| Fri 17 Aug 2001, 0:00 | | London Finance & Investment Group P.l.c. - Prelimi |
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UNAUDITED RESULTS FOR THE YEAR ENDED 30TH JUNE 2001
London Finance & Investment Group P.L.C.
Preliminary announcement of unaudited results for the year ended 30th June
2001
This year was definitely one of two halves. In the first half growth in net
asset value per share, taking listed investments at market value, was very
strong. Net assets rose from 50.0p (566.9c) per share at 30th June 2000 to
61.1p (692.7c) at 31st December, an increase of 22% in a period in which the
FTSE 100 index fell by 1%. However we were not able to avoid the turbulence
in the markets in the second half of the year and net assets declined to
54.3p (615.6c) per share at 30th June 2001. This increase in net assets of
9% over the year to GBP13.9 million (R157.6 million) compares to falls in
the FTSE 100 and FTSE All Share indices of 11% and 10% respectively over the
same period.
The profit before tax for the year ended 30th June 2001 was GBP1,060,000
(R12,017,432) an increase of 66% from GBP638,000 (R7,233,133) reported last
year. Earning per share increased by 68% from 2.4p (27.2c) last year to
4.1p (46.5c) in the year to 30th June 2001. These results have been
significantly influenced by exceptional profits recorded by our associated
company, Western Selection P.L.C., which are explained below. Excluding
exceptional items, our profit before tax has fallen from GBP444,000
(R5,033,717) last year to GBP255,000 (R2,890,986) and earnings per share
have fallen from 1.67p (18.9c) to 0.94p (10.7c). This decrease is mainly
due to a reduction in the sale of General Portfolio investments with
correspondingly lower profits.
Your directors propose to raise the dividend this year to 1.2p (13.6c) per
share, an increase of 9% (2000 - 1.1p Ý12.5c¨)
Strategic Investments
Western Selection P.L.C. ("Western")
The Company owns 17,611,745 shares, being 40.48% of the issued share
capital, and 3,238,255 warrants, of Western. On 2nd August 2001 Western
announced a profit after tax and exceptional items of GBP2 million (R22,7
million) for its year to 30th June 2001, an increase in earnings to 4.56p
(51.70c) from 1.96p (22.22c), and a 15% increase in dividend to 0.46p
(5.22c) (1999 - 0.40p Ý4.5c¨). Western's net assets at market value were
GBP13.1 million (R148.5 million), equivalent to 30.2p (342.4c) per share, an
increase of 2% over the 29.6p (335.6c) recorded at 30th June 2000.
The market value of the Company's investment in Western at 30th June 2000
was GBP3.4 million (R38.5 million) and the book value was GBP4.0 million
(R45.3 million). At market value this represents 25% of the net assets of
the Company. The underlying value of the Company's investment in Western,
valuing Western's own investments at market value, was GBP5.3 million (R60.1
million) (2000- GBP5.2 million ÝR59.0 million¨).
I am the Chairman of Western and Mr. Robotham is a non-executive director.
Western has strategic investments in The Sanctuary Group PLC and Creston plc
and has recently committed to make a Strategic Investment in Doctors Direct
plc prior to its introduction to Ofex and has reported on them as follows:
The Sanctuary Group PLC
At 30th June 2001, Western owned 4,000,000 shares (1.46% of the issued share
capital) and 3,131,801 warrants in Sanctuary. The market value of Western's
holding in shares and warrants on 30th June 2001 was GBP4.5 million (R51.0
million), being 34% of Western's net assets, and the cost was GBP593,100
(R6,724,093).
On 24th August 2000, Western sold 2,725,000 shares in Sanctuary at a price
of 73p(827.6c) each realising a profit of GBP1,575,300 (R17,859,491). This
was Western's first sale of Sanctuary shares since its transformation from
Burlington Group plc in 1998. The cash received of almost GBP2 million
(R22.7 million) has more than recouped the total investment in the company
of GBP1 million (R11.3 million). Since the year end, Western has sold a
further 1,131,801 shares and exercised the holding of 3,131,801 warrants at
25p (283.4c) each and now holds 6,000,000 shares representing 2.0% of the
issued share capital.
On 5th June 2001 Sanctuary announced its results for the half-year to 31st
March 2001. Turnover increased by 174% over the equivalent period in 2000;
operating profits before interest, taxation, depreciation and amortisation
increased by 140%. Profit before tax, after amortisation of the catalogues
rose 76%. Basic earnings per share were 0.88p (9.98c) for the half-year
compared with 0.81p (9.18c) for the same period a year earlier, an increase
of 8%.
On 19th June 2001 Sanctuary announced agreement in principle to acquire the
Trojan catalogue of over 10,000 tracks for GBP10.3 million (R116.8 million),
which will extend its presence in the Reggae segment of the market. In
addition, Sanctuary announced that it had raised GBP20.5 million (R232.4
million), by a placing of 27.35 million shares at 75p (850c) each, which
will be used to finance the acquisition of Trojan, repay some existing debt
and provide additional working capital.
