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 2015 and dividend
declaration.
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 valuation 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 consists
of investments in major U.S., U.K. and European equities.
At 31st December 2015, we held two
Strategic Investments in which we have board representation: our
associated company Western Selection P.L.C. and Finsbury Food Group
plc. Detailed comments on our Strategic Investments are given
below.
Results
Our net assets per share increased 16.0% to 58.1p at
31st December 2015 from 50.1p at 30th
June 2015. Our Strategic Investments, adjusting for the
disposal of part of the investment in Finsbury Foods, which
realised a profit of £1,409,000, increased in value by 14.0% during
the period, reflecting a strong performance in Finsbury Food’s
share price. Our General Portfolio increased by 4.5%,
compared with decreases of 3.8% and 4.5% in the FTSE 100 index and
the FTSEurofirst 300 Index respectively, over the half
year. At the close of business on 22nd February 2016, our net asset value was 57.5p
per share.
The Group profit before tax for the
half year was £3,296,000 compared to a profit of £1,017,000 for the
same period last year, which reflects the profit realised from the
disposal of part of the investment in, and the unrealised profit
arising from the strong performance of, Finsbury. Our profit
after tax and minority interest was £2,683,000 (2014: £810,000)
giving profits per share of 8.6p (2014: 2.6p).
Strategic Investments
Western Selection P.L.C. (“Western”)
The Group owns 7,860,515 Western shares, representing 43.8% of
Western’s issued share capital.
On 22nd February 2016,
Western announced a profit after tax of £77,000 for its half year
to 31st December 2015 and a profit
per share of 0.4p (2014: profit 1.2p). Western’s net assets
at market value were £14,272,000 equivalent to 80p per share, an
increase of 6% from 75p at 30th June 2015. Western has
announced an interim dividend of 1.05p per share (prior year:
1.05p).
The market value of the Company’s investment in Western at
31st December 2015 was
£3,537,000 representing 19% of the net
assets of Lonfin. The underlying value of the investment in
Western, valuing Western’s own investments at market value, was
£6.3 million (30th June 2015: £5.9
million).I am the Chairman of Western and Mr. Robotham is a
Non-Executive Director. Western’s principal core holdings are
in Northbridge Industrial Services plc, Swallowfield plc, Bilby Plc
and Hartim Limited. Extracts from Western's announcement on
its core holdings are set out below:
|
Northbridge
Industrial Services plc (“Northbridge”)
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. Further information
about Northbridge is available on their website:
www.northbridgegroup.co.uk.
Northbridge’s latest results, for the half year to 30th June 2015,
showed a loss after tax
of
£1,936,000 (2014: £2,568,000 profit). Northbridge declared an
interim dividend of 1p per share (2014: 2.2p.
During the period we increased our investment in Northbridge by
600,000 shares at a cost of £422,000 and Western now owns 2,500,000
shares, representing 13.57% of the total voting rights in
Northbridge’s issued share capital. The market value of this
investment at 31st December 2015 was £2,050,000 (30th June 2015:
£3,895,000), representing 14% of Western’s assets.
I am a Non-Executive Director of Northbridge. |
|
Swallowfield plc
(“Swallowfield”)
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. Further
information about Swallowfield is available on its website:
www.swallowfield.com.
Swallowfield announced its annual results to 30th June 2015 in
September 2015 showing a profit after tax of £746,000 compared to a
profit of £157,000 for the prior year. We received a dividend
from Swallowfield during the period of £37,383 (2014 - Nil).
Western owns 1,869,149 shares in Swallowfield (16.5% of their
issued share capital). The market value of the Company’s
holding in Swallowfield on 31st December 2015 was £3,570,000 (30th
June 2015: £2,019,000), representing 25% of the Company’s
assets.
Mr Beale is a Non-Executive Director of Swallowfield. |
|
Bilby Plc
In July 2015 we invested £1,500,000 in acquiring 1,875,000 shares
in Bilby which is 5.5% of their issued share capital.
Bilby 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 Bilby is available on
their website: www.bilbyplc.com.
Bilby announced its interim results for the six month period to 30
September 2015 on 9th December 2015 showing a profit after tax of
£55,000. Bilby paid a final dividend of 2.32p per share in
August 2015 which provided us with income of £43,500 and an interim
dividend of 0.75p per ordinary share in January 2016 which provided
us with an income of £14,063.
The market value of the Company’s holding in Bilby on 31st December
2015 was £2,775,000, representing 19% of the Company’s assets. |
|
Hartim Limited
(“Hartim”)
Hartim offers a complete export sales, marketing and logistical
service to a number of well known UK branded fast moving consumer
goods companies. This investment is accounted for as an
associated company.
Our share of Hartim’s estimated results for the period ended 31st
December 2015 is a profit after tax of £51,000 (2014 -
£23,000).
