Half-yearly Report
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 2014 and dividend declaration
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.S., U.K. and European equities.
At 31st December 2014, 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 6.9% to 47.8p at 31st December 2014 from
44.7p at 30th June 2014. Our Strategic Investments, adjusting for the
additional investment in Finsbury Foods, increased in value by 13.4% during the
period, reflecting a strong performance in both Western's and Finsbury Food's
share prices. Our General Portfolio increased by 1%, compared with decreases of
2.6% in the FTSE 100 index, and 0.2% in the FTSEurofirst 300 Index over the
half year. At the close of business on 26th February 2015, our net asset value
was 49.9p per share.
The Group profit before tax for the half year was £1,017,000 compared to a
profit of £385,000 for the same period last year, which reflects the unrealised
profit arising from the strong performances in the Strategic Investments. Our
profit after tax and minority interest was £810,000 (2013 - profit: £355,000)
giving profits per share of 2.6p (2013 - 1.1p).
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 26th February 2014, Western announced a profit after tax of £336,000 for its
half year to 31st December 2014 and a profit per share of 1.2p (2013: profit
1.9p). Western's net assets at market value were £16,647,000 equivalent to 93p
per share, a decrease of 9% from 102p at 30th June 2014. Western has announced
an interim dividend of 1.05p per share (prior year: 0.95p).
The market value of the Company's investment in Western at 31st December 2014
was £4,559,000 representing 31% of the net assets of Lonfin. The underlying
value of the investment in Western, valuing Western's own investments at market
value, was £7.3 million (30th June 2014: £8.0 million).I am the Chairman of
Western and Mr. Robotham is a Non-Executive Director. Western's principal core
holdings are in Creston plc, Northbridge Industrial Services PLC, Swallowfield
plc and Hartim Limited. Extracts from Western's announcement on its core
holdings are set out below:
Creston plc ("Creston")
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.
Creston's results for the half-year to 30th September 2014 show a profit
after tax of £3,123,000 (2013: £1,148,000). Creston declared an interim
dividend of 1.35p per share, an increase of 13% on the prior year.
Western owns 3,000,000 shares in Creston (5.0%) with a market value at
31st December 2014 of £3,840,000 (30th June 2014: £3,150,000), being 23%
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 their website:
www.northbridgegroup.co.uk.
Northbridge's latest results, for the half year to 30th June 2014, showed
profit after tax of £2,568,000 (2013: £1,949,000). Northbridge declared an
interim dividend of 2.20p per share, an increase of 10% on the prior year.
Western owns 1,875,000 shares, representing 10% of Northbridge's share
capital. The market value of this investment at 31st December 2014 was £
7,406,000 (30th June 2014: £9,750,000), representing 44% of Western's
assets.
I am a Non-Executive Director of Northbridge.
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 announced its annual results to 30th June 2014 on 18th
September 2014 showing a profit after tax of £157,000 compared to a loss
of £910,000 (restated) for the comparable period last year. No dividends
were received from Swallowfield during the year (2013 - £118,000).
Western owns 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 2014 was £1,589,000 (30th June 2014: £1,813,000)
representing 10% of the Company's assets.
Mr E.J. Beale is a Non-Executive Director of Swallowfield.
Hartim Limited ("Hartim")
Hartim offers a complete export sales, marketing and logistical service to
a number of well known UK branded fast moving consumer goods companies.
This investment is accounted for as an associated company.
Our share of Hartim's estimated results for the period ended 31st December
2014 is a profit after tax of £23,000 (2013 - £161,000, plus an
exceptional profit in 2013 of £167,000 due to the release of surplus
provisions relating to the closure of its Australian subsidiary).
At 31st December 2014, Western owned 49.5% of Hartim. The carrying value
of the Company's equity investment in Hartim on 31st December 2014 was £
591,000 (31st December 2013: £514,000) representing 3% of the Company's
assets. In addition, loans of £660,000 (equivalent to a further 4% of the
Company's assets) have been made to Hartim and its executive directors.
Mr L.H. Marshall and Mr. E.J. Beale are Non-Executive Directors of Hartim.
