TIDMLFI
LONDON FINANCE & INVESTMENT GROUP PLC
Final Results
27 September 2021
LONDON FINANCE & INVESTMENT GROUP PLC
("Lonfin", "the Company" or "the Group")
Final Results for the year ended 30th June 2021
Dividend Declaration
London Finance & Investment Group PLC. (LSE: LFI, JSE: LNF), the investment
company whose assets primarily consist of Strategic Investments and a General
Portfolio, today announces its audited Final Results for the year ended 30th
June 2021 and the Board's Dividend Declaration.
Strategy, Business Model and Investment Policy
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 Group's investment policy is to invest in a range of 'Strategic', 'General
Portfolio' and from time to time 'Other Investments'. General Portfolio
Investments comprise liquid stock market investments, both in equity
instruments and bonds, and, at the Board's discretion, 'Other Investments' are
typically property and other physical assets. Strategic Investments are
significant investments in smaller UK quoted companies. These are balanced by
the 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.
The Group's net assets per share for 2021 have increased from the previous year
to 60.5p and decreased 7.7% over the last five years. Shareholders' dividends
for 2021 remains the same at 1.15p and increased by 4.5% over the last five
years. Information on the Group's performance against the Board's key
performance indicators (KPIs) is set out on page 9 of this report.
Results
* Net assets have increased to 60.5p per share (2020 - 50.6p per share)
* Strategic Investments have increased in value over the year, from £
6,291,000 to £8,202,000
* Strategic investments are yielding 0% (2020 - 2.6%)
* The General Portfolio has increased, adjusting for investment purchases and
sales, over the year, by 21.4% from £9,948,000 to £12,081,000
* Fair value movement is £1,196,000
* No significant increase in Group operating costs
* A final dividend of 0.60p per share is recommended, making a total of 1.15p
per share for the year (2020 - 1.15p)
The Company and its subsidiaries ("Group") recorded an operating profit for the
year, before interest, tax and changes to the fair value adjustments of
investments of £225,000, compared to operating profit for the previous year,
before tax and changes to the fair value adjustments of investments, of £
130,000. The significant increase in fair value of strategic investments that
occurred during the year has led to Total Comprehensive income for the year of
£3,421,000 compared to loss of £2,112,000 for the previous year. Basic and
headline profits per share are 4.8p (2020- losses of 2.6p).
Strategic Investments
Strategic Investments have increased in value by £1,911,000 due to the market
movements in the share prices.
Western Selection PLC ("Western")
The Group holds 7,860,515 ordinary shares, being 43.8%, of the issued share
capital of Western.
On 24th September 2021, Western announced unaudited preliminary results showing
a loss after tax of £109,000 for the year to 30th June 2021 (2020 loss - £
180,000). Losses per share are 0.62p (2020 - losses of 1.0p).
Western's Board has not recommended payment of an interim or a final dividend
for the year.
Western's net assets at market value at 30th June 2021 were £10,038,000
equivalent to 56p per share, an increase of 24.44% from 45p last year.
Our share of the net assets of Western, including the value of Western's
investments at market value, was £4,396,000 (2020 - £3,560,000). The fair value
for Western recorded in the Statement of Financial Position is the market value
of £2,712,000 (2020 - £2,751,000). This represents 14.2% (2020 - 17.3%) of the
net assets of the Group.
Western's objective is to generate growth in value for shareholders over the
medium to long-term. Western's business model is to take sizeable minority
stakes in relatively small companies and maintain a dialogue 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 will grow to a
stage at which our support is no longer required, and our stake can then be
sold over time into the relevant stock market. Companies that are targeted will
have an experienced management team, a credible business model and good
prospects for growth. In addition, as part of its Treasury Operations, Western
holds a General Portfolio of shares which consists of investments, primarily in
blue-chip companies in the U.S., U.K. and Europe.
Western is a strategic investment which is technically a subsidiary of the
Company that has not been consolidated due to the application of the investment
entity exemption under IFRS 10.
David Marshall is the Chairman of Western and Edward Beale is non-executive
director.
Western's main Core Holdings are Northbridge Industrial Services plc and Kinovo
Plc.
