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unaudited results for the year ended 30 June 2013 and dividend declaration
LONDON FINANCE AND INVESTMENT GROUP P.L.C.
(“Lonfin”, “the Company” or “the Group”)
(Incorporated in England – Registration No. 201151 (UK))
JSE Code: LNF ISIN: GB0002994001
(“Lonfin”)
PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS FOR THE YEAR ENDED 30TH JUNE 2013 AND
DIVIDEND DECLARATION
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 Preliminary Results for the year ended 30th June 2013.
Chairman’s statement
Lonfin is an investment company whose objective is to generate 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 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 U.K. quoted companies and these are balanced by a
General Portfolio, which consists of a broad range of investments in major U.S.A., U.K.
and other European companies which provides a diversified exposure to international
equity markets.
At 30th June 2013, the Strategic Investments in which we have Directors in common, were
our associated company Western Selection P.L.C. and Finsbury Food Group Plc. Detailed
comments on our Strategic Investments are given below.
- Net assets have increased over the year by 44.6% from 31.6p per share to 45.7p per
share
- The General Portfolio has increased over the year by 17.5%
- The General Portfolio is yielding 3.0% (2012 – 3.0%)
- Net borrowings of £534,000 compared with £267,000 of net cash at 30 June 2012
- Decrease of 4% in operating costs
Results
Our net assets per share have increased 44.6% to 45.7p from 31.6p last year. The
increase reflects the appreciation in the value of our Strategic Investments of 81%,
largely attributable to the appreciation in Finsbury Food Group, and an increase in the
value of our General Portfolio by 17.5%
The Group achieved a profit for the year, before tax and the fair value adjustments of
investments, of £171,000 (2012, including profit on sale of freehold property of
£2,137,000 - £2,074,000). The profit after fair value adjustments, tax and non-
controlling interest was £4,637,000 (2012 - £869,000) giving a profit per share of
14.9p (2012 – 2.8p).
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 2013, Western announced a profit before associates and tax of
£681,000 for its year to 30th June 2013 (2012 – £164,000). Including associates and
after exceptional items and tax, losses per share were1.6p (2012 - profits – 1.0p).
Western has paid an interim dividend of 0.85p and proposes an increased final dividend
of 1.05p (2012 - 0.90p). Western’s net assets at market value were £14,799,000,
equivalent to 82p per share, an increase of 14% from 72p last year.
Our share of the net assets of Western including the value of Western’s investments at
market value, was £6.5 million (2012 - £5.6 million). The fair value recorded in the
statement of financial position is the market value of £3,930,000 (2012 - £3,144,000).
This represents 27% (2012 – 32%) of the net assets of the Group.
Mr. D. C. Marshall is the Chairman of Western and Mr. J. M Robotham and Mr. E.J. 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 relating to 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. In their trading announcement on 29th July, Creston reported
high levels of new business activity and confidence this would lead to underlying
growth in its client base. Further information about Creston is available on their
website: www.creston.com.
The audited results for the year to 31st March 2013, show a headline profit before tax
of £10,000,000 (2012 - £10,300,000), equivalent to fully diluted earnings of 14.66p per
share (2012 - 12.34p).
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 2013 was £3,240,000,
an increase of 96% from the value of £1,650,000 at June 2012, and represents 22% (2012
- 13%) of Western’s net assets.
Mr D. C. Marshall is a non-executive director of Creston.
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.
On 13th September Northbridge announced the acquisition of Crestchic (Asia Pacific) PTE
Limited for £6.63m, funded by cash resources and a share placing of 1,561,700 new
shares. The acquisition of the Singapore based distributor of loadbanks and
transformers, enhances Northbridge’s presence in the region and re-unifies the brand.
Further information about Northbridge is available on their website:
www.northbridgegroup.co.uk.
Northbridge announced audited profits of £3,707,000 for the year ended 31st December
2012 (2011 - £2,321,000) and declared a final dividend of 3.575p per share, making
5.425p for the year (2012 - 5.0p).
Western sold 200,000 of its 2,200,000 holding in May 2013, realising £738,000 and a
profit of £527,000, and now holds 2,000,000 shares in Northbridge. Following the sale,
Western’s holding is 11.6% of their issued share capital. The value of this investment
at 30th June 2013 was £7,040,000 (2012 - £5,984,000) being 48% (2012 - 46%) of
Western’s net assets.
Mr D. C. Marshall is a non-executive director of Northbridge.
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. The company has
recently appointed a new Chairman and a new Chief Executive. Further information about
Swallowfield is available on their website: www.swallowfield.com.
Swallowfield announced its annual results to June 2013 on 19th September showing a loss
after tax of £815,000 compared to a profit of £1,263,000 for the comparable period last
year. Dividends of £118,000 (2012 - £118,000) 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 2013 was £1,495,000
(2012 - £2,187,000), being 10% (2012 - 17%) 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. Last year Hartim acquired out of
administration its principal distributor in Australia, but the Australian business has
not been successful in generating sufficient sales to cover its overhead costs and
significant losses have been incurred, leading to the winding up of this business.
