| Thu 3 Mar 2005, 9:51 | | London Finance & Investment Group P.L.C. - Unaudit |
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London Finance & Investment Group P.L.C. - Unaudited interim results of the
Company for the six months ended 31st December 2004
LONDON FINANCE & INVESTMENT GROUP P.L.C.
(Incorporated in England - No. 201151)
Code: LNF ISSN: 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
3rd March 2005
TO THE MEMBERS
The Directors are pleased to present the unaudited interim results of the
Company for the six months ended 31st December 2004
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 2004, 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 GPG121,000 compared with
a profit of GPG151,000 last year. Our operating profits have decreased from
GPG136,000 to GPG118,000 after a fall in net income from management services of
GPG41,000 due to the timing of fees for special work. Our profit after tax and
minority interest was GPG130,000 (2003 - GPG152,000) giving earnings per share
of 0.50p (2003 - 0.59p).
Our net assets per share have increased 16% to 41.6p at 31st December 2004 from
35.8p at 30th June 2004. Our Strategic Investments have increased in value by
21% and our General Portfolio net of overdrafts and other liabilities has
increased by 11%. This compares with the rise in the FTSE 100 index of 6% over
the half year. At the close of business on 28th February 2005, our net asset
value had further increased to 47.9p.
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 31st January 2005, Western announced a profit after
tax of GPG114,000 for its half year to 31st December 2004 and earnings per share
of 0.26p (2003 - 0.24p). Western`s net assets at market value were GPG10.3
million, equivalent to 23.8p per share, an increase of 3% from 23.2p at 30th
June 2004.
The market value of the Company`s investment in Western at 31st December 2004
was GPG2.5 million and this represents 23.3% 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 GPG4.2 million (30th June 2004 - GPG4.1
million).
I am the Chairman of Western and Mr. Robotham is a non-executive director.
Western has strategic investments in Creston plc and Swallowfield 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.
Creston`s results for the half-year to 30th September 2004 show a profit after
tax of GPG1,022,000 (2003 - GPG515,000), equivalent to earnings of 4.5p per
share (2003 - 4.6p). Our income in the period from Creston amounted to
GPG16,158 (2003 - GPG32,000, which included a final dividend and a special
interim dividend).
Western exercised its option for 308,264 Creston shares at a price of GPG1.31
per share and now owns 2,308,264 shares, being 10.05% of Creston`s issued share
capital. The market value of the company`s holding in Creston on 31st December
2004 was GPG3,174,000 (30th June 2004 - GPG2,620,000), being 26.7% of Western`s
net assets.
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 plans `to raise shareholder returns by driving down total input
costs, improving manufacturing efficiencies, presenting new and exciting product
ranges and improving our pricing strategies`.
Swallowfield`s latest published results for the year to 30th June 2004 showed a
profit after tax, but before exceptional restructuring costs, of GPG1,094,000
(2003 - GPG718,000). Exceptional restructuring costs of GPG396,000 relating to
a series of restructuring actions designed to generate annual overhead savings
of GPG500,000 were incurred during the year. The value of this business is
underpinned by net assets in excess of GPG1 per share.
We own 1,000,000 shares in Swallowfield being 8.88% of the issued share capital.
The market value of the company`s holding in Swallowfield on 31st December 2004
was GPG885,000 (30th June 2004 - GPG775,000) being 7.5% of the net assets of the
Company.
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 2004 was GPG2.6 million compared with
a market value of GPG2.5 million, which represents 23.7% of the net assets of
Lonfin.
MWB is in the process of a realisation program through the controlled sale of
assets with the objective of returning cash or cash equivalents to shareholders
by end of December 2007. We expect the repayment to be above the current market
price of MWB`s shares.
Both Mr. Robotham and I are non-executive directors of MWB.
Finsbury Food Group plc (`Finsbury Food`)
At 31st December 2004, the Company owned 4,800,000 shares in Finsbury Food and
3,000,000 warrants, representing 22.7% of their share capital and 47.2% of their
warrants. The market value of our holding was GPG2.8 million on 31st December
2004 compared to a cost of GPG847,000, this represents 26.1% 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 18 January 2005, Finsbury Food announced that it had had a successful
completion to their 2004 Christmas programme by focussing on producing a group
of higher margin core products, more efficiently and more profitably.
Finsbury`s speciality breads business is performing ahead of expectations and
the Nestle programme is progressing as expected.
I am a non-executive director of Finsbury Food
General Portfolio
The General Portfolio is dominated by holdings in oils & natural resources,
pharmaceuticals, foods & beverages and banking. These sectors accounted for 74%
of the portfolio by value at 31st December 2004 and 83% at 30th June 2004. A
list of the holdings can be found below.
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. We believe that all our strategic
investments will outperform the market this year and so enhance our asset value.
