LONDON FINANCE AND INVESTMENT GROUP PLC 
By
Date: 28th February 2014
On behalf of: London Finance & Investment Group P.L.C. ("Lonfin", "the Company"
or "the Group")
Embargoed
until: 14.30hrs (UK Time) 16.30hrs (SA Time)
London Finance & Investment Group P.L.C.
Interim Results
Lonfin (LSE: LFI, JSE: LNF), today announces its unaudited interim results for
the six months ended 31st December 2013 and dividend declaration.
Chairman's Statement
Introduction
As an investment company our target is to achieve growth in shareholder value
in real terms over the medium to long term. In the short term our results can
be influenced by overall stock market performance, particularly the valuation
of our Strategic Investments. We continue to believe that a combination of
Strategic Investments and a General Portfolio is the most effective way of
achieving our aims. Strategic Investments are significant investments in
smaller UK quoted companies where we have expectations of above average growth
over the medium to longer term and these are balanced by a General Portfolio
which consists of investments in major U.S., U.K. and European equities.
At 31st December 2013, we held two Strategic Investments in which we have board
representation: our associated company Western Selection P.L.C. and Finsbury
Food Group plc. Detailed comments on our Strategic Investments are given
below.
Results
Our net assets per share increased 1.5% to 46.4p at 31st December 2013 from
45.7p at 30th June 2013. Our Strategic Investments increased in value by 3%
during the period, reflecting a strong performance in Western's share price and
weakness in the share price of Finsbury Food. Our General Portfolio increased
by 6%, compared with increases of 9% in the FTSE 100 index, and 14% in the
FTSEurofirst 300 Index over the half year. At the close of business on 25th
February 2014, our net asset value was 45.3p per share.
The Group profit before tax for the half year was £385,000 compared to a profit
of £1,389,000 for the same period last year, which included the unrealised
profit on a strong performance in Finsbury Food's share price. Our profit
after tax and minority interest was £355,000 (2012 profit: £1,359,000) giving
profits per share of 1.1p (2012 - 4.4p).
Strategic Investments
Western Selection P.L.C. ("Western")
The Group owns 7,860,515 Western shares, representing 43.8% of Western's issued
share capital.
On 26th February 2014, Western announced a profit after tax of £336,000 for its
half year to 31st December 2013 and a profit per share of 1.9p (2012: profit
0.4p). Western's net assets at market value were £16,769,000 equivalent to 93p
per share, an increase of 13% from 82p at 30th June 2013. Western has
announced an interim dividend of 0.95p per share, an increase of 12% on the
prior year.
The market value of the Company's investment in Western at 31st December 2013
was £4,323,000 representing 30% of the net assets of Lonfin. The
underlying value of the investment in Western, valuing Western's own
investments at market value, was £7.3million (30th June 2013: £6.5 million).
I am the Chairman of Western and Mr. Robotham is a Non-Executive Director.
Western has strategic investments in Creston plc, Northbridge Industrial
Services PLC, Swallowfield plc and Hartim Limited. Extracts from Western's
announcement on its strategic investments are set out below:
Creston plc ("Creston")
Creston is a digitally focussed insight and communications group with a
strategy to grow within its sector to become a substantial, diversified
international group. Further information about Creston is available on its
website: www.creston.com.
Creston's results for the half-year to 30th September 2013 show a profit after
tax of £1,148,000 (2012: £8,259,000 - including a one off item of £3,450,000
primarily deferred consideration write-back). Creston declared an interim
dividend of 1.20p per share, an increase of 20% on the prior year.
Western owns 3,000,000 shares in Creston (5.0%) with a market value at 31st
December 2013 of £2,790,000 (30th June 2013: £3,240,000), being 17% of
Western's assets.
I am a Non-Executive Director of Creston.
Northbridge Industrial Services plc ("Northbridge")
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 its website:
www.northbridgegroup.co.uk.
Northbridge's latest results, for the half year to 30th June 2013, showed
profit after tax of £1,949,000 (2012: £1,027,000). Northbridge declared an interim
dividend of 2.00p per share, an increase of 8% on the prior year.
Western owns 2,000,000 shares, representing 11.6% of Northbridge's share
capital. The market value of this investment has increased substantially and
at 31st December 2013 was £9,200,000 (30th June 2013: £7,040,000), representing
55% of Western's assets.
