LONDON FINANCE AND INVESTMENT GROUP PLC
London Finance & Investment Group P.L.C.
(the 'Company')
Unaudited Interim Results for the six months ended 31st December 2016 and
dividend declaration
The Company today announces its unaudited interim results and dividend
declaration for the six months ended 31st December 2016 (the 'Interim
Statement').
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 2016, we held two Strategic Investments: Western Selection
P.L.C., and Finsbury Food Group plc. Detailed comments on our Strategic
Investments are given below.
Change in accounting policies
The Board have decided to early adopt IFRS 9 with effect from this accounting
period, and the comparatives in the income statement have been restated to
reflect the resulting change in accounting policy. Strategic investments are a
fundamental part of the Company's investment strategy to secure long term
capital appreciation and by their very nature the investments are largely
illiquid. Consequently the directors have elected to present the unrealised
changes in value of these specific investments as part of other comprehensive
income as it better reflects the underlying performance of the Company within
its primary statements. This does not change the basis of valuation or the
amounts reported in the statement of financial position. The effect of the
change in accounting policy is further described in Note 1 below.
Results
Our net assets per share increased 5.6% to 64.9p at 31st December 2016 from
61.4p at 30th June 2016. Our Strategic Investments, adjusting for the disposal
of part of the investment in Finsbury Foods, which realised a profit of £
1,862,000, increased in value by 8% during the period. Our General Portfolio
increased by 4.5%, compared with increases of 9.8% and 10.3% in the FTSE 100
index and the FTSEurofirst 300 Index respectively, over the half year. At the
close of business on 15th February 2017, our net asset value was 66.1p per
share.
The Group profit before tax for the half year was £2,171,000 compared to a
restated profit of £1,586,000 for the same period last year. The main
differences between these two periods being in the amounts recognised as:
profit realised from the disposal of part of the investment in Finsbury Food,
and the unrealised changes in the value of General Portfolio investments. Our
profit after tax and minority interest was £1,815,000 (2015: £1,315,000
restated) giving earnings per share of 5.8p (2015: 4.2p restated).
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 10th February 2017, Western announced a profit after tax of £455,000 for its
half year to 31st December 2016 and earnings per share of 2.5p (2015: earnings
per share of 0.4p). Western's net assets at market value were £15,018,000
equivalent to 84p per share, an increase of 6.3% from 75p at 30th June 2016.
Western has announced an interim dividend of 1.1p per share (2015: 1.05p per
share).
The market value of the Company's investment in Western at 31st December 2016
was £3,694,000 representing 18% of the net assets of Lonfin. The underlying
value of the investment in Western, valuing Western's own investments at market
value, was £6,578,000 (30th June 2016: £6,227,000).
I am the Chairman of Western and Mr. Michael Robotham and Mr Edward Beale are
Non-Executive Directors.
Western's principal core holdings are in Northbridge Industrial Services plc,
Swallowfield plc, Bilby Plc and Tudor Rose International (previously Hartim
Limited). Extracts from Western's announcement, on 10th February 2017, on its
core holdings are set out below:
Northbridge Industrial Service 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, New Zealand, Singapore, Brazil and Korea,
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 2016, showed a
loss after tax of £2,338,000 for the period (2015: loss after tax of £
1,936,000). No interim dividend was declared (2015: 1p per share).
Western owns 3,223,632 Northbridge shares, representing 12.45% of
[Northbridge's issued share capital. The market value of this investment at
31st December 2016 was £3,546,000 (30th June 2016: £2,772,000), representing
24% of Western's assets.
I am a Non-Executive Director of Northbridge.
Swallowfield plc ("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 announced its annual results to 25th June 2016 in September 2016
showing a profit after tax of £2,001,000 compared to a profit of £746,000 for
the prior year. We received a dividend from Swallowfield during the period of
£52,000 (2015: £37,383).
In September 2016, we disposed of 200,000 Swallowfield shares for £520,000
(before selling expenses) and in November 2016 we disposed of a further 50,000
shares for £135,000 (before selling expenses). The market value of the
Company's holding of shares in Swallowfield on 31st December 2016 was £
4,550,000 (30th June 2016: £3,570,000), representing 30% of the Company's
assets.
