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LONDON FINANCE & INVESTMENT GROUP PLC - Half-yearly ReportLONDON FINANCE & INVESTMENT GROUP PLC - Half-yearly Report
PR Newswire
London, February 28
London Finance & Investment Group P.L.C.
Interim Results
Lonfin (LSE: LFI, JSE: LNF), today announces its unaudited interim results forthe six months ended 31st December 2012 and dividend declaration.
Chairman's Statement IntroductionAs an investment company our target is to achieve growth in shareholder valuein real terms over the medium to long term. In the short term our results canbe influenced by overall stock market performance, particularly the valuationof our Strategic Investments. We continue to believe that a combination ofStrategic Investments and a General Portfolio is the most effective way ofachieving our aims. Strategic Investments are significant investments insmaller UK quoted companies where we have expectations of above average growthover the medium to longer term and these are balanced by a General Portfoliowhich consists of investments in major U.K. and European equities.
At 31st December 2012, we held two Strategic Investments in which we have boardrepresentation: our associated company Western Selection P.L.C. and FinsburyFood Group plc. Detailed comments on our Strategic Investments are given below.
Results
Our net assets per share increased 13% to 35.6p at 31st December 2012 from31.6p at 30th June 2012. Our Strategic Investments increased in value by 23.5%,following a strong performance in Finsbury Food's share price over the period.Our General Portfolio increased by 4%, compared with increases of 6% in theFTSE 100 index, and 11% in the FTSEurofirst 300 index over the half year. Atthe close of business on 15th February 2013, our net asset value was 39.8p.
The Group profit before tax for the half year was £1,389,000 compared to aprofit of £1,233,000 for the same period last year, which included anexceptional profit on a property disposal of £2,132,000. Our profit after taxand minority interest was £1,359,000 (2011 profit: £1,108,000) giving profitsper share of 4.4p (2011 - 3.6p).
Strategic Investments
Western Selection P.L.C. ("Western")
The Group owns 7,860,515 Western shares, representing 43.8% of Western's issuedshare capital.
On 28th February 2013, Western announced a profit after tax of £78,000 for itshalf year to 31st December 2012 and a profit per share of 0.4p (2010: loss0.5p). Western's net assets at market value were £12,572,000 equivalent to 70pper share, a decrease of 3% from 72p at 30th June 2012. Western has announcedan increased interim dividend of 0.85p per share, an increase of 6% on theprior year.
The market value of the Company's investment in Western at 31st December 2012was £2,987,000 representing 27% of the net assets of Lonfin. The underlyingvalue of the investment in Western, valuing Western's own investments at marketvalue, was £5.4 million (30th June 2012: £5.6 million).
I am the Chairman of Western and Mr. Robotham is a Non-Executive Director.Western has strategic investments in Creston plc, Northbridge IndustrialServices PLC, Swallowfield plc and Hartim Limited. Extracts from Western'sannouncement on its strategic investments are set out below:
Creston plc ("Creston") Creston is a marketing services group with a strategy to grow within its sector to become a substantial, diversified international marketing services group. Further information about Creston is available on its website: www.creston.com. Creston's results for the half-year to 30th September 2012 show a profit after tax of £8,259,000 including a deferred consideration write-back of £ 3,450,000 (2011: £2,821,000). Creston declared an interim dividend of 1.0p per share, an increase of 20% on the prior year. Western owns 3,000,000 shares in Creston (4.9%) with a market value at 31st December 2012 of £2,370,000 (30th June 2012: £1,650,000), being 19% of Western's assets. Northbridge Industrial Services plc ("Northbridge") Northbridge hires and sells specialist industrial equipment to a non-cyclical customer base. With offices or agents in the U.K., U.S.A., Dubai, Germany, Belgium, France, Australia, Singapore,India, Brazil, Korea and Azerbaijan, Northbridge has a global customer base. This includes utility companies, the oil and gas sector, shipping, construction and the public sector. The product range includes loadbanks, transformers, generators, compressors, loadcells and oil tools. Further information about Northbridge