I am a Non-Executive Director of Northbridge.
Swallowfieldplc ("Swallowfield")
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 its
website: www.swallowfield.com.
Swallowfield'slatest results, for the year to 30th June 2013, showed a loss
after tax (and after restructuring costs of £491,000), of £815,000 (2012:
profit of £1,263,000). Swallowfield did not declare a final dividend (2012:
4.1p).
Western owns 1,869,149 shares in Swallowfield (16.5% of their issued share
capital). The market value of the Company's holding in Swallowfield on 31st
December 2013 was £1,570,000 (30th June 2013: £1,495,000) representing 9% of
the Company's assets.
Hartim Limited ("Hartim")
Hartim offers a complete export sales, marketing and logistical service to a
number of well known UK branded fast moving consumer goods companies. This
investment was acquired on 28th March 2009 and is accounted for as an
associated company.
Our share of Hartim's estimated results for the period ended 31st December 2013 is
a profit of £161,000 (2012: £1,000) after tax, plus an exceptional profit of £167,000
due to the release of surplus provisions relating to the closure of its Australian subsidiary.
On 18th December 2013 we announced that we were making a loan of £500,000 to Hartim
to provide funds to support its continuing growth. The loan is convertible into equity
if not repaid by 31st December 2016, carries interest at 6% over base rate and is secured
over Hartim's principal asset, its operating subsidiary, Tudor Rose Ltd.
We also announced loans of £160,000 to Hartim's executive management team to assist them with
the purchase of shares in Hartim formerly owned by the retiring managing director. These loans
bear interest at 4.5% over base rate, are repayable by 31st December 2018, and are secured over
shares in Hartim. The Western board has decided that it is in the best interests of Western's
shareholders that the current executive directors of Hartim should have a material stake in the
success of Hartim, and these loans are a pragmatic way of achieving this objective.
These loans substantially increase Western's exposure to Hartim, but the business is performing
well, the loans generate a positive return to Western, and the structure encourages the payment
of a dividend on Western's original investment.
At 31st December 2013, Western owned 49.5% of Hartim. The carrying value of
the Company's equity investment in Hartim on 31st December 2013 was £514,000
(30th June 2013: £185,000) representing 3% of the Company's assets. In
addition, loans of £660,000 (equivalent to a further 4% of the Company's
assets) have been made to Hartim and its executive directors.
Mr. Beale is a Non-Executive Director of Hartim.
Finsbury Food Group plc ("Finsbury Food")
Finsbury Food is a supplier of ambient cakes to most of the UK's major
supermarket chains and speciality breads to Waitrose including low fat
products. Further information about Finsbury Food is available on its website:
www.finsburyfoods.co.uk.
The Group holding in Finsbury Food is 9,000,000 shares, representing 13.6% of
their share capital. The market value of our holding was £5,400,000 on 31st
December 2013 compared to a cost of £2,283,000; this represents 37% of the net
assets of Lonfin.
Finsbury Food will be announcing their interim results on 24th March 2014.
I am a Non-Executive Director of Finsbury Food.
General Portfolio
The list of investments included in the General Portfolio is set out at the end
of this announcement. We added to a few of our holdings during the period and
we initiated positions in 3M and United Technologies. We also took the decision
to dispose of our holdings in BHP Billiton and Siemens.
Dividends
The Board has declared an interim dividend of 0.45p per share (2013: 0.4p).
Outlook
Expansionary policies of central bankers of the developed world have been a key
driver of share prices and markets in general for quite some time, but the
Board remain cautious given the fragile global economic conditions. The
volatile start to the calendar year comes as no surprise and we expect investor
sentiment to be a lot more erratic during the remainder of the year.
David C. Marshall
Chairman
Interim Dividend
The declared interim dividend is 0.45p per share (ZAR 8.09708 cents) (2012 -
0.4p) and will be paid on Friday, 11th April 2014 to those members registered
at the close of business on Thursday 20th March 2014 (SA) or Friday 21st March
2014 (UK). Shareholders on the South African register will receive their
dividend in South African Rand converted from sterling at the closing rate of
exchange on 26th February 2014.
The issued number of shares as at the declaration date is 31,207,479.
The Company's UK Income Tax reference number is 948/L32120.
