Last checked at 30 Sep 2009 15:30
LONDON FINANCE & INVESTMENT GROUP P.L.C. ("Lonfin", "the Company" or "the Group")
Preliminary announcement of unaudited results for the year ended 30th June 2009
London Finance & Investment Group P.L.C. , the investmentcompany whose assets primarily consist of three Strategic Investments and aGeneral Portfolio, today announces its Preliminary Results for the year ended30th June 2009. Chairman's statementLonfin 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 U.K. andEuropean equities.At 30th June 2009, the three Strategic Investments, in which we have boardrepresentation, were our associated company Western Selection P.L.C., MWB GroupHoldings Plc and Finsbury Food Group plc. Detailed comments on our StrategicInvestments are given below.
Our objective is to achieve capital growth in real terms over the medium term, while maintaining a progressive dividend policy.
We are operating in difficult times. Stock markets are down and many companiesare cutting dividends. We are not immune to these external factors. In spite ofthis the Group is in a reasonable position: * The General Portfolio is yielding 3.13%. * Borrowings are 30% of the value of liquid stock market investments
* Operating costs have been reduced and are expected to fall further in the
current year ResultsThe Group made a loss before tax for the year of 807,000 (2008 - loss - 995,000), after the Group share of an exceptional impairment charge in Westernof 239,000 (2008 - 1,322,000). Our operating income last year was higher dueto profits realised on sales of investments. Our loss after exceptional items,tax and minority interest was 796,000 (2008 - loss - 1,003,000) giving a lossper share of 2.6p (2008 - 3.2p).Our net assets per share have decreased 46% to 21p from 39p last year,reflecting the reduction in value of the Strategic Investments. These havedeclined in value by 45% and our General Portfolio by 24% after taking intoaccount additions and disposals of investments. This compares with thedecreases in the FTSE 100 index of 24% and the FTSE Eurotop 300 index of 29%over the year. At the date of this report, our unaudited net asset value hadincreased by 22% since the year end to 26p.
Dividend
In the absence of a dividend from Western, we are not recommending a final dividend, but it is our intention to resume paying dividends as soon as our dividend income recovers sufficiently.
Strategic Investments
Western Selection P.L.C. ("Western")
The Company owns 7,864,412 shares, being 43.8% of the issued share capital of Western and 3,785,820 of Western's 2010 warrants
On 29th September 2009, Western announced a loss before associates andexceptional items of 479,000 for its year to 30th June 2009 (2008 - profit - 378,000). In addition, Western has made impairment provisions against some ofits investments of 546,000 (2008: provision against Creston 3,019,000).Including associates and after exceptional items and tax, and on its increasedshare capital, losses per share were 4.8p (2008 - losses 16.4p).
Western is unable to pay a dividend because the decline in value of its investments is such that its net assets are 12% less than the total of its share capital, share premium and non-distributable reserves. Western's net assets at market value were 8,936,000, equivalent to 50p per share, a decrease of 14% from 58p last year.
The market value of the Company's investment in Western at 30th June 2009 was 2,174,000 and the book value was 4,383,000. At market value this represents33% of the net assets of Lonfin. The underlying value of the Company'sinvestment in Western, valuing Western's investments at market value, was 4.3million (2008 - 4.6 million).Mr. Marshall is the Chairman of Western and Mr. Robotham and Mr. Beale (thechief executive of our associated company City Group P.L.C.) are non-executivedirectors. Western has strategic investments in Creston plc, NorthbridgeIndustrial Services plc, Swallowfield plc and Hartim Limited. An extract fromWestern'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 2009, show a profit after tax of 6,597,000
(2008 - 4,782,000), equivalent to earnings of 12.2p per share (2008 - 8.65p). On 7th July 2009 Creston announced a placing of new shares,
raising approximately 3.3 million (gross). Western did not participate in
the placing and maintained it's holding of 3,000,000 shares in Creston.
Following the placing, this represents 4.9% of Creston's issued share
capital with a value at 30th June 2009 of 1,920,000 (2008 - 1,425,000)
being 21% (2008 - 14%) of Western's assets. Northbridge Industrial Services PLC
Northbridge was formed for the purpose of acquiring companies that hire
and sell specialist industrial equipment supplying a non-cyclical customer
base including utility companies, the public sector and the oil and gas
industries. In particular it will seek to acquire specialist businesses
that have the potential for expansion into complete outsourcing providers.
Sales are made to the U.K., U.S.A., Brazil, Singapore, Germany, UAE and
Korea; Northbridge also has subsidiaries operating in Dubai and Azerbaijan. Northbridge announced profits of 1,918,000 for the year ended 31st
December 2008 (2007 - 1,154,000) and declared a final dividend of 2.6 per
share, making 3.9p for the year (2007 - 3p). In June 2009, Northbridge raised approximately 2 million by way of an open offer in order to
finance the expansion of its hire fleet. Western took up 375,000 shares in
that offer at a cost of 413,000 and now holds 1,875,000 shares in
Northbridge (20.97%). The value of the investment at 30th June 2009 was
2,156,000 (2008 - 2,558,000) being 24% (2008 - 25%) of Western's assets. Swallowfield plc 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 cosmetics, personal
care and household good markets. Since Western's year ends Swallowfield's
results for their year to 30th June 2009 have been announced showing
maintained profits of 1,522,000 (2008 - 1,537,000) and an increase of
dividend from 5.5p to 5.9p per share. Their board indicated progress for the next 12 months.
