TIDMLFI
LONDON FINANCE & INVESTMENT GROUP P.L.C.
("Lonfin", "the Company" or "the Group")
Preliminary announcement of results for the year ended 30th June 2015 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
2015.
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.
Results
* Net assets have increased over the year by 12.1% from 44.7p per share to
50.1p per share, and our Strategic Investments, adjusting for additions,
have increased in value over the year by 23%, due to the increase in value
of our investment in Finsbury Food Group Plc.
* Strategic Investments are yielding 2.7%
* The General Portfolio, adjusting for changes, has increased over the year
by 1.4%
* The General Portfolio is yielding 2.9% (2014 - 2.8%)
* Net borrowings of GBP1,385,000 compared with GBP886,000 at 30th June 2014
* Operating costs were broadly in line with 2014
The Group achieved a profit for the year, before tax and the fair value
adjustments of investments, of GBP286,000 (2014 - GBP209,000). The profit, after
positive fair value adjustments, tax and non-controlling interest was GBP
1,968,000 (2014 - GBP43,000 loss after negative fair value adjustments of GBP
339,000) giving a profit per share of 6.3p (2014 loss per share - 0.1p).
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 30th September 2015, Western announced a profit before associates and tax of
GBP2,787,000 for its year to 30th June 2015 (2014 - GBP449,000). Including
associates and after exceptional items and tax, profits per share were 15.5p
(2014 - profits - 4.5p).
Western has paid an interim dividend of 1.05p and proposes an increased final
dividend of 1.05p making 2.1p for the year (2014 - 2.0p). Western's net assets
at market value as at 30th June 2015 were GBP13,487,000 equivalent to 75p per
share, a decrease of 26% from 102p last year.
Our share of the net assets of Western, including the value of Western's
investments at market value, was GBP5.9million (2014 - GBP8 million). The fair
value recorded in the statement of financial position is the market value of GBP
3.7million (2014 - GBP4.2 million). This represents 24% (2014 - 30%) 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.
Western's business model is 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. 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 Northbridge
Industrial Services plc, Swallowfield plc, Bilby Plc and Hartim Limited. An
extract from Western's announcement relating to its main core holdings is set
out below:
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 their website: www.northbridgegroup.co.uk.
Northbridge will announce its unaudited interim profits after tax for the six
months ended 30th June 2015 on 30th September 2015.
Western acquired a further 25,000 Northbridge shares on 2 June 2015 for GBP52,000
bringing its holding to 1,900,000 shares. Western's holding is 10.2% of
Northbridge's issued share capital. The value of this investment at 30th June
2015 was GBP3,895,000 (2014 - GBP9,750,000) being 29% (2014 - 53%) of Western's net
assets.
Mr D. C. Marshall is 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 their
website: www.swallowfield.com.
Swallowfield announced its annual results to 30th June 2015 on 22nd September
2015 and recorded a profit after tax of GBP746,000 compared to a profit of GBP
157,000 for the comparable period last year. No dividends were received from
Swallowfield during the year (2014 - nil). Profits are expected to recover
further in the current year and dividends are expected to be resumed shortly.
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 2015 had increased by 11% to GBP2,019,000 from the value at June 2014
of GBP1,813,000. This is 15% (2014 - 10%) of Western's net assets.
Mr E. J. Beale is a non-executive director of Swallowfield.
Bilby Plc ("Bilby")
In July 2015 we invested GBP1,500,000 in acquiring 1,875,000 shares in Bilby
which is 5.5% of their issued share capital.
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 results for the 14 month period to 31st March 2015 on 23rd
June 2015 showing a profit after tax of GBP1,552,000. It has announced a
dividend of 2.32p per share payable in August which will provide us with income
of GBP43,500.
Hartim Limited ("Hartim")
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
2015 of GBP68,000. Turnover in the period was GBP18,022,000 (2014 - GBP20,448,000).
Western's share of a loss after tax, including a charge for disallowed tax
losses, for the twelve months to 30th June 2015 was GBP5,000 (2014 -profit of GBP
382,000, after exceptional profit on former Australian subsidiary of GBP337,000)
and the book value of the investment at 30th June 2015 was GBP1,223,000 (2014 - GBP
1,228,000) being 9% (2014 - 7%) of Western's assets.
Western has two nominees on the board of Hartim: Mr E. J. Beale and Mr L. H.
Marshall (a director of City Group P.L.C., Western's company secretary).
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.
During the year Lonfin acquired 1 million additional shares in Finsbury for a
cost of GBP593,000. Lonfin now holds 10 million shares, representing 7.81% of
Finsbury's share capital. The market value of the holding was GBP8,000,000 as at
30th June 2015 (cost - GBP2,875,000) and represents 51% (2014 - 35%) of Lonfin's
net assets.
On 21st September 2015, Finsbury announced audited profits on continuing
operations after tax and minority interests of GBP8.9 million for the year ended
28th June 2015 (2014 - GBP5 million).
Finsbury paid an interim dividend of 0.83p and has recommended to its
shareholders a final dividend of 1.67p per share, making 2.50p for the year
(2014 - 1.00p).
Mr. Beale is a non-executive director of Finsbury.
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.
