MANCHESTER & LONDON INVESTMENT TRUST PLC – Annual Financial Report

Manchester & London Investment Trust Plc

Announcement of the Audited Group Results

For the year ended 31st July 2015

The Directors Announce the Audited Results for the year ended 31st July 2015

Company Registered Number: 01009550

Financial Summary

Total Return

	Year to 31st July 2015	Year to 31st July 2014	Percentage (decrease)/ Increase
Total return (£’000)	2,483	(6,295)	139.4
Return per 25p ordinary share – fully diluted	11.47p	(28.08)p	140.8
Total revenue return per 25p ordinary share	6.00p	13.63p	(56.0)
Cash dividend per 25p ordinary share	6.00p	13.75p	(56.4)

Capital

	At 31st July 2015	At 31st July 2014	Percentage (decrease)/ Increase
Net assets attributable to equity shareholders* (£’000)	63,074	64,361	(2.0)
Net asset value per 25p ordinary share – fully diluted	293.35p	293.20p	0.1
Benchmark performance - Total Return Basis**	6,616	6,315	4.8
Total Portfolio Return performance versus benchmark adjusting for shares bought back			0.2

* Net asset value as at 31^st July 2015 includes a £1.1m reduction in respect of own shares bought back during the year (2014: £1.3m reduction).

** Dow Jones U.K. Total Stock Market Total Return Index (DWGBT).

Ongoing Charges

	Year to 31st July 2015	Year to 31st July 2014
Ongoing charges as a percentage of average net assets***	0.78%	0.82%

*** Calculated in accordance with AIC guidelines.

Financial Calendar

Year ended:	31st July 2015
Results announced:	30th October 2015
Report and Accounts made available to shareholders:	30th October 2015
Annual General Meeting to be held in Manchester:	30th November 2015
Expected final dividend payment:	3rd  December 2015

Chairman’s Statement

Results for the year ended 31^st July 2015

The portfolio remains focused on larger capitalisation stocks listed in developed markets which are seeking global growth.

The trust’s portfolio performance for our financial year has been, for all intents and purposes, in line with our UK stock market benchmark.  Performance has improved throughout the year and the new strategy adopted by the Investment Manager has stabilised performance.

We have seen a concerted move by the Investment Manager to reduce overweight concentrations in stocks within the fund.  Overweight holdings have been a historical legacy of the trust that many believe has been one of the reasons that led to the trust trading on a large discount.  The other potential reasons for a discount, such as recent underperformance, the smaller size of the fund and the Sheppard family shareholding all remain but at least two can be rectified in time.  It is the intention for the trust to manage its portfolio on a concentrated basis but with more balance.

Dividends

On the 31^st July 2014, we announced that it was possible that, under the lower leverage conditions we have chosen to adopt to comply with the partial exemption, sub threshold regulations within the AIFM directive, the Company may have less capital with which to generate trading income for financial years following 2014.

The Company's income is comprised of both (1) dividend income from investments (considered ordinary investment income to be paid as ordinary dividends) and (2) income from trading activity which includes gains and losses on the trading of shares and equity derivatives, net of commissions, interest and other costs expensed (considered trading income to be paid as special dividends).

The Directors are proposing a final ordinary dividend per share of 1.70 pence and a final special dividend per share of 0.25 pence for the financial year 2015.  This means that, on a per share basis, the dividends proposed or paid out in respect of the 2015 financial year total to 3.20 pence as ordinary dividends and 2.80 pence as special dividends.  On a total ordinary and special basis, these dividends are 56.4 per cent lower than the total dividends paid in respect of the 2014 financial year.

It is inevitable that as we repositioned the portfolio away from more commodity and value based investments we have seen our ordinary income drop.  We do not see this trend reversing in the near future but we have been assured that the Investment Manager is constantly striving to generate as much trading income as possible.

Annual General Meeting

I look forward to welcoming shareholders to our forty third Annual General Meeting to be held at St. Ann’s Church, St. Ann Street, Manchester, M2 7LF at 1p.m. on 30^th November 2015.

P H A Stanley

Chairman

Equity Exposures (Longs)

As at 31^st July 2015

Listed investments*	Sector	Valuation £’000	% of Net Assets
P2P Global Investment plc	Fixed Income Fund	3,425	5.4
Beiersdorf AG¹	Consumer Goods	3,119	4.9
Shire plc	Healthcare & Pharmaceuticals	3,062	4.9
Heineken N.V.¹	Consumer Goods	3,015	4.8
AlphaBet Inc.²	Technology	2,797	4.4
Smith & Nephew plc	Healthcare & Pharmaceuticals	2,611	4.1
AstraZeneca plc	Healthcare & Pharmaceuticals	2,595	4.1
Amazon.com, Inc.²	Technology	2,551	4.0
Apple Inc.²	Technology	2,534	4.0
Pernod Ricard SA¹	Consumer Goods	2,493	4.0
Unilever plc	Consumer Goods	2,410	3.8
GlaxoSmithKline plc	Healthcare & Pharmaceuticals	2,231	3.5
Paypal Holdings Inc.²	Technology	2,066	3.3
Davide Campari-Milano S.p.A.¹	Consumer Goods	2,048	3.2
PZ Cussons plc	Consumer Goods	2,009	3.2
KWS SAAT AG¹	Technology	1,804	2.9
Scottish Mortgage Investment Trust plc	Technology	1,571	2.5
Polar Capital Technology Trust plc	Technology	1,531	2.4
ROBO-STOX UCITS ETF²	Technology	1,400	2.2
Baidu, Inc.²	Technology	1,088	1.7
Pacific Horizon Investment Trust plc	Technology	1,001	1.6
ARM Holdings plc	Technology	998	1.6
eBay Inc.²	Technology	940	1.5
Jimmy Choo plc	Consumer Goods	935	1.5
Perrigo Company plc²	Healthcare & Pharmaceuticals	893	1.4
Yahoo! Inc.²	Technology	866	1.4
Stada Arzneimittel AG¹	Healthcare & Pharmaceuticals	793	1.3
Other listed investments (under 1.0%)	Various	3,814	6.1
Listed investments		56,600	89.7
Unlisted at Directors’ valuation		201	0.3
Total long positions		56,801	90.0
Cash and net current assets		6,273	10.0
Net assets		63,074	100.0

(*Including equity swap exposures as detailed in note 20.)

All investments listed above are equities (unless otherwise stated), denominated in Sterling (except ¹Euro and ²USD) that have been issued by companies registered in England (save for Beiersdorf AG, Heineken N.V., Alphabet Inc., Amazon.com, Inc., Apple Inc., Pernod Ricard SA, Paypal Holdings Inc., Davide Campari-Milano S.p.A., KWS SAAT AG, Baidu, Inc., eBay Inc., Perrigo Company plc, Yahoo! Inc. and Stada Arzneimittel AG that are registered in Germany, Holland, USA, USA, USA, France, USA, Italy, Germany, China, USA, Republic of Ireland, USA and Germany respectively).

Portfolio Sector Analysis

As at 31^st July 2015

Sector	% of Net Assets
Technology	35.0
Consumer Goods	26.7
Healthcare & Pharmaceuticals	21.6
Fixed Income Funds	5.4
Other	1.0
Unlisted Investments	0.3
Cash and net current assets/(liabilities)	10.0
Net assets	100.0

Investment Manager's Review

Last year we wrote that we had underestimated how some of the geopolitical, economic and technological changes that have occurred since the 2008 depression have structurally altered some business models.  We believe this even more so today.

We have refocused the portfolio on stocks that are future focused, developed market listed and larger capitalisation.  In particular, we have refocused on growth over value and on disrupters over the disrupted.