In January this year, we disposed of a further 120,000 Swallowfield shares for
£318,000 (before selling expenses). Western now owns 1,630,000 Swallowfield
shares (representing 9.66% of Swallowfield's issued share capital).
Mr Edward Beale is a Non-Executive Director of Swallowfield.
Bilby Plc
Bilby is an established, and award winning, provider of gas installation,
maintenance and general building services to local authority and housing
associations across London and South East England. They have a strategy of
growing organically and by acquisition. Further information about Bilby is
available on their website: www.bilbyplc.com
Bilby announced its interim results for the six month period to 30th September
2016 on 16th December 2016 showing a loss after tax of £833,000. Bilby paid a
final dividend of 2.00p per share in September 2016 which provided us with
income of £47,000 and an interim dividend of 0.25p per ordinary share has been
paid in February 2017 which provided us with further income of £6,000.
At 30th June 2016, Western owned 2,337,088 Bilby shares. Further investments of
£32,000 for 62,912 Bilby shares, and £58,000 for 100,000 Bilby shares, were
made in December 2016 and February 2017 respectively. Western now holds
2,500,000 Bilby shares which represents 6.3% of Bilby's issued share capital.
The market value of the Company's holding in Bilby on 31st December 2016 was £
1,344,000 representing 9% of the Company's assets.
Tudor Rose International Limited (previously Hartim Limited) ("Tudor Rose
International")
Tudor Rose International 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, Tudor Rose International
sells into 78 countries worldwide including USA, Spain, Portugal, Italy, Czech
Republic, Russia, Turkey, South Africa, Saudi Arabia, UAE, Malaysia, Australia
and China.
Our share of Tudor Rose International's estimated results for the period ended
31st December 2016 is a profit after tax of £57,000 (2015 - profit after tax
of £51,000).
At 31st December 2016, Western owned 49.5% of Tudor Rose International. The
carrying value of the Company's equity investment in Tudor Rose International
on 31st December 2016 was £654,000 (2015: £613,000) representing 4% of the
Company's assets. In addition, loans of £442,000 (equivalent to a further 3%
of the Company's assets) were outstanding at 31st December 2016 from Tudor Rose
International and its executive directors. £250,000 was repaid by Tudor Rose
International in December and we have agreed that the balance of the loan to
Tudor Rose International (£250,000) will be rolled over into preference
shares. Subsequent to the period end we have advanced an additional £250,000
to subscribe for preference shares and agreed to invest a further £500,000 in
preference shares to support the evolution of their business model.
Mr. Edward Beale and I are Non-Executive Directors of Tudor Rose International.
Finsbury Food Group plc ("Finsbury Food")
Finsbury Food 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 Food is available on
its website: www.finsburyfoods.co.uk
In September 2016, Finsbury Food announced audited profits on continuing
operations after tax and minority interests of £8,504,000 for the 52 week
period ended 2nd July 2016 (2015: £6,620,000). Finsbury Food paid a final
dividend of 1.87p per share which provided us with income of £112,000.
At 30th June 2016, the Group held 8,000,000 shares in Finsbury Food
representing 6.1% of their then issued share capital. On 27th September 2016,
we sold 1,000,000 Finsbury Food shares for £1,200,000 (before selling expenses)
and, on 29th September 2016, we sold a further 1,000,000 Finsbury Food shares
for £1,250,000 (before selling expenses). The Company now holds 6,000,000
Finsbury Food shares which represent 4.6% of Finsbury Food's issued share
capital. The market value of our holding was £7,320,000 on 31st December 2016;
this represents 36% of the net assets of Lonfin.
Finsbury Food will be announcing their interim results in March 2017.
Mr Beale was a Non-Executive Director of Finsbury Food until 24th November
2016.
General Portfolio
The list of investments included in the General Portfolio is set out at the end
of this announcement. We continue to hold 26 investments, having invested a
net £1,492,000 in the period, financed by funds from the sale of part of our
investment in Finsbury Food.
