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Preliminary unaudited results for the year ended 30 June 2014 and dividend declaration
London Finance & Investment Group P.L.C.
(Incorporated in England – No. 201151)
Code: LNF ISSN: GB0002994001
(“Lonfin” or “the Company”)
Preliminary announcement of unaudited results for the year ended 30th June 2014 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 2014.
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.
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.
Up until 30th June 2014, the two Strategic Investments, in which we had Directors in
common, were our associated company Western Selection P.L.C. and Finsbury Food Group
Plc. With effect from 30th June 2014, David Marshall stood down as a Director of Finsbury
Food Group Plc. Edward Beale, the chief executive of our subsidiary, City Group P.L.C.,
remains a director of Finsbury Food Group Plc.
Results
1. Net assets have decreased over the year by 2% from 45.7p per share to 44.7p per share, and
our Strategic Investments have decreased in value over the year by 4%, due to the decline in
value of our investment in Finsbury Food Group Plc.
2. Strategic Investments are yielding 2.5%
3. The General Portfolio has increased over the year by 15.4%
4. The General Portfolio is yielding 2.8% (2013 – 3.0%).
5. Net borrowings of £886,000 compared with £534,000 at 30th June 2013
6. Increase of 6.6% in operating costs mainly due to the first increase in director’s fees since
2000.
The Group achieved a profit for the year, before tax and the fair value adjustments of
investments, of £205,000 (2013- £171,000). The loss, after negative fair value adjustments,
tax and non-controlling interest was £43,000 (2013 - £4,637,000 after positive fair value
adjustments of £4,637,000) giving a loss per share of 0.1p (2013 profit per share – 14.9p).
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 29th September 2014, Western announced a profit before associates and tax of £446,000
for its year to 30th June 2014 (2013 – £681,000). Including associates and after exceptional
items and tax, profits per share were 4.4p (2013 - losses – 1.6p).
Western has paid an interim dividend of 0.95p and proposes an increased final dividend of
1.05p (2013 - 0.9p). Western’s net assets at market value as at 30 th June 2014 were
£18,307,000, equivalent to 102p per share, an increase of 20% from 82p last year.
Our share of the net assets of Western, including the value of Western’s investments at
market value, was £8 million (2013 - £6.5 million). The fair value recorded in the statement
of financial position is the market value of £4.2 million (2013 - £3.9 million). This represents
30% (2013 – 27%) 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. In the past it has sought to achieve this through a twin
track approach of a mix of strategic stakes in smaller quoted companies with whom it has
directors in common and a general portfolio of investments.
Western has recently undertaken a strategic review. As a result of this review it has
determined that it will follow a single track business model in future which will provide more
clarity for investors.
Its new business model will be to take sizeable minority stakes in relatively small companies
at a pre-IPO or IPO stage, and have directors in common through which they can provide
advice and support for these growing companies. These may or may not be associated
companies. Their aim is that these core holdings will then be sold over time into the market.
Companies that are targeted as core holdings will have an experienced management team, a
credible business model and also good prospects for growth.
Mr. D. C. Marshall is the Chairman of Western and Mr. Robotham and Mr. Beale are non-
executive Directors. Western’s main core holdings are Creston plc, Northbridge Industrial
Services plc, Swallowfield plc and Hartim Limited. An extract from Western’s
announcement relating to its main core holdings 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 31st July 2014, Creston
reported a 3% growth in revenue for the 3 months to June. Further information about
Creston is available on their website: www.creston.com.
The audited results of Creston for the year to 31st March 2014, show a headline profit before
tax of £9.6 million (2013 - £10.0 million), equivalent to fully diluted earnings of 11.8p per
share (2013 – 14.7p, including tax credit from a positive conclusion to an HMRC enquiry).
Western maintained its holding of 3,000,000 shares in Creston, which is 5% of their issued
share capital. The value of this investment at 30th June 2014 was £3,150,000, a decrease of
3% from the value of £3,240,000 at 30th June 2013. This represents 17% (2013 - 22%) 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. Further information about Northbridge is available on their website:
www.northbridgegroup.co.uk.
Northbridge audited profits for the year ended 31st December 2013 were £5,255,000 and
paid a final dividend of 3.9p per share, making 5.9p for the year (2013 - 5.4p). On 23rd
September 2014, Northbridge announced unaudited interim profits for the six months ended
30th June 2014 of £2,568,000 (2013 - £1,949,000) and declared an interim dividend of 2.2p
per share (2013 - 2.0p).