The Portfolio

The portfolio (deducting all portfolio related costs such as commissions and carry cost) generated a positive total return of 5.0 per cent over the financial year compared with a return of our benchmark of 4.8 per cent.  The performance in the second half was better with an outperformance against the Dow Jones U.K. Total Stock Market Total Return Index on the same basis as above of greater than 1.2 per cent.

We are now generally holding positions in four distinct segments: Consumer Goods, Technology, Healthcare & Pharmaceuticals and Other.   In addition, we have detailed below the effect of under-performance from investments in the Oil & Gas and Mining sectors, which impacted performance during the beginning of the year.  Note that all holdings in these latter two sectors have been divested and we are unlikely to revisit them in the near future.  The portfolio segments can be broken down in contribution to performance terms over the year as follows:

Consumer Goods					3.5%
Technology					1.9%
Healthcare & Pharmaceuticals					2.6%
Other					2.0%
					10.0%
Oil & Gas (Since divested)					-4.3%
Mining (Since divested)					-0.7%
					5.0%

Technology Investments

Last year we made the observation, based upon various statistical references, that business models were being disrupted more quickly and more dramatically than in our earlier experiences on the stock market.  We were caught living in the past to painful effect.  Hence, we made the decision to shift focus within the portfolio and seek to allocate approximately one third of the portfolios weighting to Technology sector stocks including software, hardware and disrupting business models.

We believe that over the next decade we will see dramatic growth in the following themes: internet of things, electric vehicles, robotics, 3d printing, cloud computing, internet retailing, wearables and the shared economy.  Some of these themes such as 3d printing are hard to harness via the investment market and we are suspicious that the sub sector, rather like the airline industry, will favour the consumer more than the investor.  In addition to this point, we are aware that this sector is fast moving where a deep knowledge of technology via dedicated teams is an advantage and so we have tended to focus on investing within this sector in mega capitalisation stocks such as Alphabet Inc. and Apple Inc. or via specialist funds such as Scottish Mortgage, Pacific Horizon and Polar Capital Technology.  We are also trying to overlay some event driven ideas within this segment of the portfolio with stocks such as Ebay Inc. and PayPal Holdings Inc.

It is often said that this sector is wildly overvalued but we would counter this with the point that we feel it is better to be in a technology stock with a 40 per cent market share growing its top line at 25 per cent on an EV to EBITDA multiple of 15x than Diageo plc which is barely growing its top line also on 15x (hence the reason why we sold our holding in Diageo plc).

In conclusion, we think that the sector exhibits growth at a reasonable price so we are trying to harness this through a fund and mega capitalisation holdings approach.

Key positive contributors in this segment included Syngenta, which contributed 1.0 per cent to portfolio performance, driven by a takeover approach from Monsanto.  This position was sold prior to the year end, as it looked unlikely that the two sides would reach an agreement.   Alphabet also contributed 0.8 per cent to performance, while Apple and Amazon contributed 0.3 per cent and 0.4 per cent respectively.  Our worst performers were Stratasys (-0.6 per cent contribution) and Baidu (-0.5 per cent contribution), both of which have been divested.

Consumer Goods Investments

We have roughly one third of our current portfolio in Consumer Goods.

The key news is that subsequent to the year-end we completely divested of our holding in PZ Cussons plc.  Interestingly, our decision to divest did not come from a deeper understanding of the consumer goods sector (which has always been an area we have focused on) but by a better understanding of the possibilities of future technology.

Having spent some time this year studying robotics, 3d printing and the electric vehicle market we are becoming convinced that the future of Africa is looking less certain.  The old view was that once China had passed on low cost manufacturing to the ASEAN countries then it would be Africa’s turn.  In addition to that, as Africa developed better political governance, the theory ran that more of its resource wealth would filter down through to the middle classes.

We don’t see either happening in the medium term future.  We see factories being onshored and manned by robots, 3D printers making the cheap plastic toys and the use of combustion engine cars being only for collectors and car enthusiasts.

Potentially the bigger worry is that the brand owner’s power is being eroded and if previously they were worrying about the power of the mega supermarket chain and now they worry about the discounters then in a decade they will be terrified of Amazon and Alibaba.  This is going to lead to consolidation in the sector but from a position of weakness not strength.

Hence, our strategy has been to buy the larger, more global players that are targets for consolidation with top class brands like Nivea, Heineken, Dove, Campari, Jimmy Choo etc.

Performance was relatively strong across the sector, with positive contributions from; Pernod Ricard SA, which contributed 0.9 per cent to performance, Unilever plc, Svenska Cellulosa Aktiebolaget and Diageo plc which each contributed 0.7 per cent, Heineken NV and Davide Campari-Milano Spa which both contributed 0.6 per cent and Beiersforf AG which contributed 0.4 per cent.   Many of these holdings benefited from Euro weakness and low bond yields, which continued to facilitate a rotation into stocks with reliable cash flows.  Though PZ Cussons plc had a better H2 than H1, it was still a drag on performance for the year, contributing -0.8 per cent.

Healthcare & Pharmaceutical Investments

We are very excited by the prospects for health care over the next decade due to Genomics and Biologics.  We are scared about public service pricing pressures in an ever over indebted world but we think the natural result of these factors will be further consolidation to remove duplicated cost structures.  Hence, yet again, our strategy is to pick investments that are exciting prospects on a stand alone basis, with valuations that are reasonable considering their growth prospects that also have the potential to be consolidated by larger players.  We are concerned that some parts of the sector have become overvalued but we do see our chosen investments as being attractively valued.

Performance was largely driven in this sub sector by Shire plc, which contributed 1.3 per cent.   GlaxoSmithKline plc was the largest drag, contributing -0.2 per cent.  Though it is lower growth than many of our other holdings in the sector, we believe GlaxoSmithKline remains inexpensive on a sum of the parts basis and is a potential M&A candidate.

Other

Key contributors included IPOs such as Euronext, P2P Global Investments and VPC Speciality Lending, each of which contributed 0.2 per cent.

Oil & Gas

As explained in our Half Year Report, we exited all Oil and Gas investments earlier in the year.  This proved prudent as the sector subsequently fell further.  Nevertheless, our exposure to the sector early in the year contributed -4.3 per cent to overall portfolio performance.

Mining

We also exited our last remaining Mining positions, though exposure earlier in the year contributed -0.7 per cent to portfolio performance.

Generating trading income

We detailed last year why there are several reasons deriving from AIFMD as to why it will be much harder for us to generate Trading Income in future financial years.  The consequences of lower Trading Income will most probably lead to lower dividends in future financial periods.

Our Trading Income for the financial year fell from £1,377,000 for 2014 to £971,000 for 2015.  These lower returns are to be expected as we can allocate less capital to trading but we do always hope to improve the performance in the forthcoming year.

Controlling costs

Other operating expenses (being all costs excluding direct portfolio costs such as management fee, carry and commission) have decreased marginally from £234,000 to £180,000 since our preceding financial year.  This is a reasonable performance but, as has been highlighted before, we expect these costs to now escalate following the introduction of AIFMD and anticipated further regulation over forthcoming financial years.  We have recently introduced a new portfolio management software system into our systems which we believe will give the Investment Manager greater control and analytical ability over the portfolio and the Board greater clarity of the financial position of the fund.

We anticipate investing more in future years to make our systems even more robust.

Paying shareholders a dividend

Due to a refocus of the portfolio on growth rather than value our aggregate ordinary dividend per share for the 2015 year will be 3.20 pence which is lower than the 7.48 pence paid with respect to the 2014 financial year.

Due to our lower Trading Income this year our aggregate special dividends per share for the 2015 year will be 2.80 pence which is lower than the 6.27 pence paid with respect to the 2014 financial year.

The year ahead

Our five best guesses for 2016 are set out below:

• Another low growth = low returns year – this is why we have focused on growth focused stocks.

• China to be the big worry – we remain underweight in Mining and Oil & Gas.

