| Wed 3 Sep 2003, 9:43 | | PRELIMINARY ANNOUNCEMENT OF UNAUDITED |
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LONDON FINANCE & INVESTMENT GROUP P.L.C. - PRELIMINARY ANNOUNCEMENT OF UNAUDITED
RESULTS FOR THE YEAR ENDED 30TH JUNE 2003
LONDON FINANCE & INVESTMENT GROUP P.L.C.
(Incorporated in England - No. 201151)
Code: LNF
ISIN: GB0002994001
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
PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS FOR THE YEAR ENDED 30TH JUNE 2003
Introduction
As an investment company our target is to achieve growth in shareholder value in
real terms over the long term. In the short term our results are very heavily
influenced by overall stock market performance which has had a third successive
year in decline. The profit after tax for the year is more than double last
year"s profit, but is still below levels that we would wish to achieve. We
continue to believe that a combination of Strategic Investments and a General
Portfolio is the most prudent 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 longer term and these are balanced
by a General Portfolio which mainly consists of investments in major U.K. and
European equities.
At 30th June 2003, 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
The Group made a profit before tax for the year of GBP113,000 compared with a
loss of GBP159,000 last year (excluding our share of Western Selection P.L.C."s
exceptional profit of GBP219,000). Our operating profits have increased from
GBP27,000 to GBP52,000 as a result of higher profits realised on sales of
investments and increased management services income, which is offset by lower
dividend income. Our profit after tax and minority interest was GBP93,000
(2002: GBP44,000) giving earnings per share of 0.36p (2002: 0.17p).
To reflect the improvement in the earnings, the Board has decided to increase
the dividend for the year to 0.85p per share (2002: 0.80p).
Our net assets per share have fallen 11% to 33.2p at 30th June 2003 from 37.2p
last year. Our Strategic Investments have fallen in value by 3% and our General
Portfolio by 15% after taking into account additions and disposals of
investments. This compares with the fall in the FTSE 100 index of 13% and the
FTSE Euro top 300 index of 18% over the year.
Strategic Investments
Western Selection P.L.C. ("Western")
The Company owns 17,611,928 shares, being 40.48% of the issued share capital,
and 3,238,072 warrants, of Western. On 19th August 2003, Western announced a
profit after tax of GBP260,000 for its year to 30th June 2003, earnings per
share of 0.60p (2002 - 0.61p), and a 4% increase in dividend to 0.52p (2002 -
0.50p). Western"s net assets at market value were GBP8,748,000 million,
equivalent to 20.1p per share, a fall of 9% from 22.1p last year.
The market value of the Company"s investment in Western at 30th June 2003 was
GBP2.3 million and the book value was GBP4.0 million. At market value this
represents 27.2% 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 GBP3.5 million (2002 - GBP3.9 million).
I am the Chairman of Western and Mr. Robotham is a non-executive director.
Western has strategic investments in Creston Plc, The Sanctuary Group PLC,
Swallowfield plc and Doctors Direct Plc. Extracts from Western"s announcement
on its strategic investments are set out below:
Creston Plc
Creston is a marketing services group operating in the U.K. with significant
international clients. The company"s strategy is to grow within its sector both
by organic growth and acquisition.
The results for the year to 31st March 2003 show a profit after tax of
GBP715,000 (2002 - GBP138,000), equivalent to earnings of 6.4p per share (2002 -
1.2p) and Creston"s directors are confident of achieving continued growth
The Sanctuary Group Plc
Sanctuary is a diversified international media group specialising in the
ownership and commercial exploitation of Intellectual Property Rights within the
field of entertainment.
Sanctuary"s last published results were for the six months to 31st March 2003
and showed a profit of GBP1,951,000 (2002 - GBP1,712,000). Earnings per share
increased by 11% from 0.54p to 0.60p
Swallowfield Plc
Swallowfield has a long history of developing and producing aerosol, cosmetic
and toiletry products stretching back to 1950. As one of Europe"s premier
contract manufacturers of toiletries and cosmetics it offers an unrivalled
breadth of product capabilities. Its skill in design, developing and producing
gift packs and themed product ranges compliments its production capability.
