Interim Results

London Finance & Investment Group P.L.C.                    

 

 

10th March 2004

 

 

TO THE MEMBERS

The Directors are pleased to present the unaudited interim results of the
Company for the six months ended 31st December 2003.

Introduction

As an investment company our target is to achieve growth in shareholder value
in real terms over the long term. In the short term our results are influenced
by overall stock market performance. We continue to believe that a combination
of Strategic Investments and a General Portfolio is the most prudent 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 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 2003, we held three Strategic Investments in which we have
board representation: our associated company Western Selection P.L.C.,
Marylebone Warwick Balfour Group Plc and Finsbury Food Group plc. Detailed
comments on our Strategic Investments are given below.

Results

The Group made a profit before tax for the half year of £150,000 compared with
a profit of £88,000 last year. Our operating profits have increased from £
46,000 to £136,000 despite a fall in net income from management services of £
48,000 due to the timing of fees for special work. Improving stock markets have
enabled us to reduce the provision required to restate General Portfolio
investments at market value, releasing £168,000 to profits. Our profit after
tax and minority interest was £152,000 (2002 - £71,000) giving earnings per
share of 0.59p (2002 - 0.28p).

Our net assets per share have increased 20% to 39.9p at 31st December 2003 from
33.2p at 30th June 2003. Our Strategic Investments have increased in value by
21% and our General Portfolio net of overdrafts and other liabilities has
increased by 24%. This compares with the rise in the FTSE 100 index of 11% over
the half year.

Strategic Investments

Western Selection P.L.C. ('Western')

The Company owns 17,611,928 shares, being 40.48% of the issued share capital,
and 3,238,072 warrants. On 18th February 2004, Western announced a profit after
tax of £104,000 for its half year to 31st December 2003 and earnings per share
of 0.24p (2002 - 0.38p). Western's net assets at market value were £10.6
million, equivalent to 24.4p per share, an increase of 21% from 20.1p at 30th
June 2003.

The market value of the Company's investment in Western at 31st December 2003
was £2.5 million against a book value of £4.0 million. At market value this
represents 24.3% of the net assets of Lonfin. The underlying value of the
Company's investment in Western, valuing Western's own investments at market
value, was £4.3 million (30th June 2003 - £3.9 million).

I am the Chairman of Western and Mr. Robotham is a non-executive director.
Western has strategic investments in Creston plc, Swallowfield plc and Doctors
Direct PLC. Extracts from Western's announcement on its strategic investments
are set out below:

    Creston plc                                                                
                                                                               
    Creston is a marketing services group, operating in the U.K., with         
    significant international clients, whose strategy is to grow within its    
    sector both by organic growth and acquisition. In September 2003 Creston   
    announced the acquisition of Nelson Bostock Communications Ltd, a public   
    relations company based in London, for a total cost including contingent   
    consideration estimated at just over £11 million.                          
                                                                               
    The results for the half year to 30th September 2003 show a profit after   
    tax of £515,000 (2002 - £136,000), equivalent to earnings of 4.6p per share
    (2002 - 1.2p) and Creston has declared a special interim dividend of 0.6p  
    per share. Our income in the period from Creston, including their year end 
    dividend of 1.4p per share amounted to £32,000 (2002 - nil).               
                                                                               
    Western acquired an additional 400,000 Creston shares in the               
    over-subscribed placing and open offer to fund the acquisition of Nelson   
    Bostock Communications at a cost of £344,000 and now owns 2,000,000 shares,
    being 10.6% of Creston's issued share capital. The market value of the     
    company's holding in Creston on 31st December 2003 was £2,830,000 (30th    
    June 2003 - £1,272,000), being 26.7% of Western's net assets. Western also 
    owns 308,000 unlisted warrants to subscribe for Creston shares at a price  
    of £1.31 per share exercisable in the 42 days following the publication of 
    the accounts for the year ending 31st March 2004. No value has been        
    attributed to these warrants.                                              
                                                                               
    I am the non-executive chairman of Creston.                                
                                                                               
