Half-yearly Report

Date: 24th February 2010 On behalf of: London Finance & Investment Group P.L.C. ("Lonfin", "the Company" or "the Group") Embargoed until: 0700hrs London Finance & Investment Group P.L.C. Interim Results Lonfin (LSE: LFI, JSE: LNF), today announces its unaudited interim results for the six months ended 31st December 2009. Highlights from the last six month period include: * Profit before tax of £116,000 (2008 - £239,000 loss) * Increase in net asset value per share of 14% since 30th June 2009 * Continues to hold three significant strategic investment: Western Selection P.L.C., Finsbury Food Group plc and MWB Group Holdings Plc * Recommended interim dividend of 0.3p (2008: 0.55p) David Marshall, Chairman of Lonfin commented: "We have seen a strong performance from our general portfolio of investments, however the valuations of our strategic investments remain depressed. We strongly believe that our mix of strategic investments and our general portfolio of quality equities is an effective way of achieving growth in shareholder value over the medium to long term." - Ends - Enquiries to: London Finance & Investment Group P.L.C. 020 7448 8950 David Marshall/Edward Beale Notes to Editors: * Lonfin is a strategic 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. * Lonfin's strategic investments comprise: Western Selection P.L.C., MWB Group Holdings Plc and Finsbury Food Group plc. Western Selection P.L.C. has strategic investments in Creston plc, Swallowfield plc, Northbridge Industrial Services plc and Hartim Limited. Lonfin's General Portfolio has material interests in Oil, Household Leisure and Personal Goods, Food and Beverages and Tobacco. Chairman's Statement Introduction As an investment company our target is to achieve growth in shareholder value in real terms over the medium to long term. In the short term our results can be influenced by overall stock market performance, particularly the performance of our Strategic Investments. We continue to believe that a combination of Strategic Investments and a General Portfolio is the most effective way of achieving our aims. Strategic Investments are significant investments in smaller UK quoted companies where we have expectations of above average growth over the medium to longer term and these are balanced by a General Portfolio which mainly consists of investments in major U.K. and European equities. At 31st December 2009, we held three Strategic Investments in which we have board representation: 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. Results Our net assets per share increased 14% to 24.3p at 31st December 2009 from 21.3p at 30th June 2009. Our Strategic Investments decreased in value by 3% and our General Portfolio increased by 29%. This compares with the increases of 27% in the FTSE 100 index and 23% in AIM over the half year. At the close of business on 19th February 2010, our net asset value was 24.36p. The Group achieved a profit before tax for the half year of £114,000 compared to a loss of £239,000 for the same period last year. This was in the main due to the recovery of provisions made in the previous year against falls in value of the General Portfolio and a reduction of 13% in administrative costs. These favourable movements were reduced by a significant decline in dividend income. Our profit after tax and minority interest was £116,000 (2008 loss: £232,000) giving profits per share of 0.4p (2008: losses 0.7p). Strategic Investments Western Selection P.L.C. ("Western") The Group owns 7,864,412 Western shares and 3,785,820 Western 2011 Warrants representing 43.8% of Western's issued share capital and 49.2% of outstanding Warrants. The 2011 Warrants are exercisable 28 days after posting of Western's interim and annual accounts in each of the years 2008 to 2010. We have approval from Western's shareholders and the Takeover Panel to increase our holding in Western up to 48% through the exercise of warrants. On 22nd February 2010, Western announced a profit after tax of £131,000 for its half year to 31st December 2009 and a profit per share of 0.7p (2008: 0.4p). Western's net assets at market value were £10,844,000 equivalent to 61p per share, an increase of 22% from 50p at 30th June 2009. The market value of the Company's investment in Western at 31st December 2009 was £2,240,000 representing 29% of the net assets of Lonfin, against a book value of £4,285,000. The underlying value of the investment in Western, valuing Western's own investments at market value, was £4.7 million (30th June 2009: £ 4.3 million). I am the Chairman of Western and Mr. Robotham is a non-executive director. Western has strategic investments in Creston