| Wed 20 Feb 2008, 14:30 | | LNF - London Finance & Investment Group P.L.C. - Unaudited Interim Results For |
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LNF
LOJM
LNF - London Finance & Investment Group P.L.C. - Unaudited Interim Results For
The Six Months Ended 31 December 2007 And Dividend Declaration
LONDON FINANCE & INVESTMENT GROUP P.L.C.
(Incorporated in England - No. 201151)
Code: LNF ISN: GB0002994001
Directors Registered office
D.C. Marshall, Chairman 30 City Road
J.H. Maxwell London, EC1Y 2AG
Dr. F.W.A.A. Lucas
J.M. Robotham, OBE, FCA, MSI
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2007 AND DIVIDEND
DECLARATION
London Finance & Investment Group P.L.C. (LSE: LFI, JSE: LNF), the investment
company, today announces its unaudited interim results for the six months ended
31 December 2007.
Highlights from last six month period include:
- Three significant strategic investments: Western Selection P.L.C., Marylebone
Warwick Balfour Group Plc and Finsbury Food Group plc
- Increased stake in Western Selection, representing 43.8% of share capital
- Two dividends per annum proposed
David Marshall, Chairman of Lonfin commented:
"Last six months have been challenging for the Company and our strategic
investments due to the volatile financial market conditions which have had an
impact on our net assets. However, we remain confident that our balanced
investments and combined portfolios are an effective way of achieving growth
over medium and longer term."
- London Finance is an investment company whose assets primarily consist of
three Strategic Investments and a General Portfolio. Strategic Investments are
significant investments in smaller UK quoted companies and these are balanced by
a General Portfolio, which consists mainly of investments in major U.K. and
European equities.
- Its strategic investments comprise: Western Selection P.L.C., Marylebone
Warwick Balfour Group Plc and Finsbury Food Group plc. Western Selection P.L.C.
has strategic investments in Creston plc, Swallowfield plc, Northbridge
Industrial Services plc and Industrial & Commercial Holdings P.L.C. The General
Portfolio has material interests in Oil, Natural Resources, Pharmaceuticals and
Healthcare, Food and Beverages and Banking.
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 performance 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 mainly consists of investments in major U.K. and European equities.
At 31 December 2007, we held three Strategic Investments in which we have board
representation: our associated company Western Selection P.L.C., Marylebone
Warwick Balfour Group Plc and Finsbury Food Group plc. Detailed comments on our
Strategic Investments are given below.
Results
Our net assets per share decreased 15% to 56p at 31 December 2007 from 66p at 30
June 2007. Our Strategic Investments decreased in value by 19% and our General
Portfolio increased by 9%. This compares with the decline in the FTSE 100 index
of 2% over the half year. At the close of business on 15 February 2008, our net
asset value was 48p.
The Group made a profit before tax for the half year of GBP228,000 compared with
a profit of GBP1,048,000 for the same period last year due to a substantial
reduction in profits realised from the General Portfolio. Our profit after tax
and minority interest was GBP220,000 (2006 - GBP750,000) giving earnings per
share of 0.7p (2006 - 2.50p).
Strategic Investments
Western Selection P.L.C. ("Western")
The Group has increased its investment by GBP1,297,000 in the period through the
subscription for Warrant Units and the subsequent exercise of 2007 Warrants. We
now own 7,864,412 Western shares and 3,785,820 Western 2010 Warrants
representing 43.8% of Western`s issued share capital and 49.2% of outstanding
Warrants. The 2010 Warrants are exercisable 28 days after posting of Western`s
interim and annual accounts in each of the years 2008 to 2010. We have approval
from Western`s shareholders and the Takeover Panel to increase our holding in
Western up to 48% through the exercise of warrants.
Following its fund raising, Western has cash and bank facilities available to
take advantage of any buying opportunities in the stock markets and to acquire
new strategic investments.
On 14 February 2008, Western announced a profit after tax and exceptional items
of GBP38,000 for its half year to 31 December 2008 and a profit per share of
0.3p (2006 - loss after exceptional items 1.9p). Western`s net assets at market
value were GBP11,333,000 equivalent to 63p per share, a decrease of 10.9% from
89.8p at 30 June 2007 (adjusted for the exercise of warrants).