Creston plc
Western owns 1,600,000 shares and 308,264 warrants, being 14% of the issued
share capital and 16% of the warrants of Creston. The market value of
Western's holding in Creston on 30th June 2001 was GBP1.3 million (R14.7
million), being 10% of the Company's net assets, and the book value was
GBP1.6 million (R18.1 million).
On 20th December 2000, Creston disposed of its remaining property interests
and on 29th January 2001 it completed its transformation from a UK property
company, to a marketing services company by acquiring Synergie Consulting
Limited and a well established quantitative research company with a blue
chip client list, Marketing Sciences Limited. Synergie Consulting was
established by Don Elgie, Creston's new Chief Executive, for the purpose of
developing a "buy and build" concept within the marketing services sector.
Doctors Direct plc
On 31st July 2001, Western entered into an agreement providing for the
investment of a sum totalling GBP500,000 (R5,668,600) in Doctors Direct.
Ten per cent. of this total will be allocated at cost to a co-investor.
Western will therefore hold 4.5 million shares and 4.5 million warrants
(which will be 15% of their issued share capital and 41.7% of their issued
warrants). These shares will be part of an offer for subscription of 10
million new shares being conducted by way of a prospectus and admission to
trading on Ofex. On completion of the offer, assuming maximum subscription,
Doctors Direct will have 30 million shares in issue and be capitalised at
GBP3 million (R34 million) at the offer price of 10p (113.4c). In
recognition of Western's significant investment, Mr. D.C. Marshall (Chairman
of both Western and London Finance) has agreed to act as non-executive
chairman of Doctors Direct upon completion of this fund raising.
Doctors Direct provides a visiting GP service direct to individuals and
organisations at their home, hotel or workplace 24 hours a day, 365 days a
year. Visits are made at the patient's request and convenience. Doctors
can attend patients throughout the central London area. The new shares are
being issued to raise working capital to expand the business both within
London and in other areas with suitable population densities and profiles.
Unlike many Ofex stocks, Doctors Direct is an established company that is
trading profitably and made profits before tax of GBP126,000 (R1,428,487) on
turnover of GBP683,600 (R7,750,110) in the nine month period ended 31st
March 2001. It had annualised earnings per share of 0.8p (9.1c) on a pre-
funding basis.
The company believes it will be able to substantially boost turnover over
the next few years, as it plans to emulate the success of SOS Medecins,
which provides a similar service in Paris and has proved extremely
successful.
Marylebone Warwick Balfour Group Plc ("MWB")
The Company owns 3,000,000 shares in MWB, being 2.59% of the issued share
capital of MWB. The market value of the Company's holding in shares of MWB
on 30th June 2001 was GBP5.2 million (R59.0 million) and the book value was
GBP2.5 million (R28.3 million). At market value this represents 37% of the
net assets of the Company.
MWB has six main operating divisions: serviced business space, hotels, fund
management, asset management, project management and retail operations. The
first four of these are structured as long term businesses producing
recurring income and cash flow, the project management division produces
profits and fees over fixed timetables and the retail operations encompass
the Liberty retail store operations in London. I am the Chairman of MWB and
Mr. Robotham is a non-executive director.
MWB's European serviced business space operations have nearly doubled in
capacity over the last year. The focus is on Europe's major business cities
with London and Paris representing 50% of workstations and operating at 80%
capacity. 75% of the London centres have a relatively low cost base as they
are either owned or have been refurbished by MWB.
The hotels business is underpinned by long term operating and management
agreements with internationally renowned hotel groups. These agreements are
signed before commencing any new development, usually for 20 years and
including a minimum annual income guarantee. Planning consent has recently
been granted to add another two floors to The Howard, a five-star hotel on
London's Victoria Embankment, which will increase the number of rooms by
almost a third. The Malmaison chain was acquired last November and is
operated in conjunction with Scandanavian Airlines System. Construction
work continues on a 157 room luxury hotel on Park Lane, London to be
operated by Marriott International and at Argyll Street, Glasgow which will
be operated by Radisson SAS Hotels.
The first two leisure funds operated by MWB's fund management division are
fully invested and the third fund has invested GBP110 million (R1,247
million) of the total capability of GBP250 million (R2,834 million). The
life of the MWB Leisure Fund 1 has been increased by a further two years
until December 2003, providing MWB with continuing management fees.
On 6th July 2001, MWB announced that approval had been received for its 70%
owned development at the Royal Victoria Docks. This development valued at
approaching GBP300m (R3,401 million) will include 750 hotel rooms and
detailed planning consent has been received for two hotels with a total of
413 rooms which are being constructed on behalf of Accor.
Retail Stores, which owns Liberty, has disposed of surplus property, is
refurbishing the store and has converted part of the space into serviced
offices. It has a new management team to revitalise the Liberty brand and
return the retail operations to profitability.
MWB announced earnings of 5.3p (60.1c) per share for its half-year ended
31st December 2000, up from 4.8p (54.4c) for the half-year ended 31st
December 1999, and an interim dividend of 1.4p (15.9c) per share (1.4p
Ý15.9c¨ last year). At 31st December 2000 MWB had net assets GBP303 million
(R3,435 million) which represent net assets per share of 204p (2,312c) (up
from 202p Ý2,290c¨ at 30th June 2000).
