TIDMLFI
Date: 28th February 2011
On behalf of: London Finance & Investment Group P.L.C. ("Lonfin", "the
Company" or "the Group")
Embargoed until: 1600hrs
London Finance & Investment Group P.L.C.
Interim Results
Lonfin (LSE: LFI, JSE: LNF), today announces its unaudited interim results for
the six months ended 31st December 2010.
Chairman's Statement
Introduction
As an investment company our target is to achieve growth in shareholder value
in real terms over the medium to long term. In the short term our results can
be influenced by overall stock market performance, particularly the performance
of our Strategic Investments. We continue to believe that a combination of
Strategic Investments and a General Portfolio is the most effective 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 medium to longer term and these are balanced by a General Portfolio
which consists of investments in major U.K. and European equities.
At 31st December 2010, we held three Strategic Investments in which we have
board representation: our associated company Western Selection P.L.C., MWB
Group Holdings Plc and Finsbury Food Group plc. Detailed comments on our
Strategic Investments are given below.
Results
Our net assets per share increased 26% to 29.4p at 31st December 2010 from
23.3p at 30th June 2010. Our Strategic Investments increased in value by 28%
and our General Portfolio increased by 22%. This compares with the increases of
21% in the FTSE 100 index, 14% in the FTSEurofirst 300 index and 40% in AIM
over the half year. At the close of business on 15th February 2011, our net
asset value was 26.3p.
The Group achieved a profit before exceptional items and tax for the half year
of GBP196,000 compared to GBP110,000 for the same period last year. This was in the
main due to the recovery of provisions of GBP90,000 made in the previous year
against falls in value of the General Portfolio. Including the exceptional item
of GBP1,828,000 (2009 - GBP833,000) arising from the recognition of the favourable
increases in the fair value of our investments, our profit after tax and
minority interest was GBP2,005,000 (2009 profit: GBP943,000) giving profits per
share of 6.4p (2009: profit - 0.4p).
Strategic Investments
Western Selection P.L.C. ("Western")
The Group owns 7,860,515 Western shares, having sold 3,897 during the half
year, representing 43.8% of Western's issued share capital. Our holding of
Western 2011 Warrants were not taken up and have now lapsed.
On 23rd February 2011, Western announced a profit after tax of GBP328,000 for its
half year to 31st December 2010 and a profit per share of 1.8p (2009: 0.7p).
Western's net assets at market value were GBP12,800,000 equivalent to 71p per
share, an increase of 17% from 61p at 30th June 2010.
The market value of the Company's investment in Western at 31st December 2010
was GBP3,262,000] representing 35%of the net assets of Lonfin. The underlying
value of the investment in Western, valuing Western's own investments at market
value, was GBP5.6 million (30th June 2010: GBP4.8 million).
I am the Chairman of Western and Mr. Robotham is a non-executive director.
Western has strategic investments in Creston plc, Northbridge Industrial
Services PLC, Swallowfield plc. and Hartim Limited. Extracts from Western's
announcement on its strategic investments are set out below:
Creston plc
Creston is a marketing services group with a strategy to grow within its
sector to become a substantial, diversified international marketing
services group. Creston's results for the half-year to 30th September 2010
show a loss after tax of GBP133,000 (2009: profit - GBP435,00). The results of
the six month period are after charging GBP3,159,000 for the write off of
goodwill on the disposal of DLKW advertising agency for GBP28m. Net debt was
extinguished by this transaction. Completion has recently announced the
acquisition of the Cooney/Walters Businesses in the U.S.A.. That company
has been associated with Creston's divisions servicing the health care
industry for some time.
Western owns 3,000,000 shares in Creston (4.9%) with a market value at
31st December 2010 of GBP2,520,000 (30th June 2010: GBP2,752,000), being 20%
of Western's assets.
Northbridge Industrial Services PLC
Northbridge was formed for the purpose of acquiring companies that hire
and sell specialist industrial equipment such as electrical load banks and
generators. Northbridge's first acquisition was Crestchic Limited, one of
the largest specialist load bank equipment manufacturers in the world,
located in Burton-on-Trent, selling and hiring to a national and
international customer base. Northbridge has recently added to its
interests in Dubai by increasing its fleet of power and other electrical
equipment.
