| Tue 28 Sep 2010, 12:30 | | 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
unaudited results for the year ended 30 June 2010
LONDON FINANCE & INVESTMENT GROUP P.L.C.
("Lonfin", "the Company" or "the Group")
(Incorporated in England - Registration No. 201151 (UK))
JSE Code: LNF ISIN: GB0002994001
("Lonfin")
Preliminary announcement of unaudited results for the year ended 30 June 2010
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
30 June 2010.
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 30 June 2010, the three Strategic Investments, in which we have board
representation, were our associated company Western Selection P.L.C. and 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.
We are operating in difficult times. Stock markets are volatile and many
companies have been cutting dividends. We are not immune to these external
factors. In spite of this the Group is in a reasonable position:
- The General Portfolio is yielding 2.9% (2009 - 3.13%)
- Borrowings are 23% (2009 - 30%) of the value of liquid stock market
investments
- There is significant upside potential in all of our strategic investments
- Operating costs have been reduced and are expected to fall further in the
current year
Results
Following a review of accounting policies, the investment in our associated
company, Western Selection PLC ("Western"), and our strategic investments are
now valued at market value, with the changes to market value reflected in the
income statement under IAS39 (rather than directly to reserves) Comparatives
have been restated and there is no net effect of these changes on net assets
at 30 June 2009, but a reduction in profit after exceptional items, tax and
minority interests for the year ended 30 June 2009 by GBP4,512,000, offset by
an equal increase in other comprehensive income.
Our net assets per share have increased 9% to 23p from 21p last year,
reflecting the recovery in general portfolio and associated company values,
but including a reduction in value of the Strategic Investments. These
declined in value by 24%, our General Portfolio and Western increased by 25%
and 23% respectively, after taking into account additions and disposals of
investments. The General Portfolio increase of 25% compares with the
increases in the FTSE 100 index of 16% and a decrease in the FTSE Eurofirst
300 index of 14% over the year.
The Group achieved a profit before tax for the year of GBP705,000 (2009 - loss
- GBP5,031,000). Our operating income was higher due to profits realised on
sales of investments, whilst dividend income was substantially lower following
disposals at the end of the previous year and lower or passed dividends from
investments reflecting the state of European economies. The profit after
exceptional items, tax and minority interest was GBP693,000 (2009 - loss -
GBP5,020,000) giving a profit per share of 2.2p (2009 - loss - 16.1p).
Strategic Investments
Western Selection P.L.C. ("Western")
The Group owns 7,864,412 shares, being 43.8% of the issued share capital of
Western and 3,785,820 of Western`s 2010 warrants
On 06 September 2010, Western announced a loss before associates and
exceptional items of GBP151,000 for its year to 30 June 2010 (2009 - loss -
GBP479,000). Western has recovered GBP279,000 of the impairment provisions of
GBP546,000 made last year against some of its general portfolio investments.
Including associates and after exceptional items and tax, profits per share
were 1.4p (2009 - losses 4.8p).
Western has paid an interim dividend of 0.65p and proposes an equal rate for a
final dividend. Western`s net assets at market value were GBP10,935,000,
equivalent to 61p per share, an increase of 22% from 50p last year.
Our share of the net assets of Western including the value of Western`s
investments at market value, was GBP4.8 million (2009 - GBP3.9 million). The
fair value is the market value of GBP2,672,000. This represents 36% of the
net assets of the Group.
Mr. Marshall is the Chairman of Western and Mr. Robotham and Mr. Beale, the
chief executive of our associated company (City Group P.L.C.), are non-
executive directors. 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 31 March 2010, show a profit after tax of GBP5,133,000 (2009 -
GBP6,597,000), equivalent to fully diluted earnings of 8.74p per share (2009 -
12.2p). On 28 June 2010 Creston announced the strategic proposed disposal of
DLKW, its advertising agency. Western maintained its holding of 3,000,000
shares in Creston (4.9%) with a value at 30 June 2010 of GBP2,752,000 (2009 -
GBP1,920,000) being 25% (2009 - 21%) of Western`s assets.
Northbridge Industrial Services PLC
Northbridge was formed for the purpose of acquiring companies that hire and
sell specialist industrial equipment supplying a non-cyclical customer base
including utility companies, the public sector and the oil and gas industries.
In particular it will seek to acquire specialist businesses that have the
potential for expansion into complete outsourcing providers. Sales are made
to the U.K., U.S.A., Brazil, Singapore, Germany, UAE and Korea; Northbridge
also has subsidiaries operating in Dubai and Azerbaijan.
Northbridge announced profits of GBP1,571,000 for the year ended 31 December
2009 (2008 - GBP1,918,000) and declared a final dividend of 2.7p per share,
making 4.1p for the year (2008 - 3.9p). On 30 June 2010, Northbridge
announced the proposed raising of approximately GBP15 million by way of an
open offer in order to acquire Tasman Oil Tools Pty Ltd, based in Perth,
Western Australia, which specialises in the rental of equipment for the
onshore and off-shore oil industry throughout Australia. Western has taken up
325,000 shares in that offer at a cost of GBP406,250, increasing its holding
to 2,200,000 shares in Northbridge, which is 14.39% of the issued share
capital. The value of the investment at 30 June 2010 was GBP2,508,000 (2009 -
GBP2,156,000) being 23% (2009 - 24%) of Western`s assets.
