Last checked at 11 Sep 2008 09:28
Date: 11th September 2008
On behalf of: London Finance & Investment Group P.L.C ("Lonfin", "the Company" or "the Group")
|For immediate release
LONDON FINANCE & INVESTMENT GROUP P.L.C.
Preliminary announcement of audited results for the year ended 30th June 2008
London Finance & Investment Group P.L.C. , the investment company whose assets primarily consist of three Strategic Investments and a General Portfolio, today announces its Preliminary Results for the year ended 30th June 2008.
Highlights:
* Profit before exceptional items of ‚£319,000 * Total dividend 1.20p per share, up over 9% (2007 - 1.10p) * ‚£481,000 available for further investment when the Board feels appropriate
David Marshall, Chairman of Lonfin commented:
"After a volatile year in the markets, we are confident that our high quality investments will provide capital growth in the medium term. We are maintaining our annual dividend and look forward to bringing growth in value to our shareholders."
- Ends - Enquiries to:London Finance & Investment Group Via Redleaf Communications David Marshall Redleaf Communications 020 7822 0200 Emma Kane/Sanna Sumner/Rebecca Sanders-Hewett
Notes to Editors:
* London Finance is an 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. * Its strategic investments comprise: Western Selection P.L.C., Marylebone Warwick Balfour Group Plc and Finsbury Food Group plc. Western Selection P.L.C. has strategic investments in Creston plc, Swallowfield plc, Northbridge Industrial Services plc and Industrial & Commercial Holdings P.L.C. The General Portfolio has material interests in Food and Beverages, Oil, Natural Resources, Chemicals, and Tobacco. Chairman's statement
Lonfin is an 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.
At 30th June 2008, the three Strategic Investments, in which we have board representation, were 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.
Our objective is to achieve capital growth in real terms over the medium term, while maintaining a progressive dividend policy.
Results
The Group made a profit before exceptional items of ‚£319,000 (2007 - ‚£ 1,217,000). Our operating income last year was higher due to profits realised on sales of investments, particularly the disposal of one third of the Group's holding in MWB Group Holdings Plc. Fee income received by City Group reduced from last year which was boosted by one-off activities by clients not repeated in the current year. After the Group share of an exceptional impairment charge in Western of ‚£1,322,000, tax and minority interests, the Group loss was ‚£ 1,003,000 (2007 - profit - ‚£489,000) giving a loss per share of 3.21p (2007 - earnings - 1.60p).
To reflect our progressive dividend policy, the Board has decided to propose a final dividend of 0.65p. With the maiden interim dividend of 0.55p the total for the year is 1.20p per share from 1.10p last year, an increase of over 9%.
Our net assets per share, after provision for deferred taxation, have decreased 41% to 39p from 66p last year, reflecting the reduction in value of the Strategic Investments. These have declined in value by 56% and our General Portfolio by 4% after taking into account additions and disposals of investments. This compares with the decreases in the FTSE 100 index of 14.9% and the FTSE Eurotop 300 index of 25.16% over the year.
Strategic Investments
Western Selection P.L.C. ("Western")
On 16th July 2007 Western invited its shareholders to subscribe for warrants in the company, the funds raised from this subscription and from exercise of the warrants to be used to increase the assets under management, improving the ratio of assets invested to operating expenses.
The offer, which was fully subscribed, raised ‚£872,000 in September 2007 and all of the Warrants were exercised in December 2007 raising a further ‚£ 1,693,000. A further ‚£3,848,000 could be raised from the remaining warrants which are exercisable in the period 2008-2010 at 50p each.
The Company owns 7,864,412 shares, being 43.8% of the issued share capital of Western. The Company took up its entitlement to 1,261,940 warrant units issued by Western for ‚£429,000 and exercised 2,597,191 of 2008 warrants in December for ‚£853,000. The cost to the Group of these investments was financed under a specific new facility with the Group's bankers. At 30 June 2008 the Company held 3,785,820 of the 2010 warrants.
