Final Results
LONDON FINANCE & INVESTMENT GROUP P.L.C.
Preliminary announcement of Unaudited results for the year ended 30th June 2005
Introduction
We are an investment company whose assets primarily consist of three Strategic
Investments and a General Portfolio. Strategic Investments are significant
investments in smaller UK quoted companies and these are balanced by a General
Portfolio, which consists mainly of investments in major U.K. and European
equities.
At 30th June 2005, 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.
Our objective is to achieve capital growth in real terms over the medium term,
while maintaining a progressive dividend policy.
Results
The Group made a profit before tax for the year of £202,000 (2004 - £208,000).
Our operating profits have increased from £141,000 to £228,000 as a result of
higher profits realised on sales of investments and increased dividend income.
Our profit after tax and minority interest was £212,000 (2004 - £190,000)
giving earnings per share of 0.81p (2004 - 0.74p).
To reflect the improvement in the earnings and our progressive dividend policy,
the Board has decided to increase the dividend for the year to 1.0p per share
(2004 - 0.9p).
Our net assets per share have increased 23% to 44p at 30th June 2005 from 36p
last year. Our Strategic Investments have increased in value by 31% and our
General Portfolio by 10% after taking into account additions and disposals of
investments. This compares with the increase in the FTSE 100 index of 15% and
the FTSE Eurotop 300 index of 14% over the year.
Strategic Investments
Western Selection P.L.C. ('Western')
The Company owns 4,402,982 shares, being 40.48% of the issued share capital,
and 809,518 warrants, of Western. On 31st August 2005, Western announced a
profit after tax of £153,000 for its year to 30th June 2005, earnings per share
of 1.40p (2004 - 2.84p), and a 5% increase in dividend to 2.32p (2004 - 2.20p).
Western's net assets at market value were £9.4 million, equivalent to 86.5p per
share, a fall of 7% from 92.7p last year. The fall in value of Western during
the year is due to a significant fall in the value of its investment in The
Sanctuary Group plc, following a profit warning by that company. Sanctuary used
to be a strategic investment of Western's and 3.5 million shares still owned at
the time of the profit warning and at 30th June 2005 have subsequently been
sold at the year end balance sheet value. During the six year course of
Western's involvement it realised a substantial profit on this investment.
The market value of the Company's investment in Western at 30th June 2005 was £
2.4 million and the book value was £4.1 million. At market value this
represents 21% of the net assets of Lonfin. The underlying value of the
Company's investment in Western, valuing Western's investments at market value,
was £3.9 million (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, Swallowfield plc and
Industrial & Commercial Holdings PLC. An extract from Western's announcement of
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 international marketing services group. The
results for the year to 31st March 2005, show a profit after tax of £
2,640,000 (2004 - £1,449,000), equivalent to earnings of 10.7p per share
(2004 - 9.0p).
At 1st July 2004, Western owned 2,000,000 shares in Creston. During the
year we acquired an additional 873,998 shares at a cost of £1,224,141 as a
result of the exercise of our warrants and participation in Creston's
fundraising to bring our total holding to 2,873,998 shares, being 8.2% of
Creston's issued share capital. The market value of the Company's holding
in Creston on 30th June 2005 was £4,455,000 (2004 - £2,620,000), being 47%
of Western's net assets.
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's latest published results were for the 28 weeks to 8th
January 2005 and showed a profit of £431,000 (28 weeks to 10th January
2004 - £263,000).
Industrial & Commercial Holdings plc
ICH is a small unlisted PLC in which Western holds 29.9%. It holds land
pending planning permission for housing at Milngavie, adjacent to
Dougalston golf course, just north east of Glasgow. As it may take many
years for the development to progress, we are in discussion with the board
of ICH to consider an acquisition of an active business.
Marylebone Warwick Balfour Group Plc ('MWB')
The Company owns 3,000,000 shares in MWB, representing 2.73% of its issued
share capital. The market value at 30th June 2005 was £3.2 million, compared
with the book value of £2.5 million, and represents 28% of the net assets of
Lonfin.
MWB is in the process of maturing and realising its assets for the benefit of
all stakeholders through an orderly disposal programme, which is under constant
review.
Both Mr Robotham and I are non-executive directors of MWB.
Finsbury Food Group plc ('Finsbury Food')
During the year we acquired a further 300,000 shares in Finsbury Food at a cost
of £100,000 to bring our holding, at 30th June 2005 to 4,800,000 shares and
3,000,000 warrants representing 21.59% of their share capital and 47.03% of
their warrants. The market value of our holding was £3.2 million on 30th June
2005 (cost - £847,000) and represents 28% of the net assets of Lonfin.
Finsbury Food's main subsidiary, Memory Lane Cakes, is a supplier of boxed
ambient cakes to most of the UK's major supermarket chains, which include Asda,
Morrisons, Sainsbury, Somerfield, Tesco and Waitrose. Ambient cakes are baked
cakes that have not been frozen and are generally retailed at room temperature.
Finsbury Food has now repositioned itself as a speciality foods business
focused on niche markets. Its directors believe that the UK food sector is
increasingly polarised between substantial manufacturers and a large number of
smaller independent businesses and that, in this environment, opportunities
exist to acquire and develop profitable niche businesses. Finsbury Food's
directors, of which I am one, continue to monitor the sector and seek further
suitable acquisitions.