Megalomedia plc ("Megalomedia")
At 30th June 2001 the Company owned 4,300,000 shares in Megalomedia,
representing 5.74% of Megalomedia's issued share capital. The market value
of our holding was GBP1.2 million (R13.6 million) on 30th June 2001 compared
to a cost of GBP0.6 million (R6.8 million).
Megalomedia sold its post production film services business to management in
the year for GBP12 million (R136 million) and has agreed in principle to
sell its recruitment business to management for GBP0.4 million (R4.5
million). Shareholder and court approval has been granted for a tender
scheme under which Megalomedia has repurchased 77% of its shares at a price
of 29p (329c) each on 7 August. We have not tendered any of our shares and
as a result now own 25% of Megalomedia following the share repurchase.
Megalomedia has net assets of GBP5 million (R56.7 million) and two other
major shareholders: Landau Enterprises Inc. and Robert Fleming & Co Ltd who
own 28% and 26% of the company respectively. Mr. Barclay is a director of
our associated company Western, and he and I are both non-executive
directors of Megalomedia.
Megalomedia has outsourced all of its day-to-day activities to our
management services subsidiary City Group Ltd who will be working with the
board of Megalomedia to identify suitable businesses for acquisition.
Merrydown plc ("Merrydown")
In June we acquired 1,100,000 shares in Merrydown plc at a cost of
GBP432,000 (R4,897,670). This represents 4.15% of Merrydown's issued share
capital.
Merrydown is a leading cider producer and also manufactures the Schloer
range of soft drinks, which is widely distributed through supermarkets.
Sales of Schloer increased by 47% to GBP8.5 million (R96.4 million) in the
year ended 31st March 2001. This is almost 50% of the total sales for the
year of GBP17.6 million (R199.5 million) and reflects the continuing shift
in emphasis of the company from cider to soft drinks. The Merrydown cider
brand maintained its market share in a difficult year.
Merrydown's profit before tax for the year ended 31st March 2001 was GBP1.0
million (R11.3 million) compared to GBP742,000 (R8,412,202) for the previous
year and earnings per share were 2.9p (32.9c), up from 1.6p (18.1c) in the
previous year. At 31 March 2001 Merrydown had no borrowings and GBP2.8
million (R31.7) in cash. It also had GBP865,000 (R9,806,678) of property
held for resale. Shareholders funds were 50p (566.9c) per share at 31st
March 2001, which compares favourably with our average purchase price of
39.3p (445.6c).
General Portfolio
The General Portfolio is dominated by three sectors: banking and insurance;
food, beverages and consumer goods; support services, transport and
logistics. These three sectors accounted for 64% of the portfolio by value
at 30th June 2001. We believe that the companies in these sectors in which
we have invested have the potential to outperform the market in the medium
to long term.
We are taking a cautious view of the stock markets in the short term and the
General Portfolio has therefore been reduced in size over the year from a
cost of GBP3.7 million (R42.0 million) to GBP3.4 million (R38.6 million).
This has allowed a reduction in bank borrowings from GBP1.5 million (R17.0
million) to GBP0.9 million (R10.2 million) and with the bank facility of
GBP2 million (R22.7 million) gives us flexibility to take advantage of any
bargains arising from the current volatility in world stock markets.
The year ahead
Our long standing strategy is to achieve increasing value for shareholders
from a number of Strategic Investments which may well be volatile, and a
General Portfolio of leading shares in companies which operate on a global
basis.
Every day the newspapers seem to provide more bad news about the performance
or the outlook for world economies, in view of which we maintain a cautious
view for the shorter term.
Our strategy has been successful in recent years and will enable us to take
advantage, where appropriate, of new opportunities.
D.C. MARSHALL
Chairman
Consolidated Profit and Loss
Account
For the year ended 30th June 2001 2001 2000 2001
GBP000 R000 GBP000 R000
Operating Income
Investment operations 620 7,029 660 7,482
Management services 425 4,818 433 4,909
Administrative expenses
Investment operations (273) (3,095) (271) (3,072)
Management services (416) (4,716) (430) (4,875)
Operating profit 356 4,036 392 4,444
Share of result of associated
undertaking
- normal 16 181 175 1,984
- exceptional 805 9,126 194 2,199
Interest payable (117) (1,326) (123) (1,394)
Profit on ordinary activities 1,060 12,017 638 7,233
before taxation
Tax on result of ordinary (12) (136) (16) (181)
activities
Profit on ordinary activities 1,048 11,881 622 7,052
after taxation
Minority interest (3) (34) (1) (11)
Profit attributable to members 1,045 11,847 621 7,041
of the holding company
Proposed dividend 1 (307) (3,480) (281) (3,186)
Retained profit for the period 738 8,367 340 3,855
Earnings per share 2 4.09 p 46.37 c 2.43 p 27.55 c
Earnings per share excluding 2 0.94 p 10.66 c 1.67 p 18.93 c
exceptionals
Fully diluted earnings per share 2 3.93 p 44.56 c 2.35 p 26.64 c
There are no recognised gains or losses other than the above profits and
accordingly no separate statement of recognised gains and losses is shown.