An extract from Western's announcement on 24th September 2021 relating to its
main Core Holdings is set out below:
Core Holdings
Northbridge Industrial Services Plc ("Northbridge")
Northbridge hires and sells specialist industrial equipment to a non-cyclical
customer base. With offices or agents in the UK, USA, Dubai, Germany, Belgium,
France, Australia, New Zealand, China and Singapore, 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 and oil tools. Further information about Northbridge is
available on their website: www.northbridgegroup.co.uk
Northbridge, which is admitted to trading on AIM, announced its results for the
year ended 31 December 2020 on 13 April 2021 and recorded a loss after tax,
before exceptional items, of £186,000 for the year (2019 - loss after tax £
236,000). No dividend was recommended by Northbridge during the year (2020 - £
Nil).
Western holds 3,300,000 Northbridge shares which represents 11.69% of
Northbridge's issued share capital. The market value of this investment at 30
June 2021 was £3,828,000 (2020 - £2,739,000) which represents approximately
38.1% (2020 - 33.7%) of Western's net assets.
Brand Architekts Group Plc ("BAG")
BAG, which is admitted to trading on AIM, is a beauty brands business
specialising in the delivery of a growing portfolio of innovative and exciting
new products, spanning areas such as haircare, skincare and body care, to
consumers and retailers. Further information about BAG is available on its
website: https://www.brandarchitekts.com/
Western sold its entire shareholding of 1,300,000 shares in Brand Architekts on
28 September 2020 realising £1,425,000.
Kinovo Plc ("Kinovo") (formerly Bilby Plc)
Kinovo 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 Kinovo is
available on their website: www.kinovoplc.com.
Kinovo, which is admitted to trading on AIM, announced its results for the year
ended 31 March 2021 on 6 July 2021 showing a profit before tax, before
exceptional items, of £2,363,000 compared to a profit before tax, before
exceptional items, of £3,691,000 for the previous year ended 31 March 2020. No
interim dividends were paid during the year. A final dividend of 0.5p per share
was approved at its AGM held on 1 September 2021 (2020 - £nil).
Western acquired 1,163,637 shares in the period and now holds 7,500,000 Kinovo
shares which represents 12.07% of Kinovo's issued share capital. Following the
additional £408,059 acquisitions during the year, the market value of this
investment on 30 June 2021 has increased to £2,775,000 (2020- £1,235,590),
which represents approximately 27.7% (2020 - 15.2%) of Western's net assets.
Associated Companies
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, which is admitted to
trading on AIM, is available on its website: www.finsburyfoods.co.uk
At 30th June 2021, Lonfin held 6,000,000 Finsbury shares, representing 4.6% of
Finsbury's issued share capital. The market value of the holding was £5,490,000
as at 30th June 2021 (value - £3,540,000) and represents approximately 29%
(2020 - 22%) of Lonfin's net assets.
On 20th September 2021, Finsbury announced operating profits after tax of £
12,131,000 for the 52 weeks ended 27th June 2021 (2020 - £10,330,000).
No dividends were received during the financial year. Finsbury has recommended
to its shareholders a final dividend of 2.4p per share for 2021, the resolution
for which shall be put to the shareholders at the Annual General Meeting to be
held on 20th November 2021.
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 30th June 2021, the number of holdings in the General Portfolio was 36 (2020
- 31). The amount invested in the General Portfolio over the year by has
increased by £2,133,000 (2020 - decreased by £170,000).
The opening value of our General Portfolio investments at 30th June 2020 was £
9,948,000 which compared with a cost of such investments at the same date of £
6,038,000. After investment purchases during the year of £1,706,000 and
investment sales (including selling expenses) during the same period of £
769,000, the value of the General Portfolio investments as at 30th June 2021
had increased by 21.4% to £12,081,000.
Board Changes
Whilst the Board is satisfied that it has a sufficient spread of skills,
experience and support within the Board to operate the Company and to develop
the Company's investment business, the Board will continue to seek further
suitable Board candidates who can add value to the Board.
Operations, Directors and Employees
All of our operations and those of Western, with the exception of investment
selection, are outsourced to our subsidiary, City Group PLC ("City Group").
City Group also provides office accommodation, company secretarial, finance and
head office services to a number of other companies. City Group is responsible
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 6 people.
Dividend
The Board recommends a final dividend of 0.60p (ZAR 12.1190 cents) per share,
making a total of 1.15p (ZAR 23.1650 cents) per ordinary share for the year
(2020 - 1.15p). Subject to shareholders' approval at the Company's AGM to be
held on Wednesday, 1st December 2021, the dividend will be paid on Wednesday,
22nd December 2021 to those shareholders on the register at the close of
business on Friday, 10th December 2021. Shareholders on the South African
register will receive their dividend in South African rand converted from
sterling at the closing rate of exchange on Thursday, 23rd September 2021 being
GBP1= ZAR 20.1983
JSE Disclosure Requirements
In respect of the normal gross cash dividend, and in terms of the South African
Tax Act, the following dividend tax ruling only applies to those shareholders
who are registered on the South African register on Friday, 10th December
2021.