• Consolidation through M&A will pick up – most of our holdings excluding Apple and Alphabet could be consolidated.

• The Dollar continues to appreciate – ceteris paribus, we perform better when the Dollar strengthens.

• The developing markets will slow but ASEAN should still grow faster than developed markets – so we continue to favour global companies with some exposure to these markets.

Conclusion

We have refocused on change or where change is least likely to hurt us.  We have reduced overweight exposures to individual stocks and we hope that in time that may narrow our discount.  We have performed better but we still have a very long way to go.

Our concerns rest around the potential for a dramatic slowdown for China which drags the world down into a deflationary cycle where debts become overwhelming.  Our best guess is that this won’t happen and we are in line for another low economic growth and low market returns year where the dollar continues to appreciate.  We are also hopeful of a pick-up in M&A activity for which we are reasonably well positioned.

We should understand that by holding fewer small capitalisation or cyclical stocks we may underperform as we are theoretically taking less risk.

We will do our best to generate Trading Income which can be paid out to shareholders as dividend income.  We understand that dividend income is a very important aspect of shareholder returns.

Investment Manager

M & L Capital Management Limited

Principal Portfolio Holdings

Beiersdorf AG (“Beiersdorf”)

Beiersdorf is a global personal care company with strong Skin Care brands in both the mass market and premium segments such as NIVEA, Eucerin and La Prairie.  We believe the NIVEA brand is a world class, tier 1 asset and would be highly attractive to a larger peer.

Shire plc (“Shire”)

Shire is a global specialty biopharmaceutical company focusing on rare diseases, regenerative medicine and specialised conditions.  We believe Shire is inexpensive relative to its growth prospects and remains a potential M&A candidate.  We also see the proposed combination with Baxalta Inc. as compelling, potentially creating the world’s leading rare diseases platform.

Heineken NV (“Heineken”)

Heineken is a Dutch brewer that produces well known brands such as Heineken, Amstel & Strongbow.  Based on volume, Heineken is the world's third largest beer producer after AB Inbev and SABMiller.  Heineken is inexpensive relative to its peer group with relatively stable growth potential.  Though it may not be a particularly willing seller, it could still attract attention in a sector that is likely to be driven by M&A over the next few years.

Alphabet Inc (“Alphabet”)

Alphabet is a global technology company that is at the forefront of innovation in internet-based services and future technologies.  Current areas of Alphabet’s portfolio include online advertising, search, YouTube, cloud computing, Nest and Android operating systems.  Future areas of growth for Alphabet may also include Robotics, Internet of Things, driverless vehicles and Artificial Intelligence.

We see Alphabet as offering compelling value on a sum of the parts basis and is likely to be a leading player in a number of emerging technologies that could drive growth for years to come. Alphabet is likely to be a core long term holding.

Smith & Nephew Plc (“Smith & Nephew”)

Smith & Nephew is a global medical devices company.  It is an international producer of products used in arthroscopy, advanced wound management, orthopaedic reconstruction, endoscopy, trauma extremities, fixation devices and sports medicine.

Smith & Nephew has reasonably attractive growth prospects over the next 5 years and is frequently mentioned as an M&A target.  However, the company’s core segments may not be immune to technological disruption in the long run and we would not be sad to see it acquired by a US peer.

AstraZeneca plc (“AstraZeneca’’)

AstraZeneca is a global innovation-driven biopharmaceutical company.  AstraZeneca has a wide portfolio of products with a primary focus on three important areas of healthcare: Cardiovascular and Metabolic disease, Oncology and Autoimmunity.

AstraZeneca is in the midst of a lower growth phase as key drugs come off patent.  However the stock is inexpensive and, longer term, the pipeline looks attractive.  The pipeline is not without risks though, in particular their position in oncology remains somewhat behind the leaders and could fail to provide the sort of results that the market is expecting.

Amazon.com Inc (“Amazon”)

Amazon is best known as one of the world’s largest e-commerce and online retail companies.  However, it is also building a wider technological portfolio.  In particular, Amazon Web Services is the world’s largest provider of cloud computing services and is now Amazon’s fastest growing division.  Like Alphabet, we believe Amazon will be a key player in a number of future technologies that will drive growth over the longer term.

Apple Inc (“Apple”)

Apple is one of the world’s most innovative technology companies that has a history of producing well designed, sleek and desirable consumer products.  As well as hardware, Apple is a leader in the online services and software industries and is likely to take a leading role in the development of emerging and future technological areas such as wearables, internet of things and driverless vehicles.

Though the stock has recently been driven by iPhone and China slowdown concerns, Apple is inexpensive and we remain attracted to the long term prospects of its expansion into new consumer technologies.  Apple is likely to be a core long-term holding.

Pernod Ricard SA (“Pernod Ricard”)

Pernod Ricard is one of the global leaders in the wines and spirits sector manufacturing popular brands including Martell cognac, Jameson Irish whisky, Beefeater gin, Absolut vodka, Malibu rum and Jacob’s Creek wines.  Whilst its exposure to China is a potential short-term concern, longer-term it is well placed to benefit from Chinese & ASEAN consumer growth.

Unilever plc (“Unilever”)

Unilever is a multinational consumer goods company, with recognisable brands in personal goods, household goods and food.  Unilever has made steady progress this year given relatively challenging conditions and although it is not inexpensive, we would expect further non-core food disposals to drive further multiple expansion.

Investment Record of the Last Ten Years

	Total	Return per ordinary share		Dividend per ordinary	Total assets less	Net asset value per 25p share
Year ended	return £’000	Basic p	Fully diluted p	share p	liabilities £’000	Basic p	Fully diluted p
31st July 2006	3,206	42.75	31.14	9.50	36,107	481.43	351.17
31st July 2007	5,799	41.58	41.58	10.00	52,554	376.80	376.80
31st July 2008	(3,490)	(25.02)	(25.02)	10.00	47,669	341.80	341.80
31st July 2009	645	4.43	4.43	10.50	57,495	328.44	328.44
31st July 2010	13,151	71.75	71.75	11.50	85,203	379.40	379.40
31st July 2011	15,691	69.87	69.87	12.50	98,267	437.60	437.60
31st July 2012	(19,945)	(88.81)	(88.81)	13.00	75,515	336.26	336.26
31st July 2013	2,522	11.23	11.23	13.75	75,050	334.19	334.19
31st July 2014	(6,295)	(28.08)	(28.08)	13.75	64,361	293.20	293.20
31st July 2015	2,483	11.47	11.47	6.00	63,074	293.35	293.35

In the period from 1981 to 2005, total assets less liabilities increased from £241,000 to £33,611,000.  Net assets per share increased from 24.1p to 448.2p.

Strategic Report

The Directors present their annual report and financial statements for the year ended 31^st July 2015.

The Chairman’s Statement forms part of the Directors’ Report.

Business Review

The purpose of the strategic report is to provide an overview of the business of the Company by:

• Analysing development and performance using appropriate key performance indicators (“KPIs”).

• Outlining the principal risks and uncertainties affecting the Company.

• Describing how the Company manages these risks.

• Explaining the future business plan of the Company.

• Providing information about persons with whom the Company has contractual or other arrangements which are essential to the business of the Company.

• Outlining the main trends and factors likely to affect the future development, performance and position of the Company’s business.

Status

The Company is an Investment Company as defined by Section 833 of the Companies Act 2006 and operated as an Investment Trust in accordance with Section 1158 of the Corporation Tax Act 2010.

The Company is also governed by the Listing Rules and Disclosure and Transparency Rules of the Financial Conduct Authority and is listed on the main market of the London Stock Exchange under the epic code “MNL”.

The close company provisions of the Corporation Tax Act 2010 do not apply to the Company.

The Company’s registered number is 01009550.

