Last checked at 3 Oct 2016 07:00
LONDON FINANCE & INVESTMENT GROUP PLC - Unaudited Final ResultsLONDON FINANCE & INVESTMENT GROUP PLC - Unaudited Final Results
PR Newswire
London, September 30
Friday 30th September 2016
LONDON FINANCE & INVESTMENT GROUP P.L.C.(“Lonfin”, “the Company” or “the Group”)
Unaudited Preliminary results for the year ended 30th June 2016
London Finance & Investment Group P.L.C. (LSE: LFI, JSE: LNF), the investment company whose assets primarily consist of Strategic Investments and a General Portfolio, today announces its unaudited Preliminary Results for the year ended 30th June 2016.
Strategy and Business Model
Lonfin is an investment company whose objective is to generate growth in shareholder value in real terms over the medium to long term whilst maintaining a progressive dividend policy.
The Company invests in other companies in accordance with the Company’s Investment Policy. In the short term, the performance of the Company can be influenced by overall stock market performance and to ameliorate this short term risk the Company has a combination of Strategic Investments together with a General Portfolio. Strategic Investments are significant investments in smaller UK quoted companies and these are balanced by a General Portfolio, which consists of a broad range of investments in major USA, UK and other European companies which provides a diversified exposure to international equity markets.
Results
Net assets have increased over the year by 22.6% from 50.1p per share to 61.4p per share. Strategic investments have increased in value over the year by 6.0%, from £11,694,000 to £12,417,000 largely due to the increase in value of our investment in Finsbury Food Group Plc. Strategic investments are yielding 2.9% (2015 – 2.7%) The General Portfolio has increased over the year by 22.8% from £5,801,000 to £7,125,000 The General Portfolio is yielding 2.4% (2015 – 2.9%) No borrowings at 30th June 2016, compared with £1,385,000 at 30th June 2015 Operating cost were broadly in line with 2015The Company and its subsidiaries (“Group”) achieved a profit for the year, before tax and changes to the fair value adjustments of investments, of £1,683,000 (2015- £334,000). The profit, after positive fair value adjustments, tax and non-controlling interest was £3,873,000 (2015 - £1,978,000) giving a headline earnings per share of 5.2p (2015 –headline earnings per share of 0.8p).
Strategic Investments
Western Selection P.L.C. (“Western”)
The Group owns 7,860,515 shares, being 43.8%, of the issued share capital of Western.
On 30th September 2016, Western announced unaudited preliminary results showing a profit before exceptional items of £64,000 for the year to 30th June 2016 (2015 – profit before exceptional items of £159,000). Including associates and after exceptional items and tax, earnings per share were 0.4p (2015 – earnings per share – 15.5p).
Western has paid an interim dividend of 1.05p and proposes a final dividend of 1.05p making 2.1p for the year (2015 – 2.1p). Western’s net assets at market value as at 30th June 2016 were £14,217,000 equivalent to 79p per share, an increase of 5.3% from 75p last year.
Our share of the net assets of Western, including the value of Western’s investments at market value, was £6,627,000 (2015 - £5,907,000). The fair value recorded in the Statement of Financial Position is the market value of £3,537,000 (2015 - £3,694,000). This represents 26% (2015 – 24%) of the net assets of the Group. Western’s objective is to generate growth in value for shareholders over the medium to long term and pay a progressive dividend.
Western’s business model is to take sizeable minority stakes in relatively small companies usually before or as their shares are admitted to trading on one of the UK’s stock exchanges and have directors in common through which they can provide advice and support for these growing companies. These may or may not become associated companies. The aim is that these companies (“Core Holdings”) will grow to a stage at which Western’s support is no longer required and its stake can then be sold over time into the relevant stock market. Companies that are targeted as Core Holdings will have an experienced management team, a credible business model and good prospects for growth.
Mr. D. C. Marshall is the Chairman of Western and Mr L.H. Marshall, Mr. J.M. Robotham and Mr. E.J. Beale are non-executive directors. Western’s main Core Holdings are Northbridge Industrial Services plc, Swallowfield plc, Bilby Plc and Tudor Rose International Limited.
An extract from Western’s announcement relating to its main Core Holdings is set out below:
Northbridge Industrial Services plc (“Northbridge”)
Northbridge hires and sells specialist industrial equipment to a global customer base. It has offices or agents in the U.K., U.S.A., Dubai, Germany, Belgium, France, Australia, Singapore, India, Brazil, Korea and Azerbaijan. Customers include 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 their website: www.northbridgegroup.co.uk
Northbridge announced its unaudited interim results for the six months ended 30th June 2016 on 29th September 2016 and recorded a loss after tax of £2,338,000 for the period.
