LONDON FINANCE AND INVEST. GRP PLC - Unaudited Interim Results for the six months ended 31st December 2017 and dividend declaration

Release Date: 06/02/2018 10:02
Code(s): LNF
 
Wrap Text
Unaudited Interim Results for the six months ended 31st December 2017 and dividend declaration

LONDON FINANCE & INVESTMENT GROUP P.L.C.
 (Incorporated in England with registered number 201151)
LSE code: LFI
JSE code: LNF
ISIN: GB0002994001
(the ‘Company’)

Unaudited Interim Results for the six months ended 31st December 2017 and dividend declaration



The Company today announces its unaudited interim results and dividend declaration for the six months
ended 31st December 2017 (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 31st December 2017, 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 has adopted IFRS 9, 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

Our net assets per share increased 1.8% to 66.8p at 31st December 2017 from 65.6p at 30th June 2017.
Our Strategic Investments decreased in value by 0.8% during the period. Our General Portfolio increased by
4.9%, compared with increases of 5.1% and 2.5% in the FTSE 100 index and the FTSEurofirst 300 Index
respectively, over the half year. At the close of business on 31st January 2018, our net asset value was
67.1p per share.

The Group profit before tax for the half year was £615,000 compared to a restated profit of £426,000 for the
same period last year. Our total comprehensive income after tax and minority interest was £524,000 (2016:
£1,247,000 restated) giving earnings per share of 1.8p (2016: 0.2p restated).

On 4th October 2017, the Company entered into an interest rate swap agreement with Coutts & Co, expiring
on 30th September 2022, in the sum of £1,500,000 at a fixed rate of 1.06% per annum over base rate and
margin, with a view to providing insurance against rising interest rates.


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. Western
is a strategic investment which is technically a subsidiary of the Company that has not been consolidated
due to the application of the investment entity exemption under IFRS 10.

On 5th February 2018, Western announced a profit before tax of £170,000 for its half year to 31st December
2017 and earnings per share of 0.91p (2016: earnings per share of 2.5p). Western’s net assets at market
value were £17,115,000 equivalent to 95p per share. Western also announced an interim dividend of 1.1p
per share (2016: 1.1p per share).

The market value of the Company’s investment in Western at 31st December 2017 was £4,166,000
representing 20% of the net assets of Lonfin. The underlying value of the investment in Western, valuing
Western’s own investments at market value, was £5,266,000 (30th June 2017: £5,348,000).

I am the Chairman of Western and Edward Beale is a non-executive director. Michael Robotham was a non-
executive director of Western until his resignation on 5th December 2017.

Western’s main Core Holdings are Northbridge Industrial Services Plc, Swallowfield Plc, Bilby Plc and Tudor
Rose International Limited.

An extract from Western’s interim results announcement relating to its main Core Holdings is set out below:

   Core Holdings

   Northbridge Industrial Service plc (“Northbridge”)
   Northbridge hires and sells specialist industrial equipment to a non-cyclical customer base. With offices
   or agents in the UK, USA, Dubai, Germany, Belgium, France, Australia, New Zealand, Singapore, 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 and oil tools.     Further information about Northbridge is available on its website:
   www.northbridgegroup.co.uk

   Northbridge’s latest results, for the half year to 30th June 2017, showed a loss after tax of
   £2,308,000 for the period (2016: loss after tax of £2,338,000). No interim dividend was declared (2016:
   none).

   Western owns 3,223,632 Northbridge shares, representing 12.45% of Northbridge’s issued share capital.
   The market value of this investment at 31st December 2017 was £2,966,000 (30th June 2017:
   £3,320,000), representing 17% (2016: 24%) of Western’s net 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 for the 52 weeks ended 24th June 2017 in September 2017
   showing a profit after tax of £2,572,000 compared to a profit of £2,001,000 for the comparable period last
   year. Swallowfield paid a final dividend of 3.5p per share in December 2017 which provided us with
   income of £52,500.

   The market value of the Company’s holding of shares in Swallowfield on 31st December 2017 was
   £4,950,000 (30th June 2017: £5,700,000), representing 29% of the Company’s net assets.

   Western owns 1,500,000 Swallowfield shares (representing 8.90% of Swallowfield’s issued share capital).

   Edward Beale is a non-executive director of Swallowfield.

   Bilby Plc (“Bilby”)
   Bilby is an established, and award winning, provider of gas installation, maintenance and general building
   services to local authority and housing associations across London and South East England. It has a
   strategy of growing organically and by acquisition. Further information about Bilby is available on its
   website: www.bilbyplc.com.

