Half-yearly Report
Date: 24th February 2010
On behalf of: London Finance & Investment Group P.L.C. ("Lonfin", "the
Company" or "the Group")
Embargoed until: 0700hrs
London Finance & Investment Group P.L.C.
Interim Results
Lonfin (LSE: LFI, JSE: LNF), today announces its unaudited interim results for
the six months ended 31st December 2009.
Highlights from the last six month period include:
* Profit before tax of £116,000 (2008 - £239,000 loss)
* Increase in net asset value per share of 14% since 30th June 2009
* Continues to hold three significant strategic investment: Western Selection
P.L.C., Finsbury Food Group plc and MWB Group Holdings Plc
* Recommended interim dividend of 0.3p (2008: 0.55p)
David Marshall, Chairman of Lonfin commented:
"We have seen a strong performance from our general portfolio of investments,
however the valuations of our strategic investments remain depressed. We
strongly believe that our mix of strategic investments and our general
portfolio of quality equities is an effective way of achieving growth in
shareholder value over the medium to long term."
- Ends -
Enquiries to:
London Finance & Investment Group P.L.C. 020 7448 8950
David Marshall/Edward Beale
Notes to Editors:
* Lonfin is a strategic 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 U.K. and European equities.
* Lonfin's strategic investments comprise: Western Selection P.L.C., MWB
Group Holdings Plc and Finsbury Food Group plc. Western Selection P.L.C.
has strategic investments in Creston plc, Swallowfield plc, Northbridge
Industrial Services plc and Hartim Limited. Lonfin's General Portfolio has
material interests in Oil, Household Leisure and Personal Goods, Food and
Beverages and Tobacco.
Chairman's Statement
Introduction
As an investment company our target is to achieve growth in shareholder value
in real terms over the medium to long term. In the short term our results can
be influenced by overall stock market performance, particularly the performance
of our Strategic Investments. We continue to believe that a combination of
Strategic Investments and a General Portfolio is the most effective 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 medium to 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 2009, we held three Strategic Investments in which we have
board representation: our associated company Western Selection P.L.C., MWB
Group Holdings Plc and Finsbury Food Group plc. Detailed comments on our
Strategic Investments are given below.
Results
Our net assets per share increased 14% to 24.3p at 31st December 2009 from
21.3p at 30th June 2009. Our Strategic Investments decreased in value by 3% and
our General Portfolio increased by 29%. This compares with the increases of 27%
in the FTSE 100 index and 23% in AIM over the half year. At the close of
business on 19th February 2010, our net asset value was 24.36p.
The Group achieved a profit before tax for the half year of £114,000 compared
to a loss of £239,000 for the same period last year. This was in the main due
to the recovery of provisions made in the previous year against falls in value
of the General Portfolio and a reduction of 13% in administrative costs. These
favourable movements were reduced by a significant decline in dividend income.
Our profit after tax and minority interest was £116,000 (2008 loss: £232,000)
giving profits per share of 0.4p (2008: losses 0.7p).
Strategic Investments
Western Selection P.L.C. ("Western")
The Group owns 7,864,412 Western shares and 3,785,820 Western 2011 Warrants
representing 43.8% of Western's issued share capital and 49.2% of outstanding
Warrants. The 2011 Warrants are exercisable 28 days after posting of Western's
interim and annual accounts in each of the years 2008 to 2010. We have approval
from Western's shareholders and the Takeover Panel to increase our holding in
Western up to 48% through the exercise of warrants.
On 22nd February 2010, Western announced a profit after tax of £131,000 for its
half year to 31st December 2009 and a profit per share of 0.7p (2008: 0.4p).
Western's net assets at market value were £10,844,000 equivalent to 61p per
share, an increase of 22% from 50p at 30th June 2009.
The market value of the Company's investment in Western at 31st December 2009
was £2,240,000 representing 29% of the net assets of Lonfin, against a book
value of £4,285,000. The underlying value of the investment in Western, valuing
Western's own investments at market value, was £4.7 million (30th June 2009: £
4.3 million).
I am the Chairman of Western and Mr. Robotham is a non-executive director.
Western has strategic investments in Creston plc, Northbridge Industrial
Services PLC, Swallowfield plc. and Hartim Limited. Extracts from Western's
announcement on its strategic investments are set out below:
Creston plc
Creston is a marketing services group with a strategy to grow within its
sector to become a substantial, diversified international marketing
services group. Creston's results for the half-year to 30th September 2009
show a profit after tax of £435,00 (2008: £2,951,000). The results of the
six month period are after charging the costs relating to the closure of
two divisions and the associated goodwill of £4.4m, against which no tax
relief has been provided. Net debt has been reduced by £6.9m (17%) from a
51% increase in cash inflows.