At 31st December 2014, Western owned 49.5% of Hartim. The
carrying value of the Company’s equity investment in Hartim on 31st
December 2015 was £613,000 (2014: £591,000) representing 4% of the
Company’s assets. In addition, loans of £660,000 (equivalent
to a further 5% of the Company’s assets) have been made to Hartim
and its executive directors.
Mr. Beale is a Non-Executive Director of Hartim. |
Finsbury Food Group plc (“Finsbury
Food”)
Finsbury Food is a leading manufacturer of cakes and bread to
the major UK multiple grocers and recently acquired the Fletchers
Group, suppliers of fresh and frozen bread and morning goods to the
major UK multiple grocers and the UK foodservice sector.
Further information about Finsbury Food is available on its
website: www.finsburyfoods.co.uk.
In October 2015, the Group
disposed of 2,000,000 shares in Finsbury Food for £1,985,000 and
now holds 8,000,000 shares, representing 6.25% of their issued
share capital. The market value of our holding was £9,040,000 on
31st December 2015 compared to a cost
of £2,300,000; this represents 50% of the net assets of Lonfin.
Finsbury Food will be announcing their interim results on
16th March 2016.
Mr Beale is a Non-Executive Director of Finsbury Food.
General Portfolio
The list of investments included in the General Portfolio is set
out at the end of this announcement. We continue to hold 26
investments, having taken £60,000 out of the amount invested.
Outlook
The Board expect to see a continuation of the volatility
in equity and currency markets and remain cautious about the
remainder of the year.
The Board has declared an interim dividend of 0.50p per share
(prior year: 0.50p).
Statement of directors’
responsibility
The directors confirm that, to the best of their knowledge:
- the unaudited interim results for the six months ended
31st December 2015, have been
prepared in accordance with IAS 34 as adopted by the EU; and
- the interim management report includes a fair review of the
information required by DTR 4.2.7R and DTR 4.2.8R of the Disclosure
and Transparency Rules.
By order of the
Board
David C. Marshall
Chairman
Interim Dividend
The declared interim dividend is 0.50p per share (ZAR 10.73075 cents) (prior year: 0.50p) and will
be paid on Friday, 8th April 2016 to
those members registered at the close of business on Friday
18th March 2016 (SA and UK).
Shareholders on the South African register will receive their
dividend in South African Rand converted from sterling at the
closing rate of exchange on 22nd February
2016.
The issued number of shares as at the declaration date is
31,207,479.
The Company’s UK Income Tax reference number is 948/L32120.
This dividend should be regarded as a foreign dividend by South
African shareholders.
Salient dates for
dividend |
|
Last day to trade (SA) |
Friday, 11th March 2016 |
Shares trade ex dividend (SA) |
Monday, 14th March 2016 |
Shares trade ex dividend (UK) |
Thursday, 17th March 2016 |
Record date (SA and UK) |
Friday, 18th March 2016 |
Pay date |
Friday, 8th April 2016 |
Share certificates may not be dematerialised or rematerialised
between Monday, 14th March 2016 and
Friday 18th March 2016, both dates
inclusive. Shares may not be transferred between registers during
this period either.
Shareholders are hereby advised that the exchange rate to be
used will be GBP 1 = ZAR 21.4615. This has been calculated as
the average of the bid/ask spread at 16.00 (United Kingdom time) being the close of
business on 22nd February 2016. Consequently, the dividend of
0.50p will be equal to ZAR 10.73075
cents.
The JSE Listings Requirements require disclosure of additional
information in relation to any dividend payments.
Shareholders registered on the South African register are
reminded that the dividend withholding tax will be withheld from
the gross final dividend amount of ZAR
10.73075 cents per share at a rate of 15%, unless a
shareholder qualifies for an exemption; shareholders registered on
the South African register who do not quality for an exemption will
receive a net dividend of ZAR 9.12114
cents per share. 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 payment out 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 dividend
withholding tax to Computershare Investor Services (Pty) Limited,
Tel: +27 11 373-0004.
