| Thu 11 Sep 2008, 10:49 | | LNF - London Finance & Investment Group P.L.C - Preliminary announcement of |
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LNF
LOJM
LNF - London Finance & Investment Group P.L.C - Preliminary announcement of
audited results for the year ended 30th June 2008
London Finance & Investment Group P.L.C
(Incorporated in England - No. 201151)
Code: LNF ISSN: GB0002994001
("Lonfin", "the Company" or "the Group")
Preliminary announcement of audited results for the year ended 30th June 2008
London Finance & Investment Group P.L.C. (LSE: LFI, JSE: LNF), the investment
company whose assets primarily consist of three Strategic Investments and a
General Portfolio, today announces its Preliminary Results for the year ended
30th June 2008.
Highlights:
* Profit before exceptional items of GBP319,000
* Total dividend 1.20p per share, up over 9% (2007 - 1.10p)
* GBP481,000 available for further investment when the Board feels
appropriate
David Marshall, Chairman of Lonfin commented:
"After a volatile year in the markets, we are confident that our high quality
investments will provide capital growth in the medium term. We are maintaining
our annual dividend and look forward to bringing growth in value to our
shareholders."
- Ends -
Enquiries to:
London Finance & Investment Group Via Redleaf Communications
David Marshall
Redleaf Communications 020 7822 0200
Emma Kane/Sanna Sumner/Rebecca
Sanders-Hewett
Notes to Editors:
* 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 Food and Beverages,
Oil, Natural Resources, Chemicals, and Tobacco.
Chairman`s statement
Lonfin 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.
At 30th June 2008, the three Strategic Investments, in which we have board
representation, were 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.
Our objective is to achieve capital growth in real terms over the medium term,
while maintaining a progressive dividend policy.
Results
The Group made a profit before exceptional items of GBP319,000 (2007 -
GBP1,217,000). Our operating income last year was higher due to profits
realised on sales of investments, particularly the disposal of one third of the
Group`s holding in MWB Group Holdings Plc. Fee income received by City Group
reduced from last year which was boosted by one-off activities by clients not
repeated in the current year. After the Group share of an exceptional
impairment charge in Western of GBP1,322,000, tax and minority interests, the
Group loss was GBP1,003,000 (2007 - profit - GBP489,000) giving a loss per share
of 3.21p (2007 - earnings - 1.60p).
To reflect our progressive dividend policy, the Board has decided to propose a
final dividend of 0.65p. With the maiden interim dividend of 0.55p the total for
the year is 1.20p per share from 1.10p last year, an increase of over 9%.
Our net assets per share, after provision for deferred taxation, have decreased
41% to 39p from 66p last year, reflecting the reduction in value of the
Strategic Investments. These have declined in value by 56% and our General
Portfolio by 4% after taking into account additions and disposals of
investments. This compares with the decreases in the FTSE 100 index of 14.9%
and the FTSE Eurotop 300 index of 25.16% over the year.
Strategic Investments
Western Selection P.L.C. ("Western")
On 16th July 2007 Western invited its shareholders to subscribe for warrants in
the company, the funds raised from this subscription and from exercise of the
warrants to be used to increase the assets under management, improving the ratio
of assets invested to operating expenses.
The offer, which was fully subscribed, raised GBP872,000 in September 2007 and
all of the Warrants were exercised in December 2007 raising a further
GBP1,693,000. A further GBP3,848,000 could be raised from the remaining
warrants which are exercisable in the period 2008-2010 at 50p each.
The Company owns 7,864,412 shares, being 43.8% of the issued share capital of
Western. The Company took up its entitlement to 1,261,940 warrant units issued
by Western for GBP429,000 and exercised 2,597,191 of 2008 warrants in December
for GBP853,000. The cost to the Group of these investments was financed under a
specific new facility with the Group`s bankers. At 30 June 2008 the Company
held 3,785,820 of the 2010 warrants.
On 8th September 2008, Western announced a profit before associates and
exceptional items of GBP378,000 for its year to 30th June 2008 (2007 -
GBP355,000). In view of the current market value of its investment in Creston
plc, Western was forced under IFRS to make a provision for the difference
between the cost and market value of that investment, amounting to GBP3,019,000.