Western sold 125,000 of its 2,000,000 holding in April 2014 for £586,000 and a realised
profit of £434,000 and now holds 1,875,000 shares in Northbridge (2013 – realised profit of
£527,000 on disposal of 200,000 shares). Western’s holding is 10.8% of Northbridge’s
issued share capital. The value of this investment at 30th June 2014 was £9,750,000 (2013 -
£7,040,000) being 53% (2013 - 48%) 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. Further information
about Swallowfield is available on their website: www.swallowfield.com.
Swallowfield announced its annual results to 30th June 2014 on 18th September 2014 showing
a profit after tax of £157,000 compared to a loss of £910,000 (restated) for the comparable
period last year. No dividends were received from Swallowfield during the year (2013 -
£118,000). Profits are expected to recover further in the current year under the new
management
At the reporting date, Western owned 1,869,149 shares which is 16.5% of Swallowfield’s
issued share capital. The market value of this investment on 30th June 2014 had increased by
21% to £1,813,000 from the value at June 2013 of £1,495,000. This is 10% (2013 - 10%) of
Western’s net assets.
Mr E. J. Beale was appointed a non-executive director of Swallowfield on 1st July 2014.
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.
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 2014 of £434,000. Hartim
recognised exceptional profits, after tax, in connection with its former Australian subsidiary
of £337,000 (2013 loss - £2,809,000). Turnover in the period was £20,448,000 (2013 -
£21,609,000). Western’s share of the consolidated profit after exceptional items and tax for
the twelve months to 30th June 2014 was £382,000 (2013 – loss - £937,000) and the book
value of the investment at 30th June 2014 was £568,000 (2013 - £185,000), being 3% (2013 -
1%) of Western’s assets.
During the period a loan of £500,000 was made to Hartim. This loan is convertible into B
shares at par if not repaid, carries interest at a rate of 6% over base rate. It is repayable by
31st December 2016 and is secured over Hartim’s principal asset, its investment in Tudor
Rose Limited.
Western has two nominees on the board of Hartim: 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.
Lonfin holds 9 million shares, representing 13.45% of Finsbury’s share capital. The market
value of the holding was £4,860,000 as at 30th June 2014 (cost - £2,283,000) and represents
35 % (2013 – 38%) of Lonfin’s net assets.
On 22nd September 2014, Finsbury announced audited profits on continuing operations after
tax and minority interests of £6.5 million for the year ended 28th June 2014 (2013 - £5
million).
Finsbury paid an interim dividend of 0.25p and has recommended to its shareholders a final
dividend of 0.75p per share, making 1.00p for the year (2013 – 0.75p).
Mr. Beale, the Chief Executive of our subsidiary company City Group P.L.C., is a non-
executive Director of Finsbury. Mr D.C .Marshall stood down as a Director of Finsbury on
30th June 2014.
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.
The number of holdings in the General Portfolio has been held at 29. We have increased the
amount invested in the General Portfolio over the year by £271,000 (2013: increased by
£626,000).
Operations and 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 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.
Following expiry of its lease, City Group moved offices in the period and expenses of
£39,000 relating to the office move have been capitalised and are being written off over the 5
year period of its new lease.
Dividend
The Board recommend a final dividend of 0.45p per share, making 0.9p per share for the year
(2013 - 0.8p). Subject to members’ approval on 2nd December 2014, the dividend will be
paid on 12th December 2014 to those members on the register at the close of business on 21st
November 2014. Shareholders on the South African register will receive their dividend in
South African rand converted from sterling at the closing rate of exchange on 29th September
being GBP1= ZAR 18.3049. Shareholders registered on the Johannesburg register are
advised that the dividend withholding tax will be withheld from the gross final dividend
amount of 8.23721 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 qualify for an
exemption will therefore receive a net dividend of 7.00163 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 2014 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:
Last date to trade (SA) Friday 14 November 2014
Shares trade ex dividend (SA) Monday 17 November 2014
Shares trade ex dividend (UK) Thursday 20 November 2014
Record date (UK and SA) Friday 21 November 2014
Pay date Friday 12 December 2014
Share certificates may not be dematerialised or rematerialised between Monday 17th
November and Friday 21st November, 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. The political tensions in
Europe and the Middle East may well create substantial volatilityin markets and currencies.
By Order of the Board
City Group P.L.C.
