| Wed 10 Mar 2004, 13:36 | | Unaudited Interim Statement For The |
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London Finance & Investment Group P.L.C.- Unaudited Interim Statement For The
Six Months Ended 31 December 2003
London Finance & Investment Group P.L.C.
(Incorporated in England - No. 201151)
Share 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
10 March 2004
UNAUDITED INTERIM STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2003
TO THE MEMBERS
The Directors are pleased to present the unaudited interim results of the
Company for the six months ended 31st December 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 influenced by
overall stock market performance. 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 31st December 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 half year of GBP150,000 compared with
a profit of GBP88,000 last year. Our operating profits have increased from
GBP46,000 to GBP136,000 despite a fall in net income from management services of
GBP48,000 due to the timing of fees for special work. Improving stock markets
have enabled us to reduce the provision required to restate General Portfolio
investments at market value, releasing GBP168,000 to profits. Our profit after
tax and minority interest was GBP152,000 (2002 - GBP71,000) giving earnings per
share of 0.59p (2002 - 0.28p).
Our net assets per share have increased 20% to 39.9p at 31st December 2003 from
33.2p at 30th June 2003. Our Strategic Investments have increased in value by
21% and our General Portfolio net of overdrafts and other liabilities has
increased by 24%. This compares with the rise in the FTSE 100 index of 11% over
the half 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. On 18th February 2004, Western announced a profit after
tax of GBP104,000 for its half year to 31st December 2003 and earnings per share
of 0.24p (2002 - 0.38p). Western"s net assets at market value were GBP10.6
million, equivalent to 24.4p per share, an increase of 21% from 20.1p at 30th
June 2003.
The market value of the Company"s investment in Western at 31st December 2003
was GBP2.5 million against a book value of GBP4.0 million. At market value this
represents 24.3% 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 GBP4.3 million (30th June 2003 - GBP3.9 million).
I am the Chairman of Western and Mr. Robotham is a non-executive director.
Western has strategic investments in Creston 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, whose strategy is to grow within its sector both by
organic growth and acquisition. In September 2003 Creston announced the
acquisition of Nelson Bostock Communications Ltd, a public relations company
based in London, for a total cost including contingent consideration estimated
at just over GBP11 million.
The results for the half year to 30th September 2003 show a profit after tax of
GBP515,000 (2002 - GBP136,000), equivalent to earnings of 4.6p per share (2002 -
1.2p) and Creston has declared a special interim dividend of 0.6p per share.
Our income in the period from Creston, including their year end dividend of 1.4p
per share amounted to GBP32,000 (2002 - nil).
Western acquired an additional 400,000 Creston shares in the over-subscribed
placing and open offer to fund the acquisition of Nelson Bostock Communications
at a cost of GBP344,000 and now owns 2,000,000 shares, being 10.6% of Creston"s
issued share capital. The market value of the company"s holding in Creston on
31st December 2003 was GBP2,830,000 (30th June 2003 - GBP1,272,000), being 26.7%
of Western"s net assets. Western also owns 308,000 unlisted warrants to
subscribe for Creston shares at a price of GBP1.31 per share exercisable in the
42 days following the publication of the accounts for the year ending 31st March
2004. No value has been attributed to these warrants.
I am the non-executive chairman of Creston.
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 stated purpose is "to be a leading independent Contract
Manufacturer by being fast and flexible in our response to customer needs for
exciting, innovative and quality products".
Swallowfield"s latest published results for the year to 30th June 2003 showed a
profit of GBP718,000 (2002 - GBP1,687,000). 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 existing capacities and business
infrastructure. Swallowfield has recently published a trading statement
covering the period to 31st December 2003 in which it warned of interim profits
lower than those achieved last year because of poor Christmas sales volumes.
However, Swallowfield expects that trading for the full year will be in line
with expectations. The value of this business is underpinned by net assets in
excess of GBP1 per share compared to the share price on 31st December 2003 of
79.5p.
During the period we acquired an additional 120,000 shares at a cost of
GBP109,000 to bring our total holding to 1,000,000 shares being 8.88% of the
issued share capital. The market value of the company"s holding in Swallowfield
on 31st December 2003 was GBP795,000 (30th June 2003 - GBP612,000) being 7.5% of
the net assets of the company.
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 year to 30th June 2003 and
show a loss of GBP749,000 (2002 - GBP153,000) reflecting expenditure on the
development of the business and lower demand for their services.
