Friday
30th September 2016
LONDON FINANCE & INVESTMENT GROUP
P.L.C.
(“Lonfin”, “the Company” or “the Group”)
Unaudited Preliminary results for the
year ended 30th June
2016
London Finance & Investment Group P.L.C. (LSE: LFI, JSE:
LNF), the investment company whose assets primarily consist of
Strategic Investments and a General Portfolio, today announces its
unaudited Preliminary Results for the year ended 30th
June 2016.
Strategy and Business Model
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 Company invests in other companies in accordance with the
Company’s Investment Policy. In the short term, the
performance of the Company can be influenced by overall stock
market performance and to ameliorate this short term risk the
Company has a combination of Strategic Investments together with a
General Portfolio. Strategic Investments are significant
investments in smaller UK quoted companies and these are balanced
by a 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.
Results
- Net assets have
increased over the year by 22.6% from 50.1p per share to 61.4p per
share.
- Strategic investments have
increased in value over the year by 6.0%, from £11,694,000 to
£12,417,000 largely due to the increase in value of our investment
in Finsbury Food Group Plc.
- Strategic
investments are yielding 2.9% (2015 – 2.7%)
- The General
Portfolio has increased over the year by 22.8% from £5,801,000 to
£7,125,000
- The General
Portfolio is yielding 2.4% (2015 – 2.9%)
- No borrowings at
30th June 2016, compared with
£1,385,000 at 30th June
2015
- Operating cost were
broadly in line with 2015
The Company and its subsidiaries (“Group”) achieved a profit for
the year, before tax and changes to the fair value adjustments of
investments, of £1,683,000 (2015- £334,000). The profit,
after positive fair value adjustments, tax and non-controlling
interest was £3,873,000 (2015 - £1,978,000) giving a headline
earnings per share of 5.2p (2015 –headline earnings per share of
0.8p).
Strategic Investments
Western Selection P.L.C.
(“Western”)
The Group owns 7,860,515 shares, being 43.8%, of the issued
share capital of Western.
On 30th September 2016,
Western announced unaudited preliminary results showing a profit
before exceptional items of £64,000 for the year to 30th
June 2016 (2015 – profit before
exceptional items of £159,000). Including associates and
after exceptional items and tax, earnings per share were 0.4p (2015
– earnings per share – 15.5p).
Western has paid an interim dividend of 1.05p and proposes a
final dividend of 1.05p making 2.1p for the year (2015 –
2.1p). Western’s net assets at market value as at
30th June 2016 were
£14,217,000 equivalent to 79p per share, an increase of 5.3% from
75p last year.
Our share of the net assets of Western, including the value of
Western’s investments at market value, was £6,627,000 (2015 -
£5,907,000). The fair value recorded in the Statement of
Financial Position is the market value of £3,537,000 (2015 -
£3,694,000). This represents 26% (2015 – 24%) of the net
assets of the Group. Western’s objective is to generate
growth in value for shareholders over the medium to long term and
pay a progressive dividend.
Western’s business model is to take sizeable minority stakes in
relatively small companies usually before or as their shares are
admitted to trading on one of the UK’s stock exchanges and have
directors in common 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 (“Core
Holdings”) will grow to a stage at which Western’s support is no
longer required and its stake can then be sold over time into the
relevant stock market. Companies that are targeted as Core Holdings
will have an experienced management team, a credible business model
and good prospects for growth.
Mr. D. C. Marshall is the
Chairman of Western and Mr L.H.
Marshall, Mr. J.M. Robotham
and Mr. E.J. Beale are non-executive
directors. Western’s main Core Holdings are Northbridge
Industrial Services plc, Swallowfield plc, Bilby Plc and Tudor Rose
International Limited.
An extract from Western’s announcement relating to its main Core
Holdings is set out below:
Northbridge
Industrial Services plc (“Northbridge”)
Northbridge hires and sells specialist industrial equipment
to a global customer base. It has offices or agents in the
U.K., U.S.A., Dubai, Germany, Belgium, France, Australia, Singapore, India, Brazil, Korea and Azerbaijan. Customers
include 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 announced its unaudited
interim results for the six months ended 30th June 2016 on 29th
September 2016 and recorded a loss after tax of £2,338,000
for the period.
Western acquired a further 1,323,632
Northbridge shares during the year for £964,000 bringing its
holding to 3,223,632 shares. Western’s holding is now 12.45%
of Northbridge’s issued share capital. The value of this
investment at 30th June 2016 was
£2,772,000 (2015 - £3,895,000) being 19% (2015 - 29%) of Western’s
net assets.
Mr D. C.
Marshall is 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
their website: www.swallowfield.com
Swallowfield announced its annual
results to 25th June 2016 on
20th September 2016 and recorded a
profit after tax of £2,001,000 compared to a profit of £746,000 for
the comparable period last year.
