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

Date: 28th February 2014 On behalf of: London Finance & Investment Group P.L.C. ("Lonfin", "the Company" or "the Group") Embargoeduntil: 14.30hrs (UK Time) 16.30hrs (SA Time) 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 2013 and dividend declaration. Chairman's Statement Introduction As 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.S., U.K. and European equities. At 31st December 2013, 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 givenbelow. Results Our net assets per share increased 1.5% to 46.4p at 31st December 2013 from45.7p at 30th June 2013. Our Strategic Investments increased in value by 3%during the period, reflecting a strong performance in Western's share price andweakness in the share price of Finsbury Food. Our General Portfolio increasedby 6%, compared with increases of 9% in the FTSE 100 index, and 14% in theFTSEurofirst 300 Index over the half year. At the close of business on 25thFebruary 2014, our net asset value was 45.3p per share. The Group profit before tax for the half year was £385,000 compared to a profitof £1,389,000 for the same period last year, which included the unrealisedprofit on a strong performance in Finsbury Food's share price. Our profitafter tax and minority interest was £355,000 (2012 profit: £1,359,000) givingprofits per share of 1.1p (2012 - 4.4p). 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 26th February 2014, Western announced a profit after tax of £336,000 for itshalf year to 31st December 2013 and a profit per share of 1.9p (2012: profit0.4p). Western's net assets at market value were £16,769,000 equivalent to 93pper share, an increase of 13% from 82p at 30th June 2013. Western hasannounced an interim dividend of 0.95p per share, an increase of 12% on theprior year. The market value of the Company's investment in Western at 31st December 2013was £4,323,000 representing 30% of the net assets of Lonfin. Theunderlying value of the investment in Western, valuing Western's owninvestments at market value, was £7.3million (30th June 2013: £6.5 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 digitally focussed insight and communications group with astrategy to grow within its sector to become a substantial, diversifiedinternational group. Further information about Creston is available on itswebsite: www.creston.com. Creston's results for the half-year to 30th September 2013 show a profit aftertax of £1,148,000 (2012: £8,259,000 - including a one off item of £3,450,000primarily deferred consideration write-back). Creston declared an interimdividend of 1.20p per share, an increase of 20% on the prior year. Western owns 3,000,000 shares in Creston (5.0%) with a market value at 31stDecember 2013 of £2,790,000 (30th June 2013: £3,240,000), being 17% ofWestern's assets. I am a Non-Executive Director of Creston. Northbridge Industrial Services plc ("Northbridge") Northbridge hires and sells specialist industrial equipment to a non-cyclicalcustomer 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, theoil and gas sector, shipping, construction and the public sector. The productrange includes loadbanks, transformers, generators, compressors, loadcells andoil 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 2013, showedprofit after tax of £1,949,000 (2012: £1,027,000). Northbridge declared an interimdividend of 2.00p per share, an increase of 8% on the prior year. Western owns 2,000,000 shares, representing 11.6% of Northbridge's sharecapital. The market value of this investment has increased substantially andat 31st December 2013 was £9,200,000 (30th June 2013: £7,040,000), representing55% of Western's assets. I am a Non-Executive Director of Northbridge. Swallowfieldplc ("Swallowfield")Swallowfield is a market leader in the development, formulation, manufactureand supply of cosmetics, toiletries and related household products for globalbrands and retailers operating in the cosmetics, personal care and householdgoods market. Further information about Swallowfield is available on itswebsite: www.swallowfield.com. Swallowfield'slatest results, for the year to 30th June 2013, showed a lossafter tax (and after restructuring costs of £491,000), of £815,000 (2012:profit of £1,263,000). Swallowfield did not declare a final dividend (2012:4.1p). Western owns 1,869,149 shares in Swallowfield (16.5% of their issued sharecapital). The market value of the Company's holding in Swallowfield on 31stDecember 2013 was £1,570,000 (30th June 2013: £1,495,000) representing 9% ofthe Company's assets. Hartim Limited ("Hartim")Hartim offers a complete export sales, marketing and logistical service to anumber of well known UK branded fast moving consumer goods companies. Thisinvestment was acquired on 28th March 2009 and is accounted for as anassociated company. Our share of Hartim's estimated results for the period ended 31st December 2013 isa profit of £161,000 (2012: £1,000) after tax, plus an exceptional profit of £167,000due to the release of surplus provisions relating to the closure of its Australian subsidiary. On 18th December 2013 we announced that we were making a loan of £500,000 to Hartimto provide funds to support its continuing growth. The loan is convertible into equityif not repaid by 31st