Final Results
LONDON FINANCE & INVESTMENT GROUP P.L.C.
("Lonfin", "the Company" or "the Group")
Preliminary announcement of unaudited results for the year ended 30th June 2011
London Finance & Investment Group P.L.C. (LSE: LFI, JSE: LNF), the investment
company whose assets primarily consist of three Strategic Investments and a
General Portfolio, today announces its Preliminary Results for the year ended
30th June 2011.
Chairman's statement
Lonfin is an investment company whose assets primarily consist of three
Strategic Investments and a General Portfolio. Strategic Investments are
significant investments in smaller U.K. quoted companies and these are balanced
by a General Portfolio, which consists mainly of investments in major U.K. and
European equities.
At 30th June 2011, the three Strategic Investments, in which we have directors
in common, were our associated company Western Selection P.L.C. and MWB Group
Holdings 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.
â— Net assets including our investment property at its latest valuation net
of tax have increased by 29% from 27.1p per share to 35.0p per share
â— The General Portfolio is yielding 3.1 % (2010 - 2.9%) up 7%.
â— Borrowings are 17% (2010 - 23%) of the value of liquid stock market
investments
â— Operating costs have been reduced.
Results
Our net assets per share as recorded in the statement of financial position
have increased 26% to 29p from 23p last year, reflecting the recovery in the
associated company and Strategic Investments values. These increased in value
by 29% and 24% respectively, after taking into account additions and disposals
of investments. The General Portfolio increased by 23% outperforming the
markets. These movements compare with the increases in the FTSE 100 index of
21% and 13% in the FTSE Eurofirst 300 index over the year. In addition our
investment property has been revalued from £1,575,000 to £2,150,000 (from £
1,575,000 to £2,093,000 net of tax), but accounting standards do not permit us
to include these values in the statement of financial position.
The Group achieved a profit before tax for the year of £2,145,000 (2010 - £
705,000). The profit after tax and non-controlling interest was £2,118,000
(2010 - £693,000) giving a profit per share of 6.8p (2010 -2.2p).
Strategic Investments
Western Selection P.L.C. ("Western")
The Group owns 7,864,412 shares, being 43.8% of the issued share capital of
Western.
On 6th September 2011, Western announced a profit before associates and tax of
£136,000 for its year to 30th June 2011 (2010 - £128,000). Including associates
and after exceptional items and tax, profits per share were 2.6p (2010 - 1.4p).
Western has paid an interim dividend of 0.65p and proposes an increased final
dividend of 0.85p (2010 - 0.65p). Western's net assets at market value were £
15,022,000, equivalent to 84p per share, an increase of 38% from 61p last year.
Our share of the net assets of Western including the value of Western's
investments at market value, was £6.6 million (2010 - £4.8 million). The fair
value recorded in the statement of financial position is the market value of £
3,458,000 (2010 - £2,672,000). This represents 37% of the net assets of the
Group.
Mr. D. C. Marshall is the Chairman of Western and Mr. Robotham and Mr. Beale,
the chief executive of our subsidiary company (City Group P.L.C.), are
non-executive directors. Western has strategic investments in Creston plc,
Northbridge Industrial Services plc, Swallowfield plc and Hartim Limited. 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 marketing services group. The audited results
for the year to 31st March 2011, show a profit after tax of £10,400,000
(2010 - £5,133,000), equivalent to fully diluted earnings of 12.39p per
share (2010 - 8.74p). Western maintained it's holding of 3,000,000 shares
in Creston (4.9%) with a value at 30th June 2011 of £3,390,000 (2010 - £
2,752,000) being 23% (2010 - 25%) of Western's assets.
Northbridge Industrial Services PLC
Northbridge was formed for the purpose of acquiring companies that hire
and sell specialist industrial equipment supplying a non-cyclical customer
base including utility companies, the public sector and the oil and gas
industries. In particular it will seek to acquire specialist businesses
that have the potential for expansion into complete outsourcing providers.
Sales are made to the U.K., U.S.A., Brazil, Singapore, Germany, UAE and
Korea;Northbridge also has subsidiaries operating in Perth, Dubai and
Azerbaijan.