* The number of shares in issue as at the dividend declaration date is
31,207,479;
* The dividend has been declared from income reserves. Funds are sourced from
the Company's main bank account in London and is regarded as a foreign
dividend by South African shareholders; and
* The Company's UK Income Tax reference number is 948/L32120.
Dividend dates:
Last date to trade (SA) Tuesday, 7 December 2021
Shares trade ex-dividend Wednesday, 8 December 2021
(SA)
Shares trade ex-dividend Thursday, 9 December 2021
(UK)
Record date (UK and SA) Friday, 10 December 2021
Pay date Wednesday, 22 December 2021
The JSE Listings Requirements require disclosure of additional information in
relation to any dividend payments.
Shareholders registered on the South African register are advised that a
dividend withholding tax will be withheld from the gross final dividend amount
of ZAR 12.1190 cents per share at a rate of 20% unless a shareholder qualifies
for an exemption; shareholders registered on the South African register who do
not qualify for an exemption will therefore receive a net dividend of ZAR
9.6952 cents per share. The dividend withholding tax and the information
contained in this paragraph is only of direct application to shareholders
registered on the South African register, who should direct any questions about
the application of the dividend withholding tax to Computershare Investor
Services (Pty) Limited, Tel: +27 11 370 5000.
Share certificates may not be de-materialised or re-materialised between
Wednesday, 8th December 2021 and Friday, 10th December 2021, both days
inclusive. Shares may not be transferred between the registers in London and
South Africa during this period either.
Outlook
The UK economy continues to adapt to the effect of Covid-19 and Brexit.
Worldwide we are still coming to grips with the prospects of living with
Covid-19 and this is showing through most prominently in staff shortages and
supply chain disruption. We can expect further volatility and turbulence in the
markets ahead, particularly due to the emergence of the Delta variant of
Covid-19. Whilst the last 12 months has continued to be challenging for the
Group's investments, particularly its Strategic Investments, and we can likely
expect further challenges ahead, the Board is pleased to see one of the
Strategic Investments already committed to return to the payment of dividends
and is confident that the Group has a solid base of investments which can lead
to further capital growth in the medium to long term.
Future Developments
The Group's development and its financial performance are dependent on the
success of its Investment Strategy and the continued support of its
Shareholders. Against a background of challenging and uncertain times in the
markets particularly due to Covid-19 and the emergence of the Delta variant,
the Board continues to seek out investments which will generate growth in
shareholder value. The Board also continues to monitor and enhance the quality
of investments in the General Portfolio. The Board continues to pursue its
current Investment Policy and has no plans to make any further changes to the
policy in the near future. As at 30th June 2021, the Company held 36
investments in the General Portfolio.
27 September 2021
The Company's 2021 Annual Report and Accounts will be finalised shortly 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 PLC: 020 7796 9060
David Marshall/Edward Beale)Johannesburg Sponsor:
Sasfin Capital (a member of the Sasfin Group)
Consolidated Statement of Total Comprehensive Income
For the year ended 30th June
Operating Income 2021 2020
£000 £000
Dividends receivable 326 425
Rental and other income 154 150
Profits on sales of investments 245 68
Management service fees 304 284
1,029 927
Administrative expenses
Investment operations (392) (417)
Management services (412) (380)
Total administrative expenses (804) (797)
Operating profit 225 130
Unrealised changes in the carrying value of
General Portfolio investments 1,651 (700)
Exceptional income 36 -
Interest payable (39) (62)
Profit/(Loss) before taxation 1,873 (632)
Tax expense (337) (164)
Profit/(Loss)after taxation 1,536 (796)
Non-controlling interest (26) (11)
Profit/(Loss) attributable to shareholders 1,510 (807)
Other comprehensive income/(expense)
Items that will not be reclassified to
profit or loss
Unrealised changes in the carrying value of
Strategic investments 1,911 (1,305)
Other taxation -
Deferred tax - -