Principal activities

The Company carries on business as an Investment Company.  A review of investment activities for the year ended 31^st July 2015 and the outlook for the coming year is given by the Investment Manager.

Performance and key performance indicators

The key measures by which the Board judges the success of the Company are the share price, the net asset value per share and the ongoing charges measure.

The Board considers the most important key performance indicator to be the comparison with its benchmark index.  This is referred to in the Financial Summary.

Total net assets at 31^st July 2015 amounted to £63,074,000 compared with £64,361,000 at 31^st July 2014, a decrease of 2.0 per cent (net of own share buybacks as disclosed in note 18), whilst the fully diluted net asset value per ordinary share increased to 293.4p from 293.2p.

Group net revenue return after taxation for the year was £1,300,000 (2014:£3,055,000), a decrease of 57.4 per cent.

The share price during the period under review has been quoted at discounts to net asset value of 12.3 to 18.9 per cent.

Ongoing charges is a measure of the total expenses (including those charged to capital) expressed as a percentage of the average net assets over the year.  The Board regularly reviews the ongoing charges measure and monitors Group expenses.

Going concern

After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future.  For this reason, they continue to adopt the going concern basis in preparing the financial statements.

Principal risks and uncertainties associated with the Company

An investment in the Company is only suitable for financially sophisticated investors who are capable of evaluating the risks and merits of such an investment, or other investors who have been professionally advised with regard to investment and who have sufficient resources to bear any loss which might result from such an investment.  There can be no guarantee that investors will recover their initial investment.  The investment may employ gearing and may be subject to sudden and large falls in value.  Investors should be aware that movements in the price of the Company may be more volatile than movements in the price of the underlying investments and that there is a risk that investors may lose all their invested money.  Investors considering an investment should consult their stockbroker, bank manager, solicitor, accountant and/or other independent financial adviser.

In respect of some of the companies in which the Company may invest:

• the company may be undergoing significant change, or be exposed to the volatility of emerging or developing markets;
• they may have less mature businesses, a more restricted depth of management and accordingly a higher risk profile;
• the quality of the investments’ management may have been overestimated;
• the market value of, and income derived from, such shares can fluctuate; and
• there may not be a liquid market for their shares.  The fact that a share is traded on a market does not guarantee its liquidity.  Accordingly, such shares may be difficult to realise at quoted market prices.

Any change in the tax treatment of dividends paid, or income received by the Company, may reduce the level of yield received by shareholders.  Any change in the Company’s tax status, or in legislation, could affect the value of the investments held by the Company and its performance.

Investment in the Company should be regarded as long-term in nature.  There can be no guarantee that any appreciation in the value of the Company’s investments will occur and investors may not get back the full value of their investment.  There can be no guarantee that the investment objective of the Company will be met.

The Company is exposed to a range of economic and market risks, liquidity, interest rates, exchange rates and general financial risks.

The market capitalisation of the Company will make the market of the ordinary shares less liquid than would be the case for a larger company.

Whilst the use of borrowings by the Company should enhance the net asset value of the ordinary shares when the value of the Company’s underlying assets is rising, it will have the opposite effect when the underlying asset value is falling.  Furthermore, should any fall in the underlying assets’ values result in the Company breaching the financial covenants applicable to borrowings, the Company may be required to repay such borrowing in whole or in part together with any attendant costs.  In order to repay such borrowings, the Company may have to sell assets at less than their quoted market values.  A positive net asset value for the ordinary shares will be dependent upon the Company’s assets being sufficient to meet any debt.

On a winding-up of the Company, the ordinary shares rank for repayment of capital after repayment of all other creditors of the Company.  Ordinary shares are only appropriate for investors who understand that they may receive an amount less than their original investment.

Risk management

The risks with regards to financial instruments, and the Company’s policies for management of these risks, are detailed in note 20 to the financial statements - “Risks – Investments, derivatives and other risks”.  The Company manages the risks inherent in portfolio management by investing in approximately 20 to 40 securities of companies operating in a range of industrial sectors and varying the extent of cash holdings or gearing in relation to the Investment Manager’s assessment of overall market conditions.

The Company does not have any employees and consequently relies upon the services provided by a number of third parties.  The Board therefore relies on the control procedures of these third parties which include the Company’s Investment Manager, Registrar, Custodians and Broker.  This type of operational structure is not uncommon with Investment Trust companies.

The Board via reports from the Administrator reviews the internal control procedures of its third party service providers and assesses the reliability of these procedures as part of its risk management strategy. The Risk Management function is a responsibility of the Administrator, M&M Investment Services, which is a division of M&M Investment Company plc and operates as a standalone unit, comprised of individuals who are not members of the Board or the Sheppard family.  Further details with regards to the Board’s risk management procedures are detailed in the “Internal Financial Control” section of the Statement of Corporate Governance.

Gearing

By the year end gross long equity exposure represented 90.0 per cent of net assets.

Management

Details of the Company's management agreement with M & L Capital Management Limited ("the Investment Manager") are contained in note 3 to the financial statements.

Future development

A commentary on the trends and factors likely to affect the future development, performance and position of the Company, which includes an assessment of market sentiment and the effectiveness of government intervention, is set out in the Chairman’s Statement and the Investment Manager’s Report and is also released monthly in a fund factsheet published via the Company’s website.

By Order of the Board Mr M K Camp Secretary 30th October 2015

Directors’ Report

Results

The Group’s total comprehensive profit for the year, after taxation, amounted to £2,483,000 (2014: £6,295,000 total comprehensive loss).

After own share buybacks as disclosed in note 18, total net assets at 31^st July 2015 amounted to £63,074,000 compared with £64,361,000 at 31^st July 2014, whilst the fully diluted net asset value per ordinary share increased to 293.4p from 293.2p.

Dividends

A first special dividend for the year ended 31^st July 2015 of 2.30p per share was paid on 28^th November 2014 (2014: 5.00p). Further to this an interim ordinary dividend of 1.50p and a second special dividend of 0.25p per ordinary share were paid on 30^th April 2015 (2014: 5.50p interim ordinary). The Directors are recommending a final ordinary dividend of 1.70p per ordinary share (2014: 1.98p final ordinary) and a final special dividend of 0.25p per ordinary share (2014: 1.27p final special), giving a total for the year of 6.00p per ordinary share (2014: 13.75p).

It is our current intention that the final ordinary dividend will be paid on 3^rd December 2015 to shareholders registered on 20^th November 2015.  The shares will be declared ex-dividend on 19^th November 2015.

Share valuations

On 31^st July 2015, the middle market quotation and the net asset value per ordinary 25p share were 238.4p and 293.4p, respectively.  This indicates that the discount on the Company’s shares was 18.7 per cent.  This is not uncommon as the share prices of closed-end funds are often traded at a discount to their net asset values.

Events after the reporting period

The have been no significant events since the end of the reporting period other than the volatility currently experienced in the stock market.

Supplier terms

It is the Group's policy to obtain the best terms for all business, including purchases of investments and to abide by those agreed terms.

The Group had trade payables of £156,000 (2014: £96,000) at the year end.  Trade payables are settled by the due date for payment.  Payables in respect of investment purchases are settled in accordance with Stock Exchange regulations.

Directors’ Responsibilities in Relation to the Annual Report and the Financial Statements

The Directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the Group and Parent Company financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year.  Under that law the Directors have prepared the Group and Parent Company financial statements in accordance with International Financial Reporting Standards (IFRS) adopted by the European Union and Article 4 of the EU IAS Regulation.  Under Company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of the affairs of the Company and the Group and of the profit or loss of the Company and Group for that period.