Dividends of £52,000 were received
from Swallowfield during the year (2015 – nil). A final dividend of
2.3p per share has been declared and Western will receive a further
£46,000.
Western acquired a further 130,851
Swallowfield shares during the year for £203,000. At the
reporting date, Western owned 2,000,000 Swallowfield shares which
was 11.9% of Swallowfield’s issued share capital. The market value
of this investment on 30th June 2016
had increased to £3,400,000 from the value at 30th June 2015 of £2,019,000. The value of this
investment is 24% (2015 - 15%) of Western’s net assets.
On 23rd September 2016, Western sold 200,000 Swallowfield
shares for £520,000 (before selling expenses).
Mr E. J.
Beale is a non-executive director of Swallowfield.
Bilby Plc
(“Bilby”)
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.
In July
2015, the Company invested £1,500,000 in acquiring 1,875,000
shares in Bilby and in April 2016, a
further investment of £545,000 for 462,088 Bilby shares.
Western now holds 2,337,088 shares, which is 5.9% of Bilby’s issued
share capital. The market value of this investment on 30th June 2016 was £2,968,000 which is 21% of
Western’s net assets.
Bilby announced its results for the
year ended 31st March 2016 on
14th July 2016 showing a profit after
tax of £954,000 compared to a profit of £1,426,000 for the 14 month
period ended 31st March 2015. Dividends of £58,000
were received from Bilby during the year. Bilby announced a
final dividend of 2.00p per share which was paid in September 2016 which provided Western with
further income of £46,700.
Tudor Rose
International Limited (previously Hartim Limited) (“Tudor Rose
International”)
Tudor Rose International 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, Tudor Rose International
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 the issued
share capital of Tudor Rose International, which has a 31st
December year end and which generated trading profits before tax in
the year to 30th June 2016 of
£71,000. Turnover in the period was £18,542,000 (2015 -
£18,022,000).
Western’s share of a profit after
tax, including a charge for disallowed tax losses, for the twelve
months to 30th June 2016 was 35,000
(2015 – loss of £5,000) and the book value of the investment at
30th June 2016 was £1,290,000 (2015 -
£1,223,000) being 9% (2015 - 9%) of Western’s net assets.
Western has two nominees on the Board
of Tudor Rose International: Mr E. J.
Beale and Mr L. H.
Marshall.
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 is available on its website:
www.finsburyfoods.co.uk
During the year Lonfin disposed of 2,000,000 shares in Finsbury
for £1,984,000 realising a profit of £1,408,000. At 30th
June 2016, Lonfin held 8,000,000
Finsbury shares, representing 6.1% of Finsbury’s issued share
capital. The market value of the holding was £8,880,000 as at
30th June 2016 (cost -
£2,300,000) and represents 46% (2015 – 51%) of Lonfin’s net
assets.
On 19th September 2016, Finsbury
announced audited profits on continuing operations after tax and
minority interests of £8,504,000 for the 52 weeks period ended
2 July 2016 (2015 - £6,620,000).
Finsbury paid an interim dividend of 0.93p and has recommended
to its shareholders a final dividend of 1.87p per share, making
2.80p for the year (2015 – 2.5p).
On 27th September 2016, Lonfin
sold 1,000,000 Finsbury shares for £1,200,000 (before selling
expenses) and, on 29th September
2016, Lonfin sold a further 1,000,000 Finsbury shares for
£1,250,000 (before selling expenses). Lonfin now holds 6,000,000
Finsbury shares which represent 4.6% of Finsbury’s issued share
capital.
.Mr. Beale is a non-executive director of Finsbury.
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 the year end the number of holdings in the General Portfolio
was 26. We have decreased the amount invested in the General
Portfolio over the year by £20,000 (2015 - increased by
£100,000).
Operations and Employees
All of our operations and those of our associated company,
Western, except investment selection, are outsourced to our
subsidiary, City Group Limited (“City Group”). City Group
also provides office accommodation, company secretarial and head
office finance services to a number of other U.K. and Jersey
companies. City Group has responsibility 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 8 people.
Save for the appointment of Mr E.J.
Beale in April 2016, all
directors of the Company and the directors of its subsidiaries are
unchanged from last year and are male. The Group has set a target
of 25% female members of the Company’s Board and female candidates
will be considered on their merits when vacancies arise. The
Board has enlarged during the year through the appointment of Mr
E.J. Beale, the chief executive of
City Group, and since this was an internal appointment, no female
candidates were considered. Excluding directors, 4 of the 6 other
employees of the Group at 30th June 2016 were female (30th
June 2015 - 4 of 6).
Outlook
We believe our mix of Strategic Investments and a General
Portfolio gives us every chance of outperforming the broader market
in the medium to long term notwithstanding any short term
volatility in markets, currencies and commodities.