Northbridge announced profits of £3,036,000 for the year ended 31st
December 2010 (2009 - £1,571,000) and declared a final dividend of 3.05p
per share, making 4.6p for the year (2009 - 4.1p).
Northbridge acquired Tasman Oil Tools Pty Ltd, based in Perth, Western
Australia, which specialises in the rental of equipment for the onshore
and off-shore oil industry throughout Australia, after raising
approximately £8 million by way of an open offer. Western took up 325,000
shares in that offer at a cost of £406,250, increasing its holding to
2,200,000 shares in Northbridge, which is 14.19% of the issued share
capital. The value of the investment at 30th June 2011 was £6,094,000
(2010 - £2,508,000) being 40% (2010 - 23%) of Western's assets.
Swallowfield plc
Swallowfield is involved in the development, formulation, manufacture and
supply of cosmetics, toiletries and related household products for global
brands and retailers operating in the cosmetics, personal care and
household goods market. Swallowfield announced its interim results to
January 2011 showing a profit after tax of £519,000 compared to £533,000
for the comparable period last year. Dividends of £116,000 (2010 - £
87,000) were received from Swallowfield during the year.
Western increased its holding in Swallowfield during the year and since
the year end. At 31st August 2011 it owns 1,868,149 shares which is 16.52%
of the issued share capital. The market value of the Company's holding in
Swallowfield on 30th June 2011 was £1,922,000 (2010 - £1,816,000), being
13% (2010 - 17%) of Western's net assets.
Swallowfield has had turnover of £52.4 million, £49.1 million and £44.8
million over the last three years and despite this their market
capitalisation remains at £13 million. Whilst Western has played a role in
bringing about some changes to the board during the year, we believe there
may still be scope for improvement, and Western will continue to monitor
board performance.
Investments in Associates
Hartim Limited
Hartim is the unquoted holding company for Tudor Rose International
Limited ("TRI") which was founded in 1984. It works closely with a number
of leading UK branded fast moving consumer goods companies, offering a
complete sales, marketing and logistical service. Based in Stroud,
Gloucestershire, TRI sells into 78 countries worldwide including USA,
Spain, Portugal, Italy, Czech Republic, Russia, Turkey, South Africa,
Saudi Arabia, UAE, Malaysia, Australia and China. Hartim has recently
acquired a distribution business in Australia to improve the service that
it can offer to principals.
Western holds 49.5% of Hartim, which has a 31st December year end and
achieved profits in 2010 of £540,000 after tax on turnover of £22,282,000.
Western's share of the consolidated profit after tax for the twelve months
to 30th June 2011 was £337,000 (2010 - £150,000) and the book value of the
investment at 30th June 2011 was £1,465,000 (2010 - £1,129,000), being 10%
(2010 - 10%) of Western's assets.
MWB Group Holdings Plc ("MWB")
The Group holding in MWB was unchanged from the 2 million shares held at June
2011, representing 1.22% of MWB's issued share capital. The market value at
30th June 2011 was £775,000 (2010 - £795,000), compared with the book value of
£1,681,000, and represents 8% (2010 - 11%) of the net assets of the Group.
MWB is in the process of maturing and realising its assets for the benefit of
all stakeholders through an orderly disposal programme.
Mr. D.C. Marshall is a non-executive director of MWB.
Finsbury Food Group plc ("Finsbury")
The Group holding in Finsbury remains at 8 million shares, representing 15.18%
of their share capital. The market value of the holding was £1,700,000 on 30th
June 2011 (cost - £1,893,000) and represents 18% of the net assets of the
Group.
Finsbury is one of the largest producers and suppliers of premium cakes, bread
and morning goods in the UK. The Group currently supplies most of the UK's
major supermarket chains, including Asda, Co-op, Morrisons, Sainsbury,
Somerfield, Tesco and Waitrose.
Mr. D.C. Marshall and Mr. Beale, the Chief Executive of our subsidiary company
City Group P.L.C., are non-executive directors of Finsbury.
General Portfolio
The investments comprising the General Portfolio at 30th June 2011 are listed
on page 10. The General Portfolio is well spread with material interests in
Food and Beverages, Oil, Natural Resources, Chemicals, and Tobacco. We believe
that the portfolio of quality companies we hold has the potential to outperform
the market in the medium to long term, especially in respect of our Western
European holdings.