    Swallowfield plc                                                           
                                                                               
    Swallowfield has a long history of developing and producing aerosol,       
    cosmetic and toiletry products stretching back to 1950. As one of Europe's 
    premier contract manufacturers of toiletries and cosmetics it offers an    
    unrivalled breadth of product capabilities. Its skill in design, developing
    and producing gift packs and themed product ranges compliments its         
    production capability. Swallowfield's stated purpose is 'to be a leading   
    independent Contract Manufacturer by being fast and flexible in our        
    response to customer needs for exciting, innovative and quality products'. 
                                                                               
    Swallowfield's latest published results for the year to 30th June 2003     
    showed a profit of £718,000 (2002 - £1,687,000). This sharp fall in profits
    was caused when margins fell while trying to satisfy an unexpected surge in
    business volumes that could not be accommodated within existing capacities 
    and business infrastructure. Swallowfield has recently published a trading 
    statement covering the period to 31st December 2003 in which it warned of  
    interim profits lower than those achieved last year because of poor        
    Christmas sales volumes. However, Swallowfield expects that trading for the
    full year will be in line with expectations. The value of this business is 
    underpinned by net assets in excess of £1 per share compared to the share  
    price on 31st December 2003 of 79.5p.                                      
                                                                               
    During the period we acquired an additional 120,000 shares at a cost of £  
    109,000 to bring our total holding to 1,000,000 shares being 8.88% of the  
    issued share capital. The market value of the company's holding in         
    Swallowfield on 31st December 2003 was £795,000 (30th June 2003 - £612,000)
    being 7.5% of the net assets of the company.                               
                                                                               
    Doctors Direct PLC                                                         
                                                                               
    Doctors Direct provides a visiting GP service in the London area to private
    patients and corporate clients. It is also the leading provider of GP      
    medical assistance to UK and international insurance groups and their      
    agents.                                                                    
                                                                               
    Doctors Direct's latest published results are for the year to 30th June    
    2003 and show a loss of £749,000 (2002 - £153,000) reflecting expenditure  
    on the development of the business and lower demand for their services.    
                                                                               
    We own 1,125,000 shares and 1,350,000 warrants in Doctors Direct being 16% 
    of the issued share capital and 35% of the warrants. The market value of   
    the Company's holding in Doctors Direct shares on 31st December 2003 was £ 
    377,000 (30th June 2003 - £501,000), being 3.5% of Western's net assets.   
    The warrants are unlisted and no value has been attributed to them.        
                                                                               
    I am the non-executive chairman of Doctors Direct.                         

 

 

Marylebone Warwick Balfour Group Plc ('MWB')

The Company owns 3,000,000 shares in MWB, representing 2.73% of its issued
share capital. The book value at 31st December, 2003 was £2.5 million compared
with a market value of £1.5 million, which represents 14.95% of the net assets
of Lonfin.

MWB is in the process of a realisation program which has been extended to 2007.
It is likely that the difficult economic climate will impact on the amount of
the final distribution.

Both Mr. Robotham and I are non-executive directors of MWB.

Finsbury Food Group plc ('Finsbury Foods')

At 31st December 2003, the Company owned 4,500,000 shares in Finsbury Foods and
3,000,000 warrants, representing 21.5% of their share capital and 52.6% of
their warrants. The market value of our holding was £3.4 million on 31st
December 2003 compared to a cost of £747,000, this represents 33.3% of the net
assets of Lonfin.

Finsbury Food is a supplier of boxed ambient cakes to most of the UK's major
supermarket chains and speciality breads to Waitrose.

On 2nd September 2003, Finsbury Food announced that it had acquired exclusive
rights to exploit Nestlé's confectionery brands in the cake sector for a period
of 5 years from 1st January 2004, extending an existing co-manufacturing
arrangement. On 23rd January 2004, Finsbury Food announced that results from
the cake bakery in Cardiff for the Christmas season had been poor and as a
result the outlook for this year is substantially reduced. However customer
service levels have been maintained over the crucial Christmas period and the
first new Nestlé products are now being supplied to the major supermarket
chains and convenience and impulse outlets.

I am a non-executive director of Finsbury Food.