The market value of the Company`s investment in Western at 31 December 2007 was
GBP2,961,000 against a book value of GBP5,886,000, this represent 17% of the net
assets of Lonfin. The underlying value of the Company`s investment in Western,
valuing Western`s own investments at market value, was GBP4,964,000 (30th June
2007 - GBP5,300,000).
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 and Swallowfield plc. Extracts from Western`s announcement on its
strategic investments are set out below:
Creston plc
Creston is a marketing services group whose strategy is to grow within
its sector to become a substantial, diversified international marketing
services group. Creston`s results for the half-year to 30th September
2007 show a profit after tax of GBP2,280,000 (2006 restated:
GBP790,000), equivalent to earnings of 4.1p per share (2006 restated:
1.6p).
Western owns 3,000,000 shares in Creston (5.4%) with a market value at
31 December 2007 of GBP2,288,000 (30 June 2006: GBP4,890,000), being
20.2% of Western`s assets.
Northbridge Industrial Services PLC
Northbridge was formed for the purpose of acquiring companies that hire
and sell specialist industrial equipment such as electrical load banks
and generators. Northbridge`s first acquisition was Crestchic Limited,
one of the largest specialist load bank equipment manufacturers in the
world, located in Burton-on-Trent, selling and hiring to a national and
international customer base.
Northbridge has recently acquired RDS (Technical) Limited ("RDS") which
conducts the majority of its activities through a branch office in Baku,
Azerbaijan. Its principal business is to provide generators and
associated equipment by way of hire, sale and service to the oil and gas
industry in the Caspian region. RDS is held by Northbridge (Middle
East) FZE, a recently incorporated wholly owned subsidiary of
Northbridge, which has been established in the Jebel Ali Free Zone in
Dubai, UAE. This will enable its newly formed subsidiary in Dubai to
establish an oil and gas business in the Middle East and Caspian region
with a broader range of equipment available for hire and sale.
Western owns 1,500,000 shares, representing 20.3% of Northbridge`s share
capital. The value of this investment at 31 December 2007 was
GBP2,220,000 (30 June 2006: GBP2,768,000), representing 19.6% of
Western`s assets.
Swallowfield plc
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.
Swallowfield`s latest results, for the year to 30 June 2007, showed
profit, before exceptional items, of GBP683,000 (2006: loss of
GBP295,000).
At 31 December 2007, Western owned 1,000,000 shares in Swallowfield
(8.9% of their issued share capital). The market value of the Company`s
holding in Swallowfield on 31 December 2007 was GBP740,000 (30 June
2006: GBP795,000) representing 6.5% of the Company`s assets. Since 31st
December Western has acquired a small number of Swallowfield shares and
now own in excess of 9% of the company.
Western has unsuccessfully requested the Swallowfield Board`s assistance
in appointing two new directors: Peter Gyllenhammar (a fellow
Swallowfield shareholder owning 29%) and David Marshall Western does
not believe that the Swallowfield Board contains a broad enough mix of
experience and will continue to work with other Swallowfield
shareholders to rectify this.
Marylebone Warwick Balfour Group Plc ("MWB")
The Group owns 2,000,000 shares, representing 2.48% of MWB`s issued share
capital. The market value of the holding at 31st December, 2007 was
GBP4,860,000, compared with a book value of GBP1,681,000, which represents 28%
of the net assets of Lonfin.
MWB is in the process of a realisation program through the controlled sale of
assets with the objective of returning cash or cash equivalents to shareholders
by the end of December 2008. We expect the repayment to be above the current
market price of MWB`s shares.
I am a non-executive director of MWB.
Finsbury Food Group plc ("Finsbury Food")
The Group owns 8,000,000 shares in Finsbury Food, representing 15.6% of their
share capital. The market value of our holding was GBP6,880,000 on 31 December
2007 compared to a cost of GBP1,893,000; this represents 39% 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.
I am a deputy chairman of Finsbury Food.
General Portfolio
The General Portfolio consists of large capitalisation companies with
significant exposure to the United Kingdom and Europe`s leading international
groups. The list of these investments appears below.
Outlook
Over the medium to long term we expect superior returns from our Strategic
Investments in smaller quoted companies. However we accept that the share
prices of these investments could be volatile in the short term.
Funding for new strategic investments will not be available until we have had
the opportunity to release funds from our existing strategic investment in MWB
and this will act as a constraint on corporate activity in the short term.
