RNS Number:3124Y
London Finance & Investment Grp.PLC
5 February 2001
London Finance & Investment Group P.L.C.
Directors Registered office
D.C. Marshall, Chairman
25 City Road
R.A. Good
London, EC1Y 1BQ
Dr. F.W.A.A. Lucas
J.M. Robotham, OBE, FCA, MSI
5th February 2001
TO THE MEMBERS
The directors are pleased to present the unaudited interim results of the
company for the six months ended 31st December 2000.
Results
Our profit on ordinary activities attributable to shareholders for the six
months was #883,000 compared to #228,000 for the same period in 1999 and
earnings per share were 3.46p (1999 - 0.89p), an increase of 289%
The increase in dividends received is mainly due to a dividend of #64,000 from
our investment in Creston plc. The increase in contribution from management
services results mainly from one off tasks undertaken on behalf of overseas
clients. The contribution to profits by our associated company, Western
Selection P.L.C., for its half year to 31st December 2000 was #715,000 (1999 -
#80,000). This substantial increase occurred as a result of exceptional
profits realised on the sale of part of Western's strategic investment in The
Sanctuary Group PLC and the receipt of an exceptional dividend from its
strategic investment in Creston plc.
As is our practice, we are not paying an interim dividend; the dividend paid
in October was for the 12 months ended on 30th June 2000. At 31st December
2000 our net asset value per share was 61.1p, an increase of 22% from 30th
June 2000 and 9% from 31st December 1999. This compares favourably with falls
in both the FTSE 100, which was down 1.43% over the last six months and 10.21%
over the year, and the FTSE All Share, which fell 1.52% in the last six months
and 6.85% in over the year. The increase in net asset value is mainly due to a
significant increase in the market value of our strategic investment in
Marylebone Warwick Balfour Group Plc, which is held as a long term fixed
asset.
If we value our investment in Western at net asset value, rather than market
value, our net assets per share at 31st December 2000 were 76p compared to 60p
at 30th June 2000.
Investment policy and management
Our investment policy is to have strategic stakes in a few special situations,
and hold a diversified general portfolio of U.K. and European listed equities.
Strategic investments are minority positions where we seek to exercise
influence over the management of the investment. We are represented on the
boards of our strategic investments and, in turn, Western is also represented
on the boards of its two strategic investments, Creston plc and The Sanctuary
Group PLC.
Our general portfolio is managed by two of our non-executive directors,
Richard Good and Michael Robotham. Decisions in relation to both our strategic
and unlisted investments are taken by the board as a whole.
Strategic Investments
Marylebone Warwick Balfour Group Plc's strategy is the creation of a series of
highly cash generative businesses, each of which has property at its core.
Operations are split into 6 areas:
MWB Business Exchange, which provides 755,000 square feet of serviced offices
in 29 centres,
Hotels, most of which have 20-year management agreements with recognised
operators,
Retail Stores, which owns the Liberty brand, retail operations and properties,
Fund Management, which has invested #530m out of #650m committed by three
leisure funds,
Asset Management, which owns and manages commercial property, and
Project Management, which covers activities that create one-off profits or
fees, over a defined time-scale, with clearly contained risk.
The group announced profits before tax of #11,418,000 for its year ended 30th
June 2000 (1999: #6,320,000) and dividends for the year of 2.8p (1999: 2.5p)
per share. Earnings per share increased by 3% to 9.8p. At 30th June 2000 the
group had net assets with a book value in excess of #210m (1999: 83m), and net
assets per share of 202p (up from 143p at 30th June 1999).
On 3rd November 2000, the company announced that it had raised #62 million to
fund capital investment through a placing and open offer for 28.7 million
shares at 215p. The share price at 31st December was 233.5p compared to 155.5p
at 31st December 1999.
Megalomedia plc announced profits for its first half to 30th September 2000 of
#2,304,000, mainly from the disposal of its Contract Publishing business.
Since 30th September it has announced the disposal of its Post Production
Digital Services business to its management for #12,000,000.
This leaves the Company with a strong balance sheet including cash resources
after the disposal of approximately #20.9m (28p per share) and further loan
note receivables of #2.2m, compared to a market capitalisation of #16.6m. We
have acquired a further 245,000 Megalomedia shares in the period for #56,000.
The share price at 31st December was 22p compared to 32.5p at 31st December
1999.
Western Selection P.L.C., our associate strategic investment company,
announced profits after tax for the six months to 31st December 2000 of #
1,753,500 compared with #188,900 for the same period in the previous year.
