Final Results

LONDON FINANCE & INVESTMENT GROUP P.L.C. Preliminary announcement of unaudited results for the year ended 30th June 2004 Introduction As an investment company our target is to achieve long-term growth in shareholder value. Our results are very heavily influenced by the overall performance of the stock market, which has shown an upward trend after three years of decline. The profit for the year is more than double last year and the net asset value has increased. Strategic Investments are significant investments in smaller UK quoted companies and these are balanced by a General Portfolio, which mainly consists of investments in major U.K. and European equities. At 30th June 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 year of £208,000 (2003 £113,000). Our operating profits have increased from £52,000 to £141,000 as a result of higher profits realised on sales of investments including the release of investment provisions and increased dividend income. Our profit after tax and minority interest was £190,000 (2003: £93,000) giving earnings per share of 0.74p (2003: 0.36p). To reflect the improvement in the earnings and our progressive dividend policy, the Board has decided to increase the dividend for the year to 0.90p per share (2003: 0.85p). Our net assets per share have increased 8% to 35.9p at 30th June 2004 from 33.2p last year. Our Strategic Investments have increased in value by 7% and our General Portfolio by 9% after taking into account additions and disposals of investments. This compares with the increase in the FTSE 100 index of 11% and the FTSE Euro top 300 index of 17% 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 2004, Western announced a profit after tax of £307,000 for its year to 30th June 2004, earnings per share of 0.7p (2003 - 0.6p), and a 5.8% increase in dividend to 0.55p (2003 - 0.52p). Western's net assets at market value were £10.1 million, equivalent to 23.2p per share, an increase of 15% from 20.1p last year. The market value of the Company's investment in Western at 30th June 2004 was £ 2.5 million and the book value was £4.1 million. At market value this represents 26.6% of the net assets of Lonfin. The underlying value of the Company's investment in Western, valuing Western's investments at market value, was £4.1 million (2003 - £3.5 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. Western reclassified its investment in The Sanctuary Group PLC to its General Portfolio during the year. 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 2004 show a profit after tax of £ 1,449,000 (2003 - £715,000), equivalent to earnings of 9.0p per share (2003 - 6.4p). 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 10th January 2004 and showed a profit of £263,000 (28 weeks to 11th January 2003 - £480,000). This decline in profits was caused by reduced sales in both the cosmetics and aerosol parts of the business. The Company expects to make greater use of Far Eastern sourcing as a means of reducing production costs and is also setting up a representative office in China. The value of the company is underpinned by net assets in excess of £1 per share and we believe that the business model, incorporating the proposed changes to product sourcing, and driven by a committed, entrepreneurial, management team has a high likelihood of success. Doctors Direct plc Doctors Direct provides a visiting General Practitioner service in the London area to private patients and corporate clients. It is also a leading provider of GP medical assistance to UK and international insurance groups and their agents. Doctors Direct's latest published results are for the nine months to 31st March 2004 and show a loss of £255,000 as a result of volumes for private patient and insurance business well below levels achieved in previous years. Marylebone Warwick Balfour Group Plc ('MWB') The Company owns 3,000,000 shares in MWB, representing 2.73 percent of its issued share capital. The market value at 30th June 2004 was £1.6 million, compared with the book value of £2.5 million that represents 17.8 percent 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, which is under constant review. Both Mr Robotham and I are non-executive directors of MWB. Finsbury Food Group plc ('Finsbury Foods') At 30th June 2004, the Company owned 4,500,000 shares in Finsbury Foods and 3,000,000 warrants, representing 21.29% of their share capital and 47.03% of their warrants. The market value of our holding was £2.5 million on 30th June 2004 (cost - £747,000) and represents 26.6% 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, Safeway, Sainsbury Somerfield, Tesco and Waitrose. Ambient cakes are baked cakes that have not been frozen and are generally retailed at room temperature. 