We own 1,125,000 shares and 1,350,000 warrants in Doctors Direct being 16% of
the issued share capital and 35% of the warrants. The market value of the
Company"s holding in Doctors Direct shares on 31st December 2003 was GBP377,000
(30th June 2003 - GBP501,000), being 3.5% of Western"s net assets. The warrants
are unlisted and no value has been attributed to them.
I am the non-executive chairman of Doctors Direct.
Marylebone Warwick Balfour Group Plc ("MWB")
The Company owns 3,000,000 shares in MWB, representing 2.73% of its issued share
capital. The book value at 31st December, 2003 was GBP2.5 million compared with
a market value of GBP1.5 million, which represents 14.95% of the net assets of
Lonfin.
MWB is in the process of a realisation program which has been extended to 2007.
It is likely that the difficult economic climate will impact on the amount of
the final distribution.
Both Mr. Robotham and I are non-executive directors of MWB.
Finsbury Food Group plc ("Finsbury Foods")
At 31st December 2003, the Company owned 4,500,000 shares in Finsbury Foods and
3,000,000 warrants, representing 21.5% of their share capital and 52.6% of their
warrants. The market value of our holding was GBP3.4 million on 31st December
2003 compared to a cost of GBP747,000, this represents 33.3% of the net assets
of Lonfin.
Finsbury Food is a supplier of boxed ambient cakes to most of the UK"s major
supermarket chains and speciality breads to Waitrose.
On 2nd September 2003, Finsbury Food announced that it had acquired exclusive
rights to exploit Nestle"s confectionery brands in the cake sector for a period
of 5 years from 1st January 2004, extending an existing co-manufacturing
arrangement. On 23rd January 2004, Finsbury Food announced that results from
the cake bakery in Cardiff for the Christmas season had been poor and as a
result the outlook for this year is substantially reduced. However customer
service levels have been maintained over the crucial Christmas period and the
first new Nestle products are now being supplied to the major supermarket chains
and convenience and impulse outlets.
I am a non-executive director of Finsbury Food
General Portfolio
The General Portfolio is dominated by holdings in banking, insurance, food,
beverages and consumer goods. These sectors accounted for 60% of the portfolio
by value at 31st December 2003 and 57% at 30th June 2003.
The year ahead
The share prices of our Strategic Investments in small listed companies will
remain volatile, but we expect these investments to provide good value to
shareholders over the longer term.
As is our practice, we only declare one dividend a year which was paid in
October 2003 for the year ended 30th June 2003. It is our intention, subject to
unforeseen circumstances, to maintain a policy of progressive increases in
annual dividends.
David C. Marshall
Chairman
Unaudited Consolidated Profit & Loss Account
Half year Year
ended ended
31st 30th
December June
2003 2002 2003
GBP00 GBP00 GBP00
0 0 0
Operating Income
Dividends received 80 51 123
Interest and sundry income 14 14 27
Profit on sales of investments 189 77 164
283 142 314
Management services income 275 292 520
558 434 834
Administrative expenses
Investment operations (140) (138) (277)
Management services (282) (250) (505)
Total administrative expenses (422) (388) (782)
Operating profit 136 46 52
Share of result of associated undertaking 47 68 124
- normal
Interest payable (32) (26) (63)
Profit on ordinary activities before 151 88 113
taxation
Tax on result of ordinary activities (1) (1) (10)
Profit on ordinary activities after 150 87 103
taxation
Minority interest 2 (16) (10)
Profit attributable to members of the 152 71 93
holding company
Proposed dividend - - (218)
Retained profit for the period 152 71 (125)
Earnings per share 0.59p 0.28p 0.36p
Earnings per share excluding exceptional 0.59p 0.28p 0.36p
Fully diluted earnings per share 0.58p 0.29p 0.36p
Dividend per share Nil Nil 0.85p
Unaudited Consolidated Balance Sheet
31st December 30th
June
2003 2002 2003
GBP000 GBP000 GBP000
Fixed assets
Tangible assets 442 461 451
Investments 7,308 7,320 7,358
7,750 7,781 7,809
Current assets
Listed investments 2,928 2,374 2,685
Unlisted investments - 43 -
Debtors 171 114 167
Cash, bank balances and deposits 81 36 28
3,180 2,567 2,880
Creditors falling due within one year (1,195) (633) (1,176)
Net Current Assets 1,985 1,934 1,704
Total Assets less Current Liabilities 9,735 9,715 9,513
Capital and Reserves
Called up share capital 1,295 1,281 1,281
Share premium account 1,033 975 975
Reserves 361 361 361
Profit and loss account 6,975 7,019 6,823
Shareholders funds 9,664 9,636 9,440
Minority equity interests 71 79 73
9,735 9,715 9,513
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 2003. 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 2003 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 25,714,981 (December 2002 - 25,615,641 and June
2003 - 25,615,862), in issue during the period.
