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LONDON FINANCE AND INVEST. GRP PLC - Preliminary unaudited results for the year ended 30 June 2012

Release Date: 28/09/2012 08:00
Code(s): LNF     PDF:  
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Preliminary unaudited results for the year ended 30 June 2012

London Finance & Investment Group P.L.C.

(Incorporated in England – No. 201151)

Code : LNF               ISSN: GB0002994001

Preliminary announcement of unaudited results for the year ended 30th June 2012

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 2012.


Chairman’s statement

Lonfin is an investment company whose target is to achieve growth in shareholder value in real terms over the
medium to long term while maintaining a progressive dividend policy.

In the short term, the performance of the Company can be influenced by overall stock market performance and
to diversify this short term risk the Company has a combination of Strategic Investments and a General
Portfolio. Strategic Investments are significant investments in smaller U.K. quoted companies and these are
balanced by a General Portfolio, which consists of investments in major U.K. and European equities and
provides an exposure to the equity market.

At 30th June 2012, the three Strategic Investments, in which we have Directors in common, were our
associated company Western Selection P.L.C. and MWB Group Holdings Plc and Finsbury Food Group Plc.
Detailed comments on our Strategic Investments are given below.

- Net assets have decreased by 11.1% from 35.0p per share to 31.1p per share
- The General Portfolio has decreased by 4.2% compared to declines of 6.3% and 8.1% in FTSE100
and FTSE Eurofirst 300 respectively.
- The General Portfolio is yielding 3.0% (2011 – 3.1%).
- There are no net borrowings (2011 – borrowings equal to 17% of the value of liquid stock market
investments)
- Operating costs have been reduced.

Disposal of Investment Property
At the General Meeting on 21st December 2011 shareholders approved the disposal of the Company’s
investment property for gross proceeds of £2,625,000. Net cash proceeds after transaction costs and tax are
£2,495,000 compared to the estimate of £2,397,000, mainly due to lower tax payable. Sale proceeds were
received on 23rd December 2011 and the transaction formally completed on 27th January 2012. The sale
proceeds are being held in cash pending reinvestment in the General Portfolio.

Results
Our net assets per share have decreased 11.1% to 31p from 35p last year (including a valuation of £2,093,000
of the investment property, in place of the book value of £367,000). The decrease reflects the decline in the
value of our Strategic Investments by 14%, particularly in MWB Group. The General Portfolio decreased by
4.2%, outperforming the markets, where a decrease in the FTSE 100 index was 6.3% and in the FTSE
Eurofirst 300 index, 8.1%, over the year.

The Group achieved a profit for the year, before tax and the fair value adjustments of investments, of
£2,003,000 (2011 - £123,000). The profit after fair value adjustments, tax and non-controlling interest was
£869,000 (2011 - £2,118,000) giving a profit per share of 2.9p (2011 - 6.8p).

Strategic Investments
Western Selection P.L.C. (“Western”)
The Group owns 7,864,412 shares, being 43.8% of the issued share capital of Western.
On 27th September 2012, Western announced a profit before associates and tax of £164,000 for its year to 30 th
June 2012 (2011 - £136,000). Including associates and after exceptional items and tax, losses per share were
1.0p (2011 - profits - 2.6p).

Western has paid an interim dividend of 0.80p and proposes an increased final dividend of 0.9p (2011 -
0.85p). Western’s net assets at market value were £12,895,000, equivalent to 72p per share, a decrease of
14% from 84p last year.

Our share of the net assets of Western including the value of Western’s investments at market value, was £5.6
million (2011 - £6.6 million). The fair value recorded in the statement of financial position is the market
value of £3,144,000 (2011 - £3,458,000). This represents 32% (2011 - 37%) of the net assets of the Group.

Mr. D. C. Marshall is the Chairman of Western and Mr. Robotham and Mr. Beale, the chief executive of our
subsidiary 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. Further information about Creston is available on their website: www.creston.com.

      The audited results for the year to 31st March 2012, show a profit after tax of £10,300,000 (2011 -
      £10,400,000), equivalent to fully diluted earnings of 12.34p per share (2011 - 12.39p).

      Western maintained its holding of 3,000,000 shares in Creston, which is 4.9% of their issued share
      capital. The value of this investment at 30th June 2012 was £1,650,000 (2011 - £3,390,000) being
      13% (2011 - 23%) of Western’s assets.