   Bilby announced its interim results for the six month period to 30th September 2017 on 21st
   November 2017 showing a loss after tax of £1,966,000 (2016: loss after tax of £833,000). Bilby will pay
   an interim dividend of 0.5p per share in January 2018 which will provide us with income of £13,500.

   Western owns 2,699,280 Bilby shares, which represent 6.8% of Bilby’s issued share capital. The market
   value of the Company’s holding in Bilby on 31st December 2017 was £3,051,000 representing 18% of the
   Company’s net 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.

   Our share of Tudor Rose International’s estimated results for the period ended 31st December 2017 is a
   profit after tax of £81,000 (2016: profit after tax of £57,000).

   At 31st December 2017, Western owned 49.5% of Tudor Rose International. The carrying value of the
   Company’s equity investment in Tudor Rose International on 31st December 2017 was £1,674,000
   (2016: £654,000) representing 9.8% of the Company’s net assets. In addition, loans of £191,756
   (equivalent to a further 1% of the Company’s net assets) were outstanding at 31st December 2017 from
   Tudor Rose International’s executive directors.

   Western has two nominees on the board of Tudor Rose International: Edward Beale and I are the
   directors.


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,
which is admitted to trading on AIM, is available on its website: www.finsburyfoods.co.uk

At 31st December 2017, Lonfin held 6,000,000 Finsbury shares, representing approximately 4.6% of
Finsbury’s issued share capital. The market value of the holding was £6,420,000 as at 31st December 2017
(cost - £1,724,000) and represents approximately 31% (2016: 34%) of Lonfin’s net assets.

On 18th September 2017, Finsbury announced audited profits on continuing operations after tax and
minority interests of £12,958,000 for the 52 weeks ended 1st July 2017 (2016: £12,754,000).

Finsbury paid a final dividend of 2.0 per share, making 3.0p for the year (2016: 2.8p). This provided the
Company with further income of £120,000.

General Portfolio

The portfolio is diverse with material interests in Food and Beverages, Natural Resources, Chemicals and
Tobacco. We believe that the portfolio of quality companies we hold has the potential to outperform the
market in the medium to long term.

At 31st December 2017, the number of holdings in the General Portfolio was 30 (2016: 26).

Board Change

On 31st January 2018, the Company announced the appointment of Warwick Marshall to the Board. His
substantial business experience in the development of the Monteagle Group in South Africa and particularly
its trading division will assist the Board in the assessment of the performance of investments and will
complement the skills and experience of existing board members. He has extensive investment experience
in his private capacity and he now resides in Zug, Switzerland.


Outlook

Although markets have shown resilience and strength over the course of the last year, they are close to an
all-time high. The Board remains cautious about the potential impact of major geo-political risks. Accordingly,
the Board expects to see continued volatility in the equity and currency markets. These may have a material
impact on the value of our investments.

The Board has declared an interim dividend of 0.55p per share (2016: 0.55p).


6th February 2018
                                                                                            D.C. MARSHALL
                                                                                                    Chairman




Interim Dividend
The Board recommends an interim gross dividend of 0.55p per share (9.36442 SA cents) (2016: 0.55p)
which will be paid on Friday 6th April 2018 to those members registered at the close of business on Friday
16th March 2018 (SA and UK). Shareholders on the South African register will receive their dividend in SA
Rand converted from sterling at the closing rate of exchange on Thursday 1st February 2018 being GBP 1 =
SA Rand 17.02622.

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 16th March 2018. All other shareholders are exempt.

Shareholders registered on the South African register are advised that the dividend withholding tax will be
withheld from the gross final dividend amount of 9.36442 SA cents per share at a rate of 20% unless a
shareholder qualifies for an exemption; shareholders registered on the South African register who do not
qualify for an exemption will therefore receive a net dividend of 7.49154 SA cents per share. The dividend
withholding tax and the information contained in this paragraph is only of direct application to shareholders
registered on the South African register, who should direct any questions about the application of the
dividend withholding tax to Computershare Investor Services (Pty) Limited, Tel: +27 11 370 5000

-   The number of shares in issue now and as at the dividend declaration date is 31,207,479;
-  The interim gross dividend in SA cents is 9.36442 cents.
-   The dividend has been declared from income reserves, which funds are sourced from the Company’s
    main bank account in London and is regarded as a foreign dividend by South African shareholders; and
-   The Company’s UK Income Tax reference number is 948/L32120.