is available on its website: www.northbridgegroup.co.uk. Northbridge's latest results, for the half year to 30th June 2012, showed profit after tax of £1,027,000 (2011: £1,656,000). Northbridge declared an interim dividend of 1.85p per share, an increase of 6% on the prior year. Western owns 2,200,000 shares, representing 14.2% of Northbridge's share capital. The value of this investment has been volatile and at 31st December 2012 was £5,170,000 (30th June 2012: £5,984,000), representing 41% of Western's assets. Swallowfield plc ("Swallowfield") Swallowfield is a market leader in the development, formulation, manufacture and supply of cosmetics, toiletries and related household products for global brands and retailers operating in the cosmetics, personal care and household goods market. Further information about Swallowfield is available on its website: www.swallowfield.com. Swallowfield's latest results, for the year to 30th June 2012, showed profit after tax of £1,263,000 (2011: £1,082,000). Swallowfield declared a final dividend of 4.1p, unchanged on the prior year. Swallowfield has warned that full year results for the year ending 30th June 2013 will be below last year's results. At 31st December 2012, Western owned 1,869,149 shares in Swallowfield (16.5% of their issued share capital). The market value of the Company's holding in Swallowfield on 31st December 2012 was £1,925,000 (30th June 2012: £2,187,000) representing 15% of the Company's assets. Hartim Limited ("Hartim") Hartim offers a complete export sales, marketing and logistical services to a number of well known UK branded fast moving consumer goods companies. This investment was acquired on 28th March 2009 and is accounted for as an associated company. Hartim's estimated results for the year ended 31st December 2012 showed a loss of £1,000 (2010 £220,000) after tax and before exceptional items. These results include losses incurred in turning round its Australian distributor acquired out of administration last year. At 31st December 2012, Western owned 49.5% of Hartim. The carrying value of the Company's investment in Hartim on 31st December 2012 was £1,173,000 (30th June 2012: £1,124,000) representing 9% of the Company's assets.Finsbury Food Group plc ("Finsbury Food")
Finsbury Food is a supplier of ambient cakes to most of the UK's majorsupermarket chains and speciality breads to Waitrose, including gluten-free andlow fat products. On 28th February 2013, Finsbury Food announced the sale ofits gluten-free businesses to its joint venture partner, Genius Foods Limited,for £21 million. Further information about Finsbury Food is available on itswebsite: www.finsburyfoods.co.uk.
The Group increased its holding in Finsbury Food in November by 958,000 shares,at a cost of £366,000, to 8,958,000 shares, representing 12.5% of their sharecapital. The market value of our holding was £3,359,000 on 31st December 2012compared to a cost of £2,259,000; this represents 30% of the net assets ofLonfin.
I am a Non-Executive Director of Finsbury
MWB Group Holdings Plc ("MWB")
The Group owns 2,000,000 shares, representing 1.2% of MWB's issued sharecapital. The shares were suspended following that company enteringadministration. Full provision against the cost of this investment has now beenmade, an additional amount of £70,000 being made in the period.
General Portfolio
The list of investments included in the General Portfolio is set out at the endof this announcement. There have been very few changes to the portfolio in theperiod and we retain cash balances while waiting for an opportunity to acquireundervalued stocks.
Dividends
The Board has declared an interim of 0.4p payable on Friday 12th April 2013 toshareholders on the register at the close of business on Friday 22nd March2013.
Outlook
Global stock markets have had a very strong start to the New Year, but theBoard are cautious given the disconnect between the performance of equities andgeneral economic conditions. However, it is the intention of the Board to getfully invested as and when buying opportunities arise.
David C. Marshall Chairman Interim dividendThe declared interim dividend is 0.4p per share (ZAR 5.36424 cents) (2011 -0.35p) and will be paid on Friday 12th April 2013 to those members registeredat the close of business on Friday 22nd March 2013. Shareholders on the SouthAfrican register will receive their dividend in South African Rand convertedfrom sterling at the closing rate of exchange on 27th February 2013.
