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Interim results and dividend declaration
London Finance and Investment Group P.L.C.
(Incorporated in England with registered number 201151)
LSE code: LFI
JSE code: LNF
ISIN: GB0002994001
(“Lonfin” or “the Company”)
Unaudited Interim Results for the six months ended 31 December 2016 and dividend declaration
The Company today announces its unaudited interim results and dividend declaration for the six months
ended 31 December 2016 (the „Interim Statement?).
Chairman’s Statement
Introduction
As an investment company our target is to achieve growth in shareholder value in real terms over the
medium to long term. In the short term our results can be influenced by overall stock market performance,
particularly the valuation of our Strategic Investments. We continue to believe that a combination of
Strategic Investments and a General Portfolio is the most effective way of achieving our aims. Strategic
Investments are significant investments in smaller UK quoted companies where we have expectations of
above average growth over the medium to longer term and these are balanced by a General Portfolio which
consists of investments in major U.S., U.K. and European equities.
At 31 December 2016, we held two Strategic Investments: Western Selection P.L.C., and Finsbury Food
Group plc. Detailed comments on our Strategic Investments are given below.
Change in accounting policies
The Board have decided to early adopt IFRS 9 with effect from this accounting period, and the comparatives
in the income statement have been restated to reflect the resulting change in accounting policy. Strategic
investments are a fundamental part of the Company?s investment strategy to secure long term capital
appreciation and by their very nature the investments are largely illiquid. Consequently the directors have
elected to present the unrealised changes in value of these specific investments as part of other
comprehensive income as it better reflects the underlying performance of the Company within its primary
statements. This does not change the basis of valuation or the amounts reported in the statement of
financial position. The effect of the change in accounting policy is further described in Note 1 below.
Results
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Our net assets per share increased 5.6% to 64.9p at 31 December 2016 from 61.4p at 30 June 2016. Our
Strategic Investments, adjusting for the disposal of part of the investment in Finsbury Foods, which realised
a profit of £1,862,000, increased in value by 8% during the period. Our General Portfolio increased by 4.5%,
compared with increases of 9.8% and 10.3% in the FTSE 100 index and the FTSEurofirst 300 Index
respectively, over the half year. At the close of business on 15 February 2017, our net asset value was
66.1p per share.
The Group profit before tax for the half year was £2,171,000 compared to a restated profit of £1,586,000 for
the same period last year. The main differences between these two periods being in the amounts
recognised as: profit realised from the disposal of part of the investment in Finsbury Food, and the
unrealised changes in the value of General Portfolio investments. Our profit after tax and minority interest
was £1,815,000 (2015: £1,315,000 restated) giving earnings per share of 5.8p (2015: 4.2p restated).
Strategic Investments
Western Selection P.L.C. (“Western”)
The Group owns 7,860,515 Western shares, representing 43.8% of Western?s issued share capital.
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On 10 February 2017, Western announced a profit after tax of £455,000 for its half year to 31 December
2016 and earnings per share of 2.5p (2015: earnings per share of 0.4p). Western?s net assets at market
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value were £15,018,000 equivalent to 84p per share, an increase of 6.3% from 75p at 30 June 2016.
Western has announced an interim dividend of 1.1p per share (2015: 1.05p per share).
The market value of the Company?s investment in Western at 31 December 2016 was £3,694,000
representing 18% of the net assets of Lonfin. The underlying value of the investment in Western, valuing
Western?s own investments at market value, was £6,578,000 (30 June 2016: £6,227,000).
I am the Chairman of Western and Mr. Michael Robotham and Mr Edward Beale are Non-Executive
Directors.
Western?s principal core holdings are in Northbridge Industrial Services plc, Swallowfield plc, Bilby Plc and
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Tudor Rose International (previously Hartim Limited). Extracts from Western's announcement, on 10
February 2017, on its core holdings are set out below:
Northbridge Industrial Service plc (“Northbridge”)
Northbridge hires and sells specialist industrial equipment to a non-cyclical customer base. With
offices or agents in the U.K., U.S.A., Dubai, Germany, Belgium, France, Australia, New Zealand,
Singapore, Brazil and Korea, 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 its website: www.northbridgegroup.co.uk
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Northbridge?s latest results, for the half year to 30 June 2016, showed a loss after tax of £2,338,000
for the period (2015: loss after tax of £1,936,000). No interim dividend was declared (2015: 1p per
share).
