Half-yearly Report
Date: 28th February 2013
On behalf of: London Finance & Investment Group P.L.C. ("Lonfin", "the
Company" or "the Group")
Embargoed until: 14.30hrs (UK Time) 16.30hrs (SA Time)
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 2012 and dividend declaration.
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 valuation
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 consists of investments in major U.K. and European equities.
At 31st December 2012, we held two Strategic Investments in which we have board
representation: our associated company Western Selection P.L.C. and Finsbury
Food Group plc. Detailed comments on our Strategic Investments are given below.
Results
Our net assets per share increased 13% to 35.6p at 31st December 2012 from
31.6p at 30th June 2012. Our Strategic Investments increased in value by 23.5%,
following a strong performance in Finsbury Food's share price over the period.
Our General Portfolio increased by 4%, compared with increases of 6% in the
FTSE 100 index, and 11% in the FTSEurofirst 300 index over the half year. At
the close of business on 15th February 2013, our net asset value was 39.8p.
The Group profit before tax for the half year was £1,389,000 compared to a
profit of £1,233,000 for the same period last year, which included an
exceptional profit on a property disposal of £2,132,000. Our profit after tax
and minority interest was £1,359,000 (2011 profit: £1,108,000) giving profits
per share of 4.4p (2011 - 3.6p).
Strategic Investments
Western Selection P.L.C. ("Western")
The Group owns 7,860,515 Western shares, representing 43.8% of Western's issued
share capital.
On 28th February 2013, Western announced a profit after tax of £78,000 for its
half year to 31st December 2012 and a profit per share of 0.4p (2010: loss
0.5p). Western's net assets at market value were £12,572,000 equivalent to 70p
per share, a decrease of 3% from 72p at 30th June 2012. Western has announced
an increased interim dividend of 0.85p per share, an increase of 6% on the
prior year.
The market value of the Company's investment in Western at 31st December 2012
was £2,987,000 representing 27% of the net assets of Lonfin. The underlying
value of the investment in Western, valuing Western's own investments at market
value, was £5.4 million (30th June 2012: £5.6 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")
Creston is a marketing services group with a strategy to grow within its
sector to become a substantial, diversified international marketing
services group. Further information about Creston is available on its
website: www.creston.com.
Creston's results for the half-year to 30th September 2012 show a profit
after tax of £8,259,000 including a deferred consideration write-back of £
3,450,000 (2011: £2,821,000). Creston declared an interim dividend of 1.0p
per share, an increase of 20% on the prior year.
Western owns 3,000,000 shares in Creston (4.9%) with a market value at
31st December 2012 of £2,370,000 (30th June 2012: £1,650,000), being 19%
of Western's assets.
Northbridge Industrial Services plc ("Northbridge")
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 its website: www.northbridgegroup.co.uk.
Northbridge's latest results, for the half year to 30th June 2012, showed
profit after tax of £1,027,000 (2011: £1,656,000). Northbridge declared an
interim dividend of 1.85p per share, an increase of 6% on the prior year.
Western owns 2,200,000 shares, representing 14.2% of Northbridge's share
capital. The value of this investment has been volatile and at 31st
December 2012 was £5,170,000 (30th June 2012: £5,984,000), representing
41% of Western's assets.
Swallowfield plc ("Swallowfield")
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 its website: www.swallowfield.com.
Swallowfield's latest results, for the year to 30th June 2012, showed
profit after tax of £1,263,000 (2011: £1,082,000). Swallowfield declared a
final dividend of 4.1p, unchanged on the prior year. Swallowfield has
warned that full year results for the year ending 30th June 2013 will be
below last year's results.
At 31st December 2012, Western owned 1,869,149 shares in Swallowfield
(16.5% of their issued share capital). The market value of the Company's
holding in Swallowfield on 31st December 2012 was £1,925,000 (30th June
2012: £2,187,000) representing 15% of the Company's assets.
Hartim Limited ("Hartim")
Hartim offers a complete export sales, marketing and logistical services
to a number of well known 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 2012 showed a
loss of £1,000 (2010 £220,000) after tax and before exceptional items.
These results include losses incurred in turning round its Australian
distributor acquired out of administration last year.
At 31st December 2012, Western owned 49.5% of Hartim. The carrying value
of the Company's investment in Hartim on 31st December 2012 was £1,173,000
(30th June 2012: £1,124,000) representing 9% of the Company's assets.
Finsbury Food Group plc ("Finsbury Food")
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. On 28th February 2013, Finsbury Food announced the sale of
its gluten-free businesses to its joint venture partner, Genius Foods Limited,
for £21 million. Further information about Finsbury Food is available on its
website: www.finsburyfoods.co.uk.
