| Fri 25 Aug 2006, 17:40 | | Lonfin - Preliminary announcement of unaudited res |
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LNF
LOJM
Lonfin - Preliminary announcement of unaudited results for the year ended
30th June 2006 and dividend announcement
LONDON FINANCE & INVESTMENT GROUP P.L.C.
(Incorporated in England - No. 201151)
Code: LNF ISIN: GB0002994001
("LONFIN")
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
2006 and dividend announcement
London Finance is an investment company whose assets primarily consist of
three Strategic Investments and a General Portfolio. Strategic Investments
are significant investments in smaller UK quoted companies and these are
balanced by a General Portfolio, which consists mainly of investments in
major British and European equities.
At 30th June 2006, 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.
Our objective is to achieve capital growth in real terms over the medium
term, while maintaining a progressive dividend policy.
Results
The Group made a profit before tax for the year of GBP309,000 (2005 -
GBP202,000). Our operating profits have increased from GBP228,000 to
GBP263,000 as a result of higher profits realised on sales of investments
and increased fee income achieved by City Group. Our profit after tax and
minority interest was GBP303,000 (2005 - GBP212,000) giving earnings per
share of 1.06p (2005 - 0.81p).
To reflect the improvement in the earnings and our progressive dividend
policy, the Board has decided to increase the dividend for the year to
1.05p per share (2005 - 1.0p).
Our net assets per share have increased 17% to 52p at 30th June 2006 from
44p last year after provision for deferred taxation. Our Strategic
Investments have increased in value by 43% and our General Portfolio by 22%
after taking into account additions and disposals of investments. This
compares with the increase in the FTSE 100 index of 14% and the FTSE
Eurotop 300 index of 15% over the year.
International Financial Reporting Standards
This is the first year when the consolidated financial statements have been
prepared under the International Financial Reporting Standards (IFRS)
adopted by the EU. The comparatives for 2005 have accordingly been
restated from UK Generally Accepted Accounting Practice (UK GAAP). Figures
on an IFRS basis were included as memoranda columns in the 2005 financial
statements.
Strategic Investments
Western Selection P.L.C. ("Western")
The Company owns 5,212,000 shares, being 44.6% of the issued share capital
of Western. On 24th August 2006, Western announced a profit after tax of
GBP315,000 for its year to 30th June 2006, earnings per share of 2.75p
(2005 - 1.40p), and a 5.6% increase in dividend to 2.45p (2005 - 2.32p).
Western"s net assets at market value were GBP10,495,000, equivalent to
89.8p per share, a 1% increase from 88.8p last year. This increase in
value was reduced by the exercise of warrants at 64p, which increased
Western"s capital in issue by 7.5%.
The market value of the Company"s investment in Western at 30th June 2006
was GBP2,997,000 and the book value was GBP4,643,000. At market value this
represents 19% of the net assets of Lonfin. The underlying value of the
Company"s investment in Western, valuing Western"s investments at market
value, was GBP4.68 million (2005 - GBP3.9 million).
Mr. Marshall is the Chairman of Western and Mr. Robotham is a non-executive
director. Western has strategic investments in Creston plc, Swallowfield
plc, Northbridge Industrial Services plc and Industrial & Commercial
Holdings PLC. An extract from Western"s announcement of its strategic
investments is set out below:
Creston plc
Creston is a marketing services group whose strategy is to grow within its
sector both by organic growth and through selective acquisition to become a
substantial, diversified international marketing services group. The
results for the year to 31st March 2006, show a profit after tax of
GBP2,927,000 (2005 - GBP2,640,000), equivalent to earnings of 8.04p per
share (2005 - 7.04p).
At 1st July 2005, Western owned 2,873,998 shares in Creston. During the
year a further 126,002 shares were acquired at a cost of GBP207,903 by way
of exercise of warrants and participation in Creston"s fundraising. At the
year end, the total holding of 3,000,000 shares represented 8.6% of
Creston"s issued share capital. The market value of the Company"s holding
in Creston on 30th June 2006 was GBP4,845,000 (2005 - GBP4,455,000), being
40% of Western"s net assets.
