TIDMLFI
LONDON FINANCE & INVESTMENT GROUP P.L.C.
("Lonfin", "the Company" or "the Group")
Preliminary announcement of unaudited results for the year ended 30th June 2013
and dividend declaration
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 Preliminary Results for the year ended 30th June
2013.
Chairman's statement
Lonfin is an investment company whose objective is to generate growth in
shareholder value in real terms over the medium to long term while maintaining
a progressive dividend 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 U.K. quoted
companies and these are balanced by a General Portfolio, which consists of a
broad range of investments in major U.S.A., U.K. and other European companies
which provides a diversified exposure to international equity markets.
At 30th June 2013, the Strategic Investments in which we have Directors in
common, were our associated company Western Selection P.L.C. and Finsbury Food
Group Plc. Detailed comments on our Strategic Investments are given below.
* Net assets have increased over the year by 44.6% from 31.6p per share to
45.7p per share
* The General Portfolio has increased over the year by 17.5%
* The General Portfolio is yielding 3.0% (2012 - 3.0%)
* Net borrowings of GBP534,000 compared with GBP267,000 of net cash at 30 June
2012
* Decrease of 4% in operating costs
Results
Our net assets per share have increased 44.6% to 45.7p from 31.6p last year.
The increase reflects the appreciation in the value of our Strategic
Investments of 81%, largely attributable to the appreciation in Finsbury Food
Group, and an increase in the value of our General Portfolio by 17.5%
The Group achieved a profit for the year, before tax and the fair value
adjustments of investments, of GBP171,000 (2012, including profit on sale of
freehold property of GBP2,137,000 - GBP2,074,000). The profit after fair value
adjustments, tax and non-controlling interest was GBP4,637,000 (2012 - GBP869,000)
giving a profit per share of 14.9p (2012 - 2.8p).
Strategic Investments
Western Selection P.L.C. ("Western")
The Group owns 7,864,412 shares, being 43.8%, of the issued share capital of
Western.
On 27th September 2013, Western announced a profit before associates and tax of
GBP681,000 for its year to 30th June 2013 (2012 - GBP164,000). Including associates
and after exceptional items and tax, losses per share were1.6p (2012 - profits
- 1.0p).
Western has paid an interim dividend of 0.85p and proposes an increased final
dividend of 1.05p (2012 - 0.90p). Western's net assets at market value were GBP
14,799,000, equivalent to 82p per share, an increase of 14% from 72p last year.
Our share of the net assets of Western including the value of Western's
investments at market value, was GBP6.5 million (2012 - GBP5.6 million). The fair
value recorded in the statement of financial position is the market value of GBP
3,930,000 (2012 - GBP3,144,000). This represents 27% (2012 - 32%) of the net
assets of the Group.
Mr. D. C. Marshall is the Chairman of Western and Mr. J. M Robotham and Mr.
E.J. Beale, the chief executive of our subsidiary company (City Group P.L.C.),
are non-executive Directors. Western has Strategic Investments in Creston plc,
Northbridge Industrial Services plc, Swallowfield plc and Hartim Limited. An
extract from Western's announcement relating to its Strategic Investments is
set out below:
Creston plc
Creston is a marketing services group whose strategy is to grow within its
sector both by organic growth and through selective acquisition to become a
substantial diversified marketing services group. In their trading
announcement on 29th July, Creston reported high levels of new business
activity and confidence this would lead to underlying growth in its client
base. Further information about Creston is available on their website:
www.creston.com.
The audited results for the year to 31st March 2013, show a headline profit
before tax of GBP10,000,000 (2012 - GBP10,300,000), equivalent to fully diluted
earnings of 14.66p per share (2012 - 12.34p).
Western maintained its holding of 3,000,000 shares in Creston, which is 4.9%
of their issued share capital. The value of this investment at 30th June
2013 was GBP3,240,000, an increase of 96% from the value of GBP1,650,000 at June
2012, and represents 22% (2012 - 13%) of Western's net assets.
Mr D. C. Marshall is a non-executive director of Creston.
Northbridge Industrial Services PLC
Northbridge hires and sells specialist industrial equipment to a
non-cyclical customer base. With offices or agents in the U.K., U.S.A.,
Dubai, Germany, Belgium, France, Australia, Singapore, India, Brazil, Korea
and Azerbaijan, Northbridge has a global customer base. This includes
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.
On 13th September Northbridge announced the acquisition of Crestchic (Asia
Pacific) PTE Limited for GBP6.63m, funded by cash resources and a share
placing of 1,561,700 new shares. The acquisition of the Singapore based
distributor of loadbanks and transformers, enhances Northbridge's presence
in the region and re-unifies the brand. Further information about
Northbridge is available on their website: www.northbridgegroup.co.uk.