General Portfolio

The General Portfolio is dominated by holdings in banking, insurance, food,
beverages and consumer goods. These sectors accounted for 60% of the portfolio
by value at 31st December 2003 and 57% at 30th June 2003.

The year ahead

The share prices of our Strategic Investments in small listed companies will
remain volatile, but we expect these investments to provide good value to
shareholders over the longer term.

As is our practice, we only declare one dividend a year which was paid in
October 2003 for the year ended 30th June 2003. It is our intention, subject to
unforeseen circumstances, to maintain a policy of progressive increases in
annual dividends.

 

David C. Marshall

Chairman

 

 

 

Unaudited Consolidated Profit & Loss Account

 

                                                    Half year ended       Year
                                                                         ended
                                                                              
                                                     31st December   30th June
                                                                              
                                                       2003     2002      2003
                                                                              
                                                       £000     £000      £000
                                                                              
Operating Income                                                              
                                                                              
Dividends received                                      80       51       123 
                                                                              
Interest and sundry income                              14       14        27 
                                                                              
Profit on sales of investments                         189       77       164 
                                                                              
                                                     ______   ______    ______
                                                                              
                                                       283      142       314 
                                                                              
Management services income                             275      292       520 
                                                                              
                                                     ______   ______    ______
                                                                              
                                                       558      434       834 
                                                                              
                                                     ______   ______    ______
                                                                              
Administrative expenses                                                       
                                                                              
Investment operations                                 (140)    (138)     (277)
                                                                              
Management services                                   (282)    (250)     (505)
                                                                              
                                                     ______   ______    ______
                                                                              
Total administrative expenses                         (422)    (388)     (782)
                                                                              
                                                     ______   ______    ______
                                                                              
Operating profit                                       136       46        52 
                                                                              
Share of result of associated undertaking - normal      47       68       124 
                                                                              
Interest payable                                       (32)     (26)      (63)
                                                                              
                                                     ______   ______    ______
                                                                              
Profit on ordinary activities before taxation          151       88       113 
                                                                              
Tax on result of ordinary activities                    (1)      (1)      (10)
                                                                              
                                                     ______   ______    ______
                                                                              
Profit on ordinary activities after taxation           150       87       103 
                                                                              
Minority interest                                        2      (16)      (10)
                                                                              
                                                     ______   ______    ______
                                                                              
Profit attributable to members of the holding          152       71        93 
company                                                                       
                                                                              
Proposed dividend                                        -        -      (218)
                                                                              
                                                     ______   ______    ______
                                                                              
Retained profit for the period                         152       71      (125)
                                                                              
                                                     ______   ______    ______
                                                                              
Earnings per share                                    0.59p    0.28p     0.36p
                                                                              
Earnings per share excluding exceptional              0.59p    0.28p     0.36p
                                                                              
Fully diluted earnings per share                      0.58p    0.29p     0.36p
                                                                              
Dividend per share                                      Nil      Nil     0.85p

 

 

 

 

Unaudited Consolidated Balance Sheet

                                                       31st December  30th June
                                                                               
                                                        2003     2002      2003
                                                                               
                                                        £000     £000      £000
                                                                               
Fixed assets                                                                   
                                                                               
Tangible assets                                         442      461       451 
                                                                               
Investments                                           7,308    7,320     7,358 
                                                                               
                                                      ______   ______    ______
                                                                               
                                                      7,750    7,781     7,809 
                                                                               
Current assets                                                                 
                                                                               
Listed investments                                    2,928    2,374     2,685 
                                                                               
Unlisted investments                                      -       43         - 
                                                                               
Debtors                                                 171      114       167 
                                                                               
Cash, bank balances and deposits                         81       36        28 
                                                                               
                                                      ______   ______    ______
                                                                               
                                                      3,180    2,567     2,880 
                                                                               
Creditors falling due within one year                (1,195)    (633)   (1,176)
                                                                               