Swallowfield"s latest published results were for the 28 weeks to 11th January
2003 which showed a profit of GBP164,000 (2002 - GBP1,265,000). This sharp fall
in profits was caused when margins fell while trying to satisfy an unexpected
surge in business volumes that could not be accommodated within the existing
capacities and business infrastructure. However, we consider that the business
model remains sound, backed up with a committed management team and underpinned
by net assets in excess of GBP1 per share.
Doctors Direct Plc
Doctors Direct provides a visiting GP service in the London area to private
patients and corporate clients. It is also the leading provider of GP medical
assistance to UK and international insurance groups and their agents.
Doctors Direct"s latest published results are for the half year to 31st December
2002 and show a loss of GBP221,000 (2002 - GBP80,000) reflecting expenditure on
the development of the business
Marylebone Warwick Balfour Group Plc ("MWB")
The Company owns 3,000,000 shares in MWB, representing 2.79 per cent of its
issued share capital. The market value at 30th June, 2003 was GBP1.8 million,
compared with the book value of GBP2.5 million, this represents 21.2 per cent of
the net assets of Lonfin.
MWB is in the process of maturing and realising its assets for the benefit of
all stakeholders through an orderly disposal programme. MWB intends to make
cash distributions, which should be completed by December 2005. It is targeting
gross cash returns in excess of 200p per share which will be distributed in a
tax efficient and transparent manner. No interim dividend was declared in
respect of the half year ended 31st December 2002.
Both Mr. Robotham and I are non-executive directors of MWB.
Finsbury Food Group Plc ("Finsbury Foods")
At 30th June 2003, the Company owned 4,500,000 shares in Finsbury Foods and
3,000,000 warrants, representing 21.47% of their share capital and 45.79% of
their warrants. On 22nd July 2002, the company announced that it had entered
into conditional agreements to acquire the issued share capital of Memory Lane
Cakes Limited for GBP9.5 million to be satisfied by payment of GBP8.5 million in
cash and the issue of 3,333,333 new ordinary shares. Following this
announcement, we purchased 200,000 shares on 24th July 2002, increasing our
holding to 4,500,000 shares and during the year we purchased 1,566,667 warrants.
The market value of our holding was GBP2.1 million on 30th June 2003 compared to
a cost of GBP747,000, this represents 24.1% of the net assets of Lonfin.
Memory Lane Cakes is a supplier of boxed ambient cakes to most of the UK"s major
supermarket chains. Ambient cakes are baked cakes that have not been frozen and
are generally retailed at room temperature. Asda, Safeway, Sainsbury Somerfield
and Tesco are major customers. On 19th February 2003, Finsbury Foods announced
the acquisition of the trade and assets of Nicholas and Harris, a supplier of
speciality breads and boxed ambient cakes, for an initial consideration of
GBP2.5 million. Additional consideration of up to GBP2.5 million is payable
depending on earnings.
Finsbury Food has now repositioned itself as a speciality foods business focused
on niche markets. Its directors believe that the UK food sector is increasingly
polarised between substantial manufacturers and a large number of smaller
independent businesses and believe that, in this environment, opportunities
exist to acquire and develop profitable niche businesses. Finsbury Food"s
directors, of which I am one, continue to review the sector and seek further
suitable acquisitions.
General Portfolio
The General Portfolio is dominated by holdings in banking, insurance, food,
beverages and consumer goods. These sectors accounted for 57% of the portfolio
by value at 30th June 2003 and 65% at 30th June 2002. 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 have increased the number of holdings in the General Portfolio from 27 to 36
over the year in order to increase diversification and plan to top up on some of
our smaller holdings as buying opportunities occur.
We have GBP1.2m available to increase the portfolio, having drawn GBP800,000 of
our GBP2 million bank facility at the balance sheet date.
The year ahead
We expect the share prices of our Strategic Investments to remain volatile, but
to provide good value to shareholders over the longer term. We are cautiously
optimistic for the coming year and expect the value of our General Portfolio to
improve over the next 12 months.
We have reduced our gearing during the past year and, although the outlook for
both the short and medium term continues to be uncertain, with our low gearing,
we are able to take advantage of any investment opportunities that may arise.