The number of holdings in the General Portfolio has decreased to 23 from 25. We
have decreased the amount invested in the General Portfolio by £464,000 (2010:
decreased by £669,000) over the year.
We have a £2 million bank facility, and at 30th June 2011 had net borrowings of
£1.8 million. This leaves £200,000 available for further investment when the
Board feels appropriate. The increase in value of our investments over the
period has decreased borrowings as a percentage of the market value of all
stock market investments from 23% to 17 %.
Operations & Employees
All of our operations and those of our associate, Western, except investment
selection, are outsourced to our subsidiary, City Group P.L.C. City Group also
provides office accommodation, company secretarial and head office finance
services to a number of other U.K., Jersey and Luxembourg clients. City Group
has responsibility for the initial identification and appraisal of potential
new strategic investments for the Group and the day to day monitoring of
existing strategic investments.
Dividend
The Company will be recommending final dividend for the year ended 30th June
2011 and further details will be announced shortly.
Outlook
The outlook for stock markets remains very uncertain. We will continue to adopt
a cautious stance, with our general portfolio invested in the best European
companies.
By Order of the Board
CITY GROUP P.L.C.
Secretaries
28th September 2011
Unaudited Consolidated Comprehensive Income Statement
For the year ended 30th June 2011 2010
£000 £000
Dividends - Listed investments 251 174
Interest receivable - 1
Rental and other income 94 86
Profits realised on sales of investments 266 119
Management services fees 398 405
---------- ----------
Operating income 1,009 785
Administration expenses (749) (757)
---------- ----------
Operating profit 260 28
Unrealised changes in the carrying value of investments 1,995 791
Interest payable (110) (114)
---------- ----------
Profit on ordinary activities before taxation 2,145 705
Tax on result of ordinary activities (19) (18)
---------- ----------
Profit on ordinary activities after taxation 2,126 687
Non-controlling interest (8) 6
---------- ----------
Profit for the financial year attributable to members of 2,118 693
the holding company
Other comprehensive income - -
---------- ----------
Total comprehensive income attributable to shareholders 2,118 693
====== ======
Reconciliation of headline earnings
Basic profit per share 6.8 p 2.2 p
Adjustment for the unrealised changes in the carrying (6.4)p (2.5)p
value of investments, net of tax
---------- ----------
Headline profit/(loss) per share 0.4 p (0.3)p
====== ======
All profits and losses are on continuing activities.
Unaudited Consolidated Statement of Changes in Shareholders' Equity
Share of
undistributed Retained
Ordinary Share Unrealised results of realised Non-
Share premium Revaluation profits/ Subsidiaries profits Controlling Total
(losses) &
Capital account Reserve on and losses Total interests equity
investments associates
£000 £000 £000 £000 £000 £000 £000 £000 £000
Year ended 30th
June 2010
Balances at 1st 1,560 2,318 330 (4,538) 747 6,239 6,656 90 6,746
July 2009
Total comprehensive - - - 791 44 (142) 693 (6) 687
income
------- ------- ------- ------- ------- ------- ---- ------- -----
Interim dividend - - - - - (93) (93) - (93)
paid
------- ------- ------- ------- -------- ------- ---- ------- -----
Total transactions - - - - - (93) (93) - (93)
with shareholders
------- ------- ------- ------- ------- ------- ---- ------- -----
Balances at 30th 1,560 2,318 330 (3,747) 791 6,004 7,256 84 7,340
June 2010
------- ------- ------- ------- ------- ------- ---- ------- -----
Year ended 30th
June 2011
Balances at 1st 1,560 2,318 330 (3,747) 791 6,004 7,256 84 7,340
July 2010
------- ------- ------- ------- ------- ------- ---- ------- -----
Total comprehensive - - - 1,997 113 8 2,118 8 2,126
income
------- ------- ------- ------- ------- ------- ---- ------- -----
Shares issued - 2 - - - - 2 - 2
Dividends paid - - - - - (187) (187) - (187)
------- ------- ------- ------- ------- ------- ---- ------- -----
Total transactions - 2 - - - (187) (185) (185)
with shareholders
------- ------- ------- ------- ------- ------- ---- ------- -----
Balances at 30th 1,560 2,320 330 (1,750) 904 5,825 9,189 92 9,281
