LONDON FINANCE AND INVESTMENT GROUP PLC
LONDON FINANCE & INVESTMENT GROUP P.L.C.
("Lonfin", "the Company" or "the Group")
Preliminary announcement of unaudited results for the year ended 30th June 2014
and dividend declaration
London Finance & Investment Group P.L.C. (LSE: LFI, JSE: LNF), the investment
company whose assets primarily consist of Strategic Investments and a General
Portfolio, today announces its Preliminary Results for the year ended 30th June
2014.
Strategy and Business Model
Lonfin is an investment company whose objective is to generate growth in
shareholder value in real terms over the medium to long term whilst maintaining
a progressive dividend policy.
In the short term, the performance of the Company can be influenced by overall
stock market performance and to ameliorate this short term risk the Company has
a combination of Strategic Investments together with a General Portfolio.
Strategic Investments are significant investments in smaller U.K. quoted
companies and these are balanced by a General Portfolio, which consists of a
broad range of investments in major U.S.A., U.K. and other European companies
which provides a diversified exposure to international equity markets.
Up until 30th June 2014, the two Strategic Investments, in which we had
Directors in common, were our associated company Western Selection P.L.C. and
Finsbury Food Group Plc. With effect from 30th June 2014, David Marshall stood
down as a Director of Finsbury Food Group Plc. Edward Beale, the chief
executive of our subsidiary, City Group P.L.C., remains a director of Finsbury
Food Group Plc.
Results
* Net assets have decreased over the year by 2% from 45.7p per share to 44.7p
per share, and our Strategic Investments have decreased in value over the
year by 4%, due to the decline in value of our investment in Finsbury Food
Group Plc.
* Strategic Investments are yielding 2.5%
* The General Portfolio has increased over the year by 15.4%
* The General Portfolio is yielding 2.8% (2013 - 3.0%).
* Net borrowings of £886,000 compared with £534,000 at 30th June 2013
* Increase of 6.6% in operating costs mainly due to the first increase in
director's fees since 2000.
The Group achieved a profit for the year, before tax and the fair value
adjustments of investments, of £205,000 (2013- £171,000). The loss, after
negative fair value adjustments, tax and non-controlling interest was £43,000
(2013 - £4,637,000 after positive fair value adjustments of £4,637,000) giving
a loss per share of 0.1p (2013 profit per share - 14.9p).
Strategic Investments
Western Selection P.L.C. ("Western")
The Group owns 7,860,515 shares, being 43.8%, of the issued share capital of
Western.
On 29th September 2014, Western announced a profit before associates and tax of
£446,000 for its year to 30th June 2014 (2013 - £681,000). Including associates
and after exceptional items and tax, profits per share were 4.4p (2013 - losses
- 1.6p).
Western has paid an interim dividend of 0.95p and proposes an increased final
dividend of 1.05p (2013 - 0.9p). Western's net assets at market value as at
30th June 2014 were £18,307,000, equivalent to 102p per share, an increase of
20% from 82p last year.
Our share of the net assets of Western, including the value of Western's
investments at market value, was £8 million (2013 - £6.5 million). The fair
value recorded in the statement of financial position is the market value of £
4.2 million (2013 - £3.9 million). This represents 30% (2013 - 27%) of the net
assets of the Group.
Western's objective is to generate growth in value for shareholders over the
medium to long term and pay a progressive dividend. In the past it has sought
to achieve this through a twin track approach of a mix of strategic stakes in
smaller quoted companies with whom it has directors in common and a general
portfolio of investments.
Western has recently undertaken a strategic review. As a result of this review
it has determined that it will follow a single track business model in future
which will provide more clarity for investors.
Its new business model will be to take sizeable minority stakes in relatively
small companies at a pre-IPO or IPO stage, and have directors in common through
which they can provide advice and support for these growing companies. These
may or may not be associated companies. Their aim is that these core holdings
will then be sold over time into the market. Companies that are targeted as
core holdings will have an experienced management team, a credible business
model and also good prospects for growth.