This provision does not reduce Western`s distributable profits. Including
associates and after exceptional items and tax, and on its increased share
capital, losses per share were 16.4p (2007 - earnings 0.51p). The company
announced an increased dividend on the increased share capital of 2.60p (2007 -
2.55p). Western`s net assets at market value were GBP10,419,000, equivalent to
58p per share, a decrease of 42% from 100p last year. The decrease in value was
principally due to the fall in value of its strategic investments.
The market value of the Company`s investment in Western at 30th June 2008 was
GBP2,468,900 and the book value was GBP6,082,000. At market value this
represents 20% of the net assets of Lonfin. The underlying value of the
Company`s investment in Western, valuing Western`s investments at market value,
was GBP4.6 million (2007 - GBP5.27 million).
Mr. Marshall is 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. An extract from
Western`s announcement of its strategic investments is set out below:
Creston plc
Creston is a marketing services group whose strategy is to
grow within its sector both by organic growth and through
selective acquisition to become a substantial, diversified
marketing services group. The audited results for the year
to 31st March 2008, show a profit after tax of GBP4,782,000
(2007 - GBP4,445,000), equivalent to earnings of 8.65p per
share (2007 - 8.50p). Western maintained its holding of
3,000,000 shares in Creston (5.4%) during the year. The
value of this investment at 30th June 2008 was GBP1,425,000
(2007 - GBP4,890,000) being 14% (2007 - 38%) of Western`s
assets. Creston appears, on a historical basis, to be
significantly undervalued, as it is now yielding 5.7% at a
P/E of 5.7. At its recent AGM held on 1st September,
Creston`s directors expressed their confidence in current
trading conditions being experienced by the enlarged group.
Northbridge Industrial Services PLC
Northbridge announced profits of GBP1,154,000 for the year
ended 31st December 2007 (2006 - GBP731,000) and declared a
final dividend of 2p per share, making 3p for the year (2006
- 2p). Western maintained its holding of 1,500,000 shares in
Northbridge (19.66%). The value of the investment at 30th
June 2008 was GBP2,558,000 (2007 - GBP2,768,000) being 25%
(2007- 22%) of Western`s assets.
Northbridge was formed for the purpose of acquiring companies
that hire and sell specialist industrial equipment such as
load banks, generators, pumps, air compressors, heaters and
chillers. Northbridge`s first acquisition was Crestchic
Limited, one of the largest electrical load bank equipment
manufacturers in the world. The company`s customers are
leading national and international companies in the oil,
energy and shipping industries.
Swallowfield plc
Swallowfield has a long history of developing and producing
aerosol, cosmetic and toiletry products stretching back to
1950. As one of Europe`s premier contract manufacturers of
toiletries and cosmetics it has the ability to produce a wide
range of products. Its skill in design, developing and
producing gift packs and themed product ranges compliments
its production capability.
Swallowfield`s latest published results were for the 28 weeks
to 12th January 2008 and showed a profit of GBP1,592,000
(2007 - GBP255,000).
Western has increased its holding in Swallowfield during the
year and now owns 1,156,000 shares which is 10.27% of the
issued share capital. The market value of Western`s holding
in Swallowfield on 30th June 2008 was GBP971,000 (2007 -
GBP455,000), being 9% (2007 - 6%) of Westerns` net assets.
Hartim Limited
On 28th March 2008 Western invested GBP728,000 to acquire
49.5% of Hartim Limited, the holding company of Tudor Rose
International Limited ("TRI"). Western`s share of the
consolidated profit after tax in the three month period to
30th June 2008 was GBP68,000 and the book value of the
investment at 30th June 2008 was GBP797,000, being 8% of
Western`s assets.
TRI, which was founded in 1984, 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 has a turnover in
excess of GBP15 million and sells into 78 countries worldwide
including USA, Spain, Portugal, Italy, Czech Republic,
Russia, Turkey, South Africa, Saudi Arabia, UAE, Malaysia,
Australia and China.
MWB Group Holdings Plc ("MWB")
The Company`s holding in MWB was unchanged from the 2 million shares held at
June 2007, representing 2.58% of MWB`s issued share capital. The market value
at 30th June 2008 was GBP2.5 million, compared with the book value of GBP1.7
million, and represents 20% of the net assets of Lonfin.
