REG-Lon.Fin.&Inv.Grp.: Final Results
30/09/2022 15:45
LONDON FINANCE & INVESTMENT GROUP PLC
Final Results
30 September 2022
LONDON FINANCE & INVESTMENT GROUP PLC
(“Lonfin”, “the Company” or “the Group”)
Final Results for the year ended 30 June 2022
and Final Dividend Declaration
London Finance & Investment Group PLC. (LSE: LFI, JSE: LNF), the investment
company whose assets primarily consist of Strategic Investments and a General
Portfolio, today announces its audited Final Results for the year ended 30
June 2022 and the Board’s Final Dividend Declaration.
Strategy, Business Model and Investment Policy
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.
The Group’s investment policy is to invest in a range of ‘Strategic’,
‘General Portfolio’ and from time to time ‘Other Investments’. General
Portfolio Investments comprise liquid stock market investments, both in equity
instruments and bonds, and, at the Board’s discretion, ‘Other
Investments’ are typically property and other physical assets. Strategic
Investments are significant investments in smaller UK quoted companies. These
are balanced by the General Portfolio, which consists of a broad range of
investments in major USA, UK and other European companies which provides a
diversified exposure to international equity markets.
Further information on the Group’s Investment Policy can be found in the
Directors’ Report set out in the Company’s 2022 Annual Report which will
be published shortly.
The Group’s net assets per share for 2022 have decreased from the previous
year to 54.8p and decreased 16.2% over the last five years. Shareholders’
total dividends for 2022 remains the same at 1.15p. Information on the
Group’s performance against the Board’s key performance indicators (KPIs)
is included in the Strategic Report set out in the Company’s 2022 Annual
Report.
Results
* Net assets have decreased to 54.8p per share (2021 – 60.5p per share)
* The sale of 4,200,000 shares in Finsbury Food Group Plc for £3,445,000
has led to decrease in value of the Strategic Investments, from £8,202,000 to
£3,957,000.
* The value of the General Portfolio has increased, including investment
purchases and sales, over the year, by 16.3% from £12,081,000 to £14,055,000
* The fair value of the General Portfolio investments over the period
has decreased by £508,000.
* No significant increase in Group operating costs
* A final dividend of 0.60p per share is recommended, making a total of
1.15p per share for the year (2021 – 1.15p)
The Company and its subsidiaries (“Group”) recorded an operating profit
for the year, before interest, tax and changes to the fair value adjustments
of investments of £180,000, compared to operating profit for the previous
year, before tax and changes to the fair value adjustments of investments, of
£225,000. The significant decrease in fair value of Strategic Investments
that occurred during the year has led to Total Comprehensive loss for the year
of £1,439,000 compared to Total Comprehensive income of £3,241,000 for the
previous year. Basic and headline losses per share are (1.4)p (2021- profit of
4.8p).
Strategic Investments
The value of the Strategic Investments has decreased by £4,245,000 due to the
disposal of Finsbury Food Group Plc shares during the year and the market
movements in the share prices.
Western Selection PLC (“Western”)
The Group holds 7,860,515 ordinary shares, being 43.8% of the issued share
capital of Western.
On 28 September 2022, Western announced unaudited preliminary results showing
a loss after tax of £438,000 for the year to 30 June 2022 (2021 loss –
£109,000). Losses per share are 2.4p (2021 - losses of 0.62p).
Western’s Board has not recommended payment of an interim or a final
dividend for the year.
Western’s net assets at market value at 30 June 2022 were £9,963,000
equivalent to 56p per share, which remains the same level with the 56p last
year.
Our share of the net assets of Western, including the value of Western’s
investments at market value, was £4,364,000 (2021 – £4,396,000). The fair
value for Western recorded in the Statement of Financial Position is the
market value of £2,751,000 (2021 - £2,712,000). This represents 15.8% (2021
– 14.2%) of the net assets of the Group.
Western’s objective is to generate growth in value for shareholders over the
medium to long-term. Western also aspires to pay a progressive dividend, when
in the best interest of the shareholders and the company, including ensuring
any dividend paid would not have a negative effect on the ability to maintain
continued growth.
Recently some of the Core Holdings held by Western have not performed well.
The Western Board has fully engaged with those companies’ boards to
encourage change and ensure a focus on shareholder value. The Western Board is
delighted to see a recovery in value in some cases and continues to be fully
engaged investors. At present, Western is not seeking to invest in new Core
Holdings. Western continues to actively invest through its treasury operations
which consist of a mix of cash and debt facilities as well as the liquid
investments. These liquid investments are primarily in blue-chip companies in
the USA, UK and Europe.