Northbridge announced audited profits of GBP3,707,000 for the year ended 31st
December 2012 (2011 - GBP2,321,000) and declared a final dividend of 3.575p
per share, making 5.425p for the year (2012 - 5.0p).
Western sold 200,000 of its 2,200,000 holding in May 2013, realising GBP
738,000 and a profit of GBP527,000, and now holds 2,000,000 shares in
Northbridge. Following the sale, Western's holding is 11.6% of their issued
share capital. The value of this investment at 30th June 2013 was GBP7,040,000
(2012 - GBP5,984,000) being 48% (2012 - 46%) of Western's net assets.
Mr D. C. Marshall is a non-executive director of Northbridge.
Swallowfield plc
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.The company has recently appointed a new Chairman and
a new Chief Executive. Further information about Swallowfield is available
on their website: www.swallowfield.com.
Swallowfield announced its annual results to June 2013 on 19th September
showing a loss after tax of GBP815,000 compared to a profit of GBP1,263,000 for
the comparable period last year. Dividends of GBP118,000 (2012 - GBP118,000)
were received from Swallowfield during the year.
At the reporting date Western owned 1,869,149 shares which is 16.5% of their
issued share capital. The market value of this investment on 30th June 2013
was GBP1,495,000 (2012 - GBP2,187,000), being 10% (2012 - 17%) of Western's net
assets.
Investments in Associates
Hartim Limited
Hartim is the unquoted holding company for Tudor Rose International Limited
("TRI") which was founded in 1984. It 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, TRI
sells into 78 countries worldwide including USA, Spain, Portugal, Italy,
Czech Republic, Russia, Turkey, South Africa, Saudi Arabia, UAE, Malaysia,
Australia and China. Last year Hartim acquired out of administration its
principal distributor in Australia, but the Australian business has not been
successful in generating sufficient sales to cover its overhead costs and
significant losses have been incurred, leading to the winding up of this
business.
Western holds 49.5% of Hartim, which has a 31st December year end, and which
generated trading profits before exceptional items in the year to 30th June
2013 of GBP915,000. Hartim sustained exceptional losses, after tax, in
connection with Australia of GBP2,809,000. Turnover in the period was GBP
21,609,000 (2012 - GBP27,799,000). Western's share of the consolidated loss
after exceptional items and tax for the twelve months to 30th June 2013 was
GBP937,000 (2012 - loss - GBP342,000) and the book value of the investment at
30th June 2013 was GBP185,000 (2012 - GBP1,124,000), being 1% (2012 - 10%) of
Western's assets.
Despite the problems in Australia, the UK division of Hartim continues to
trade profitably. We have high hopes for this business provided that it can
avoid any more costly misadventures.
Western has two nominees on the board of Hartim: Mr E. J. Beale and Mr L. H.
Marshall (a director of City Group PLC, Western's company secretaries).
MWB Group Holdings Plc ("MWB")
MWB was placed into administration on 16 November 2012. We made an
impairment provision in the subsidiary holding this investment of GBP1,611,000
in 2012 and with a write off of GBP70,000 this year the cost has now been
fully written off.
Finsbury Food Group Plc ("Finsbury")
Finsbury is one of the largest producers and suppliers of premium cakes,
bread and morning goods in the UK. The Group currently supplies most of the
UK's major supermarket chains. Further information about Finsbury is
available on its website: www.finsburyfoods.co.uk.
The Group increased its holding in Finsbury by 1 million shares at a cost of
GBP390,000 and held 9 million shares, representing 13.95% of their share
capital. The market value of the holding was GBP5,490,000 on 30th June 2013
(cost - GBP2,283,000) and represents 38% (2012 - 19%) of the net assets of the
Group.
On 23rd September Finsbury announced audited profits on continuing
operations after tax and minority interests of GBP5,218,000 for the year ended
30th June 2013 (2012 - GBP3,291,000) and profits after tax on discontinued
operations of GBP3,034,000 (2012 - GBP1,560,000). Finsbury returned to the
dividend list for the first time since 2008, paying an interim of 0.25p and
declaring a final dividend of 0.5p per share, making 0.75p for the year
(2012 - nil).
Mr. D.C. Marshall and Mr. E. J. Beale, the Chief Executive of our subsidiary
company City Group P.L.C., are non-executive Directors of Finsbury.
General Portfolio
The investments comprising the General Portfolio at 30th June 2013 are
listed on page 11. The spread of the General Portfolio was increased by the
addition of North American holdings. 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.
The number of holdings in the General Portfolio has reduced to 29 from 30.