Finsbury Food Group plc ("Finsbury Food")
Finsbury Food is a leading manufacturer of cakes and bread to the major UK
multiple grocers and recently acquired the Fletchers Group, suppliers of fresh
and frozen bread and morning goods to the major UK multiple grocers and the UK
foodservice sector. Further information about Finsbury Food is available on its
website: www.finsburyfoods.co.uk.
The Group acquired a further 1,000,000 shares in Finsbury Food for £593,000
during the period and now holds 10,000,000 shares, representing 7.9% of their
share capital. The Group interest has reduced from 13.7% at June 2014 following
Finsbury's acquisition of Fletchers Group for £56m by way of £35m of shares and
new debt facilities. The market value of our holding was £5,900,000 on 31st
December 2014 compared to a cost of £2,876,000; this represents 40% of the net
assets of Lonfin.
Finsbury Food will be announcing their interim results on 23rd March 2015.
Mr E.J. Beale is a Non-Executive Director of Finsbury Food.
General Portfolio
The list of investments included in the General Portfolio is set out at the end
of this announcement. We continue to hold 29 investments having taken £67,000
out of the amount invested.
Dividends
The Board has declared an interim dividend of 0.50p per share (prior year:
0.45p)
Outlook
Despite only modest improvements in global economic conditions, world indices
are at record levels. As a result the Board remains cautious about the
remainder of the year.
David C. Marshall
Chairman
Interim Dividend
The declared interim dividend is 0.5p per share (ZAR 8.86735 cents) (prior
year: 0.45p) and will be paid on Friday, 10th April 2015 to those members
registered at the close of business on Friday 20th March 2015 (SA and UK).
Shareholders on the South African register will receive their dividend in South
African Rand converted from sterling at the closing rate of exchange on 26th
February 2015.
The issued number of shares as at the declaration date is 31,207,479.
The Company's UK Income Tax reference number is 948/L32120.
Salient dates for dividend
Last day to trade (SA) Friday, 13th March 2015
Shares trade ex dividend (SA) Monday, 16th March 2015
Shares trade ex dividend (UK) Thursday, 19th March 2015
Record date (SA and UK) Friday, 20th March 2015
Pay date Friday, 10th April 2015
Shareholders are hereby advised that the exchange rate to be used will be GBP 1
= ZAR 17.7347. This has been calculated as the average of the bid/ask spread at
16.00 (United Kingdom time) being the close of business on 26th February 2015.
Consequently, the dividend of 0.50p will be equal to ZAR 8.86735 cents.
The JSE Listings Requirements require disclosure of additional information in
relation to any dividend payments.
Shareholders registered on the South African register are reminded that the
dividend withholding tax will be withheld from the gross final dividend amount
of ZAR 8.86735 cents per share at a rate of 15%, unless a shareholder qualifies
for an exemption; shareholders registered on the South African register who do
not quality for an exemption will receive a net dividend of ZAR 7.53725 cents
per share. 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 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 Monday, 16th March 2015 and Friday 20th March 2015 all dates inclusive.
Unaudited Consolidated Statement of Comprehensive Income
Half year ended Year ended
31st December 30th June
2014 2013 2014
£000 £000 £000
Operating Income
Dividends received 197 173 393
Rental and other income 41 41 82
Profit on sales of investments, including 91 205 205
provisions
329 419 680
Management services income 108 93 205
437 512 885
Administrative expenses
Investment operations (171) (158) (330)
Management services (111) (173) (321)
Total administrative expenses (282) (331) (651)
Operating profit 155 181 234
Unrealised changes in the carrying value of 879 206 (339)
investments
Interest payable (17) (2) (25)
Profit on ordinary activities before taxation 1,017 385 (130)
Tax on result of ordinary activities (188) (45) 71
Profit on ordinary activities after taxation 829 340 (59)
Non-controlling interest (19) 15 16
Total comprehensive income - profit 810 355 (43)