The issued number of shares as at declaration date is 31,207,479
Salient dates for dividend Last day to trade (SA) Thursday 14th March 2013Shares trade ex dividend (SA) Friday 15th March 2013
Shares trade ex dividend (UK) Wednesday 20th March 2013
Record date (UK & SA) Friday 22nd March 2013 Pay date Friday 12th April 2013Shareholders are hereby advised that the exchange rate to be used will be GBP 1= ZAR 13.4106. This has been calculated as the average of the bid/ask spread at16.00 (United Kingdom time) being the close of business on 27th February 2013.Consequently the dividend of 0.4p will be equal to 5.36424 South African cents.
Since the introduction on 1st April 2012 of a new dividend withholding tax inSouth Africa, the JSE Listings Requirements require disclosure of additionalinformation in relation to any dividend payments. Shareholders registered onthe Johannesburg register are therefore advised that the new dividendwithholding tax will be withheld from the gross final dividend amount of5.36424 SA cents per share at a rate of 15%, unless a shareholder qualifies foran exemption; shareholders registered on the Johannesburg register who do notquality for an exemption will therefore receive a net dividend of 4.5596 SAcents per share. The Company, as a non-resident of South Africa, was notsubject to the secondary tax on companies (STC) applicable before 1st April2012, and accordingly, no STC credits are available for set-off against thedividend withholding tax liability on the final net dividend amount. Thedividend is payable in cash as a `Dividend' (as defined in the South AfricanIncome Tax Act, 58 of 1962, as amended) by way of a payment out of incomereserves. The dividend withholding tax and the information contained in thisparagraph is only of direct application to shareholders registered on theJohannesburg register, who should direct any questions about the application ofthe new dividend withholding tax to Computershare Investor Services (Pty)Limited, Tel: +27 11 373-0004.
No dematerialisation or rematerialisation of share certificates, nor transferof shares between the registers in London and South Africa will take placebetween Friday 15th March 2013 and Friday 22nd March 2013, both datesinclusive.
Unaudited Consolidated Statement of Comprehensive Income
Half year ended Year ended 31st December 30th June 2012 2011 2012 £000 £000 £000 Operating Income Dividends received 106 102 265 Interest and sundry income - 25 74 Profit/(Losses) on sales of investments, including 131 - (32)provisions -------- -------- -------- 237 127 307 Management services income 134 199 295 -------- -------- -------- 371 326 602 -------- -------- -------- Administrative expenses Investment operations (148) (144) (301) Management services (146) (150) (337) -------- -------- -------- Total administrative expenses (294) (294) (638) -------- -------- -------- Operating profit/(loss) 77 32 (36)Unrealised changes in the carrying value of 1,321 (925) (1,134)investments
Exceptional profit on sale of property - 2,132 2,137 Interest payable (9) (6) (27) -------- -------- --------Profit on ordinary activities before taxation 1,389 1,233 940
Tax on result of ordinary activities (34) (102) (65) -------- -------- --------Profit on ordinary activities after taxation 1,355 1,131 875
Non-controlling interest 4 (23) (6) -------- -------- --------Total comprehensive income - profit attributable 1,359 1,108 869to members of the holding company
-------- -------- -------- Reconciliation of headline earnings Earnings per share 4.4 p 3.6 p 2.8 pAdjustment for unrealised changes in the carrying (4.3)p (3.6)p 3.6 pvalue of investments and exceptional items, net of
tax -------- -------- -------- Headline (loss)/earnings per share 0.1 p 0.0 p 6.4 p -------- -------- -------- Interim dividend 0.4 p 0.35 p 0.35 p Final dividend - - 0.35 p Total in respect of the year - - 0.70 pUnaudited ConsolidatedChanges in Shareholders' Equity
31st December 30th June 2012 2011 2012 £000 £000 £000 Total comprehensive income 1,359 1,108 869 Dividends paid to equity shareholders (109) (94) (203) -------- -------- -------- 1,250 1,014 666Equity shareholders' funds at start of period 9,855 9,189 9,189
