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

3 Mar 2005 07:00

LONDON FINANCE & INVESTMENT GROUP P.L.C. 3rd March 2005 TO THE MEMBERSThe Directors are pleased to present the unaudited interim results of theCompany for the six months ended 31st December 2004IntroductionAs an investment company our target is to achieve growth in shareholder valuein real terms over the long term. In the short term our results are influencedby overall stock market performance. We continue to believe that a combinationof Strategic Investments and a General Portfolio is the most prudent way ofachieving our aims. Strategic Investments are significant investments insmaller UK quoted companies where we have expectations of above average growthover the longer term and these are balanced by a General Portfolio, whichmainly consists of investments in major U.K. and European equities.At 31st December 2004, we held three Strategic Investments in which we haveboard representation: our associated company Western Selection P.L.C.,Marylebone Warwick Balfour Group Plc and Finsbury Food Group plc. Detailedcomments on our Strategic Investments are given below.ResultsThe Group made a profit before tax for the half year of ‚£121,000 compared witha profit of ‚£151,000 last year. Our operating profits have decreased from ‚£136,000 to ‚£118,000 after a fall in net income from management services of ‚£41,000 due to the timing of fees for special work. Our profit after tax andminority interest was ‚£130,000 (2003 - ‚£152,000) giving earnings per share of0.50p (2003 - 0.59p).Our net assets per share have increased 16% to 41.6p at 31st December 2004 from35.8p at 30th June 2004. Our Strategic Investments have increased in value by21% and our General Portfolio net of overdrafts and other liabilities hasincreased by 11%. This compares with the rise in the FTSE 100 index of 6% overthe half year. At the close of business on 28th February 2005, our net assetvalue had further increased to 47.9p.Strategic InvestmentsWestern Selection P.L.C. ("Western")The Company owns 17,611,928 shares, being 40.48% of the issued share capital,and 3,238,072 warrants. On 31st January 2005, Western announced a profit aftertax of ‚£114,000 for its half year to 31st December 2004 and earnings per shareof 0.26p (2003 - 0.24p). Western's net assets at market value were ‚£10.3million, equivalent to 23.8p per share, an increase of 3% from 23.2p at 30thJune 2004.The market value of the Company's investment in Western at 31st December 2004was ‚£2.5 million and this represents 23.3% of the net assets of Lonfin. Theunderlying value of the Company's investment in Western, valuing Western's owninvestments at market value, was ‚£4.2 million (30th June 2004 - ‚£4.1 million).I am the Chairman of Western and Mr. Robotham is a non-executive director.Western has strategic investments in Creston plc and Swallowfield plc. Extractsfrom Western's announcement on its strategic investments are set out below: Creston plc Creston is a marketing services group, operating in the U.K., with significant international clients, whose strategy is to grow within its sector both by organic growth and acquisition. Creston's results for the half-year to 30th September 2004 show a profit after tax of ‚£1,022,000 (2003 - ‚£515,000), equivalent to earnings of 4.5p per share (2003 - 4.6p). Our income in the period from Creston amounted to ‚£16,158 (2003 - ‚£32,000, which included a final dividend and a special interim dividend). Western exercised its option for 308,264 Creston shares at a price of ‚£ 1.31 per share and now owns 2,308,264 shares, being 10.05% of Creston's issued share capital. The market value of the company's holding in Creston on 31st December 2004 was ‚£3,174,000 (30th June 2004 - ‚£2,620,000), being 26.7% of Western's net assets. I am the non-executive chairman of Creston. 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 plans "to raise shareholder returns by driving down total input costs, improving manufacturing efficiencies, presenting new and exciting product ranges and improving our pricing strategies". Swallowfield's latest published results for the year to 30th June 2004 showed a profit after tax, but before exceptional restructuring costs, of ‚£1,094,000 (2003 - ‚£718,000). Exceptional restructuring costs of ‚£396,000 relating to a series of restructuring actions designed to generate annual overhead savings of ‚£500,000 were incurred during the year. The value of this business is underpinned by net assets in excess of ‚£1 per share. We own 1,000,000 shares in Swallowfield being 8.88% of