| Wed 18 Feb 2009, 10:00 | | LNF - London Finance & Investment Group P.L.C. - Interim Results And Dividend |
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LNF
LOJM
LNF - London Finance & Investment Group P.L.C. - Interim Results And Dividend
Announcement
LONDON FINANCE & INVESTMENT GROUP P.L.C.
(Incorporated in England - No. 201151)
Code: LNF & ISSN: GB0002994001
Directors
Interim Results
London Finance & Investment Group P.L.C. (LSE: LFI, JSE: LNF), today announces
its unaudited interim results for the six months ended 31st December 2008.
Highlights from the last six month period include:
- Loss before tax of GBP239,000 (2007 - GBP228,000 profit)
- Decline in net asset value per share of 50% since 30 June 2008
- Continues to hold three significant strategic investment: Western Selection
P.L.C., Finsbury Food Group plc and MWB Group Holdings Plc
- Recommended interim dividend of 0.55p (2007: 0.55p)
David Marshall, Chairman of Lonfin commented:
"The last six months have been very challenging for the Company due to the
unprecedented global financial crisis that has weighed heavily on assets of all
classes and has materially impacted our net asset value. However, we strongly
believe that our mix of strategic investments and our general portfolio of
quality equities is an effective way of achieving growth in shareholder value
over the medium to long term."
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 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 31st December 2008, 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 50% to 19.2p at 31st December 2008 from 38.7p
at 30th June 2008. Our Strategic Investments decreased in value by 59% and our
General Portfolio decreased by 23%. This compares with the declines of 21% in
the FTSE 100 index and 60% in AIM over the half year. At the close of business
on 13th February 2009, our net asset value was 16p.
The Group incurred a loss before tax for the half year of GBP239,000 compared to
a profit of GBP228,000 for the same period last year due to provisions against
falls in value of the General Portfolio, compared with profits in the previous
period. Our loss after tax and minority interest was GBP232,000 (2007 profit:
GBP220,000) giving losses per share of 0.7p (2007 earnings: 0.7p).
Strategic Investments
Western Selection P.L.C. ("Western")
The Group owns 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.
On 11th February 2009, Western announced a profit after tax of GBP63,000 for its
half year to 31st December 2008 and a profit per share of 0.4p (2007: 0.3p).
Western`s net assets at market value were GBP8,080,000 equivalent to 45p per
share, a decrease of 22% from 58p at 30th June 2008.
The market value of the Company`s investment in Western at 31st December 2008
was GBP2,076,000 against a book value of GBP5,918,000, this represents 34% 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 GBP3.3 million
(30th June 2008: GBP4.6 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 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 2008 show a profit after
tax of GBP2,951,000 (2007: GBP2,280,000).
Western owns 3,000,000 shares in Creston (5.4%) with a market value at 31st
December 2008 of GBP840,000 (30th June 2008: GBP1,425,000), being 10% 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`s latest results, for the half year to 30th June 2008, showed profit
of GBP748,000 (2007: GBP430,000).
Western owns 1,500,000 shares, representing 20.3% of Northbridge`s share
capital. The value of this investment at 31st December 2008 was GBP1,950,000
(30th June 2008: GBP2,558,000), representing 24% 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 30th June 2008, showed profit,
before exceptional items, of GBP1,041,000 (30th June 2007: GBP601,000).
At 31st December 2008, Western owned 1,296,500 shares in Swallowfield (11.5% of
their issued share capital). The market value of the Company`s holding in
Swallowfield on 31st December 2008 was GBP921,000 (30th June 2008: GBP971,000)
representing 11% of the Company`s assets.
We do not believe that the Board of Swallowfield has the necessary mix of skills
and experience amongst its non-executive directors and we will continue to work
with other shareholders to rectify this.
Hartim Limited
Hartim offers a complete sales, marketing and logistical services to a number of
UK branded fast moving consumer goods companies. This investment was acquired
on 28th March 2008 and is accounted for as an associated company.
Hartim`s estimated results for the 9 month period ended on 31st December 2008
are a profit of GBP416,000 after tax.
At 31st December 2008, Western owned 49.5% of Hartim. The carrying value of the
Company`s investment in Hartim on 31st December 2008 was GBP935,000 (30th June
2008: GBP797,000) representing 12% of the Company`s assets.
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 GBP940,000 on 31st December
2008 compared to a cost of GBP1,893,000; this represents 16% 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. In a recent trading update the company confirmed that the
consumer environment remained uncertain and that operating margins during the
first half of the year were likely to be between 1% and 2% lower than the same
period in 2007.
I am chairman of Finsbury Food.