Western owns 3,000,000 shares in Creston (4.9%) with a market value at
31st December 2009 of £2,377,000 (30th June 2009: £1,920,000), being 22%
of Western's assets.
Northbridge Industrial Services PLC
Northbridge was formed for the purpose of acquiring companies that hire
and sell specialist industrial equipment such as electrical load banks and
generators. Northbridge's first acquisition was Crestchic Limited, one of
the largest specialist load bank equipment manufacturers in the world,
located in Burton-on-Trent, selling and hiring to a national and
international customer base. Northbridge has recently added to its
interests in Dubai by increasing its fleet of power and other electrical
equipment.
Northbridge's latest results, for the half year to 30th June 2009, showed
profit of £606,000 (2008: £748,000) after exchange losses of £200,000
(2008: nil).
Western owns 1,875,000 shares, representing 20.3% of Northbridge's share
capital. The value of this investment at 31st December 2009 was £2,475,000
(30th June 2009: £2,156,000), representing 23% of Western's assets.
Swallowfield plc
Swallowfield is a full service provider for global and household brands
operating in the cosmetics and personal care and household goods
marketplace. It offers a flexible and tailored service including: contract
filling market analysis, design, formulation and testing of products,
packaging design and sourcing and distribution of stock.
Swallowfield's latest results, for the year to 30th June 2009, showed
profit, before exceptional items and tax, of £1,313,000 (30th June 2008: £
1,319,000).
At 31st December 2009, Western owned 1,421,800 shares in Swallowfield
(12.6% of their issued share capital) having increased the holding by
90,300 shares at a cost of £106,000. The market value of Western's holding
in Swallowfield on 31st December 2009 was £1,766,000 (30th June 2009: £
999,000) representing 16% of Western's assets.
Hartim Limited
Hartim offers a complete sales, marketing and logistical services to a
number of UK branded fast moving consumer goods companies. This investment
was acquired on 28th March 2009 and is accounted for as an associated
company.
Hartim's estimated results for the year ended 31st December 2009 is a
profit of £327,000 after tax. This is down from the very high profits of £
443,000 achieved last year, but still represents a very good return on our
investment.
At 31st December 2009, Western owned 49.5% of Hartim. The carrying value
of the Company's investment in Hartim on 31st December 2009 was £1,124,000
(30th June 2009: £979,000) representing 10% of Western's assets.
Finsbury Food Group plc ("Finsbury Food")
The Group owns 8,000,000 shares in Finsbury Food, representing 15.2% of their
share capital. The market value of our holding was £1,620,000 on 31st December
2009 compared to a cost of £1,893,000; this represents 21% of the net assets of
Lonfin.
Finsbury Food is a supplier of ambient cakes to most of the UK's major
supermarket chains and speciality breads to Waitrose including gluten-free and
low fat products. Finsbury has recently announced the appointment of a new
Finance Director and that the company is trading in line with market
expectations.
I stood down as chairman of Finsbury Food at the last AGM and I am now a
non-executive director.
MWB Group Holdings Plc ("MWB")
The Group owns 2,000,000 shares, representing 1.2% of MWB's issued share
capital. The market value of the holding at 31st December, 2009 was £780,000,
compared with a book value of £1,681,000, which represents 10% of the net
assets of Lonfin.
MWB is a hotel, serviced offices and retail group that is in the process of
realising its assets through an orderly disposal programme. MWB completed a
fund raising on 12th January 2010 and issued a trading statement on 14th
January 2010. In the trading statement, MWB reported strong cash generation
from its Malmaison and Hotel du Vin division and continuing organic and
acquisition driven growth in MWB Business Exchange.
I am a non-executive director of MWB.
General Portfolio
The General Portfolio is diverse and consists of U.K. and European blue chip
equities, most of which have significant international exposure. The list of
these investments is set out at the end of this announcement.
Dividends
The board has declared an interim of 0.30p payable on Thursday 1st April 2010
to shareholders on the register at the close of business on Friday 12th March
2010.
Outlook
World stock markets have rebounded considerably over the last six months,
however we remain cautious about the outlook for 2010 and have positioned the
general portfolio accordingly. We will be looking to reduce debt slightly over
the next six months, as and when selling opportunities arise.