Dividend dates:
Last day to trade (SA)                                   Tuesday 13th March 2018

Shares trade ex-dividend (SA)                            Wednesday 14h March 2018
Shares trade ex-dividend (UK)                            Thursday 15th March 2018
Record date (SA and UK)                                  Friday 16th March 2018
Pay date                                                 Friday 6th April 2018

Share certificates may not be de-materialised or re-materialised between Wednesday 14th March 2018 and
Friday 16th March 2018, both dates inclusive. Shares may not be transferred between registers in London
and South Africa between Wednesday 14th March 2018 and Friday 16th March 2018, both dates inclusive.

Statement of Directors’ responsibility
The Directors confirm that, to the best of their knowledge:

- the unaudited interim results for the six months ended 31st December 2017, 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.

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.

The Directors accept responsibility for the contents of this Interim Statement.


For further information, please contact:
London Finance & Investment Group P.L.C
+44(0) 20 7796 9060

United Kingdom
6 February 2018

Sponsor: Sasfin Capital (a member of the Sasfin group).
Consolidated Statement of Total Comprehensive Income (Unaudited)
                                                                 Half year ended          Year Ended
                                                                 31st December             30th June
                                                                               Restated     Restated
                                                                  2017            2016          2017
                                                                  £000            £000          £000
Operating Income
Dividends received                                                 311             265           608
 Rental and other income                                            50              50           109
 Profit on sales of investments, including provisions               26               3             3
                                                                   387             318           720
 Management service fees                                           118             130           296
                                                                   505             448         1,016
Administrative expenses
 Investment operations                                            (229)           (190)         (352)
 Management services                                              (162)           (168)         (389)
Total administrative expenses                                     (391)           (358)         (741)
Operating profit                                                   114              90           275


Unrealised changes in the carrying value of General Portfolio
investments                                                        501             335           989
Interest payable                                                    (1)              -           (33)
Profit before taxation                                             615             425         1,231
Tax expense                                                        (49)           (350)         (121)
Profit after taxation                                              566              75         1,110
Non-controlling interest                                            (3)             (6)           (7)
Profit attributable to shareholders                                563              69         1,103

Other comprehensive income/(expense) –
Items that may subsequently be reclassified to profit or loss
Unrealised changes in the carrying value of Strategic
Investments                                                        (87)            819           477
Profit on sale of strategic investments                              -             217           217
Deferred tax                                                        48             142            99
Corporation tax                                                      -               -          (238)
Total other comprehensive income                                   (39)          1,178           555

Total comprehensive income attributable to shareholders            524           1,247         1,658

Basic and Diluted earnings per share                              1.8p             0.2p         3.5p
Adjustment for the unrealised changes in the carrying value of
investments, net of tax                                          (1.5)p          (1.1)p        (2.5)p
Headline earnings per share                                        0.3p          (0.9)p          1.0p

Interim dividend                                                 0.55p           0.55p         0.50p
Final dividend                                                       -               -         0.55p
Total in respect of the period                                   0.55p           0.55p         1.05p
Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)

                                                              Half year ended             Year ended
                                                              31st December                30th June
                                                               2017           2016              2017
                                                               £000           £000              £000

Total comprehensive income attributable to shareholders         531              1,247         1,658
Dividends paid to equity shareholders                          (172)              (171)         (343)
                                                                359              1,076         1,315
Equity shareholders’ funds at start of period                20,483             19,168        19,168
Equity shareholders’ funds at end of period                  20,842             20,244        20,483



Consolidated Statement of Financial Position (Unaudited)

                                                                31st December               30th June
                                                                 2017             2016           2017
                                                                 £000             £000           £000
Non-current assets
Property, plant and equipment                                     15                 18            14
Strategic investments: -
 Finsbury Food Group Plc                                       6,420              7,320        6,900
 Western Selection P.L.C.                                      4,166              3,694        3,773
                                                              10,601             11,032       10,687

Current assets
Listed investments                                            11,295              8,836       10,766
Trade and other receivables                                       63                178          220
Cash, at bank                                                    277              1,588          222
                                                              11,635             10,602       11,208
Total Assets                                                  22,236             21,634       21,895

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                   8,514              7,967        8,265
Share of retained profits and losses of subsidiaries           4,007              3,647        3,794
Company’s retained realised profits and losses                 4,441              4,750        4,544
Total Capital and Reserves attributable to owners             20,842             20,244       20,483

Trade and other payables falling due within one year             483                479          486
Deferred taxation                                                818                815          829
Non-controlling equity interest                                   93                 96           97
                                                              22,236             21,634       21,895