Western holds 49.5% of Hartim, which has a 31st December year end, and which generated
trading profits before exceptional items in the year to 30th June 2013 of £915,000.
Hartim sustained exceptional losses, after tax, in connection with Australia of
£2,809,000. Turnover in the period was £21,609,000 (2012 - £27,799,000). Western’s
share of the consolidated loss after exceptional items and tax for the twelve months to
30th June 2013 was £937,000 (2012 – loss - £342,000) and the book value of the
investment at 30th June 2013 was £185,000 (2012 - £1,124,000), being 1% (2012 - 10%) of
Western’s assets.
Despite the problems in Australia, the UK division of Hartim continues to trade
profitably. We have high hopes for this business provided that it can avoid any more
costly misadventures.
Western has two nominees on the board of Hartim: Mr E. J. Beale and Mr L. H. Marshall
(a director of City Group PLC, Western’s company secretaries).
MWB Group Holdings Plc (“MWB”)
MWB was placed into administration on 16 November 2012. We made an impairment provision
in the subsidiary holding this investment of £1,611,000 in 2012 and with a write off of
£70,000 this year the cost has now been fully written off.
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. Further information about Finsbury is available on its website:
www.finsburyfoods.co.uk.
The Group increased its holding in Finsbury by 1 million shares at a cost of £390,000
and held 9 million shares, representing 13.95% of their share capital. The market
value of the holding was £5,490,000 on 30th June 2013 (cost - £2,283,000) and
represents 38% (2012 – 19%) of the net assets of the Group.
On 23rd September Finsbury announced audited profits on continuing operations after tax
and minority interests of £5,218,000 for the year ended 30th June 2013 (2012 -
£3,291,000) and profits after tax on discontinued operations of £3,034,000 (2012 -
£1,560,000). Finsbury returned to the dividend list for the first time since 2008,
paying an interim of 0.25p and declaring a final dividend of 0.5p per share, making
0.75p for the year (2012 - nil).
Mr. D.C. Marshall and Mr. E. J. Beale, the Chief Executive of our subsidiary company
City Group P.L.C., are non-executive Directors of Finsbury.
General Portfolio
The investments comprising the General Portfolio at 30th June 2013 are listed on page
11. The spread of the General Portfolio was increased by the addition of North
American holdings. 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.
The number of holdings in the General Portfolio has reduced to 29 from 30. We have
increased the amount invested in the General Portfolio over the year by £626,000 (2012:
increased by £171,000).
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 Board recommends a final dividend of 0.4p, making 0.8p per share for the year (2012
- 0.7p). Subject to member’s approval on 28th November 2013, the dividend will be paid
on 11th December 2013 to those members on the register at the close of business on 22nd
November 2013. Shareholders on the South African register will receive their dividend
in South African rand converted from sterling at the closing rate of exchange on 26
September 2013 being GBP1 = ZAR16.0307.
Since the introduction on 1 April 2012 of a new dividend withholding tax in South
Africa, the JSE Listings Requirements require disclosure of additional information in
relation to any dividend payments. Shareholders registered on the Johannesburg
register are therefore advised that the new dividend withholding tax will be withheld
from the gross final dividend amount of 6.41228 SA cents per share at a rate of 15%,
unless a shareholder qualifies for an exemption; shareholders registered on the
Johannesburg register who do not quality for an exemption will therefore receive a net
dividend of 5.45044 SA cents per share. The Company, as a non-resident of South
Africa, was not subject to the secondary tax on companies (STC) applicable before 1st
April 2012, and accordingly, no STC credits are available for set-off against the
dividend withholding tax liability on the final net dividend amount. 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 reduction of income reserves. The number of shares in
issue as at 30th September 2013 is 31,207,479 and the Company’s UK Income Tax reference
number is 948/L32120. 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 new
dividend withholding tax to Computershare Investor Services (Pty) Limited, Tel: +27 11
373-0004.
Dividend dates:
2013
Last date to trade (SA) Friday, 15 November
Shares trade ex dividend (SA) Monday,18 November
Shares trade ex dividend (UK) Wednesday, 20 November
Record date (UK and SA) Friday, 22 November 2013
Pay date Wednesday, 11 December 2013
Share certificates may not be dematerialised or rematerialised between Monday 18th
November and Friday 22nd November 2013, both days inclusive. Shares may not be
transferred between registers during this period either.
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. However, as a
board we do concern ourselves that large scale quantitative easing by central banks is
creating a market that is divorced from economic reality.
By Order of the Board
CITY GROUP P.L.C.