In preparing those financial statements, the Directors are required to:

• properly select suitable accounting policies in accordance with IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors, and apply them consistently;

• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

• make judgements and accounting estimates that are reasonable;

• provide additional disclosure when compliance with the specific requirements of IFRS are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company and Group financial position and financial performance;

• state that the Company and Group financial statements have been prepared in accordance with IFRS, subject to any material departures disclosed and explained in the financial statements;

• present fairly the Company and Group financial position, financial performance and cashflows; and

• prepare the financial statements on a going concern basis unless it is inappropriate to presume that the company will continue in business.

The Directors are responsible for keeping adequate accounting records that show and explain the Company’s and Group’s transactions and disclose with reasonable accuracy, at any time, the financial position of the Company and of the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation.  They are also responsible for safeguarding the assets of the Company and Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website.  Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, a Directors' Report and Statement of Corporate Governance that comply with that law and those regulations.

To the best of the knowledge of each of the Directors:

1. the financial statements, prepared in accordance with the IFRS adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
2. the Annual Report includes a fair review of the development and performance of the fund and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

The board confirms that the annual report and accounts, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the performance, strategy and business model of the Company and Group. This statement is underpinned by the comprehensive review process of the annual report by the audit committee and directors. Each of the Directors accepts responsibility accordingly.

On behalf of the Board of Directors

Mr P H A Stanley

Chairman

30th October 2015

Directors’ Remuneration Report

Annual statement

This report has been prepared by the Board in accordance with the requirements of the Companies Act 2006 in respect of the year ended 31^st July 2015.  An ordinary resolution for the approval of this report will be put to the members at the forthcoming Annual General Meeting.

Company law requires the Company's Auditor to audit certain information set out in this report.  Where information has been audited it is indicated as such.

Directors’ remuneration policy

The Board as a whole reviews and sets the level of remuneration payable to each Director annually.

The Company's Articles of Association limit the aggregate fees payable to the Directors to a total of £200,000 per annum.  Subject to this overall limit, it is the Board's policy that the remuneration of Directors should be set at a level that is commensurate with the duties and responsibilities of the role.  The Board also takes into account remuneration levels elsewhere in the investment trust industry and all other relevant information when considering Directors' fees.  The Board considers that the current policy to remunerate the Directors by way of fixed fees is appropriate to the Company's present circumstances and there are no plans to introduce any alternative remuneration schemes.

Non-executive Directors are not eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits.  There are no executive directors.

Terms of Directors’ appointment

No Directors have a contract of service.

There are no agreements between the Company and its Directors concerning compensation for loss of office.

Directors' emoluments for the year (audited)

The Directors who served during the year received the following emoluments in the form of fees:

	Fees 2015 £	Fees 2014 £
Mr P H A Stanley (Chairman)	18,000	18,000
Mr B S Sheppard (Resigned 30th August 2013)	-	1,000
Mr D Harris	15,000	15,000
Mr B Miller (Appointed 30th August 2013)	15,000	13,750
	48,000	47,750

There were no other payments to past directors.

Director shareholdings are disclosed in the Directors’ Report.

Approval

The Directors' Remuneration Report was approved by the Board of Directors on 30^th October 2015 and signed on its behalf by:

Mr P H A Stanley

Chairman

Independent Auditor’s Report To The Members of Manchester & London Investment Trust plc

The Company’s financial statements for the year ended 31^st July 2015 have been audited by CLB Coopers. The entire Auditor’s report, which is unqualified, can be found in the Company’s Annual Report and Financial Statements at www.manchesterandlondon.co.uk.

Consolidated Statement of Comprehensive Income

For the year ended 31^st July 2015

		2015	2015	2015		2014	2014	2014
	Note	Revenue £’000	Capital £’000	Total £’000		Revenue £’000	Capital £’000	Total £’000
Gains
Gains/(losses) on investments at fair value through profit or loss		-	1,402	1,402		-	(9,052)	(9,052)
Trading income	2	971	-	971		1,377	-	1,377
Investment income	2	1,185	-	1,185		2,431	-	2,431
Gross return		2,156	1,402	3,558		3,808	(9,052)	(5,244)
Expenses
Investment management fee	3	(311)	-	(311)		(348)	-	(348)
Cost of investment transactions		(303)	-	(303)		(170)	-	(170)
Other operating expenses	4	(180)	-	(180)		(234)	-	(234)
Total expenses		(794)	-	(794)		(752)	-	(752)
Return before finance costs and tax		1,362	1,402	2,764		3,056	(9,052)	(5,996)
Finance costs	6	(62)	(219)	(281)		(1)	(298)	(299)
Return on ordinary activities before tax		1,300	1,183	2,483		3,055	(9,350)	(6,295)
Tax expense	7	-	-	-		-	-	-
Return on ordinary activities after tax		1,300	1,183	2,483		3,055	(9,350)	(6,295)
Earnings per ordinary share (pence)
Basic	9	6.00	5.47	11.47		13.63	(41.71)	(28.08)
Fully diluted	9	6.00	5.47	11.47		13.63	(41.71)	(28.08)

The total column of this statement represents the Statement of Comprehensive Income of the Group 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.

The Group does not have any Other Comprehensive Income and hence the return on ordinary activities after tax, as disclosed above, is the same as the Group’s Total Comprehensive (Loss)/Income.

All items in the above statement derive from continuing operations.

Consolidated and Company Statements of Changes in Equity

For the year ended 31^st July 2015

Group	Share capital £’000	Share premium £’000	Treasury shares £’000	Other reserves £’000	Capital reserve (unrealised) £’000	Capital reserve (realised) £’000	Retained earnings £’000	Total £’000
Balance at 1st August 2013	5,614	35,132	-	(79)	5,596	24,899	3,888	75,050
Changes in equity for 2014
Total comprehensive loss	-	-	-	-	-	-	(6,295)	(6,295)
Buybacks of ordinary shares	-	-	(1,306)	-	-	-	-	(1,306)
Transfer of capital	-	-	-	-	9,643	(18,993)	9,350	-
Equity dividends paid	-	-	-	-	-	-	(3,088)	(3,088)
Balance at 31st July 2014	5,614	35,132	(1,306)	(79)	15,239	5,906	3,855	64,361
Changes in equity for 2015
Total comprehensive income	-	-	-	-	-	-	2,483	2,483
Buybacks of ordinary shares	-	-	(1,089)	-	-	-	-	(1,089)
Transfer of capital	-	-	-	-	(10,088)	11,271	(1,183)	-
Equity dividends paid	-	-	-	-	-	-	(2,681)	(2,681)
Balance at 31st July 2015	5,614	35,132	(2,395)	(79)	5,151	17,177	2,474	63,074
Company	Share capital £’000	Share premium £’000	Treasury shares £’000	Other reserves £’000	Capital reserve (unrealised) £’000	Capital reserve (realised) £’000	Retained earnings £’000	Total £’000
Balance at 1st August 2013	5,614	35,295	-	(79)	5,596	1,530	27,102	75,058
Changes in equity for 2014
Total comprehensive loss	-	-	-	-	-	-	(6,303)	(6,303)
Buybacks of ordinary shares	-	-	(1,306)	-	-	-	-	(1,306)
Transfer of capital	-	-	-	-	9,643	(18,993)	9,350	-
Equity dividends paid	-	-	-	-	-	-	(3,088)	(3,088)
Balance at 31st July 2014	5,614	35,295	(1,306)	(79)	15,239	(17,463)	27,061	64,361
Changes in equity for 2015
Total comprehensive income	-	-	-	-	-	-	2,483	2,483
Buybacks of ordinary shares	-	-	(1,089)	-	-	-	-	(1,089)
Transfer of capital	-	-	-	-	(10,088)	11,271	(1,183)	-
Equity dividends paid	-	-	-	-	-	-	(2,681)	(2,681)
Balance at 31st July 2015	5,614	35,295	(2,395)	(79)	5,151	(6,192)	25,680	63,074

