Final Results
LONDON FINANCE & INVESTMENT GROUP P.L.C.
("Lonfin", "the Company" or "the Group")
Preliminary announcement of unaudited results for the year ended 30th June 2009
London Finance & Investment Group P.L.C. (LSE: LFI, JSE: LNF), the investment
company whose assets primarily consist of three Strategic Investments and a
General Portfolio, today announces its Preliminary Results for the year ended
30th June 2009.
Chairman's statement
Lonfin is 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 2009, the three Strategic Investments, in which we have board
representation, were 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.
Our objective is to achieve capital growth in real terms over the medium term,
while maintaining a progressive dividend policy.
We are operating in difficult times. Stock markets are down and many companies
are cutting dividends. We are not immune to these external factors. In spite of
this the Group is in a reasonable position:
* The General Portfolio is yielding 3.13%.
* Borrowings are 30% of the value of liquid stock market investments
* Operating costs have been reduced and are expected to fall further in the
current year
Results
The Group made a loss before tax for the year of £807,000 (2008 - loss - £
995,000), after the Group share of an exceptional impairment charge in Western
of £239,000 (2008 - £1,322,000). Our operating income last year was higher due
to profits realised on sales of investments. Our loss after exceptional items,
tax and minority interest was £796,000 (2008 - loss - £1,003,000) giving a loss
per share of 2.6p (2008 - 3.2p).
Our net assets per share have decreased 46% to 21p from 39p last year,
reflecting the reduction in value of the Strategic Investments. These have
declined in value by 45% and our General Portfolio by 24% after taking into
account additions and disposals of investments. This compares with the
decreases in the FTSE 100 index of 24% and the FTSE Eurotop 300 index of 29%
over the year. At the date of this report, our unaudited net asset value had
increased by 22% since the year end to 26p.
Dividend
In the absence of a dividend from Western, we are not recommending a final
dividend, but it is our intention to resume paying dividends as soon as our
dividend income recovers sufficiently.
Strategic Investments
Western Selection P.L.C. ("Western")
The Company owns 7,864,412 shares, being 43.8% of the issued share capital of
Western and 3,785,820 of Western's 2010 warrants
On 29th September 2009, Western announced a loss before associates and
exceptional items of £479,000 for its year to 30th June 2009 (2008 - profit - £
378,000). In addition, Western has made impairment provisions against some of
its investments of £546,000 (2008: provision against Creston £3,019,000).
Including associates and after exceptional items and tax, and on its increased
share capital, losses per share were 4.8p (2008 - losses 16.4p).
Western is unable to pay a dividend because the decline in value of its
investments is such that its net assets are 12% less than the total of its
share capital, share premium and non-distributable reserves. Western's net
assets at market value were £8,936,000, equivalent to 50p per share, a decrease
of 14% from 58p last year.
The market value of the Company's investment in Western at 30th June 2009 was £
2,174,000 and the book value was £4,383,000. At market value this represents
33% of the net assets of Lonfin. The underlying value of the Company's
investment in Western, valuing Western's investments at market value, was £4.3
million (2008 - £4.6 million).
Mr. Marshall is the Chairman of Western and Mr. Robotham and Mr. Beale (the
chief executive of our associated 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 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 marketing services group. The audited results
for the year to 31st March 2009, show a profit after tax of £6,597,000
(2008 - £4,782,000), equivalent to earnings of 12.2p per share (2008 -
8.65p). On 7th July 2009 Creston announced a placing of new shares,
raising approximately £3.3 million (gross). Western did not participate in
the placing and maintained it's holding of 3,000,000 shares in Creston.
Following the placing, this represents 4.9% of Creston's issued share
capital with a value at 30th June 2009 of £1,920,000 (2008 - £1,425,000)
being 21% (2008 - 14%) of Western's assets.
Northbridge Industrial Services PLC
Northbridge was formed for the purpose of acquiring companies that hire
and sell specialist industrial equipment supplying a non-cyclical customer
base including utility companies, the public sector and the oil and gas
industries. In particular it will seek to acquire specialist businesses
that have the potential for expansion into complete outsourcing providers.
Sales are made to the U.K., U.S.A., Brazil, Singapore, Germany, UAE and
Korea; Northbridge also has subsidiaries operating in Dubai and
Azerbaijan.
Northbridge announced profits of £1,918,000 for the year ended 31st
December 2008 (2007 - £1,154,000) and declared a final dividend of 2.6 per
share, making 3.9p for the year (2007 - 3p). In June 2009, Northbridge
raised approximately £2 million by way of an open offer in order to
finance the expansion of its hire fleet. Western took up 375,000 shares in
that offer at a cost of £413,000 and now holds 1,875,000 shares in
Northbridge (20.97%). The value of the investment at 30th June 2009 was £
2,156,000 (2008 - £2,558,000) being 24% (2008 - 25%) of Western's assets.