30 September 2014
Unaudited Consolidated Statement of Total Comprehensive Income
For the year ended 30th June
2014 2013
£000 £000
Dividends - Listed investments 393 313
Interest receivable - 4
Rental and other income 82 54
Profits realised on sales of investments 205 215
Management services fees 205 228
Operating income 885 814
Administration expenses (651) (610)
Operating profit 234 204
Unrealised changes in the carrying value of investments (339) 4,629
Interest payable (25) (33)
(Loss)/profit on ordinary activities before taxation (130) 4,800
Tax on result of ordinary activities 71 (180)
(Loss)/profit on ordinary activities after taxation (59) 4,620
Non-controlling interest 16 17
(Loss)/profit for the financial year attributable to members of
the holding company (43) 4,637
Other comprehensive income - -
Total comprehensive income attributable to shareholders (43) 4,637
Reconciliation of headline earnings
Basic (loss)/profit per share (0.1)p 14.9p
Adjustment for the unrealised changes in the carrying value of
investments, net of tax 0.8p (14.2)p
Headline profit per share 0.7p 0.7p
Unaudited Consolidated Statement of Changes in Shareholders’ Equity
Share of Retained
Ordinary Share Unrealised undistributed realised Non-
Share premium profits/(losses) results of profits & Controlling Total
Capital account on investments Subsidiaries losses Total interests equity
£000 £000 £000 £000 £000 £000 £000 £000
Year ended 30th June 2013
Balances at 1st July 2012 1,560 2,320 336 (572) 6,211 9,855 98 9,953
Total comprehensive income - - 4,495 73 69 4,637 (17) 4,620
- -
Dividends paid - - - (234) (234) (234)
-
Total transactions with shareholders - - - - (234) (234) (234)
4,831
Balances at 30 June 2013 1,560 2,320 (499) 6,046 14,258 81 14,339
Year ended 30th June 2014
Balances at 1st July 2013 1,560 2,320 4,831 (499) 6,046 14,258 81 14,339
Total comprehensive income - - (246) 205 (2) (43) (16) (59)
Dividends paid - - - - (265) (265) - (265)
Total transactions with shareholders - - - - (265) (265) - (265)
Balances at 30th June 2014 1,560 2,320 4,585 (294) 5,779 13,950 65 14,015
Unaudited Consolidated Statement of Financial Position
At 30th June 2014 2013
£000 £000
Non-current Assets
Tangible assets 39 3
Investments 9,026 9,420
9,065 9,423
Current Assets
Listed investments 5,927 5,601
Trade and other receivables 245 256
Cash at bank 39 116
6,211 5,973
Current Liabilities
Trade and other payables: falling due within one year (1,150) (853)
Net Current Assets 5,061 5,120
Deferred taxation (111) (204)
Total Assets less Current Liabilities 14,015 14,339
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,320 2,320
Unrealised profits and losses on investments 4,585 4,831
Share of retained realised profits and losses of subsidiaries (294) (499)
Company’s retained realised profits and losses 5,779 6,046
13,950 14,258
Non-controlling equity interests 65 81
14,015 14,339
Unaudited Company Statement of Financial Position
at 30th June
2014 2013
£000 £000
Non-current Assets
Investments in Group companies 5,923 6,147
5,923 6,147
Current Assets
Listed investments 5,927 5,601
Trade and other receivables 25 35
Bank balance 12 76
5,964 5,712
Current Liabilities
Trade and other payables: falling due within one year (997) (757)
Net Current Assets 4,967 4,955
Deferred taxation (111) (204)
Total Assets less Current Liabilities 10,779 10,898
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,320 2,320
Unrealised profits and losses on investments 1,120 972
Realised profits and losses 5,779 6,046
Equity shareholders' funds 10,779 10,898
Unaudited Consolidated Statement of Cash Flow
For the year ended 30th June
2014 2013
£000 £000
Cash flows from operating activities
(Loss)/profit before tax (130) 4,800
Adjustments for non-cash and non-operating activities -
Finance expense 25 33
Depreciation charges 3 1
Unrealised changes in the fair value of investments 339 (4,629)
237 205
Taxes paid (22) (22)
Changes in working capital
Decrease/(increase) in trade and other receivables 11 (16)
Increase in trade and other payables 23 64
Increase in current asset investments 272) (375)
(238) (327)
Addition to non-current tangible assets (39) -
Cash flows from tangible non-current assets (39) -
Cash flows from investment activity
Purchase of strategic investments - (390)
Net cash outflow from investment activity - (390)
Cash flows from financing
Interest paid (25) (33)
Equity dividends paid (265) (234)
Net drawdown/(repayment) of loan facilities 275 (1,300)
Net cash outflow from financing (15) (1,567)
Decrease in cash and cash equivalents (77) (2,101)
Cash and cash equivalents at the beginning of the year 116 2,217
Cash and cash equivalents at end of the year 39 116
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 (2013 – 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 2014 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 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 2013
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 7796 9060
David Marshall/Edward Beale
30 September 2014
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
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