Western acquired a further 1,323,632 Northbridge shares during the year for £964,000 bringing its holding to 3,223,632 shares. Western’s holding is now 12.45% of Northbridge’s issued share capital. The value of this investment at 30th June 2016 was £2,772,000 (2015 - £3,895,000) being 19% (2015 - 29%) of Western’s net assets.
Mr D. C. Marshall is a non-executive director of Northbridge.
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 their website: www.swallowfield.com
Swallowfield announced its annual results to 25th June 2016 on 20th September 2016 and recorded a profit after tax of £2,001,000 compared to a profit of £746,000 for the comparable period last year.
Dividends of £52,000 were received from Swallowfield during the year (2015 – nil). A final dividend of 2.3p per share has been declared and Western will receive a further £46,000.
Western acquired a further 130,851 Swallowfield shares during the year for £203,000. At the reporting date, Western owned 2,000,000 Swallowfield shares which was 11.9% of Swallowfield’s issued share capital. The market value of this investment on 30th June 2016 had increased to £3,400,000 from the value at 30th June 2015 of £2,019,000. The value of this investment is 24% (2015 - 15%) of Western’s net assets.
On 23rd September 2016, Western sold 200,000 Swallowfield shares for £520,000 (before selling expenses).
Mr E. J. Beale is a non-executive director of Swallowfield.
Bilby Plc (“Bilby”)
Bilby is an established and award winning provider of gas installation, maintenance and general building services to local authority and housing associations across London and South East England. They have a strategy of growing organically and by acquisition. Further information about Bilby is available on their website: www.bilbyplc.com.
In July 2015, the Company invested £1,500,000 in acquiring 1,875,000 shares in Bilby and in April 2016, a further investment of £545,000 for 462,088 Bilby shares. Western now holds 2,337,088 shares, which is 5.9% of Bilby’s issued share capital. The market value of this investment on 30th June 2016 was £2,968,000 which is 21% of Western’s net assets.
Bilby announced its results for the year ended 31st March 2016 on 14th July 2016 showing a profit after tax of £954,000 compared to a profit of £1,426,000 for the 14 month period ended 31st March 2015. Dividends of £58,000 were received from Bilby during the year. Bilby announced a final dividend of 2.00p per share which was paid in September 2016 which provided Western with further income of £46,700.
Tudor Rose International Limited (previously Hartim Limited) (“Tudor Rose International”)
Tudor Rose International 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, Tudor Rose International 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 the issued share capital of Tudor Rose International, which has a 31st December year end and which generated trading profits before tax in the year to 30th June 2016 of £71,000. Turnover in the period was £18,542,000 (2015 - £18,022,000).
Western’s share of a profit after tax, including a charge for disallowed tax losses, for the twelve months to 30th June 2016 was 35,000 (2015 – loss of £5,000) and the book value of the investment at 30th June 2016 was £1,290,000 (2015 - £1,223,000) being 9% (2015 - 9%) of Western’s net assets.
Western has two nominees on the Board of Tudor Rose International: Mr E. J. Beale and Mr L. H. Marshall.
Finsbury Food Group plc (“Finsbury”)
Finsbury is one of the largest producers and suppliers of premium cakes, bread and morning goods in the UK and currently supplies most of the UK's major supermarket chains. Further information about Finsbury is available on its website:
www.finsburyfoods.co.uk
During the year Lonfin disposed of 2,000,000 shares in Finsbury for £1,984,000 realising a profit of £1,408,000. At 30th June 2016, Lonfin held 8,000,000 Finsbury shares, representing 6.1% of Finsbury’s issued share capital. The market value of the holding was £8,880,000 as at 30th June 2016 (cost - £2,300,000) and represents 46% (2015 – 51%) of Lonfin’s net assets.
On 19th September 2016, Finsbury announced audited profits on continuing operations after tax and minority interests of £8,504,000 for the 52 weeks period ended 2 July 2016 (2015 - £6,620,000).
Finsbury paid an interim dividend of 0.93p and has recommended to its shareholders a final dividend of 1.87p per share, making 2.80p for the year (2015 – 2.5p).
On 27th September 2016, Lonfin sold 1,000,000 Finsbury shares for £1,200,000 (before selling expenses) and, on 29th September 2016, Lonfin sold a further 1,000,000 Finsbury shares for £1,250,000 (before selling expenses). Lonfin now holds 6,000,000 Finsbury shares which represent 4.6% of Finsbury’s issued share capital.
.Mr. Beale is a non-executive director of Finsbury.
General Portfolio
The portfolio is diverse with material interests in Food and Beverages, Natural Resources, Chemicals and Tobacco. We believe that the portfolio of quality companies we hold has the potential to outperform the market in the medium to long term.
At the year end the number of holdings in the General Portfolio was 26. We have decreased the amount invested in the General Portfolio over the year by £20,000 (2015 - increased by £100,000).