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.
David Marshall is the Chairman of Western and Edward Beale is non-executive
director.
Western’s main Core Holdings are Crestchic Plc (formerly Northbridge
Industrial Services plc) and Kinovo Plc (formerly Bilby plc).
An extract from Western’s announcement on 28 September 2022 relating to its
main Core Holdings is set out below:
Core Holdings
Crestchic Plc (previously Northbridge Industrial Services Plc)
Crestchic designs, manufactures 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, China and Singapore,
Crestchic 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 Crestchic is available on their website: www.crestchicplc.com
Crestchic, which is admitted to trading on AIM, announced its results for the
year ended 31 December 2021 on 12 April 2022 and recorded a total
comprehensive loss of £5,515,000 for the year (2021- total comprehensive loss
of £7,400,000). A final dividend of £0.01p was announced and paid by
Crestchic in June this year (2021 - £Nil).
Western has disposed of 2,234,500 shares in Crestchic and now holds 1,065,500
Crestchic shares which represents 3.6% of Crestchic’s issued share capital.
Following the disposal, the market value of this investment on 30 June 2022
was £2,024,450 (2021 - £3,828,000) which represents approximately 20.3%
(2021 – 38.1%) of Western’s net assets.
Kinovo Plc (“Kinovo”) (formerly Bilby Plc)
Kinovo 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 Kinovo is
available on their website: www.kinovoplc.com.
Kinovo, which is admitted to trading on AIM, announced its results for the
year ended 31 March 2022 on 19 August 2022 showing a total comprehensive loss
of £10,882,000 compared to a total comprehensive profit of £157,000 for the
previous year ended 31 March 2021. Interim dividends of £0.05p per share were
paid during the year (2021 – Nil). No final dividend (2021 - £0.05p per
share) was recommended.
Western holds 7,500,000 Kinovo shares which represents 12.07% of Kinovo’s
issued share capital. The market value of this investment on 30 June 2022 was
£1,125,000 (2021- £2,775,000), which represents approximately 11.3% (2021
– 27.7%) of Western’s net assets.
Associated Companies
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, whose shares are
admitted to trading on AIM, is available on its website:
www.finsburyfoods.co.uk
At 30 June 2022, Lonfin held 1,800,000 Finsbury shares, representing 1.4% of
Finsbury’s issued share capital. The market value of the holding was
£1,206,000 as at 30 June 2022 (cost - £517,065) and represents approximately
7% (2021 – 29%) of Lonfin’s net assets.
On 21 February 2022, Finsbury announced their interim results, with total
comprehensive profit of £4,667,000 for the 26 weeks ended 25 December 2021
(52 weeks to 26 June 2021 –£13,645,000).
A total of £154,030 in dividends were received from Finsbury during the year
(2021 - £Nil).
As of 8 September 2022, all the remaining 1,800,000 shares have been disposed
of.
General Portfolio
The investments comprising the General Portfolio at 30 June 2022 are listed in
the Company’s 2022 Annual Report.
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 30 June 2022, the number of holdings in the General Portfolio was 40 (2021
– 36). The value of the General Portfolio over the year has increased by
£1,974,000 (2021 - increased by £2,133,000) from £12,081,000 to
£14,055,000. This 16.3% increase includes investment purchases during the
year of £5,152,000 and investment sales (including selling expenses) during
the same period of £1,735,000.
The fair value of the General Portfolio investments, after adjusting for
sales, has decreased by 12.2% as at 30 June 2022.
Board Changes
Whilst the Board is satisfied that it has a sufficient spread of skills,
experience and support within the Board to operate the Company and to develop
the Company’s investment business, the Board will continue to seek further
suitable Board candidates who can add value to the Board.
Operations, Directors and Employees
All of our operations and those of Western, with the exception of investment
selection, are outsourced to our subsidiary, City Group PLC (“City
Group”). City Group also provides office accommodation, company secretarial,
finance and head office services to a number of other companies. City Group is
responsible 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 6 people.
Dividend
The Board recommends a final dividend of 0.60p (ZAR 11.89206 cents) per
share, making a total of 1.15p (ZAR 22.7932 cents) per ordinary share for the
year (2021 – 1.15p). Subject to shareholders’ approval at the Company’s
Annual General Meeting (“AGM”) to be held on 10 November 2022, the
dividend will be paid on 21 December 2022 to those shareholders on the
register at the close of business on 9 December 2022. Shareholders on the
South African register will receive their dividend in South African rand
converted from Pounds sterling (“Sterling”) at the closing rate of
exchange on Thursday, 22 September 2022 being GBP1= ZAR 19.8201.