      Northbridge Industrial Services PLC
      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 announced profits of £2,321,000 for the year ended 31st December 2011 (2010 -
      £3,036,000) and declared a final dividend of 3.25p per share, making 5.0p for the year (2010 -
      4.6p).

      Western maintained its holding of 2,200,000 shares in Northbridge, which is 14.3% of their issued
      share capital. The value of this investment at 30th June 2012 was £5,984,000 (2011 - ££6,094,000)
      being 46 % (2011 - 40%) 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 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 June 2012 showing a profit after tax of £1,263,000
      compared to £1,082,000 (restated) for the comparable period last year. Dividends of £118,000
      (2011 - £116,000) were received from Swallowfield during the year.

      At the reporting date Western owned 1,869,149 shares which is 16.5% of their issued share capital.
      The market value of this investment on 30th June 2012 was £2,187,000 (2011 - £1,922,000), being
      17% (2011 - 13%) of Western’s net assets.

      Investments in Associates
      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.
      Hartim has acquired out of administration its principal distributor in Australia; to maintain and
      improve the service that it can offer to principals. Losses are being incurred by this business while
      it is being turned around. Hartim has also incurred an exceptional loss in a legal dispute about the
      exercise of the break clause in a property lease.

      Western holds 49.5% of Hartim, which has a 31st December year end and sustained losses in 2011
      of £220,000 after tax on turnover of £27,799,000. Western’s share of the consolidated loss after
      exceptional items and tax for the twelve months to 30th June 2012 was £342,000 (2011 – profit -
      £337,000) and the book value of the investment at 30th June 2012 was £1,124,000 (2011 -
      £1,465,000), being 9% (2011 - 10%) of Western’s assets.


MWB Group Holdings Plc (“MWB”)
MWB is a hotel, serviced offices and retail group that is in the process of realising its assets through an
orderly disposal programme. Further information about MWB is available on its website: www.mwb.co.uk.

The Group holding in MWB was unchanged from the 2 million shares held at June 2011, representing 1.22%
of MWB’s issued share capital. The market value at 30th June 2012 was £70,000 (2011 - £775,000),
compared with a cost of £1,681,000, and represents 1% (2011 – 8%) of the net assets of the Group.

The share price of MWB has declined significantly over the recent year and we have made an impairment
provision in the subsidiary holding this investment of £1,611,000 and also provided an equal amount in the
parent company against the loan to that subsidiary.

Mr. D.C. Marshall is a non-executive director of MWB.

Finsbury Food Group Plc (“Finsbury”)
Finsbury is one of the largest producers and 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, Co-op, Morrisons,
Sainsbury, Somerfield, Tesco and Waitrose. Further information about Finsbury is available on its website:
www.finsburyfoods.co.uk.

The Group holding in Finsbury remains at 8 million shares, representing 15.18% of their share capital. The
market value of the holding was £1,880,000 on 30th June 2012 (cost - £1,893,000) and represents 19% (2011 –
18%) of the net assets of the Group.

Mr. D.C. Marshall and Mr. Beale, the Chief Executive of our subsidiary company City Group P.L.C., are non-
executive Directors of Finsbury.

General Portfolio
The General Portfolio is well spread 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 increased to 30 from 23. The proceeds from the sale of
our investment property are being reinvested in the General Portfolio and we have increased the amount
invested in the General Portfolio over the year by £171,000 (2011: decreased by £464,000).

Operations & Employees
All of our operations and those of our associate, Western, except investment selection, are outsourced to our
subsidiary, City Group P.L.C. City Group also provides office accommodation, company secretarial and head
office finance services to a number of other U.K. and Jersey clients. City Group has responsibility for the
initial identification and appraisal of potential new strategic investments for the Group and the day to day
monitoring of existing strategic investments.
Dividend
The Company will be recommending a final dividend for the year ended 30th June 2012 of 0.35p and further
details will be announced shortly.

Outlook
We remain concerned that the high national debts of developed countries can only be reduced significantly
through prolonged austerity and/or substantial inflation. We remain invested in large diversified international
non-financial companies, which we think are well placed to outperform the market. We hope that volatility in
the financial markets will provide long term investors, such as ourselves, with buying opportunities.