Western expects to at least maintain its dividend of 0.40p for its current
year. The net asset value of Western, at market values, has increased to #
14,719,000 from #11,179,000 at 31st December 1999. This equates to 33.8p per
share at 31st December 2000, an increase of 14% since 30th June 2000. The
share price at 31st December was 14.75p compared to 19.25p at 31st December
1999 and, following the announcement of its interim results, the price has
increased to 18p at 31st January 2001.
Western has strategic investments in The Sanctuary Group PLC and Creston plc
and has recently reported on them as follows:
The Sanctuary Group PLC, Western's main strategic investment, is a
diversified media group and owner and exploiter of intellectual property
rights, which continues to expand through both acquisition and organic
means. Sanctuary is organised into four divisions: Music, covering
management, record companies, agency and books, New Media, covering
internet related activities, Facilities, covering recording and rehearsal
facilities and Screen, covering television production and distribution.
Sanctuary has issued preliminary results for the twelve months to 30th
September 2000, reporting an increase in turnover of 91% and operating
profits before interest and tax of #5,533,000 (1999: #3,303,000). Earnings
per share increased 14% to 1.88p from 1.65p last year, and the full year
dividend is increased from 0.20p to 0.25p. The Sanctuary share price has
increased from 56.5p at 30th June 2000 to 76p at 31st December 2000.
Creston plc has recently announced the disposal of its remaining property
interests and its restructuring into the holding company of a Marketing
Services Group with the intention of embarking on a buy and build
strategy. Its acquisition of Marketing Sciences Limited and Synergy
Consulting Limited was approved by shareholders on 29th January 2001.
Creston believes that there is great growth potential in providing
consultancy advice to established companies on marketing strategies, and
also believes that there are good opportunities to identify synergistic
benefits within the manufacturing services industry.
The net assets of the company at 31st December 2000 were substantially
unchanged from the 87p reported at 30th September 2000 after a final
dividend for the nine month period to 31st March 2000 of 32.5p (1999:
3.0p). The Creston share price was 115p at 30th June, declined to 90p at
31st December 2000 following the payment of the 32.5p final dividend.
Subsequent to the completion of the acquisition and re-listing the shares
have improved to 110p on 31st January 2001.
Conclusion
The market appreciates the underlying value of some of our Strategic
Investments but others remain undervalued. We continue to work with the
management of our Strategic Investments to help grow their businesses and
enhance shareholder value.
The General Portfolio of investments has outperformed recently compared to the
market, mainly because of our exposure to European stocks. Two thirds of our
General Portfolio comprises shares listed in the UK and, taken as a whole,
these investments have performed in line with the market. Future developments
for telecommunications and technology stocks are uncertain and we continue to
limit our exposure to these sectors. General Portfolio investments are held
for the medium to long term and we expect that they will provide a reasonable
return over time by way of both income and capital growth.
We declared a dividend for the year to 30th June 2000 of 1.1p per share, which
was paid in October. As mentioned above, it is not our intention to pay
interim dividends; and subject to unforeseen circumstances, we expect to at
least maintain our dividend for the year to 30th June 2001, which we
anticipate paying in October 2001.
David C. Marshall
Chairman
Unaudited Consolidated Profit & Loss Account
Half Year Ended Year Ended
31st December 30th June
2000 1999 2000
#000 #000 #000
Operating Income
Dividends received 174 106 306
Interest and sundry income 16 14 29
Profit on sales of investments 136 214 325
326 334 660
Management services income 238 212 433
564 546 1,093
Administrative expenses
Investment operations (137) (134) (271)
Management services (186) (212) (430)
Total administrative expenses (323) (346) (701)
Operating profit 241 200 392
Share of result of associated undertaking 715 80 350
Interest payable (58) (48) (104)
Profit on ordinary activities before 898 232 638
taxation
Tax on result of ordinary activities - (4) (16)
Profit on ordinary activities after 898 228 622
taxation
Minority interest (15) - (1)
Profit attributable to members of the 883 228 621
holding company
Proposed dividend - - (281)
Retained profit for the period 883 228 340
Earnings per share 3.46 p 0.89 p 2.43 p
Dividend per share Nil Nil 1.10 p
Unaudited Consolidated Balance Sheet
31st December 30th June
2000 1999 2000
#000 #000 #000
Fixed assets
Tangible assets 509 517 517
Investments 7,199 6,320 6,499
7,708 6,837 7,016
Current assets
Listed investments 3,537 3,553 3,710
Unlisted investments 43 66 55
Debtors 225 175 146
Cash, bank balances and deposits 238 46 53
4,043 3,840 3,964
Creditors falling due within one year(1,828) (1,773) (1,962)
Net Current Assets 2,215 2,067 2,002
Total Assets less Current Liabilities 9,923 8,904 9,018
Capital and Reserves
Called up share capital 1,277 1,276 1,276
Share premium account 961 956 957
Reserves 363 361 361
Profit and loss account 7,254 6,259 6,371
Shareholders funds 9,855 8,852 8,965
Minority equity interests 68 52 53
9,923 8,904 9,018
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 2000. 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 period ended
30th June 2000 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 25,530,338 (December 1999 -
25,520,274 and June 2000 - 25,523,710), in issue during the period.
