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 2012
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 2012.
Chairman's statement
Lonfin is an investment company whose target is to achieve growth in
shareholder value in real terms over the medium to long term while maintaining
a progressive dividend policy.
In the short term, the performance of the Company can be influenced by overall
stock market performance and to diversify this short term risk the Company has
a combination of 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 of investments in
major U.K. and European equities and provides an exposure to the equity market.
At 30th June 2012, 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.
- Net assets have decreased by 11.1% from 35.0p per share to 31.1p per
share
- The General Portfolio has decreased by 4.2% compared to declines of 6.3%
and 8.1% in FTSE100 and FTSE Eurofirst 300 respectively.
- The General Portfolio is yielding 3.0% (2011 - 3.1%).
- There are no net borrowings (2011 - borrowings equal to 17% of the value
of liquid stock market investments)
- Operating costs have been reduced.
Disposal of Investment Property
At the General Meeting on 21st December 2011 shareholders approved the disposal
of the Company's investment property for gross proceeds of £2,625,000. Net cash
proceeds after transaction costs and tax are £2,495,000 compared to the
estimate of £2,397,000, mainly due to lower tax payable. Sale proceeds were
received on 23rd December 2011 and the transaction formally completed on 27th
January 2012. The sale proceeds are being held in cash pending reinvestment in
the General Portfolio.
Results
Our net assets per share have decreased 11.1% to 31p from 35p last year
(including a valuation of £2,093,000 of the investment property, in place of
the book value of £367,000). The decrease reflects the decline in the value of
our Strategic Investments by 14%, particularly in MWB Group. The General
Portfolio decreased by 4.2%, outperforming the markets, where a decrease in the
FTSE 100 index was 6.3% and in the FTSE Eurofirst 300 index, 8.1%, over the
year.
The Group achieved a profit for the year, before tax and the fair value
adjustments of investments, of £2,003,000 (2011 - £123,000). The profit after
fair value adjustments, tax and non-controlling interest was £869,000 (2011 - £
2,118,000) giving a profit per share of 2.9p (2011 - 6.8p).
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 27th September 2012, Western announced a profit before associates and tax of
£164,000 for its year to 30th June 2012 (2011 - £136,000). Including associates
and after exceptional items and tax, losses per share were 1.0p (2011 - profits
- 2.6p).
Western has paid an interim dividend of 0.80p and proposes an increased final
dividend of 0.9p (2011 - 0.85p). Western's net assets at market value were £
12,895,000, equivalent to 72p per share, a decrease of 14% from 84p last year.
Our share of the net assets of Western including the value of Western's
investments at market value, was £5.6 million (2011 - £6.6 million). The fair
value recorded in the statement of financial position is the market value of £
3,144,000 (2011 - £3,458,000). This represents 32% (2011 - 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. Further
information about Creston is available on their website:
www.creston.com.
The audited results for the year to 31st March 2012, show a profit after
tax of £10,300,000 (2011 - £10,400,000), equivalent to fully diluted
earnings of 12.34p per share (2011 - 12.39p).
Western maintained its holding of 3,000,000 shares in Creston, which is
4.9% of their issued share capital. The value of this investment at 30th
June 2012 was £1,650,000 (2011 - £3,390,000) being 13% (2011 - 23%) of
Western's assets.
Northbridge Industrial Services PLC
Northbridge hires and sells specialist industrial equipment to a
non-cyclical customer base. With offices or agents in the U.K., U.S.A.,
Dubai, Germany, Belgium, France, Australia, Singapore, India, Brazil,
Korea and Azerbaijan, Northbridge has a global customer base. This
includes utility companies, the oil and gas sector, shipping,
construction and the public sector. The product range includes
loadbanks, transformers, generators, compressors, loadcells and oil
tools. Further information about Northbridge is available on their
website: www.northbridgegroup.co.uk.
Northbridge announced profits of £2,321,000 for the year ended 31st
December 2011 (2010 - £3,036,000) and declared a final dividend of 3.25p
per share, making 5.0p for the year (2010 - 4.6p).
Western maintained its holding of 2,200,000 shares in Northbridge, which
is 14.3% of their issued share capital. The value of this investment at
30th June 2012 was £5,984,000 (2011 - ££6,094,000) being 46 % (2011 -
40%) of Western's assets.
Swallowfield plc
Swallowfield is a market leader 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. Further information about
Swallowfield is available on their website: www.swallowfield.com.
