21,818           25,344
Current liabilities
Creditors: amounts falling due within one year              (1,893)              (2,835)          (2,075)

                                                        -----------          -----------      -----------
Net current assets                                            1,268               18,983           23,269

                                                        -----------          -----------      -----------
Total assets less current liabilities                        16,367              134,436           97,486
Creditors: amounts falling due after more than             (21,187)             (52,000)         (52,000)
one year
                                                        -----------          -----------      -----------
Total net (liabilities)/assets                              (4,820)               82,436           45,486

                                                            =======              =======          =======

Capital and reserves
Called-up share capital                                      22,425               22,425           22,425
Share premium account                                        97,064               97,050           97,050
Special reserve                                              17,550               17,550           17,550
Capital reserve - realised                                 (66,959)             (15,217)         (29,412)
Capital reserve - unrealised                               (94,115)             (55,583)         (79,191)
Revenue reserve                                               2,582                  915            1,119

                                                        -----------          -----------      -----------
Shareholders' funds                                        (21,453)               67,140           29,541
Minority interest - ZDP shares                               16,633               15,296           15,945

                                                        -----------          -----------      -----------
                                                            (4,820)               82,436           45,486

                                                            =======              =======          =======

Funds attributable to:
Ordinary shares                                                   -               16,998            1,119
Redeemable preference shares                                      -               50,142           28,422
Minority interest - ZDP shares                                    -               15,296           15,945

                                                        -----------          -----------      -----------
                                                                  -               82,436           45,486

                                                             ======               ======           ======

                                                              Pence                Pence            Pence
Net asset value per share:
Ordinary share                                                    -                19.84             1.31
Redeemable preference share                                       -                50.14            28.42
ZDP share in subsidiary                                           -               101.97           106.30

This report was approved by the Board of Directors on 15 January 2003.



Ken Greatbatch

Chairman







Group cash flow statement (unaudited)

for the half year ended 31 October 2002
                                                    (Unaudited)               (Unaudited)                  (Audited)
                                        For the half year ended   For the half year ended         For the year ended
                                                31 October 2002           31 October 2001              30 April 2002
                                             £'000        £'000        £'000        £'000        £'000         £'000

Net cash inflow from operating                            2,584                     4,462                      9,728
activities
Returns on investments and servicing
of finance
Interest and loan breakage costs paid                   (3,602)                   (2,001)                    (3,964)

Taxation
Tax recovered                                                 5                         -                          8

Capital expenditure on financial
investments

Purchases of investments                  (18,694)                  (85,592)                  (95,953)
Sales of investments                        28,456                    32,322                    48,411

                                       -----------               -----------               -----------
Net cash inflow/(outflow) from                            9,762                  (53,270)
financial investment
                                                                                                            (47,542)

Equity dividends paid                                         -                   (3,856)                    (8,741)

                                                    -----------               -----------                -----------
Net cash inflow/(outflow) before                          8,749                  (54,665)                   (50,511)
financing

Management of liquid resources and
financing
Cash placed on short term deposit                             -                         -                   (17,853)

Financing
Gross proceeds from issue of ordinary            -                    75,000                    75,000
shares
Issue expenses paid                              -                   (1,124)                   (1,124)
Loan repaid                               (30,813)                         -                         -

                                       -----------               -----------               -----------
Net cash (outflow)/inflow from                         (30,813)                    73,876                     73,876
financing
                                                    -----------               -----------                -----------
(Decrease)/increase in cash                            (22,064)                    19,211                      5,512

                                                        =======                    ======                     ======









LeggMason Investors Income & Growth Trust plc



Notes to the accounts

for the half year ended 31 October 2002

 1. Accounts for the year ended 30 April 2002

    The figures and financial information for year ended 30 April 2002 are
    extracted from the latest published accounts of the Company and do not
    constitute statutory accounts for that year. Those accounts have been
    delivered to the Registrar of Companies and included the report of the
    auditors which was unqualified and did not include a statement under either
    Section 237(2) or Section 237(3) of the Companies Act 1985.
 2. Zero Dividend Preference Shares

    At 31 October 2002 the consolidated net assets of the Group were
    insufficient to pay any of the final capital entitlement of the ZDP shares
    of 212.75p. Even with the portfolio valued at mid-market prices, the assets
    are £4.8 million below the level at which any asset value becomes
    attributable to the ZDP shares. These shares were issued by the Company's
    subsidiary, LeggMason Investors Income & Growth Securities plc. In
    accordance with the reporting requirements of Financial Reporting Standard
    4, the obligations under the loan and subscription agreements have been
    accounted for in full rather than on the basis of the assets available.
    However, due to the significant doubt that the parent Company will have any
    assets available to meet these obligations, the net asset value per ZDP
    share is shown at zero.