                                                      ______   ______    ______
                                                                               
Net Current Assets                                    1,985    1,934     1,704 
                                                                               
                                                      ______   ______    ______
                                                                               
Total Assets less Current Liabilities                 9,735    9,715     9,513 
                                                                               
                                                      ______   ______    ______
                                                                               
Capital and Reserves                                                           
                                                                               
Called up share capital                               1,295    1,281     1,281 
                                                                               
Share premium account                                 1,033      975       975 
                                                                               
Reserves                                                361      361       361 
                                                                               
Profit and loss account                               6,975    7,019     6,823 
                                                                               
                                                      ______   ______    ______
                                                                               
Shareholders funds                                    9,664    9,636     9,440 
                                                                               
Minority equity interests                                71       79        73 
                                                                               
                                                      ______   ______    ______
                                                                               
                                                      9,735    9,715     9,513 
                                                                               
                                                      ______   ______    ______

Notes:-

1. The results for the half-year are unaudited and have been prepared on the
basis of the accounting policies adopted in the accounts for the year ended
30th June 2003. The financial information in this interim report does not
constitute statutory accounts within the meaning of Section 240(5) of the
Companies Act 1985. The audited accounts of the Group for the year ended 30th
June 2003 have been reported on by the Group's auditors and have been delivered
to the Registrar of Companies. The report of the auditors was unqualified and
did not contain a statement under Section 237(2) or 272(3) of the Companies Act
1985.

 2. Earnings per share are based on the profit after taxation and minorities,
    and on the average number of shares 25,714,981 (December 2002 - 25,615,641
    and June 2003 - 25,615,862), in issue during the period.
   
 

 

 

 

Consolidated Cash Flow Statement

                                                  Half year ended      Year
                                                                      ended
                                                                           
                                                   31st December  30th June
                                                                           
                                                    2003     2002      2003
                                                                           
                                                    £000     £000      £000
                                                                           
Cash (outflow)/inflow on operating activities      (194)     277       (74)
                                                                           
                                                  ______   ______    ______
                                                                           
Returns on investments and servicing of finance                            
                                                                           
Dividend received                                   172      139       211 
                                                                           
Interest paid                                       (28)     (26)      (47)
                                                                           
                                                  ______   ______    ______
                                                                           
Net cash inflow from returns on investments and     144      113       164 
servicing of finance                                                       
                                                                           
                                                  ______   ______    ______
                                                                           
Taxation paid                                        (1)      (1)       (7)
                                                                           
                                                  ______   ______    ______
                                                                           
Investing activities                                                       
                                                                           
Fixed assets investments - purchased                  -     (138)     (138)
                                                                           
- proceeds on disposal                                -      663       662 
                                                                           
                                                  ______   ______    ______
                                                                           
Net cash outflow from investment activities           -      525       524 
                                                                           
                                                  ______   ______    ______
                                                                           
Equity dividend paid - Company                     (218)    (205)     (205)
                                                                           
                                                  ______   ______    ______
                                                                           
Financing                                                                  
                                                                           
Share capital issued                                 72        -         - 
                                                                           
Net drawdown/(repayment) of loan facility           250     (700)     (400)
                                                                           
                                                  ______   ______    ______
                                                                           
Net cash inflow/(outflow) from financing            322     (700)     (400)
                                                                           
                                                  ______   ______    ______
                                                                           
Increase in cash                                     53        9         2 
                                                                           
                                                  ______   ______    ______

 

 

 1. Reconciliation of operating profit to net cash flow from operating
    activities
   
                                                       31st 30th June
                                                   December          
                                                                     
                                                       2003      2003
                                                                     
                                                       £000      £000
                                                                     
Operating profit                                       136        52 
                                                                     
Dividends receivable                                   (80)     (123)
                                                                     
Depreciation charges                                    10        20 
                                                                     
Profit on sales of fixed asset investments               -      (124)
                                                                     
Decrease in debtors                                     (4)       21 
                                                                     
Decrease in creditors                                  (13)      (20)
                                                                     
(Increase)/Decrease in current asset                  (243)      100 
investments                                                          
                                                                     
                                                     ______    ______
                                                                     
                                                      (194)      (74)
                                                                     
