| Mon 5 Feb 2001, 0:00 | | London Finance & Investment Group P.l.c. - Interim |
|
LONDON FINANCE & INVESTMENT GROUP P.L.C.
INTERIM STATEMENT 31ST DECEMBER 2000
London Finance & Investment Group P.L.C.
Directors Registered office
D.C. Marshall, Chairman 25 City Road
R.A. Good London, EC1Y 1BQ
Dr. F.W.A.A. Lucas
J.M. Robotham, OBE, FCA, MSI 5th February 2001
TO THE MEMBERS
The directors are pleased to present the unaudited interim results of the
company for the six months ended 31st December 2000.
Results
Our profit on ordinary activities attributable to shareholders for the six
months was GBP883,000 compared to GBP228,000 for the same period in 1999 and
earnings per share were 3.46p (1999 - 0.89p), an increase of 289%
The increase in dividends received is mainly due to a dividend of GBP64,000
from our investment in Creston plc. The increase in contribution from
management services results mainly from one off tasks undertaken on behalf of
overseas clients. The contribution to profits by our associated company,
Western Selection P.L.C., for its half year to 31st December 2000 was
GBP715,000 (1999 - GBP80,000). This substantial increase occurred as a result
of exceptional profits realised on the sale of part of Western's strategic
investment in The Sanctuary Group PLC and the receipt of an exceptional
dividend from its strategic investment in Creston plc.
As is our practice, we are not paying an interim dividend; the dividend paid in
October was for the 12 months ended on 30th June 2000. At 31st December 2000
our net asset value per share was 61.1p, an increase of 22% from 30th June 2000
and 9% from 31st December 1999. This compares favourably with falls in both
the FTSE 100, which was down 1.43% over the last six months and 10.21% over the
year, and the FTSE All Share, which fell 1.52% in the last six months and 6.85%
in over the year. The increase in net asset value is mainly due to a
significant increase in the market value of our strategic investment in
Marylebone Warwick Balfour Group Plc, which is held as a long term fixed asset.
If we value our investment in Western at net asset value, rather than market
value, our net assets per share at 31st December 2000 were 76p compared to 60p
at 30th June 2000.
Investment policy and management
Our investment policy is to have strategic stakes in a few special situations,
and hold a diversified general portfolio of U.K. and European listed equities.
Strategic investments are minority positions where we seek to exercise
influence over the management of the investment. We are represented on the
boards of our strategic investments and, in turn, Western is also represented
on the boards of its two strategic investments, Creston plc and The Sanctuary
Group PLC.
Our general portfolio is managed by two of our non-executive directors, Richard
Good and Michael Robotham. Decisions in relation to both our strategic and
unlisted investments are taken by the board as a whole.
Strategic Investments
Marylebone Warwick Balfour Group Plc's strategy is the creation of a series of
highly cash generative businesses, each of which has property at its core.
Operations are split into 6 areas:
MWB Business Exchange, which provides 755,000 square feet of serviced offices
in 29 centres,
Hotels, most of which have 20-year management agreements with recognised
operators,
Retail Stores, which owns the Liberty brand, retail operations and properties,
Fund Management, which has invested GBP530m out of GBP650m committed by three
leisure funds,
Asset Management, which owns and manages commercial property, and
Project Management, which covers activities that create one-off profits or
fees, over a defined time-scale, with clearly contained risk.
The group announced profits before tax of GBP11,418,000 for its year ended 30th
June 2000 (1999: GBP6,320,000) and dividends for the year of 2.8p (1999: 2.5p)
per share. Earnings per share increased by 3% to 9.8p. At 30th June 2000 the
group had net assets with a book value in excess of GBP210m (1999: 83m), and
net assets per share of 202p (up from 143p at 30th June 1999).
On 3rd November 2000, the company announced that it had raised GBP62 million to
fund capital investment through a placing and open offer for 28.7 million
shares at 215p. The share price at 31st December was 233.5p compared to 155.5p
at 31st December 1999.
Megalomedia plc announced profits for its first half to 30th September 2000 of
GBP2,304,000, mainly from the disposal of its Contract Publishing business.
Since 30th September it has announced the disposal of its Post Production
Digital Services business to its management for GBP12,000,000.
This leaves the Company with a strong balance sheet including cash resources
after the disposal of approximately GBP20.9m (28p per share) and further loan
note receivables of GBP2.2m, compared to a market capitalisation of GBP16.6m.
We have acquired a further 245,000 Megalomedia shares in the period for
GBP56,000. The share price at 31st December was 22p compared to 32.5p at 31st
December 1999.