 3. Fundamental uncertainty: going concern

    The directors have concluded that although they believe that it remains
    appropriate for the financial statements to be prepared on a going
    concern basis, there is fundamental uncertainty regarding the ability of
    the Company to continue in operational existence for the foreseeable
    future. Had the financial statements not been prepared on a going
    concern basis, it would have been necessary to value the portfolio at
    net realisable value and to accrue for winding up costs including the
    cost of terminating the bank loan early.





LeggMason Investors Income & Growth Securities plc

Statement of total return (unaudited)

(incorporating the revenue account)

for the half year ended 31 October 2002
                                                            (Unaudited)                           (Unaudited)
                                                For the half year ended               For the half year ended
                                                        31 October 2002                       31 October 2001
                                      Revenue      Capital        Total      Revenue     Capital        Total
                                        £'000        £'000        £'000        £'000       £'000        £'000

Accrued redemption premium                  -          688          688            -         296          296
receivable from parent company
Provision for bad debt                      -     (16,636)     (16,636)            -           -            -

                                  -----------  -----------  -----------  ----------- -----------  -----------
Gross revenue and capital                   -     (15,948)     (15,948)            -         296          296
(losses)/gains

Administrative expenses                     -            -            -            -           -            -

                                  -----------  -----------  -----------  ----------- -----------  -----------
Net (loss)/return on ordinary               -     (15,948)     (15,948)            -         296          296
activities before taxation
Taxation on net (loss)/return on            -            -            -            -           -            -
ordinary activities
                                  -----------  -----------  -----------  ----------- -----------  -----------
Net(loss)/return on ordinary                -     (15,948)     (15,948)            -         296          296
activities after taxation

Appropriations in respect of
non-equity shares:
                                            -        (688)        (688)            -       (296)        (296)
ZDP Shares
                                 ------------ ------------ ------------ ------------ ----------- ------------
Transfer from reserves                      -     (16,636)     (16,636)            -           -            -

                                      =======      =======      =======      =======      ======       ======
                                        Pence        Pence        Pence        Pence       Pence        Pence
(Loss)/return per share:
Ordinary                                    -       (5.00)       (5.00)            -           -            -
ZDP                                         -     (106.30)     (106.30)            -        1.97         1.97


The revenue columns of this statement represent the revenue accounts of the
Company.

All revenue and capital item in the above statement derive from continuing
operations. No operations were acquired or discontinued throughout the half year
ended 31 October 2002.


                                                               (Audited)
                                                      For the year ended

                                                           30 April 2002
                                       Revenue      Capital        Total
                                         £'000        £'000        £'000

Accrued redemption premium                   -          945          945
receivable from parent company
Provision for bad debt                       -            -            -

                                   -----------  -----------  -----------
Gross revenue and capital                    -          945          945
(losses)/gains

Administrative expenses                      -            -            -

                                   -----------  -----------  -----------
Net (loss)/return on ordinary                -          945          945
activities before taxation
Taxation on net (loss)/return on             -            -            -
ordinary activities before
taxation                           -----------  -----------  -----------
Net(loss)/return on ordinary                 -          945          945
activities after taxation

Appropriations in respect of
non-equity shares:
                                             -        (945)        (945)
ZDP shares
                                  ------------ ------------ ------------
Transfer from reserves                       -            -            -

                                       =======      =======      =======
                                         Pence        Pence        Pence
(Loss)/return per share:
Ordinary                                     -            -            -
ZDP                                          -         6.30         6.30

The revenue columns of this statement represent the revenue accounts of the
Company.

All revenue and capital item in the above statement derive from continuing
operations. No operations were acquired or discontinued throughout the half year
ended 31 October 2002.