Consolidated Statement of Financial Position

At 31^st July 2015

			2015		2014
	Note		£’000		£’000
Non-current assets
Investments at fair value through profit or loss	10		28,040		45,664
			28,040		45,664
Current assets
Unrealised derivative assets	16		2,387		291
Trade and other receivables	12		24		100
Cash and cash equivalents	13		34,233		19,625
			36,644		20,016
Gross assets			64,684		65,680
Current liabilities
Unrealised derivative liabilities	16		(1,410)		(1,185)
Trade and other payables	15		(200)		(134)
			(1,610)		(1,319)
Net assets			63,074		64,361
Equity attributable to equity holders
Ordinary share capital	17		5,614		5,614
Shares held in treasury	18		(2,395)		(1,306)
Share premium			35,132		35,132
Other reserves
Capital reserve – realised			17,177		5,906
Capital reserve – unrealised			5,151		15,239
Goodwill reserve			(79)		(79)
Retained earnings			2,474		3,855
Total equity			63,074		64,361
Net asset value per share
Ordinary shares – basic	19 18		293.4p		293.2p
Ordinary shares – fully diluted	19		293.4p		293.2p

The financial statements were approved by the Board of Directors and authorised for issue on 30^th October 2015 and are signed on their behalf by:

Mr D Harris Directors

Mr P H A Stanley (Chairman)

Company Statement of Financial Position

At 31^st July 2015

			2015		2014
	Note		£’000		£’000
Non-current assets
Investments at fair value through profit or loss	10		28,040		45,664
			28,040		45,664
Current assets
Unrealised derivative assets	16		2,387		291
Trade and other receivables	12		24		100
Cash and cash equivalents	13		34,233		19,625
			36,644		20,016
Gross assets			64,684		65,680
Current liabilities
Unrealised derivative liabilities	16		(1,410)		(1,185)
Trade and other payables	15		(200)		(134)
			(1,610)		(1,319)
Net assets			63,074		64,361
Equity attributable to equity holders
Ordinary share capital	17		5,614		5,614
Shares held in treasury	18		(2,395)		(1,306)
Share premium			35,295		35,295
Other reserves
Capital reserve – realised			(6,192)		(17,463)
Capital reserve – unrealised			5,151		15,239
Goodwill reserve			(79)		(79)
Retained earnings			25,680		27,061
Total equity			63,074		64,361

The financial statements were approved by the Board of Directors and authorised for issue on 30^th October 2015 and are signed on their behalf by:

Mr D Harris Directors

Mr P H A Stanley (Chairman)

Consolidated Statement of Cash Flows

For the year ended 31^st July 2015

	2015 £’000		2014 £’000
Cash flow from operating activities
Return on operating activities before taxation	2,483		(6,295)
Interest paid	54		299
Loss on investments	1,215		2,208
Decrease in receivables	76		90
Increase/(decrease) in payables	66		(49)
Increase in derivatives	(1,871)		(10,587)
Net cash generated from/(used in) operating activities	2,023		(14,334)
Cash flow from investing activities
Purchases of investments	(47,247)		(35,015)
Sales of investments	63,656		62,832
Net cash generated from investing activities	16,409		27,817
Cash flow from financing activities
Equity dividends paid	(2,681)		(3,088)
Buybacks of ordinary shares	(1,089)		(1,306)
Repaid to loan facility	-		(10,967)
Interest paid	(54)		(299)
Net cash used in financing activities	(3,824)		(15,660)
Net increase/(decrease) in cash and cash equivalents	14,608		(2,177)
Cash and cash equivalents at beginning of year	19,625		21,802
Cash and cash equivalents at end of year	34,233		19,625

Company Statement of Cash Flows

For the year ended 31^st July 2015

	2015 £’000		2014 £’000
Cash flow from operating activities
Return on operating activities before taxation	2,483		(6,303)
Interest paid	54		299
Loss on investments	1,215		2,225
Decrease in receivables	76		2,661
Increase/(decrease) in payables	66		(66)
Increase in derivatives	(1,871)		(5,482)
Net cash generated by/(used in) operating activities	2,023		(6,666)
Cash flow from investing activities
Purchases of investments	(47,247)		(35,015)
Sales of investments	63,656		62,832
Net cash generated from investing activities	16,409		27,817
Cash flow from financing activities
Equity dividends paid	(2,681)		(3,088)
Buybacks of ordinary shares	(1,089)		(1,306)
Repaid to loan facility	-		(10,967)
Interest paid	(54)		(299)
Net cash used in financing activities	(3,824)		(15,660)
Net increase in cash and cash equivalents	14,608		5,491
Cash and cash equivalents at beginning of year	19,625		14,134
Cash and cash equivalents at end of year	34,233		19,625

Notes Forming Part of the Financial Statements

For the year ended 31^st July 2015

1. Accounting policies

A summary of the principal accounting policies is set out below.

Manchester & London Investment Trust plc (“MLIT”) is a public limited company, which is listed on the London Stock Exchange and is incorporated and domiciled in the United Kingdom.  The consolidated financial statements of the Company for the year ended 31^st July 2015 comprise the Company and its subsidiaries (together referred to as the ‘Group’ and individually as ‘Group entities’).

a) Basis of preparation and statement of compliance

In accordance with European Union regulations, these financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (“IASB”), as adopted for use in the EU effective at 31^st July 2015.

The financial statements have been prepared on the historical cost basis except where IFRS require an alternative treatment.

To the extent that presentational guidance set out in the Statement of Recommended Practice (“SORP”) for investment trusts revised by the Association of Investment Companies (“AIC”) is inconsistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP, whilst adhering to IFRS.

The Group's principal accounting policies are set out below.  These accounting policies have been applied consistently to all periods presented in these consolidated financial statements.

b) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31^st July each year.  Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.  All intra-group balances are eliminated on consolidation.

As permitted by Section 408 of the Companies Act 2006, the parent Company’s statement of comprehensive income has not been included in these financial statements.  The parent Company’s comprehensive profit after tax for the year was £2,483,000 (2014: £6,303,000 comprehensive loss).

The results of subsidiaries or businesses acquired or disposed of during the year are included in the consolidated Statement of Comprehensive Income from the effective date of acquisition or up to the effective date of disposal as appropriate.

2. Income

	2015 £’000		2014 £’000
Total income comprises
Trading income	971		1,377
Dividends from listed investments	1,140		2,428
Interest	45		3
	2,156		3,808

Finance, commission and other costs (including stamp duty) deducted in the calculation of trading income are not disclosed separately.

3. Investment management fee

	2015	2015	2015		2014	2014	2014
	Revenue £’000	Capital £’000	Total £’000		Revenue £’000	Capital £’000	Total £’000
Investment management fee	311	-	311		348	-	348

The Investment Manager provides investment services to the Company under a management agreement with a termination period of three months.  The annual fee is 0.5 per cent of the total portfolio value including cash and short term deposits, payable quarterly in arrears.  The fee is not subject to Value Added Tax (“VAT”). Transactions with the investment manager during the year are disclosed in note 21.

The investment management fee is chargeable to revenue.

4. Other operating expenses

	2015 £’000		2014 £’000
Directors’ fees	48		48
Auditors’ remuneration	23		23
Registrar fees	10		11
Exchange rate variances	-		45
Other expenses	99		107
	180		234
Fees payable to the Company’s auditor for the audit of the parent company and consolidated financial statements	23		23
Fees payable to the Company’s auditor for other services:
other services relating to taxation	7		7
	30		30

Other operating expenses include irrecoverable VAT where appropriate.

5. Staff numbers and costs

Excluding Directors, the Group employs no members of staff.

Included in Directors' fees above (note 4) are the emoluments paid to the Chairman as follows:

	2015 £’000		2014 £’000
P H A Stanley  (Chairman)	18		18

6. Finance costs

	2015 £’000		2014 £’000
Charged to revenue	62		1
Charged to capital	219		298
	281		299

The finance costs attributable to closed positions defined as trading income are deducted in the calculation of trading income along with commission costs.  The split between the commission charged for trading and capital items is not disclosed separately.