MWB Group Holdings 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, 2008 was GBP595,000,
compared with a book value of GBP1,681,000, which represents 10% 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. A recent trading
update for the year ended 31 December 2008 confirmed that trading at Malmaison
and Hotel du Vin had been firm, Business Exchange had maintained occupancy
levels at 90% and sales at Liberty for the first 10 months of the year were
ahead of comparative trading levels.
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
Following the interim dividend last year of 0.55p the board have declared an
interim of 0.55p payable on Friday 27th March 2009.
Outlook
Attempts by the public and private sectors at mending the fragile financial
system seem to have had little effect to date and it has become clear that both
parties underestimated the magnitude of the crisis. With the major Western
economies contracting and unemployment on the rise we expect the second half of
the financial year to be challenging.
David C. Marshall
Chairman
Interim dividend
The recommended interim dividend is 0.55p per share (2007 - 0.55p) and will be
paid on Friday 27th March 2009 to those members registered at the close of
business on Friday 6th March 2009. Shareholders on the South African register
will receive their dividend in South African Rand converted from sterling at the
closing rate of exchange on Monday 16th February 2009.
Salient dates for dividend
Last day to trade (SA) Friday 27th February 2009
Shares trade ex dividend (SA) Monday 2nd March 2009
Shares trade ex dividend (UK) Wednesday 4th March 2009
Record date (UK & SA) Friday 6th March 2009
Pay date Friday 27th March 2009
Shareholders are hereby advised that the exchange rate to be used will be GBP 1
= ZAR 14.2929. This has been calculated as the average of the bid/ask spread at
16h00 (United Kingdom time) being the close of business on Monday 16th February
2009. Consequently the dividend of 0.55p will be equal to 7.8611 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 2nd March 2009 and Friday 6th March 2009, both dates inclusive.
Unaudited Consolidated Income Statement
Half year ended Year ended
31st December 30th June
2008 2007 2008
GBP000 GBP000 GBP000
Operating Income
Dividends received 223 205 323
Interest and sundry income 17 17 33
Profit on sales of investments, (231) 234 289
including provisions
---------- ---------- ----------
9 456 645
Management services income 231 241 516
---------- ---------- ----------
240 697 1,161
---------- ---------- ----------
Administrative expenses
Investment operations (185) (193) (373)
Management services (247) (235) (507)
---------- ---------- ----------
Total administrative expenses (432) (428) (880)
---------- ---------- ----------
Operating (loss)/profit (192) 269 281
Share of result of associated
undertaking
Operating profit 40 38 216
Exceptional expenses - - (1,322)
Interest payable (87) (79) (170)
---------- ---------- ----------
(Loss)/Profit on ordinary activities (239) 228 (995)
before taxation
Tax on result of ordinary activities - (3) (2)
---------- ---------- ----------
(Loss)/Profit on ordinary activities (239) 225 (997)
after taxation
Minority interest 7 (5) (6)
---------- ---------- ----------
(Loss)/Profit attributable to members (232) 220 (1,003)
of the holding company
====== ====== ======
Reconciliation of headline earnings
(Loss)/Earnings per share (0.7)p 0.7p (3.2)p
Adjustment for exceptional items, net - - (4.2)p
of tax
---------- ---------- ----------
Headline earnings per share (0.7)p 0.7p 1.0p
---------- ---------- ----------
Interim dividend (0.00)p 0.55p 0.55p
Final dividend - - 0.65p
Total in respect of the year 1.20p
Consolidated Statement of Changes in Shareholders` Equity
Unrealised gains/(losses) on (5,672) (2,922) (6,942)
investments, net of taxation
Profit/(Loss) attributable to (232) 220 (1,003)
members
---------- ---------- ----------
Total income and expense (5,904) (2,702) (7,945)
---------- ---------- ----------
Costs of warrant issue (9) - -
Dividend paid in respect of the (203) (343) (343)
previous year
Interim dividend paid - - (172)
---------- ---------- ----------
Total transactions with shareholders (212) (343) (515)
---------- ---------- ----------
Shareholders` funds at start of 12,060 20,520 20,520
period
---------- ---------- ----------
Shareholders` funds at end of period 5,944 17,475 12,060