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 7th
January 2006 and showed a loss of GBP695,000, after reorganisation costs of
GBP677,000 (28 weeks to 8th January 2005 - profit of GBP353,000).
Western owns 1,000,000 shares in Swallowfield being 8.9% of the issued
share capital. The market value of the Company"s holding in Swallowfield
on 30th June 2006 was GBP455,000 (2005 - GBP775,000), being 4% of Westerns"
net assets.
Northbridge Industrial Services PLC
Western announced in March that it was making an investment of GBP1.5
million in Northbridge Industrial Services PLC. That company placed
6,437,500 shares at GBP1 and at the same time it shares were admitted to
AIM. Western Selection was allotted 1.5 million shares representing 20.3%
of Northbridge"s share capital. The value of the investment at 30th June
2006 was GBP1,598,000.
Northbridge was formed for the purpose of acquiring companies that hire and
sell specialist industrial equipment such as generators, load banks, pumps,
air compressors, heaters and chillers .Northbridge is seeking to acquire
specialist niche businesses that have the potential for expansion into
outsourcing providers, capable of supplying a non-cyclical customer base.
Northbridge"s first acquisition is Crestchic Limited, one of the largest
specialist load bank equipment manufacturers in the world; selling and
hiring to a national and international customer base.
Industrial & Commercial Holdings PLC
ICH is a small unlisted PLC in which Western holds 29.9%.It holds land with
potential to receive planning permission for housing at Milngavie, adjacent
to Dougalston golf course, just north east of Glasgow. As it may take many
years for the permission to be received, we are in discussion with the
board of ICH to consider an acquisition of an active business.
Marylebone Warwick Balfour Group Plc ("MWB")
The Company owns 3 million shares, representing 3.16% of MWB"s issued share
capital. The market value at 30th June 2006 was GBP5.9 million, compared
with the book value of GBP2.5 million, and represents 38% 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, having disposed
of the Park Lane Marriot hotel for GBP105 million in May and the recently
announced disposal of its West India Quay subsidiary for GBP110 million.
Mr. Marshall is a non-executive director of MWB and the board constantly
reviews the programme of disposal.
Finsbury Food Group plc ("Finsbury")
During the year we acquired a further 200,000 shares in Finsbury at a cost
of GBP146,000 to bring our holding to 5,000,000 shares and 3,000,000
warrants representing 21.66% of their share capital and 54.06% of their
warrants. The market value of our holding was GBP4.3 million on 30th June
2006 (2005 - GBP3.2 million) with a cost of cost of GBP993,000 and
represents 28% of the net assets of Lonfin.
Finsbury Food"s main subsidiary, Memory Lane Cakes, is a supplier of boxed
ambient cakes to most of the UK"s major supermarket chains, which include
Asda, Morrisons, Sainsbury, Somerfield, Tesco and Waitrose. Ambient cakes
are baked cakes that have not been frozen and are generally retailed at
room temperature.
Finsbury Food acquired three new bakeries in November 2005 and is involved
in capital projects for the automation of existing, and the installation of
new, production lines, together with the segregation of a gluten free area
to give a market leading facility. Mr. Marshall is a non-executive
director of Finsbury.
General Portfolio
The General Portfolio has material interests in oil, natural resources and
utilities, pharmaceuticals and healthcare, banking and insurance and food
and beverages. These sectors accounted for 69% of the portfolio by value
at 30th June 2006 (73% at 30th June 2005). 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.
The number of holdings in the General Portfolio has increased to 43 from
39. We have invested GBP238,000 (2005: GBP457,000) in the General
Portfolio over the year and the average value of each holding has increased
from GBP110,000 to GBP114,000.
We have a GBP2 million bank facility and at 30th June 2006 had drawn down
GBP1.65 million. This leaves GBP350,000 available for further investment.
Dividend
The recommended dividend is 1.05p per share (2005 - 1.00p). Subject to
shareholder"s approval, the dividend will be paid on 6th October 2006 to
those members registered at the close of business on 8th September 2006.
Shareholders on the South African register will receive their dividend in
South African Rand converted from sterling at the closing rate of exchange
on 24th August 2006.