JSE Disclosure Requirements
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, 9
December 2022.
* The number of shares in issue as at the dividend declaration date is
31,207,479;
* The dividend has been declared from income reserves. 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 date to trade (SA) Tuesday, 6 December 2022
Shares trade ex-dividend (SA) Wednesday, 7 December 2022
Shares trade ex-dividend (UK) Thursday, 8 December 2022
Record date (UK and SA) Friday, 9 December 2022
Pay date Wednesday, 21 December 2022
The JSE Listings Requirements require disclosure of additional information in
relation to any dividend payments.
Shareholders registered on the South African register are advised that a
dividend withholding tax will be withheld from the gross final dividend amount
of ZAR 11.89206 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 ZAR 9.51365 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.
Share certificates may not be de-materialised or re-materialised between
Wednesday, 7 December 2022 and Friday, 9 December 2022, both days inclusive.
Shares may not be transferred between the registers in London and South Africa
during this period either.
Outlook
The UK economy continues to adapt to the effects of Covid-19 and Brexit which
have led to staff shortages across the UK and continued disruption to supply
chains. The UK is now having to deal with new challenges. The invasion of
Ukraine by Russia has significantly increased geopolitical risk and created
considerable uncertainty in the UK and internationally. Supply chains have
been disrupted further, interest rates and inflation are rising rapidly and
the prospect of recession is a major concern for the UK’s new
administration. Further volatility and turbulence in the markets, as interest
rates continue to increase, can be expected. The last 12 months have been
challenging, and will continue to be so, for the Group’s investments,
particularly its Strategic Investments, However, the Board is pleased to see
its Strategic Investments reporting positive trading results and that one of
the Strategic Investments has already committed to return to the payment of
dividends. The Board is confident that the Group has a solid base of
investments which can lead to further capital growth in the medium to long
term.
Future Developments
The Group’s development and its financial performance are dependent on the
success of its Investment Strategy and the continued support of its
shareholders. Against a background of challenging and uncertain times in the
markets due to the continued presence of Covid-19 and the emergence of new
variants, and the more recent concerns with the war in Ukraine, energy supply
and food shortages and the rising cost of living alongside increasing
inflation, the Board continues to seek out investments which will generate
growth in shareholder value. The Board also continues to monitor and enhance
the quality of investments in the General Portfolio. The Board continues to
pursue its current Investment Policy and has no plans to make any further
changes to the policy in the near future. As at 30 June 2022, the Company held
40 investments in the General Portfolio.
30 September 2022
The Company’s 2022 Annual Report and Accounts will be finalised shortly and
sent to shareholders.
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014.
The directors of the Company accept responsibility for the contents of this
announcement.
For further information, please contact:
London Finance & Investment Group PLC: 020 7796 9060
David Marshall/Edward Beale)
Johannesburg Sponsor:
Questco Corporate Advisory: +27 11 011 9212
Consolidated Statement of Total Comprehensive Income
For the year ended 30 June
Operating Income 2022 2021
£000 £000
Dividends receivable 652 326
Management service fees 327 304
Rental and other income 136 154
(Loss)/Profits on disposal of General portfolio investments (111) 245
1,004 1,029
Administrative expenses
Investment operations (394) (392)
Management services (430) (412)
Total administrative expenses (824) (804)
Operating profit 180 225
Unrealised changes in the carrying value of General Portfolio investments (508) 1,651
Other income - 36
Interest payable (6) (39)
(Loss)/Profit before taxation (334) 1,873
Tax expense (96) (337)
(Loss)/Profit after taxation (430) 1,536
Non-controlling interest (12) (26)
(Loss)/Profit attributable to shareholders (442) 1,510
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss
Loss on disposal of Strategic investments (398) -
Unrealised changes in the carrying value of Strategic investments (402) 1,911