                                                     ______    ______

 2. Reconciliation of net cash flow to movement in net debt
   
                                                At start      Cash At end of
                                                                            
                                                 of year      flow      year
                                                                            
                                                    £000      £000      £000
                                                                            
2003/2004                                                                   
                                                                            
Cash at bank                                         28        53        81 
                                                                            
Bank loan                                          (800)     (250)   (1,050)
                                                                            
                                                  ______    ______    ______
                                                                            
                                                   (772)     (197)     (969)
                                                                            
2002/2003                                         ______    ______    ______
                                                                            
Cash at bank                                         26         2        28 
                                                                            
Bank loan                                        (1,200)      400      (800)
                                                                            
                                                  ______    ______    ______
                                                                            
                                                 (1,174)      402      (772)
                                                                            
                                                  ______    ______    ______

 

 

 

 

Balance Sheet Analysis taking investments at market value

                                                   31st December      30th June
                                                                               
                                                  2003        2002         2003
                                                                               
                                                  £000        £000         £000
                                                                               
Principal investments at market value:                                         
                                                                               
Western Selection P.L.C.                        2,507       2,095        2,315 
                                                                               
Finsbury Food Group plc                         3,435       1,552        2,055 
                                                                               
Marylebone Warwick Balfour Group Plc            1,545       1,522        1,808 
                                                                               
                                                7,487       5,169        6,178 
                                                                               
General equity portfolio (see analysis below)   3,417       2,610        2,938 
                                                                               
Tangible fixed assets                             442         461          451 
                                                                               
Cash, bank balances and deposits                   81          36           28 
                                                                               
Bank Overdraft                                 (1,050)       (500)        (800)
                                                                               
Other net liabilities                              26          25         (209)
                                                                               
Minority interests                                (71)        (79)         (73)
                                                                               
Net assets                                     10,332       7,722        8,513 
                                                                               
Net Assets per share                            39.88p      30.15p       33.23p

 

 

 

 

Market Value of General Portfolio

                                                   31stDecember 2003 
                                                                     
                                                       £000         %
                                                                     
Nestlé                                                  209       6.1
                                                                     
UBS                                                     198       5.8
                                                                     
Shell Transport & Trading Co                            125       3.7
                                                                     
Associated British Foods                                117       3.4
                                                                     
Cadbury Schweppes                                       115       3.4
                                                                     
Barclays Bank                                           115       3.4
                                                                     
HSBC Holding                                            114       3.3
                                                                     
Roche Holdings                                          113       3.3
                                                                     
Smith & Nephew                                          113       3.3
                                                                     
AstraZeneca                                             113       3.3
                                                                     
Napier Brown Foods                                      112       3.3
                                                                     
ING Groep                                               108       3.2
                                                                     
BOC Group                                               102       3.0
                                                                     
GlaxoSmithKline                                         102       3.0
                                                                     
Novartis                                                101       2.9
                                                                     
Reckitt Benckiser                                       101       2.9
                                                                     
Lloyds TSB Group                                         98       2.9
                                                                     
Centrica                                                 95       2.8
                                                                     
British American Tobacco                                 92       2.7
                                                                     
BP                                                       91       2.6
                                                                     
Imperial Tobacco Group                                   88       2.6
                                                                     
Boots Group                                              83       2.4
                                                                     
Credit Suisse Group                                      82       2.4
                                                                     
Diageo PLC                                               81       2.4
                                                                     
Land Securities Group                                    78       2.3
                                                                     
Allied Domecq                                            78       2.3
                                                                     
Reed Elsevier                                            74       2.2
                                                                     
Prudential Corporation                                   71       2.1
                                                                     
Legal & General Group                                    70       2.0
                                                                     
Pernod-Ricard                                            68       2.0
                                                                     
Fortis                                                   68       2.0
                                                                     
J. Sainsbury                                             66       1.9
                                                                     
Scottish & Newcastle                                     49       1.4
                                                                     
Johnson Matthey                                          49       1.4
                                                                     
Liberty International                                    41       1.2
                                                                     
Zurich Financial Services Group                          37       1.1
                                                                     
                                                     ______    ______
                                                                     
                                                      3,417     100.0
                                                                     
                                                     ______    ______