Northbridge's latest results, for the half year to 30th June 2010, showed
profit of GBP1,024,000 (2009: GBP806,000, reflecting the growth in higher
margin rental business.
Western took up 325,000 shares at a cost of GBP406,250 in July 2010 under an
open offer for Northbridge to acquire Tasman Oil Tools Pty Ltd, based in
Perth, Western Australia. Western now owns 2,200,000 shares, representing
14.39% of Northbridge's share capital. The value of this investment at
31st December 2010 was GBP4,268,000 (30th June 2010: GBP2,508,000),
representing 33% of Western's assets.
Swallowfield plc
Swallowfield is a full service provider for global and household brands
operating in the cosmetics and personal care and household goods
marketplace. It offers a flexible and tailored service including: contract
filling market analysis, design, formulation and testing of products,
packaging design and sourcing and distribution of stock.
Swallowfield's latest results, for the year to 30th June 2010, showed
profit of GBP921,000 (30th June 2009: GBP1,094,000) against a background of
customer uncertainty and rising input costs.
At 31st December 2010, Western owned 1,837,649 shares in Swallowfield
(16.25% of their issued share capital) having increased the holding by
340,000 shares at a cost of GBP434,000. The market value of the Company's
holding in Swallowfield on 31st December 2010 was GBP2,444,000 (30th June
2010: GBP1,816,000) representing 19% of the Company's assets.
Western does not believe that the Board of Swallowfield has the necessary
mix of skills and experience amongst its non-executive directors and will
continue to work with other shareholders to rectify this.
Hartim Limited
Hartim offers a complete sales, marketing and logistical services to a
number of 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 2010 is a
profit of GBP540,000 after tax (2009 GBP335,000). These results are a credible
achievement under challenging world wide conditions and represent a very
good return on our investment. Hartim's results vary over the year and are
traditionally better in the second half of the calendar year.
At 31st December 2010, Western owned 49.5% of Hartim. The carrying value
of the Company's investment in Hartim on 31st December 2010 was GBP1,355,000
(30th June 2010: GBP1,128,000) representing 11% of the Company's assets.
Finsbury Food Group plc ("Finsbury Food")
The Group owns 8,000,000 shares in Finsbury Food, representing 15.2% of their
share capital. The market value of our holding was GBP1,840,000 on 31st December
2010 compared to a cost of GBP1,893,000; this represents 20% of the net assets of
Lonfin.
Finsbury Food is a supplier of ambient cakes to most of the UK's major
supermarket chains and speciality breads to Waitrose including gluten-free and
low fat products. Finsbury issued a trading statement Group revenue was up 6.0%
compared with the same period last year reversing the decline of the last full
year. Whilst the consumer and inflationary environment remains difficult to
predict, Finsbury continues to see new product growth opportunities and the
company is trading in line with market expectations.
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 share
capital. The market value of the holding at 31st December, 2010 was GBP880,000,
compared with a book value of GBP1,681,000, which represents 9% of the net assets
of Lonfin.
MWB is a hotel, serviced offices and retail group that is in the process of
realising its assets through an orderly disposal programme. At the MWB Loan
Stock Holders' meeting on 10 January 2011, the redemption date relating to the
GBP22 million 9.75% Loan Stock was extended from 30 June 2012 to 31 December
2016. This now aligns with the projected back-stop end date of the Group's Cash
Distribution Programme. MWB issued a trading statement on 20th January 2010,
reporting that despite the return over the important Christmas period of the
winter snows, strong cash generation from its Malmaison and Hotel du Vin
division and continuing organic driven growth in MWB Business Exchange.
I am a non-executive director of MWB.
General Portfolio
The General Portfolio is diverse and consists of U.K. and European blue chip
equities, most of which have significant international exposure. The list of
these investments is set out at the end of this announcement.