Total Other Comprehensive Income/(Loss)
attributable to shareholders 1,911 (1,305)
Total Comprehensive Income/(Loss)
attributable to owners of the parent 3,421 (2,112)
Reconciliation of headline earnings
Basic and diluted earnings per share 4.8p (2.6)p
Adjustment for the unrealised changes in
the carrying value of investments, net of - -
tax
Headline earnings per share 4.8p (2.6)p
Consolidated Statement of Financial Position
At 30th June
2021 2020
£000 £000
Non-current Assets
Property, Plant and Equipment 22 31
Right of use asset 145 512
Investments 8,202 6,291
8,369 6,834
Current Assets
Listed investments 12,081 9,948
Trade and other receivables 125 166
Cash and cash equivalents 309 269
12,515 10,383
Current Liabilities
Trade and other payables (228) (225)
Lease liabilities (71) (52)
(299) (277)
Net Current Assets 12,216 10,106
Non-current Liabilities
Lease liabilities (107) (519)
Borrowings (650) -
Deferred Taxation (806) (520)
(1,563) (1,039)
Total Assets less Total Liabilities 19,022 15,901
Capital and Reserves
Ordinary share capital 1,560 1,560
Share premium 2,320 2,320
Unrealised profits and losses on 4,530 1,708
investments
Share of retained realised profits and 4,734 4,712
losses of subsidiaries
Company's retained realised profits 5,749 5,498
and losses
Capital and reserves attributable to 18,893 15,798
owners
Non-controlling interests 129 103
Total Capital and Reserves 19,022 15,901
Company Statement of Financial Position
At 30th June
2021 2020
£000 £000
Non-current Assets
Investments in Group companies 2,079 2,074
Current Assets
Listed investments 12,081 9,948
Trade and other receivables 17 16
Cash and cash equivalents 23 91
12,121 10,055
Current Liabilities
Trade and other payables (106) (132)
(106) (132)
Net Current Assets 11,365 9,923
Non-current Liabilities
Borrowings (650) -
Deferred Taxation (806) (520)
(1,456) (520)
Total Assets less Total Liabilities 12,639 11,477
Capital and Reserves
Ordinary share capital 1,560 1,560
Share premium 2,320 2,320
Unrealised profits and losses on investments 3,010 2,099
6,890 5,979
Realised Profit and Loss
Balance at 1st July 5,498 3,739
Net Profit/(Loss)/ for the period 577 2,118
Dividends paid (326) (359)
Balance at 30th June 5,749 5,498
Equity shareholders' funds 12,639 11,477
Under Section 408 of the Companies Act 2006, the Parent Company is exempt from
the requirement to present its own income statement.
Consolidated Statement of Cash Flows
For the year ended 30th June
2021 2020
£000 £000
Cash flows from operating activities
Profit/(Loss) before tax 1,873 (632)
Adjustments for non-cash items -
Finance expense 39 62
Depreciation charges 10 10
Depreciation on right of use asset 62 62
Lease adjustment (36) -
Unrealised changes in the fair value of (1,196) 1,265
investments
Realised gain on disposal of investments (700) (633)
Decrease in trade and other receivables 41 10
Increase/(Decrease) in trade and other payables 10 (7)
Taxes paid (51) (39)
Net cash inflow from operating activities 52 98
Cash flows from investment activity
Acquisition of property, plant and equipment - (2)
Acquisition of current investments (1,706) (163)
Proceeds from disposal of current investments 1,469 966
Net cash (outflow)/inflow from investment (237) 801
activity
Cash flows from financing activities
Interest paid (19) (31)
Interest paid on lease liabilities (28) (31)
Repayment of lease liabilities (52) (49)
Equity dividends paid (326) (359)
Net drawdown/(repayment) of loan facilities 650 (400)
Net cash inflow/(outflow) from financing 225 (870)
activities
Increase in cash and cash equivalents 40 29
Cash and cash equivalents at the beginning of 269 240
the year
Cash and cash equivalents at end of the year 309 269
Company Statement of Cash Flows
For the year ended 30th June
2021 2020
£000 £000
Cash flows from operating activities
Profit before tax 1,825 891
Adjustments for non-cash items -
Finance expense 11 31
Release of Impairment provision - (1,681)
Unrealised changes in the fair value of (1,197) 1,266
investments
Realised gain on disposal of investments (700) (633)
(Increase)/Decrease in trade and other (1) 7
receivables
Decrease in trade and other payables (18) (16)
Overseas Taxes paid (51) (39)
Net cash outflow from operating activities (131) (174)
Cash flows from investment activity
Acquisition of investments (1,706) (163)
Proceeds from disposal of investments 1,469 966
Net cash (outflow)/inflow from investment (237) 803
activity
Cash flows from financing activities