Swallowfield plc
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. Swallowfield announced its interim results to January 2010
showing a profit after tax of GBP533,000 compared to GBP449,000 for the
comparable period last year. Dividends of GBP87,000 (2009 - GBP77,000) were
received from Swallowfield during the year.
Western increased its holding in Swallowfield during the year, and since the
year end, and now owns 1,582,649 shares which is 13.99% of the issued share
capital. The market value of the Company`s holding in Swallowfield on 30 June
2010 was GBP1,816,000 (2009 - GBP999,000), being 17% (2009 - 11%) of Westerns`
net assets.
Western would like to see the Swallowfield Board strengthened and remain in
discussions with the company and other major shareholders about the
composition of the Swallowfield board. Western has submitted a resolution for
discussion at the next Swallowfield AGM requesting that the Swallowfield Board
increases in size from 5 to 7 by the appointment of additional non-executive
directors with relevant skills and experience. Since the resolution was
submitted, Swallowfield have announced the appointment of an additional non-
executive director and Western look forward to being introduced to him.
Hartim Limited
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 31 December year end and achieved
profits in 2009 of GBP335,000 after tax on turnover of GBP20,422,000.
Western`s share of the consolidated profit after tax for the twelve months to
30 June 2010 was GBP150,000 (2009 - GBP181,000) and the book value of the
investment at 30 June 2010 was GBP1,129,000 (2009 - GBP979,000), being 10%
(2009 - 11%) of Western`s assets.
MWB Group Holdings Plc ("MWB")
The Group holding in MWB was unchanged from the 2 million shares held at June
2010, representing 1.22% of MWB`s issued share capital. The market value at
30 June 2010 was GBP795,000, compared with the book value of GBP1,681,000, and
represents 11% of the net assets of the Group.
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 Group holding in Finsbury remains at 8 million shares, representing 15.18%
of their share capital. The market value of the holding was GBP1,200,000 on
30 June 2010 (cost - GBP1,893,000) and represents 16% of the net assets of the
Group.
Finsbury is one of the largest suppliers of premium cakes, bread and morning
goods in the UK. The Group currently supplies most of the UK`s major
supermarket chains, including Asda, Morrisons, Sainsbury, Somerfield, Tesco
and Waitrose.
Mr. Marshall and Mr. Beale, the Chief Executive of our associated company City
Group P.L.C., are non-executive directors of Finsbury.
General Portfolio
The investments comprising the General Portfolio at 30 June 2010 are listed on
page (9). 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 25 from 29.
We have decreased the amount invested in the General Portfolio by GBP669,000
(2009: decreased by GBP717,000) over the year.
We have a GBP2 million bank facility in addition to the facility to cover the
increased investment in Western, and at 30 June 2010 had drawn down GBP1.8
million. This leaves GBP200,000 available for further investment when the
Board feels appropriate. The increase in value of our investments over the
period has decreased borrowings as a percentage of the market value of all
stock market investments from 29% to 23%.
Dividend
The declared dividend is 0.30p per share, making 0.60p for the year (2009 -
nil). Subject to member`s approval, the dividend will be paid on 12 November
2010 to those members registered at the close of business on 22 October 2010.
Shareholders on the South African register will receive their dividend in
South African Rand converted from sterling at the closing rate of exchange on
27 September 2010.
Salient dates for dividend
Last day to trade (SA) Friday 15 October 2010
Shares trade ex dividend (SA) Monday 18 October 2010
Shares trade ex dividend (UK) Wednesday 20 October 2010
Record date (UK & SA) Friday 22 October 2010
Pay date Friday 12 November 2010
Currency conversion date Friday 27 September 2010
Shareholders are hereby advised that the exchange rate to be used will be GBP
1 = ZAR11.0990.
This has been calculated as the average of the bid/ask spread as at 16h00
(United Kingdom time) being close of business on 27 September 2010.
Consequently the dividend of 0.30p will be equal to 3.3297 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, 18 October 2010 and Friday 22 October 2010, both dates
inclusive.
Outlook
The outlook for stock markets remains very uncertain. We have seen some rises
recently, but are concerned that these may prove to be transitory. We will
continue to adopt a cautious stance, with our general portfolio invested in
the best European companies.
By Order of the Board
CITY GROUP P.L.C.
Secretaries
28 September 2010
Consolidated Comprehensive Income Statement
For the year ended 30 June 2009
2010 Restated
GBP000 GBP000
Dividends - Listed investments 174 536
Interest receivable 1 6
Rental and other income 86 79
Profits/(Losses) realised on sales of investments 119 (45)
Management services fees 405 418
Operating income 785 994
Administration expenses (757) (851)
Operating loss 28 143
Exceptional change in fair value of investments 791 (5,023)
Interest payable (114) (151)
Profit/(Loss) on ordinary activities before taxation 705 (5,031)
Tax on result of ordinary activities (18) -
Profit/(Loss) on ordinary activities after taxation 687 (5,031)
Equity minority interest 6 11
Profit/(Loss) for the financial year attributable to 693 (5,020)
members of the holding company
Other comprehensive income
Expenses of capital re-organisation - (10)
Total comprehensive income attributable to 693 (5,030)
shareholders
Basic profit/(loss) per share 2.2p (16.1)p
Headline (loss) per share (0.3)p (0.0)p
All profits and losses are on continuing activities.