Unaudited Consolidated Statement of
Comprehensive Income
|
Half year ended |
Year
ended |
|
31st December |
30th
June |
|
2015 |
|
2014 |
|
2015 |
|
£000 |
|
£000 |
|
£000 |
Operating Income |
|
|
|
|
|
Dividends received |
270 |
|
197 |
|
487 |
Rental and other income |
41 |
|
41 |
|
82 |
Profit on sales of
investments, including provisions |
1,448 |
|
91 |
|
175 |
|
1,759 |
|
329 |
|
744 |
Management services income |
122 |
|
108 |
|
233 |
|
1,881 |
|
437 |
|
977 |
Administrative expenses |
|
|
|
|
|
Investment operations |
(175) |
|
(171) |
|
(345) |
Management services |
(112) |
|
(111) |
|
(298) |
Total administrative expenses |
(287) |
|
(282) |
|
(643) |
Operating profit |
1,594 |
|
155 |
|
334 |
Unrealised changes in the carrying
value of investments |
1,718 |
|
879 |
|
2,049 |
Interest payable |
(16) |
|
(17) |
|
(48) |
Profit on ordinary activities
before taxation |
3,296 |
|
1,017 |
|
2,335 |
Tax on result of ordinary
activities |
(588) |
|
(188) |
|
(357) |
Profit on ordinary activities
after taxation |
2,708 |
|
829 |
|
1,978 |
Non-controlling interest |
(25) |
|
(19) |
|
(10) |
Total comprehensive
income - profit attributable to members of the holding
company |
2,683 |
|
810 |
|
1,968 |
Reconciliation of headline
earnings |
|
|
|
|
|
Earnings per share |
8.6p |
|
2.6p |
|
6.3p |
Adjustment for unrealised changes in
the carrying value of investments and exceptional items, net of
tax |
(3.6)p |
|
(2.8)p |
|
(5.5)p |
Headline earnings per share |
5.0p |
|
(0.2)p |
|
0.8p |
|
|
|
|
|
|
|
|
|
|
|
|
Interim dividend |
0.50p |
|
0.50p |
|
0.50p |
Final dividend |
|
|
|
|
0.50p |
Total in respect of the year |
|
|
|
|
1.00p |
Unaudited Consolidated Changes in
Shareholders’ Equity
|
31st
December |
30th
June |
|
2015 |
|
2014 |
|
2015 |
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
Total comprehensive income
attributable to members |
2,683 |
|
810 |
|
1,968 |
Dividends paid to equity
shareholders |
(162) |
|
(141) |
|
(296) |
|
2,521 |
|
669 |
|
1,672 |
Equity shareholders’ funds at start
of period |
15,622 |
|
13,950 |
|
13,950 |
Equity shareholders’ funds at end of
period |
18,143 |
|
14,619 |
|
15,622 |
Unaudited Consolidated Statement of
Financial Position
|
31st December |
30th June |
|
2015 |
|
2014 |
|
2015 |
|
£000 |
|
£000 |
|
£000 |
Non-current assets |
|
|
|
|
|
Tangible assets |
26 |
|
35 |
|
31 |
Principal investments:- |
|
|
|
|
|
Finsbury Food Group
Plc |
9,040 |
|
5,900 |
|
8,000 |
Western Selection
P.L.C. |
3,537 |
|
4,559 |
|
3,694 |
|
12,603 |
|
10,494 |
|
11,725 |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Listed investments |
6,040 |
|
5,899 |
|
5,801 |
Trade and other receivables |
232 |
|
252 |
|
218 |
Cash, bank balances and
deposits |
649 |
|
83 |
|
115 |
|
6,921 |
|
6,234 |
|
6,134 |
Total Assets |
19,524 |
|
16,728 |
|
17,859 |
|
|
|
|
|
|
Capital and Reserves |
|
|
|
|
|
Called up share capital |
1,560 |
|
1,560 |
|
1,560 |
Share premium account |
2,320 |
|
2,320 |
|
2,320 |
Unrealised profits and losses on
investments |
7,439 |
|
5,280 |
|
6,304 |
Share of undistributed
profits and losses of subsidiaries and associates |
767 |
|
(125) |
|
26 |
Company’s retained realised profits
and losses |
6,057 |
|
5,584 |
|
5,412 |
Equity shareholders
funds |
18,143 |
|
14,619 |
|
15,622 |
Trade and other payables
falling due within one year |
256 |
|
1,729 |
|
1,720 |
Deferred taxation |
1,025 |
|
296 |
|
442 |
Non-controlling equity
interest |
100 |
|
84 |
|
75 |
|
19,524 |
|
16,728 |
|
17,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets per share |
58.1p |
|
46.4p |
|
50.1p |
Number of shares in
issue |
31,207,479 |
|
31,207,479 |
|
31,207,479 |
Unaudited Consolidated Statement of
Cash Flow
|
Half year ended |
Year
ended |
|
31st
December |
30th
June |
|
2015 |
|
2014 |
|
2015 |
|
£000 |
|
£000 |
|
£000 |
Profit before taxation |
3,296 |
|
1,017 |
|
2,335 |
Adjustments for non-cash and
non-operating expenses:- |