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 that, in this environment, opportunities exist to acquire and develop profitable niche businesses. Finsbury Food's directors, of which I am one, continue to monitor the sector and seek further suitable acquisitions. General Portfolio The General Portfolio has material interests in Oil, Natural Resources and Utilities, Pharmaceuticals and Healthcare, Banking, Food and Beverages. These sectors accounted for 76% of the portfolio by value at 30th June 2004 (57% at 30th June 2003). 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 remained unchanged at 36: we have invested £124,000 in the General Portfolio over the year and increased the average value of holdings. We have a £2 million bank facility and at 30th June 2004 had drawn down £1.3 million. This leaves £700,000 available for further investment when the Board feels confident in the prospects for the World economies. The year ahead There is a great deal of uncertainty at present and major political elections will take place over the next 12 months in both the U.S.A. and the United Kingdom. We will continue to watch events carefully and hope we will be able to achieve another satisfactory year. D.C. MARSHALL Chairman 20th August 2004 Consolidated Profit and Loss Account For the year ended 30th June 2004 2003 £000 £000 Operating Income Investment operations 407 314 Management services 533 520 Administrative expenses Investment operations (281) (277) Management services (518) (505) -------- -------- Operating profit 141 52 Share of result of associated undertaking 139 124 Interest payable (72) (63) -------- -------- Profit on ordinary activities before taxation 208 113 Tax on result of ordinary activities (9) (10) -------- -------- Profit on ordinary activities after taxation 199 103 Equity minority interest (9) (10) -------- -------- Profit attributable to members of the holding company 190 93 Proposed dividend (233) (218) -------- -------- Retained (loss) for the financial year (43) (125) -------- -------- Earnings per share 0.74p 0.36p Headline earnings per share 0.74p 0.36p Fully diluted earnings per share 0.73p 0.36p 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 2004 2003 2004 2003 £000 £000 £000 £000 Fixed Assets Tangible assets 437 451 437 447 Investments in Group companies - - 5,855 5,755 Investments 7,390 7,358 - - -------- -------- -------- -------- 7,827 7,809 6,292 6,202 -------- -------- -------- -------- Current Assets Listed investments 3,077 2,685 3,077 2,685 Debtors 272 167 43 79 Bank balance and deposits 30 28 25 27 -------- -------- -------- -------- 3,379 2,880 3,145 2,791 Current Liabilities Creditors: falling due within one year (1,655) (1,176) (1,591) (1,198) -------- -------- -------- -------- Net Current Assets 1,724 1,704 1,554 1,593 -------- -------- -------- -------- Total Assets less Current Liabilities 9,551 9,513 7,846 7,795 ===== ===== ===== ===== Capital and Reserves Called up share capital 1,295 1,281 1,295 1,281 Share premium account 1,033 975 1,033 975 Reserves 361 361 480 480 Profit and loss account 6,780 6,823 5,038 5,059 -------- -------- -------- -------- Equity shareholders' funds 9,469 9,440 7,846 7,795 Minority equity interests 82 73 - - -------- -------- -------- -------- 9,551 9,513 7,846 7,795 ===== ===== ===== ===== Consolidated Cash Flow Statement For the year ended 30th June 2004 2003 £000 £000 Cash outflow on operating activities (479) (74) -------- -------- Returns on investments and servicing of finance Dividends received 246 211 Interest paid (60) (47) -------- -------- Net cash inflow from returns on investments and servicing 186 164 of finance -------- -------- Taxation (9) (7) -------- -------- Investing activities Fixed asset investments - purchased - (138) - proceeds on disposal - 662 -------- -------- Net cash inflow/(outflow) from investment activities - 524 -------- -------- Equity dividend paid - Company (218) (205) Financing Share capital issued 72 - Net draw down/(repayment) of loan facility 450 (400) -------- -------- Net cash inflow/(outflow) from financing 522 (400) -------- -------- Increase in cash 2 2 Notes 1 . The dividend for the year of 0.90 p per share (2003 - 0.85 p) will be paid on 1st October 2004 to shareholders on the register on 3rd September 2004 . 2 . Earnings per share are based on the result of ordinary activities after taxation and minority interests and on 25,809,406(2003- 25,615,862) 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 30 th June 2003 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. 5 Changes in Equity 2004 2003 £000 £000 Profit for the financial year 190 93 Proposed dividend (233) (218) Shares issued during the year 72 - ---------- ---------- 29 (125) Opening equity shareholders' funds 9,440 9,565 ---------- ---------- Closing equity shareholders' funds 9,469 9,440 ---------- ----------

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