All profits and losses are on continuing activities.
There is no difference in either year between the above profit and the
profit on an historical cost basis.
Balance Sheets
at 30th June Group Company
2001 2001 2000 2000 2001 200
GBP000 R000 GBP000 R000 GBP000 R00
Fixed Assets
Tangible assets 493 5,589 517 5,861 467 5,2
Investments in Group - - - - 6,154 69,
companies
Investments 7,607 86,242 6,499 73,681 - -
8,100 91,831 7,016 79,542 6,621 75,
Current Assets
Listed investments 3,443 39,034 3,710 42,061 3,443 39,
Unlisted investments 43 487 55 624 43 487
Debtors 157 1,780 146 1,655 44 499
Bank balance and 32 363 53 601 17 193
deposits
3,675 41,664 3,964 44,941 3,547 40,
Current Liabilities
Creditors: falling (2,010) (22,787) (1,962) (22,244) (1,972) (22
due within one year
Net Current Assets 1,665 18,877 2,002 22,697 1,575 17,
Total Assets less 9,765 110,708 9,018 102,239 8,196 92,
Current Liabilities
Capital and Reserves
Called up share 1,277 14,478 1,276 14,466 1,277 14,
capital
Share premium 962 10,906 957 10,850 962 10,
account
Reserves 361 4,093 361 4,093 480 5,4
Profit and loss 7,109 80,596 6,371 72,229 5,477 62,
account
Equity shareholders' 9,709 110,073 8,965 101,638 8,196 92,
funds
Minority equity 56 635 53 601 - -
interests
9,765 110,708 9,018 102,239 8,196 92,
Analysis of Net Assets
at 30th June 2001 2001 2000 2000
GBP000 R000 GBP000 R000
Principal investments at market
value:
Western Selection P.L.C. 3,418 38,751 2,604 29,522
Megalomedia plc 1,161 13,162 867 9,829
Marylebone Warwick Balfour Group Plc 5,160 58,500 4,830 54,759
Creston plc - sold 30 January 2001 - 238 2,698
Merrydown PLC - acquired 27 June 429 4,864 -
2001
10,168 115,277 8,539 96,808
General equity portfolio at market 5,040 57,139 5,479 62,117
value
Tangible fixed assets 493 5,589 517 5,861
Cash, bank balances and deposits 32 363 53 601
Bank Loan (900) (10,203) (1,500) (17,00
Other net liabilities (910) (10,317) (261) (2,959
Minority interests (55) (624) (53) (601)
Net assets, including investments at 13,868 157,224 12,774 144,82
market value
Net assets per share, including 54 p615 c50 p 567
investments at market values
The market value of net assets is stated before any taxation, which may
arise on disposal.
Consolidated Cash Flow Statement
For the year ended 30th June 2001 2001 2000 2000
GBP000 R000 GBP000 R000
Cash outflow on operating 888 10,067 (18) (204)
activities
Returns on investments and
servicing of finance
Dividends received 374 4,240 369 4,183
Interest paid (105) (1,190) (104) (1,179)
Net cash inflow from returns on 269 3,050 265 3,004
investments and servicing of
finance
Taxation (6) (68) (10) (113)
Investing activities
Tangible fixed assets - purchased (3) (34) (31) (351)
Fixed asset investments - (532) (6,031) (511) (5,793)
purchased
- proceeds on disposal 238 2,698 167 1,893
Net cash outflow from investment (297) (3,367) (375) (4,251)
activities
Equity dividend paid - Company (281) (3,186) (255) (2,891)
Financing
Share capital issued 6 68 1 11
Net (repayment)/drawdown of loan (600) (6,802) 350 3,968
facility
Net cash (outflow)/inflow from (594) (6,734) 351 3,979
financing
Decrease in cash (21) (238) (42) (476)
Notes
1 The dividend for the year of 1.20p (13.60c) per share (2000 - 1.10p
Ý12.47c¨) will be paid on 12th October 2001 to shareholders on the register
on 21st September 2001.
2 Earnings per share are based on the result of ordinary activities after
taxation and minority interests and on 25,540,767 (2000 - 25,523,710) 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
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 audited accounts of the group for the year ended
30th June 2000 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.
General Equity Portfolio
Anglo American PLC
AstraZeneca PLC
Avocet Mining PLC
BAA PLC
BOC Group PLC
Cable & Wireless PLC
CGNU PLC
Credit Suisse Group AG
Diageo PLC
Fortis (NL)NV
Fuller, Smith&Turner PLC
GlaxoSmithKline PLC
HSBC Holding plc
ING Groep NV
J. Sainsbury plc
Johnson, Matthey PLC
Lavendon Group PLC
Lloyds TSB Group PLC
Marconi PLC
Nestle SA
Novartis AG
Pearson PLC
Prudential PLC
Reuters Group PLC
Roche Holdings AG
Rolls-Royce PLC
Schweiz-Ruckversicherungs-G
The Shell Transport & Trading Company
PLC
Somerfield PLC
Tibbett & Britten Group PLC
UBS AG
Unilever PLC
UTi Worldwide Inc.