Salient dates for dividend
Last day to trade (SA) Friday, 1 September 2006
Shares trade ex dividend (SA) Monday, 4 September 2006
Shares trade ex dividend (UK) Wednesday, 6 September 2006
Record date (SA) Friday, 8 September 2006
Record date (UK) Friday, 8 September 2006
Pay date Friday, 6 October 2006
Currency conversion date Thursday, 24 August 2006.
Shareholders are hereby advised that the exchange rate to be used will be
GBP 1 = ZAR 13.5374
This has been calculated as the average of the bid/ask spread as at 00h00
(United Kingdom time) being opening of business on 24 August 2006.
Consequently the dividend of 1,05p will be equal to 14.2143 South African
cents.
No dematerialisation or rematerialisation of share certificates, nor
transfer of shares between the registers in London and South Africa will
take place between Monday, 4 September 2006 and Friday, 8 September 2006,
both dates inclusive.
D.C. MARSHALL
Chairman
25th August 2006
Consolidated Profit and Loss Account
For the year ended 30th June 2006 2005
GBP000 GBP000
Operating Income
Investment operations 610 572
Management services 587 501
Administrative expenses
Investment operations (350) (294)
Management services (584) (551)
Operating profit 263 228
Share of result of associated undertaking 169 90
Interest payable (123) (116)
Profit on ordinary activities before taxation 309 202
Tax on result of ordinary activities (4) (12)
Profit on ordinary activities after taxation 305 190
Equity minority interest (2) 22
Profit for the financial year attributable to 303 212
members of the holding company
Basic earnings per share 1.06p 0.81p
Headline earnings per share 1.06p 0.81p
Diluted earnings per share 1.06p 0.80p
Consolidated Statement of Recognised Gains and Losses
Profit attributable to members 303 212
Unrealised gains on investments held as :-
Fixed assets 3,768 2,131
Current assets 427 130
Deferred taxation on unrealised gains (1,188) (176)
Total recognised gains and losses for the year 3,310 2,297
Changes in Shareholders" Equity
Total recognised gains and losses for the year 3,310 2,297
Proceeds of new shares issued 949 77
Dividend paid in respect of the previous year (262) (233)
3,997 2,141
Shareholders" funds at start of year 11,634 9,493
Shareholders" funds at end of year 15,631 11,634
All profits and losses are on continuing activities.
Consolidated Balance Sheet
at 30th June 2006 2005
GBP000 GBP000
Non-current Assets
Tangible assets 430 431
Investments 13,247 8,776
13,677 9,207
Current Assets
Listed investments 4,907 4,265
Accounts receivable 196 178
Bank balance and deposits 171 48
5,274 4,491
Current Liabilities
Accounts payable: falling due within one year (1,893) (1,827
)
Net Current Assets 3,381 2,664
Total Assets less Current Liabilities 17,058 11,871
Deferred taxation (1,363) (176)
Total Assets less Current Liabilities 15,695 11,695
Capital and Reserves
Called up share capital 1,500 1,310
Share premium account 1,854 1,095
Reserves 5,244 2,237
Profit and loss account 7,033 6,992
Equity shareholders" funds 15,631 11,634
Minority equity interests 64 61
15,695 11,695
Consolidated Cash Flow Statement
For the year ended 30th June 2006 2005
GBP000 GBP000
Cash outflow on operating activities (120) (244)
Returns on investments and servicing of
finance
Dividends received 281 277
Interest paid (95) (89)
Net cash inflow from returns on investments 186 188
and servicing of finance
Taxation (4) (15)
Investing activities
Purchase of tangible fixed assets (12) (4)
Fixed asset investments - purchased (664) (101)
Net cash outflow from investment activities (676) (105)
Equity dividend paid (262) (233)
Financing
Share capital issued 949 77
Net (repayment)/draw down of loan facility (50) 350
Net cash inflow from financing 999 427
Increase in cash 123 18
Notes
1. The dividend for the year of 1.05p per share (2005 - 1.00p) will be
paid on 6th October 2006 to shareholders on the register on 8th September
2006.
2. Earnings per share are based on the profit on ordinary activities
after taxation and minority interests and on 28,672,672 shares (2005 -
26,113,943) 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.
4. 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 2005 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.
Date: 25/08/2006 05:40:18 PM Produced by the JSE SENS Department