plc, Northbridge Industrial Services PLC, Swallowfield plc. and Hartim Limited. Extracts from Western's announcement on its strategic investments are set out below: Creston plc Creston is a marketing services group with a strategy to grow within its sector to become a substantial, diversified international marketing services group. Creston's results for the half-year to 30th September 2009 show a profit after tax of £435,00 (2008: £2,951,000). The results of the six month period are after charging the costs relating to the closure of two divisions and the associated goodwill of £4.4m, against which no tax relief has been provided. Net debt has been reduced by £6.9m (17%) from a 51% increase in cash inflows. Western owns 3,000,000 shares in Creston (4.9%) with a market value at 31st December 2009 of £2,377,000 (30th June 2009: £1,920,000), being 22% of Western's assets. Northbridge Industrial Services PLC Northbridge was formed for the purpose of acquiring companies that hire and sell specialist industrial equipment such as electrical load banks and generators. Northbridge's first acquisition was Crestchic Limited, one of the largest specialist load bank equipment manufacturers in the world, located in Burton-on-Trent, selling and hiring to a national and international customer base. Northbridge has recently added to its interests in Dubai by increasing its fleet of power and other electrical equipment. Northbridge's latest results, for the half year to 30th June 2009, showed profit of £606,000 (2008: £748,000) after exchange losses of £200,000 (2008: nil). Western owns 1,875,000 shares, representing 20.3% of Northbridge's share capital. The value of this investment at 31st December 2009 was £2,475,000 (30th June 2009: £2,156,000), representing 23% of Western's assets. Swallowfield plc Swallowfield is a full service provider for global and household brands operating in the cosmetics and personal care and household goods marketplace. It offers a flexible and tailored service including: contract filling market analysis, design, formulation and testing of products, packaging design and sourcing and distribution of stock. Swallowfield's latest results, for the year to 30th June 2009, showed profit, before exceptional items and tax, of £1,313,000 (30th June 2008: £ 1,319,000). At 31st December 2009, Western owned 1,421,800 shares in Swallowfield (12.6% of their issued share capital) having increased the holding by 90,300 shares at a cost of £106,000. The market value of Western's holding in Swallowfield on 31st December 2009 was £1,766,000 (30th June 2009: £ 999,000) representing 16% of Western's assets. Hartim Limited Hartim offers a complete sales, marketing and logistical services to a number of UK branded fast moving consumer goods companies. This investment was acquired on 28th March 2009 and is accounted for as an associated company. Hartim's estimated results for the year ended 31st December 2009 is a profit of £327,000 after tax. This is down from the very high profits of £ 443,000 achieved last year, but still represents a very good return on our investment. At 31st December 2009, Western owned 49.5% of Hartim. The carrying value of the Company's investment in Hartim on 31st December 2009 was £1,124,000 (30th June 2009: £979,000) representing 10% of Western's assets. Finsbury Food Group plc ("Finsbury Food") The Group owns 8,000,000 shares in Finsbury Food, representing 15.2% of their share capital. The market value of our holding was £1,620,000 on 31st December 2009 compared to a cost of £1,893,000; this represents 21% of the net assets of Lonfin. Finsbury Food is a supplier of ambient cakes to most of the UK's major supermarket chains and speciality breads to Waitrose including gluten-free and low fat products. Finsbury has recently announced the appointment of a new Finance Director and that the company is trading in line with market expectations. I stood down as chairman of Finsbury Food at the last AGM and I am now a non-executive director. MWB Group Holdings Plc ("MWB") The Group owns 2,000,000 shares, representing 1.2% of MWB's issued share capital. The market value of the holding at 31st December, 2009 was £780,000, compared with a book value of £1,681,000, which represents 10% of the net assets of Lonfin. MWB is a hotel, serviced offices and retail group that is in the process of realising its assets through an orderly disposal programme. MWB completed a fund raising on 12th January 2010 and issued a trading statement on 14th January 2010. In the trading statement, MWB reported strong cash generation from its Malmaison and Hotel du Vin division and continuing organic and acquisition driven growth in MWB Business