Lloyd Marshall
It was with great sadness that we announced on 23rd November 2016, the death of
Mr Lloyd Marshall. He was a highly valued member of the management team who
brought a wealth of experience, knowledge and common sense to the Company along
with strong principles.
Outlook
The Board expect to see a continuation of the volatility in equity and currency
markets and remain cautious about the remainder of the year.
The Board has declared an interim dividend of 0.55p per share (2015: 0.50p).
20th February 2017
D.C. MARSHALL
Chairman
Interim Dividend
The declared interim dividend is 0.55p per share (9.09791 ZAR cents) (2015:
0.50p) and will be paid on Friday 7th April 2017 to those members registered at
the close of business on Friday 17th March 2017 (SA and 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 Friday 3rd February
2017 being GBP 1 = ZAR 16.54165.
In respect of the normal gross cash dividend, and in terms of the South African
Tax Act, the following dividend tax ruling only applies to those shareholders
who are registered on the South African register on Friday 17th March 2017.
All other shareholders are exempt.
* The dividend has been declared from income reserves, which funds are
sourced from the Company's main bank account in the UK and is regarded as a
foreign dividend by South African shareholders.
* The gross dividend in ZAR cents is 9.09791 cents.
* The dividend withholding tax rate is 15% resulting in a net dividend of
0.46750 pence (7.73322 ZAR cents) per share to those shareholders who are
not exempt from the dividend withholding tax.
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) Tuesday 14th March 2017
Shares trade ex dividend (SA) Wednesday 15th March 2017
Shares trade ex dividend (UK) Thursday 16th March 2017
Record date (SA and UK) Friday 17th March 2017
Pay date Friday 7th April 2017
Share certificates may not be de-materialised or re-materialised between
Wednesday 15th March 2017 and Friday 17th March 2017, both dates inclusive.
Shares may not be transferred between registers during this period either.
Statement of Directors' responsibility
The Directors confirm that, to the best of their knowledge:
- the unaudited interim results for the six months ended 31st December 2016,
have been prepared in accordance with IAS 34 as adopted by the EU; and
- the Interim Statement includes a fair review of the information required by
DTR 4.2.7R and DTR 4.2.8R of the Disclosure and Transparency Rules.
The Directors accept responsibility for the contents of this Interim Statement.
Neither this Interim Statement nor any future interim statements of the Company
will be posted to shareholders. The Interim Statement is available as follows:
* on the Company's website at www.city-group.com/london-finance-investment-
group-plc/; and
* by writing to City Group P.L.C., the Company Secretary, at 6 Middle Street,
London EC1A 7JA
This Interim Statement contains inside information for the purposes of Article
7 of EU Regulation 596/2014.
For further information, please contact:
London Finance & Investment Group
P.L.C. +44(0) 20 7796 9060
Unaudited Condensed Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Half year ended Year ended
31st December 30th June
Restated Restated
2016 2015 2016
£000 £000 £000
Operating Income
Dividends received 265 270 550
Rental and other income 50 41 82
Profit on sales of investments, including 1,981 1,448 1,448
provisions
2,296 1,759 2,080
Management service fees 130 122 252
2,426 1,881 2,332
Administrative expenses
Investment operations (190) (175) (345)
Management services (168) (112) (304)
Total administrative expenses (358) (287) (649)
Operating profit 2,068 1,594 1,683
Unrealised changes in the carrying value of 219 39 39
General Portfolio investments
Reversal of previously recognised unrealised (116) (31) (56)
changes in the carrying value of investments on
sale of General Portfolio investments
2,171 1,602 1,666
Interest payable - (16) (16)
Profit on ordinary activities before taxation 2,171 1,586 1,650
Tax on result of ordinary activities (350) (246) (95)
Profit on ordinary activities after taxation 1,821 1,340 1,745