====== ====== ======
Unaudited Consolidated Balance Sheet
31st December 30th June
2008 2007 2008
GBP000 GBP000 GBP000
Non-current assets
Tangible assets 397 410 403
Principle investments:-
Marylebone Warwick Balfour Group Plc 595 4,860 2,455
Finsbury Food Group plc 940 6,880 3,860
Western Selection P.L.C. 2,076 2,961 2,469
---------- ---------- ----------
4,008 15,111 9,187
Current assets ---------- ---------- ----------
Listed investments 4,522 6,885 5,726
Debtors 408 284 319
Cash, bank balances and deposits 73 31 36
---------- ---------- ----------
5,003 7,200 6,081
---------- ---------- ----------
Total Assets 9,011 22,311 15,268
====== ====== ======
Capital and Reserves
Called up share capital 1,560 1,560 1,560
Share premium account 2,318 2,328 2,328
Reserves (3,197) 6,503 2,483
Profit and loss account 5,263 7,084 5,689
---------- ---------- ----------
Shareholders funds 5,944 17,475 12,060
Creditors falling due within one 2,976 3,268 3,107
year
Deferred taxation - 1,468 -
Minority equity interest 85 100 101
---------- ---------- ----------
9,011 22,311 15,268
====== ====== ======
Consolidated Cash Flow Statement
Half year ended Year ended
31st December 30th June
2008 2007 2008
GBP000 GBP000 GBP000
Cash inflow/(outflow) on operating 233 (354) 4
activities
---------- ---------- ----------
Returns on investments and servicing
of finance
Dividends received 427 340 458
Net interest paid (87) (58) (143)
---------- ---------- ----------
Net cash inflow from returns on 340 282 315
investments and servicing of finance
---------- ---------- ----------
Taxation paid - (2) (235)
---------- ---------- ----------
Investing activities
Non-current asset investments - (1,297) (1,297)
purchases
Non-current asset investments - - -
disposals
---------- ---------- ----------
Net cash outflow from investment - (1,297) (1,297)
activities
---------- ---------- ----------
Equity dividends paid - Company (203) (343) (515)
---------- ---------- ----------
Financing
Cost of warrants issue (9) - -
Net (repayment) drawdown of loan (324) 1,658 1,677
facility
---------- ---------- ----------
Net cash (outflow)/inflow from (333) 1,658 1,677
financing
---------- ---------- ----------
Increase/(Decrease) in cash 37 (56) (51)
====== ====== ======
(a) Reconciliation of operating profit to net cash flow from operating
activities
31st December 30th June
2008 2007 2008
GBP000 GBP000 GBP000
(Loss)/Profit before taxation (238) 228 (995)
Dividends receivable (223) (205) (323)
Share of associate (40) (38) 1,127
Depreciation charges 7 7 13
Net interest paid 87 80 143
Increase in debtors (110) (100) (135)
Increase/(Decrease) in creditors 196 (168) (115)
Decrease/(Increase) in current asset 554 (158) 289
investments
---------- ---------- ----------
233 (354) 4
====== ====== ======
(b) 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
2008
Cash at bank 36 37 73
Bank loan (2,924) 324 (2,600)
---------- ---------- ----------
(2,888) 351 (2,527)
---------- ---------- ----------
2007
Cash at bank 87 (56) 31
Bank loan (1,247) (1,658) (2,905)
---------- ---------- ----------
(1,160) (1,714) (2,874)
---------- ---------- ----------
Year ended 30th June 2008
Cash at bank 87 (51) 36
---------- ---------- ----------
Bank loan (1,247) (1,677) (2,924)
---------- ---------- ----------
(1,160) (1,728) (2,888)
---------- ---------- ----------
Market Value of General Portfolio
31st December 2008
GBP000 %
Nestle 274 6.1
British American Tobacco 232 5.1
Beiersdorf 210 4.6
L`Oreal 208 4.6
Imperial Tobacco Group 184 4.1
Royal Dutch Shell 180 4.0
Novartis 180 4.0
Investor 163 3.6
Roche Holdings 161 3.6
BP 158 3.5
BHP Billiton 155 3.4
Schindler-Holdings 155 3.4
Pernod-Ricard 150 3.3
Reckitt Benckiser 150 3.3
Unilever 147 3.3
BASF 147 3.2
Total 145 3.2
ABB 144 3.2
Diageo 142 3.1
Heineken 138 3.1
Holcim 131 2.9
Henkel 130 2.9
Associated British Foods 117 2.6
Land Securities Group 114 2.5
Carlsberg 113 2.5
Koninklijke 99 2.2
Lafarge 93 2.1
Johnson Matthey 93 2.1
Anglo American 82 1.8
ING Groep 63 1.4
Richemont 60 1.3
Other 4 0.1
4,522 100.0
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 30th June 2008 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 30th June 2008 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 2007 and June 2008 - same).
London
17 February 2009
Sponsor
Sasfin Capital
A division of Sasfin Bank Limited
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