Interim Results LONDON FINANCE & INVESTMENT GROUP P.L.C. 3rd
March 2005 TO THE MEMBERS The Directors are pleased to present the
unaudited interim results of the Company for the six months ended
31st December 2004 Introduction As an investment company our target
is to achieve growth in shareholder value in real terms over the
long term. In the short term our results are influenced by overall
stock market performance. We continue to believe that a combination
of Strategic Investments and a General Portfolio is the most
prudent way of achieving our aims. Strategic Investments are
significant investments in smaller UK quoted companies where we
have expectations of above average growth over the longer term and
these are balanced by a General Portfolio, which mainly consists of
investments in major U.K. and European equities. At 31st December
2004, we held three Strategic Investments in which we have board
representation: our associated company Western Selection P.L.C.,
Marylebone Warwick Balfour Group Plc and Finsbury Food Group plc.
Detailed comments on our Strategic Investments are given below.
Results The Group made a profit before tax for the half year of
�121,000 compared with a 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 and minority
interest was �130,000 (2003 - �152,000) giving earnings per share
of 0.50p (2003 - 0.59p). Our net assets per share have increased
16% to 41.6p at 31st December 2004 from 35.8p at 30th June 2004.
Our Strategic Investments have increased in value by 21% and our
General Portfolio net of overdrafts and other liabilities has
increased by 11%. This compares with the rise in the FTSE 100 index
of 6% over the half year. At the close of business on 28th February
2005, our net asset value had further increased to 47.9p. Strategic
Investments Western 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 after tax of �114,000 for its half year to 31st December
2004 and earnings per share of 0.26p (2003 - 0.24p). Western's net
assets at market value were �10.3 million, equivalent to 23.8p per
share, an increase of 3% from 23.2p at 30th June 2004. The market
value of the Company's investment in Western at 31st December 2004
was �2.5 million and this represents 23.3% of the net assets of
Lonfin. The underlying value of the Company's investment in
Western, valuing Western's own investments 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. Extracts
from 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 issued share capital. The book
value at 31st December 2004 was �2.6 million compared with a market
value of �2.5 million, which represents 23.7% of the net assets of
Lonfin. MWB is in the process of a realisation program through the
controlled sale of assets with the objective of returning cash or
cash equivalents to shareholders by end of December 2007. We expect
the repayment to be above the current market price 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 and 3,000,000
warrants, representing 22.7% of their share capital and 47.2% of
their warrants. The market value of our holding was �2.8 million on
31st December 2004 compared to a cost of �847,000, this represents
26.1% of the net assets of Lonfin. Finsbury Food is a supplier of
boxed ambient cakes to most of the UK's major supermarket chains
and speciality breads to Waitrose. On 18 January 2005, Finsbury
Food announced that it had had a successful completion to their
2004 Christmas programme by focussing on producing a group of
higher margin core products, more efficiently and more profitably.
Finsbury's speciality breads business is performing ahead of
expectations and the Nestl� programme is progressing as expected. I
am a non-executive director of Finsbury Food General Portfolio The
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. A list of the holdings can
be found below. The year ahead The share prices of our Strategic
Investments in small listed companies will remain volatile, but we
expect these investments to provide good value to shareholders over
the longer term. We believe that all our strategic investments will
outperform the market this year and so enhance our asset value. As
is our practice, we only declare one dividend a year, which was
paid in October 2004 for the year ended 30th June 2004. It is our
intention, subject to unforeseen circumstances, to maintain a
policy of progressive increases in annual dividends. David C.
Marshall Chairman 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 operating activities 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 % Nestl� 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
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