Exchange. I am a non-executive director of MWB. General Portfolio The General Portfolio is diverse and consists of U.K. and European blue chip equities, most of which have significant international exposure. The list of these investments is set out at the end of this announcement. Dividends The board has declared an interim of 0.30p payable on Thursday 1st April 2010 to shareholders on the register at the close of business on Friday 12th March 2010. Outlook World stock markets have rebounded considerably over the last six months, however we remain cautious about the outlook for 2010 and have positioned the general portfolio accordingly. We will be looking to reduce debt slightly over the next six months, as and when selling opportunities arise. David C. Marshall Chairman Interim dividend The recommended interim dividend is 0.30p per share (2008 - 0.55p) and will be paid on Thursday 1st April 2010 to those members registered at the close of business on Friday 12th March 2010. Shareholders on the South African register will receive their dividend in South African Rand converted from sterling at the closing rate of exchange on Monday 22nd February 2010. Salient dates for dividend Last day to trade (SA) Friday 5th March 2010 Shares trade ex dividend (SA) Monday 8th March 2010 Shares trade ex dividend (UK) Wednesday 10th March 2010 Record date (UK & SA) Friday 12th March 2010 Pay date Thursday 1st April 2010 Shareholders are hereby advised that the exchange rate to be used will be GBP 1 = ZAR 11.9862. This has been calculated as the average of the bid/ask spread at 16.00 (United Kingdom time) being the close of business on Monday 22nd February 2010. Consequently the dividend of 0.30p will be equal to 3.59586 South African cents. No dematerialisation or rematerialisation of share certificates, nor transfer of shares between the registers in London and South Africa will take place between Monday 8th March 2010 and Friday 12th March 2010, both dates inclusive. Unaudited Consolidated Income Statement Half year ended Year ended 31st December 30th June 2009 2008 2009 £000 £000 £000 Operating Income Dividends received 29 223 332 Interest and sundry income 20 17 35 Profit on sales of investments, including 227 (231) (263) provisions ---------- ---------- ---------- 276 9 104 Management services income 225 231 468 ---------- ---------- ---------- 501 240 572 ---------- ---------- ---------- Administrative expenses Investment operations (146) (185) (359) Management services (231) (247) (492) ---------- ---------- ---------- Total administrative expenses (377) (432) (851) ---------- ---------- ---------- Operating profit/(loss) 124 (192) (279) Share of result of associated undertaking Operating profit 6 40 (138) Exceptional income/expense 51 - (239) Interest payable (67) (87) (151) ---------- ---------- ---------- Profit/(Loss) on ordinary activities before 114 (239) (807) taxation Tax on result of ordinary activities (1) - - ---------- ---------- ---------- Profit/(Loss) on ordinary activities after 113 (239) (807) taxation Minority interest 3 7 11 ---------- ---------- ---------- Profit/(Loss) attributable to members of 116 (232) (796) the holding company ====== ====== ====== Reconciliation of headline earnings Earnings/(Loss) per share 0.4 p (0.7)p (2.6)p Adjustment for exceptional items, net of (0.2)p - 0.8 p tax ---------- ---------- ---------- Headline earnings/(loss) per share 0.2 p (0.7)p (1.8)p ---------- ---------- ---------- Interim dividend 0.30p 0.55p 0.55p Final dividend - - Total in respect of the year 0.55p 0.55p Unaudited Consolidated Statement of Comprehensive Income Profit/(Loss) attributable to shareholders 116 (232) (796) Costs of warrant issue - (9) (10) Unrealised profits/(losses) on listed 815 (5,672) (4,224) undertakings --------- --------- --------- Total comprehensive income/(expense) 931 (5,913) (5,030) ===== ===== ===== Unaudited Consolidated Changes in Shareholders' Equity Total comprehensive income/(expense) 931 (5,913) (5,030) Dividends paid to equity shareholders - (203) (374) --------- --------- --------- 931 (6,116) (5,404) Equity shareholders' funds at start of period 6,656 12,060 12,060 --------- --------- --------- Equity shareholders' funds at end of period 7,587 5,944 6,656 ===== ===== ===== Unaudited Consolidated Statement of Financial Position 31st December 30th June 2009 2008 2009 £000 £000 £000 Non-current assets Tangible assets 383 397 390 Principle investments:- MWB Group Holdings Plc 780 595 980 Finsbury Food Group plc 1,620 940 1,640 Western Selection P.L.C. 2,240 2,076 2,174 ---------- ---------- ---------- 5,023 4,008 5,184 Current assets ---------- ---------- ---------- Listed investments 5,036 