Western owns 3,223,632 Northbridge shares, representing 12.45% of [Northbridge?s issued share
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capital. The market value of this investment at 31 December 2016 was £3,546,000 (30 June 2016:
£2,772,000), representing 24% of Western?s assets.
I am a Non-Executive Director of Northbridge.
Swallowfield plc (“Swallowfield”)
Swallowfield is a market leader in the development, formulation, manufacture and supply of cosmetics,
toiletries and related household products for global brands and retailers operating in the cosmetics,
personal care and household goods market. Further information about Swallowfield is available on its
website: www.swallowfield.com
Swallowfield announced its annual results to 25 June 2016 in September 2016 showing a profit after
tax of £2,001,000 compared to a profit of £746,000 for the prior year. We received a dividend from
Swallowfield during the period of £52,000 (2015: £37,383).
In September 2016, we disposed of 200,000 Swallowfield shares for £520,000 (before selling
expenses) and in November 2016 we disposed of a further 50,000 shares for £135,000 (before selling
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expenses). The market value of the Company?s holding of shares in Swallowfield on 31 December
2016 was £4,550,000 (30 June 2016: £3,570,000), representing 30% of the Company?s assets.
In January this year, we disposed of a further 120,000 Swallowfield shares for £318,000 (before
selling expenses). Western now owns 1,630,000 Swallowfield shares (representing 9.66% of
Swallowfield?s issued share capital).
Mr Edward Beale is a Non-Executive Director of Swallowfield.
Bilby Plc
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
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Bilby announced its interim results for the six month period to 30 September 2016 on 16 December
2016 showing a loss after tax of £833,000. Bilby paid a final dividend of 2.00p per share in September
2016 which provided us with income of £47,000 and an interim dividend of 0.25p per ordinary share
has been paid in February 2017 which provided us with further income of £6,000.
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At 30 June 2016, Western owned 2,337,088 Bilby shares. Further investments of £32,000 for 62,912
Bilby shares, and £58,000 for 100,000 Bilby shares, were made in December 2016 and February 2017
respectively. Western now holds 2,500,000 Bilby shares which represents 6.3% of Bilby?s issued
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share capital. The market value of the Company's holding in Bilby on 31 December 2016 was
£1,344,000 representing 9% of the Company's assets.
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.
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Our share of Tudor Rose International's estimated results for the period ended 31 December 2016 is
a profit after tax of £57,000 (2015 - profit after tax of £51,000).
At 31 December 2016, Western owned 49.5% of Tudor Rose International. The carrying value of the
Company's equity investment in Tudor Rose International on 31 December 2016 was £654,000
(2015: £613,000) representing 4% of the Company's assets. In addition, loans of £442,000
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(equivalent to a further 3% of the Company's assets) were outstanding at 31 December 2016 from
Tudor Rose International and its executive directors. £250,000 was repaid by Tudor Rose
International in December and we have agreed that the balance of the loan to Tudor Rose
International (£250,000) will be rolled over into preference shares. Subsequent to the period end we
have advanced an additional £250,000 to subscribe for preference shares and agreed to invest a
further £500,000 in preference shares to support the evolution of their business model.
Mr. Edward Beale and I are Non-Executive Directors of Tudor Rose International.
Finsbury Food Group plc (“Finsbury Food”)
Finsbury Food 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 Food is available on its website: www.finsburyfoods.co.uk
In September 2016, Finsbury Food announced audited profits on continuing operations after tax and minority
interests of £8,504,000 for the 52 week period ended 2 July 2016 (2015: £6,620,000). Finsbury Food paid
a final dividend of 1.87p per share which provided us with income of £112,000.
At 30 June 2016, the Group held 8,000,000 shares in Finsbury Food representing 6.1% of their then issued
share capital. On 27 September 2016, we sold 1,000,000 Finsbury Food shares for £1,200,000 (before
selling expenses) and, on 29 September 2016, we sold a further 1,000,000 Finsbury Food shares for
£1,250,000 (before selling expenses). The Company now holds 6,000,000 Finsbury Food shares which
represent 4.6% of Finsbury Food's issued share capital. The market value of our holding was £7,320,000 on
31 December 2016; this represents 36% of the net assets of Lonfin.
Finsbury Food will be announcing their interim results in March 2017.