Western Selection P.L.C., our associate strategic investment company, announced
profits after tax for the six months to 31st December 2000 of GBP1,753,500
compared with GBP188,900 for the same period in the previous year. Western
expects to at least maintain its dividend of 0.40p for its current year. The
net asset value of Western, at market values, has increased to GBP14,719,000
from GBP11,179,000 at 31st December 1999. This equates to 33.8p per share at
31st December 2000, an increase of 14% since 30th June 2000. The share price
at 31st December was 14.75p compared to 19.25p at 31st December 1999 and,
following the announcement of its interim results, the price has increased to
18p at 31st January 2001.
Western has strategic investments in The Sanctuary Group PLC and Creston plc
and has recently reported on them as follows:
The Sanctuary Group PLC, Western's main strategic investment, is a diversified
media group and owner and exploiter of intellectual property rights, which
continues to expand through both acquisition and organic means. Sanctuary is
organised into four divisions: Music, covering management, record companies,
agency and books, New Media, covering internet related activities, Facilities,
covering recording and rehearsal facilities and Screen, covering television
production and distribution.
Sanctuary has issued preliminary results for the twelve months to 30th
September 2000, reporting an increase in turnover of 91% and operating profits
before interest and tax of GBP5,533,000 (1999: GBP3,303,000). Earnings per
share increased 14% to 1.88p from 1.65p last year, and the full year dividend
is increased from 0.20p to 0.25p. The Sanctuary share price has increased from
56.5p at 30th June 2000 to 76p at 31st December 2000.
Creston plc has recently announced the disposal of its remaining property
interests and its restructuring into the holding company of a Marketing
Services Group with the intention of embarking on a buy and build strategy.
Its acquisition of Marketing Sciences Limited and Synergy Consulting Limited
was approved by shareholders on 29th January 2001. Creston believes that there
is great growth potential in providing consultancy advice to established
companies on marketing strategies, and also believes that there are good
opportunities to identify synergistic benefits within the manufacturing
services industry.
The net assets of the company at 31st December 2000 were substantially
unchanged from the 87p reported at 30th September 2000 after a final dividend
for the nine month period to 31st March 2000 of 32.5p (1999: 3.0p). The
Creston share price was 115p at 30th June, declined to 90p at 31st December
2000 following the payment of the 32.5p final dividend. Subsequent to the
completion of the acquisition and re-listing the shares have improved to 110p
on 31st January 2001.
Conclusion
The market appreciates the underlying value of some of our Strategic
Investments but others remain undervalued. We continue to work with the
management of our Strategic Investments to help grow their businesses and
enhance shareholder value.
The General Portfolio of investments has outperformed recently compared to the
market, mainly because of our exposure to European stocks. Two thirds of our
General Portfolio comprises shares listed in the UK and, taken as a whole,
these investments have performed in line with the market. Future developments
for telecommunications and technology stocks are uncertain and we continue to
limit our exposure to these sectors. General Portfolio investments are held
for the medium to long term and we expect that they will provide a reasonable
return over time by way of both income and capital growth.
We declared a dividend for the year to 30th June 2000 of 1.1p per share, which
was paid in October. As mentioned above, it is not our intention to pay
interim dividends; and subject to unforeseen circumstances, we expect to at
least maintain our dividend for the year to 30th June 2001, which we anticipate
paying in October 2001.
David C. Marshall
Chairman
Unaudited Consolidated Profit & Loss Account
Half Year Ended Year Ended
31st December 30th June
2000 1999 2000
GBP000 GBP000 GBP000
Operating Income
Dividends received 174 106 306
Interest and sundry income 16 14 29
Profit on sales of investments 136 214 325
326 334 660
Management services income 238 212 433
564 546 1,093
Administrative expenses
Investment operations (137) (134) (271)
Management services (186) (212) (430)
Total administrative expenses (323) (346) (701)
Operating profit 241 200 392
Share of result of associated
undertaking 715 80 350
Interest payable (58) (48) (104)
Profit on ordinary activities
before taxation 898 232 638
Tax on result of ordinary activities - (4) (16)
Profit on ordinary activities
after taxation 898 228 622
Minority interest (15) - (1)
Profit attributable to members
of the holding company 883 228 621
Proposed dividend - - (281)
Retained profit for the period 883 228 340
Earnings per share 3.46p 0.89p 2.43p
Dividend per share Nil Nil 1.10 p
Unaudited Consolidated Balance Sheet
31st December 30th June
2000 1999 2000
GBP000 GBP000 GBP000
Fixed assets
Tangible assets 509 517 517
Investments 7,199 6,320 6,499
7,708 6,837 7,016
Current assets
Listed investments 3,537 3,553 3,710
Unlisted investments 43 66 55
Debtors 225 175 146
Cash, bank balances and deposits 238 46 53
4,043 3,840 3,964
Creditors falling due within one year (1,828) (1,773) (1,962)
Net Current Assets 2,215 2,067 2,002
Total Assets less Current Liabilities 9,923 8,904 9,018
Capital and Reserves
Called up share capital 1,277 1,276 1,276
Share premium account 961 956 957
Reserves 363 361 361
Profit and loss account 7,254 6,259 6,371
Shareholders funds 9,855 8,852 8,965
Minority equity interests 68 52 53
9,923 8,904 9,018
Notes:-
1. The results for the half-year are unaudited and have been prepared on the
basis of the accounting policies adopted in the accounts for the year ended
30th June 2000. 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 period ended
30th June 2000 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 average number of shares 25,530,338 (December 1999 - 25,520,274 and
June 2000 - 25,523,710), in issue during the period.