David C. Marshall
Chairman
Interim dividend
The recommended interim dividend is 0.30p per share (2008 - 0.55p) and will be
paid on Thursday 1st April 2010 to those members registered at the close of
business on Friday 12th March 2010. Shareholders on the South African register
will receive their dividend in South African Rand converted from sterling at
the closing rate of exchange on Monday 22nd February 2010.
Salient dates for dividend
Last day to trade (SA) Friday 5th March 2010
Shares trade ex dividend (SA) Monday 8th March 2010
Shares trade ex dividend (UK) Wednesday 10th March 2010
Record date (UK & SA) Friday 12th March 2010
Pay date Thursday 1st April 2010
Shareholders are hereby advised that the exchange rate to be used will be GBP 1
= ZAR 11.9862. This has been calculated as the average of the bid/ask spread at
16.00 (United Kingdom time) being the close of business on Monday 22nd February
2010. Consequently the dividend of 0.30p will be equal to 3.59586 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 8th March 2010 and Friday 12th March 2010, both dates inclusive.
Unaudited Consolidated Income Statement
Half year ended Year ended
31st December 30th June
2009 2008 2009
£000 £000 £000
Operating Income
Dividends received 29 223 332
Interest and sundry income 20 17 35
Profit on sales of investments, including 227 (231) (263)
provisions
---------- ---------- ----------
276 9 104
Management services income 225 231 468
---------- ---------- ----------
501 240 572
---------- ---------- ----------
Administrative expenses
Investment operations (146) (185) (359)
Management services (231) (247) (492)
---------- ---------- ----------
Total administrative expenses (377) (432) (851)
---------- ---------- ----------
Operating profit/(loss) 124 (192) (279)
Share of result of associated undertaking
Operating profit 6 40 (138)
Exceptional income/expense 51 - (239)
Interest payable (67) (87) (151)
---------- ---------- ----------
Profit/(Loss) on ordinary activities before 114 (239) (807)
taxation
Tax on result of ordinary activities (1) - -
---------- ---------- ----------
Profit/(Loss) on ordinary activities after 113 (239) (807)
taxation
Minority interest 3 7 11
---------- ---------- ----------
Profit/(Loss) attributable to members of 116 (232) (796)
the holding company
====== ====== ======
Reconciliation of headline earnings
Earnings/(Loss) per share 0.4 p (0.7)p (2.6)p
Adjustment for exceptional items, net of (0.2)p - 0.8 p
tax
---------- ---------- ----------
Headline earnings/(loss) per share 0.2 p (0.7)p (1.8)p
---------- ---------- ----------
Interim dividend 0.30p 0.55p 0.55p
Final dividend - -
Total in respect of the year 0.55p 0.55p
Unaudited Consolidated Statement of Comprehensive Income
Profit/(Loss) attributable to shareholders 116 (232) (796)
Costs of warrant issue - (9) (10)
Unrealised profits/(losses) on listed 815 (5,672) (4,224)
undertakings
--------- --------- ---------
Total comprehensive income/(expense) 931 (5,913) (5,030)
===== ===== =====
Unaudited Consolidated Changes in Shareholders' Equity
Total comprehensive income/(expense) 931 (5,913) (5,030)
Dividends paid to equity shareholders - (203) (374)
--------- --------- ---------
931 (6,116) (5,404)
Equity shareholders' funds at start of period 6,656 12,060 12,060
--------- --------- ---------
Equity shareholders' funds at end of period 7,587 5,944 6,656
===== ===== =====
Unaudited Consolidated Statement of Financial Position
31st December 30th June
2009 2008 2009
£000 £000 £000
Non-current assets
Tangible assets 383 397 390
Principle investments:-
MWB Group Holdings Plc 780 595 980
Finsbury Food Group plc 1,620 940 1,640
Western Selection P.L.C. 2,240 2,076 2,174
---------- ---------- ----------
5,023 4,008 5,184
Current assets ---------- ---------- ----------
Listed investments 5,036 4,522 3,976
Debtors 254 408 309
Cash, bank balances and deposits 49 73 114
---------- ---------- ----------
5,339 5,003 4,399
---------- ---------- ----------
Total Assets 10,362 9,011 9,583
====== ====== ======
Capital and Reserves
Called up share capital 1,560 1,560 1,560
Share premium account 2,318 2,318 2,318
Revaluation reserve 330 330 330
Unrealised profits and losses on (1,244) (3,089) (2,071)
investments