Mr. D. C. Marshall is the Chairman of Western and Mr. Robotham and Mr. Beale
are non-executive Directors. Western's main core holdings are Creston plc,
Northbridge Industrial Services plc, Swallowfield plc and Hartim Limited. An
extract from Western's announcement relating to its main core holdings is set
out below:
Creston plc
Creston is a marketing services group whose strategy is to grow within its
sector both by organic growth and through selective acquisition to become a
substantial, diversified marketing services group. In their trading
announcement on 31st July 2014, Creston reported a 3% growth in revenue for the
3 months to June. Further information about Creston is available on their
website: www.creston.com.
The audited results of Creston for the year to 31st March 2014, show a headline
profit before tax of £9.6 million (2013 - £10.0 million), equivalent to fully
diluted earnings of 11.8p per share (2013 - 14.7p, including tax credit from a
positive conclusion to an HMRC enquiry).
Western maintained its holding of 3,000,000 shares in Creston, which is 5% of
their issued share capital. The value of this investment at 30th June 2014 was
£3,150,000, a decrease of 3% from the value of £3,240,000 at 30th June 2013.
This represents 17% (2013 - 22%) of Western's net assets.
Mr D. C. Marshall is a non-executive director of Creston.
Northbridge Industrial Services PLC
Northbridge hires and sells specialist industrial equipment to a non-cyclical
customer base. With offices or agents in the U.K., U.S.A., Dubai, Germany,
Belgium, France, Australia, Singapore, India, Brazil, Korea and Azerbaijan,
Northbridge has a global customer base. This includes utility companies, the
oil and gas sector, shipping, construction and the public sector. The product
range includes loadbanks, transformers, generators, compressors, loadcells and
oil tools. Further information about Northbridge is available on their website:
www.northbridgegroup.co.uk.
Northbridge audited profits for the year ended 31st December 2013 were £
5,255,000 and paid a final dividend of 3.9p per share, making 5.9p for the year
(2013 - 5.4p). On 23rd September 2014, Northbridge announced unaudited interim
profits for the six months ended 30th June 2014 of £2,568,000 (2013 - £
1,949,000) and declared an interim dividend of 2.2p per share (2013 - 2.0p).
Western sold 125,000 of its 2,000,000 holding in April 2014 for £586,000 and a
realised profit of £434,000 and now holds 1,875,000 shares in Northbridge (2013
- realised profit of £527,000 on disposal of 200,000 shares). Western's holding
is 10.8% of Northbridge's issued share capital. The value of this investment at
30th June 2014 was £9,750,000 (2013 - £7,040,000) being 53% (2013 - 48%) of
Western's net assets.
Mr D. C. Marshall is a non-executive director of Northbridge.
Swallowfield plc
Swallowfield is a market leader in the development, formulation, manufacture
and supply of cosmetics, toiletries and related household products for global
brands and retailers operating in the cosmetics, personal care and household
goods market. Further information about Swallowfield is available on their
website: www.swallowfield.com.
Swallowfield announced its annual results to 30th June 2014 on 18th September
2014 showing a profit after tax of £157,000 compared to a loss of £910,000
(restated) for the comparable period last year. No dividends were received from
Swallowfield during the year (2013 - £118,000). Profits are expected to recover
further in the current year under the new management
At the reporting date, Western owned 1,869,149 shares which is 16.5% of
Swallowfield's issued share capital. The market value of this investment on
30th June 2014 had increased by 21% to £1,813,000 from the value at June 2013
of £1,495,000. This is 10% (2013 - 10%) of Western's net assets.
Mr E. J. Beale was appointed a non-executive director of Swallowfield on 1st
July 2014.
Investments in Associates
Hartim Limited
Hartim is the unquoted holding company for Tudor Rose International Limited
("TRI") which was founded in 1984. It works closely with a number of leading UK
branded fast moving consumer goods companies, offering a complete sales,
marketing and logistical service. Based in Stroud, Gloucestershire, TRI sells
into 78 countries worldwide including USA, Spain, Portugal, Italy, Czech
Republic, Russia, Turkey, South Africa, Saudi Arabia, UAE, Malaysia, Australia
and China.
