TIDMLFI
Date: 29th February 2012
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 2011 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.K. and European equities.
At 31st December 2011, we held three Strategic Investments in which we have
board representation: our associated company Western Selection P.L.C., MWB
Group Holdings Plc and Finsbury Food Group plc. Detailed comments on our
Strategic Investments are given below.
Results
Our net assets per share decreased 7% to 32.7p at 31st December 2011 from 35.0p
at 30th June 2011. Our Strategic Investments decreased in value by 8%. Our
General Portfolio decreased by 9%, compared with the increases of 21% in the
FTSE 100 index, a decrease of 10% in the FTSEurofirst 300 index and a decrease
of 19% in AIM over the half year. At the close of business on 15th February
2012, our net asset value was 34.6p.
The Group profit before exceptional items and tax for the half year was GBP32,000
compared to a profit of GBP250,000 for the same period last year. This was in the
main due to no profits being realised from the General Portfolio. Including the
exceptional profit of GBP2,132,000 arising from the disposal of the property and
the recognition of the net decrease in the fair value of our investments, our
profit after tax and minority interest was GBP1,108,000 (2010 profit: GBP2,005,000)
giving profits per share of 3.6p (2010 - 6.4p).
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 28th February 2012, Western announced a loss after tax of GBP86,000 for its
half year to 31st December 2011 and a loss per share of 0.5p (2010: profit
1.8p). Western's net assets at market value were GBP12,113,000 equivalent to 67p
per share, a decrease of 19% from 84p at 30th June 2011. Western has announced
an increased interim dividend of 0.8p per share, an increase of 23% on the
prior year.
The market value of the Company's investment in Western at 31st December 2011
was GBP2,987,000 representing 29% of the net assets of Lonfin. The underlying
value of the investment in Western, valuing Western's own investments at market
value, was GBP5.4 million (30th June 2011: GBP5.6 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 marketing services group with a strategy to grow within its
sector to become a substantial, diversified international marketing
services group. Creston's results for the half-year to 30th September 2011
show a profit after tax of GBP2,821,000 (2010: loss - GBP133,000). Creston
declared an interim dividend of 0.83p per share, an increase of 11% on the
prior year.
Creston has recently announced the acquisition of the Corkery Group, a New
York based health and medical public relations company, complementing
Creston's US healthcare company Cooney/Waters. Further information about
Creston is available on its website: www.creston.com.
Western owns 3,000,000 shares in Creston (4.9%) with a market value at
31st December 2011 of GBP2,070,000 (30th June 2011: GBP2,752,000), being 16%
of Western's assets.
Northbridge Industrial Services plc ("Northbridge")
Northbridge hires and sells specialist industrial equipment to utility
companies, the oil and gas sector, shipping, construction and the public
sector. The product range includes loadbanks, transformers, generators,
compressors and oil tools. It has grown by acquisition of companies in the
UK, Dubai, Azerbaijan and Australia and through investing further in those
companies to make them more successful. Further information about
Northbridge is available on its website: www.northbridgegroup.co.uk.
Northbridge's latest results, for the half year to 30th June 2011, showed
profit of GBP1,656,000 (2010: GBP1,024,000). Northbridge declared an interim
dividend of 1.75p per share, an increase of 13% on the prior year.
Western owns 2,200,000 shares, representing 14.4% of Northbridge's share
capital. The value of this investment has been volatile and at 31st
December 2011 was GBP4,576,000 (30th June 2011: GBP6,094,000), representing
37% of Western's assets. The value of this investment has increased
substantially since 31st December 2011.
Swallowfield plc ("Swallowfield")
Swallowfield is a full service provider for global and household brands
operating in the cosmetics and personal care and household goods
marketplace. It offers a flexible and tailored service including: contract
filling, market analysis, design, formulation and testing of products,
packaging design and sourcing and distribution of stock. Further
information about Swallowfield is available on its website:
www.swallowfield.com.
Swallowfield's latest results, for the half year to 31st December 2011,
showed profit of GBP535,000 (31st December 2010: GBP519,000) against a
background of customer uncertainty and rising input costs. Swallowfield
declared an interim dividend of 2.2p, unchanged on the prior year.
At 31st December 2011, Western owned 1,869,149 shares in Swallowfield
(16.53% of their issued share capital). The market value of the Company's
holding in Swallowfield on 31st December 2011 was GBP2,187,000 (30th June
2011: GBP2,444,000) representing 18% of the Company's assets.
Hartim Limited ("Hartim")
Hartim offers a complete export sales, marketing and logistical services
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.
Hartim's estimated results for the year ended 31st December 2011 showed a
profit of GBP168,000 (2010 GBP540,000) after tax and before exceptional items.
These results are explained above, are a credible achievement under
challenging world wide conditions, and still represent a reasonable return
on our investment.