Secretaries
30 September 2013
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Unaudited Consolidated Statement of Comprehensive Income
Consolidated Statement of Total Comprehensive Income
For the year ended 30th June 2013 2012
£000 £000
Dividends - Listed investments 313 265
Interest receivable 4 4
Rental and other income 54 70
Profits/(Losses) realised on sales of investments 215 (32)
Management services fees 228 295
Operating income 814 602
Administration expenses (610) (638)
Operating profit/(loss) 204 (36)
Unrealised changes in the carrying value of
investments 4,629 (1,134)
Exceptional profit on disposal of property - 2,137
Interest payable (33) (27)
Profit on ordinary activities before taxation 4,800 940
Tax on result of ordinary activities (180) (65)
Profit on ordinary activities after taxation 4,620 875
Non-controlling interest 17 (6)
Profit for the financial year attributable to
members of the holding company 4,637 869
Other comprehensive income - -
Total comprehensive income attributable to
shareholders 4,637 869
Reconciliation of headline earnings
Basic profit per share 14.9p 2.8p
Adjustment for the unrealised changes in the
carrying value of investments, net of tax (14.2)p 3.6p
Headline profit per share 0.7p 6.4p
Unaudited Consolidated Statement of Changes in Shareholders’ Equity
Share Retai
of ned
Ordi Share Unreali undistr reali Non-
nary sed ibuted sed
premi profits results Contro Tota
Shar um Revalu /(losse of profi lling l
e ation s) ts &
accou on Subsidi To intere equi
Capi nt Reserv investm aries losse ta sts ty
tal e ents s l
£000 £0 £000 £000
£000 £000 £000 £000 £000 00
Year ended 30th
June 2012
904 9, 92 9,28
Balances at 1st 1,56 18 1
July 2012 0 2,320 330 (1,750) 5,825 9
Total
comprehensive 86
income - - - 2,086 (1,476) 259 9 6 875
Transfer on - - - - -
disposal - (330) 330 -
- (2 - (203
03 )
Dividends paid - - - - (203) )
Total transactions (2 - (203
with 03 )
shareholders - - - - - (203) )
(572) 9, 98 9,95
Balances at 30th 1,56 85 3
June 2013 0 2,320 - 336 6,211 5
Year ended 30th
June 2013
Balances at 1st 1,56 (572) 9,85 98 9,95
July 2012 0 2,320 - 336 6,211 5 3
Total
comprehensive 4,63 4,62
income - - - 4,495 73 69 7 (17) 0
- (234 - (234
Dividends paid - - - - (234) ) )
Total transactions - (234
with (234 )
shareholders - - - - - (234) )
Balances at 30th 1,56 (499) 14,2 81 14,3
June 2013 0 2,320 - 4,831 6,046 58 39
Unaudited Consolidated Statement of Financial Position
At 30th June 2013 2012
£000 £000
Non-current Assets
Tangible assets 3 4
Investments 9,420 5,094
9,423 5,098
Current Assets
Listed investments 5,601 4,533
Trade and other receivables 256 272
Cash at bank 116 2,217
5,973 7,022
Current Liabilities
Trade and other payables: falling due within one year (853) (2,167)
Net Current Assets 5,120 4,855
Deferred taxation (204) -
Total Assets less Current Liabilities 14,339 9,953
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,320 2,320
Unrealised profits and losses on investments 4,831 336
Share of retained realised profits and losses of
subsidiaries (499) (572)
Company’s retained realised profits and losses 6,046 6,211
14,258 9,855
Non-controlling equity interests 81 98
14,339 9,953
Unaudited Company Statement of Financial Position
at 30th June 2013 2012
£000 £000
Non-current Assets
Investments in Group companies 6,147 5,987
----- --------- -
Current Assets
Listed investments 5,601 4,533
Trade and other receivables 35 18
Bank balance 76 2,202
5,712 6,753
Trade and other payables: falling due within one year (757) (2,096)
Net Current Assets 4,955 4,657
Deferred taxation (204) -
Total Assets less Current Liabilities 10,898 10,644
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,320 2,320
Unrealised profits and losses on investments 972 553
Realised profits and losses 6,046 6,211
Equity shareholders' funds 10,898 10,644
Unaudited Consolidated Statement of Cash Flow
For the year ended 30th June 2013 2012
£000 £000
Cash flows from operating activities
Profit before tax 4,800 940
Adjustments for non-cash and non-operating activities -
Finance expense 33 27
Profit on disposal of property - (2,137)
Depreciation charges 1 5
Unrealised changes in the fair value of investments (4,629) 1,134
205 (971)
Taxes paid (22) (17)
Changes in working capital
Increase in trade and other receivables (16) (12)
Increase in trade and other payables 64 158
Increase in current asset investments (375) (301)
(327) (155)
Net cash outflow from operating activities (144) (63)
Cash flows from disposal of property - 2,495
Cash flows from investment activity
Purchase of strategic investments (390) -
Net cash outflow from investment activity (390) -
Cash flows from financing
Interest paid (33) (27)
Equity dividends paid (234) (203)
Net (repayment)/drawdown of loan facilities (1,300) 134
Net cash outflow from financing (1,567) (96)
(Decrease)/Increase in cash and cash equivalents (2,101) 2,196
Cash and cash equivalents at the beginning of the year 2,217 21
Cash and cash equivalents at end of the year 116 2,217
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 (2012 -
31,207,479) 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 2013 or 30th June 2012 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 30th June 2012 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
30 September 2013
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
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