As is our practice, we only declare one dividend a year, which was paid in
October 2004 for the year ended 30th June 2004. 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 ended Year
ended
31st December 30th June
2004 2003 2004
GPG000 GPG000 GPG000
Operating Income
Dividends received 96 80 154
Interest and sundry income 14 14 28
Profit on sales of investments 180 189 225
290 283 407
Management services income 234 275 533
524 558 940
Administrative expenses
Investment operations (150) (140) (281)
Management services (256) (282) (518)
Total administrative expenses (406) (422) (799)
Operating profit 118 136 141
Share of result of associated undertaking 55 47 139
Interest payable (52) (32) (72)
Profit on ordinary activities before 121 151 208
taxation
Tax on result of ordinary activities (1) (1) (9)
Profit on ordinary activities after 120 150 199
taxation
Minority interest 10 2 (9)
Profit attributable to members of the 130 152 190
holding company
Proposed dividend - - (233)
Retained profit/(loss) for the period 130 152 (43)
Earnings per share 0.50p 0.59p 0.74p
Headline earnings per share 0.50p 0.59p 0.74p
Fully diluted earnings per share 0.50p 0.58p 0.73p
Dividend per share Nil Nil 0.90 p
Unaudited Consolidated Balance Sheet
31st December 30th June
2004 2003 2004
GPG000 GPG000 GPG000
Fixed assets
Tangible assets 432 442 437
Investments 7,440 7,308 7,390
7,872 7,750 7,827
Current assets
Listed investments 3,218 2,928 3,077
Debtors 121 171 272
Cash, bank balances and deposits 79 81 30
3,418 3,180 3,379
Creditors falling due within one year (1,540) (1,195) (1,655)
Net Current Assets 1,878 1,985 1,724
Total Assets less Current Liabilities 9,750 9,735 9,551
Capital and Reserves
Called up share capital 1,311 1,295 1,295
Share premium account 1,096 1,033 1,033
Reserves 361 361 361
Profit and loss account 6,910 6,975 6,780
Shareholders funds 9,678 9,664 9,469
Minority equity interest 72 71 82
9,750 9,735 9,551
Notes:-
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
2004. 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 2004 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.
Earnings per share are based on the profit after taxation and minorities, and on
the average number of shares 25,960,112 (December 2003 - 25,714,981 and June
2004 - 25,809,406), in issue during the period.
Consolidated Cash Flow Statement
Half year ended Year
ended
31st December 30th June
2004 2003 2004
GPG000 GPG000 GPG000
Cash inflow/(outflow) on operating 5 (194) (479)
activities
Returns on investments and servicing of
finance
Dividend received 193 172 246
Interest paid (43) (28) (60)
Net cash inflow from returns on
investments and
servicing of finance 150 144 186
Taxation paid (1) (1) (9)
Investing activities
Fixed assets investments purchases (100) - -
Net cash outflow from investment (100) - -
activities
Equity dividend paid - Company (233) (218) (218)
Financing
Share capital issued 78 72 72
Net drawdown of loan facility 150 250 450
Net cash inflow from financing 228 322 522
Increase in cash 49 53 2
(a) Reconciliation of operating profit to net cash flow from operating
activities
31st 30th
December June
2004 2004
GPG000 GPG000
Operating profit 118 141
Dividends receivable (96) (154)
Depreciation charges 5 15
Decrease/(increase) in debtors 151 (105)
(Decrease)/increase in creditors (32) 16
Increase in current asset investments (141) (392)
5 (479)
(b) Reconciliation of net cash flow to movement in net debt
At start Cash At end of
of period flow period
GPG000 GPG000 GPG000
2004/2005
Cash at bank 30 49 79
Bank loan (1,250) (150) (1,400)
(1,220) (101) (1,321)
2003/2004
Cash at bank 28 2 30
Bank loan (800) (450) (1,250)
(772) (448) (1,220)
Balance Sheet Analysis taking investments at market value
31st December 30th June
2004 2003 2004
GPG000 GPG000 GPG000
Principal investments at market value:
Marylebone Warwick Balfour Group Plc 2,580 1,545 2,463
Finsbury Food Group plc 2,847 3,435 2,467
Western Selection P.L.C. 2,535 2,507 1,650
General equity portfolio - (see 3,924 3,417 3,679
analysis attached)
Tangible fixed assets 432 442 437
Cash, bank balances and deposits 79 81 30
Bank loan (1,400) (1,050) (1,250)
Other net (liabilities)/assets (19) 26 (133)
Minority interests (72) (71) (82)
Net assets 10,906 10,332 9,260
Net Assets per share 41.6 p 39.9 p 35.8 p
Net Assets per share at 28th February 2005 47.9p
Market Value of General Portfolio
31st December 2004
GPG000 %
Nestle 204 5.2
UBS 166 4.2
Cadbury Schweppes 136 3.5
Shell Transport & Trading Co 133 3.4
ING Groep 130 3.3
Reckitt Benckiser 126 3.2
Pernod-Ricard 120 3.1
Roche Holdings 120 3.1
BOC 119 3.1
Associated British Foods 117 3.0
HSBC Holding 114 2.9
Imperial Tobacco Group 114 2.9
Tesco 113 2.9
Diageo 111 2.8
Land Securities Group 110 2.8
Hilton Group 108 2.8
British American Tobacco 108 2.8
Smith & Nephew 107 2.7
Novartis 105 2.7
Lloyds TSB Group 104 2.7
Credit Suisse Group 103 2.6
BP 102 2.6
Vodafone Group 99 2.5
Johnson Matthey 99 2.5
Boots Group 98 2.5
GlaxoSmithKline 98 2.5
Reed Elsevier 96 2.4
Rexam 92 2.3
Liberty International 87 2.2
Scottish & Newcastle 87 2.2
Intercontinental Hotels Group 87 2.2
Carlsberg 79 2.0
Heineken 79 2.0
Beiersdorf 73 1.9
L`Oreal 67 1.7
Schindler-Holdings 57 1.4
Smiths Group 56 1.4
3,924 100.0
Date: 03/03/2005 09:00:19 AM
Produced by the JSE SENS Department