Western holds 49.5% of Hartim, which has a 31st December year end, and which
generated trading profits before exceptional items in the year to 30th June
2014 of £434,000. Hartim recognised exceptional profits, after tax, in
connection with its former Australian subsidiary of £337,000 (2013 loss - £
2,809,000). Turnover in the period was £20,448,000 (2013 - £21,609,000).
Western's share of the consolidated profit after exceptional items and tax for
the twelve months to 30th June 2014 was £382,000 (2013 - loss - £937,000) and
the book value of the investment at 30th June 2014 was £568,000 (2013 - £
185,000), being 3% (2013 - 1%) of Western's assets.
During the period a loan of £500,000 was made to Hartim. This loan is
convertible into B shares at par if not repaid, carries interest at a rate of
6% over base rate. It is repayable by 31st December 2016 and is secured over
Hartim's principal asset, its investment in Tudor Rose Limited.
Western has two nominees on the board of Hartim: Mr E. J. Beale and Mr L. H.
Marshall.
Finsbury Food Group Plc ("Finsbury")
Finsbury is one of the largest producers and suppliers of premium cakes, bread
and morning goods in the UK and currently supplies most of the UK's major
supermarket chains. Further information about Finsbury is available on its
website: www.finsburyfoods.co.uk.
Lonfin holds 9 million shares, representing 13.45% of Finsbury's share capital.
The market value of the holding was £4,860,000 as at 30th June 2014 (cost - £
2,283,000) and represents 35 % (2013 - 38%) of Lonfin's net assets.
On 22nd September 2014, Finsbury announced audited profits on continuing
operations after tax and minority interests of £6.5 million for the year ended
28th June 2014 (2013 - £5 million).
Finsbury paid an interim dividend of 0.25p and has recommended to its
shareholders a final dividend of 0.75p per share, making 1.00p for the year
(2013 - 0.75p).
Mr. Beale, the Chief Executive of our subsidiary company City Group P.L.C., is
a non-executive Director of Finsbury. Mr D.C .Marshall stood down as a Director
of Finsbury on 30th June 2014.
General Portfolio
The portfolio is diverse with material interests in Food and
Beverages, Natural Resources, Chemicals and Tobacco. We believe that the
portfolio of quality companies we hold has the potential to outperform the
market in the medium to long term.
The number of holdings in the General Portfolio has been held at 29. We have
increased the amount invested in the General Portfolio over the year by £
271,000 (2013: increased by £626,000).
Operations and Employees
All of our operations and those of our associate, Western, except investment
selection, are outsourced to our subsidiary, City Group P.L.C. City Group also
provides office accommodation, company secretarial and head office finance
services to a number of other U.K. and Jersey companies. City Group has
responsibility for the initial identification and appraisal of potential new
strategic investments for the Company and the day to day monitoring of existing
strategic investments and employs 8 people.
Following expiry of its lease, City Group moved offices in the period and
expenses of £39,000 relating to the office move have been capitalised and are
being written off over the 5 year period of its new lease.
Dividend
The Board recommend a final dividend of 0.45p per share, making 0.9p per share
for the year (2013 - 0.8p). Subject to members' approval on 2nd December 2014,
the dividend will be paid on 12th December 2014 to those members on the
register at the close of business on 21st November 2014. Shareholders on the
South African register will receive their dividend in South African rand
converted from sterling at the closing rate of exchange on 29th September being
GBP1= ZAR 18.3049. Shareholders registered on the Johannesburg register are
advised that the dividend withholding tax will be withheld from the gross final
dividend amount of 8.23721 SA cents per share at a rate of 15% unless a
shareholder qualifies for an exemption; shareholders registered on the
Johannesburg register who do not qualify for an exemption will therefore
receive a net dividend of 7.00163 SA cents per share. The Company, as a
non-resident of South Africa, was not subject to the secondary tax on companies
(STC) applicable before 1st April 2012, and accordingly, no STC credits are
available for set-off against the dividend withholding tax liability on the
final net dividend amount. The dividend is payable in cash as a `Dividend' (as
defined in the South African Income Tax Act, 58 of 1962, as amended) by way of
a reduction of income reserves. The number of shares in issue as at 30th
September 2014 is 31,207,479 and the Company's UK Income Tax reference number
is 948/L32120. The dividend withholding tax and the information contained in
this paragraph is only of direct application to shareholders registered on the
Johannesburg register, who should direct any questions about the application of
the new dividend withholding tax to Computershare Investor Services (Pty)
Limited, Tel: +27 11 373-0004.