|
|
|
|
|
Depreciation charges |
3 |
|
4 |
|
8 |
Profit on non-current asset
disposal |
(1,409) |
|
- |
|
- |
Unrealised changes in the
carrying value of fixed asset investments |
(1,718) |
|
(879) |
|
(2,049) |
Net interest paid |
16 |
|
17 |
|
48 |
|
(3,108) |
|
(858) |
|
(1,993) |
Taxation paid |
(5) |
|
(4) |
|
(26) |
|
|
|
|
|
|
Changes in working capital:- |
|
|
|
|
|
(Increase)/Decrease in debtors |
(15) |
|
(8) |
|
27 |
Increase/(Decrease) in
creditors |
39 |
|
(244) |
|
(5) |
Decrease in current asset
investments |
20 |
|
67 |
|
100 |
|
44 |
|
(185) |
|
122 |
Cash outflow on operating
activities |
227 |
|
(30) |
|
438 |
Investment activities |
|
|
|
|
|
Disposal of part of/purchase of
additional shares in, strategic investment |
1,985 |
|
(593) |
|
(593) |
Net cash outflow from investment
activities |
1,985 |
|
(593) |
|
(593) |
Cash flows from
financing |
|
|
|
|
|
Net interest paid |
(16) |
|
(17) |
|
(48) |
Drawdown of loan facilities |
(1,500) |
|
825 |
|
575 |
Equity dividends paid |
(162) |
|
(141) |
|
(296) |
Net cash inflow/(outflow) from
financing |
(1,678) |
|
667 |
|
231 |
|
|
|
|
|
|
Increase/(Decrease) in cash
and cash equivalents |
534 |
|
44 |
|
76 |
Cash and cash equivalents at
start of period |
115 |
|
39 |
|
39 |
Cash and cash equivalents at end
of period |
649 |
|
83 |
|
115 |
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 |
2015 |
|
|
|
|
|
Cash at bank |
115 |
|
534 |
|
649 |
Bank loan |
(1,500) |
|
1,500 |
|
- |
|
(1,385) |
|
2,034 |
|
649 |
2014 |
|
|
|
|
|
Cash at bank |
39 |
|
44 |
|
83 |
Bank loan |
(650) |
|
(825) |
|
(1,475) |
|
(611) |
|
(781) |
|
(1,392) |
Year ended 30th
June 2015 |
|
|
|
|
|
Cash at bank |
39 |
|
76 |
|
115 |
Bank loan |
(925) |
|
(575) |
|
(1,500) |
|
(886) |
|
(499) |
|
(1,385) |
Notes:-
1. |
Basis of
preparation:
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 2015 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. |
|
This report has been prepared in accordance with the accounting
policies contained in the Company’s Annual Report and Accounts
2015, International Financial Reporting Standards and comply with
IAS34. |
2. |
Earnings per
share:
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. |
3. |
Going
Concern:
Based on the Group’s cash flow forecasts and projections, the Board
is satisfied that the Group will be able to operate within the
level of its facilities for the foreseeable future. For this reason
the Board considers it appropriate for the Group to adopt the going
concern basis in preparing its financial statements. |
4. |
Principal risks and
uncertainties:
The principal risks and uncertainties which could impact the
Group’s long-term performance remain on pages 8-9 of the Group’s
Annual Report and Accounts 2015. The key risks and mitigating
activities have not changed from these:
- Stock
market vulnerability and economic uncertainty;
-
Possible volatility of share prices of investments;
-
Dividend income;
-
Ability to make strategic investments; and
-
Liquidity of equity investments in strategic investments. |
Composition of General Portfolio
|
31st
December 2015 |
|
|
|
|
|
Value |
|
|
|
£000 |
|
% |
|
|
|
|
British
American Tobacco |
330 |
|
5.5 |
Investor |
328 |
|
5.4 |
Imperial Tobacco |
319 |
|
5.3 |
Heineken |
317 |
|
5.2 |
Schindler-Holdings |
315 |
|
5.2 |
Reckitt Benckiser |
309 |
|
5.1 |
Nestle |
307 |
|
5.1 |
Henkel |
300 |
|
5.0 |
Pernod-Ricard |
269 |
|
4.5 |
Diageo |
269 |
|
4.5 |
Philip Morris International |
266 |
|
4.4 |
Unilever |
258 |
|
4.3 |
L'Oreal |
244 |
|
4.0 |
Anheuser Busch Inbev |
233 |
|
3.9 |
Novartis |
195 |
|
3.2 |
3M |
191 |
|
3.2 |
Exxon |
190 |
|
3.2 |
Danone |
186 |
|
3.1 |
BASF |
181 |
|
3.0 |
Procter & Gamble |
179 |
|
3.0 |
Chevron |
164 |
|
2.7 |
ABB |
162 |
|
2.7 |
United Technologies |
156 |
|
2.6 |
Givaudan |
151 |
|
2.5 |
Linde |
118 |
|
2.0 |
LVMH |
103 |
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
6,040 |
|
100.0 |