REG-Lon.Fin.&Inv.Grp.: Half-year Report
25/02/2019 07:05
London Finance & Investment Group PLC
(‘Lonfin’ or the ‘Company’)
Unaudited Interim Results for the six months ended 31(st) December 2018 and
interim dividend declaration
The Company today announces its unaudited interim results and interim dividend
declaration for the six months ended 31(st) December 2018 (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(st) December 2018, we held two Strategic Investments: Western Selection
PLC, and Finsbury Food Group plc. Detailed comments on our Strategic
Investments are given below.
Results
Our net assets per share decreased 5.2% to 62.0p at 31(st) December 2018 from
65.4p at 30(th) June 2018. Our Strategic Investments decreased in value by 4%
during the period. Our General Portfolio decreased by 8%, compared with
decreases of 11.9% and 10.5% in the FTSE 100 index and the FTSEurofirst 300
Index respectively, over the half year. At the close of business on 31(st)
January 2019, our net asset value was 59.9p per share.
The Group loss before tax for the half year was £721,000 compared to a profit
of £615,000 for the same period last year. Our total comprehensive loss after
tax and minority interest was £872,000 (2017: £524,000) giving a loss per
share of 1.7p (2017: earning per share 1.8p).
Strategic Investments
Western Selection PLC (“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 22(nd) February 2019, Western announced a loss before tax of £427,000 for
its half year to 31(st) December 2018 and a loss per share of 2.4p (2017:
restated earnings per share of 0.9p). Western’s net assets at market value
were £13,425,000 equivalent to 75p per share. Western also announced an
interim dividend of 1.1p per share (2017: 1.1p per share).
The market value of the Company’s investment in Western at 31(st) December
2018 was £4,087,000 representing 21% of the net assets of Lonfin. The
underlying value of the investment in Western, valuing Western’s own
investments at market value, was £4,117,000 (30(th) June 2018:
£4,329,000).
I am the Chairman of Western and Edward Beale is a non-executive director.
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 30(th) June 2018, showed
a loss after tax of £1,472,000 for the period
(2017: loss after tax of £2,308,000). No interim dividend was declared (2017:
none).
Western owns 3,300,000 Northbridge shares, representing 11.8% of
Northbridge’s issued share capital. The market value of this investment at
31(st) December 2018 was £3,564,000 (30(th) June 2018: £4,290,000),
representing 26.5% 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 53 weeks ended 30(th) June
2018 in September 2018 showing a profit after tax of £3,633,000 compared to a
profit of £2,572,000 for the comparable period last year. Swallowfield paid
a final dividend of 4.2 per share in December 2018 which provided us with
income of £54,600.
The market value of the Company’s holding of shares in Swallowfield on
31(st) December 2018 was £2,730,000 (30(th) June 2018: £4,095,000),
representing 20% of the Company’s net assets.
Western owns 1,300,000 Swallowfield shares (representing 7.6% 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 30(th)
September 2018 on 11(th) December 2018 showing a profit after tax of
£1,133,000 (2017: £1,966,000). Bilby paid an interim dividend of 0.5p per
share in January 2019 which provided us with income of £13,500.
Western owns 2,700,000 Bilby shares, which represent 6.7% of Bilby’s issued
share capital. The market value of the Company’s holding in Bilby on
31(st) December 2018 was £1,647,000 (30(th) June 2018: £2,835,000)
representing 12% 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 31(st) December 2018 is a loss after tax of £92,000 (2017 – profit
after tax of £81,000).
At 31(st) December 2018, Western owned 49.5% of Tudor Rose International. The
carrying value of the Company’s equity investment in Tudor Rose
International on 31(st) December 2018 was £1,542,000 (2017: £1,674,000)
representing 11.5% 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 31(st) December 2018 from Tudor Rose’s executive directors.
Edward Beale and I are non-executive directors of Tudor Rose International.
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 31(st) December 2018, Lonfin held 6,000,000 Finsbury shares, representing
approximately 4.6% of Finsbury’s issued share capital. The market value of
the holding was £6,120,000 as at 31(st) December 2018 (cost - £1,724,000)
and represents approximately 32% (2017: 31%) of Lonfin’s net assets.
On 18(th) September 2018, Finsbury announced audited profits on continuing
operations after tax and minority interests of £2,037,000 for the 52 weeks
ended 30(th) June 2018 (2017: £5,638,000).
Finsbury paid a final dividend of 2.2 per share, making 3.3p for the year
(2017: 3p). This provided the Company with income of £132,000.
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 31(st) December 2018, the number of holdings in the General Portfolio was
30 (2017: 30).