the issued share capital. The market value of the company's holding in Swallowfield on 31st December 2004 was ‚£885,000 (30th June 2004 - ‚£775,000) being 7.5% of the net assets of the Company. Marylebone Warwick Balfour Group Plc ("MWB")The Company owns 3,000,000 shares in MWB, representing 2.73% of its issuedshare capital. The book value at 31st December 2004 was ‚£2.6 million comparedwith a market value of ‚£2.5 million, which represents 23.7% of the net assetsof Lonfin.MWB is in the process of a realisation program through the controlled sale ofassets with the objective of returning cash or cash equivalents to shareholdersby end of December 2007. We expect the repayment to be above the current marketprice of MWB's shares.Both Mr. Robotham and I are non-executive directors of MWB.Finsbury Food Group plc ("Finsbury Food")At 31st December 2004, the Company owned 4,800,000 shares in Finsbury Food and3,000,000 warrants, representing 22.7% of their share capital and 47.2% oftheir warrants. The market value of our holding was ‚£2.8 million on 31stDecember 2004 compared to a cost of ‚£847,000, this represents 26.1% of the netassets of Lonfin.Finsbury Food is a supplier of boxed ambient cakes to most of the UK's majorsupermarket chains and speciality breads to Waitrose.On 18 January 2005, Finsbury Food announced that it had had a successfulcompletion to their 2004 Christmas programme by focussing on producing a groupof higher margin core products, more efficiently and more profitably.Finsbury's speciality breads business is performing ahead of expectations andthe Nestlƒ© programme is progressing as expected.I am a non-executive director of Finsbury FoodGeneral PortfolioThe General Portfolio is dominated by holdings in oils & natural resources,pharmaceuticals, foods & beverages and banking. These sectors accounted for 74%of the portfolio by value at 31st December 2004 and 83% at 30th June 2004. Alist of the holdings can be found below.The year aheadThe share prices of our Strategic Investments in small listed companies willremain volatile, but we expect these investments to provide good value toshareholders over the longer term. We believe that all our strategicinvestments will outperform the market this year and so enhance our assetvalue.As is our practice, we only declare one dividend a year, which was paid inOctober 2004 for the year ended 30th June 2004. It is our intention, subject tounforeseen circumstances, to maintain a policy of progressive increases inannual dividends.David C. MarshallChairman Unaudited Consolidated Profit & Loss Account Half year ended Year ended 31st December 30th June 2004 2003 2004 ‚£000 ‚£000 ‚£000 Operating Income Dividends received 96 80 154 Interest and sundry income 14 14 28 Profit on sales of investments 180 189 225 ---------- ---------- ---------- 290 283 407 Management services income 234 275 533 ---------- ---------- ---------- 524 558 940 ---------- ---------- ---------- Administrative expenses Investment operations (150) (140) (281) Management services (256) (282) (518) ---------- ---------- ---------- Total administrative expenses (406) (422) (799) ---------- ---------- ---------- Operating profit 118 136 141 Share of result of associated undertaking 55 47 139 Interest payable (52) (32) (72) ---------- ---------- ---------- Profit on ordinary activities before taxation 121 151 208 Tax on result of ordinary activities (1) (1) (9) ---------- ---------- ---------- Profit on ordinary activities after taxation 120 150 199 Minority interest 10 2 (9) ---------- ---------- ---------- Profit attributable to members of the holding 130 152 190 company Proposed dividend - - (233) ---------- ---------- ---------- Retained profit/(loss) for the period 130 152 (43) ====== ====== ====== Earnings per share 0.50p 0.59p 0.74p Headline earnings per share 0.50p 0.59p 0.74p Fully diluted earnings per share 0.50p 0.58p 0.73p Dividend per share Nil Nil 0.90 p Unaudited Consolidated Balance Sheet 31st December 30th June 2004 2003 2004 ‚£000 ‚£000 ‚£000 Fixed assets Tangible assets 432 442 437 Investments 7,440 7,308 7,390 ---------- ---------- ---------- 7,872 7,750 7,827 Current assets Listed investments 3,218 2,928 3,077 Debtors 121 171 272 Cash, bank balances and deposits 79 81 30 ---------- ---------- ---------- 3,418 3,180 3,379 Creditors falling due within one year (1,540) (1,195) (1,655) ---------- ---------- ---------- Net Current Assets 1,878 1,985 1,724 ---------- ---------- ---------- Total Assets less Current Liabilities 9,750 9,735 9,551 ====== ====== ====== Capital and Reserves Called up