Consolidated Cash Flow Statement Half Year Ended Full Year
31 December 30 June
2000 1999 2000
#000 #000 #000
Cash inflow/(outflow) on operating activities 304 551 (18)
Returns on investments and servicing of finance
Dividends received 270 168 369
Interest paid (58) (48) (104)
Net cash inflow from returns on investments and 212 120 265
servicing of finance
Taxation recovered/(paid) 5 2 (10)
Investing activities
Tangible fixed assets - purchased (5) (20) (31)
Fixed asset investments - purchased (56) (635) (511)
- 188 167
- proceeds on disposal
Net cash outflow from investment activities (61) (467) (375)
Equity dividend paid - Company (281) (255) (255)
Fnancing
Share capital issued 6 - 1
Net drawdown of loan facility - - 350
Net cash inflow from financing 6 - 351
Increase/(Decrease) in cash 185 (49) (42)
Balance Sheet Analysis taking investments at market value
Half Year Ended Year Ended
31st December 30th June
2000 1999 2000
#000 #000 #000
Principal investments at
market value:-
Marylebone Warwick Balfour 7,005 4,665 4,830
Group Plc
Megalomedia plc 902 1,253 867
Western Selection P.L.C. 2,841 3,811 2,604
Creston plc 186 365 238
10,934 10,094 8,539
General equity portfolio 5,557 5,201 5,479
(see analysis below)
Tangible fixed assets 509 517 517
Cash, bank balances and 238 46 53
deposits
Bank overdraft (1,500) (1,600) (1,500)
Other net (liabilities)/ (61) 143 (261)
assets
Minority interests (68) (52) (53)
Net assets 15,609 14,349 12,774
Net assets per share 61.11 p 56.22 p 50.05 p
+ Lonfin owns 40.48% of the issued shares of Western Selection P.L.C. and
accounts for it as an associated company. Taking Western's investments at
market value at 31st December 2000 our investment had an underlying value of
approximately #6.5 million.
# %
Market Value of General Portfolio at 31st December 2000
UTi Worldwide 317,840 5.72
Unilever 286,500 5.16
Nestle 231,933 4.17
ING Groep 218,542 3.93
Diageo 194,400 3.50
HSBC Holding 192,075 3.46
UBS 188,156 3.39
Zurich Financial 187,633 3.38
Barclays 186,480 3.36
GlaxoSmithKline 170,232 3.06
Liberty International 165,750 2.98
Shell Transport & Trading 164,700 2.96
Prudential 161,550 2.91
Schroders 158,520 2.85
Lloyds TSB Group 155,760 2.80
BAA 148,320 2.67
Roche Holdings 136,407 2.45
AstraZeneca 135,000 2.43
CGNU 129,840 2.34
Cadbury Schweppes 129,640 2.33
Anglo American 129,172 2.32
Schweiz-Ruckversicherungs 128,393 2.31
Credit Suisse Group 127,236 2.29
Reuters Group 124,634 2.24
BOC Group 122,040 2.20
Novartis 118,354 2.13
De Beers 115,172 2.07
BAE Systems 114,600 2.06
Cable & Wireless 108,360 1.95
Marconi Electronic Systems 107,850 1.94
Fortis 107,500 1.93
Vodafone Group 98,200 1.77
Pearsons 95,400 1.72
Wyndeham Press Group 93,000 1.67
J. Sainsbury 79,400 1.43
Fuller, Smith &Turner 68,000 1.22
Tibbett & Britten Group 57,500 1.03
Other (less than 1%) 102,780 1.85
5,556,868 100.00
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