7. Taxation

	2015	2015	2015	2014	2014	2014
	Revenue £’000	Capital £’000	Total £’000	Revenue £’000	Capital £’000	Total £’000
Current UK corporation tax	-	-	-	-	-	-
The charge for the year can be reconciled to the profit per the income statement as follows:
Profit/(loss) before tax	1,300	1,183	2,483	3,055	(9,350)	(6,295)
Tax at the UK corporation tax rate of 20.67% (2014: 22.33%)	269	245	514	682	(2,088)	(1,406)
Tax effect of non-taxable dividends/unrealised profits	(228)	-	(228)	(489)	-	(489)
Income not subject to UK corporation tax	(17)	-	(17)	(308)	-	(308)
Brought forward losses utilised during the period	(28)	-	(28)	-	-	-
Losses on investments not relieved	-	(290)	(290)	-	2,022	2,022
Other non-taxable income less expenses not deductible for tax	-	45	45	-	66	66
Unrelieved tax losses and other deductions arising in the period	4	-	4	-	-	-
Excess management expenses	-	-	-	115	-	115
Current year tax charge	-	-	-	-	-	-

The Company has surplus management expenses at 31^st July 2015 of £2,372,000 (2014: £3,053,000).

At 31^st July 2015, there is an unrecognised deferred tax asset, measured at the standard rate of 20.7 per cent, of £490,000 (2014: £641,000).  This deferred tax asset relates to surplus management expenses.  It is unlikely that the Group will generate sufficient taxable profits in the foreseeable future to recover these amounts and therefore the asset has not been recognised in the year, or in prior years.

As at 31^st July 2015, the Company has unrelieved capital losses of £9,330,000 (2014: £9,330,000).  There is therefore, a related unrecognised deferred tax asset, measured at the standard rate of 20.7 per cent, of £1,928,000 (2014: £1,959,000).  These capital losses can only be utilised to the extent that the Company does not qualify as an investment trust in the future and, as such, the asset has not been recognised.

8. Dividends

Amounts recognised as distributions to equity holders in the period:	2015 £’000		2014 £’000
Final ordinary dividend for the year ended 31st July 2014 of 1.98p (2013: 8.25p) per share	431		1,853
First special dividend for the year ended 31st July 2014 of 5.00p (2014: Nil) per share	1,098		-
Second special dividend for the year ended 31st July 2014 of 1.27p (2014: Nil) per share	276		-
Interim ordinary dividend for the year ended 31st July 2015 of 1.50p (2014: 5.50p) per share	322		1,235
First special dividend for the year ended 31st July 2015 of 2.30p (2014: Nil) per share	500		-
Second special dividend for the year ended 31st July 2015 of 0.25p (2014: Nil) per share	54		-
	2,681		3,088

The Directors are proposing a final ordinary dividend of 1.70p and a final special dividend of 0.25p for the financial year 2015. These proposed dividends have been excluded as a liability in these financial statements in accordance with IFRS.

We also set out below the total dividend payable in respect of the financial year, which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered.

	2015 £’000		2014 £’000
Interim ordinary dividend for the year ended 31st July 2015 of 1.50p (2014: 5.50p) per share	322		1,235
Proposed final ordinary dividend for the year ended 31st July 2015 of 1.70p (2014: 1.98p) per share*	365		431
First special dividend for the year ended 31st July 2015 of 2.30p (2014: 5.00p) per share	500		1,098
Second special dividend for the year ended 31st July 2015 of 0.25p (2014: nil) per share	54		-
Proposed final special dividend for the year ended 31 July 2015 of 0.25p (2014: 1.27p) per share*	54		277
	1,295		3,041

*Based on the total shares eligible to receive dividend as at 30^th October 2015.

9. Return per ordinary share

The calculation of the basic and fully diluted earnings per ordinary share is based on the following:

	2015	2015	2015		2014	2014	2014
	Revenue £’000	Capital £’000	Total £’000		Revenue £’000	Capital £’000	Total £’000
Return:
Basic and fully diluted	1,300	1,183	2,483		3,055	(9,350)	(6,295)

Basic revenue, capital and total return per ordinary share is based on the net revenue, capital and total return for the period and on the weighted average number of ordinary shares in issue (excluding those shares held in treasury per note 18) of 21,645,499 (2014: 22,417,547).

10. Investments at fair value through profit or loss

		Group &  Company
		2015 £’000	2014 £’000
Investments as below		28,040	45,664

   

			Listed £’000	Unlisted £’000	Total £’000
Opening cost at 1st August			30,663	56	30,719
Opening unrealised appreciation at 1st August			14,868	77	14,945
Opening fair value at 1st August			45,531	133	45,664
Purchases at cost			47,183	64	47,247
Sales proceeds			(63,656)	-	(63,656)
Realised profit on sales			10,672	-	10,672
(Decrease)/increase in unrealised appreciation			(11,891)	4	(11,887)
Closing fair value at 31st July			27,839	201	28,040
Closing cost at 31st July			24,862	120	24,982
Closing unrealised appreciation at 31st July			2,977	81	3,058
Closing fair value at 31st July			27,839	201	28,040

11. Subsidiary undertakings

				Company
				2015	2014
				£’000	£’000
Opening cost at 1st August				17	17
Provision for diminution in value				(17)	(17)
Closing cost at 31st July				-	-

The Company has investments in the following subsidiary undertakings:

Name of undertaking		Principal Activity	Country of	% of shares held
			incorporation and operation	Ordinary shares	Preference shares
OSP Limited	Non-Trading		Guernsey	100	-
Manchester & London Securities Limited	Dormant		England	100	-
Saintclose Limited	Dormant		England	100	-
Beacontree Plaza Limited	Dormant		England	100	100
Beaconbranch Limited	Dormant		England	100*	-
Darethrift Limited	Dormant		England	100	-
Fileglow Limited	Dormant		England	100	-
Zealgate Limited	Dormant		England	100	-

All these subsidiary undertakings are included in the consolidation.

*Beaconbranch Limited is 100 per cent owned by Beacontree Plaza Limited.

In the opinion of the Directors, there is no material difference between the book value and fair value of these investments.

12. Trade and other receivables

	Group			Company
	2015 £’000	2014 £’000		2015 £’000	2014 £’000
Dividend receivables	-	51		-	51
Other receivables	16	10		16	10
Prepayments	8	39		8	39
	24	100		24	100

13. Cash and cash equivalents

	Group			Company
	2015 £’000	2014 £’000		2015 £’000	2014 £’000
Cash & cash equivalents	34,233	19,625		34,233	19,625

Cash & cash equivalents include £33.3m (2014: £15.0m) held in investment accounts as collateral against open equity swap and derivative exposures which are detailed in note 20.

14. Securities

As part of custodian relationships, assets held with both Morgan Stanley & Co. International plc and JP Morgan Chase & Co. are subject to a first fixed charge with full title guarantee as continuing security.

£25.3m of collateral was held with Morgan Stanley & Co. International plc as at 31^st July 2015 (2014: £14.2m).

£36.0m of collateral was held with JP Morgan Chase & Co. as at 31^st July 2015 (2014: £Nil).

15. Trade and other payables

Group
	Group			Company
	2015 £’000	2014 £’000		2015 £’000	2014 £’000
Trade payables	156	96		156	96
Accruals	44	38		44	38
	200	134		200	134

16. Derivatives

The Company may use a variety of derivative contracts, including equity swaps, futures, forwards and options under master agreements with the Company’s derivative counterparties to enable the Company to gain long and short exposure on individual securities.  Derivatives are valued by reference to the underlying market value of the corresponding security.