Share of undistributed profits and losses 6 232 (51)
of subsidiaries and associates
Company's retained realised profits and 4,629 4,593 4,570
losses
---------- ---------- ----------
Equity shareholders funds 7,599 5,944 6,656
Creditors falling due within one year 2,676 2,973 2,837
Minority equity interest 87 94 90
---------- ---------- ----------
10,362 9,011 9,583
====== ====== ======
Consolidated Cash Flow Statement
Half year ended Year ended
31st December 30th June
2009 2008 2009
£000 £000 £000
Cash inflow on operating activities 30 233 438
---------- ---------- ----------
Returns on investments and servicing of
finance
Dividends received 29 427 537
Net interest paid (67) (87) (145)
---------- ---------- ----------
Net cash (outflow)/inflow from returns on (38) 340 392
investments and servicing of finance
---------- ---------- ----------
Taxation paid (1) - -
---------- ---------- ----------
Net cash flow from investment activities - - -
---------- ---------- ----------
Equity dividends paid - Company - (203) (374)
---------- ---------- ----------
Financing
Cost of warrants issue - (9) (10)
Net repayment of loan facility (56) (324) (368)
---------- ---------- ----------
Net cash outflow from financing (56) (333) (378)
---------- ---------- ----------
(Decrease)/Increase in cash (65) 37 78
====== ====== ======
(a) Reconciliation of operating profit to net cash flow from operating
activities
31st December 30th June
2009 2008 2009
£000 £000 £000
Profit/(Loss) before taxation 114 (238) (807)
Dividends receivable (29) (223) (332)
Share of associate (57) (40) 377
Depreciation charges 7 7 13
Investment provisions (297) - 219
Net interest paid 67 87 145
(Decrease)/Increase in debtors 55 (110) 10
(Decrease)/Increase in creditors (161) 196 98
(Increase /Decrease/(Increase) in current 331 554 715
asset investments
---------- ---------- ----------
30 233 438
====== ====== ======
(b) Reconciliation of net cash flow to movement in net debt
At start Cash At end of
of period flow Period
Half year ended 31st December £000 £000 £000
2009
Cash at bank 114 (65) 49
Bank loan (2,556) 56 (2,500)
---------- ---------- ----------
(2,442) (9) (2,451)
---------- ---------- ----------
2008
Cash at bank 36 37 73
Bank loan (2,924) 324 (2,600)
---------- ---------- ----------
(2,888) 361 (2,527)
---------- ---------- ----------
Year ended 30th June 2009
Cash at bank 36 78 114
Bank loan (2,924) 368 (2,556)
---------- ---------- ----------
(2,888) 446 (2,442)
---------- ---------- ----------
Market Value of General Portfolio
31st December 2009 Current
Value
£ %
Nestlé 271 5.37
L'Oreal 236 4.68
British American Tobacco 222 4.41
Royal Dutch Shell 217 4.32
BHP Billiton 215 4.28
Schindler-Holdings 211 4.19
Heineken 191 3.79
Imperial Tobacco Group 195 3.87
Henkel KGAA 189 3.76
Reckitt Benckiser 195 3.87
Holcim 197 3.92
BASF 187 3.70
Total 189 3.75
Pernod-Ricard 180 3.58
Beiersdorf 184 3.65
Investor 186 3.70
BP 180 3.57
Novartis 176 3.49
DSM 168 3.34
Unilever 175 3.48
Carlsberg 165 3.28
Roche Holdings 158 3.14
Diageo 160 3.02
Danone 152 3.02
ABB 158 3.14
Lafarge 147 2.93
Johnson Matthey 130 2.58
---------- ----------
5,036 100.00
====== ======
Notes:-
1. The results for the half-year are unaudited. The information contained in
this report does not constitute statutory accounts within the meaning of
the Companies Act 2006. The statutory accounts of the Group for the year
ended 30th June 2009 have been reported on by the Company's auditors and
have been delivered to the Registrar of Companies. The report of the
auditors was unqualified.
2. This report has been prepared in accordance with the accounting policies
contained in the Company's Annual Report and Accounts 2009 International
Financial Reporting Standards, and comply with IAS34.
3. The amendment to presentation, under IAS 1, which is mandatory for periods
beginning 1st April 2009, has been adopted. This amendment requires the
presentation of comprehensive income, which the company has opted to
present in two statements - an income statement and a statement of
comprehensive income.
4. The calculation of earnings per share is based on the weighted average
number of shares in issue for the period and the profit on ordinary
activities after tax.
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