Dividend dates:
Last date to trade (SA) Friday 14 November 2014
Shares trade ex dividend (SA) Monday 17 November 2014
Shares trade ex dividend (UK) Thursday 20 November 2014
Record date (UK and SA) Friday 21 November 2014
Pay date Friday 12 December 2014
Share certificates may not be dematerialised or rematerialised between Monday
17th November and Friday 21st November, both days inclusive. Shares may not be
transferred between registers during this period either.
Outlook
We believe our mix of Strategic Investments and a General Portfolio gives us
every chance of outperforming the broader market in the medium to long term.
The political tensions in Europe and the Middle East may well create
substantial volatility in markets and currencies.
By Order of the Board
City Group P.L.C.
29th September 2014
Johannesburg Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)
Unaudited Consolidated Statement of Total Comprehensive Income
For the year ended 30th June
2014 2013
£000 £000
Dividends - Listed investments 393 313
Interest receivable - 4
Rental and other income 82 54
Profits realised on sales of investments 205 215
Management services fees 205 228
------ ------
Operating income 885 814
Administration expenses (651) (610)
------ ------
Operating profit 234 204
Unrealised changes in the carrying value of (339) 4,629
investments
Interest payable (25) (33)
------ ------
(Loss)/profit on ordinary activities before taxation (130) 4,800
Tax on result of ordinary activities 71 (180)
------ ------
(Loss)/profit on ordinary activities after taxation (59) 4,620
Non-controlling interest 16 17
------ -------
(Loss)/profit for the financial year attributable to (43) 4,637
members of the holding company
Other comprehensive income - -
------- -------
Total comprehensive income attributable to (43) 4,637
shareholders _______ _______
Reconciliation of headline earnings
Basic (loss)/profit per share (0.1)p 14.9p
Adjustment for the unrealised changes in the carrying 0.8p (14.2)p
value of investments, net of tax
------- -------
Headline profit per share 0.7p 0.7p
------- -------
Unaudited Consolidated Statement of Changes in Shareholders' Equity
Unrealised Share of Retained
Ordinary Share profits(losses) undistributed realised Non-
Share premium on results of profits & Controlling Total
Capital account investments Subsidiaries losses Total interests equity
£000 £000 £000 £000 £000 £000 £000 £000
Year ended 30th
June 2013
Balances at 1st 1,560 2,320 336 (572) 6,211 9,855 98 9,953
July 2012
Total - - 4,495 73 69 4,637 (17) 4,620
comprehensive
income --------------------------------------------------------------------------------------------
Dividends paid - - - - (234) (234) - (234)
--------------------------------------------------------------------------------------------
Total transactions - - - - (234) (234) - (234)
with shareholders
--------------------------------------------------------------------------------------------
Balances at 30th 1,560 2,320 4,831 (499) 6,046 14,258 81 14,339
June 2013 --------------------------------------------------------------------------------------------
Year ended 30th
June 2014
Balances at 1st 1,560 2,320 4,831 (499) 6,046 14,258 81 14,339
July 2013 ------------------------------------------------------------------------------------------
Total - - (246) 205 (2) (43) (16) (59)
comprehensive
income -------------------------------------------------------------------------------------------
Dividends paid - - - - (265) (265) - (265)
--------------------------------------------------------------------------------------------
Total - - - - (265) (265) - (265)
transactions with
shareholders --------------------------------------------------------------------------------------------
Balances at 30th 1,560 2,320 4,585 (294) 5,779 13,950 65 14,015
June 2014 --------------------------------------------------------------------------------------------
Unaudited Consolidated Statement of Financial Position
At 30th June 2014 2013
£000 £000
Non-current Assets
Tangible assets 39 3
Investments 9,026 9,420