Swallowfield announced itsannual results to June 2012 showing a profit
after tax of £1,263,000 compared to £1,082,000 (restated) for the
comparable period last year. Dividends of £118,000 (2011 - £116,000)
were received from Swallowfield during the year.
At the reporting date Western owned 1,869,149 shares which is 16.5% of
their issued share capital. The market value of this investment on 30th
June 2012 was £2,187,000 (2011 - £1,922,000), being 17% (2011 - 13%) of
Western's net assets.
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
acquired out of administration its principal distributor in Australia;
to maintain and improve the service that it can offer to principals.
Losses are being incurred by this business while it is being turned
around. Hartim has also incurred an exceptional loss in a legal dispute
about the exercise of the break clause in a property lease.
Western holds 49.5% of Hartim, which has a 31st December year end and
sustained losses in 2011 of £220,000 after tax on turnover of £
27,799,000. Western's share of the consolidated loss after exceptional
items and tax for the twelve months to 30th June 2012 was £342,000 (2011
- profit - £337,000) and the book value of the investment at 30th June
2012 was £1,124,000 (2011 - £1,465,000), being 9% (2011 - 10%) of
Western's assets.
MWB Group Holdings Plc ("MWB")
MWB is a hotel, serviced offices and retail group that is in the process of
realising its assets through an orderly disposal programme. Further information
about MWB is available on its website: www.mwb.co.uk.
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 2012 was £70,000 (2011 - £775,000), compared with a cost of £
1,681,000, and represents 1% (2011 - 8%) of the net assets of the Group.
The share price of MWB has declined significantly over the recent year and we
have made an impairment provision in the subsidiary holding this investment of
£1,611,000 and also provided an equal amount in the parent company against the
loan to that subsidiary.
Mr. D.C. Marshall is a non-executive director of MWB.
Finsbury Food Group Plc ("Finsbury")
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. Further information about Finsbury is available
on its website: www.finsburyfoods.co.uk.
The Group holding in Finsbury remains at 8 million shares, representing 15.18%
of their share capital. The market value of the holding was £1,880,000 on 30th
June 2012 (cost - £1,893,000) and represents 19% (2011 - 18%) of the net assets
of the Group.
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 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 increased to 30 from 23.
The proceeds from the sale of our investment property are being reinvested in
the General Portfolio and we have increased the amount invested in the General
Portfolio over the year by £171,000 (2011: decreased by £464,000).
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. and Jersey 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 a final dividend for the year ended 30th June
2012 of 0.35p and further details will be announced shortly.
Outlook
We remain concerned that the high national debts of developed countries can
only be reduced significantly through prolonged austerity and/or substantial
inflation. We remain invested in large diversified international non-financial
companies, which we think are well placed to outperform the market. We hope
that volatility in the financial markets will provide long term investors, such
as ourselves, with buying opportunities.
By Order of the Board
CITY GROUP P.L.C.
Secretaries
28th September 2012
Unaudited Consolidated Statement of Comprehensive Income
For the year ended 30th June 2012 2011
£000 £000
Dividends - Listed investments 265 251
Interest receivable 4 -
Rental and other income 70 94
(Losses)/Profits realised on sales of investments (32) 266
Management services fees 295 398
---------- ----------
Operating income 602 1,009
Administration expenses (638) (749)
---------- ----------
Operating (loss)/profit (36) 260
Unrealised changes in the carrying value of investments (1,134) 1,995
Exceptional profit on disposal of property 2,137 -
Interest payable (27) (110)
---------- ----------
Profit on ordinary activities before taxation 940 2,145
Tax on result of ordinary activities (65) (19)
---------- ----------
Profit on ordinary activities after taxation 875 2,126
Non-controlling interest (6) (8)
---------- ----------
Profit for the financial year attributable to members of 869 2,118
the holding company
Other comprehensive income - -
---------- ----------
Total comprehensive income attributable to shareholders 869 2,118
======= =======
Reconciliation of headline earnings
Basic profit per share 2.8p 6.8 p
Adjustment for the unrealised changes in the carrying 3.6p (6.4)p
value of investments, net of tax
---------- ----------
Headline profit per share 6.4p 0.4 p
====== ======
All profits and losses are on continuing activities.