Vodafone Group PLC
Wyndeham Press Group PLC
Zurich Financial Services AG
Preliminary announcement of unaudited results for the year ended 30th June
2001
This year was definitely one of two halves. In the first half growth in net
asset value per share, taking listed investments at market value, was very
strong. Net assets rose from 50.0p (566.9c) per share at 30th June 2000 to
61.1p (692.7c) at 31st December, an increase of 22% in a period in which the
FTSE 100 index fell by 1%. However we were not able to avoid the turbulence
in the markets in the second half of the year and net assets declined to
54.3p (615.6c) per share at 30th June 2001. This increase in net assets of
9% over the year to GBP13.9 million (R157.6 million) compares to falls in
the FTSE 100 and FTSE All Share indices of 11% and 10% respectively over the
same period.
The profit before tax for the year ended 30th June 2001 was GBP1,060,000
(R12,017,432) an increase of 66% from GBP638,000 (R7,233,133) reported last
year. Earning per share increased by 68% from 2.4p (27.2c) last year to
4.1p (46.5c) in the year to 30th June 2001. These results have been
significantly influenced by exceptional profits recorded by our associated
company, Western Selection P.L.C., which are explained below. Excluding
exceptional items, our profit before tax has fallen from GBP444,000
(R5,033,717) last year to GBP255,000 (R2,890,986) and earnings per share
have fallen from 1.67p (18.9c) to 0.94p (10.7c). This decrease is mainly
due to a reduction in the sale of General Portfolio investments with
correspondingly lower profits.
Your directors propose to raise the dividend this year to 1.2p (13.6c) per
share, an increase of 9% (2000 - 1.1p Ý12.5c¨)
Strategic Investments
Western Selection P.L.C. ("Western")
The Company owns 17,611,745 shares, being 40.48% of the issued share
capital, and 3,238,255 warrants, of Western. On 2nd August 2001 Western
announced a profit after tax and exceptional items of GBP2 million (R22,7
million) for its year to 30th June 2001, an increase in earnings to 4.56p
(51.70c) from 1.96p (22.22c), and a 15% increase in dividend to 0.46p
(5.22c) (1999 - 0.40p Ý4.5c¨). Western's net assets at market value were
GBP13.1 million (R148.5 million), equivalent to 30.2p (342.4c) per share, an
increase of 2% over the 29.6p (335.6c) recorded at 30th June 2000.
The market value of the Company's investment in Western at 30th June 2000
was GBP3.4 million (R38.5 million) and the book value was GBP4.0 million
(R45.3 million). At market value this represents 25% of the net assets of
the Company. The underlying value of the Company's investment in Western,
valuing Western's own investments at market value, was GBP5.3 million (R60.1
million) (2000- GBP5.2 million ÝR59.0 million¨).
I am the Chairman of Western and Mr. Robotham is a non-executive director.
Western has strategic investments in The Sanctuary Group PLC and Creston plc
and has recently committed to make a Strategic Investment in Doctors Direct
plc prior to its introduction to Ofex and has reported on them as follows:
The Sanctuary Group PLC
At 30th June 2001, Western owned 4,000,000 shares (1.46% of the issued share
capital) and 3,131,801 warrants in Sanctuary. The market value of Western's
holding in shares and warrants on 30th June 2001 was GBP4.5 million (R51.0
million), being 34% of Western's net assets, and the cost was GBP593,100
(R6,724,093).
On 24th August 2000, Western sold 2,725,000 shares in Sanctuary at a price
of 73p(827.6c) each realising a profit of GBP1,575,300 (R17,859,491). This
was Western's first sale of Sanctuary shares since its transformation from
Burlington Group plc in 1998. The cash received of almost GBP2 million
(R22.7 million) has more than recouped the total investment in the company
of GBP1 million (R11.3 million). Since the year end, Western has sold a
further 1,131,801 shares and exercised the holding of 3,131,801 warrants at
25p (283.4c) each and now holds 6,000,000 shares representing 2.0% of the
issued share capital.
On 5th June 2001 Sanctuary announced its results for the half-year to 31st
March 2001. Turnover increased by 174% over the equivalent period in 2000;
operating profits before interest, taxation, depreciation and amortisation
increased by 140%. Profit before tax, after amortisation of the catalogues
rose 76%. Basic earnings per share were 0.88p (9.98c) for the half-year
compared with 0.81p (9.18c) for the same period a year earlier, an increase
of 8%.
On 19th June 2001 Sanctuary announced agreement in principle to acquire the
Trojan catalogue of over 10,000 tracks for GBP10.3 million (R116.8 million),
which will extend its presence in the Reggae segment of the market. In
addition, Sanctuary announced that it had raised GBP20.5 million (R232.4
million), by a placing of 27.35 million shares at 75p (850c) each, which
will be used to finance the acquisition of Trojan, repay some existing debt
and provide additional working capital.
Creston plc
Western owns 1,600,000 shares and 308,264 warrants, being 14% of the issued
share capital and 16% of the warrants of Creston. The market value of
Western's holding in Creston on 30th June 2001 was GBP1.3 million (R14.7
million), being 10% of the Company's net assets, and the book value was
GBP1.6 million (R18.1 million).