Western increased its holding in Swallowfield during the year and now owns
1,331,500 shares which is 11.8% of the issued share capital. The market
value of Western's holding in Swallowfield on 30th June 2009 was 999,000
(2008 - 971,000), being 11% (2008 - 9%) of Westerns' net assets.
Western would like to see the Swallowfield board strengthened and remain
in discussions with the company and other major shareholders about the composition of the Swallowfield board. Hartim Limited Hartim is the unquoted holding company for Tudor Rose International
Limited ("TRI") which was founded in 1984. It 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 sells into 78 countries worldwide including USA, Spain, Portugal, Italy, Czech Republic, Russia, Turkey, South Africa, Saudi Arabia, UAE, Malaysia, Australia and China. Western holds 49.5% of Hartim, which has a 31st December year end and
achieved profits in 2008 of 443,000 on turnover of 16,809,000. Western's
share of the consolidated profit after tax for the twelve months to 30th
June 2009 was 181,000 (2008 - three months 69,000) and the book value of
the investment at 30th June 2009 was 979,000 (2008 - 797,000), being 11%
(2008 - 8%) of Western's assets.
MWB Group Holdings Plc ("MWB")
The Company holding in MWB was unchanged from the 2 million shares held at June2008, representing 2.76% of MWB's issued share capital. The market value at30th June 2009 was 980,000, compared with the book value of 1,681,000, andrepresents 15% of the net assets of Lonfin.
MWB is in the process of moneytising 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, representing15.55% of their share capital. The market value of the holding was 1,640,000on 30th June 2009 (cost - 1,893,000) and represents 25% of the net assets ofLonfin.Finsbury is one of the largest suppliers of premium cakes, bread and morninggoods in the UK. The group currently supplies most of the UK's majorsupermarket chains, including Asda, Morrisons, Sainsbury, Somerfield, Tesco andWaitrose.
Mr. Marshall is the non-executive chairman and Mr. Beale, the Chief Executive of our associated company 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 portfolioof quality companies we hold has the potential to outperform the market in themedium to long term, especially in respect of our Western European holdings.The number of holdings in the General Portfolio has decreased to 29 from 35. Wehave decreased the amount invested in the General Portfolio by 715,000 (2008:decreased by 188,000) over the year.We have a 2 million bank facility in addition to the facility to cover theincreased investment in Western, and at 30th June 2009 had drawn down 1.6million. This leaves 400,000 available for further investment when the Boardfeels appropriate. The fall in value of our investments over the period hasincreased borrowings as a percentage of the market value of all stock marketinvestments from 20% to 29%.
Outlook
The outlook for stock markets remains very uncertain. We will continue to adopta cautious stance, with our general portfolio invested in the best Europeancompanies. By Order of the Board CITY GROUP P.L.C. Secretaries30th September 2009 Annual General Meeting
The Company's Annual General Meeting will be held at its registered office, 30City Road, London, EC1Y 2AG, U.K. on Wednesday 28th October 2008 at 10.30 a.m.The annual report and accounts will be posted to shareholders on or before 5thOctober 2009.