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 cosmetics, personal
care and household good markets. Since Western's year ends Swallowfield's
results for their year to 30th June 2009 have been announced showing
maintained profits of £1,522,000 (2008 - £1,537,000) and an increase of
dividend from 5.5p to 5.9p per share. Their board indicated progress for
the next 12 months.
Western increased its holding in Swallowfield during the year and now owns
1,331,500 shares which is 11.8% of the issued share capital. The market
value of Western's holding in Swallowfield on 30th June 2009 was £999,000
(2008 - £971,000), being 11% (2008 - 9%) of Westerns' net assets.
Western would like to see the Swallowfield board strengthened and remain
in discussions with the company and other major shareholders about the
composition of the Swallowfield board.
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.
Western holds 49.5% of Hartim, which has a 31st December year end and
achieved profits in 2008 of £443,000 on turnover of £16,809,000. Western's
share of the consolidated profit after tax for the twelve months to 30th
June 2009 was £181,000 (2008 - three months £69,000) and the book value of
the investment at 30th June 2009 was £979,000 (2008 - £797,000), being 11%
(2008 - 8%) of Western's assets.
MWB Group Holdings Plc ("MWB")
The Company holding in MWB was unchanged from the 2 million shares held at June
2008, representing 2.76% of MWB's issued share capital. The market value at
30th June 2009 was £980,000, compared with the book value of £1,681,000, and
represents 15% of the net assets of Lonfin.
MWB is in the process of moneytising its assets for the benefit of all
stakeholders through an orderly disposal programme. Mr. Marshall is a
non-executive director of MWB and the board constantly reviews the programme of
disposal.
Finsbury Food Group plc ("Finsbury")
The Company holding in Finsbury remains at 8,000,000 shares, representing
15.55% of their share capital. The market value of the holding was £1,640,000
on 30th June 2009 (cost - £1,893,000) and represents 25% of the net assets of
Lonfin.
Finsbury is one of the largest suppliers of premium cakes, bread and morning
goods in the UK. The group currently supplies most of the UK's major
supermarket chains, including Asda, Morrisons, Sainsbury, Somerfield, Tesco and
Waitrose.
Mr. Marshall is the non-executive chairman and Mr. Beale, the Chief Executive
of our associated company City Group P.L.C., is a non-executive director of
Finsbury.
General Portfolio
The General Portfolio is diverse with material interests in Food and Beverages,
Oil, 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, especially in respect of our Western European holdings.
The number of holdings in the General Portfolio has decreased to 29 from 35. We
have decreased the amount invested in the General Portfolio by £715,000 (2008:
decreased by £188,000) over the year.
We have a £2 million bank facility in addition to the facility to cover the
increased investment in Western, and at 30th June 2009 had drawn down £1.6
million. This leaves £400,000 available for further investment when the Board
feels appropriate. The fall in value of our investments over the period has
increased borrowings as a percentage of the market value of all stock market
investments from 20% to 29%.
Outlook
The outlook for stock markets remains very uncertain. We will continue to adopt
a cautious stance, with our general portfolio invested in the best European
companies.
By Order of the Board
CITY GROUP P.L.C.
Secretaries
30th September 2009
Annual General Meeting
The Company's Annual General Meeting will be held at its registered office, 30
City Road, London, EC1Y 2AG, U.K. on Wednesday 28th October 2008 at 10.30 a.m.
The annual report and accounts will be posted to shareholders on or before 5th
October 2009.