30th September
2016
The annual report and accounts will shortly be finalised 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
P.L.C.:
020 7796 9060
(David
Marshall/Edward
Beale)
Johannesburg Sponsor:
Sasfin Capital (a division of
Sasfin Bank Limited)
Consolidated Statement of Total Comprehensive Income
For the year ended 30th
June
|
|
2016 |
2015 |
|
Notes |
£000 |
£000 |
Dividends – Listed investments |
|
550 |
487 |
|
|
|
|
Rental and other Income |
|
82 |
82 |
Profits realised on sales of
investments |
|
1,448 |
175 |
Management service fees |
|
252 |
233 |
Operating income |
|
2,332 |
977 |
|
|
|
|
Administration expenses |
|
(649) |
(643) |
Operating Profit |
|
1,683 |
334 |
Unrealised changes in the carrying
value of investments |
|
2,643 |
2,049 |
Interest payable |
|
(16) |
(48) |
Profit on ordinary activities
before taxation |
|
4,310 |
2,335 |
|
|
|
|
Tax on result of ordinary
activities |
|
(437) |
(357) |
Profit on ordinary activities
after taxation |
|
3,873 |
1,978 |
Non-controlling interest |
|
(15) |
(10) |
Profit for the financial year
attributable to members of the holding company |
|
3,858 |
1,968 |
Other comprehensive Income |
|
- |
- |
Total comprehensive income
attributable to shareholders |
|
3,858 |
1,968 |
|
|
|
|
Reconciliation of headline
earnings |
|
|
|
Basic earnings per share |
1 |
12.4p |
6.3p |
Adjustment for the unrealised
changes in the carrying value of investments, net of tax |
|
(7.2)p |
(5.5)p |
Headline earnings per share |
1 |
5.2p |
0.8p |
|
|
|
|
|
|
|
|
All profits and losses
are on continuing activities |
Consolidated Statement of Changes in Shareholders’
Equity
|
|
|
|
|
|
|
|
|
|
Ordinary Share capital £000 |
Share
Premium Account £000 |
Un-realised
Profit on
Investments
£000 |
Share of Undistributed
Results of Subsidiaries
£000 |
Retained realised
Profits & Losses
£000 |
Total
£000 |
Non-controlling Interests
£000 |
Total
Equity
£000 |
|
|
|
|
|
|
|
|
|
Year ended 30th June
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at 1st July
2014 |
1,560 |
2,320 |
4,585 |
(294) |
5,779 |
13,950 |
65 |
14,015 |
|
|
|
|
|
|
|
|
|
Total Comprehensive Income |
- |
- |
1,719 |
320 |
(71) |
1,968 |
10 |
1,978 |
|
|
|
|
|
|
|
|
|
Dividends paid |
- |
- |
- |
- |
(296) |
(296) |
- |
(296) |
|
|
|
|
|
|
|
|
|
Total transactions with
shareholders |
- |
- |
- |
- |
(296) |
(296) |
- |
(296) |
|
|
|
|
|
|
|
|
|
Balances at 30th June
2015 |
1,560 |
2,320 |
6,304 |
26 |
5,412 |
15,622 |
75 |
15,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 30th June
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance a 1st July
2015 |
1,560 |
2,320 |
6,304 |
26 |
5,412 |
15,622 |
75 |
15,697 |
|
|
|
|
|
|
|
|
|
Total Comprehensive Income |
- |
- |
2,235 |
1,795 |
(172) |
3,858 |
15 |
3,873 |
|
|
|
|
|
|
|
|
|
Dividends paid |
- |
- |
- |
- |
(312) |
(312) |
- |
(312) |
|
|
|
|
|
|
|
|
|
Total transactions with
shareholders |
- |
- |
- |
- |
(312) |
(312) |
- |
(312) |
|
|
|
|
|
|
|
|
|
Balance at 30th June
2016 |
1,560 |
2,320 |
8,539 |
1,821 |
4,928 |
19,168 |
90 |
19,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Financial Position
|
|
2016 |
2015 |
|
|
£000 |
£000 |
At 30th June |
|
|
|
|
|
|
|
Non-current
Assets |
|
|
|
Tangible assets |
|
22 |
31 |
Investments |
|
12,417 |
11,694 |
|
|
12, 439 |
11,725 |
|
|
|
|
Current Assets |
|
|
|
Listed Investments |
|
7,125 |
5,801 |
Trade and other
receivables |
|
272 |
218 |
Cash at bank |
|
588 |
115 |
|
|
7,985 |
6,134 |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
Trade and other
payables falling due within the year |
|
(316) |
(1,720) |
Net Current Assets |
|
7,669 |
4,414 |
|
|
|
|
Deferred Taxation |
|
(850) |
(442) |
Total Assets less Current
Liabilities |
|
19,258 |
15,697 |
|
|
|
|
Capital and Reserves |
|
|
|
Called up Share Capital |
|
1,560 |
1,560 |
Share Premium account |
|
2,320 |
2,320 |
Un-realised profits and losses on
investments |
|
8,539 |
6,304 |
Share of retained realised profits