By Order of the Board

CITY GROUP P.L.C.
Secretaries
28th September 2012


Unaudited Consolidated Statement of Comprehensive Income

For the year ended 30th June                                                             2012           2011
                                                                                         £000           £000

Dividends - Listed investments                                                             265           251
Interest receivable                                                                           4             -
Rental and other income                                                                     70            94
(Losses)/Profits realised on sales of investments                                          (32)          266
Management services fees                                                                   295           398
                                                                                      ----------    ----------
Operating income                                                                           602         1,009

Administration expenses                                                                  (638)         (749)
                                                                                      ----------    ----------
Operating (loss)/profit                                                                    (36)          260

Unrealised changes in the carrying value of investments                                (1,134)         1,995
Exceptional profit on disposal of property                                               2,137              -
Interest payable                                                                           (27)         (110)
                                                                                      ----------    ----------
Profit on ordinary activities before taxation                                              940         2,145

Tax on result of ordinary activities                                                       (65)          (19)
                                                                                      ----------    ----------
Profit on ordinary activities after taxation                                               875         2,126

Non-controlling interest                                                                     (6)           (8)
                                                                                      ----------    ----------
Profit for the financial year attributable to members of the holding company               869         2,118

Other comprehensive income                                                                   -              -
                                                                                     ----------     ----------
Total comprehensive income attributable to shareholders                                   869          2,118
                                                                                    =======        =======


Reconciliation of headline earnings

Basic profit per share                                                                    2.8p          6.8 p
Adjustment for the unrealised changes in the carrying value of investments, net
of tax                                                                                     3.6p        (6.4)p
                                                                                      ----------    ----------
Headline profit per share                                                                  6.4p         0.4 p
                                                       ======   ======

All profits and losses are on continuing activities.
Unaudited Consolidated Statement of Changes in Shareholders’ Equity

                                                                                                                   Share of        Retained
                                       Ordinary          Share                             Unrealised         undistributed         realised                       Non-
                                          Share       premium        Revaluation       profits/(losses)           results of       profits &                 Controlling        Total
                                        Capital        account          Reserve        on investments          Subsidiaries           losses   Total           interests       equity
                                           £000           £000             £000                   £000                 £000            £000    £000                £000         £000

Year ended 30th June 2011


Balances at 1st July 2011                 1,560         2,318               330                (3,747)                 791            6,004    7,256                 84         7,340
Total comprehensive income                    -             -                 -                 1,997                  113                8    2,118                  8         2,126

                                         ------         ------           ------                ------                ------          ------    -----             ------        ------
Shares issued                                 -             2                 -                      -                    -               -       2                    -           2
Dividends paid                                -             -                 -                      -                    -            (187)   (187)                   -        (187)

                                         ------         ------           ------                ------                ------          ------    -----             ------        ------
Total transactions with shareholders          -             2                 -                      -                    -            (187)   (185)                            (185)

                                         ------         ------           ------                ------                ------          ------    -----             ------        ------
Balances at 30th June 2011                1,560         2,320               330                (1,750)                 904            5,825    9,189                 92         9,281
                                         ------         ------           ------                ------                ------          ------    -----             ------        ------



Year ended 30th June 2012

                                                                                                                         904                                          92         9,281
Balances at 1st July 2011                  1,560          2,320              330                (1,750)                                5,825      9,189
                                          ------         ------           ------                ------                ------          ------     ------           ------       ------
Total comprehensive income                        -              -                 -              2,086               (1,476)            259           869             6          875
                                          ------         ------           ------                ------                ------          ------     ------           ------       ------
                                                                 -                                        -                    -                                           -            -
Transfer on disposal                              -                         (330)                                                        330             -
                                          ------         ------           ------                ------                ------          ------     ------           ------       ------
                                                                                                                               -                                           -     (343)
Dividends paid                                    -              -                 -                      -                            (343)      (343)
                                          ------         ------           ------                ------                ------          ------     ------           ------       ------
                                                                                                                                                                           -     (343)
Total transactions with shareholders              -              -                 -                      -                    -       (343)      (343)
                                          ------         ------           ------                ------                ------          ------     ------           ------       ------
                                                                                                                       (572)                                          98         9,813
Balances at 30th June 2012                 1,560          2,320                    -                336                                6,071      9,715
                                          ------         ------           ------                ------                ------          ------     ------           ------       ------
Unaudited Consolidated Statement of Financial Position

At 30th June                                                           2012           2011
                                                                       £000           £000
Non-current Assets
 Tangible assets                                                        4            367
 Investments                                                        5,094          5,933
                                                                  -----------   -----------
                                                                    5,098          6,300
                                                                 -----------    -----------
Current Assets
 Listed investments                                                 4,533          4,668
 Trade and other receivables                                          272            260
 Cash at bank                                                       2,217             21
                                                                 -----------    -----------
                                                                    7,022          4,949