General Portfolio
The General Portfolio has material interests in Oil, Natural Resources,
Pharmaceuticals and Healthcare, Banking, Food and Beverages. These sectors
accounted for 73% of the portfolio by value at 30th June 2005 (76% at 30th June
2004). We believe that the companies in these sectors in which we have invested
have the potential to outperform the market in the medium to long term.
The number of holdings in the General Portfolio has increased to 39 from 36. We
have invested £114,000 (2004 - £124,000) in the General Portfolio over the year
and the average value of each holding has increased from £102,000 to £110,000.
We have a £2 million bank facility and at 30th June 2005 had drawn down £1.6
million. This leaves £400,000 available for further investment when the Board
feels appropriate; together with the £936,000 we anticipate receiving during
October on the final date of exercise of our remaining outstanding warrants.
The year ahead
Despite weak consumer demand, we remain confident in the underlying strength of
the U.K.'s equity markets and will utilise the balance of our available
facilities both cautiously and 'stock specific'. Since our year end, the stock
markets have had a good run and, at the time of writing, our net asset value
has moved up to 51.94p from 44.05p at 30th June 2005. Barring unforeseen
circumstances, your Directors intend to maintain the dividend in the year
ahead.
D.C. MARSHALL
Chairman
2nd September 2005
Unaudited Consolidated Profit and Loss Account
For the year ended 30th June 2005 2004
£000 £000
Operating Income
Investment operations 572 407
Management services 501 533
Administrative expenses
Investment operations (294) (281)
Management services (551) (518)
-------- --------
Operating profit 228 141
Share of result of associated undertaking 90 139
Interest payable (116) (72)
-------- --------
Profit on ordinary activities before taxation 202 208
Tax on result of ordinary activities (12) (9)
-------- --------
Profit on ordinary activities after taxation 190 199
Equity minority interest in subsidiary 22 (9)
-------- --------
Profit attributable to members of the holding company 212 190
Proposed dividend (262) (233)
-------- --------
Retained loss for the financial year (50) (43)
===== =====
Basic earnings per share 0.81p 0.74p
Headline earnings per share 0.81p 0.74p
Diluted earnings per share 0.80p 0.73p
There are no other recognised gains or losses.
Unaudited Consolidated Balance Sheet
at 30th June 2005 2004
£000 £000
Fixed Assets
Tangible assets 431 437
Investments 7,455 7,390
-------- --------
7,886 7,827
-------- --------
Current Assets
Listed investments 3,534 3,077
Debtors 178 272
Bank balance and deposits 48 30
-------- --------
3,760 3,379
Current Liabilities
Creditors: falling due within one year (2,089) (1,655)
-------- --------
Net Current Assets 1,671 1,724
-------- --------
Total Assets less Current Liabilities 9,557 9,551
===== =====
Capital and Reserves
Called up share capital 1,310 1,295
Share premium account 1,095 1,033
Reserves 361 361
Profit and loss account 6,730 6,780
-------- --------
Equity shareholders' funds 9,496 9,469
Minority equity interests 61 82
-------- --------
9,557 9,551
===== =====
Unaudited Consolidated Cash Flow Statement
For the year ended 30th June 2005 2004
£000 £000
Cash outflow on operating activities (244) (479)
-------- --------
Returns on investments and servicing of finance
Dividends received 277 246
Interest paid (89) (60)
-------- --------
Net cash inflow from returns on investments and servicing 188 186
of finance
-------- --------
Taxation (15) (9)
-------- --------
Investing activities
Purchase of tangible fixed assets (4) -
Purchase of fixed asset investments (101) -
-------- --------
Net cash outflow from investment activities (105) -
===== =====
Equity dividend paid (233) (218)
Financing
Share capital issued 77 72
Net draw down of loan facility 350 450
-------- --------
Net cash inflow from financing 427 522
-------- --------
Increase in cash 18 2
-------- --------
Notes
1 . The dividend for the year of 1 .0 p per share (2004 - 0.90 p) will be paid
on 7th October 2005 to shareholders on the register on 16th September 2005
.
2 . Earnings per share are based on the result of ordinary activities after
taxation and minority interests and on 26,113,943(2004- 25,809,406) being
the weighted average of the number of shares in issue during the year.
3 . The net assets attributable to shareholders, taking investments at market
value, are before providing for any tax that may arise on realisation.
4 . The financial information in this preliminary announcement of unaudited
group results, which has been reviewed and agreed by the auditors, does not
constitute statutory accounts within the meaning of section 240(5) of the
Companies Act 1985. The accounts have been prepared in accordance with the
Accounting Standards of the Auditing Practices Board of the United Kingdom
and are consistent with those applied in the previous financial year. The
audited accounts of the group for the year ended 30 th June 2004 have been
reported on with an unqualified audit report in accordance with section 235
of the Companies Act 1985 and have been delivered to the Registrar of
Companies.
5 Changes in Equity 2005 2004
£000 £000
Profit for the financial year 212 190
Proposed dividend (262) (233)
Shares issued during the year 77 72
---------- ----------
27 29
Opening equity shareholders' funds 9,469 9,440
---------- ----------
Closing equity shareholders' funds 9,496 9,469
---------- ----------
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