The sources of the return under the derivative contract (e.g. notional dividends, financing costs, interest returns and capital changes) are allocated to the revenue and capital accounts in accordance with the nature of the underlying source of income and in accordance with the guidance given in the AIC SORP. Notional dividend income arising on long positions is apportioned wholly to the revenue account. Notional interest expense on long positions is initially allocated 100% to capital whilst the position is unrealised, however, upon realisation these costs are expensed through the income statement as revenue or capital in accordance with the Company’s revenue recognition accounting policy.  Unrealised changes in value relating to underlying price movements of securities in relation to derivatives are allocated to revenue or capital, dependent upon their nature.

The net fair value of derivatives at 31^st July 2015 was a positive £977,000 (2014: negative £894,000). The corresponding gross exposure on equity swaps as at 31^st July 2015 was £28,761,000 (2014: £21,273,000). The net marked to market futures and options total value as at 31^st July 2015 was negative £406,000 (2014: negative £290,000).

Group
	Group						Company
	2015 £’000		2014 £’000					2015 £’000	2014 £’000
Assets
Unrealised derivative assets	2,387		291					2,387	291
	2,387		291					2,387	291
Current liabilities
Unrealised derivative liabilities	1,410		1,185					1,410	1,185
	1,410		1,185					1,410	1,185

17. Share capital

Ordinary share capital		2015			2014
	No. (‘000)	£’000		No. (‘000)	£’000
Authorised
Ordinary shares of 25p each	28,000	7,000		28,000	7,000
Non-voting Convertible Preference shares of £1 each	1,000	1,000		1,000	1,000
Ordinary shares of 25p each issued and fully paid
Balance as at 1st August	22,457	5,614		22,457	5,614
Balance as at 31st July	22,457	5,614		22,457	5,614

Ordinary shares carry the right to one vote and the right to dividends.

18. Shares held in treasury

		2015			2014
	No. (‘000)	£’000		No. (‘000)	£’000
Balance as at 1st August	506	1,306		-	-
Shares bought back during year	450	1,089		506	1,306
Balance as at 31st July	956	2,395		506	1,306

At the annual general meeting held on 24^th November 2014, shareholders approved the Board's proposal to authorise the Company to acquire up to 14.99 per cent of its issued share capital as at 31^st July 2014.

During the year the Company bought back 450,271 (2.0%) of its Ordinary Shares for a total consideration of £1,089,000.  These shares were held in Treasury throughout the period.

19. Net asset value per share

	Net asset value per share			Net assets        attributable
	2015 p	2014 p		2015 £’000	2014 £’000
Ordinary shares: basic and fully diluted	293.4	293.2		63,074	64,361

The basic net asset value per ordinary share is based on net assets at the year end and 21,500,920 (2014: 21,951,191) ordinary shares in issue, adjusted for any shares held in treasury.

20. Risks – Investments, derivatives and other risks

In order to manage its portfolio efficiently and to enable the Investment Manager to pursue the investment objectives, the Group holds equity swaps, derivatives and other financial instruments.  All equity swaps, derivative transactions and financial instruments are accounted for at fair value and comprise securities, cash balances, trade receivables and trade payables arising directly from financial operations.

The main risk arising from the Group's investment strategy is market price risk.  There is also exposure to liquidity risk, interest rate risk and currency rate risk.

The Board regularly reviews and agrees policies for managing these risks, which are monitored by the Administrator, as summarised below.

Market price risk

Market price risk arises mainly from uncertainty about future prices of financial instruments held.  It represents the potential loss the Group might suffer through holding market positions in the face of price movements. Both the Investment Manager and the Administrator actively monitor market prices throughout the year and report to the Board, which meets regularly to review investment strategy.

If the price of these investments and equity swaps had increased by 3 per cent at the reporting date with all other variables remaining constant, the capital return in the statement of comprehensive income and the net assets attributable to equity holders of the Group would increase by £1,704,000.

A 3 per cent decrease in share prices would have resulted in an equal and opposite effect of £1,704,000, on the basis that all other variables remain constant.

At the year end the Group’s direct equity exposure to market price risk was as follows:

	Group			Company
	2015	2014		2015	2014
	£’000	£’000		£’000	£’000
Equity long exposures
Investments held in equity form	28,040	45,664		28,040	45,664
Long exposure held in equity swaps	28,761	21,273		28,761	21,273
	56,801	66,937		56,801	66,937

Interest rate risk

Interest rate risk arises from uncertainty over the interest rates charged by financial institutions.  It represents the potential increased costs of financing for the Group.  The Investment Manager actively monitors interest rates and the Group’s ability to meet its financing requirements throughout the year and reports to the Board.

Liquidity risk

Liquidity risk reflects the risk that the Group will have insufficient funds to meet its financial obligations as they fall due.  The Directors have minimised liquidity risk by investing in a portfolio of quoted companies that are readily realisable.

The Group's un-invested funds are held almost entirely with the Custodians or on interest bearing deposits with UK banking institutions.

As at 31^st July 2015 the financial liabilities comprised:

	Group			Company
	2015	2014		2015	2014
	£’000	£’000		£’000	£’000
Unrealised derivative liabilities	1,410	1,185		1,410	1,185
Trade payables and accruals	200	134		200	134
	1,610	1,319		1,610	1,319

All of the above liabilities are due within one month and are stated at fair value.

The Group manages liquidity risk through constant monitoring of the Group’s gearing position to ensure the Group is able to satisfy any and all debts within the agreed credit terms.

Currency rate risk

Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The only material foreign currency exposures are Beiersdorf AG, Heineken N.V., Pernod Ricard SA, Davide Campari-Milano S.p.A., KWS SAAT AG and Stada Arzneimittel AG with a market value of £13,272,000, denominated in Euros and Alphabet Inc., Amazon.com, Inc., Apple Inc., Paypal Holdings Inc., ROBO-STOX UCITS ETF, Baidu, Inc., eBay Inc., Perrigo Company plc and Yahoo! Inc. denominated in US Dollars with a market value of £15,135,000.

In addition the group held cash exposure to US Dollars of £7,746,000 at the year end.

The Group constantly monitors currency rate risk to ensure balances wherever possible are translated at rates favourable to the group.

21. Related party transactions

The Investment Manager of the Company is now M & L Capital Management Limited (the former Investment Manager was Midas Investment Management Limited).  Both companies are controlled by Mr M Sheppard.

The Investment Manager receives a quarterly investment management fee for these services which in the year under review amounted to a total of £311,000 (2014: £348,000) excluding VAT. The balance owing to the Investment Manager as at 31^st July 2015 was £127,000 (2014: Nil).

Also payable in the year to Midas was a corporate fee for acting as financial adviser amounting to £30,000 (2014: £30,000) excluding VAT and commission fees of £16,000 (2014: £293,000) excluding VAT to the Company.  The balance owing to Midas at 31^st July 2015 was £Nil (2014: £82,000).

During the year the Company paid service, administration and secretarial charges totalling £18,000 (2013:£Nil) to its parent company, M&M Investment Company plc.  The balance owing to MMIC as at 31^st July 2015 was £28,000 (2014: £Nil).

22. Capital management

There are no externally imposed capital requirements. The capital managed is noted in the Statements of Changes in Equity and managed in accordance with the Investment Policies and Objectives.

23. Ultimate control

The holding company and ultimate parent throughout the year and the previous year was M&M Investment Company plc, a company incorporated in England and Wales.  This company was controlled throughout the year and the previous year by Mr M Sheppard and his immediate family.

A copy of the consolidated financial statements of M&M Investment Company plc can be obtained by writing to The Company Secretary, 2^nd Floor, Arthur House, Chorlton Street, Manchester M1 3FH.

24. Post balance sheet events

The have been no significant events since the end of the reporting period other than the volatility currently experienced in the stock market.