Our practice has been to only declare one dividend a year, which was paid in
October 2007 for the year ended 30 June 2007. In future we will declare two
dividends a year, with an interim dividend of approximately half of the
distribution of the previous year.
We view the future with some uncertainty due to the World economic problems in
the banking and mortgaging industries, however we expect the broad spread of our
investments to perform satisfactorily. It is our intention, subject to
unforeseen circumstances, to maintain our policy of a progressive dividend
distribution
David C. Marshall
Chairman
Interim dividend
The recommended interim dividend is 0.55p per share (2006 - nil) and will be
paid on 28 March 2008 to those members registered at the close of business on 29
February 2008. Shareholders on the South African register will receive their
dividend in South African Rand converted from sterling at the closing rate of
exchange on Tuesday, 19 February 2008.
Salient dates for dividend
Last day to trade (SA) Friday, 29 February 2008
Shares trade ex dividend (SA) Monday, 3 March 2008
Shares trade ex dividend (UK) Wednesday, 5 March 2008
Record date (UK & SA) Friday, 7 March 2008
Pay date Friday 28 March 2008
Currency conversion date Tuesday, 19 February 2008
Shareholders are hereby advised that the exchange rate to be used will be GBP 1
= ZAR14.9147.
This has been calculated as the average of the bid/ask spread at 16h00 (United
Kingdom time) being the close of business on Tuesday, 19 February 2008.
Consequently the dividend of 0.55p will be equal to 8.2031 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
Monday, 3 March 2008 and Friday, 7 March 2008, both dates inclusive.
UNAUDITED CONSOLIDATED INCOME STATEMENT
Half year ended Year ended
31 December 30 June
2007 2006 2007
GBP000 GBP000 GBP000
Operating Income
Dividends received 205 155 252
Interest and sundry income 17 18 83
Profit on sales of 234 1,337 1,426
investments
456 1,510 1,761
Management services income 241 251 614
697 1,761 2,375
Administrative expenses
Investment operations (193) (170) (344)
Management services (235) (274) (594)
Total administrative (428) (444) (938)
expenses
Operating profit 269 1,317 1,437
Share of result of
associated undertaking
Operating profit 38 9 75
Exceptional expenses - (202) (597)
Interest payable (79) (76) (150)
Profit on ordinary 228 1,048 765
activities before taxation
Tax on result of ordinary (3) (309) (245)
activities
Profit on ordinary 225 739 520
activities after taxation
Minority interest (5) 11 (31)
Profit attributable to 220 750 489
members of the holding
company
Reconciliation of headline
earnings
Earnings per share 0.7p 2.5p 1.6p
Adjustment for exceptional - 0.5p 2.4p
items, net of tax
Headline earnings per share 0.7p 3.0p 4.0p
Dividend per share 0.55p Nil 1.10p
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY
Unrealised gains/(losses) on (2,922) 1,943 4,181
investments, net of taxation
Profit attributable to members 220 750 489
Total income and expense (2,702) 2,693 4,670
Share capital issued - 60 534
Dividend paid in respect of the (343) (315) (315)
previous year
Total transactions with (343) (255) 219
shareholders
Shareholders` funds at start of 20,520 15,631 15,631
period
Shareholders` funds at end of 17,475 18,069 20,520
period
UNAUDITED CONSOLIDATED BALANCE SHEET
31 December 30 June
2007 2006 2007
GBP000 GBP000 GBP000
Non-current assets
Tangible assets 410 423 416
Principle investments:-
Marylebone Warwick Balfour Group 4,860 4,820 5,495
Plc
Finsbury Food Group plc 6,880 7,020 9,320
Western Selection P.L.C. 2,961 3,542 3,490
15,111 15,805 18,721
Current assets
Listed investments 6,885 5,382 6,564
Debtors 284 177 184
Cash, bank balances and deposits 31 878 87
7,200 6,437 6,835
Total Assets 22,311 22,242 25,556
Capital and Reserves
Called up share capital 1,560 1,560 1,560