Unaudited Consolidated Statement of Changes in Shareholders' Equity
Retained
Unrealised Share of realised
Ordinary Share profits/ undistributed profits Non-
Share Premium Revaluation (losses) on results of & Controlling Total
Capital account Reserve investments Subsidiaries losses Total interests equity
£000 £000 £000 £000 £000 £000 £000 £000 £000
Year ended 30th June
2011
Balances at 1st July 1,560 2,318 330 (3,747) 791 6,004 7,256 84 7,340
2011
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
------ ------ ------ ------ ------ ------ ----- ------ ------
Year ended 30th
June 2012
Balances at 1st 1,560 2,320 330 (1,750) 904 5,825 9,189 92 9,281
July 2011
------ ------ ------ ------ ------ ------ ------ ------ ------
Total - - - 2,086 (1,476) 259 869 6 875
comprehensive
income
------ ------ ------ ------ ------ ------ ------ ------ ------
Transfer on - - (330) - - 330 - - -
disposal
------ ------ ------ ------ ------ ------ ------ ------ ------
Dividends paid - - - - - (343) (343) - (343)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total - - - - - (343) (343) - (343)
transactions
with
shareholders
------ ------ ------ ------ ------ ------ ------ ------ ------
Balances at 1,560 2,320 - 336 (572) 6,071 9,715 98 9,813
30th June 2012
------ ------ ------ ------ ------ ------ ------ ------ ------
Unaudited Consolidated Statement of Financial Position
At 30th June 2012 2011
£000 £000
Non-current Assets
Tangible assets 4 367
Investments 5,094 5,933
----------- -----------
5,098 6,300
----------- -----------
Current Assets
Listed investments 4,533 4,668
Trade and other receivables 272 260
Cash at bank 2,217 21
----------- -----------
7,022 4,949
Current Liabilities
Trade and other payables: falling due within one year (2,307) (1,968)
----------- -----------
Net Current Assets 4,715 2,981
----------- -----------
Total Assets less Current Liabilities 9,813 9,281
======= =======
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,320 2,320
Revaluation reserve - 330
Unrealised profits and losses on investments 336 (1,750)
Share of retained realised profits and losses of (572) 904
subsidiaries
Company's retained realised profits and losses 6,071 5,825
----------- -----------
9,715 9,189
Non-controlling equity interests 98 92
----------- -----------
9,813 9,281
======= =======
Unaudited Company Statement of Financial Position
at 30th June 2012 2011
£000 £000
Non-current Assets
Tangible assets - 367
Investments in Group companies 5,987 7,726
----------- -----------
5,987 8,093
Current Assets ----------- -----------
Listed investments 4,533 4,668
Trade and other receivables 18 38
Bank balance 2,202 -
----------- -----------
6,753 4,706
Current Liabilities
Trade and other payables: falling due within one year (2,236) (1,915)
----------- -----------
Net Current Assets 4,517 2,791
----------- -----------
Total Assets less Current Liabilities 10,504 10,884
======= =======
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,320 2,320
Revaluation reserve - 330
Unrealised profits and losses on investments 553 849
Realised profits and losses 6,071 5,825
----------- -----------
Equity shareholders' funds 10,504 10,884
======= =======
Unaudited Consolidated Statement of Cash Flow
For the year ended 30th June 2012 2011
£000 £000
Cash flows from operating activities
Profit before tax 940 2,145
----------- -----------
Adjustments for non-cash and non-operating activities
-
Finance expense 27 110
Profit on disposal of property (2,137) -
Depreciation charges 5 10
Unrealised changes in the fair value of investments 1,134 (1,995)
----------- -----------
(971) (1,875)
----------- -----------
Taxes paid (17) (19)
----------- -----------
Changes in working capital
Decrease in trade and other receivables (12) 34
(Decrease) in trade and other payables 158 (6)
Decrease in current asset investments (161) 285
----------- -----------
(15) 313
----------- -----------
Net cash inflow from operating activities (63) 564
----------- -----------
Cash flows from disposal of property 2,495 -
----------- -----------
Cash flows from financing
Shares issued - 2
Interest paid (27) (110)
Equity dividends paid (343) (187)
Net repayment of loan facilities 134 (265)
----------- -----------
Net cash outflow from financing (236) (560)
----------- -----------
Increase/(Decrease) in cash and cash equivalents 2,196 4
Cash and cash equivalents at the beginning of the year 21 17
----------- -----------
Cash and cash equivalents at end of the year 2,217 21
====== ======
Notes
1. Earnings per share are based on the profiton ordinary activities after
taxation andnon controllinginterests and on 31,207,479shares
(2011-31,205,694) being the weighted average of the number of shares in
issue during the year.
2. 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 2012 or 30th June 2011 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 2011
were reported on with an unqualified audit report and have been
delivered to the Registrar of Companies.
Enquiries to:
London Finance & Investment Group P.L.C. 020 7448 8950
David Marshall / Edward Beale
END
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