Other taxation -
Tax on disposal of strategic investments (198) -
Total Other Comprehensive (Loss)/Income attributable to shareholders (998) 1,911
Total Comprehensive (Loss)/Income attributable to owners of the parent (1,440) 3,421
Reconciliation of headline earnings
Basic and diluted (loss)/earnings per share (1.4)p 4.8p
Adjustment for the unrealised changes in the carrying value of investments, net of tax - -
Headline earnings per share (1.4)p 4.8p
Consolidated Statement of Financial Position
At 30 June
2022 2021
£000 £000
Non-current Assets
Property, Plant and Equipment 12 22
Right of use asset 81 145
Strategic investments at fair value though other comprehensive income 3,957 8,202
4,050 8,369
Current Assets
General portfolio investments at fair value through profit and loss 14,055 12,081
Trade and other receivables 109 125
Cash and cash equivalents 407 309
14,571 12,515
Current Liabilities
Overdraft (66) -
Trade and other payables (171) (228)
Lease liabilities (75) (71)
Corporation tax (198) -
(510) (299)
Net Current Assets 14,061 12,216
Non-current Liabilities
Lease liabilities (33) (107)
Borrowings - (650)
Deferred Taxation (843) (806)
(876) (1,563)
Total Assets less Total Liabilities 17,235 19,022
Capital and Reserves
Ordinary share capital 1,560 1,560
Share premium 2,320 2,320
Unrealised profits and losses on investments 11 4,530
Share of retained realised profits and losses of subsidiaries 5,331 4,734
Company’s retained realised profits and losses 7,872 5,749
Capital and reserves attributable to owners 17,094 18,893
Non-controlling interests 141 129
Total Capital and Reserves 17,235 19,022
Company Statement of Financial Position
At 30 June
2022 2021
£000 £000
Non-current Assets
Investments in Group companies 89 2,079
Current Assets
General portfolio investments at fair value through profit or loss 14,055 12,081
Trade and other receivables 13 17
Cash and cash equivalents 124 23
14,192 12,121
Current Liabilities
Overdraft (66) -
Trade and other payables (90) (106)
(156) (106)
Net Current Assets 14,036 11,365
Non-current Liabilities
Borrowings - (650)
Deferred Taxation (843) (806)
(843) (1,456)
Total Assets less Total Liabilities 13,282 12,639
Capital and Reserves
Ordinary share capital 1,560 1,560
Share premium 2,320 2,320
Unrealised profits and losses on investments 1,530 3,010
5,410 6,890
Realised Profit and Loss
Balance at 1 July 5,749 5,498
Net Profit for the period 2,482 577
Dividends paid (359) (326)
Balance at 30 June 7,872 5,749
Equity shareholders’ funds 13,282 12,639
Total Comprehensive income 1,002 1,488
Consolidated Statement of Cash Flows
For the year ended 30 June
2022 2021
£000 £000
Cash flows from operating activities
(Loss)/Profit before tax (334) 1,873
Adjustments for non-cash items -
Finance expense 6 39
Depreciation charges 10 10
Depreciation on right of use asset 64 62
Lease adjustment - (36)
Unrealised changes in the fair value of general portfolio investments 508 (1,196)
Realised gain on disposal of general portfolio investments 111 (700)
Decrease in trade and other receivables 17 41
(Decrease)/Increase in trade and other payables (49) 10
Taxes paid (59) (51)
Net cash inflow from operating activities 274 52
Cash flows from investment activity
Acquisition of general portfolio investments (5,152) (1,706)
Proceeds from disposal of general portfolio investments 2,559 1,469
Proceeds from disposal of strategic investments 3,445 -
Net cash inflow/(outflow) from investment activity 852 (237)
Cash flows from financing activities
Interest paid (5) (19)
Interest paid on lease liabilities (9) (28)
Repayment of lease liabilities (71) (52)
Equity dividends paid (359) (326)
Net (repayments)/drawdown of loan facilities (650) 650
Net cash (outflow)/inflow from financing activities (1,094) 225
Increase in cash and cash equivalents 32 40
Cash and cash equivalents at the beginning of the year 309 269
Net Cash and cash equivalents at end of the year 341 309
Cash and cash equivalents 407 309
Overdraft (66) -
Net Cash and cash equivalents 341 309
Company Statement of Cash Flows
2022 2021
£000 £000
Cash flows from operating activities
Profit before tax 1,098 1,825
Adjustments for non-cash items -
Finance (income)/expense (3) 11
Unrealised changes in the fair value of general portfolio investments 508 (1,197)
Realised gain on disposal of general portfolio investments 111 (700)
Decreased/(Increase) in trade and other receivables 4 (1)
Decrease in trade and other payables (6) (18)
Overseas Taxes paid (59) (51)
Net cash inflow/(outflow) from operating activities 1,653 (131)