On 8th September 2008, Western announced a profit before associates and exceptional items of ‚£378,000 for its year to 30th June 2008 (2007 - ‚£355,000). In view of the current market value of itsinvestment in Creston plc, Western was forced under IFRS to make a provision for the difference between the cost and market value of that investment, amounting to ‚£3,019,000. This provision does not reduce Western's distributable profits. Including associates and after exceptional items and tax, and on its increased share capital, losses per share were 16.4p (2007 - earnings 0.51p). The company announced an increased dividend on the increased share capital of 2.60p (2007 - 2.55p). Western's net assets at market value were ‚£10,419,000, equivalent to 58p per share, a decrease of 42% from 100p last year. The decrease in value was principally due to the fall in value of its strategic investments.
The market value of the Company's investment in Western at 30th June 2008 was ‚£ 2,468,900 and the book value was ‚£6,082,000. At market value this represents 20% of the net assets of Lonfin. The underlying value of the Company's investment in Western, valuing Western's investments at market value, was ‚£4.6 million (2007 - ‚£5.27 million).
Mr. Marshall is 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. An extract from Western's announcement of its strategic investments is set out below:
Creston plc Creston is a marketing services group whose strategy is to grow within its sector both by organic growth and through selective acquisition to become a substantial, diversified marketing services group. The audited results for the year to 31st March 2008, show a profit after tax of ‚£4,782,000 (2007 - ‚£4,445,000), equivalent to earnings of 8.65p per share (2007 - 8.50p). Western maintained its holding of 3,000,000 shares in Creston (5.4%) during the year. The value of this investment at 30th June 2008 was ‚£1,425,000 (2007 - ‚£4,890,000) being 14% (2007 - 38%) of Western's assets. Creston appears, on a historical basis, to be significantly undervalued, as it is now yielding 5.7% at a P/E of 5.7. At its recent AGM held on 1st September, Creston's directors expressed their confidence in current trading conditions being experienced by the enlarged group. Northbridge Industrial Services PLC Northbridge announced profits of ‚£1,154,000 for the year ended 31st December 2007 (2006 - ‚£731,000) and declared a final dividend of 2p per share, making 3p for the year (2006 - 2p). Western maintained its holding of 1,500,000 shares in Northbridge (19.66%). The value of the investment at 30th June 2008 was ‚£2,558,000 (2007 - ‚£2,768,000) being 25% (2007- 22%) of Western's assets. Northbridge was formed for the purpose of acquiring companies that hire and sell specialist industrial equipment such as load banks, generators, pumps, air compressors, heaters and chillers. Northbridge's first acquisition was Crestchic Limited, one of the largest electrical load bank equipment manufacturers in the world. The company's customers are leading national and international companies in the oil, energy and shipping industries. 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 has the ability to produce a wide range of products. Its skill in design, developing and producing gift packs and themed product ranges compliments its production capability. Swallowfield's latest published results were for the 28 weeks to 12th January 2008 and showed a profit of ‚£1,592,000 (2007 - ‚£255,000). Western has increased its holding in Swallowfield during the year and now owns 1,156,000 shares which is 10.27% of the issued share capital. The market value of Western's holding in Swallowfield on 30th June 2008 was ‚£ 971,000 (2007 - ‚£455,000), being 9% (2007 - 6%) of Westerns' net assets. Hartim Limited On 28th March 2008 Western invested ‚£728,000 to acquire 49.5% of Hartim Limited, the holding company of Tudor Rose International Limited ("TRI"). Western's share of the consolidated profit after tax in the three month period to 30th June 2008 was ‚£68,000 and the book value of the investment at 30th June 2008 was ‚£797,000, being 8% of Western's assets. TRI, which was founded in 1984, works closely with a number of leading UK branded fast moving consumer goods companies, offering a complete sales, marketing and logistical service. Based in Stroud, Gloucestershire, TRI has a turnover in excess of ‚£15 million and sells into 78 countries worldwide including USA, Spain, Portugal, Italy, Czech Republic, Russia, Turkey, South Africa, Saudi Arabia, UAE, Malaysia, Australia and China.
MWB Group Holdings Plc ("MWB")
The Company's holding in MWB was unchanged from the 2 million shares held at June 2007, representing 2.58% of MWB's issued share capital. The market value at 30th June 2008 was ‚£2.5 million, compared with the book value of ‚£1.7 million, and represents 20% of the net assets of Lonfin.
MWB is in the process of maturing and realising its assets for the benefit of all stakeholders through an orderly disposal programme. Mr. Marshall is a non-executive director of MWB and the board constantly reviews the programme of disposal.