Outlook
The Company’s investment performance since the year end has been affected by
the volatility in the markets and by the reduction in value of our Strategic
Holdings. Although global stock markets have shown resilience and strength
over the course of the last year, they are now close to all-time highs at a
time when there is continued economic and political uncertainty. Accordingly,
the Board remains cautious about the potential impact of major geo-political
risks and expects to see continued volatility in the equity and currency
markets. These may impact further on the value of our investments.
The Board has declared an interim dividend of 0.55p per share (2017: 0.55p).
25(th) February 2019
D.C. MARSHALL
Chairman
Interim Dividend
The Board recommends an interim gross dividend of 0.55p per share (10.28561 SA
cents) (2017: 0.55p) which will be paid on Friday 5(th) April 2019 to those
members registered at the close of business on Friday 15(th) March 2019 (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 14(th) February 2019 being GBP 1 = SA Rand 18.7011.
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 15(th)
March 2019. 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 10.28561 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 8.22849
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 is 10.28561 SA cents;
- The interim net dividend is 8.22849 SA 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 12 (th)March 2019
Shares trade ex-dividend (SA) Wednesday 13 (th)March 2019
Shares trade ex-dividend (UK) Thursday 14 (th)March 2019
Record date (SA and UK) Friday 15 (th)March 2019
Pay date Friday 5 (th)April 2019
Share certificates may not be de-materialised or re-materialised between
Wednesday 13(th) March 2019 and Friday 15(th) March 2019, both dates
inclusive. Shares may not be transferred between registers in London and South
Africa between Wednesday 13(th) March 2019 and Friday 15(th) March 2019, 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 31(st) December 2018,
have been prepared in accordance with IAS 34, ‘Interim financial
reporting’, 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 PLC, the Company Secretary, at 1 Ely Place,
London EC1N 6RY
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 PLC Sponsor: Sasfin Capital (a member of the Sasfin Group). +44(0) 20 7796 9060
Consolidated Statement of Total Comprehensive Income (Unaudited)
Half year ended Year Ended
31 (st)December 30 (th)June
2018 2017 2018
£000 £000 £000
Operating Income
Dividends received 335 311 674
Rental and other income 55 50 107
Profit on sales of investments, including provisions 15 26 26
405 387
Management service fees 132 118 274
537 505 1,081
Administrative expenses
Investment operations (209) (229) (411)
Management services (191) (162) (364)
Total administrative expenses (400) (391) (775)
Operating profit 137 114 306
Unrealised changes in the carrying value of General Portfolio investments (814) 501 (117)
Exceptional costs – office move (35) - -
Interest payable (9) (1) (14)
(Loss)/Profit before taxation (721) 615 175
Tax expense 182 (49) 20
(Loss)/Profit after taxation (539) 566 195
Non-controlling interest 19 (3) (8)
(Loss)/Profit attributable to shareholders (520) 563 187
Other comprehensive income/(expense) –
Unrealised changes in the carrying value of Strategic Investments (443) (87) (23)
Deferred tax 90 48 42
Corporation tax - - 50
Total other comprehensive (expense)/income (353) (39) 69
Total comprehensive (expense)/income attributable to shareholders (873) 524 256
Basic and Diluted (loss)/earnings per share (1.7)p 1.8p 0.6p
Adjustment for the unrealised changes in the carrying value of investments, net of tax 2.0p (1.5)p 0.2p
Headline earnings per share 0.3p 0.3p 0.8p
Interim dividend 0.55p 0.55p 0.55p
Final dividend - 0.60p
Total in respect of the period 0.55p 0.55p 1.15p
Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)
Ordinary Share Capital Share Premium Account Unrealised Profits and Losses on Investments Share of Retained profits and losses Results of Subsidiaries Retained Realised Profits & Losses Total Non-Controlling Interests Total Equity
£000 £000 £000 £000 £000 £000 £000 £000
Period ended 31 (st)Dec 2018
Balances at 1 (st)July 2017 1,560 2,320 8,056 4,207 4,253 20,396 105 20,501
(Loss)/Profit for the Period - - (613) 198 (105) (520) (19) (539)
Other Comprehensive Expense - - (353) - - (353) - (353)
Total comprehensive (expense)/income - - (966) 198 (105) (873) (19) (892)
Dividends paid and total transactions with shareholders - - - - (187) (187) - (187)
Balances at 31 (st)Dec 2018 1,560 2,320 7,090 4,405 3,961 19,336 86 19,422
Ordinary Share Capital Share Premium Account Unrealised Profits and Losses on Investments Share of Retained profits and losses Results of Subsidiaries Retained Realised Profits & Losses Total Non-Controlling Interests Total Equity