Dividends
The board has declared an interim of 0.30p payable on Friday 15th April 2011 to
shareholders on the register at the close of business on Friday 25th March
2011.
Outlook
World stock markets have rebounded considerably over the last six months,
however we remain cautious about the outlook for 2011 and have positioned the
general portfolio accordingly. We will be looking to reduce debt slightly over
the next six months, as and when selling opportunities arise.
David C. Marshall
Chairman
Interim dividend
The declared interim dividend is 0.30p per share (2009 - 0.30p) and will be
paid on Friday 15th April 2011 to those members registered at the close of
business on Friday 25th March 2011. Shareholders on the South African register
will receive their dividend in South African Rand converted from sterling at
the closing rate of exchange on Friday 25th February 2011.
Salient dates for dividend
Last day to trade (SA) Thursday 17th March 2011
Shares trade ex dividend (SA) Friday 18th March 2011
Shares trade ex dividend (UK) Wednesday 23rd March 2011
Record date (UK & SA) Friday 25th March 2011
Pay date Friday 15th April 2011
Shareholders are hereby advised that the exchange rate to be used will be GBP 1
= ZAR 11.2706. This has been calculated as the average of the bid/ask spread at
16.00 (United Kingdom time) being the close of business on Friday 25th February
2011. Consequently the dividend of 0.30p will be equal to 3.38118 South African
cents.
No dematerialisation or rematerialisation of share certificates, nor transfer
of shares between the registers in London and South Africa will take place
between Friday 18th March 2011 and Friday 25th March 2011, both dates
inclusive.
Unaudited Consolidated Income Statement
Half year ended Year
ended
31st December 30th June
2010 2009 2010
Restated
GBP000 GBP000 GBP000
Operating Income
Dividends received 97 80 174
Interest and sundry income 20 20 87
Profit on sales of investments, including 255 227 119
provisions
-------- -------- --------
372 327 380
Management services income 245 225 405
-------- -------- --------
617 552 785
-------- -------- --------
Administrative expenses
Investment operations (142) (146) (293)
Management services (225) (231) (464)
-------- -------- --------
Total administrative expenses (367) (377) (757)
-------- -------- --------
Operating profit 250 175 28
Exceptional fair value adjustment 1,828 833 791
Interest payable (53) (67) (114)
-------- -------- --------
Profit on ordinary activities before taxation 2,025 941 705
Tax on result of ordinary activities (5) (1) (18)
-------- -------- --------
Profit on ordinary activities after taxation 2,020 940 687
Minority interest (15) 3 6
-------- -------- --------
Total comprehensive income - profit attributable 2,005 943 693
to members of the holding company
===== ===== =====
Reconciliation of headline earnings
Earnings per share 6.4p 3.0 p 2.2p
Adjustment for exceptional items, net of tax (5.8)p (2.6)p (2.5)p
-------- -------- --------
Headline earnings/(loss) per share 0.6p 0.4 p (0.3)p
-------- -------- --------
Interim dividend 0.30p 0.30p 0.30p
Final dividend - - 0.30p
Total in respect of the year 0.60p
Unaudited ConsolidatedChanges in Shareholders' Equity
Total comprehensive income/(expense) 2,005 943 693
Dividends paid to equity shareholders (94) - (93)
-------- -------- --------
1,911 943 600
Equity shareholders' funds at start of period 7,256 6,656 6,656
-------- -------- --------
Equity shareholders' funds at end of period 9,167 7,599 7,256
===== ===== =====
Unaudited Consolidated Statement of Financial Position
31st December 30th June
2010 2009 2010
GBP000 GBP000 GBP000
Non-current assets
Tangible assets 372 383 377
Principle investments:-
MWB Group Holdings Plc 880 780 795
Finsbury Food Group plc 1,840 1,620 1,200
Western Selection P.L.C. 3,262 2,240 2,672