At 31st December 2011, Western owned 49.5% of Hartim. The carrying value
of the Company's investment in Hartim on 31st December 2011 was GBP1,300,000
(30th June 2011: GBP1,465,000) representing 11% of the Company's assets.
Finsbury Food Group plc ("Finsbury Food")
The Group owns 8,000,000 shares in Finsbury Food, representing 15.2% of their
share capital. The market value of our holding was GBP2,160,000 on 31st December
2011 compared to a cost of GBP1,893,000; this represents 21% of the net assets of
Lonfin.
Finsbury Food is a supplier of ambient cakes to most of the UK's major
supermarket chains and speciality breads to Waitrose including gluten-free and
low fat products. Further information about Finsbury Food is available on its
website: www.finsburyfoods.co.uk.
I am a Non-Executive Director of Finsbury.
MWB Group Holdings Plc ("MWB")
The Group owns 2,000,000 shares, representing 1.2% of MWB's issued share
capital. The market value of the holding at 31st December, 2011 was GBP290,000
(30th June 2011 - GBP775,000) which represents 3% of the net assets of Lonfin.
MWB is a hotel, serviced offices and retail group that is in the process of
realising its assets through an orderly disposal programme. Further information
about MWB is available on its website: www.mwb.co.uk.
I am a Non-Executive Director of MWB.
General Portfolio
The General Portfolio is diverse and consists of U.K. and European blue chip
equities, most of which have significant international exposure. The list of
these investments is set out at the end of this announcement.
Dividends
The Board has declared an interim of 0.35p payable on Thursday 12th April 2012
to shareholders on the register at the close of business on Friday 23rd March
2012.
Outlook
World stock markets have rebounded considerably over the last six months,
however we remain cautious about the outlook for 2012 and have positioned the
general portfolio accordingly. It is the intention of the Board to reinvest the
proceeds of the sale of our property into our General Portfolio, as and when
buying opportunities arise.
David C. Marshall
Chairman
Interim dividend
The declared interim dividend is 0.35p per share (2010 - 0.30p) and will be
paid on Thursday 12th April 2012 to those members registered at the close of
business on Friday 23rd March 2012. 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 24th February 2012.
Salient dates for dividend
Last day to trade (SA) Thursday 15th March 2012
Shares trade ex dividend (SA) Friday 16th March 2012
Shares trade ex dividend (UK) Wednesday 21st March 2012
Record date (UK & SA) Friday 23rd March 2012
Pay date Thursday 12th April 2012
Shareholders are hereby advised that the exchange rate to be used will be GBP 1
= ZAR 12.04. This has been calculated as the average of the bid/ask spread at
16h00 (United Kingdom time) being the close of business on Friday 24th February
2012. Consequently the dividend of 0.35p will be equal to 4.214 South African
cents.
No dematerialisation or rematerialisation of share certificates, nor transfer
of shares between the registers in London and South Africa will take place
between Friday 16th March 2012 and Friday 23rd March 2012, both dates
inclusive.
Unaudited Consolidated Statement of Comprehensive Income
Year
Half year ended ended
31st December 30th June
2011 2010 2011
Restated
GBP000 GBP000 GBP000
Operating Income .
Dividends received 102 97 251
Interest and sundry income 25 20 94
Profit on sales of investments, including - 255 266
provisions
-------- -------- --------
127 372 611
Management services income 199 245 398
-------- -------- --------
326 617 1,009
-------- -------- --------
Administrative expenses
Investment operations (144) (142) (314)
Management services (150) (225) (435)
-------- -------- --------
Total administrative expenses (294) (367) (749)
-------- -------- --------
Operating profit 32 250 260
Unrealised changes in the carrying value of (925) 1,828 1,995
investments
Exceptional profit on sale of property 2,132 - -
Interest payable (6) (53) (110)
-------- -------- --------
Profit on ordinary activities before taxation 1,233 2,025 2,145
Tax on result of ordinary activities (102) (5) (19)
-------- -------- --------
Profit on ordinary activities after taxation 1,131 2,020 2,126
Minority interest (23) (15) (8)
-------- -------- --------
Total comprehensive income - profit attributable 1,108 2,005 2,118
to members of the holding company
-------- -------- --------
Reconciliation of headline earnings
Earnings per share 3.6p 6.4p 6.8p
Adjustment for unrealised changes in the carrying (3.6)p (5.8)p (6.4)p