Salient dates for dividend
Last day to trade (SA) Thursday, 13th March 2014
Shares trade ex dividend (SA) Friday, 14th March 2014
Shares trade ex dividend (UK) Wednesday, 19th March 2014
Record date (SA) Thursday, 20th March 2014
Record date (UK) Friday, 21st March 2014
Pay date Friday, 11th April 2014
Shareholders are hereby advised that the exchange rate to be used will be GBP 1
= ZAR 17.9935. This has been calculated as the average of the bid/ask spread
at 16.00 (United Kingdom time) being the close of business on 26th February
2014. Consequently, the dividend of 0.45p will be equal to 8.09708 South
African cents.
The JSE Listings Requirements require disclosure of additional information in
relation to any dividend payments.
Shareholders registered on the Johannesburg register are reminded that the
dividend withholding tax will be withheld from the gross final dividend amount
of 8.09708 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 quality for an exemption will therefore receive a net dividend of 6.88252
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 payment out of income
reserves. 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 dividend withholding tax to Computershare Investor Services (Pty) Limited,
Tel: +27 11 373-0004.
No dematerialisation or rematerialisation of share certificates, nor transfer
of shares between the registers in London and South Africa will take place
between Friday 14th March 2014, Thursday 20th all dates inclusive.
Unaudited Consolidated Statement of Comprehensive Income
Half year ended Year ended
31st December 30th June
2013 2012 2013
£000 £000 £000
Operating Income
Dividends received 173 106 313
Interest and sundry income - - 58
Profit on sales of investments, including provisions 205 131 215
----- ----- -----
378 237 586
Management services income 134 134 228
----- ------ -----
512 371 814
----- ----- -----
Administrative expenses
Investment operations (158) (148) (295)
Management services (173) (146) (315)
------ ------ -------
Total administrative expenses (331) (294) (610)
------ ------ -------
Operating profit 181 77 204
Unrealised changes in the carrying value of investments 206 1,321 4,629
Interest payable (2) (9) (33)
------ ------ -------
Profit on ordinary activities before taxation 385 1,389 4,800
Tax on result of ordinary activities (45) (34) (180)
------ -------- ------
Profit on ordinary activities after taxation 340 1,355 4,620
Non-controlling interest 15 4 17
------- -------- -------
Total comprehensive income - profit attributable to members of
the holding company 355 1,359 4,637
------- -------- -------
Reconciliation of headline earnings
Earnings per share 1.1p 4.4 p 14.9p
Adjustment for unrealised changes in the carrying value of
investments and exceptional items, net of tax (0.6)p (4.3)p (14.2)p
------ ------ --------
Headline earnings per share 0.5p 0.1 p 0.7p
------ ------ --------
Interim dividend 0.45p 0.4 p 0.4p
Final dividend 0.4p
-------
Total in respect of the year 0.8p
-------
Unaudited Consolidated Changes in Shareholders' Equity
31st December 30th June
2013 2012 2013
£000 £000 £000
Total comprehensive income attributable to members 355 1,359 4,637
Dividends paid to equity shareholders (125) (109) (234)
------- -------- ------
230 1,250 4,403
Equity shareholders' funds at start of period 14,258 9,855 9,855
-------- -------- ------
Equity shareholders' funds at end of period 14,488 11,105 14,258
-------- -------- ------
Unaudited Consolidated Statement of Financial Position
31st December 30th June
2013 2012 2013
£000 £000 £000
Non-current assets
Tangible assets 2 3 3
Principal investments:-
Finsbury Food Group Plc 5,400 3,359 5,490
Western Selection P.L.C. 4,323 2,987 3,930
------ ------- ------
9,725 6,349 9,423
------ ------- ------
Current assets
Listed investments 5,775 4,746 5,601
Trade and other receivables 254 269 256
Cash, bank balances and deposits 123 1,108 116
------ ------ -------
6,152 6,123 5,973
------ ------ -------
Total Assets 15,877 12,472 15,396
------ ------ -------
Capital and Reserves
Called up share capital 1,560 1,560 1,560
Share premium account 2,320 2,320 2,320
Unrealised profits and losses on investments 5,037 1,727 4,831