Operations and Employees
All of our operations and those of our associated company, Western, except investment selection, are outsourced to our subsidiary, City Group Limited (“City Group”). City Group also provides office accommodation, company secretarial and head office finance services to a number of other U.K. and Jersey companies. City Group has responsibility for the initial identification and appraisal of potential new strategic investments for the Company and the day to day monitoring of existing strategic investments and employs 8 people.
Save for the appointment of Mr E.J. Beale in April 2016, all directors of the Company and the directors of its subsidiaries are unchanged from last year and are male. The Group has set a target of 25% female members of the Company’s Board and female candidates will be considered on their merits when vacancies arise. The Board has enlarged during the year through the appointment of Mr E.J. Beale, the chief executive of City Group, and since this was an internal appointment, no female candidates were considered. Excluding directors, 4 of the 6 other employees of the Group at 30th June 2016 were female (30th June 2015 - 4 of 6).
Outlook
We believe our mix of Strategic Investments and a General Portfolio gives us every chance of outperforming the broader market in the medium to long term notwithstanding any short term volatility in markets, currencies and commodities.
30th September 2016
The annual report and accounts will shortly be finalised and sent to shareholders.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
The directors of the Company accept responsibility for the contents of this announcement.
For further information, please contact:
London Finance & Investment Group P.L.C.: 020 7796 9060(David Marshall/Edward Beale)
Johannesburg Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)
Consolidated Statement of Total Comprehensive IncomeFor the year ended 30th June
| 2016 | 2015 | ||
| Notes | £000 | £000 | |
| Dividends – Listed investments | 550 | 487 | |
| Rental and other Income | 82 | 82 | |
| Profits realised on sales of investments | 1,448 | 175 | |
| Management service fees | 252 | 233 | |
| Operating income | 2,332 | 977 | |
| Administration expenses | (649) | (643) | |
| Operating Profit | 1,683 | 334 | |
| Unrealised changes in the carrying value of investments | 2,643 | 2,049 | |
| Interest payable | (16) | (48) | |
| Profit on ordinary activities before taxation | 4,310 | 2,335 | |
| Tax on result of ordinary activities | (437) | (357) | |
| Profit on ordinary activities after taxation | 3,873 | 1,978 | |
| Non-controlling interest | (15) | (10) | |
| Profit for the financial year attributable to members of the holding company | 3,858 | 1,968 | |
| Other comprehensive Income | - | - | |
| Total comprehensive income attributable to shareholders | 3,858 | 1,968 | |
| Reconciliation of headline earnings | |||
| Basic earnings per share | 1 | 12.4p | 6.3p |
| Adjustment for the unrealised changes in the carrying value of investments, net of tax | (7.2)p | (5.5)p | |
| Headline earnings per share | 1 | 5.2p | 0.8p |
| All profits and losses are on continuing activities | |||
Consolidated Statement of Changes in Shareholders’ Equity
| Ordinary Share capital £000 | Share Premium Account £000 | Un-realised Profit on Investments £000 | Share of Undistributed Results of Subsidiaries £000 | Retained realised Profits & Losses £000 | Total £000 | Non-controlling Interests £000 | Total Equity £000 | |
| Year ended 30th June 2015 | ||||||||
| Balances at 1st July 2014 | 1,560 | 2,320 | 4,585 | (294) | 5,779 | 13,950 | 65 | 14,015 |
| Total Comprehensive Income | - | - | 1,719 | 320 | (71) | 1,968 | 10 | 1,978 |
| Dividends paid | - | - | - | - | (296) | (296) | - | (296) |
| Total transactions with shareholders | - | - | - | - | (296) | (296) | - | (296) |
| Balances at 30th June 2015 | 1,560 | 2,320 | 6,304 | 26 | 5,412 | 15,622 | 75 | 15,697 |
| Year ended 30th June 2016 | ||||||||
| Balance a 1st July 2015 | 1,560 | 2,320 | 6,304 | 26 | 5,412 | 15,622 | 75 | 15,697 |
| Total Comprehensive Income | - | - | 2,235 | 1,795 | (172) | 3,858 | 15 | 3,873 |
| Dividends paid | - | - | - | - | (312) | (312) | - | (312) |
| Total transactions with shareholders | - | - | - | - | (312) | (312) | - | (312) |
| Balance at 30th June 2016 | 1,560 | 2,320 | 8,539 | 1,821 | 4,928 | 19,168 | 90 | 19,258 |
Consolidated Statement of Financial Position
| 2016 | 2015 | ||
| £000 | £000 | ||
| At 30th June | |||
| Non-current Assets | |||
| Tangible assets | 22 | 31 | |
| Investments | 12,417 | 11,694 | |
| 12, 439 | 11,725 | ||
| Current Assets | |||
| Listed Investments | 7,125 | 5,801 | |
| Trade and other receivables | 272 | 218 | |