Consolidated Cash Flow Statement
Half year Year ended
ended
31st December 30th
June
2003 2002 2003
GBP000 GBP00 GBP000
0
Cash (outflow)/inflow on operating (194) 277 (74)
activities
Returns on investments and servicing of
finance
Dividend received 172 139 211
Interest paid (28) (26) (47)
Net cash inflow from returns on 144 113 164
investments and servicing
of finance
Taxation paid (1) (1) (7)
Investing activities
Fixed assets investments - purchased - (138) (138)
- proceeds on disposal - 663 662
Net cash outflow from investment - 525 524
activities
Equity dividend paid - Company (218) (205) (205)
Financing
Share capital issued 72 - -
Net drawdown/(repayment) of loan 250 (700) (400)
facility
Net cash inflow/(outflow) from financing 322 (700) (400)
Increase in cash 53 9 2
1. Reconciliation of operating profit to net cash flow
from operating activities
31st 30th
December June
2003 2003
GBP000 GBP000
Operating profit 136 52
Dividends receivable (80) (123)
Depreciation charges 10 20
Profit on sales of fixed asset - (124)
investments
Decrease in debtors (4) 21
Decrease in creditors (13) (20)
(Increase)/Decrease in current asset (243) 100
investments
(194) (74)
2 Reconciliation of net cash flow to
movement in net debt
At Cash At end
start flow of year
of year
GBP000 GBP000 GBP000
2003/2004
Cash at bank 28 53 81
Bank loan (800) (250) (1,050)
(772) (197) (969)
2002/2003
Cash at bank 26 2 28
Bank loan (1,200) 400 (800)
(1,174) 402 (772)
Balance Sheet Analysis taking investments at market value
31st December 30th
June
2003 2002 2003
GBP000 GBP000 GBP000
Principal investments at market
value:
Western Selection P.L.C. 2,507 2,095 2,315
Finsbury Food Group plc 3,435 1,552 2,055
Marylebone Warwick Balfour Group Plc 1,545 1,522 1,808
7,487 5,169 6,178
General equity portfolio (see 3,417 2,610 2,938
analysis below)
Tangible fixed assets 442 461 451
Cash, bank balances and deposits 81 36 28
Bank Overdraft (1,050) (500) (800)
Other net liabilities 26 25 (209)
Minority interests (71) (79) (73)
Net assets 10,332 7,722 8,513
Net Assets per share 39.88p 30.15p 33.23p
Market Value of General Portfolio
31st December
2003
GBP000 %
Nestle 209 6.1
UBS 198 5.8
Shell Transport & Trading Co 125 3.7
Associated British Foods 117 3.4
Cadbury Schweppes 115 3.4
Barclays Bank 115 3.4
HSBC Holding 114 3.3
Roche Holdings 113 3.3
Smith & Nephew 113 3.3
AstraZeneca 113 3.3
Napier Brown Foods 112 3.3
ING Groep 108 3.2
BOC Group 102 3.0
GlaxoSmithKline 102 3.0
Novartis 101 2.9
Reckitt Benckiser 101 2.9
Lloyds TSB Group 98 2.9
Centrica 95 2.8
British American Tobacco 92 2.7
BP 91 2.6
Imperial Tobacco Group 88 2.6
Boots Group 83 2.4
Credit Suisse Group 82 2.4
Diageo PLC 81 2.4
Land Securities Group 78 2.3
Allied Domecq 78 2.3
Reed Elsevier 74 2.2
Prudential Corporation 71 2.1
Legal & General Group 70 2.0
Pernod-Ricard 68 2.0
Fortis 68 2.0
J. Sainsbury 66 1.9
Scottish & Newcastle 49 1.4
Johnson Matthey 49 1.4
Liberty International 41 1.2
Zurich Financial Services Group 37 1.1
3,417 100.0
Date: 10/03/2004 01:15:12 PM Produced by the JSE SENS Department