------ ------
9,065 9,423
------ ------
Current Assets
Listed investments 5,927 5,601
Trade and other receivables 245 256
Cash at bank 39 116
------ ------
6,211 5,973
Current Liabilities
Trade and other payables: falling due within one year (1,150) (853)
-------- ------
Net Current Assets 5,061 5,120
Deferred taxation (111) (204)
------- -------
Total Assets less Current Liabilities 14,015 14,339
------- -------
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,320 2,320
Unrealised profits and losses on investments 4,585 4,831
Share of retained realised profits and losses of (294) (499)
subsidiaries
Company's retained realised profits and losses 5,779 6,046
------- -------
13,950 14,258
Non-controlling equity interests 65 81
------- -------
14,015 14,339
------- -------
Unaudited Company Statement of Financial Position
at 30th June
2014 2013
£000 £000
Non-current Assets
Investments in Group companies 5,923 6,147
------- ------
5,923 6,147
------- ------
Current Assets
Listed investments 5,927 5,601
Trade and other receivables 25 35
Bank balance 12 76
------- ------
5,964 5,712
Current Liabilities
Trade and other payables: falling due within one year (997) (757)
-------- ------
Net Current Assets 4,967 4,955
Deferred taxation (111) (204)
-------- ------
Total Assets less Current Liabilities 10,779 10,898
-------- ------
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,320 2,320
Unrealised profits and losses on investments 1,120 972
Realised profits and losses 5,779 6,046
------- ------
Equity shareholders' funds 10,779 10,898
------- ------
Unaudited Consolidated Statement of Cash Flow
For the year ended 30th June
2014 2013
£000 £000
Cash flows from operating activities
(Loss)/profit before tax (130) 4,800
Adjustments for non-cash and non-operating activities -
Finance expense 25 33
Depreciation charges 3 1
Unrealised changes in the fair value of investments 339 (4,629)
------ -------
237 205
------ -------
Taxes paid (22) (22)
------ -------
Changes in working capital
Decrease/(increase) in trade and other receivables 11 (16)
Increase in trade and other payables 23 64
Increase in current asset investments (272) (375)
------ -------
(238) (327)
------ -------
Addition to non-current tangible assets (39) -
------ -------
Cash flows from tangible non-current assets (39) -
------ -------
Cash flows from investment activity
Purchase of strategic investments - (390)
------ -------
Net cash outflow from investment activity - (390)
------ -------
Cash flows from financing
Interest paid (25) (33)
Equity dividends paid (265) (234)
Net drawdown/(repayment) of loan facilities 275 (1,300)
------- -------
Net cash outflow from financing (15) (1,567)
------- -------
Decrease in cash and cash equivalents (77) (2,101)
Cash and cash equivalents at the beginning of the 116 2,217
year ------- --------
Cash and cash equivalents at end of the year 39 116
------- --------
Notes
1. Earnings per share are based on the profit on ordinary activities after
taxation and non controlling interests and on 31,207,479 shares (2013 -
31,207,479) being the weighted average of the number of shares in issue
during the year.
2. The financial information in this preliminary announcement of unaudited
group results does not constitute the company's statutory accounts for the
years ended 30th June 2014 or 30th June 2013 but is derived from those
accounts. The accounts have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union and
with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. The accounts are prepared on the historical cost
bases, except for certain assets and liabilities which are measured at fair
value, in accordance with IFRS and comply with IAS 34. The audited accounts
for the group for the year ended 30th June 2013 were reported on with an
unqualified audit report and have been delivered to the Registrar of
Companies.
Enquiries to:
London Finance & Investment Group P.L.C.: 020 7796 9060
David Marshall/Edward Beale
29th September 2014
Johannesburg Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)