Cash flows from investment activity
Acquisition of general portfolio investments (5,152) (1,706)
Proceeds from disposal of general portfolio investments 2,559 1,469
Net cash outflow from investment activity (2,593) (237)
Cash flows from financing activities
Interest paid (6) (19)
Equity dividends paid (359) (326)
Decrease/(Increase) in loan to subsidiary 1,990 (5)
Net (repayment)/drawdown of loan facilities (650) 650
Net cash inflow from financing activities 975 300
Increase/(Decrease) in cash and cash equivalents 35 (68)
Cash and cash equivalents at the beginning of the year 23 91
Net Cash and cash equivalents at end of the year 58 23
Cash and cash equivalents 8 23
Overdraft (66) -
Net Cash and cash equivalents 58 23
Consolidated Statement of Changes in Shareholders’ Equity
Ordinary Share Capital Share Premium Account Unrealised profits and losses on Investments Share of retained realised profits and losses of Subsidiaries Company’s retained realised profits and losses Total Non-Controlling Interests Total Equity
£000 £000 £000 £000 £000 £000 £000 £000
Year ended 30 June 2022
Balances at 1 July 2021 1,560 2,320 4,530 4,734 5,749 18,893 129 19,022
Profit for the Year - - (1,480) (1,444) 2,482 (442) 12 (430)
Other Comprehensive Income - - (3,039) 2,041 - (998) - (998)
Total comprehensive income - - (4,519) 597 2,482 (1,440) 12 (1,428)
Dividends paid and total transactions with shareholders - - - - (359) (359) - (359)
Balances at 30 June 2022 1,560 2,320 11 5,331 7,872 17,094 141 17,235
Year ended 30 June 2021
Balances at 1 July 2020 1,560 2,320 1,708 4,712 (5,498) 15,798 103 15,901
Profit for the Year - - 911 22 577 1,510 26 1,536
Other Comprehensive Income - - 1,911 - - 1,911 - 1,911
Total comprehensive income 1,560 2,320 2,822 22 577 3,421 26 3,447
Dividends paid and total transactions with shareholders - - - - (359) (359) - (359)
Unclaimed dividends - - - - 33 33 - 33
Balances at 30 June 2021 1,560 2,320 4,530 4,734 5,749 18,893 129 19,022
Company Statement of Changes in Shareholders’ Equity
Ordinary Share Capital Share Premium Account Unrealised profits and losses on Investments Realised profits and losses Equity Total
£000 £000 £000 £000 £000
Year ended 30 June 2022
Balances at 1 July 2021 1,560 2,320 3,010 5,749 12,639
Profit for the Year and total comprehensive income - - (1,480) 2,482 1,002
Dividends paid and total transactions with shareholders - - - (359) (359)
Balances at 30 June 2022 1,560 2,320 1,530 7,872 13,282
Year ended 30 June 2021
Balances at 1 July 2020 1,560 2,320 2,099 5,498 11,477
Profit for the Year and total comprehensive income - - 911 577 1,488
Dividends paid and total transactions with shareholders - - - (359) (359)
Unclaimed dividends - - - 33 33
Balances at 30 June 2021 1,560 2,320 3,010 5,749 12,639
Notes:
Reconciliation of basic and headline (loss)/earnings
Basic and headline (loss)/earnings per share, based on the loss attributable
to the shareholders after tax and non-controlling interests of £(442,000)
(2021 – profit £1,510,000) and on 31,207,479 shares issued.
Diluted (loss)/earnings per share, based on the loss attributable to the
shareholders after tax and non-controlling interests of £(442,000) (2021 –
profit £1,510,000) and on 31,207,479 shares issued plus 80,000 share options
granted in 2016.
1. Net assets per share
The net assets per share are calculated taking investments at fair value and
on 31,207,479 shares (2021 – 31,207,479) being the weighted average of the
number of shares in issue during the year.
2. Financial information
The financial information in this preliminary announcement does not constitute
the Company’s statutory accounts for the year ended 30 June 2022 within the
meaning of Section 435 of the Companies Act 2006.
The consolidated financial statements of the London Finance & Investment Group
PLC have been prepared in accordance with UK-adopted international accounting
standards (‘UK-adopted IAS’) and with Companies Act 2006.
The accounts have been prepared in accordance with UK-adopted IAS and with the
requirements of the Companies Act 2006.
The accounts are prepared on the historical cost bases, except for certain
assets and liabilities which are measured at fair value, in accordance with
UK-adopted IAS . The audited accounts for the Group for the year ended 30 June
2022 were reported on with an unqualified audit report and did not contain an
emphasis of matter paragraph or any statement under section 498 of the
Companies Act 2006 and have been delivered to the Registrar of Companies.
3. Copies of this Announcement
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