On 20th December 2000, Creston disposed of its remaining property interests
and on 29th January 2001 it completed its transformation from a UK property
company, to a marketing services company by acquiring Synergie Consulting
Limited and a well established quantitative research company with a blue
chip client list, Marketing Sciences Limited. Synergie Consulting was
established by Don Elgie, Creston's new Chief Executive, for the purpose of
developing a "buy and build" concept within the marketing services sector.
Doctors Direct plc
On 31st July 2001, Western entered into an agreement providing for the
investment of a sum totalling GBP500,000 (R5,668,600) in Doctors Direct.
Ten per cent. of this total will be allocated at cost to a co-investor.
Western will therefore hold 4.5 million shares and 4.5 million warrants
(which will be 15% of their issued share capital and 41.7% of their issued
warrants). These shares will be part of an offer for subscription of 10
million new shares being conducted by way of a prospectus and admission to
trading on Ofex. On completion of the offer, assuming maximum subscription,
Doctors Direct will have 30 million shares in issue and be capitalised at
GBP3 million (R34 million) at the offer price of 10p (113.4c). In
recognition of Western's significant investment, Mr. D.C. Marshall (Chairman
of both Western and London Finance) has agreed to act as non-executive
chairman of Doctors Direct upon completion of this fund raising.
Doctors Direct provides a visiting GP service direct to individuals and
organisations at their home, hotel or workplace 24 hours a day, 365 days a
year. Visits are made at the patient's request and convenience. Doctors
can attend patients throughout the central London area. The new shares are
being issued to raise working capital to expand the business both within
London and in other areas with suitable population densities and profiles.
Unlike many Ofex stocks, Doctors Direct is an established company that is
trading profitably and made profits before tax of GBP126,000 (R1,428,487) on
turnover of GBP683,600 (R7,750,110) in the nine month period ended 31st
March 2001. It had annualised earnings per share of 0.8p (9.1c) on a pre-
funding basis.
The company believes it will be able to substantially boost turnover over
the next few years, as it plans to emulate the success of SOS Medecins,
which provides a similar service in Paris and has proved extremely
successful.
Marylebone Warwick Balfour Group Plc ("MWB")
The Company owns 3,000,000 shares in MWB, being 2.59% of the issued share
capital of MWB. The market value of the Company's holding in shares of MWB
on 30th June 2001 was GBP5.2 million (R59.0 million) and the book value was
GBP2.5 million (R28.3 million). At market value this represents 37% of the
net assets of the Company.
MWB has six main operating divisions: serviced business space, hotels, fund
management, asset management, project management and retail operations. The
first four of these are structured as long term businesses producing
recurring income and cash flow, the project management division produces
profits and fees over fixed timetables and the retail operations encompass
the Liberty retail store operations in London. I am the Chairman of MWB and
Mr. Robotham is a non-executive director.
MWB's European serviced business space operations have nearly doubled in
capacity over the last year. The focus is on Europe's major business cities
with London and Paris representing 50% of workstations and operating at 80%
capacity. 75% of the London centres have a relatively low cost base as they
are either owned or have been refurbished by MWB.
The hotels business is underpinned by long term operating and management
agreements with internationally renowned hotel groups. These agreements are
signed before commencing any new development, usually for 20 years and
including a minimum annual income guarantee. Planning consent has recently
been granted to add another two floors to The Howard, a five-star hotel on
London's Victoria Embankment, which will increase the number of rooms by
almost a third. The Malmaison chain was acquired last November and is
operated in conjunction with Scandanavian Airlines System. Construction
work continues on a 157 room luxury hotel on Park Lane, London to be
operated by Marriott International and at Argyll Street, Glasgow which will
be operated by Radisson SAS Hotels.
The first two leisure funds operated by MWB's fund management division are
fully invested and the third fund has invested GBP110 million (R1,247
million) of the total capability of GBP250 million (R2,834 million). The
life of the MWB Leisure Fund 1 has been increased by a further two years
until December 2003, providing MWB with continuing management fees.
On 6th July 2001, MWB announced that approval had been received for its 70%
owned development at the Royal Victoria Docks. This development valued at
approaching GBP300m (R3,401 million) will include 750 hotel rooms and
detailed planning consent has been received for two hotels with a total of
413 rooms which are being constructed on behalf of Accor.
Retail Stores, which owns Liberty, has disposed of surplus property, is
refurbishing the store and has converted part of the space into serviced
offices. It has a new management team to revitalise the Liberty brand and
return the retail operations to profitability.
MWB announced earnings of 5.3p (60.1c) per share for its half-year ended
31st December 2000, up from 4.8p (54.4c) for the half-year ended 31st
December 1999, and an interim dividend of 1.4p (15.9c) per share (1.4p
Ý15.9c¨ last year). At 31st December 2000 MWB had net assets GBP303 million
(R3,435 million) which represent net assets per share of 204p (2,312c) (up
from 202p Ý2,290c¨ at 30th June 2000).
Megalomedia plc ("Megalomedia")
At 30th June 2001 the Company owned 4,300,000 shares in Megalomedia,
representing 5.74% of Megalomedia's issued share capital. The market value
of our holding was GBP1.2 million (R13.6 million) on 30th June 2001 compared
to a cost of GBP0.6 million (R6.8 million).