We have increased the amount invested in the General Portfolio over the year
by GBP626,000 (2012: increased by GBP171,000).
Operations & Employees
All of our operations and those of our associate, Western, except investment
selection, are outsourced to our subsidiary, City Group P.L.C. City Group also
provides office accommodation, company secretarial and head office finance
services to a number of other U.K. and Jersey clients. City Group has
responsibility for the initial identification and appraisal of potential new
strategic investments for the Group and the day to day monitoring of existing
strategic investments.
Dividend
The Board recommends a final dividend of 0.4p, making 0.8p per share for the
year (2012 - 0.7p). Subject to member's approval on 28th November 2013, the
dividend will be paid on 11th December 2013 to those members on the register at
the close of business on 22nd November 2013. Shareholders on the South African
register will receive their dividend in South African rand converted from
sterling at the closing rate of exchange on 26 September 2013 being GBP1 =
ZAR16.0307.
Since the introduction on 1 April 2012 of a new dividend withholding tax in
South Africa, the JSE Listings Requirements require disclosure of additional
information in relation to any dividend payments. Shareholders registered on
the Johannesburg register are therefore advised that the new dividend
withholding tax will be withheld from the gross final dividend amount of
6.41228 SA cents per share at a rate of 15%, unless a shareholder qualifies for
an exemption; shareholders registered on the Johannesburg register who do not
quality for an exemption will therefore receive a net dividend of 5.45044 SA
cents per share. The Company, as a non-resident of South Africa, was not
subject to the secondary tax on companies (STC) applicable before 1st April
2012, and accordingly, no STC credits are available for set-off against the
dividend withholding tax liability on the final net dividend amount. The
dividend is payable in cash as a `Dividend' (as defined in the South African
Income Tax Act, 58 of 1962, as amended) by way of a reduction of income
reserves. The dividend withholding tax and the information contained in this
paragraph is only of direct application to shareholders registered on the
Johannesburg register, who should direct any questions about the application
of the new dividendwithholding tax to Computershare Investor Services (Pty)
Limited, Tel: +27 11373-0004.
Dividend dates:
2013
Last date to trade (SA) Friday, 15 November
Shares trade ex dividend (SA) Monday,18 November
Shares trade ex dividend (UK) Wednesday, 20 November
Record date (UK and SA) Friday, 22 November 2013
Pay date Wednesday, 11 December 2013
Share certificates may not be dematerialised or rematerialised between Monday
18th November and Friday 22nd November 2013, both days inclusive. Shares may
not be transferred between registers during this period either.
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.
However, as a board we do concern ourselves that large scale quantitative
easing by central banks is creating a market that is divorced from economic
reality.
By Order of the Board
CITY GROUP P.L.C.
Secretaries
30th September 2013
Unaudited Consolidated Statement of Comprehensive Income
Consolidated Statement of Total Comprehensive Income
For the year ended 30th June 2013 2012
GBP000 GBP000
Dividends - Listed investments 313 265
Interest receivable 4 4
Rental and other income 54 70
Profits/(Losses) realised on sales of investments 215 (32)
Management services fees 228 295
------ -----
Operating income 814 602
Administration expenses (610) (638)
------ ------
Operating profit/(loss) 204 (36)
Unrealised changes in the carrying value of 4,629 (1,134)
investments
Exceptional profit on disposal of property - 2,137
Interest payable (33) (27)
----- ------
Profit on ordinary activities before taxation 4,800 940
Tax on result of ordinary activities (180) (65)
----- ------
Profit on ordinary activities after taxation 4,620 875
Non-controlling interest 17 (6)
----- ------
Profit for the financial year attributable to 4,637 869
members of the holding company
Other comprehensive income - -
----- ------
Total comprehensive income attributable to 4,637 869
shareholders
Reconciliation of headline earnings
Basic profit per share 14.9p 2.8p
Adjustment for the unrealised changes in the (14.2)p 3.6p
carrying value of investments, net of tax ------- ------
Headline profit per share 0.7p 6.4p
------- ------
Unaudited Consolidated Statement of Changes in Shareholders' Equity
Unrealised Share of Retained
Ordinary Share profits/ undistributed realised Non-
Share premium Revaluation (losses) on results of profits Controlling Total
Capital account Reserve investments Subsidiaries & losses Total interests equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Year ended 30th June
2012
Balances at 1st July 1,560 2,320 330 (1,750) 904 5,825 9,189 92 9,281
2012
Total comprehensive - - - 2,086 (1,476) 259 869 6 875
income ---------------------------------------------------------------------------------------
Transfer on disposal - - (330) - - 330 - - -
Dividends paid - - - - - (203) (203) - (203)