Interest paid (19) (15)
Equity dividends paid (326) (359)
(Increase)/Decrease in loan to subsidiary (5) 135
Net drawdown/(repayment) of loan facilities 650 (400)
Net cash inflow/(outflow) from financing 300 (639)
activities
(Decrease)/Increase in cash and cash (68) (10)
equivalents
Cash and cash equivalents at the beginning 91 101
of the year
Cash and cash equivalents at end of the year 23 91
Consolidated Statement of Changes in Shareholders' Equity
Ordinary Share Unrealised Share of Company's Total Non-Controlling Total
Share Premium profits and retained retained Interests Equity
Capital Account losses on realised realised
Investments profits and profits
losses of and losses
Subsidiaries
£000 £000 £000 £000 £000 £000 £000 £000
Year ended 30th
June 2021
Balances at 1st 15,798 103
July 2020 1,560 2,320 1,708 4,712 5,498 15,901
Profit for the - - 911 22 577 1,510 26 1,536
Year
Other - - 1,911 - - 1,911 - 1,911
Comprehensive
Income
Total 3,421
comprehensive 1,560 2,320 2,822 22 577 26 3,447
income
Dividends paid - - - - (359) (359) - (359)
and total
transactions
with
shareholders
Unclaimed - - - - 33 33 - 33
dividends
Balances at 30th 18,893 129
June 2021 1,560 2,320 4,530 4,734 5,749 19,022
Year ended 30th
June 2020
Balances at 1st 3,739 18,269
July 2019 1,560 2,320 6,085 4,565 92 18,361
(Loss)/profit - - (1,391) 147 437 (807) 11 (796)
for the Year
Other - - (1,305) - - (1,305) - (1,305)
Comprehensive
Income
Total (2,112)
comprehensive - - (2,696) 147 437 11 (2,101)
income
Impairment - - (1,681) - 1,681 - - -
provision
released
Dividends paid - - - - (359) (359) - (359)
and total
transactions
with
shareholders
Balances at 30th 5,498 15,798
June 2020 1,560 2,320 1,708 4,712 103 15,901
Company Statement of Changes in Shareholders' Equity
Ordinary Share Capital Share Premium Account Unrealised profits and Realised Equity
losses on Investments profits and Total
losses
£000 £000 £000 £000 £000
Year ended 30th June
2021
Balances at 1st July 1,560 2,320 2,099 5,498 11,477
2020
Profit for the Year - - 911 577 1,488
and total
comprehensive income
Dividends paid and - - - (359) (359)
total transactions
with shareholders
Unclaimed dividends - - - 33 33
Balances at 30th
June 2021
2,320 3,010 5,749 12,639
1,560
Year ended 30th June
2020
Balances at 1st July 1,560 2,320 3,490 3,739 11,109
2019
(Loss)/profit for the - - (1,391) 2,118 727
Year and total
comprehensive income
Dividends paid and - - - (359) (359)
total transactions with
shareholders
Balances at 30th June
2020 1,560 2,320 2,099
5,498 11,477
Notes:
1. Basic earnings per share and Headline earnings per share
Basic earnings/(loss) per share, based on the earnings attributable to the
shareholders after tax and non-controlling interests of £1,510,000 (2020 - loss
£807,000) and on 31,207,479 shares issued
Headline earnings are required to be disclosed by the JSE.
Headline earnings per share are based on the profit attributable to the
shareholders after tax and non-controlling interests, before unrealised changes
in the fair value of investments net of tax, of £1,510,000 (2020 - loss £
807,000) and on 31,207,479 shares issued plus 80,000 share options granted in
2016.
1. Net assets per share
The net assets per share are calculated taking investments at fair value and on
31,207,479 shares (2020 - 31,207,479) being the weighted average of the number
of shares in issue during the year.
1. Financial information
The financial information in this preliminary announcement does not constitute
the Company's statutory accounts for the year ended 30th June 2021 within the
meaning of Section 435 of the Companies Act 2006.
The accounts have been prepared in accordance with International Accounting
Standards in conformity with the requirements of the Companies Act 2006 and
interpretations issued by the IFRS Interpretations Committee (IFRS IC) and with
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. The
audited accounts for the Group for the year ended 30th June 2020 were reported
on with an unqualified audit report and did not contain an emphasis of matter
paragraph or any statement under section 498 of the Companies Act 2006 and have
been delivered to the Registrar of Companies.
1. Copies of this Announcement
Copies of this announcement are held at the Company's registered office, 1 Ely
Place, London, EC1N 6RY (tel. 020 7796 9060) and are available for a period of
14 days from the date of this announcement.
END
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