| Cash at bank | 588 | 115 | |
| 7,985 | 6,134 | ||
| Current Liabilities | |||
| Trade and other payables falling due within the year | (316) | (1,720) | |
| Net Current Assets | 7,669 | 4,414 | |
| Deferred Taxation | (850) | (442) | |
| Total Assets less Current Liabilities | 19,258 | 15,697 | |
| Capital and Reserves | |||
| Called up Share Capital | 1,560 | 1,560 | |
| Share Premium account | 2,320 | 2,320 | |
| Un-realised profits and losses on investments | 8,539 | 6,304 | |
| Share of retained realised profits and losses of subsidiaries | 1,821 | 26 | |
| Company’s retained realised profits and losses | 4,928 | 5,412 | |
| 19,168 | 15,622 | ||
| Non-controlling equity interests | 90 | 75 | |
| 19,258 | 15,697 | ||
| All profits and losses are on continuing activities | |||
Company Statement of Financial Position
| 2016 | 2015 | |||
| At 30th June 2016 | £000 | £000 | ||
| Non-current Assets | ||||
| Investments in Group companies | 3,847 | 6,203 | ||
| 3,847 | 6,203 | |||
| Current Assets | ||||
| Listed investments | 7,125 | 5,801 | ||
| Trade and other receivables | 27 | 19 | ||
| Cash at bank | 451 | 71 | ||
| 7,603 | 5,891 | |||
| Current Liabilities | ||||
| Trade and other payables: falling due within the year | (93) | (1,597) | ||
| Net Current Assets | 7,510 | 4,294 | ||
| Deferred Taxation | (330) | (442) | ||
| Total Assets less Current Liabilities | 11,027 | 10,055 | ||
| Capital and Reserves | ||||
| Called up share capital | 1,560 | 1,560 | ||
| Share premium account | 2,320 | 2,320 | ||
| Unrealised profits and losses on investments | 2,219 | 763 | ||
| Realised profits and losses | 4,928 | 5,412 | ||
| Equity shareholders’ funds | 11,027 | 10,055 |
Consolidated Statement of Cash Flow
| Notes | 2016 | 2015 | |
| £000 | £000 | ||
| Cash flows from operating activities | |||
| Profit/(Loss) before tax | 4,310 | 2,335 | |
| Adjustments for non-cash and non-operating activities - | |||
| Finance expense | 16 | 48 | |
| Depreciation charges | 9 | 8 | |
| Profit on non-current investment | (1,408) | - | |
| Unrealised changes in the fair value of investments | (2,643) | (2,049) | |
| 284 | 342 | ||
| Taxes paid | (28) | (26) | |
| Changes in working capital | |||
| (Increase)/decrease in trade and other receivables | (54) | 27 | |
| Increase/(decrease) in trade and other payables | 96 | (5) | |
| Decrease in current asset investments | 20 | 100 | |
| 62 | 122 | ||
| Cash flows from investment activity | |||
| Disposal/(Purchase) of strategic investment | 1,984 | (593) | |
| Net cash outflow from investment activity | 1.984 | (593) | |
| Cash flows from financing | |||
| Interest paid | (16) | (48) | |
| Equity dividends paid | (312) | (296) | |
| Net drawdown/(repayment) of loan facilities | (1,500) | 575 | |
| Net cash inflow/(outflow) from financing | (1,828) | 231 | |
| Decrease in cash and cash equivalents | 473 | 76 | |
| Cash and cash equivalents at the beginning of the year | 115 | 39 | |
| Cash and cash equivalents at end of the year | 588 | 115 |
Notes:
1. Basic earnings per share are based on the profit on ordinary activities after taxation and non-controlling interests and on 31,207,479 shares (2015 – 31,207,479) being the weighted average of the number of shares in issue during the year.
Headline earnings are required to be disclosed by the JSE.
Headline earnings per share are based on the ordinary activities after taxation and non-controlling interests, before unrealised changes in the fair value of investments net of tax, of £1,623,000 (2015 - £250,000) and on 31,207,479 (2015 – 31,207,479) shares being the weighted average of number of shares in issue during the year.
2. The net assets per share are calculated taking investments at market value and on 31,207,479 shares (2015 – 31,207,479) being the weighted average of the number of shares in issue during the year.
3. The financial information in this preliminary announcement of audited group results does not constitute the company’s statutory accounts for the years ended 30th June 2016 or 30th June 2015 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 Act 2006 applicable to companies reporting under IFRS. The accounts are prepared on the historical cost bases, except for certain assets and liabilities which are measured at fair value, in accordance with IFRS and comply with IAS 34. The audited accounts for the group for the year ended 30th June 2015 were reported on with an unqualified audit report and have been delivered to the Registrar of Companies.
Copies of this notification are held at the Company’s office, 6 Middle Street, London, EC1A 7JA (tel. 020 7796 9060) and are available for a period of 14 days from the date of this announcement.