value of investments and exceptional items, net of
tax
-------- -------- -------
Headline (loss)/earnings per share (0.0)p 0.6p 0.4p
-------- -------- -------
Interim dividend 0.35p 0.30p 0.30p
Final dividend 0.30p
Total in respect of the year 0.60p
Unaudited ConsolidatedChanges in Shareholders' Equity
31st December 30th June
2010 2011 2011
GBP000 GBP000 GBP000
Total comprehensive income 1,108 2,005 2,118
Shares issued - - 2
Dividends paid to equity shareholders (94) (94) (187)
-------- ------- --------
1,014 1,911 1,849
Equity shareholders' funds at start of period 9,189 7,256 7,340
-------- ------- --------
Equity shareholders' funds at end of period 10,203 9,167 9,189
======== ======= ========
Unaudited Consolidated Statement of Financial Position
Non-current assets
Tangible assets - 372 367
Principle investments:-
MWB Group Holdings Plc 290 880 775
Finsbury Food Group plc 2,160 1,840 1,700
Western Selection P.L.C. 2,987 3,262 3,458
-------- -------- ------
5,437 6,354 6,300
-------- -------- ------
Current assets
Listed investments 4,240 4,691 4,668
Trade and other receivables 348 269 260
Cash, bank balances and deposits 2,591 50 21
-------- -------- -------
7,179 5,010 4,949
-------- -------- --------
Total Assets 12,616 11,364 11,249
======== ====== =======
Capital and Reserves
Called up share capital 1,560 1,560 1,560
Share premium account 2,320 2,320 2,320
Revaluation reserve - 330 330
Unrealised profits and losses on investments (2,675) (1,827) (1,750)
Share of undistributed profits and losses of 996 854 904
subsidiaries and associates
Company's retained realised profits and losses 8,002 5,930 5,825
-------- -------- ------
Equity shareholders funds 10,203 9,167 9,189
Trade and other payables falling due within one 2,298 2,098 1,968
year
Non-controlling equity interest 115 99 92
-------- -------- -------
12,616 11,364 11,249
======== ======== ========
Unaudited Statement of Cash Flow
Year
Half year ended ended
31st December 30th June
2011 2010 2011
GBP000 GBP000 GBP000
Profit before taxation 1,233 2,025 2,145
-------- -------- -------
Adjustments for non-cash and non-operating
expenses:-
Depreciation charges - 5 10
Unrealised changes in the carrying value of fixed 496 (1,919) (1,995)
asset investments
Exceptional profit on sale of property (2,132) - -
Net interest paid 6 53 110
-------- -------- --------
(1,630) (1,861) (1,875)
-------- -------- --------
Tax paid (102) (5) (19)
-------- -------- --------
Changes in working capital:-
(Increase)/Decrease in debtors (88) 24 34
Increase/(Decrease) in creditors 196 7 (6)
Decrease in current asset investments 429 139 285
-------- -------- --------
537 170 313
-------- -------- --------
Cash inflow on operating activities 38 329 564
-------- -------- --------
Investment activities
Net proceeds from sale of property 2,498 - -
-------- -------- --------
Cash flows from financing
Net interest paid (6) (53) (110)
Shares issued - - 2
Drawdown/(Repayment) of loan facilities 134 (149) (265)
Equity dividend paid (94) (94) (187)
-------- -------- --------
Net cash inflow/(outflow) from financing 34 (296) (560)
-------- -------- --------
Increase in cash and cash equivalents 2,570 33 4
Cash and cash equivalents at start of period 21 17 17
-------- -------- --------
Cash and cash equivalents at end of period 2,591 50 21
======= ======== ========
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 GBP000 GBP000 GBP000
2011
Cash at bank 21 2,570 2,591
Bank loan (1,816) (134) (1,950)
-------- -------- --------
(1,795) 2,436 641
2010 ======== ======= ========
Cash at bank 17 33 50
Bank loan (2,081) 149 (1,932)
-------- -------- --------
(2,064) 182 (1,882)
======== ======== ========
Year ended 30th June 2011
Cash at bank 17 4 21
Bank loan (2,081) 265 (1,816)
-------- -------- --------
(2,064) 269 (1,795)
======== ======= ========
Market Value of General Portfolio
31st December 2011 Current
Value
GBP000 %
Royal Dutch Shell 268 6.3
British American Tobacco 266 6.3
Nestle 254 6.0
Imperial Tobacco 217 5.1
Schindler 215 5.1
Diageo 208 4.9
Pernod-Ricard 207 4.9
Novartis 192 4.5
Unilever 190 4.5
L'Oreal 189 4.5
Henkel 189 4.5
Heineken 173 4.1
Investor 168 4.0
Beiersdorf 165 3.9
Total 156 3.8
Danone 162 3.8
ABB 161 3.8
BASF 157 3.7
Reckitt Benckiser 156 3.7
DSM 155 3.7
Carlsberg 132 3.1
BHB Billiton 131 3.1
Holcim 128 3.0
-------- --------
4,240 100.0
======== ========
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 2011 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 2011, 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.
END
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