Megalomedia sold its post production film services business to management in
the year for GBP12 million (R136 million) and has agreed in principle to
sell its recruitment business to management for GBP0.4 million (R4.5
million). Shareholder and court approval has been granted for a tender
scheme under which Megalomedia has repurchased 77% of its shares at a price
of 29p (329c) each on 7 August. We have not tendered any of our shares and
as a result now own 25% of Megalomedia following the share repurchase.
Megalomedia has net assets of GBP5 million (R56.7 million) and two other
major shareholders: Landau Enterprises Inc. and Robert Fleming & Co Ltd who
own 28% and 26% of the company respectively. Mr. Barclay is a director of
our associated company Western, and he and I are both non-executive
directors of Megalomedia.
Megalomedia has outsourced all of its day-to-day activities to our
management services subsidiary City Group Ltd who will be working with the
board of Megalomedia to identify suitable businesses for acquisition.
Merrydown plc ("Merrydown")
In June we acquired 1,100,000 shares in Merrydown plc at a cost of
GBP432,000 (R4,897,670). This represents 4.15% of Merrydown's issued share
capital.
Merrydown is a leading cider producer and also manufactures the Schloer
range of soft drinks, which is widely distributed through supermarkets.
Sales of Schloer increased by 47% to GBP8.5 million (R96.4 million) in the
year ended 31st March 2001. This is almost 50% of the total sales for the
year of GBP17.6 million (R199.5 million) and reflects the continuing shift
in emphasis of the company from cider to soft drinks. The Merrydown cider
brand maintained its market share in a difficult year.
Merrydown's profit before tax for the year ended 31st March 2001 was GBP1.0
million (R11.3 million) compared to GBP742,000 (R8,412,202) for the previous
year and earnings per share were 2.9p (32.9c), up from 1.6p (18.1c) in the
previous year. At 31 March 2001 Merrydown had no borrowings and GBP2.8
million (R31.7) in cash. It also had GBP865,000 (R9,806,678) of property
held for resale. Shareholders funds were 50p (566.9c) per share at 31st
March 2001, which compares favourably with our average purchase price of
39.3p (445.6c).
General Portfolio
The General Portfolio is dominated by three sectors: banking and insurance;
food, beverages and consumer goods; support services, transport and
logistics. These three sectors accounted for 64% of the portfolio by value
at 30th June 2001. We believe that the companies in these sectors in which
we have invested have the potential to outperform the market in the medium
to long term.
We are taking a cautious view of the stock markets in the short term and the
General Portfolio has therefore been reduced in size over the year from a
cost of GBP3.7 million (R42.0 million) to GBP3.4 million (R38.6 million).
This has allowed a reduction in bank borrowings from GBP1.5 million (R17.0
million) to GBP0.9 million (R10.2 million) and with the bank facility of
GBP2 million (R22.7 million) gives us flexibility to take advantage of any
bargains arising from the current volatility in world stock markets.
The year ahead
Our long standing strategy is to achieve increasing value for shareholders
from a number of Strategic Investments which may well be volatile, and a
General Portfolio of leading shares in companies which operate on a global
basis.
Every day the newspapers seem to provide more bad news about the performance
or the outlook for world economies, in view of which we maintain a cautious
view for the shorter term.
Our strategy has been successful in recent years and will enable us to take
advantage, where appropriate, of new opportunities.
D.C. MARSHALL
Chairman
Consolidated Profit and Loss
Account
For the year ended 30th June 2001 2001 2000 2001
GBP000 R000 GBP00 R000
0
Operating Income
Investment operations 620 7,029 660 7,482
Management services 425 4,818 433 4,909
Administrative expenses
Investment operations (273) (3,095 (271) (3,072
) )
Management services (416) (4,716 (430) (4,875
) )
Operating profit 356 4,036 392 4,444
Share of result of associated
undertaking
- normal 16 181 175 1,984
- exceptional 805 9,126 194 2,199
Interest payable (117) (1,326 (123) (1,394
) )
Profit on ordinary activities 1,060 12,017 638 7,233
before taxation
Tax on result of ordinary (12) (136) (16) (181)
activities
Profit on ordinary activities 1,048 11,881 622 7,052
after taxation
Minority interest (3) (34) (1) (11)
Profit attributable to members 1,045 11,847 621 7,041
of the holding company
Proposed dividend 1 (307) (3,480 (281) (3,186
) )
Retained profit for the period 738 8,367 340 3,855
Earnings per share 2 4.09 p46.37 c2.43 p 27.55 c
Earnings per share excluding 2 0.94 p10.66 c1.67 p 18.93 c
exceptionals
Fully diluted earnings per 2 3.93 p44.56 c2.35 p 26.64 c
share
There are no recognised gains or losses other than the above profits and
accordingly no separate statement of recognised gains and losses is shown.
All profits and losses are on continuing activities.
There is no difference in either year between the above profit and the
profit on an historical cost basis.