Share premium account 2,328 1,855 2,328
Reserves 6,503 7,186 9,425
Profit and loss account 7,084 7,468 7,207
Shareholders funds 17,475 18,069 20,520
Creditors falling due within one 3,268 2,023 1,777
year
Deferred taxation 1,468 2,097 3,164
Minority equity interest 100 53 95
22,311 22,242 25,556
CONSOLIDATED CASH FLOW STATEMENT
Half year ended Year ended
31 December 30 June
2007 2006 2007
GBP000 GBP000 GBP000
Cash outflow on operating (354) (305) (1,311)
activities
Returns on investments and
servicing of finance
Dividends received 340 282 380
Net interest paid (58) (54) (88)
Net cash inflow from returns on 282 228 292
investments and servicing
of finance
Taxation paid (2) (3) (13)
Investing activities
Non-current asset investments (1,297) (888) (948)
purchases
Non-current asset investments - 2,080 2,080
disposals
Net cash (outflow)/inflow from (1,297) 1,192 1,132
investment activities
Equity dividend paid - Company (343) (315) (315)
Financing
Share capital issued - 60 534
Net drawdown/(repayment) of loan 1,658 (150) (403)
facility
Net cash inflow/(outflow) from 1,658 (90) 131
financing
Increase in cash (56) 707 (84)
(a) Reconciliation of operating profit to net cash flow from operating
activities
31 December 30 June
2007 2007
GBP000 GBP000
Profit before taxation 228 765
Dividends receivable (205) (253)
Share of associate (38) (75)
Depreciation charges 7 14
Net interest paid 80 138
Profit on sale of non-current - (1,239)
asset investment
(Increase)/Decrease in debtors (99) 12
(Decrease)/Increase in creditors (168) 56
Increase in current asset (158) (729)
investments
(353) (1,311)
(b) Reconciliation of net cash flow to movement in net debt
At start Cash At end of
of period flow Period
GBP000 GBP000 GBP000
2007
Cash at bank 87 (56) 31
Bank loan (1,247) (1,658 (2,905)
)
(1,160) (1,714 (2,874)
)
2006/2007
Cash at bank 171 (84) 87
Bank loan (1,650) 403 (1,247)
(1,479) 319 (1,160)
MARKET VALUE OF GENERAL PORTFOLIO
31 December 2007
GBP000 %
L`Oreal 248 3.6
Nestle 231 3.4
British American Tobacco 224 3.2
Heineken 211 3.1
Royal Dutch Shell 210 3.0
ABB 203 2.9
BASF 202 2.9
Lafarge 202 2.9
Beiersdorf 199 2.9
Unilever 192 2.8
Reckitt Benckiser 189 2.7
BHP Billiton 187 2.7
Land Securities Group 186 2.7
BP 186 2.7
Standard Chartered 185 2.7
Diageo 184 2.7
Anglo American 183 2.7
Investor 179 2.6
Imperial Tobacco Group 178 2.6
Holcim 178 2.6
ING Groep 172 2.5
Pernod-Ricard 168 2.4
Koninklijke 167 2.4
Henkel 166 2.4
Credit Suisse Group 163 2.4
Schindler-Holdings 162 2.4
Johnson Matthey 160 2.3
Total 159 2.3
Associated British Foods 157 2.3
Richemont 155 2.3
Carlsberg 153 2.2
Rio Tinto 150 2.2
LVMH Moet Hennessy-Louis Vuitton 147 2.1
Novartis 144 2.1
UBS 140 2.0
Roche Holdings 130 1.9
Deutche Post 121 1.8
Swire Pacific 109 1.6
Heidelbergcement 106 1.5
TNT 101 1.5
6,885 100.0
Notes:-
1. The results for the half-year are unaudited and have been
prepared in accordance with International Financial Reporting
Standards which was the basis on which the accounts for the
year ended 30 June 2007 were prepared. The financial
information in this interim report does not constitute
statutory accounts within the meaning of Section 240(5) of
the Companies Act 1985. The audited accounts of the Group
for the year ended 30 June 2007 have been reported on by the
Group`s auditors and have been delivered to the Registrar of
Companies. The report of the auditors was unqualified and
did not contain a statement under Section 237(2) or 272(3) of
the Companies Act 1985.
2. Earnings per share are based on the profit after taxation and
minorities and on the weighted average number of shares in
issue during the period - 31,200,000 (December 2006 -
30,065,217 and June 2007 - 30,631,233).
Date: 20/02/2008 14:30:01 Produced by the JSE SENS Department.
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