Finsbury Food Group plc ("Finsbury")
The Company holding in Finsbury remains at 8,000,000 shares, representing 15.55% of their share capital. The market value of the holding was ‚£3.9 million on 30th June 2008 (cost - ‚£1.9 million) and represents 32% of the net assets of Lonfin.
Finsbury has fast become one of the largest suppliers of premium cakes, bread and morning goods in the UK. The acquisitive Group currently has seven subsidiaries which supply most of the UK's major supermarket chains, including Asda, Morrisons, Sainsbury, Somerfield, Tesco and Waitrose.
A recent announcement from Finsbury confirmed that despite a tough trading environment the Group's growth prospects remained positive.
Mr. Marshall is the non-executive chairman and Mr. Beale, the Chief Executive of our subsidiary City Group P.L.C., is a non-executive director of Finsbury.
General Portfolio
The General Portfolio is diverse with material interests in Food and Beverages, Oil, Natural Resources, Chemicals, and Tobacco. We believe that the portfolio of quality companies we hold has the potential to outperform the market in the medium to long term, especially in respect our Western European holdings.
The number of holdings in the General Portfolio has decreased to 35 from 39. We have decreased the amount invested in the General Portfolio by ‚£188,000 (2007: increased by ‚£694,000) over the year.
We have a ‚£2 million bank facility in addition to the facility to cover the increased investment in Western, and at 30th June 2008 had drawn down ‚£1.519 million. This leaves ‚£481,000 available for further investment when the Board feels appropriate.
Dividend
The recommended dividend is 0.65p per share, making 1.20p for the year (2007 - 1.10p). Subject to member's approval, the dividend will be paid on 10th October 2008 to those members registered at the close of business on 26th September 2008. Shareholders on the South African register will receive their dividend in South African Rand converted from sterling at the closing rate of exchange on 9th September 2007.
Warrants
The Directors propose to issue, free of charge, Warrants to subscribe for ordinary shares in the Company. The Warrants will be exercisable at a fixed price of 28p each on the last day of each month from November 2008 until the Final Exercise Date which will be on or about 30th September 2010. The Warrants will be issued on the basis of 12 Warrants for every 100 shares held at the close of business on 6th October 2008, but fractions of warrants will not be issued. Warrant certificates will be posted at the holders risk on or about 17 October 2008. The Warrants will not be listed.
Outlook
Despite very volatile markets around the world the recurring dividend incomefrom our high quality portfolio should enable us to at least maintain ourannual dividend. By Order of the Board CITY GROUP P.L.C. Secretaries11th September 2008
Consolidated Income Statement
For the year ended 30th June 2008 2007 ‚£000 ‚£000 Operating Income Investment operations 645 1,713 Management services 516 662 Administrative expenses Investment operations (373) (344) Management services (507) (594) Exceptional - (597) ---------- ---------- Operating profit 281 840 Share of result of associated undertaking - normal 216 206
Share of result of associated undertaking - exceptional (1,322) (131)
Interest payable (170) (150) ---------- ---------- (Loss)/Profit on ordinary activities before taxation (995) 765 Tax on result of ordinary activities (2) (245) ---------- ---------- (Loss)/Profit on ordinary activities after taxation (997) 520 Equity minority interest (6) (31) ---------- ----------
(Loss)/Profit for the financial year attributable to (1,003) 489 members of the holding company
====== ====== Reconciliation of headline earnings per share Basic (loss)/earnings per share (3.2)p 1.6p
Adjustment for exceptional items net of tax and minorities 4.2 p 2.4p
--------- --------- Headline earnings per share 1.0 p 4.0p --------- ---------
Consolidated Statement of Changes in Shareholders' Equity
Ordinary Share Fair share premium Revaluation value Retained Total capital account reserve earnings reserve ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Year ended 30th June 2007
Balances at 1st July 1,500 1,854 330 4,914 7,033 15,631 2006