Mr Beale was a Non-Executive Director of Finsbury Food until 24 November 2016.
General Portfolio
The list of investments included in the General Portfolio is set out at the end of this announcement. We
continue to hold 26 investments, having invested a net £1,492,000 in the period, financed by funds from the
sale of part of our investment in Finsbury Food.
Lloyd Marshall
It was with great sadness that we announced on 23 November 2016, the death of Mr Lloyd Marshall. He
was a highly valued member of the management team who brought a wealth of experience, knowledge and
common sense to the Company along with strong principles.
Outlook
The Board expect to see a continuation of the volatility in equity and currency markets and remain cautious
about the remainder of the year.
The Board has declared an interim dividend of 0.55p per share (2015: 0.50p).
20 February 2017
D.C. MARSHALL
Chairman
Interim Dividend
The declared interim dividend is 0.55p per share (9.09791 ZAR cents) (2015: 0.50p) and will be paid on
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Friday 7 April 2017 to those members registered at the close of business on Friday 17 March 2017 (SA
and UK). Shareholders on the South African register will receive their dividend in South African Rand
converted from sterling at the closing rate of exchange on Friday 3 February 2017 being GBP 1 = ZAR
16.54165.
In respect of the normal gross cash dividend, and in terms of the South African Tax Act, the following
dividend tax ruling only applies to those shareholders who are registered on the South African register on
Friday 17 March 2017. All other shareholders are exempt.
- The dividend has been declared from income reserves, which funds are sourced from the Company?s
main bank account in the UK and is regarded as a foreign dividend by South African shareholders.
- The gross dividend in ZAR cents is 9.09791 cents.
- The dividend withholding tax rate is 15% resulting in a net dividend of 0.46750 pence (7.73322 ZAR
cents) per share to those shareholders who are not exempt from the dividend withholding tax.
The issued number of shares as at the declaration date is 31,207,479.
The Company's UK Income Tax reference number is 948/L32120.
Salient dates for dividend:
Last day to trade (SA) Tuesday 14 March 2017
Shares trade ex dividend (SA) Wednesday 15 March 2017
Shares trade ex dividend (UK) Thursday 16 March 2017
Record date (SA and UK) Friday 17 March 2017
Pay date Friday 7 April 2017
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Share certificates may not be de-materialised or re-materialised between Wednesday 15 March 2017 and
Friday 17 March 2017, both dates inclusive. Shares may not be transferred between registers during this
period either.
Statement of Directors’ responsibility
The Directors confirm that, to the best of their knowledge:
- the unaudited interim results for the six months ended 31 December 2016, have been prepared in
accordance with IAS 34 as adopted by the EU; and
- the Interim Statement includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R of
the Disclosure and Transparency Rules.
The Directors accept responsibility for the contents of this Interim Statement.
Neither this Interim Statement nor any future interim statements of the Company will be posted to
shareholders. The Interim Statement is available as follows:
- on the Company's website at www.city-group.com/london-finance-investment-group-plc/; and
- by writing to City Group P.L.C., the Company Secretary, at 6 Middle Street, London EC1A 7JA
This Interim Statement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
For further information, please contact:
London Finance & Investment Group P.L.C.