Consolidated Statement of Changes in Shareholders` Equity
Ordinary Share Revaluation
share premium Reserve
capital account
GBP000 GBP000 GBP000
Year ended 30 June 2009
Balances at 1 July 2008 1,560 2,328 330
Prior year restatement - - -
Restated balances at 1 July 2008 1,560 2,328 330
Total comprehensive income - (10) -
Dividends paid in respect of the - - -
previous year
Interim dividend paid - - -
Total transactions with shareholders - - -
Balances at 30 June 2009 1,560 2,318 330
Unrealised Share of Retained Total
profits / undistributed realised
(losses) on results of profits &
investments Subsidiaries losses
GBP000 GBP000 GBP000 GBP000
Year ended 30 June 2009
Balances at 1 July 2008 2,153 452 5,237 12,060
Prior year restatement (1,668) 366 1,302 -
Restated balances at 1 485 818 6,539 12,060
July 2008
Total comprehensive income (5,023) (71) 74 (5,030)
Dividends paid in - - (202) (202)
respect of the previous
year
Interim dividend paid - - (172) (172)
Total transactions with - - (374) (374)
shareholders
Balances at 30 June 2009 (4,538) 747 6,239 6,656
Year ended 30 June 2010
Balances at 1 July 1,560 2,318 330 (4,538) 747 6,239 6,656
2009
Total comprehensive - - - 791 44 (142) 693
income
- - - - - (93) (93)
Interim dividend
paid
Total transactions - - - - - (93) (93)
with shareholders
Balances at 30 June 1,560 2,318 330 (3,747) 791 6,004 7,256
2010
Consolidated Statement of Financial Position
At 30 June 2009 2008
2010 Restated Restated
GBP000 GBP000 GBP000
Non-current Assets
Tangible assets 377 390 403
Investments 4,667 4,794 8,784
5,044 5,184 9,187
Current Assets
Listed investments 4,225 3,976 5,726
Trade and other receivables 294 309 319
Bank balance and deposits 17 114 36
4,536 4,399 6,081
Current Liabilities
Trade and other payables: falling due within (2,240) (2,837) (3,107)
one year
Net Current Assets 2,296 1,562 2,974
Total Assets less Current Liabilities 7,340 6,746 12,161
Capital and Reserves
Called up share capital 1,560 1,560 1,560
Share premium account 2,318 2,318 2,328
Revaluation reserve 330 330 330
Unrealised profits and losses on (3,747) (4,538) 485
investments
Share of retained realised profits and 791 747 818
losses of subsidiaries
Company`s retained realised profits and 6,004 6,239 6,539
losses
7,256 6,656 12,060
Minority equity interests 84 90 101
7,340 6,746 12,161
Consolidated Statement of Cash Flow
For the year ended 30 June 2010 2009
GBP000 GBP000
Cash flows from operating activities
Profit/(Loss) before tax 705 (5,031
)
Adjustments for non-cash and non-operating activities -
Finance expense 114 151
Depreciation charges 13 13
Investment provisions (791) 5,023
(664) 5,187
Taxes paid (18) -
Changes in working capital
Decrease in trade and other receivables 15 10
(Decrease)/Increase in trade and other payables (122) 98
Decrease in current asset investments 669 717
Net cash inflow from operating activities 585 981
Cash flows from financing
Interest paid (114) (151)
Cost of warrant issue - (10)
Equity dividends paid (93) (374)
Net repayment of loan facilities (475) (368)
Net cash outflow from financing (682) (903)
(Decrease)/Increase in cash and cash equivalents (97) 78
Cash and cash equivalents at the beginning of the year 114 36
Cash and cash equivalents at end of the year 17 114
Notes
1. Earnings per share are based on the loss on ordinary activities after
taxation and minority interests and on 31,201,446 shares (2009 -
31,201,133) being the weighted average of the number of shares in issue
during the year.
2. The net assets attributable to shareholders, taking investments at market
value, are before providing for any tax that may arise on realisation.
3. The financial information in this preliminary announcement of unaudited
group results does not constitute the company`s statutory accounts for
the years ended 30 June 2010 or 30 June 2009 but is derived from those
accounts. 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 2006 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 30 June 2009 have been reported
on with an unqualified audit report and have been delivered to the
Registrar of Companies.
Enquiries to:
London Finance & Investment Group 020 7448 8950
David Marshall / Edward Beale
Johannesburg
28 September 2010
Sasfin Capital
(a division of Sasfin Bank Limited)
Date: 28/09/2010 12:30:01 Produced by the JSE SENS Department.
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