3rd September 2003
Consolidated Profit and Loss Account
For the year ended 30th June 2003 2002
GBP000 GBP000
Operating Income
Investment operations 314 276
Management services 520 495
Administrative expenses
Investment operations (277) (263)
Management services (505) (481)
Operating profit 52 27
Share of result of associated 124 (98)
undertaking - Beneficial
- Exceptional - 219
Interest payable (63) (88)
Profit on ordinary activities before 113
taxation 60
Tax on result of ordinary activities (10) (9)
Profit on ordinary activities after 103
taxation 51
Equity minority interest (10) (7)
Profit attributable to members of the 93
holding company 44
Proposed dividend (218) (205)
Retained (loss) for the financial year (125) (161)
Earnings per share 0.36p 0.17 p
Earnings/(loss) per share excluding 0.36p
exceptional (0.68)p
Fully diluted earnings per share 0.36p 0.17 p
Balance Sheets
at 30th June Group Company
2003 2002 2003 2002
GBP000 GBP000 GBP000 GBP000
Fixed Assets
Tangible assets 451 471 447 457
Investments in Group - - 5,755 6,127
companies
Investments 7,358 7,741 - -
7,809 8,212 6,202 6,584
Current Assets
Listed investments 2,685 2,743 2,685 2,743
Unlisted investments - 43 - 43
Debtors 167 187 79 45
Bank balance and deposits 28 26 27 20
2,880 2,999 2,791 2,851
Current Liabilities
Creditors: falling due within (1,176) (1,583) (1,198) (1,551)
one year
Net Current Assets 1,704 1,416 1,593 1,300
Total Assets less Current 9,513 9,628 7,795 7,884
Liabilities
Capital and Reserves
Called up share capital 1,281 1,281 1,281 1,281
Share premium account 975 975 975 975
Reserves 361 361 480 480
Profit and loss account 6,823 6,948 5,059 5,148
Equity shareholders" funds 9,440 9,565 7,795 7,884
Minority equity interests 73 63 - -
9,513 9,628 7,795 7,884
Consolidated Cash Flow Statement
For the year ended 30th June 2003 2002
GBP000 GBP000
Cash inflow/(outflow) on operating activities (74) (71)
Returns on investments and servicing of finance
Dividends received 211 243
Interest paid (47) (78)
Net cash inflow from returns on investments and 164 165
servicing of finance
Taxation (7) (5)
Investing activities
Fixed asset investments - purchased (138) (107)
- proceeds on disposal 662 3
Net cash inflow/(outflow) from investment 524 (104)
activities
Equity dividend paid - Company (205) (307)
Financing
Share capital issued - 16
Net (repayment)/draw down of loan facility (400) 300
Net cash (outflow)/inflow from financing (400) 316
Increase/decrease in cash 2 (6)
Notes
1.The exceptional item for 2002 comprised the Company"s share of Western
Selection P.L.C."s exceptional profits for its year to 30th June 2002.
2.The dividend for the year of 0.85p per share (2002 - 0.80p) will be paid on
3rd October 2003 to shareholders on the register on 12th September 2003.
3.Earnings per share are based on the result of ordinary activities after
taxation and minority interests and on 25,615,862 (2002 - 25,592,026) being the
weighted average of the number of shares in issue during the year.
4. The net assets attributable to shareholders, taking investments at market
value, are before providing for any tax that may arise on realisation.
5. The financial information in this preliminary announcement of unaudited group
results, which has been reviewed and agreed by the auditors, does not constitute
statutory accounts within the meaning of section 240(5) of the Companies Act
1985. The accounts have been prepared in accordance with the Accounting
Standards of the Auditing Practices Board of the United Kingdom and are
consistent with those applied in the previous financial year. The audited
accounts of the group for the year ended 30th June 2002 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.
6 Changes in Equity 2003 2002
GBP000 GBP000
Profit for the financial year 93 44
Proposed dividend (218) (205)
Shares issued during the year - 17
(125) (144)
Opening equity shareholders" funds 9,565 9,709
Closing equity shareholders" funds 9,440 9,565
Johannesburg
3 September 2003
Sponsor
Imara Corporate Finance South Africa (Pty) Limited
Date: 03/09/2003 09:00:15 AM Supplied by www.sharenet.co.za
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