Non-controlling interest (6) (25) (15)
Profit attributable to shareholders 1,815 1,315 1,730
Other comprehensive income/(expense) -
Items that may subsequently be reclassified to
profit or loss
Unrealised changes in the carrying value of 935 3,310 4,260
Strategic Investments
Reversal of previously recognised unrealised (1,645) (1,600) (1,600)
changes in the carrying value of investments on
sale of Strategic Investments
Deferred taxation on above items 142 (342) (532)
Total other comprehensive income (568) 1,368 2,128
Total comprehensive income attributable to 1,247 2,683 3,858
shareholders
Basic, Diluted and Headline earnings per share 5.8p 4.2p 5.5p
Interim dividend 0.55p 0.50p 0.50p
Final dividend 0.55p
Total in respect of the year 1.05p
Unaudited Condensed Consolidated Statement of Changes in Shareholders' Equity
Half year ended Year ended
31st December 30th June
2016 2015 2016
£000 £000 £000
Total comprehensive income attributable to 1,247 2,683 3,858
shareholders
Dividends paid to equity shareholders (171) (162) (312)
1,076 2,521 3,546
Equity shareholders' funds at start of period 19,168 15,622 15,622
Equity shareholders' funds at end of period 20,244 18,143 19,168
Unaudited Condensed Consolidated Statement of Financial Position
31st 30th June
December
2016 2015 2016
£000 £000 £000
Non-current assets
Tangible assets 18 26 22
Principal investments:-
Finsbury Food Group Plc 7,320 9,040 8,880
Western Selection P.L.C. 3,694 3,537 3,537
11,032 12,603 12,439
Current assets
Listed investments 8,836 6,040 7,125
Trade and other receivables 178 232 272
Cash, bank balances and deposits 1,588 649 588
10,602 6,921 7,985
Total Assets 21,634 19,524 20,424
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 7,967 7,439 8,539
Share of undistributed profits and losses of 3,647 767 1,821
subsidiaries and associates
Company's retained realised profits and losses 4,750 6,057 4,928
Equity shareholders funds 20,244 18,143 19,168
Trade and other payables falling due within one 479 256 316
year
Deferred taxation 815 1,025 850
Non-controlling equity interest 96 100 90
21,634 19,524 20,424
Net assets per share 64.9p 58.1p 61.4p
Number of shares in issue 31,207,479 31,207,479 31,207,479
Unaudited Condensed Consolidated Statement of Cash Flow
Half year ended Year ended
31st December 30th June
Restated Restated
2016 2015 2016
£000 £000 £000
Profit before taxation 2,171 1,586 1,650
Adjustments for non-cash and non-operating
expenses:-
Depreciation charges 4 3 9
Profit on disposal of non-current investment (1,862) (1,409) (1,408)
Unrealised changes in the carrying value of
General Portfolio investments (219) (39) (39)
Reversal of previously recognised unrealised 55
changes in the carrying value of investments on 116 31
sale of General Portfolio investments
Net interest paid - 16 16
(1,961) (1,398) (1,367)
Taxation paid (7) (5) (29)
Changes in working capital:-
Decrease/(Increase) in debtors 97 (15) (54)
(Decrease)/Increase in creditors (74) 39 97
(Increase)/Decrease in current asset (1,492) 20 20
investments
(1,469) 44 63
Cash (outflow)/inflow on operating activities (1,266) 227 317
Investment activities
Disposal of non-current investment 1,984
2,438 1,985
Net cash inflow from investment activities 2,438 1,985 1,984
Cash flows from financing
Net interest paid - (16) (16)
Drawdown of loan facilities - (1,500) (1,500)
Equity dividends paid (172) (162) (312)
Net cash outflow from financing (172) (1,678) (1,828)
Increase in cash and cash equivalents 1,000 534 473
Cash and cash equivalents at start of period 588 115 115
Cash and cash equivalents at end of period 1,588 649 588
Reconciliation of net cash flow to movement in net debt
At start Cash At end of
of period Flow Period
Half year ended 31st December £000 £000 £000
2016
Cash at bank 588 1,000 1,588
2015
Cash at bank 115 534 649
Bank loan (1,500) 1,500 -
(1,385) 2,034 649
Year ended 30th June 2016
Cash at bank 115 473 588
Bank loan (1,500) 1,500 -
(1,385) 1,973 588
Notes:-
1. Basis of preparation:
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 2016 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.
