Lon.fin&inv.grp Regulatory News (LFI)

25 Aug 2006 16:00

LONDON FINANCE & INVESTMENT GROUP P.L.C. Preliminary announcement of unaudited results for the year ended 30th June 2006London Finance is an investment company whose assets primarily consist of threeStrategic Investments and a General Portfolio. Strategic Investments aresignificant investments in smaller UK quoted companies and these are balancedby a General Portfolio, which consists mainly of investments in major Britishand European equities.At 30th June 2006, we held three Strategic Investments in which we have boardrepresentation: our associated company Western Selection P.L.C., MaryleboneWarwick Balfour Group Plc and Finsbury Food Group plc. Detailed comments on ourStrategic Investments are given below.Our objective is to achieve capital growth in real terms over the medium term,while maintaining a progressive dividend policy.ResultsThe Group made a profit before tax for the year of ‚£309,000 (2005 - ‚£202,000).Our operating profits have increased from ‚£228,000 to ‚£263,000 as a result ofhigher profits realised on sales of investments and increased fee incomeachieved by City Group. Our profit after tax and minority interest was ‚£303,000(2005 - ‚£212,000) giving earnings per share of 1.06p (2005 - 0.81p).To reflect the improvement in the earnings and our progressive dividend policy,the Board has decided to increase the dividend for the year to 1.05p per share(2005 - 1.0p).Our net assets per share have increased 17% to 52p at 30th June 2006 from 44plast year after provision for deferred taxation. Our Strategic Investments haveincreased in value by 43% and our General Portfolio by 22% after taking intoaccount additions and disposals of investments. This compares with the increasein the FTSE 100 index of 14% and the FTSE Eurotop 300 index of 15% over theyear.International Financial Reporting StandardsThis is the first year when the consolidated financial statements have beenprepared under the International Financial Reporting Standards (IFRS) adoptedby the EU. The comparatives for 2005 have accordingly been restated from UKGenerally Accepted Accounting Practice (UK GAAP). Figures on an IFRS basis wereincluded as memoranda columns in the 2005 financial statements.Strategic InvestmentsWestern Selection P.L.C. ("Western")The Company owns 5,212,000 shares, being 44.6% of the issued share capital ofWestern. On 24th August 2006, Western announced a profit after tax of ‚£315,000for its year to 30th June 2006, earnings per share of 2.75p (2005 - 1.40p), anda 5.6% increase in dividend to 2.45p (2005 - 2.32p). Western's net assets atmarket value were ‚£10,495,000, equivalent to 89.8p per share, a 1% increasefrom 88.8p last year. This increase in value was reduced by the exercise ofwarrants at 64p, which increased Western's capital in issue by 7.5%.The market value of the Company's investment in Western at 30th June 2006 was ‚£2,997,000 and the book value was ‚£4,643,000. At market value this represents19% of the net assets of Lonfin. The underlying value of the Company'sinvestment in Western, valuing Western's investments at market value, was ‚£4.68million (2005 - ‚£3.9 million).Mr. Marshall is the Chairman of Western and Mr. Robotham is a non-executivedirector. Western has strategic investments in Creston plc, Swallowfield plc,Northbridge Industrial Services plc and Industrial & Commercial Holdings PLC.An extract from Western's announcement of its strategic investments is set outbelow: 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 international marketing services group. The results for the year to 31st March 2006, show a profit after tax of ‚£ 2,927,000 (2005 - ‚£2,640,000), equivalent to earnings of 8.04p per share (2005 - 7.04p). At 1st July 2005, Western owned 2,873,998 shares in Creston. During the year a further 126,002 shares were acquired at a cost of ‚£207,903 by way of exercise of warrants and participation in Creston's fundraising. At the year end, the total holding of 3,000,000 shares represented 8.6% of Creston's issued share capital. The market value of the Company's holding in Creston on 30th June 2006 was ‚£4,845,000 (2005 - ‚£4,455,000), being 40% of Western's net assets. 