-------- -------- --------Equity shareholders' funds at end of period 11,105 10,203 9,855
====== ====== ======Unaudited Consolidated Statement of Financial Position
31st December 30th June 2012 2011 2012 £000 £000 £000 Non-current assets Tangible assets 3 - 4 Principle investments:- MWB Group Holdings Plc - 290 70 Finsbury Food Group plc 3,359 2,160 1,880 Western Selection P.L.C. 2,987 2,987 3,144 -------- -------- -------- 6,349 5,437 5,098 -------- -------- -------- Current assets Listed investments 4,746 4,240 4,533 Trade and other receivables 269 348 272 Cash, bank balances and deposits 1,108 2,591 2,217 6,123 7,179 7,022 Total Assets 12,472 12,616 12,120 Capital and Reserves Called up share capital 1,560 1,560 1,560 Share premium account 2,320 2,320 2,320Unrealised profits and losses on investments 1,727 (2,675) 336
Share of undistributed profits and losses of (576) 996 (572)subsidiaries and associates
Company's retained realised profits and 6,074 8,002 6,211losses
Equity shareholders funds 11,105 10,203 9,855Trade and other payables falling due within 1,274 2,298 2,167one year
Non-controlling equity interest 93 115 98 12,472 12,616 12,120 Net assets per share 35.6p 32.7p 31.6pUnaudited Statement of Cash Flow
Half year ended Year ended 31st December 30th June 2012 2011 2012 £000 £000 £000 Profit before taxation 1,389 1,233 940 Adjustments for non-cash and non-operatingexpenses:- Depreciation charges 1 - 5Unrealised changes in the carrying value of (1,321) 496 1,134fixed asset investments
Exceptional profit on sale of property - (2,132) (2,137) Net interest paid 9 6 27 (1,311) (1,630) (971) Tax paid (4) (102) (17) Changes in working capital:- Decrease/(Increase) in debtors 3 (88) (12) Increase in creditors 26 196 158 Decrease/(Increase) in current asset 222 429 (301)investments 251 537 (155)Cash inflow/Outflow) on operating activities 325 38 (203)
Investment activities Net proceeds from sale of property - 2,498 2,495 Purchase of additional shares in strategic (366) - -investment (366) - - Cash flows from financing Net interest paid (9) (6) (27)(Repayment)/Drawdown of loan facilities (950) 134 134
Equity dividends paid (109) (94) (203) Net (outflow)/inflow from financing (1,068) 34 (96) (Decrease)/Increase in cash and cash (1,109) 2,570 2,196equivalents Cash and cash equivalents at start of period 2,217 21 21Cash and cash equivalents at end of period 1,108 2,591 2,217
Reconciliation of net cash flow to movement in net debt
At start Cash At end of of period Flow PeriodHalf year ended 31st December £000 £000 £0002012 Cash at bank 2,217 (1,109) 1,108 Bank loan (1,950) 950 (1,000) 167 159 108 2011 Cash at bank 21 2,570 2,591 Bank loan (1,816) (134) (1,950) (1,795) 2,436 641 Year ended 30th June 2012 Cash at bank 21 2,196 2,217 Bank loan (1,816) (134) (1,950) (1,795) 2,062 267 Market Value of General Portfolio31st December 2012 Current Value £000 % Nestlé 276 5.8British American Tobacco 270 5.7Diageo 269 5.7Henkel 259 5.4Schindler 253 5.3Pernod Ricard 245 5.2Royal Dutch Shell 240 5.1L'Oreal 241 5.1Heineken 238 5.0Investor 220 4.6Imperial Tobacco 210 4.4Unilever 209 4.4Novartis 202 4.3BASF 203 4.3Koninklijke DSM 197 4.1Reckitt Benckiser 191 4.0ABB 168 3.5Holcim 168 3.5Danone 162 3.4BHP Billiton 150 3.2Others 375 8.0 4,746 100.0 Notes:- 1. The results for the half-year are unaudited. The information contained in this report does not constitute statutory accounts within the meaning of the Companies Act 2006. The statutory accounts of the Group for the year ended 30th June 2012 have been reported on by the Company's auditors and have been delivered to the Registrar of Companies. The report of the auditors was unqualified. 2. This report has been prepared in accordance with the accounting policies contained in the Company's Annual Report and Accounts 2012, International Financial Reporting Standards and comply with IAS34. 3. The calculation of earnings per share is based on the weighted average number of shares in issue for the period and the profit on ordinary activities after tax.