and losses of subsidiaries |
|
1,821 |
26 |
Company’s retained realised profits
and losses |
|
4,928 |
5,412 |
|
|
19,168 |
15,622 |
Non-controlling equity
interests |
|
90 |
75 |
|
|
19,258 |
15,697 |
|
|
|
|
All profits and losses
are on continuing activities |
Company Statement of Financial Position
|
|
2016 |
|
2015 |
At 30th
June 2016 |
|
£000 |
|
£000 |
Non-current
Assets |
|
|
|
|
Investments in Group
companies |
|
3,847 |
|
6,203 |
|
|
3,847 |
|
6,203 |
|
|
|
|
|
Current
Assets |
|
|
|
|
Listed
investments |
|
7,125 |
|
5,801 |
Trade and other
receivables |
|
27 |
|
19 |
Cash at bank |
|
451 |
|
71 |
|
|
7,603 |
|
5,891 |
Current
Liabilities |
|
|
|
|
Trade and other
payables: falling due within the year |
|
(93) |
|
(1,597) |
Net Current
Assets |
|
7,510 |
|
4,294 |
Deferred
Taxation |
|
(330) |
|
(442) |
Total Assets less
Current Liabilities |
|
11,027 |
|
10,055 |
Capital and
Reserves |
|
|
|
|
Called up share
capital |
|
1,560 |
|
1,560 |
Share premium
account |
|
2,320 |
|
2,320 |
Unrealised profits and
losses on investments |
|
2,219 |
|
763 |
Realised profits and
losses |
|
4,928 |
|
5,412 |
Equity
shareholders’ funds |
|
11,027 |
|
10,055 |
Consolidated Statement of Cash Flow
|
Notes |
2016 |
2015 |
|
|
£000 |
£000 |
Cash flows from
operating activities |
|
|
|
Profit/(Loss) before
tax |
|
4,310 |
2,335 |
Adjustments for
non-cash and non-operating activities - |
|
|
|
Finance expense |
|
16 |
48 |
Depreciation
charges |
|
9 |
8 |
Profit on non-current
investment |
|
(1,408) |
- |
Unrealised changes in
the fair value of investments |
|
(2,643) |
(2,049) |
|
|
284 |
342 |
Taxes paid |
|
(28) |
(26) |
Changes in working
capital |
|
|
|
(Increase)/decrease in
trade and other receivables |
|
(54) |
27 |
Increase/(decrease) in
trade and other payables |
|
96 |
(5) |
Decrease in current
asset investments |
|
20 |
100 |
|
|
62 |
122 |
Cash flows from
investment activity |
|
|
|
Disposal/(Purchase) of
strategic investment |
|
1,984 |
(593) |
Net cash outflow from
investment activity |
|
1.984 |
(593) |
Cash flows from
financing |
|
|
|
Interest paid |
|
(16) |
(48) |
Equity dividends
paid |
|
(312) |
(296) |
Net
drawdown/(repayment) of loan facilities |
|
(1,500) |
575 |
Net cash
inflow/(outflow) from financing |
|
(1,828) |
231 |
Decrease in cash
and cash equivalents |
|
473 |
76 |
Cash and cash
equivalents at the beginning of the year |
|
115 |
39 |
Cash and cash
equivalents at end of the year |
|
588 |
115 |
Notes:
1. Basic
earnings per share are based on the profit on ordinary activities
after taxation and non-controlling interests and on 31,207,479
shares (2015 – 31,207,479) being the weighted average of the number
of shares in issue during the year.
Headline earnings are required to be disclosed by the
JSE.
Headline earnings per share are based on the ordinary
activities after taxation and non-controlling interests, before
unrealised changes in the fair value of investments net of tax, of
£1,623,000 (2015 - £250,000) and on 31,207,479 (2015 – 31,207,479)
shares being the weighted average of number of shares in issue
during the year.
2. The net assets per
share are calculated taking investments at market value and on
31,207,479 shares (2015 – 31,207,479) being the weighted average of
the number of shares in issue during the year.
3. The financial
information in this preliminary announcement of audited group
results does not constitute the company’s statutory accounts for
the years ended 30th June
2016 or 30th June
2015 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 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 and
comply with IAS 34. The audited accounts for the group for
the year ended 30th June
2015 were reported on with an unqualified audit report and
have been delivered to the Registrar of Companies.
Copies of this notification are held at the Company’s office, 6
Middle Street, London, EC1A 7JA
(tel. 020 7796 9060) and are available for a period of 14 days from
the date of this announcement.