December 2016, carries interest at 6% over base rate and is securedover Hartim's principal asset, its operating subsidiary, Tudor Rose Ltd. We also announced loans of £160,000 to Hartim's executive management team to assist them with the purchase of shares in Hartim formerly owned by the retiring managing director. These loansbear interest at 4.5% over base rate, are repayable by 31st December 2018, and are secured overshares in Hartim. The Western board has decided that it is in the best interests of Western'sshareholders that the current executive directors of Hartim should have a material stake in thesuccess of Hartim, and these loans are a pragmatic way of achieving this objective. These loans substantially increase Western's exposure to Hartim, but the business is performingwell, the loans generate a positive return to Western, and the structure encourages the paymentof a dividend on Western's original investment. At 31st December 2013, Western owned 49.5% of Hartim. The carrying value ofthe Company's equity investment in Hartim on 31st December 2013 was £514,000(30th June 2013: £185,000) representing 3% of the Company's assets. Inaddition, loans of £660,000 (equivalent to a further 4% of the Company'sassets) have been made to Hartim and its executive directors. Mr. Beale is a Non-Executive Director of Hartim. 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 low fatproducts. Further information about Finsbury Food is available on its website:www.finsburyfoods.co.uk. The Group holding in Finsbury Food is 9,000,000 shares, representing 13.6% oftheir share capital. The market value of our holding was £5,400,000 on 31stDecember 2013 compared to a cost of £2,283,000; this represents 37% of the netassets of Lonfin. Finsbury Food will be announcing their interim results on 24th March 2014. I am a Non-Executive Director of Finsbury Food. General Portfolio The list of investments included in the General Portfolio is set out at the endof this announcement. We added to a few of our holdings during the period andwe initiated positions in 3M and United Technologies. We also took the decisionto dispose of our holdings in BHP Billiton and Siemens. Dividends The Board has declared an interim dividend of 0.45p per share (2013: 0.4p). Outlook Expansionary policies of central bankers of the developed world have been a keydriver of share prices and markets in general for quite some time, but theBoard remain cautious given the fragile global economic conditions. Thevolatile start to the calendar year comes as no surprise and we expect investorsentiment to be a lot more erratic during the remainder of the year. David C. MarshallChairman Interim Dividend The declared interim dividend is 0.45p per share (ZAR 8.09708 cents) (2012 -0.4p) and will be paid on Friday, 11th April 2014 to those members registeredat the close of business on Thursday 20th March 2014 (SA) or Friday 21st March2014 (UK). Shareholders on the South African register will receive theirdividend in South African Rand converted from sterling at the closing rate ofexchange on 26th February 2014. The issued number of shares as at the declaration date is 31,207,479. The Company's UK Income Tax reference number is 948/L32120. Salient dates for dividend Last day to trade (SA) Thursday, 13th March 2014 Shares trade ex dividend (SA) Friday, 14th March 2014 Shares trade ex dividend (UK) Wednesday, 19th March 2014 Record date (SA) Thursday, 20th March 2014 Record date (UK) Friday, 21st March 2014 Pay date Friday, 11th April 2014 Shareholders are hereby advised that the exchange rate to be used will be GBP 1= ZAR 17.9935. This has been calculated as the average of the bid/ask spreadat 16.00 (United Kingdom time) being the close of business on 26th February2014. Consequently, the dividend of 0.45p will be equal to 8.09708 SouthAfrican cents. The JSE Listings Requirements require disclosure of additional information inrelation to any dividend payments. Shareholders registered on the Johannesburg register are reminded that thedividend withholding tax will be withheld from the gross final dividend amountof 8.09708 SA cents per share at a rate of 15%, unless a shareholder qualifiesfor an exemption; shareholders registered on the Johannesburg register who donot quality for an exemption will therefore receive a net dividend of 6.88252SA cents 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 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 14th March 2014, Thursday 20th all dates inclusive. Unaudited Consolidated Statement of Comprehensive Income Half year ended Year ended 31st December 30th June 2013 2012 2013 £000 £000 £000 Operating Income Dividends received 173 106 313 Interest and sundry income - - 58Profit on sales of investments, including provisions 205 131 215 ----- ----- ----- 378 237 586 Management services income 134 134 228 ----- ------ ----- 512 371 814 ----- ----- -----Administrative expenses Investment operations (158) (148) (295) Management services (173) (146) (315) ------ ------ -------Total administrative expenses (331) (294) (610) ------ ------ ------- Operating profit 181 77 204 Unrealised changes in the carrying value of investments 206 1,321 4,629Interest payable (2) (9) (33) ------ ------ ------- Profit on ordinary activities before taxation 385 