The Group increased its holding in Finsbury Food in November by 958,000 shares,
at a cost of £366,000, to 8,958,000 shares, representing 12.5% of their share
capital. The market value of our holding was £3,359,000 on 31st December 2012
compared to a cost of £2,259,000; this represents 30% of the net assets of
Lonfin.
I am a Non-Executive Director of Finsbury
MWB Group Holdings Plc ("MWB")
The Group owns 2,000,000 shares, representing 1.2% of MWB's issued share
capital. The shares were suspended following that company entering
administration. Full provision against the cost of this investment has now been
made, an additional amount of £70,000 being made in the period.
General Portfolio
The list of investments included in the General Portfolio is set out at the end
of this announcement. There have been very few changes to the portfolio in the
period and we retain cash balances while waiting for an opportunity to acquire
undervalued stocks.
Dividends
The Board has declared an interim of 0.4p payable on Friday 12th April 2013 to
shareholders on the register at the close of business on Friday 22nd March
2013.
Outlook
Global stock markets have had a very strong start to the New Year, but the
Board are cautious given the disconnect between the performance of equities and
general economic conditions. However, it is the intention of the Board to get
fully invested as and when buying opportunities arise.
David C. Marshall
Chairman
Interim dividend
The declared interim dividend is 0.4p per share (ZAR 5.36424 cents) (2011 -
0.35p) and will be paid on Friday 12th April 2013 to those members registered
at the close of business on Friday 22nd March 2013. Shareholders on the South
African register will receive their dividend in South African Rand converted
from sterling at the closing rate of exchange on 27th February 2013.
The issued number of shares as at declaration date is 31,207,479
Salient dates for dividend
Last day to trade (SA) Thursday 14th March 2013
Shares trade ex dividend (SA) Friday 15th March 2013
Shares trade ex dividend (UK) Wednesday 20th March 2013
Record date (UK & SA) Friday 22nd March 2013
Pay date Friday 12th April 2013
Shareholders are hereby advised that the exchange rate to be used will be GBP 1
= ZAR 13.4106. This has been calculated as the average of the bid/ask spread at
16.00 (United Kingdom time) being the close of business on 27th February 2013.
Consequently the dividend of 0.4p will be equal to 5.36424 South African cents.
Since the introduction on 1st April 2012 of a new dividend withholding tax in
South Africa, the JSE Listings Requirements require disclosure of additional
information in relation to any dividend payments. Shareholders registered on
the Johannesburg register are therefore advised that the new dividend
withholding tax will be withheld from the gross final dividend amount of
5.36424 SA cents per share at a rate of 15%, unless a shareholder qualifies for
an exemption; shareholders registered on the Johannesburg register who do not
quality for an exemption will therefore receive a net dividend of 4.5596 SA
cents per share. The Company, as a non-resident of South Africa, was not
subject to the secondary tax on companies (STC) applicable before 1st April
2012, and accordingly, no STC credits are available for set-off against the
dividend withholding tax liability on the final net dividend amount. The
dividend is payable in cash as a `Dividend' (as defined in the South African
Income Tax Act, 58 of 1962, as amended) by way of a payment out of income
reserves. The dividend withholding tax and the information contained in this
paragraph is only of direct application to shareholders registered on the
Johannesburg register, who should direct any questions about the application of
the new dividend withholding tax to Computershare Investor Services (Pty)
Limited, Tel: +27 11 373-0004.
No dematerialisation or rematerialisation of share certificates, nor transfer
of shares between the registers in London and South Africa will take place
between Friday 15th March 2013 and Friday 22nd March 2013, both dates
inclusive.