-------- -------- --------
6,354 5,023 5,044
-------- -------- --------
Current assets
Listed investments 4,691 5,036 4,225
Debtors 269 254 294
Cash, bank balances and deposits 50 49 17
-------- -------- --------
5,010 5,339 4,536
-------- -------- --------
Total Assets 11,364 10,362 9,580
===== ===== =====
Capital and Reserves
Called up share capital 1,560 1,560 1,560
Share premium account 2,320 2,318 2,318
Revaluation reserve 330 330 330
Unrealised profits and losses on investments (1,827) (3,492) (3,747)
Share of undistributed profits and losses of 854 737 791
subsidiaries and associates
Company's retained realised profits and losses 5,930 6,146 6,004
-------- -------- --------
Equity shareholders funds 9,167 7,599 7,256
Creditors falling due within one year 2,098 2,676 2,240
Minority equity interest 99 87 84
-------- -------- --------
11,364 10,362 9,580
===== ===== =====
Consolidated Cash Flow Statement
Half year ended Year
ended
31st December 30th June
2010 2009 2010
GBP000 GBP000 GBP000
Profit before taxation 2,025 941 705
-------- -------- --------
Adjustments for non-cash and non-operating
expenses:-
Depreciation charges 5 7 13
Investment provisions (1,919) (1,130) (791)
Net interest paid 53 67 114
-------- -------- --------
(1,861) (1,136) (664)
-------- -------- --------
Tax paid (5) (1) (18)
-------- -------- --------
Changes in working capital:-
Decrease in debtors 24 55 15
Increase/(Decrease) in creditors 7 (161) (122)
Decrease in current asset investments 139 331 669
-------- -------- --------
170 225 562
-------- -------- --------
Cash inflow on operating activities 329 58 585
Cash flows from financing
Net interest paid (53) (67) (114)
Repayment of loan facilities (149) (56) (475)
Equity dividend paid (94) - (93)
-------- -------- --------
Net cash outflow from financing (296) (123) (682)
-------- -------- --------
Increase/(Decrease) in cash and cash equivalents 33 (65) (97)
Cash and cash equivalents at start of period 17 114 114
-------- -------- --------
Cash and cash equivalents at end of period 50 49 17
===== ===== =====
Reconciliation of net cash flow to movement in net debt
At start Cash At end of
of period Flow Period
Half year ended 31st December GBP000 GBP000 GBP000
2010
Cash at bank 17 33 50
Bank loan (2,081) 149 (1,932)
-------- -------- --------
(2,064) 182 (1,882)
===== ===== =====
2009
Cash at bank 114 (65) 49
Bank loan (2,556) 56 (2,500)
-------- -------- --------
(2,442) (9) (2,451)
===== ===== =====
Year ended 30th June 2010
Cash at bank 114 (97) 17
Bank loan (2,556) 475 (2,081)
-------- -------- --------
(2,442) 378 (2,064)
===== ===== ======
Market Value of General Portfolio
31st December 2010 Current
Value
GBP %
Nestlé 260 5.5
Royal Dutch Shell 233 5.0
Schindler-Holdings 221 4.7
British American Tobacco 217 4.6
Pernod-Ricard 212 4.5
L'Oreal 204 4.4
Henkel KGAA 200 4.3
Novartis 198 4.2
Koninklijke DSM 193 4.1
ABB 191 4.1
Carlsberg 191 4.1
Investor 190 4.0
Heineken 186 4.0
BHP Billiton 183 3.9
Holcim 181 3.9
BASF 179 3.8
Imperial Tobacco Group 177 3.8
Diageo 176 3.8
Reckitt Benckiser 175 3.7
Unilever 172 3.7
Danone 165 3.5
Total 163 3.5
Beiersdorf 162 3.4
Roche Holdings 143 3.0
Lafarge 119 2.5
-------- --------
4,691 100.0
===== =====
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 2010 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 2010, International
Financial Reporting Standards and comply with IAS34.
3. The amendment to presentation, under IAS 1, which is mandatory for periods
beginning 1st April 2009, has been adopted. This amendment requires the
presentation of comprehensive income, which the company has opted to
present in two statements - an income statement and a statement of
comprehensive income.
4. 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.
END
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