---------- ---------- ---------- --------- ---------- --------- Profit attributable - - - - 489 489 to shareholders Fair value adjustment - - - 4,181 - 4,181 on listed undertakings, net of profits realised during the year and reflected in the income statement ---------- ---------- ---------- --------- ---------- --------- Total income and - - - 4,181 489 4,670 expense for the period ---------- ---------- ---------- --------- ---------- --------- New shares issued 60 474 - - - 534 Dividends paid in - - - - (315) (315)respect of the previous year ---------- ---------- ---------- --------- ---------- --------- Total transactions 60 474 - - (315) 219 with shareholders for the year ---------- ---------- ---------- --------- ---------- --------- Balances at 30th June 1,560 2,328 330 9,095 7,207 20,520 2007 ====== ====== ====== ===== ====== ===== Year ended 30thJune 2008 Balances at 1st July 1,560 2,328 330 9,095 7,207 20,520 2007 ---------- ---------- ---------- --------- ---------- --------- Loss attributable to - - - - (1,003) (1,003)shareholders Fair value adjustment - - - (6,942) - (6,942)on listed undertakings, net of profits realised during the year and reflected in the income statement ---------- ---------- ---------- --------- ---------- --------- Total income and - - - (6,942) (1,003) (7,945)expense for the period ---------- ---------- ---------- --------- ---------- --------- Dividends paid in - - - - (343) (343)respect of the previous year Interim dividend paid - - - - (172) (172) ---------- ---------- ---------- --------- ---------- --------- Total transactions - - - - (515) (515) with shareholders for the year ---------- ---------- ---------- --------- ---------- --------- Balances at 30thJune 1,560 2,328 330 2,153 5,689 12,060 2008 ====== ====== ====== ===== ====== ===== Consolidated Balance Sheetat 30th June 2008 2007 ‚£000 ‚£000 Non-current Assets Tangible assets 403 416 Investments 8,784 18,305 ---------- ---------- 9,187 18,721 Current Assets ---------- ---------- Listed investments 5,726 6,564 Accounts receivable 319 184 Bank balance and deposits 36 87 ---------- ---------- 6,081 6,835 Current Liabilities Accounts payable: falling due within one year (3,107) (1,777) ---------- ---------- Net Current Assets 2,974 5,058 ---------- ---------- Total Assets less Current Liabilities 12,161 23,779 Deferred taxation - (3,164) ---------- ---------- Total Assets less Current Liabilities 12,161 20,615 ====== ====== Capital and Reserves Called up share capital 1,560 1,560 Share premium account 2,328 2,328 Reserves 2,483 9,425 Profit and loss account 5,689 7,207 ---------- ---------- Equity shareholders' funds 12,060 20,520 Minority equity interests 101 95 ---------- ---------- 12,161 20,615 ====== ======
Consolidated Cash Flow Statement
For the year ended 30th June 2008 2007 ‚£000 ‚£000 Cash inflow/(outflow) on operating activities Cash generated/(absorbed) by operations, including General 4 (1,311)Portfolio investment Dividends receivable 458 380 Interest paid (148) (100) Interest received 5 12 Taxation paid (235) (13) ---------- ---------- Net cash generated/(absorbed) by operations 84 (1,032) Investing activities Proceeds on sale of non-current asset investments - 2,080 Non-current asset investments - purchased (1,297) (948) ---------- ----------
Net cash (outflow)/inflow from investment activities (1,297) 1,132
---------- ---------- Financing Share capital issued - 534 Equity dividends paid (515) (315) Net drawdown/( repayment) of loan facilities 1,677 (403) ---------- ---------- Net cash inflow from financing 1,162 (184) ---------- ---------- Decrease in cash (51) (84) ===== Notes1. The final dividend for the year of 0.65p per share (2007 - 1.10p) will be paid on 10th October 2008 to shareholders on the register on 26th September 2008. 2. Earnings per share are based on the profit on ordinary activities after taxation and minority interests and on 30,631,233 shares (2006 - 28,672,672) being the weighted average of the number of shares in issue during the year. 3. The net assets attributable to shareholders, taking investments at market value, are before providing for any tax that may arise on realisation. 4. The financial information in this preliminary announcement of unaudited group results, which has been reviewed and agreed by the auditors, does not constitute statutory accounts within the meaning of section 240(5) of the Companies Act 1985. The accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with those parts of the Companies Acts 1985 applicable to companies reporting under IFRS. The accounts are prepared on the historical cost basis, except for certain assets and liabilities which are measured at fair value, in accordance with IFRS. The audited accounts of the group for the year ended 30th June 2007 have been reported on with an unqualified audit report in accordance with section 235 of the Companies Act 1985 and have been delivered to the Registrar of Companies.
LONDON FINANCE & INVESTMENT GROUP PLC