Unaudited Consolidated Income Statement
For the year ended 30th June 2009 2008
£000 £000
Operating Income
Investment operations 104 645
Management services 468 516
Administrative expenses
Investment operations (359) (373)
Management services (492) (507)
---------- ----------
Operating (loss)/profit (279) 281
Share of result of associated undertaking - normal (138) 195
Share of result of associated undertaking - exceptional (239) (1,322)
Interest payable (151) (149)
---------- ----------
Loss on ordinary activities before taxation (807) (995)
Tax on result of ordinary activities - (2)
---------- ----------
Loss on ordinary activities after taxation (807) (997)
Equity minority interest 11 (6)
---------- ----------
Loss for the financial year attributable to members of the (796) (1,003)
holding company
====== ======
Reconciliation of headline earnings per share
Basic (loss) per share (2.6)p (3.2)p
Adjustment for exceptional items net of tax and minorities 0.8 p 4.2 p
--------- ---------
Headline earnings per share (1.8)p 1.0p
--------- ---------
Unaudited Consolidated Statement of Changes in Shareholders' Equity
Share of
undistributed Retained
Ordinary Share Unrealised results of realised
share premium Revaluation profits/ subsidiaries profits &
(losses) &
capital account Reserve on associates losses Total
investments
Year ended 30th £000 £000 £000 £000 £000 £000 £000
June 2008
Balances at 1st 1,560 2,328 330 - - -
July 2007
Restated balances - - - 9,095 1,702 5,505 20,520
at 1st July 2007
---------- ---------- ---------- ---------- ---------- ---------- ----------
Loss before fair - - - - (1,250) (106) (1,356)
value release from
equity
Fair value of - - - - - 353 353
investments
recycled to income
statement on
disposal
---------- ---------- ---------- ---------- ---------- ---------- ----------
Loss attributable - - - - (1,250) 247 (1,003)
to shareholders
Fair value recycled - - - (353) - - (353)
from equity to
income statement
Fair value - - - (6,589) - - (6,589)
adjustment on
listed undertakings
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total income and - - - (6,942) (1,250) 247 (7,945)
expense for the
period
---------- ---------- ---------- ---------- ---------- ---------- ----------
Dividends paid in - - - - - (343) (343)
respect of the
previous year
Interim dividend - - - - - (172) (172)
paid
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total transactions - - - - - (515) (515)
with shareholders
for the year
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balances at 30th 1,560 2,328 330 2,153 452 5,237 12,060
June 2008
====== ====== ====== ====== ====== ====== ======
Year ended 30thJune
2009
Balances at 1st July 1,560 2,328 330 2,153 452 5,237 12,060
2008
---------- ---------- ---------- ---------- ---------- ---------- ----------
Loss before fair - - - - (503) (470) (973)
value release from
equity
Fair value of - - - - - 177 177
investments recycled
to income statement
on disposal
---------- ---------- ---------- ---------- ---------- ---------- ----------
Loss attributable to - - - - (503) (293) (796)
shareholders
Expenses of capital - (10) - - - - (10)
re-organisation
Fair value recycled - - - (177) - - (177)
from equity to
income statement
Fair value - - - (4,047) - - (4,047)
adjustment on listed
undertakings
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total income and - (10) - (4,224) (503) (293) (5,030)
expense for the
period
---------- ---------- ---------- ---------- ---------- ---------- ----------
Final dividends paid - - - - - (202) (202)
in respect of the
previous year
Interim dividend - - - - - (172) (172)
paid
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total transactions - - - - - (374) (374)
with shareholders
for the year
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balances at 30th 1,560 2,318 330 (2,071) (51) 4,570 6,656
June 2009
====== ====== ====== ====== ====== ====== ======
Unaudited Consolidated Balance Sheet
at 30th June 2009 2008
£000 £000
Non-current Assets
Tangible assets 390 403
Investments 4,794 8,784
---------- ----------
5,184 9,187
---------- ----------
Current Assets
Listed investments 3,976 5,726
Accounts receivable 309 319
Bank balance and deposits 114 36
---------- ----------
4,399 6,081
Current Liabilities
Accounts payable: falling due within one year (2,837) (3,107)
---------- ----------
Net Current Assets 1,562 2,974
---------- ----------
Total Assets less Current Liabilities 6,746 12,161
===== =====
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,318 2,328
Revaluation reserve 330 330
Unrealised profits and losses on investments (2,071) 2,153
Share of undistributed profits and losses of subsidiaries (51) 452
and associates
Company's retained realised profits and losses 4,570 5,237
---------- ----------
6,656 12,060
Minority equity interests 90 101
---------- ----------
6,746 12,161
===== =====
Unaudited Consolidated Cash Flow Statement
For the year ended 30th June 2009 2008
£000 £000
Cash inflow on operating activities
Cash generated by operations, including General Portfolio 438 4
investment
Dividends receivable 537 458
Interest paid (151) (148)
Interest received 6 5
Taxation paid - (235)
---------- ----------
Net cash generated by operations 830 84
Investing activities
Non-current asset investments - purchased - (1,297)
---------- ----------
Net cash outflow from investment activities - (1,297)
---------- ----------
Financing
Share capital issued - -
Cost of warrant issue (10) -
Equity dividends paid (374) (515)
Net (repayment)/drawdown of loan facilities (368) 1,677
---------- ----------
Net cash (outflow)/inflow from financing (752) 1,162
---------- ----------
Increase/(Decrease) in cash 78 (51)
===== =====
Notes
1. Earnings per share are based on the loss on ordinary activities after
taxation and minority interests and on 31,201,133 shares (2008 -
31,200,000) being the weighted average of the number of shares in issue
during the year.
2. The net assets attributable to shareholders, taking investments at market
value, are before providing for any tax that may arise on realisation.
3. 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 2009 or 30th June 2008 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 Acts 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. The audited accounts of the group for
the year ended 30th June 2008 have been reported on with an unqualified
audit report and have been delivered to the Registrar of Companies.
Enquiries to:
London Finance & Investment Group 020 7448 8950
David Marshall / Edward Beale
Monday, 20th May 2024
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