MWB is in the process of maturing and realising its assets for the benefit of
all stakeholders through an orderly disposal programme. Mr. Marshall is a non-
executive director of MWB and the board constantly reviews the programme of
disposal.
Finsbury Food Group plc ("Finsbury")
The Company holding in Finsbury remains at 8,000,000 shares, representing 15.55%
of their share capital. The market value of the holding was GBP3.9 million on
30th June 2008 (cost - GBP1.9 million) and represents 32% of the net assets of
Lonfin.
Finsbury has fast become one of the largest suppliers of premium cakes, bread
and morning goods in the UK. The acquisitive Group currently has seven
subsidiaries which supply most of the UK`s major supermarket chains, including
Asda, Morrisons, Sainsbury, Somerfield, Tesco and Waitrose.
A recent announcement from Finsbury confirmed that despite a tough trading
environment the Group`s growth prospects remained positive.
Mr. Marshall is the non-executive chairman and Mr. Beale, the Chief Executive of
our subsidiary City Group P.L.C., is a non-executive director of Finsbury.
General Portfolio
The General Portfolio is diverse with material interests in Food and Beverages,
Oil, 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, especially in respect our Western European holdings.
The number of holdings in the General Portfolio has decreased to 35 from 39. We
have decreased the amount invested in the General Portfolio by GBP188,000 (2007:
increased by GBP694,000) over the year.
We have a GBP2 million bank facility in addition to the facility to cover the
increased investment in Western, and at 30th June 2008 had drawn down GBP1.519
million. This leaves GBP481,000 available for further investment when the Board
feels appropriate.
Dividend
The recommended dividend is 0.65p per share, making 1.20p for the year (2008 -
1.10p). Subject to member`s approval, the dividend will be paid on 10th October
2008 to those members registered at the close of business on 26th September
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
9th September 2007.
Salient dates for dividend:
2008
Last day to trade (SA) Thursday, 18th September
Shares trade ex dividend (SA) Friday, 19th September
Shares trade ex dividend (UK) Wednesday, 24th September
Record date (UK & SA) Friday, 26th September
Pay date Friday, 10th October
Currency conversion date Tuesday, 9th September
Shareholders are hereby advised that the exchange rate to be used will be GBP 1
= ZAR13.9752.
This has been calculated as the average of the bid/ask spread as at 16h00
(United Kingdom time) being closing of business on 9th September 2008.
Consequently the dividend of 0.65p will be equal to 9.08388 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 19th September 2008 and Friday 26th September 2008, both dates inclusive.
Warrants
The Directors propose to issue, free of charge, Warrants to subscribe for
ordinary shares in the Company. The Warrants will be exercisable at a fixed
price of 28p each on the last day of each month from November 2008 until the
Final Exercise Date which will be on or about 30th September 2010. The Warrants
will be issued on the basis of 12 Warrants for every 100 shares held at the
close of business on 6th October 2008, but fractions of warrants will not be
issued. Warrant certificates will be posted at the holders risk on or about 17
October 2008. The Warrants will not be listed.For the South African
shareholders the salient dates will be announced at a later stage.
Outlook
Despite very volatile markets around the world the recurring dividend income
from our high quality portfolio should enable us to at least maintain our annual
dividend.
By Order of the Board
CITY GROUP P.L.C.