+44(0) 20 7796 9060
Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
Half year ended Year ended
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31 December 30 June
Restated Restated
2016 2015 2016
£000 £000 £000
Operating Income
Dividends received 265 270 550
Rental and other income 50 41 82
Profit on sales of investments, including provisions 1,981 1,448 1,448
2,296 1,759 2,080
Management service fees 130 122 252
2,426 1,881 2,332
Administrative expenses
Investment operations (190) (175) (345)
Management services (168) (112) (304)
Total administrative expenses (358) (287) (649)
Operating profit 2,068 1,594 1,683
Unrealised changes in the carrying value of General Portfolio
investments 219 39 39
Reversal of previously recognised unrealised changes in the
carrying value of investments on sale of General Portfolio
investments (116) (31) (56)
2,171 1,602 1,666
Interest payable - (16) (16)
Profit on ordinary activities before taxation 2,171 1,586 1,650
Tax on result of ordinary activities (350) (246) (95)
Profit on ordinary activities after taxation 1,821 1,340 1,745
Non-controlling interest (6) (25) (15)
Profit attributable to shareholders 1,815 1,315 1,730
Other comprehensive income/(expense) –
Items that may subsequently be reclassified to profit or loss
Unrealised changes in the carrying value of Strategic
Investments 935 3,310 4,260
Reversal of previously recognised unrealised changes in the
carrying value of investments on sale of Strategic Investments (1,645) (1,600) (1,600)
Deferred taxation on above items 142 (342) (532)
Total other comprehensive income (568) 1,368 2,128
Total comprehensive income attributable to shareholders 1,247 2,683 3,858
Basic, Diluted and Headline earnings per share 5.8p 4.2p 5.5p
Interim dividend 0.55p 0.50p 0.50p
Final dividend 0.55p
Total in respect of the year 1.05p
Unaudited Condensed Consolidated Statement of Changes in Shareholders’ Equity
Half year ended Year ended
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31 December 30 June
2016 2015 2016
£000 £000 £000
Total comprehensive income attributable to shareholders 1,247 2,683 3,858
Dividends paid to equity shareholders (171) (162) (312)
1,076 2,521 3,546
Equity shareholders funds at start of period 19,168 15,622 15,622
Equity shareholders funds at end of period 20,244 18,143 19,168
Unaudited Condensed Consolidated Statement of Financial Position
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31 December 30 June
2016 2015 2016
£000 £000 £000
Non-current assets
Tangible assets 18 26 22
Principal investments:-
Finsbury Food Group Plc 7,320 9,040 8,880
Western Selection P.L.C. 3,694 3,537 3,537
11,032 12,603 12,439
Current assets
Listed investments 8,836 6,040 7,125
Trade and other receivables 178 232 272
Cash, bank balances and deposits 1,588 649 588
10,602 6,921 7,985
Total Assets 21,634 19,524 20,424
Capital and Reserves
Called up share capital 1,560 1,560 1,560
Share premium account 2,320 2,320 2,320
Unrealised profits and losses on investments 7,967 7,439 8,539
Share of undistributed profits and losses of subsidiaries and
associates 3,647 767 1,821
Company;s retained realised profits and losses 4,750 6,057 4,928
Equity shareholders funds 20,244 18,143 19,168
Trade and other payables falling due within one year 479 256 316
Deferred taxation 815 1,025 850
Non-controlling equity interest 96 100 90
21,634 19,524 20,424
Net assets per share 64.9p 58.1p 61.4p
Number of shares in issue 31,207,479 31,207,479 31,207,479
Unaudited Condensed Consolidated Statement of Cash Flow
Half year ended Year ended
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31 December 30 June
Restated Restated
2016 2015 2016
£000 £000 £000
Profit before taxation 2,171 1,586 1,650
Adjustments for non-cash and non-operating expenses:-
Depreciation charges 4 3 9
Profit on disposal of non-current investment (1,862) (1,409) (1,408)
Unrealised changes in the carrying value of General Portfolio
investments (219) (39) (39)
Reversal of previously recognised unrealised changes in the
carrying value of investments on sale of General Portfolio 116 31
investments 55
Net interest paid - 16 16
(1,961) (1,398) (1,367)
Taxation paid (7) (5) (29)
Changes in working capital:-
Decrease/(Increase) in debtors 97 (15) (54)
(Decrease)/Increase in creditors (74) 39 97
(Increase)/Decrease in current asset investments (1,492) 20 20
(1,469) 44 63
Cash (outflow)/inflow on operating activities (1,266) 227 317
Investment activities
Disposal of non-current investment 2,438 1,985 1,984
Net cash inflow from investment activities 2,438 1,985 1,984
Cash flows from financing
Net interest paid - (16) (16)
Drawdown of loan facilities - (1,500) (1,500)
Equity dividends paid (172) (162) (312)
Net cash outflow from financing (172) (1,678) (1,828)
Increase in cash and cash equivalents 1,000 534 473
Cash and cash equivalents at start of period 588 115 115
Cash and cash equivalents at end of period 1,588 649 588
Reconciliation of net cash flow to movement in net debt
At start Cash At end of
of period Flow Period
Half year ended 31 December £000 £000 £000
2016
Cash at bank 588 1,000 1,588
2015
Cash at bank 115 534 649
Bank loan (1,500) 1,500 -
(1,385) 2,034 649
Year ended 30 June 2016
Cash at bank 115 473 588
Bank loan (1,500) 1,500 -
(1,385) 1,973 588
Notes:-
1. Basis of preparation:
The results for the half-year are unaudited. The information contained in this report does not
constitute statutory accounts within the meaning of the Companies Act 2006. The statutory
accounts of the Group for the year ended 30 June 2016 have been reported on by the Company's
auditors and have been delivered to the Registrar of Companies. The report of the auditors was
unqualified.