attributable to members of the holding
company
Reconciliation of headline earnings
Earnings/(Loss) per share 2.6p 1.1p (0.1)p
Adjustment for unrealised changes in the (2.8)p (0.6)p 0.8p
carrying value of investments and exceptional
items, net of tax
Headline (loss)/earnings per share (0.2)p 0.5p 0.7p
Interim dividend 0.50p 0.45p 0.45p
Final dividend 0.45p
Total in respect of the year 0.90p
Unaudited Consolidated Changes in Shareholders' Equity
31st December 30th June
2014 2013 2014
£000 £000 £000
Total comprehensive income attributable to 810 355 (43)
members
Dividends paid to equity shareholders (141) (125) (265)
669 230 (308)
Equity shareholders' funds at start of 13,950 14,258 14,258
period
Equity shareholders' funds at end of period 14,619 14,488 13,950
Unaudited Consolidated Statement of Financial Position
31st December 30th June
2014 2013 2014
£000 £000 £000
Non-current assets
Tangible assets 35 2 39
Principal investments:-
Finsbury Food Group Plc 5,900 5,400 4,860
Western Selection P.L.C. 4,559 4,323 4,166
10,494 9,725 9,065
Current assets
Listed investments 5,899 5,775 5,927
Trade and other receivables 252 254 245
Cash, bank balances and deposits 83 123 39
6,234 6,152 6,211
Total Assets 16,728 15,877 15,276
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 5,280 5,037 4,585
Share of undistributed profits and losses of (125) (387) (294)
subsidiaries and associates
Company's retained realised profits and 5,584 5,958 5,779
losses
Equity shareholders funds 14,619 14,488 13,950
Trade and other payables falling due within 1,729 1,067 1,150
one year
Deferred taxation 296 255 111
Non-controlling equity interest 84 67 65
16,728 15,877 15,276
Net assets per share 46.8p 46.4p 44.7p
Number of shares in issue 31,207,479 31,207,479 31,207,479
Unaudited Consolidated Statement of Cash Flow
Half year ended Year ended
31st December 30th June
2014 2013 2014
£000 £000 £000
Profit/(Loss) before taxation 1,017 385 (130)
Adjustments for non-cash and non-operating
expenses:-
Depreciation charges 4 1 3
Unrealised changes in the carrying value of (879) (206) 339
fixed asset investments
Net interest paid 17 2 25
(858) (203) 367
Taxation paid (4) (3) (22)
Changes in working capital:-
(Increase)/Decrease in debtors (8) 11 11
(Decrease)/Increase in creditors (244) 69 23
Decrease/(Increase) in current asset 67 (300) (272)
investments
(185) (220) (238)
Cash outflow on operating activities (30) (41) (39)
Investment activities
Purchase of additional shares in strategic (593) - -
investment
Net cash outflow from investment activities (593) - -
Cash flows from financing
Net interest paid (17) (2) (25)
Drawdown of loan facilities 825 175 275
Equity dividends paid (141) (125) (265)
Net cash inflow/(outflow) from financing 667 48 (15)
Increase/(Decrease) in cash and cash 44 7 (77)
equivalents
Cash and cash equivalents at start of period 39 116 116
Cash and cash equivalents at end of period 83 123 39
Reconciliation of net cash flow to movement in net debt
At start Cash At end
of period Flow of Period
Half year ended 31st December £000 £000 £000
2014
Cash at bank 39 44 83
Bank loan (650) (825) (1,475)
(611) (781) (1,392)
2013
Cash at bank 116 7 123
Bank loan (650) (175) (825)
(534) (168) (702)
Year ended 30th June 2014
Cash at bank 116 (77) 39
Bank loan (650) - (650)
(534) (77) (611)
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 2014 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 2014, 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.
Composition of General Portfolio
31st December 2014
Value
£000 %
Nestle 322 5.5
L'Oreal 322 5.5
British American Tobacco 305 5.2
Investor 304 5.1
Henkel 292 4.9
Diageo 271 4.6
Heineken 265 4.5
Reckitt Benckiser 265 4.5
Pernod-Ricard 255 4.3
Schindler-Holdings 252 4.3
Novartis 247 4.2
Imperial Tobacco 238 4.0
Philip Morris International 232 3.9
Unilever 231 3.9
Exxon 213 3.6
Procter & Gamble 194 3.3
BASF 193 3.3
Chevron 189 3.2
ABB 181 3.1
Danone 170 2.9
Holcim 169 2.9
Linde 145 2.5
Givaudan 144 2.4
Anheuser Busch Inbev 126 2.1
LVMH 106 1.8
3M 96 1.6
Glencore International 90 1.5
United Technologies 72 1.2
Hermes International 10 0.2
5,899 100.0
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