Secretaries
11th September 2008
Consolidated Income Statement
For the year ended 30th June 2008 2007
GBP000 GBP000
Operating Income
Investment operations 645 1,713
Management services 516 662
Administrative expenses
Investment operations (373) (344)
Management services (507) (594)
Exceptional - (597)
Operating profit 281 840
Share of result of associated undertaking - 216 206
normal
Share of result of associated undertaking - (1,322) (131)
exceptional
Interest payable (170) (150)
(Loss)/Profit on ordinary activities before (995) 765
taxation
Tax on result of ordinary activities (2) (245)
(Loss)/Profit on ordinary activities after (997) 520
taxation
Equity minority interest (6) (31)
(Loss)/Profit for the financial year (1,003) 489
attributable to members of the holding
company
Reconciliation of headline earnings per share
Basic (loss)/earnings per share (3.2)p 1.6p
Adjustment for exceptional items net of tax 4.2 p 2.4p
and minorities
Headline earnings per share 1.0 p 4.0p
Consolidated Statement of Changes in Shareholders` Equity
Ordinary Share Fair
share premium Revaluation value Retained Total
capital account reserve reserve earnings
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Year ended
30th June
2007
Balances at 1,500 1,854 330 4,914 7,033 15,631
1st July 2006
Profit - - - - 489 489
attributable
to
shareholders
Fair value - - - 4,181 - 4,181
adjustment on
listed
undertakings,
net of
profits
realised
during the
year and
reflected in
the income
statement
Total income - - - 4,181 489 4,670
and expense
for the
period
New shares 60 474 - - - 534
issued
Dividends - - - - (315) (315)
paid in
respect of
the previous
year
Total 60 474 - - (315) 219
transactions
with
shareholders
for the year
Balances at 1,560 2,328 330 9,095 7,207 20,520
30th June
2007
Year ended
30th June
2008
Balances at 1,560 2,328 330 9,095 7,207 20,520
1st July 2007
Loss - - - - (1,003) (1,003)
attributable
to
shareholders
Fair value - - - (6,942) - (6,942)
adjustment on
listed
undertakings,
net of
profits
realised
during the
year and
reflected in
the income
statement
Total income - - - (6,942) (1,003) (7,945)
and expense
for the
period
Dividends - - - - (343) (343)
paid in
respect of
the previous
year
Interim - - - - (172) (172)
dividend paid
Total - - - - (515) (515)
transactions
with
shareholders
for the year
Balances at 1,560 2,328 330 2,153 5,689 12,060
30th June
2008
Consolidated Balance Sheet
at 30th June 2008 2007
GBP000 GBP000
Non-current Assets
Tangible assets 403 416
Investments 8,784 18,305
9,187 18,721
Current Assets
Listed investments 5,726 6,564
Accounts receivable 319 184
Bank balance and deposits 36 87
6,081 6,835
Current Liabilities
Accounts payable: falling due within one year (3,107 (1,777
) )
Net Current Assets 2,974 5,058
Total Assets less Current Liabilities 12,161 23,779
Deferred taxation - (3,164
)
Total Assets less Current Liabilities 12,161 20,615
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,328 2,328
Reserves 2,483 9,425
Profit and loss account 5,689 7,207
Equity shareholders` funds 12,060 20,520
Minority equity interests 101 95
12,161 20,615
Consolidated Cash Flow Statement
For the year ended 30th June 2008 2007
GBP000 GBP000
Cash inflow/(outflow) on operating activities
Cash generated/(absorbed) by operations, 4 (1,311
including General Portfolio investment )
Dividends receivable 458 380
Interest paid (148) (100)
Interest received 5 12
Taxation paid (235) (13)
Net cash generated/(absorbed) by operations 84 (1,032
)
Investing activities
Proceeds on sale of non-current asset investments - 2,080
Non-current asset investments - purchased (1,297 (948)
)
Net cash (outflow)/inflow from investment (1,297 1,132
activities )
Financing
Share capital issued - 534
Equity dividends paid (515) (315)
Net drawdown/( repayment) of loan facilities 1,677 (403)
Net cash inflow from financing 1,162 (184)
Decrease in cash (51) (84)
Notes
1. The final dividend for the year of 0.65p per share (2007 -
1.10p) will be paid on 10th October 2008 to shareholders on
the register on 26th September 2008.
2. Earnings per share are based on the profit on ordinary
activities after taxation and minority interests and on
30,631,233 shares (2006 - 28,672,672) being the weighted
average of the number of shares in issue during the year.
3. The net assets attributable to shareholders, taking
investments at market value, are before providing for any tax
that may arise on realisation.
4. The financial information in this preliminary announcement of
unaudited group results, which has been reviewed and agreed
by the auditors, does not constitute statutory accounts
within the meaning of section 240(5) of the Companies Act
1985. The accounts have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted
by the European Union and with those parts of the Companies
Acts 1985 applicable to companies reporting under IFRS. The
accounts are prepared on the historical cost basis, except
for certain assets and liabilities which are measured at fair
value, in accordance with IFRS. The audited accounts of the
group for the year ended 30th June 2007 have been reported on
with an unqualified audit report in accordance with section
235 of the Companies Act 1985 and have been delivered to the
Registrar of Companies.
Date: 11/09/2008 10:49:02 Produced by the JSE SENS Department.
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