Unaudited Consolidated Income Statement
For the year ended 30th June 2009
2008 GBP000 GBP000 Operating Income Investment operations 104 645 Management services 468 516 Administrative expenses Investment operations (359) (373) Management services (492) (507) ---------- ---------- Operating (loss)/profit (279) 281
Share of result of associated undertaking - normal (138)
195
Share of result of associated undertaking - exceptional (239) (1,322) Interest payable (151) (149) ---------- ----------
Loss on ordinary activities before taxation (807)
(995)
Tax on result of ordinary activities -
(2) ---------- ----------
Loss on ordinary activities after taxation (807)
(997) Equity minority interest 11 (6) ---------- ---------- Loss for the financial year attributable to members of the (796) (1,003)holding company ====== ======
Reconciliation of headline earnings per share
Basic (loss) per share (2.6)p (3.2)p Adjustment for exceptional items net of tax and minorities 0.8 p 4.2 p --------- --------- Headline earnings per share (1.8)p 1.0p --------- ---------
Unaudited Consolidated Statement of Changes in Shareholders' Equity
Share of undistributed Retained Ordinary Share Unrealised
results of realised share premium Revaluation profits/ subsidiaries profits & (losses) & capital account Reserve on associates losses Total investments Year ended 30th GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000June 2008 Balances at 1st 1,560 2,328 330 - - - July 2007 Restated balances - - - 9,095 1,702 5,505 20,520 at 1st July 2007 ---------- ---------- ---------- ----------
---------- ---------- ----------
Loss before fair - - - - (1,250) (106) (1,356)value release from equity Fair value of - - - - - 353 353 investments recycled to income statement on disposal ---------- ---------- ---------- ----------
---------- ---------- ----------
Loss attributable - - - - (1,250) 247 (1,003)to shareholders Fair value recycled - - - (353) - - (353)from equity to income statement Fair value - - - (6,589) - - (6,589)adjustment on listed undertakings ---------- ---------- ---------- ----------
---------- ---------- ----------
Total income and - - - (6,942) (1,250) 247 (7,945)expense for the period ---------- ---------- ---------- ----------
---------- ---------- ----------
Dividends paid in - - - - - (343) (343)respect of the previous year Interim dividend - - - - - (172) (172)paid ---------- ---------- ---------- ----------
---------- ---------- ----------
Total transactions - - - - - (515) (515) with shareholders for the year ---------- ---------- ---------- ----------
---------- ---------- ----------
Balances at 30th 1,560 2,328 330 2,153 452 5,237 12,060 June 2008 ====== ====== ====== ====== ====== ====== ======Year ended 30thJune 2009 Balances at 1st July 1,560 2,328 330 2,153 452 5,237 12,060 2008 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Loss before fair - - - - (503) (470) (973)value release from equity Fair value of - - - - - 177 177 investments recycled to income statement on disposal ---------- ---------- ---------- ---------- ---------- ---------- ---------- Loss attributable to - - - - (503) (293) (796)shareholders Expenses of capital - (10) - - - - (10)re-organisation Fair value recycled - - - (177) - - (177)from equity to income statement Fair value - - - (4,047) - - (4,047)adjustment on listed undertakings ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total income and - (10) - (4,224) (503) (293) (5,030)expense for the period ---------- ---------- ---------- ---------- ---------- ---------- ---------- Final dividends paid - - - - - (202) (202)in respect of the previous year Interim dividend - - - - - (172) (172)paid ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total transactions - - - - - (374) (374) with shareholders for the year ---------- ---------- ---------- ---------- ---------- ---------- ---------- Balances at 30th 1,560 2,318 330 (2,071) (51) 4,570 6,656 June 2009 ====== ====== ====== ====== ====== ====== ======
Unaudited Consolidated Balance Sheet
at 30th June 2009 2008 GBP000 GBP000 Non-current Assets Tangible assets 390 403 Investments 4,794 8,784 ---------- ---------- 5,184 9,187 ---------- ---------- Current Assets Listed investments 3,976 5,726 Accounts receivable 309 319 Bank balance and deposits 114 36 ---------- ---------- 4,399 6,081 Current Liabilities Accounts payable: falling due within one year (2,837) (3,107) ---------- ---------- Net Current Assets 1,562 2,974 ---------- ---------- Total Assets less Current Liabilities 6,746 12,161 ===== ===== Capital and Reserves Called up share capital 1,560 1,560 Share premium account 2,318 2,328 Revaluation reserve 330 330 Unrealised profits and losses on investments (2,071)
2,153
Share of undistributed profits and losses of subsidiaries (51) 452 and associates Company's retained realised profits and losses 4,570 5,237 ---------- ---------- 6,656 12,060 Minority equity interests 90 101 ---------- ---------- 6,746 12,161 ===== =====
Unaudited Consolidated Cash Flow Statement
For the year ended 30th June 2009 2008 GBP000 GBP000
Cash inflow on operating activities Cash generated by operations, including General Portfolio 438
4 investment Dividends receivable 537 458 Interest paid (151) (148) Interest received 6 5 Taxation paid - (235) ---------- ----------
Net cash generated by operations 830
84 Investing activities Non-current asset investments - purchased - (1,297) ---------- ---------- Net cash outflow from investment activities - (1,297) ---------- ---------- Financing Share capital issued - - Cost of warrant issue (10) - Equity dividends paid (374) (515) Net (repayment)/drawdown of loan facilities (368) 1,677 ---------- ---------- Net cash (outflow)/inflow from financing (752) 1,162 ---------- ---------- Increase/(Decrease) in cash 78 (51) ===== ===== Notes1. Earnings per share are based on the loss on ordinary activities after taxation and minority interests and on 31,201,133 shares (2008 - 31,200,000) being the weighted average of the number of shares in issue during the year.
2. The net assets attributable to shareholders, taking investments at market
value, are before providing for any tax that may arise on realisation.
3. The financial information in this preliminary announcement of unaudited
group results does not constitute the company's statutory accounts for the years ended 30th June 2009 or 30th June 2008 but is derived from those
accounts. 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 2006 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 2008 have been reported on with an unqualified
audit report and have been delivered to the Registrar of Companies. Enquiries to:London Finance & Investment Group 020 7448 8950
David Marshall / Edward Beale
LONDON FINANCE & INVESTMENT GROUP PLC