Current Liabilities
 Trade and other payables: falling due within one year             (2,307)        (1,968)
                                                                 -----------    -----------
Net Current Assets                                                  4,715          2,981
                                                                 -----------    -----------
Total Assets less Current Liabilities                               9,813          9,281
                                                                 =======        =======

Capital and Reserves
 Called up share capital                                            1,560          1,560
 Share premium account                                              2,320          2,320
 Revaluation reserve                                                     -           330
 Unrealised profits and losses on investments                         336         (1,750)
 Share of retained realised profits and losses of subsidiaries       (572)           904
 Company’s retained realised profits and losses                     6,071          5,825
                                                                 -----------    -----------
                                                                    9,715          9,189
 Non-controlling equity interests                                      98             92
                                                                 -----------    -----------
                                                                    9,813          9,281
                                                                 =======        =======
Unaudited Company Statement of Financial Position

at 30th June                                                  2012          2011
                                                              £000          £000
Non-current Assets
 Tangible assets                                                -           367
 Investments in Group companies                             5,987         7,726
                                                         -----------   -----------
                                                            5,987         8,093
Current Assets                                           -----------   -----------

 Listed investments                                         4,533         4,668
 Trade and other receivables                                   18            38
 Bank balance                                               2,202             -
                                                         -----------   -----------
                                                            6,753         4,706

Current Liabilities
 Trade and other payables: falling due within one year     (2,236)       (1,915)
                                                         -----------   -----------
Net Current Assets                                          4,517         2,791
                                                         -----------   -----------
Total Assets less Current Liabilities                      10,504        10,884
                                                         =======       =======
Capital and Reserves
 Called up share capital                                    1,560         1,560
 Share premium account                                      2,320         2,320
 Revaluation reserve                                            -           330
 Unrealised profits and losses on investments                 553           849
 Realised profits and losses                                6,071         5,825
                                                         -----------   -----------
Equity shareholders' funds                                 10,504        10,884
                                                         =======       =======
Unaudited Consolidated Statement of Cash Flow

For the year ended 30th June                                                                         2012          2011
                                                                                                     £000          £000
Cash flows from operating activities
Profit before tax                                                                                     940        2,145
                                                                                                -----------   -----------
Adjustments for non-cash and non-operating activities -
 Finance expense                                                                                      27           110
 Profit on disposal of property                                                                   (2,137)             -
 Depreciation charges                                                                                  5            10
Unrealised changes in the fair value of investments                                                1,134        (1,995)
                                                                                                -----------   -----------
                                                                                                    (971)       (1,875)
                                                                                                -----------   -----------
Taxes paid                                                                                            (17)          (19)
                                                                                                -----------   -----------
Changes in working capital
 Decrease in trade and other receivables                                                             (12)            34
 (Decrease) in trade and other payables                                                              158             (6)
 Decrease in current asset investments                                                              (161)           285
                                                                                                -----------   -----------
                                                                                                      (15)          313
                                                                                                -----------   -----------
Net cash inflow from operating activities                                                             (63)          564
                                                                                                -----------   -----------
Cash flows from disposal of property                                                                2,495                -
                                                                                                -----------   -----------
Cash flows from financing
 Shares issued                                                                                          -            2
 Interest paid                                                                                       (27)         (110)
 Equity dividends paid                                                                              (343)         (187)
 Net repayment of loan facilities                                                                    134          (265)
                                                                                                -----------   -----------
Net cash outflow from financing                                                                     (236)         (560)
                                                                                                -----------   -----------

Increase/(Decrease) in cash and cash equivalents                                                   2,196               4

Cash and cash equivalents at the beginning of the year                                                 21            17
                                                                                                -----------   -----------
Cash and cash equivalents at end of the year                                                      2,217           21
                                                                                                ======        ======


Notes

1.      Earnings per share are based on the profit on ordinary activities after taxation and non controlling interests
        and on 31,207,479 shares (2011 - 31,205,694) being the weighted average of the number of shares in issue
        during the year.
2.      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 2012 or 30th June 2011 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 basis, except for certain
        assets and liabilities which are measured at fair value, in accordance with IFRS and comply with IAS 34. The
        audited accounts of the group for the year ended 30 th June 2011 were reported on with an unqualified audit
        report and have been delivered to the Registrar of Companies.
Enquiries to:

London Finance & Investment Group P.L.C.             
020 7448 8950
David Marshall / Edward Beale


Johannesburg
28 September 2012

Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)

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