June 2011
------- ------- ------- ------- ------- ------- ---- ------- -----
Unaudited Consolidated Statement of Financial Position
At 30th June 2011 2010
£000 £000
Non-current Assets
Tangible assets 367 377
Investments 5,933 4,667
--------- ---------
6,300 5,044
--------- ---------
Current Assets
Listed investments 4,668 4,225
Trade and other receivables 260 294
Bank balance and deposits 21 17
--------- ---------
4,949 4,536
Current Liabilities
Trade and other payables: falling due within one year (1,968) (2,240)
--------- ---------
Net Current Assets 2,981 2,296
--------- ---------
Total Assets less Current Liabilities 9,281 7,340
===== =====
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,320 2,318
Revaluation reserve 330 330
Unrealised profits and losses on investments (1,750) (3,747)
Share of retained realised profits and losses of 904 791
subsidiaries and associates
Company's retained realised profits and losses 5,825 6,004
--------- ---------
9,189 7,256
Non-controlling equity interests 92 84
--------- ---------
9,281 7,340
====== ======
Unaudited Company Statement of Financial Position
at 30th June 2011 2010
£000 £000
Non-current Assets
Tangible assets 367 377
Investments in Group companies 7,726 7,832
------- -------
8,093 8,209
------- -------
Current Assets
Listed investments 4,668 4,225
Trade and other receivables 38 58
Bank balance - -
------- -------
4,706 4,283
Current Liabilities
Trade and other payables: falling due within one year (1,915) (2,159)
------- -------
Net Current Assets 2,791 2,124
------- -------
Total Assets less Current Liabilities 10,884 10,333
Deferred taxation - -
------- -------
10,884 10,333
====== ======
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,320 2,318
Revaluation reserve 330 330
Unrealised profits and losses on investments 849 121
Realised profits and losses 5,825 6,004
------- -------
Equity shareholders' funds 10,884 10,333
====== ======
Unaudited Consolidated Statement of Cash Flow
For the year ended 30th June 2011 2010
£000 £000
Cash flows from operating activities
Profit before tax 2,145 705
Adjustments for non-cash and non-operating activities ------- -------
-
Finance expense 110 114
Depreciation charges 10 13
Unrealised changes in the fair value of investments (1,995) (791)
------- -------
(1,875) (664)
------- -------
Taxes paid (19) (18)
------- -------
Changes in working capital
Decrease in trade and other receivables 34 15
(Decrease) in trade and other payables (6) (122)
Decrease in current asset investments 285 669
------- -------
313 562
------- -------
Net cash inflow from operating activities 564 585
Cash flows from financing
Shares issued 2 -
Interest paid (110) (114)
Equity dividends paid (187) (93)
Net repayment of loan facilities (265) (475)
------- -------
Net cash outflow from financing (560) (682)
------- -------
Increase/(Decrease) in cash and cash equivalents 4 (97)
Cash and cash equivalents at the beginning of the year 17 114
------- -------
Cash and cash equivalents at end of the year 21 17
====== ======
Notes
1. Earnings per share are based on the profiton ordinary activities after
taxation andnon controllinginterests and on 31,205,694shares (2010-
31,201,466) being the weighted average of the number of shares in issue
during the year.
2. The net assets attributable to shareholders, taking investments at
market value, are before providing for any tax that may arise on
realisation.
3. The financial information in this preliminary announcement of unaudited
group results does not constitute the company's statutory accounts for
the years ended 30th June 2011 or 30th June 2010 but is derived from
those accounts. The accounts have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the
European Union and with those parts of the Companies Act 2006 applicable
to companies reporting under IFRS. The accounts are prepared on the
historical cost basis, except for certain assets and liabilities which
are measured at fair value, in accordance with IFRS and comply with IAS
34. The audited accounts of the group for the year ended 30th June 2010
were reported on with an unqualified audit report and have been
delivered to the Registrar of Companies.
Enquiries to:
London Finance & Investment Group 020 7448 8950
David Marshall / Edward Beale
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