£000 £000 £000 £000 £000 £000 £000 £000
Period ended 31 (st)Dec 2017
Balances at 1 (st)July 2017 1,560 2,320 8,265 3,794 4,544 20,483 97 20,580
Profit for the Period - - 288 206 68 563 3 566
Other Comprehensive Expense - - (39) - - (39) - (39)
Total comprehensive income - - 249 206 68 524 3 527
Dividends paid and total transactions with shareholders - - - - (172) (172) - (172)
Balances at 31 (st)Dec 2017 1,560 2,320 8,514 4,000 4,441 20,835 100 20,935
Consolidated Statement of Financial Position (Unaudited)
31 (st)December 30 (th)June
2018 2017 2018
£000 £000 £000
Non-current assets
Property, plant and equipment 46 15 13
Strategic investments: -
Finsbury Food Group Plc 6,120 6,420 6,720
Western Selection PLC 4,087 4,166 3,930
10,253 10,601 10,663
Current assets
Listed investments 9,829 11,295 10,676
Trade and other receivables 227 63 251
Cash and cash equivalents 495 277 304
10,551 11,635 11,231
Current liabilities
Trade and other payables falling due within one year (943) (483) (671)
Net Current Assets 9,608 11,152 10,560
Deferred taxation (439) (818) (722)
Total Assets less Total Liabilities 19,422 20,935 20,501
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 7,090 8,514 8,056
Share of retained profits and losses of subsidiaries 4,405 4,000 4,207
Company’s retained realised profits and losses 3,961 4,441 4,253
Total Capital and Reserves attributable to owners 19,336 20,835 20,396
Non-controlling equity interest 86 100 105
19,422 20,935 20,501
Net assets per share 62.0p 66.8p 65.4p
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
31 (st)December 30 (th)June
2018 2017 2018
£000 £000 £000
Cash flows from operating activities
(Loss)/Profit before tax (721) 615 175
Adjustments for non-cash -
Finance expense 9 1 14
Depreciation charges 6 4 9
Unrealised changes in the fair value of investments 814 (501) 117
Realised gain on disposal of investments (15) - (26)
Decrease/(Increase)in trade and other receivables 26 157 (32)
Increase/(Decrease) in trade and other payables 45 (3) 96
Overseas Taxes paid (11) (11) (230)
Net cash inflow from operating activities 153 262 123
Cash flows from investment activity
Acquisition of property, plant and equipment (39) (5) (8)
Acquisition of current investments (611) (727) (699)
Disposal of current investment 660 698 698
Net cash inflow/(outflow) from investment activity 10 (34) (9)
Cash flows from financing
Interest paid (9) (1) (14)
Equity dividends paid (188) (172) (343)
Net drawdown of loan facilities 225 - 325
Net cash inflow/(outflow) from financing 28 (173) (32)
Increase in cash and cash equivalents 191 55 82
Cash and cash equivalents at the beginning of the year 304 222 222
Cash and cash equivalents at end of the year 495 277 304
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
31 (st)December 2018
Cash and cash equivalents 304 191 495
Bank revolving credit facility (325) (225) (550)
Net cash and cash equivalents (21) (34) (55)
31 (st)December 2017
Cash and cash equivalents 222 55 277
Year ended 30 (th)June 2018
Cash and cash equivalents 222 82 304
Bank revolving credit facility - (325) (325)
Net cash and cash equivalents 222 (243) (21)
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
(th)June 2018 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.
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 2018 Annual Report and Accounts and International Financial Reporting Standards, and complies with IAS 34, ‘Interim financial reporting’ as adopted by the EU. The financial information
contained in this report has not been audited or reviewed by the Company’s auditors.
2. Earnings per share: Earnings per share are based on the (loss)/profit on ordinary activities after taxation and non-controlling interests of £(520,000) (2017: £563,000) and on 31,207,479 (2017: 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 £93,000 (2017: £11,000) and on 31,207,479 (2017: 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 and its performance over the remaining six months of the financial year are disclosed on pages 9-10 of the Group’s 2018 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 %
Diageo 475 4.8
LVMH Moet Hennessey 464 4.7
Investor AB 462 4.7
Pernod Ricard 444 4.5
Schindler-Holdings AG 436 4.4
Royal Dutch Shell 421 4.3
Unilever 414 4.2
Nestle 384 3.9
Brown Forman 383 3.9
L'Oreal 381 3.9
Givaudan 381 3.9
Heineken Holding 374 3.8
HSBC Holding 356 3.6
Exxon Mobil Corp 353 3.6
Danone 331 3.4
3M Co 329 3.3
Procter & Gamble Co 325 3.3
Henkel 318 3.2
Antofagasta 313 3.2
Reckitt Benckiser Group 295 3.0
United Technologies Corp 284 2.9
Phillip Morris International Inc 267 2.7
Becton Dickinson & Co 248 2.5
British American Tobacco 245 2.5
BASF 228 2.3
Imperial Brands 212 2.2
Anheuser Busch Inbev 193 2.0
AP Moeller-Maersk 187 1.9
Compagnie Financiere Richemont 166 1.7
Deutsche Post 160 1.6
9,829 100
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