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 latest published results were for the 28 weeks to 7th January 2006 and showed a loss of ‚£695,000, after reorganisation costs of ‚£677,000 (28 weeks to 8th January 2005 - profit of ‚£353,000). Western owns 1,000,000 shares in Swallowfield being 8.9% of the issued share capital. The market value of the Company's holding in Swallowfield on 30th June 2006 was ‚£455,000 (2005 - ‚£775,000), being 4% of Westerns' net assets. Northbridge Industrial Services PLC Western announced in March that it was making an investment of ‚£1.5 million in Northbridge Industrial Services PLC. That company placed 6,437,500 shares at ‚£1 and at the same time it shares were admitted to AIM. Western Selection was allotted 1.5 million shares representing 20.3% of Northbridge's share capital. The value of the investment at 30th June 2006 was ‚£1,598,000. Northbridge was formed for the purpose of acquiring companies that hire and sell specialist industrial equipment such as generators, load banks, pumps, air compressors, heaters and chillers .Northbridge is seeking to acquire specialist niche businesses that have the potential for expansion into outsourcing providers, capable of supplying a non-cyclical customer base. Northbridge's first acquisition is Crestchic Limited, one of the largest specialist load bank equipment manufacturers in the world; selling and hiring to a national and international customer base. Industrial & Commercial Holdings PLC ICH is a small unlisted PLC in which Western holds 29.9%.It holds land with potential to receive planning permission for housing at Milngavie, adjacent to Dougalston golf course, just north east of Glasgow. As it may take many years for the permission to be received, we are in discussion with the board of ICH to consider an acquisition of an active business. Marylebone Warwick Balfour Group Plc ("MWB")The Company owns 3 million shares, representing 3.16% of MWB's issued sharecapital. The market value at 30th June 2006 was ‚£5.9 million, compared with thebook value of ‚£2.5 million, and represents 38% of the net assets of Lonfin.MWB is in the process of maturing and realising its assets for the benefit ofall stakeholders through an orderly disposal programme, having disposed of thePark Lane Marriot hotel for ‚£105 million in May and the recently announceddisposal of its West India Quay subsidiary for ‚£110 million. Mr. Marshall is anon-executive director of MWB and the board constantly reviews the programme ofdisposal.Finsbury Food Group plc ("Finsbury")During the year we acquired a further 200,000 shares in Finsbury at a cost of ‚£146,000 to bring our holding to 5,000,000 shares and 3,000,000 warrantsrepresenting 21.66% of their share capital and 54.06% of their warrants. Themarket value of our holding was ‚£4.3 million on 30th June 2006 (2005 - ‚£3.2million) with a cost of ‚£993,000 and represents 28% of the net assets ofLonfin.Finsbury Food's main subsidiary, Memory Lane Cakes, is a supplier of boxedambient cakes to most of the UK's major supermarket chains, which include Asda,Morrisons, Sainsbury, Somerfield, Tesco and Waitrose. Ambient cakes are bakedcakes that have not been frozen and are generally retailed at room temperature.Finsbury Food acquired three new bakeries in November 2005 and is involved incapital projects for the automation of existing, and the installation of new,production lines, together with the segregation of a gluten free area to give amarket leading facility. Mr. Marshall is a non-executive director of Finsbury.General PortfolioThe General Portfolio has material interests in oil, natural resources andutilities, pharmaceuticals and healthcare, banking and insurance and food andbeverages. These sectors accounted for 69% of the portfolio by value at 30thJune 2006 (73% at 30th June 2005). We believe that the companies in thesesectors in which we have invested have the potential to outperform the marketin the medium to long term.The number of holdings in the General Portfolio has increased to 43 from 39. Wehave invested ‚£238,000 (2005: ‚£457,000) in the General Portfolio over the yearand the average value of each holding has increased from ‚£110,000 to ‚£114,000.We have a ‚£2 million bank facility and at 30th June 2006 had drawn down ‚£1.65million. This leaves ‚£350,000 available for further investment.DividendThe recommended dividend is 1.05p per share (2005 - 1.00p). Subject toshareholder approval, the dividend will be paid on 6th October 2006 to thosemembers registered at the close of business on 8th September 2006. Shareholderson the South African register will receive their dividend in South African Randconverted from sterling at the closing rate of exchange on 23rd August 2006.D.C. MARSHALLChairman25th August 2006 Consolidated Profit and Loss AccountFor the year ended 30th June 2006 2005 ‚£000 ‚£000 Operating Income Investment operations 610 572 Management services 587 501 Administrative expenses Investment operations (350) (294) Management services (584) (551) -------- -------- Operating profit 263 228 Share of result of associated undertaking 169 90 Interest payable (123) (116) -------- -------- Profit on ordinary activities before taxation 309 202 Tax on result of ordinary activities (4) (12) -------- -------- Profit on ordinary activities after taxation 305 190 Equity minority interest (2) 22 -------- -------- Profit for the financial year attributable to members of the 303 212 holding company ===== ===== Basic earnings per share 1.06p 0.81p Headline earnings per share 1.06p 0.81p Diluted earnings per share 1.06p 0.80p Consolidated Statement of Recognised Gains and LossesProfit attributable to members 303 212 Unrealised gains on investments held as :- Fixed assets 3,768 2,131 Current assets 427 130 Deferred taxation on unrealised gains (1,188) (176) -------- -------- Total recognised gains and losses for the year 3,310 2,297 ===== ===== Changes in Shareholders' EquityTotal recognised gains and losses for the year 3,310 2,297 Proceeds of new shares issued 949 77 Dividend paid in respect of the previous year (262) (233) -------- -------- 3,997 2,141 Shareholders' funds at start of year 11,634 9,493 -------- -------- Shareholders' funds at end of year 15,631 11,634 ===== ===== All profits and losses are on continuing activities.Consolidated Balance Sheetat 30th June 2006 2005 ‚£000 ‚£000 Non-current Assets Tangible assets 430 431 Investments 13,247 8,776 -------- -------- 13,677 9,207 -------- -------- Current Assets Listed investments 4,907 4,265 Accounts receivable 196 178 Bank balance and deposits 171 48 -------- -------- 5,274 4,491 Current Liabilities Accounts payable: falling due within one year (1,893) (1,827) -------- -------- Net Current Assets 3,381 2,664 -------- -------- Total Assets less Current Liabilities 17,058 11,871 Deferred taxation (1,363) (176) -------- -------- Total Assets less Current Liabilities 15,695 11,695 ===== ===== Capital and Reserves Called up share capital 1,500 1,310 Share premium account 1,854 1,095 Reserves 5,244 2,237 Profit and loss account 7,033 6,992 -------- -------- Equity shareholders' funds 15,631 11,634 Minority equity interests 64 61 -------- -------- 15,695 11,695 ===== =====Consolidated Cash Flow StatementFor the year ended 30th June 2006 2005 ‚£000 ‚£000 Cash outflow on operating activities (120) (244) -------- -------- Returns on investments and servicing of finance Dividends received 281 277 Interest paid (95) (89) -------- -------- Net cash inflow from returns on investments and servicing of 186 188 finance Taxation (4) (15) -------- -------- Investing activities Purchase of tangible fixed assets (12) (4) Fixed asset investments - purchased (664) (101) -------- -------- Net cash outflow from investment activities (676) (105) -------- -------- Equity dividend paid (262) (233) Financing Share capital issued 949 77 Net (repayment)/draw down of loan facility (50) 350 -------- -------- Net cash inflow from financing 999 427 -------- -------- Increase in cash 123 18 ===== ===== Notes1. The dividend for the year of 1.05p per share (2005 - 1.00p) will be paid on 6th October 2006 to shareholders on the register on 8th September 2006. 2. Earnings per share are based on the profit on ordinary activities after taxation and minority interests and on 28,672,672 shares (2005 - 26,113,943) 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 the Accounting Standards of the Auditing Practices Board of the United Kingdom and are consistent with those applied in the previous financial year. The audited accounts of the group for the year ended 30th June 2005 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. ENDLONDON FINANCE & INVESTMENT GROUP PLC