The Company has early adopted IFRS 9 in this period, and the comparative amounts in the
Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
have been restated on a comparable basis. Under IFRS 9, the Company has elected to classify its
long term Strategic Investments as financial instruments which are held at fair value with unrealised
changes in value taken directly to Other Comprehensive Income. General Portfolio investments are
held at fair value with unrealised changes in fair value recognised in Profit or Loss. Strategic and
General Portfolio investments are quoted investments, and their fair value continues to be
calculated using quoted prices.
This change in accounting policy has no effect on the Unaudited Condensed Consolidated
Statement of Financial Position, and moves into Other Comprehensive Income certain amounts that
were previously recognised as Profit or Loss. Prior to this change there were no amounts
recognised in Other Comprehensive Income. This re-categorisation has changed Profit on ordinary
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activities after tax from £2,708,000 at 31 December 2015 and £3,873,000 at 30 June 2016.
Basic and Headline Earnings per Share have also been restated from 8.6p and 5.0p for the half
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year ended 31 December 2015, and 12.4p and 5.2p for the year ended 30 June 2016.
Other than mentioned above this report has been prepared in accordance with the accounting
policies contained in the Company's Annual Report and Accounts 2016. It has been prepared in
accordance with International Financial Reporting Standards, and complies with IAS34.
2. Earnings per share:
Earnings per share are based on the profit on ordinary activities after taxation and non-controlling
interests of £1,815,000 (2015: £1,315,000) and on 31,207,479 (2015 – 31,207,479) shares being
the weighted average of number of shares in issue during the year.
There are options outstanding over 80,000 shares. The dilution effect of these options is negligible.
Reconciliation of headline earnings
Headline earnings are required to be disclosed by the JSE.
Headline earnings per share are based on the profit on ordinary activities after taxation and non-
controlling interests, of £1,815,000 (2015: £1,315,000) and on 31,207,479 (2015 – 31,207,479)
shares being the weighted average of number of shares in issue during the year.
3. Going Concern:
After making enquiries, the Board is satisfied that the Group will be able to operate within the level
of its facilities for the foreseeable future. For this reason the Board considers it appropriate for the
Group to adopt the going concern basis in preparing its financial statements.
4. Principal risks and uncertainties:
The principal risks and uncertainties which could impact the Group's long-term performance are
disclosed on pages 8-9 of the Group's 2016 Annual Report and Accounts. The key risks and
mitigating activities have not changed from these:
Stock market vulnerability and economic uncertainty;
Possible volatility of share prices of investments;
Dividend income;
Ability to make strategic investments; and
Liquidity of equity investments in strategic investments.
Composition of General Portfolio
Value
£000 %
British American Tobacco 453 5.2
Investor 417 4.8
Schindler-Holdings 407 4.6
Henkel 405 4.6
Philip Morris International 377 4.3
Chevron 371 4.2
Exxon 365 4.1
Diageo 357 4.0
Becton Dickenson 356 4.0
Nestle 351 4.0
Reckitt Benckiser 337 3.8
Unilever 332 3.8
Heineken 329 3.7
Anheuser Busch Inbev 322 3.6
BASF 318 3.6
3M 318 3.6
Imperial Tobacco 315 3.6
L'Oreal 312 3.5
Pernod-Ricard 305 3.4
Procter & Gamble 272 3.1
United Technologies 266 3.0
Danone 258 2.9
Linde 257 2.9
LVMH 248 2.8
ABB 226 2.6
Brown Forman B 190 2.1
Givaudan 186 2.1
Kimberley Clark Corp 185 2.1
8,835 100
United Kingdom
20 February 2017
Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)
Date: 20/02/2017 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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