4,522 3,976 Debtors 254 408 309 Cash, bank balances and deposits 49 73 114 ---------- ---------- ---------- 5,339 5,003 4,399 ---------- ---------- ---------- Total Assets 10,362 9,011 9,583 ====== ====== ====== Capital and Reserves Called up share capital 1,560 1,560 1,560 Share premium account 2,318 2,318 2,318 Revaluation reserve 330 330 330 Unrealised profits and losses on (1,244) (3,089) (2,071) investments Share of undistributed profits and losses 6 232 (51) of subsidiaries and associates Company's retained realised profits and 4,629 4,593 4,570 losses ---------- ---------- ---------- Equity shareholders funds 7,599 5,944 6,656 Creditors falling due within one year 2,676 2,973 2,837 Minority equity interest 87 94 90 ---------- ---------- ---------- 10,362 9,011 9,583 ====== ====== ====== Consolidated Cash Flow Statement Half year ended Year ended 31st December 30th June 2009 2008 2009 £000 £000 £000 Cash inflow on operating activities 30 233 438 ---------- ---------- ---------- Returns on investments and servicing of finance Dividends received 29 427 537 Net interest paid (67) (87) (145) ---------- ---------- ---------- Net cash (outflow)/inflow from returns on (38) 340 392 investments and servicing of finance ---------- ---------- ---------- Taxation paid (1) - - ---------- ---------- ---------- Net cash flow from investment activities - - - ---------- ---------- ---------- Equity dividends paid - Company - (203) (374) ---------- ---------- ---------- Financing Cost of warrants issue - (9) (10) Net repayment of loan facility (56) (324) (368) ---------- ---------- ---------- Net cash outflow from financing (56) (333) (378) ---------- ---------- ---------- (Decrease)/Increase in cash (65) 37 78 ====== ====== ====== (a) Reconciliation of operating profit to net cash flow from operating activities 31st December 30th June 2009 2008 2009 £000 £000 £000 Profit/(Loss) before taxation 114 (238) (807) Dividends receivable (29) (223) (332) Share of associate (57) (40) 377 Depreciation charges 7 7 13 Investment provisions (297) - 219 Net interest paid 67 87 145 (Decrease)/Increase in debtors 55 (110) 10 (Decrease)/Increase in creditors (161) 196 98 (Increase /Decrease/(Increase) in current 331 554 715 asset investments ---------- ---------- ---------- 30 233 438 ====== ====== ====== (b) Reconciliation of net cash flow to movement in net debt At start Cash At end of of period flow Period Half year ended 31st December £000 £000 £000 2009 Cash at bank 114 (65) 49 Bank loan (2,556) 56 (2,500) ---------- ---------- ---------- (2,442) (9) (2,451) ---------- ---------- ---------- 2008 Cash at bank 36 37 73 Bank loan (2,924) 324 (2,600) ---------- ---------- ---------- (2,888) 361 (2,527) ---------- ---------- ---------- Year ended 30th June 2009 Cash at bank 36 78 114 Bank loan (2,924) 368 (2,556) ---------- ---------- ---------- (2,888) 446 (2,442) ---------- ---------- ---------- Market Value of General Portfolio 31st December 2009 Current Value £ % Nestlé 271 5.37 L'Oreal 236 4.68 British American Tobacco 222 4.41 Royal Dutch Shell 217 4.32 BHP Billiton 215 4.28 Schindler-Holdings 211 4.19 Heineken 191 3.79 Imperial Tobacco Group 195 3.87 Henkel KGAA 189 3.76 Reckitt Benckiser 195 3.87 Holcim 197 3.92 BASF 187 3.70 Total 189 3.75 Pernod-Ricard 180 3.58 Beiersdorf 184 3.65 Investor 186 3.70 BP 180 3.57 Novartis 176 3.49 DSM 168 3.34 Unilever 175 3.48 Carlsberg 165 3.28 Roche Holdings 158 3.14 Diageo 160 3.02 Danone 152 3.02 ABB 158 3.14 Lafarge 147 2.93 Johnson Matthey 130 2.58 ---------- ---------- 5,036 100.00 ====== ====== Notes:- 1. The results for the half-year are unaudited. The information contained in this report does not constitute statutory accounts within the meaning of the Companies Act 2006. The statutory accounts of the Group for the year ended 30th June 2009 have been reported on by the Company's auditors and have been delivered to the Registrar of Companies. The report of the auditors was unqualified. 2. This report has been prepared in accordance with the accounting policies contained in the Company's Annual Report and Accounts 2009 International Financial Reporting Standards, and comply with IAS34. 3. The amendment to presentation, under IAS 1, which is mandatory for periods beginning 1st April 2009, has been adopted. This amendment requires the presentation of comprehensive income, which the company has opted to present in two statements - an income statement and a statement of comprehensive income. 4. The calculation of earnings per share is based on the weighted average number of shares in issue for the period and the profit on ordinary activities after tax.

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