Consolidated Cash Flow Statement
Half Year Ended Full Year
31 December 30 June
2000 1999 2000
GBP000 GBP000 GBP000
Cash inflow/(outflow) on operating
activities 304 551 (18)
Returns on investments and
servicing of finance
Dividends received 270 168 369
Interest paid (58) (48) (104)
Net cash inflow from returns
on investments and servicing
of finance 212 120 265
Taxation recovered/(paid) 5 2 (10)
Investing activities
Tangible fixed assets - purchased (5) (20) (31)
Fixed asset investments - purchased (56) (635) (511)
- proceeds on disposal - 188 167
Net cash outflow from investment
activities (61) (467) (375)
Equity dividend paid - Company (281) (255) (255)
Financing
Share capital issued 6 - 1
Net drawdown of loan facility - - 350
Net cash inflow from financing 6 0 351
Increase/(Decrease) in cash 185 (49) (42)
Balance Sheet Analysis taking investments at market value
Half Year Ended Year Ended
31st December 30th June
2000 1999 2000
GBP000 GBP000 GBP000
Principal investments at market value:-
Marylebone Warwick Balfour
Group Plc 7,005 4,665 4,830
Megalomedia plc 902 1,253 867
Western Selection P.L.C. 2,841 3,811 2,604
Creston plc 186 365 238
10,934 10,094 8,539
General equity portfolio
(see analysis below) 5,557 5,201 5,479
Tangible fixed assets 509 517 517
Cash, bank balances and deposits 238 46 53
Bank overdraft (1,500) (1,600) (1,500)
Other net (liabilities)/assets (61) 143 (261)
Minority interests (68) (52) (53)
Net assets 15,609 14,349 12,774
Net assets per share 61.11p 56.22p 50.05p
* Lonfin owns 40.48% of the issued shares of Western Selection P.L.C. and
accounts for it as an associated company. Taking Western's investments at
market value at 31st December 2000 our investment had an underlying value of
approximately GBP6.5 million.
Market Value of General Portfolio at 31st December 2000
GBP %
UTi Worldwide 317,840 5.72
Unilever 286,500 5.16
Nestle 231,933 4.17
ING Groep 218,542 3.93
Diageo 194,400 3.50
HSBC Holding 192,075 3.46
UBS 188,156 3.39
Zurich Financial 187,633 3.38
Barclays 186,480 3.36
GlaxoSmithKline 170,232 3.06
Liberty International 165,750 2.98
Shell Transport & Trading 164,700 2.96
Prudential 161,550 2.91
Schroders 158,520 2.85
Lloyds TSB Group 155,760 2.80
BAA 148,320 2.67
Roche Holdings 136,407 2.45
AstraZeneca 135,000 2.43
CGNU 129,840 2.34
Cadbury Schweppes 129,640 2.33
Anglo American 129,172 2.32
Schweiz-Ruckversicherungs 128,393 2.31
Credit Suisse Group 127,236 2.29
Reuters Group 124,634 2.24
BOC Group 122,040 2.20
Novartis 118,354 2.13
De Beers 115,172 2.07
BAE Systems 114,600 2.06
Cable & Wireless 108,360 1.95
Marconi Electronic Systems 107,850 1.94
Fortis 107,500 1.93
Vodafone Group 98,200 1.77
Pearsons 95,400 1.72
Wyndeham Press Group 93,000 1.67
J. Sainsbury 79,400 1.43
Fuller, Smith &Turner 68,000 1.22
Tibbett & Britten Group 57,500 1.03
Other (less than 1%) 102,780 1.85
5,556,868 100.00