---------------------------------------------------------------------------------------
Total transactions - - - - - (203) (203) - (203)
with shareholders
---------------------------------------------------------------------------------------
Balances at 30th 1,560 2,320 - 336 (572) 6,211 9,855 98 9,953
June 2013 ---------------------------------------------------------------------------------------
Year ended 30th
June 2013
Balances at 1st 1,560 2,320 - 336 (572) 6,211 9,855 98 9,953
July 2012 ---------------------------------------------------------------------------------------
Total - - - 4,495 73 69 4,637 (17) 4,620
comprehensive ---------------------------------------------------------------------------------------
income
Dividends paid - - - - - (234) (234) - (234)
---------------------------------------------------------------------------------------
Total - - - - - (234) (234) - (234)
transactions
with ---------------------------------------------------------------------------------------
shareholders
Balances at 30th 1,560 2,320 - 4,831 (499) 6,046 14,258 81 14,339
June 2013 ----------------------------------------------------------------------------------------
Unaudited Consolidated Statement of Financial Position
At 30th June 2013 2012
GBP000 GBP000
Non-current Assets
Tangible assets 3 4
Investments 9,420 5,094
------ ------
9,423 5,098
------ ------
Current Assets
Listed investments 5,601 4,533
Trade and other receivables 256 272
Cash at bank 116 2,217
------ ------
5,973 7,022
Current Liabilities
Trade and other payables: falling due within one year (853) (2,167)
------ ------
Net Current Assets 5,120 4,855
Deferred taxation (204) -
------ ------
Total Assets less Current Liabilities 14,339 9,953
------ ------
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,320 2,320
Unrealised profits and losses on investments 4,831 336
Share of retained realised profits and losses of (499) (572)
subsidiaries
Company's retained realised profits and losses 6,046 6,211
------- -------
14,258 9,855
Non-controlling equity interests 81 98
------- -------
14,339 9,953
------- -------
Unaudited Company Statement of Financial Position
at 30th June 2013 2012
GBP000 GBP000
Non-current Assets
Investments in Group companies 6,147 5,987
---------- -----------
Current Assets
Listed investments 5,601 4,533
Trade and other receivables 35 18
Bank balance 76 2,202
------- -------
5,712 6,753
Trade and other payables: falling due within one year (757) (2,096)
------- -------
Net Current Assets 4,955 4,657
------- -------
Deferred taxation (204) -
------- -------
Total Assets less Current Liabilities 10,898 10,644
------- -------
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,320 2,320
Unrealised profits and losses on investments 972 553
Realised profits and losses 6,046 6,211
------- -------
Equity shareholders' funds 10,898 10,644
------- -------
Unaudited Consolidated Statement of Cash Flow
For the year ended 30th June 2013 2012
GBP000 GBP000
Cash flows from operating activities
Profit before tax 4,800 940
Adjustments for non-cash and non-operating activities -
Finance expense 33 27
Profit on disposal of property - (2,137)
Depreciation charges 1 5
Unrealised changes in the fair value of investments (4,629) 1,134
------- ------
205 (971)
Taxes paid (22) (17)
------- -------
Changes in working capital
Increase in trade and other receivables (16) (12)
Increase in trade and other payables 64 158
Increase in current asset investments (375) (301)
------- ------
(327) (155)
------- ------
Net cash outflow from operating activities (144) (63)
------- -------
Cash flows from disposal of property - 2,495
------- -------
Cash flows from investment activity
Purchase of strategic investments (390) -
------- -------
Net cash outflow from investment activity (390) -
------- -------
Cash flows from financing
Interest paid (33) (27)
Equity dividends paid (234) (203)
Net (repayment) / drawdown of loan facilities (1,300) 134
------- ------
Net cash outflow from financing (1,567) (96)
------- ------
(Decrease)/Increase in cash and cash equivalents (2,101) 2,196
Cash and cash equivalents at the beginning of the year 2,217 21
------- ------
Cash and cash equivalents at end of the year 116 2,217
------- ------
Notes
1. Earnings per share are based on the profit on ordinary activities after
taxation and non controlling interests and on 31,207,479 shares
(2012-31,207,479) being the weighted average of the number of shares in
issue during the year.
2. The financial information in this preliminary announcement of unaudited
group results does not constitute the company's statutory accounts for the
years ended 30th June 2013 or 30th June 2012 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
basis, except for certain assets and liabilities which are measured at
fair value, in accordance with IFRS and comply with IAS 34. The audited
accounts of the group for the year ended 30th June 2012 were reported on
with an unqualified audit report and have been delivered to the Registrar
of Companies.
Enquiries to:
London Finance & Investment GroupP.L.C. 020 7448 8950
David Marshall / Edward Beale
END
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