share capital 1,311 1,295 1,295 Share premium account 1,096 1,033 1,033 Reserves 361 361 361 Profit and loss account 6,910 6,975 6,780 ---------- ---------- ---------- Shareholders funds 9,678 9,664 9,469 Minority equity interest 72 71 82 ---------- ---------- ---------- 9,750 9,735 9,551 ====== ====== ======Notes:-1. The results for the half-year are unaudited and have been prepared on the basis of the accounting policies adopted in the accounts for the year ended 30th June 2004. The financial information in this interim report does not constitute statutory accounts within the meaning of Section 240 (5) of the Companies Act 1985. The audited accounts of the Group for the year ended 30th June 2004 have been reported on by the Group's auditors and have been delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under Section 237 (2) or 272(3) of the Companies Act 1985. 2. Earnings per share are based on the profit after taxation and minorities, and on the average number of shares 25,960,112 (December 2003 - 25,714,981 and June 2004 - 25,809,406), in issue during the period. Consolidated Cash Flow Statement Half year ended Year ended 31st December 30th June 2004 2003 2004 ‚£000 ‚£000 ‚£000 Cash inflow/(outflow) on operating activities 5 (194) (479) ---------- ---------- ---------- Returns on investments and servicing of finance Dividend received 193 172 246 Interest paid (43) (28) (60) ---------- ---------- ---------- Net cash inflow from returns on investments and servicing of finance 150 144 186 ---------- ---------- ---------- Taxation paid (1) (1) (9) ---------- ---------- ---------- Investing activities Fixed assets investments purchases (100) - - ---------- ---------- ---------- Net cash outflow from investment activities (100) - - ---------- ---------- ---------- Equity dividend paid - Company (233) (218) (218) ---------- ---------- ---------- Financing Share capital issued 78 72 72 Net drawdown of loan facility 150 250 450 ---------- ---------- ---------- Net cash inflow from financing 228 322 522 ---------- ---------- ---------- Increase in cash 49 53 2 ====== ====== ======(a) Reconciliation of operating profit to net cash flow from operatingactivities 31st December 30th June 2004 2004 ‚£000 ‚£000 Operating profit 118 141 Dividends receivable (96) (154) Depreciation charges 5 15 Decrease/(increase) in debtors 151 (105) (Decrease)/increase in creditors (32) 16 Increase in current asset investments (141) (392) ---------- ---------- 5 (479) ====== ======(b) Reconciliation of net cash flow to movement in net debt At start Cash At end of of period flow period ‚£000 ‚£000 ‚£000 2004/2005 Cash at bank 30 49 79 Bank loan (1,250) (150) (1,400) ---------- ---------- ---------- (1,220) (101) (1,321) ====== ====== ====== 2003/2004 Cash at bank 28 2 30 Bank loan (800) (450) (1,250) ---------- ---------- ---------- (772) (448) (1,220) ====== ====== ====== Balance Sheet Analysis taking investments at market value 31st December 30th June 2004 2003 2004 ‚£000 ‚£000 ‚£000 Principal investments at market value: Marylebone Warwick Balfour Group Plc 2,580 1,545 2,463 Finsbury Food Group plc 2,847 3,435 2,467 Western Selection P.L.C. 2,535 2,507 1,650 ---------- ---------- ---------- General equity portfolio - (see analysis 3,924 3,417 3,679 attached) Tangible fixed assets 432 442 437 Cash, bank balances and deposits 79 81 30 Bank loan (1,400) (1,050) (1,250) Other net (liabilities)/assets (19) 26 (133) Minority interests (72) (71) (82) ---------- ---------- ---------- Net assets 10,906 10,332 9,260 ---------- ---------- ---------- Net Assets per share 41.6p 39.9p 35.8p Net Assets per share at 28th February 2005 47.9p Market Value of General Portfolio 31st December 2004 ‚£000 % Nestlƒ© 204 5.2 UBS 166 4.2 Cadbury Schweppes 136 3.5 Shell Transport & Trading Co 133 3.4 ING Groep 130 3.3 Reckitt Benckiser 126 3.2 Pernod-Ricard 120 3.1 Roche Holdings 120 3.1 BOC 119 3.1 Associated British Foods 117 3.0 HSBC Holding 114 2.9 Imperial Tobacco Group 114 2.9 Tesco 113 2.9 Diageo 111 2.8 Land Securities Group 110 2.8 Hilton Group 108 2.8 British American Tobacco 108 2.8 Smith & Nephew 107 2.7 Novartis 105 2.7 Lloyds TSB Group 104 2.7 Credit Suisse Group 103 2.6 BP 102 2.6 Vodafone Group 99 2.5 Johnson Matthey 99 2.5 Boots Group 98 2.5 GlaxoSmithKline 98 2.5 Reed Elsevier 96 2.4 Rexam 92 2.3 Liberty International 87 2.2 Scottish & Newcastle 87 2.2 Intercontinental Hotels Group 87 2.2 Carlsberg 79 2.0 Heineken 79 2.0 Beiersdorf 73 1.9 L'Oreal 67 1.7 Schindler-Holdings 57 1.4 Smiths Group 56 1.4 ---------- ---------- 3,924 100.0 ====== ======END