Net assets per share                                           66.8p              64.9p         65.9p

Number of shares in issue                                  31,207,479     31,207,479       31,207,479
Consolidated Statement of Cash Flows (Unaudited)
                                                             Half year ended          Year ended
                                                             31st December             30th June
                                                                          Restated      Restated
                                                              2017            2016           2017
                                                              £000            £000           £000
Cash flows from operating activities

 Profit before tax                                              615           425          1,231
 Adjustments for non-cash -
 Finance expense                                                  1               -           33
 Depreciation charges                                             4              4             8
 Unrealised changes in the fair value of investments           (501)          (335)         (989)
Decrease/(Increase)in trade and other receivables               157             97            52
(Decrease)/Increase in trade and other payables                  (3)           (74)          (66)
Overseas Taxes paid                                             (11)            (7)          (45)
Net cash inflow from operating activities                       262            110           224

Cash flows from investment activity

(Increase)/Decrease in current asset investments               (727)        (1,376)        (2,652)
Disposal of investment                                          698          2,438          2,438
Purchase of IT software                                          (5)              -              -
Net cash inflow/(outflow) from investment activity              (34)         1,062           (214)

Cash flows from financing

Interest paid                                                    (1)              -          (33)
Equity dividends paid                                          (172)          (172)         (343)
Net cash outflow from financing                                (173)          (172)         (376)

(Decrease)/Increase in cash and cash equivalents                 55          1,000          (366)
Cash and cash equivalents at the beginning of the year          222            588           588
Cash and cash equivalents at end of the year                    277          1,588           222




Reconciliation of net cash flow to movement in net debt
                                                            At start         Cash       At end of
                                                          of Period          Flow          Period
Half year ended                                                £000          £000           £000
31st December 2017
Cash and cash equivalents                                       222            205           427
Bank overdraft                                                    0           (150)         (150)
Net cash and cash equivalents                                   222             55           277

31st December 2016
Cash and cash equivalents                                       588          1,000         1,588

Year ended 30th June 2017
Cash and cash equivalents                                       588           (366)          222
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 30th June 2017 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 adopted IFRS 9. 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 report has been prepared in accordance with the accounting policies contained in the Group’s
      2017 Annual Report and Accounts and International Financial Reporting Standards, and complies
      with IAS 34.

2.    Earnings per share:
      Earnings per share are based on the profit on ordinary activities after taxation and non-controlling
      interests of £563,000 (2016: £70,000) and on 31,207,479 (2016: 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.

      Reconciliation of headline earnings
      Headline earnings are required to be disclosed by the JSE. Headline earnings per share are based
      on the profit attributable to the shareholders after tax and non-controlling interests, before
      unrealised changes in the fair value of investments net of tax, of £11,000 (2016: £279,000 loss) and
      on 31,207,479 (2016: 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 9-10 of the Group’s 2017 Annual Report and Accounts, The key risks and
      mitigating activities have not changed from these:
      -      Stock market vulnerability and economic uncertainty including Brexit;
      -      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     %
Investor                                           624    5.5
British American Tobacco                           492    4.4
Schindler Holding                                  484    4.3
Diageo                                             463    4.1
LVMH Moet Hennessy                                 436    3.9
HSBC Holdings                                      422    3.7
Brown Forman                                       417    3.7
Heineken Holding                                   417    3.7
Unilever                                           416    3.7
Pernod Ricard                                      405    3.6
Henkel                                             405    3.6
Antofagasta                                        402    3.6
Phillip Morris                                     398    3.5
Nestle                                             384    3.4
3M                                                 383    3.4
Danone                                             373    3.3
Chevron                                            361    3.2
Givaudan                                           358    3.2
Royal Dutch Shell                                  357    3.2
L'Oreal                                            346    3.1
BASF                                               342    3.0
Reckitt Benckiser                                  339    3.0
United Technologies                                321    2.8
Exxon Mobil                                        309    2.7
Anheuser Busch                                     308    2.7
Procter & Gamble                                   306    2.7
Kimberley Clark                                    303    2.7
Imperial Brands                                    281    2.3
Compagnie Financiere Richemont                     222    2.0
Becton Dickinson                                   221    2.0
                                                11,295   100



United Kingdom
6th February 2018

Sponsor:
Sasfin Capital (a member of the Sasfin group)

Date: 06/02/2018 10:02:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Email this JSE Sens Item to a Friend.

Share This Story