Unaudited Consolidated Statement of Comprehensive Income
Half year ended Year
ended
31st December 30th June
2012 2011 2012
£000 £000 £000
Operating Income
Dividends received 106 102 265
Interest and sundry income - 25 74
Profit/(Losses) on sales of investments, including 131 - (32)
provisions
-------- -------- --------
237 127 307
Management services income 134 199 295
-------- -------- --------
371 326 602
-------- -------- --------
Administrative expenses
Investment operations (148) (144) (301)
Management services (146) (150) (337)
-------- -------- --------
Total administrative expenses (294) (294) (638)
-------- -------- --------
Operating profit/(loss) 77 32 (36)
Unrealised changes in the carrying value of 1,321 (925) (1,134)
investments
Exceptional profit on sale of property - 2,132 2,137
Interest payable (9) (6) (27)
-------- -------- --------
Profit on ordinary activities before taxation 1,389 1,233 940
Tax on result of ordinary activities (34) (102) (65)
-------- -------- --------
Profit on ordinary activities after taxation 1,355 1,131 875
Non-controlling interest 4 (23) (6)
-------- -------- --------
Total comprehensive income - profit attributable 1,359 1,108 869
to members of the holding company
-------- -------- --------
Reconciliation of headline earnings
Earnings per share 4.4 p 3.6 p 2.8 p
Adjustment for unrealised changes in the carrying (4.3)p (3.6)p 3.6 p
value of investments and exceptional items, net of
tax
-------- -------- --------
Headline (loss)/earnings per share 0.1 p 0.0 p 6.4 p
-------- -------- --------
Interim dividend 0.4 p 0.35 p 0.35 p
Final dividend - - 0.35 p
Total in respect of the year - - 0.70 p
Unaudited ConsolidatedChanges in Shareholders' Equity
31st December 30th June
2012 2011 2012
£000 £000 £000
Total comprehensive income 1,359 1,108 869
Dividends paid to equity shareholders (109) (94) (203)
-------- -------- --------
1,250 1,014 666
Equity shareholders' funds at start of period 9,855 9,189 9,189
-------- -------- --------
Equity shareholders' funds at end of period 11,105 10,203 9,855
====== ====== ======
Unaudited Consolidated Statement of Financial Position
31st December 30th June
2012 2011 2012
£000 £000 £000
Non-current assets
Tangible assets 3 - 4
Principle investments:-
MWB Group Holdings Plc - 290 70
Finsbury Food Group plc 3,359 2,160 1,880
Western Selection P.L.C. 2,987 2,987 3,144
-------- -------- --------
6,349 5,437 5,098
-------- -------- --------
Current assets
Listed investments 4,746 4,240 4,533
Trade and other receivables 269 348 272
Cash, bank balances and deposits 1,108 2,591 2,217
6,123 7,179 7,022
Total Assets 12,472 12,616 12,120
Capital and Reserves
Called up share capital 1,560 1,560 1,560
Share premium account 2,320 2,320 2,320
Unrealised profits and losses on investments 1,727 (2,675) 336
Share of undistributed profits and losses of (576) 996 (572)
subsidiaries and associates
Company's retained realised profits and 6,074 8,002 6,211
losses
Equity shareholders funds 11,105 10,203 9,855
Trade and other payables falling due within 1,274 2,298 2,167
one year
Non-controlling equity interest 93 115 98
12,472 12,616 12,120
Net assets per share 35.6p 32.7p 31.6p
Unaudited Statement of Cash Flow
Half year ended Year ended
31st December 30th June
2012 2011 2012
£000 £000 £000
Profit before taxation 1,389 1,233 940
Adjustments for non-cash and non-operating
expenses:-
Depreciation charges 1 - 5
Unrealised changes in the carrying value of (1,321) 496 1,134
fixed asset investments
Exceptional profit on sale of property - (2,132) (2,137)
Net interest paid 9 6 27
(1,311) (1,630) (971)
Tax paid (4) (102) (17)
Changes in working capital:-
Decrease/(Increase) in debtors 3 (88) (12)
Increase in creditors 26 196 158
Decrease/(Increase) in current asset 222 429 (301)
investments
251 537 (155)
Cash inflow/Outflow) on operating activities 325 38 (203)
Investment activities
Net proceeds from sale of property - 2,498 2,495
Purchase of additional shares in strategic (366) - -
investment
(366) - -
Cash flows from financing
Net interest paid (9) (6) (27)
(Repayment)/Drawdown of loan facilities (950) 134 134
Equity dividends paid (109) (94) (203)
Net (outflow)/inflow from financing (1,068) 34 (96)
(Decrease)/Increase in cash and cash (1,109) 2,570 2,196
equivalents
Cash and cash equivalents at start of period 2,217 21 21
Cash and cash equivalents at end of period 1,108 2,591 2,217
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
2012
Cash at bank 2,217 (1,109) 1,108
Bank loan (1,950) 950 (1,000)
167 159 108
2011
Cash at bank 21 2,570 2,591
Bank loan (1,816) (134) (1,950)
(1,795) 2,436 641
Year ended 30th June 2012
Cash at bank 21 2,196 2,217
Bank loan (1,816) (134) (1,950)
(1,795) 2,062 267
Market Value of General Portfolio
31st December 2012 Current
Value
£000 %
Nestlé 276 5.8
British American Tobacco 270 5.7
Diageo 269 5.7
Henkel 259 5.4
Schindler 253 5.3
Pernod Ricard 245 5.2
Royal Dutch Shell 240 5.1
L'Oreal 241 5.1
Heineken 238 5.0
Investor 220 4.6
Imperial Tobacco 210 4.4
Unilever 209 4.4
Novartis 202 4.3
BASF 203 4.3
Koninklijke DSM 197 4.1
Reckitt Benckiser 191 4.0
ABB 168 3.5
Holcim 168 3.5
Danone 162 3.4
BHP Billiton 150 3.2
Others 375 8.0
4,746 100.0
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 2012 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 2012, International
Financial Reporting Standards and comply with IAS34.
3. 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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