The Company has early adopted IFRS 9 in this period, and the comparative
amounts in the Unaudited Condensed Consolidated Statement of Profit or Loss
and Other Comprehensive Income have been restated on a comparable basis.
Under IFRS 9, the Company has elected to classify its long term Strategic
Investments as financial instruments which are held at fair value with
unrealised changes in value taken directly to Other Comprehensive Income.
General Portfolio investments are held at fair value with unrealised
changes in fair value recognised in Profit or Loss. Strategic and General
Portfolio investments are quoted investments, and their fair value
continues to be calculated using quoted prices.
This change in accounting policy has no effect on the Unaudited Condensed
Consolidated Statement of Financial Position, and moves into Other
Comprehensive Income certain amounts that were previously recognised as
Profit or Loss. Prior to this change there were no amounts recognised in
Other Comprehensive Income. This re-categorisation has changed Profit on
ordinary activities after tax from £2,708,000 at 31st December 2015 and £
3,873,000 at 30th June 2016. Basic and Headline Earnings per Share have
also been restated from 8.6p and 5.0p for the half year ended 31st December
2015, and 12.4p and 5.2p for the year ended 30th June 2016.
Other than mentioned above this report has been prepared in accordance with
the accounting policies contained in the Company's Annual Report and
Accounts 2016. It has been prepared in accordance with International
Financial Reporting Standards, and complies with IAS34.
2. Earnings per share:
Earnings per share are based on the profit on ordinary activities after
taxation and non-controlling interests of £1,815,000 (2015: £1,315,000) and
on 31,207,479 (2015 - 31,207,479) shares being the weighted average of
number of shares in issue during the year.
There are options outstanding over 80,000 shares. The dilution effect of
these options is negligible.
Reconciliation of headline earnings
Headline earnings are required to be disclosed by the JSE.
Headline earnings per share are based on the profit on ordinary activities
after taxation and non-controlling interests, of £1,815,000 (2015: £
1,315,000) and on 31,207,479 (2015 - 31,207,479) shares being the weighted
average of number of shares in issue during the year.
3. Going Concern:
After making enquiries, the Board is satisfied that the Group will be able
to operate within the level of its facilities for the foreseeable future.
For this reason the Board considers it appropriate for the Group to adopt
the going concern basis in preparing its financial statements.
4. Principal risks and uncertainties:
The principal risks and uncertainties which could impact the Group's
long-term performance are disclosed on pages 8-9 of the Group's 2016 Annual
Report and Accounts. The key risks and mitigating activities have not
changed from these:
- Stock market vulnerability and economic uncertainty;
- Possible volatility of share prices of investments;
- Dividend income;
- Ability to make strategic investments; and
- Liquidity of equity investments in strategic investments.
Composition of General Portfolio
Value
£000 %
British American Tobacco 453 5.2
Investor 417 4.8
Schindler-Holdings 407 4.6
Henkel 405 4.6
Philip Morris International 377 4.3
Chevron 371 4.2
Exxon 365 4.1
Diageo 357 4.0
Becton Dickenson 356 4.0
Nestle 351 4.0
Reckitt Benckiser 337 3.8
Unilever 332 3.8
Heineken 329 3.7
Anheuser Busch Inbev 322 3.6
BASF 318 3.6
3M 318 3.6
Imperial Tobacco 315 3.6
L'Oreal 312 3.5
Pernod-Ricard 305 3.4
Procter & Gamble 272 3.1
United Technologies 266 3.0
Danone 258 2.9
Linde 257 2.9
LVMH 248 2.8
ABB 226 2.6
Brown Forman B 190 2.1
Givaudan 186 2.1
Kimberley Clark Corp 185 2.1
8,835 100
LONDON FINANCE & INVESTMENT : Unaudited Interim Results and dividend declaration
February 20, 2017 at 02:01 am EST
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