Balance Sheets
at 30th June Group Company
2001 2001 2000 2000 2001 2001 2
GBP000 R000 GBP000 R000 GBP000 R000 G
Fixed Assets
Tangible assets 493 5,589 517 5,861 467 5,295 4
Investments in - - - - 6,154 69,769 6
Group companies
Investments 7,607 86,242 6,499 73,681 - - -
8,100 91,831 7,016 79,542 6,621 75,064 6
Current Assets
Listed investments 3,443 39,034 3,710 42,061 3,443 39,034 3
Unlisted 43 487 55 624 43 487 5
investments
Debtors 157 1,780 146 1,655 44 499 4
Bank balance and 32 363 53 601 17 193 3
deposits
3,675 41,664 3,964 44,941 3,547 40,213 3
Current Liabilities
Creditors: falling (2,010 (22,787 (1,962) (22,244 (1,972) (22,357 (
due within one year ) ) ) )
Net Current Assets 1,665 18,877 2,002 22,697 1,575 17,856 1
Total Assets less 9,765 110,708 9,018 102,239 8,196 92,920 8
Current Liabilities
Capital and
Reserves
Called up share 1,277 14,478 1,276 14,466 1,277 14,478 1
capital
Share premium 962 10,906 957 10,850 962 10,906 9
account
Reserves 361 4,093 361 4,093 480 5,442 4
Profit and loss 7,109 80,596 6,371 72,229 5,477 62,094 5
account
Equity 9,709 110,073 8,965 101,638 8,196 92,920 8
shareholders' funds
Minority equity 56 635 53 601 - - -
interests
9,765 110,708 9,018 102,239 8,196 92,920 8
Analysis of Net Assets
at 30th June 2001 2001 2000 2000
GBP000 R000 GBP000 R000
Principal investments at market
value:
Western Selection P.L.C. 3,418 38,751 2,604 29,522
Megalomedia plc 1,161 13,162 867 9,829
Marylebone Warwick Balfour Group 5,160 58,500 4,830 54,759
Plc
Creston plc - sold 30 January 2001 - 238 2,698
Merrydown PLC - acquired 27 June 429 4,864 -
2001
10,168 115,277 8,539 96,808
General equity portfolio at market 5,040 57,139 5,479 62,117
value
Tangible fixed assets 493 5,589 517 5,861
Cash, bank balances and deposits 32 363 53 601
Bank Loan (900) (10,203) (1,500) (17,00
Other net liabilities (910) (10,317) (261) (2,959
Minority interests (55) (624) (53) (601)
Net assets, including investments 13,868 157,224 12,774 144,82
at market value
Net assets per share, including 54 p615 c50 p567
investments at market values
The market value of net assets is stated before any taxation, which may
arise on disposal.
Consolidated Cash Flow Statement
For the year ended 30th June 2001 2001 2000 2000
GBP00 R000 GBP00 R000
0 0
Cash outflow on operating 888 10,067 (18) (204)
activities
Returns on investments and
servicing of finance
Dividends received 374 4,240 369 4,183
Interest paid (105) (1,190 (104) (1,179
) )
Net cash inflow from returns on 269 3,050 265 3,004
investments and servicing of
finance
Taxation (6) (68) (10) (113)
Investing activities
Tangible fixed assets - purchased (3) (34) (31) (351)
Fixed asset investments - (532) (6,031 (511) (5,793
purchased ) )
- proceeds on disposal 238 2,698 167 1,893
Net cash outflow from investment (297) (3,367 (375) (4,251
activities ) )
Equity dividend paid - Company (281) (3,186 (255) (2,891
) )
Financing
Share capital issued 6 68 1 11
Net (repayment)/drawdown of loan (600) (6,802 350 3,968
facility )
Net cash (outflow)/inflow from (594) (6,734 351 3,979
financing )
Decrease in cash (21) (238) (42) (476)
Notes
1 The dividend for the year of 1.20p (13.60c) per share (2000 - 1.10p
Ý12.47c¨) will be paid on 12th October 2001 to shareholders on the register
on 21st September 2001.
2 Earnings per share are based on the result of ordinary activities after
taxation and minority interests and on 25,540,767 (2000 - 25,523,710) 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
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 audited accounts of the group for the year ended
30th June 2000 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.
General Equity Portfolio
Anglo American PLC
AstraZeneca PLC
Avocet Mining PLC
BAA PLC
BOC Group PLC
Cable & Wireless PLC
CGNU PLC
Credit Suisse Group AG
Diageo PLC
Fortis (NL)NV
Fuller, Smith&Turner PLC
GlaxoSmithKline PLC
HSBC Holding plc
ING Groep NV
J. Sainsbury plc
Johnson, Matthey PLC
Lavendon Group PLC
Lloyds TSB Group PLC
Marconi PLC
Nestle SA
Novartis AG
Pearson PLC
Prudential PLC
Reuters Group PLC
Roche Holdings AG
Rolls-Royce PLC
Schweiz-Ruckversicherungs-G
The Shell Transport & Trading Company
PLC
Somerfield PLC
Tibbett & Britten Group PLC
UBS AG
Unilever PLC
UTi Worldwide Inc.
Vodafone Group PLC
Wyndeham Press Group PLC
Zurich Financial Services AG