At year end the number of holdings in the General Portfolio was 26. We have
decreased the amount invested in the General Portfolio over the year by GBP
100,000 (2014 - increased by GBP272,000).
Operations and Employees
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All of our operations and those of our associate, Western, except investment
selection, are outsourced to our subsidiary, City Group. 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.
All 5 directors of the Company, and the 4 directors of its subsidiaries are
unchanged from last year and are male. The Group has set a target of 25% female
members of the Company's Board and female candidates will be considered on
their merits when vacancies arise. Excluding directors, 4 of the 6 other
employees of the Group at 30th June 2015 were female (30th June 2014 - 3 of 6).
Dividend
The Board recommend a final dividend of 0.5p per share, making a total of 1p
per share for the year (2014 - 0.9p). Subject to shareholders' approval at the
Company's Annual General Meeting on 2nd December 2015, the dividend will be
paid on 11th December 2015 to those shareholders on the register at the close
of business on 20th November 2015. 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 2015 being GBP1= ZAR 21.1213.
The number of shares in issue as at the declaration date is 31,207,479 and the
Company's UK Income Tax reference number is 948/L32120.
Dividend dates:
Last date to trade (SA) Friday 13th November 2015
Shares trade ex dividend (SA) Monday 16th November 2015
Shares trade ex dividend (UK) Thursday 19th November 2015
Record date (UK and SA) Friday 20th November 2015
Pay date Friday 11th December 2015
The JSE Listings Requirements require disclosure of additional information in
relation to any dividend payments.
Shareholders registered on the Johannesburg register are advised that the
dividend withholding tax will be withheld from the gross final dividend amount
of 10.56065 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 8.97655
SA cents per share. 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 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.
Share certificates may not be dematerialised or rematerialised between Monday
16th November 2015 and Friday 20th November 2015, both days inclusive. Shares
may not be transferred between the registers in London and South Africa 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
notwithstanding any short term volatility in markets, currencies and
commodities.
By Order of the Board
City Group P.L.C.
Company Secretary
29th September 2015
Johannesburg Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)
Consolidated Statement of Total Comprehensive Income
For the year ended 30th June
2015 2014
GBP000 GBP000
Dividends - Listed investments 487 393
Interest receivable - -
Rental and other income 82 82
Profits realised on sales of investments 175 205
Management services fees 233 205
Operating income 977 885
Administration expenses (643) (651)
Operating profit 334 234
Unrealised changes in the carrying value of 2,049 (339)
investments
Interest payable (48) (25)
Profit/(Loss) on ordinary activities before taxation 2,335 (130)
Tax on result of ordinary activities (357) 71
Profit/(Loss) on ordinary activities after taxation 1,978 (59)
Non-controlling interest (10) 16
Profit/(Loss) for the financial year attributable to 1,968 (43)
members of the holding company
Other comprehensive income - -
Total comprehensive income attributable to 1,968 (43)
shareholders
Reconciliation of headline earnings
Basic (loss)/profit per share 6.3p (0.1)p
Adjustment for the unrealised changes in the carrying (5.5)p 0.8p
value of investments, net of tax
Headline profit per share 0.8p 0.7p
All profits and losses are on continuing activities.
Consolidated Statement of Changes in Shareholders' Equity
Share of Retained
Ordinary Share Unrealised undistributed realised Non-
Share premium profits/ results of profits Controlling Total
(losses) &
Capital account on Subsidiaries losses Total interests equity
investments
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Year ended 30th June
2014
Balances at 1st July 1,560 2,320 4,831 (499) 6,046 14,258 81 14,339
2013
Total comprehensive - - (246) 205 (2) (43) (16) (59)
income
Dividends paid - - - - (265) (265) - (265)
Total transactions - - - - (265) (265) - (265)
with shareholders
Balances at 30th 1,560 2,320 4,585 (294) 5,779 13,950 65 14,015
June 2014
Year ended 30th June
2015
Balances at 1st July 1,560 2,320 4,585 (294) 5,779 13,950 65 14,015
2014
Total comprehensive - - 1,719 320 (71) 1,968 10 1,978
income
Dividends paid - - - - (296) (296) - (296)
Total transactions - - - - (296) (296) - (296)
with shareholders
Balances at 30th 1,560 2,320 6,304 26 5,412 15,622 75 15,697
June 2015
Consolidated Statement of Financial Position
At 30th June 2015 2014
GBP000 GBP000
Non-current Assets
Tangible assets 31 39
Investments 11,694 9,026
11,725 9,065
Current Assets
Listed investments 5,801 5,927
Trade and other receivables 218 245
Cash at bank 115 39
6,134 6,211
Current Liabilities
Trade and other payables: falling due within one year (1,720) (1,150)
Net Current Assets 4,414 5,061
Deferred taxation (442) (111)
Total Assets less Current Liabilities 15,697 14,015
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,320 2,320
Unrealised profits and losses on investments 6,304 4,585
Share of retained realised profits and losses of 26 (294)
subsidiaries
Company's retained realised profits and losses 5,412 5,779
15,622 13,950
Non-controlling equity interests 75 65
15,697 14,015
Company Statement of Financial Position
at 30th June
2015 2014
GBP000 GBP000
Non-current Assets
Investments in Group companies 6,203 5,923
6,203 5,923
Current Assets
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