1,389 4,800Tax on result of ordinary activities (45) (34) (180) ------ -------- ------ Profit on ordinary activities after taxation 340 1,355 4,620Non-controlling interest 15 4 17 ------- -------- ------- Total comprehensive income - profit attributable to members ofthe holding company 355 1,359 4,637 ------- -------- ------- Reconciliation of headline earnings Earnings per share 1.1p 4.4 p 14.9pAdjustment for unrealised changes in the carrying value ofinvestments and exceptional items, net of tax (0.6)p (4.3)p (14.2)p ------ ------ --------Headline earnings per share 0.5p 0.1 p 0.7p ------ ------ -------- Interim dividend 0.45p 0.4 p 0.4pFinal dividend 0.4p -------Total in respect of the year 0.8p ------- Unaudited Consolidated Changes in Shareholders' Equity 31st December 30th June 2013 2012 2013 £000 £000 £000 Total comprehensive income attributable to members 355 1,359 4,637Dividends paid to equity shareholders (125) (109) (234) ------- -------- ------ 230 1,250 4,403Equity shareholders' funds at start of period 14,258 9,855 9,855 -------- -------- ------Equity shareholders' funds at end of period 14,488 11,105 14,258 -------- -------- ------ Unaudited Consolidated Statement of Financial Position 31st December 30th June 2013 2012 2013 £000 £000 £000 Non-current assetsTangible assets 2 3 3Principal investments:- Finsbury Food Group Plc 5,400 3,359 5,490 Western Selection P.L.C. 4,323 2,987 3,930 ------ ------- ------ 9,725 6,349 9,423 ------ ------- ------ Current assetsListed investments 5,775 4,746 5,601Trade and other receivables 254 269 256Cash, bank balances and deposits 123 1,108 116 ------ ------ ------- 6,152 6,123 5,973 ------ ------ -------Total Assets 15,877 12,472 15,396 ------ ------ ------- Capital and ReservesCalled up share capital 1,560 1,560 1,560Share premium account 2,320 2,320 2,320Unrealised profits and losses on investments 5,037 1,727 4,831Share of undistributed profits and losses of subsidiariesand associates (387) (576) (499)Company's retained realised profits and losses 5,958 6,074 6,046 ------ ------ ------Equity shareholders funds 14,488 11,105 14,258 Trade and other payables falling due within one year 1,067 1,274 853Deferred taxation 255 - 204Non-controlling equity interest 67 93 81 ------- ------- ------- 15,877 12,472 15,396 ------- ------- ------- Net assets per share 46.4p 35.6p 45.7p Number of shares in issue 31,207,479 31,207,479 31,207,479 Unaudited Consolidated Statement of Cash Flow Half year ended Year ended 31st December 30th June 2013 2012 2013 £000 £000 £000 Profit before taxation 385 1,389 4,800 ------ ------ ------ Adjustments for non-cash and non-operating expenses:- Depreciation charges 1 1 1 Unrealised changes in the carrying value of fixed assetinvestments (206) (1,321) (4,629)Net interest paid 2 9 33 ------- ------- ------- (203) (1,311) (4,595) ------- ------- -------Taxation paid (3) (4) (22) ------- ------ ------ Changes in working capital:-Decrease/(Increase) in debtors 11 3 (16)Increase in creditors 69 26 64(Increase)/Decrease in current asset investments (300) 222 (375) ------- ------ ------- (220) 251 (327) ------- ------ -------Cash (outflow)/inflow on operating activities (41) 325 (144) ------- ------ ------- Investment activitiesPurchase of additional shares in strategic investment - (366) (390) ------- ------- ------Net cash outflow from investment activities - (366) (390) ------- ------- ------Cash flows from financingNet interest paid (2) (9) (33)Drawdown/(Repayment) of loan facilities 175 (950) (1,300)Equity dividends paid (125) (109) (234) ------- ------- -------Net cash inflow/(outflow) from financing 48 (1,068) (1,567) ------- ------- ------- Increase/(Decrease) in cash and cash equivalents 7 (1,109) (2,101)Cash and cash equivalents at start of period 116 2,217 2,217 ------ ------- -------Cash and cash equivalents at end of period 123 1,108 116 ------ ------- -------- Reconciliation of net cash flow to movement in net debt At start Cash At end of period Flow of PeriodHalf year ended 31st December £000 £000 £0002013Cash at bank 116 7 123Bank loan (650) (175) (825) -------- ------- -------- (534) (168) (702) -------- ------- --------2012Cash at bank 2,217 (1,109) 1,108Bank loan (1,950) 950 (1,000) -------- ------- -------- 267 (159) 108 -------- ------- --------Year ended 30th June 2013Cash at bank 2,217 (2,101) 116Bank loan (1,950) 1,300 (650) -------- ------- -------- 267 (801) (534) -------- ------- -------- Composition of General Portfolio31st December 2013 Current Value £000 % Nestlé 303 5.3 L'Oreal 299 5.2 Diageo 293 5.1 British American Tobacco 283 4.9 Investor 279 4.8 Henkel 260 4.5 Schindler 259 4.5 Royal Dutch Shell 'B' 249 4.3 Pernod-Ricard 238 4.1 Heineken 237 4.1 Reckitt Benckiser 234 4.1 Philip Morris International 233 4.0 BASF 224 3.9 Unilever 218 3.8 ABB 211 3.7 Imperial Tobacco 208 3.6 Novartis 193 3.3 Danone 174 3.0 Exxon Mobil 169 2.9 Holcim 168 2.9 Procter & Gamble 162 2.8 Chevron 156 2.7 Linde 152 2.6 Anheuser Busch Inbev 111 1.9 Glencore Xstrata 110 1.9 Givaudan 110 1.9 LVMH 103 1.8 3M 72 1.2 United Technologies 67 1.2 ------ ----- 5,775 100.0 ------ ----- 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 2013 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 2013, 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.