LeggMason Investors Income & Growth Securities plc

Balance sheet (unaudited)

as at 31 October 2002


                                                        (Unaudited)          (Unaudited)        (Audited)
                                                              As at                As at            As at
                                                    31 October 2002      31 October 2001    30 April 2002
                                                              £'000                £'000            £'000

Fixed asset investments
Listed in United Kingdom                                          5                    5                5

Current assets
Debtors (see note 1)                                              -               15,286           15,948
Cash at bank                                                      5                    5                5

                                                        -----------          -----------      -----------
Net current assets                                                5               15,291           15,953

                                                        -----------          -----------      -----------

Total net assets                                                 10               15,296           15,958

                                                            =======              =======          =======

Capital and reserves
Called-up share capital                                          13                    -               13
Share premium                                                15,000               15,000           15,000
Reserve for redemption premium                                1,633                  296              945
Provision for bad debt                                     (16,636)                    -                -
Unrealised reserve                                                -                    -                -
Revenue reserve                                                   -                    -                -

                                                        -----------          -----------      -----------
                                                                 10               15,296           15,958

                                                            =======              =======          =======



Funds attributable to:
Equity shareholders                                              10                    -               13
Non-equity shareholders                                           -               15,296           15,945

                                                        -----------          -----------      -----------
                                                                 10               15,296           15,958

                                                            =======              =======          =======


                                                              Pence                Pence            Pence
Net asset value per share:
Ordinary                                                      20.00               100.00            25.00

                                                            =======              =======          =======
ZDP                                                               -               101.97           106.30

                                                            =======              =======          =======

This report was approved by the Board of Directors on 15 January 2003.

Ken Greatbatch

Chairman









LeggMason Investors Income & Growth Securities plc

Cash flow statement (unaudited)

for the half year ended 31 October 2002
                                                       (Unaudited)           (Unaudited)       (Unaudited)
                                                             As at                 As at             As at
                                                   31 October 2002       31 October 2001     30 April 2002
                                                             £'000                 £'000             £'000

Net cash inflow from operating activities                        -                     -                 -
Servicing of finance                                             -                     -                 -
Net cash outflow from financial investments                      -                   (5)               (5)

                                                     -------------         -------------     -------------
Net cash outflow before financing                                -                   (5)               (5)
Cash inflow from financing                                       -                    10                10

                                                     -------------         -------------     -------------
Increase in cash                                                 -                     5                 5

                                                          ========              ========          ========

Reconciliation of operating revenue to net
cash inflow from operating activities
Profit before taxation                                           -                     -                 -

                                                     -------------         -------------     -------------
Inflow from operating activities                                 -                     -                 -

                                                          ========              ========          ========

Reconciliation of net cash flow to movement
in net funds
Increase in cash as above                                        -                     5                 5
Net funds at start of period                                     5                     -                 -

                                                     -------------         -------------     -------------
Net funds at end of period                                       5                     5                 5

                                                          ========              ========          ========

Represented by:
Cash at bank                                                     5                     5                 5

                                                          ========              ========          ========







LeggMason Investors Income & Growth Securities plc

Notes to the accounts

for the half year ended 31 October 2002



1. Debtors
                                                                                             2002         2001
                                                                                            £'000        £'000
Loan to parent undertaking                                                                 15,003       14,990
Amount due from parent undertaking in respect of the subscription for ordinary              1,633          296
shares
                                                                                     ------------ ------------
                                                                                           16,636       15,286
Less provision against doubtful recoverability of debt due from parent                   (16,636)            -

                                                                                    ------------- ------------
                                                                                                -       15,286

                                                                                          =======      =======



2. Accounts for the year ended 30 April 2002

The figures and financial information for year ended 30 April 2002 are extracted
from the latest published accounts of the Company and do not constitute
statutory accounts for that year. Those accounts have been delivered to the
Registrar of Companies and included the report of the auditors which was
unqualified and did not include a statement under either Section 237(2) or
Section 237(3) of the Companies Act 1985.

The interim report will be sent to shareholders in January 2003 and will be
available to members of the public from the Company's registered office at 55
Moorgate, London, EC2R 6PA



For further information:

Please contact:
Zoe Burton Tel: 020 7070 7474
e-mail: z.burton@leggmasoninvestors.com

Nitya Bolam Tel: 020 7404 5959
e-mail: nbolam@BrunswickGroup.com


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