Share of undistributed profits and losses of subsidiaries
and associates (387) (576) (499)
Company's retained realised profits and losses 5,958 6,074 6,046
------ ------ ------
Equity shareholders funds 14,488 11,105 14,258
Trade and other payables falling due within one year 1,067 1,274 853
Deferred taxation 255 - 204
Non-controlling equity interest 67 93 81
------- ------- -------
15,877 12,472 15,396
------- ------- -------
Net assets per share 46.4p 35.6p 45.7p
Number of shares in issue 31,207,479 31,207,479 31,207,479
Unaudited Consolidated Statement of Cash Flow
Half year ended Year ended
31st December 30th June
2013 2012 2013
£000 £000 £000
Profit before taxation 385 1,389 4,800
------ ------ ------
Adjustments for non-cash and non-operating expenses:-
Depreciation charges 1 1 1
Unrealised changes in the carrying value of fixed assetinvestments (206) (1,321) (4,629)
Net interest paid 2 9 33
------- ------- -------
(203) (1,311) (4,595)
------- ------- -------
Taxation paid (3) (4) (22)
------- ------ ------
Changes in working capital:-
Decrease/(Increase) in debtors 11 3 (16)
Increase in creditors 69 26 64
(Increase)/Decrease in current asset investments (300) 222 (375)
------- ------ -------
(220) 251 (327)
------- ------ -------
Cash (outflow)/inflow on operating activities (41) 325 (144)
------- ------ -------
Investment activities
Purchase of additional shares in strategic investment - (366) (390)
------- ------- ------
Net cash outflow from investment activities - (366) (390)
------- ------- ------
Cash flows from financing
Net interest paid (2) (9) (33)
Drawdown/(Repayment) of loan facilities 175 (950) (1,300)
Equity dividends paid (125) (109) (234)
------- ------- -------
Net cash inflow/(outflow) from financing 48 (1,068) (1,567)
------- ------- -------
Increase/(Decrease) in cash and cash equivalents 7 (1,109) (2,101)
Cash and cash equivalents at start of period 116 2,217 2,217
------ ------- -------
Cash and cash equivalents at end of period 123 1,108 116
------ ------- --------
Reconciliation of net cash flow to movement in net debt
At start Cash At end
of period Flow of Period
Half year ended 31st December £000 £000 £000
2013
Cash at bank 116 7 123
Bank loan (650) (175) (825)
-------- ------- --------
(534) (168) (702)
-------- ------- --------
2012
Cash at bank 2,217 (1,109) 1,108
Bank loan (1,950) 950 (1,000)
-------- ------- --------
267 (159) 108
-------- ------- --------
Year ended 30th June 2013
Cash at bank 2,217 (2,101) 116
Bank loan (1,950) 1,300 (650)
-------- ------- --------
267 (801) (534)
-------- ------- --------
Composition of General Portfolio
31st December 2013 Current
Value
£000 %
Nestlé 303 5.3
L'Oreal 299 5.2
Diageo 293 5.1
British American Tobacco 283 4.9
Investor 279 4.8
Henkel 260 4.5
Schindler 259 4.5
Royal Dutch Shell 'B' 249 4.3
Pernod-Ricard 238 4.1
Heineken 237 4.1
Reckitt Benckiser 234 4.1
Philip Morris International 233 4.0
BASF 224 3.9
Unilever 218 3.8
ABB 211 3.7
Imperial Tobacco 208 3.6
Novartis 193 3.3
Danone 174 3.0
Exxon Mobil 169 2.9
Holcim 168 2.9
Procter & Gamble 162 2.8
Chevron 156 2.7
Linde 152 2.6
Anheuser Busch Inbev 111 1.9
Glencore Xstrata 110 1.9
Givaudan 110 1.9
LVMH 103 1.8
3M 72 1.2
United Technologies 67 1.2
------ -----
5,775 100.0
------ -----
Notes:-
1. The results for the half-year are unaudited. The information contained in
this report does not constitute statutory accounts within the meaning of the
Companies Act 2006. The statutory accounts of the Group for the year ended
30th June 2013 have been reported on by the Company's auditors and have been
delivered to the Registrar of Companies. The report of the auditors was
unqualified.
2. This report has been prepared in accordance with the accounting policies
contained in the Company's Annual Report and Accounts 2013, International
Financial Reporting Standards and comply with IAS34.
3. The calculation of earnings per share is based on the weighted average
number of shares in issue for the period and the profit on ordinary
activities after tax.London Finance & Investment Group plc : - Half-yearly Report
February 28, 2014 at 09:31 am EST
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