REG-Lon.Fin.&Inv.Grp.: Half-year Report
22/02/2021 07:05
London Finance & Investment Group PLC
(‘Lonfin’ or the ‘Company’)
Unaudited Interim Results for the six months ended 31(st) December 2020 and
interim dividend declaration
The Company today announces its unaudited interim results and interim dividend
declaration for the six months ended 31(st) December 2020 (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. The
Company acknowledges the increased focus on Environmental, Social and
Governance (ESG) issues in recent years and the benefits of socially
responsible long-term investment.
At 31(st) December 2020, 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 increased by 9.7% to 55.5p at 31(st) December 2020
from 50.6p at 30(th) June 2020. Our Strategic Investments increased in value
by 16% during the period. Our General Portfolio increased by 9.5% compared
with increases of 4.7% and 9.3% in the FTSE 100 index and the FTSEurofirst 300
Index respectively, over the half year. At the close of business on 31(st)
January 2021, our net asset value was 62.6p per share.
The Group profit before tax for the half year was £848,000 compared to a
profit of £91,000 for the same period last year. Our total comprehensive
profit after tax and minority interest was £1,689,000 (2019: £1,481,000)
giving an earnings per share of 2.1p (2019: earnings per share 0.3p).
Strategic Investments
Finsbury Food Group Plc (“Finsbury”)
Finsbury is a leading UK speciality bakery manufacturer of cake, bread and
morning goods for the retail and foodservice channels. Further information
about Finsbury, which is admitted to trading on AIM, is available on its
website: www.finsburyfoods.co.uk
On 21(st) September 2020, Finsbury announced profits on continuing operations
after tax of £107,000 for the 52 weeks ended 27(th) June 2019 (2019:
£10,293,000).
Finsbury also announced that they would not pay a final dividend, after
previously cancelling the interim dividend, due to the uncertainties
surrounding the pandemic and Brexit. The board are looking to restart paying
dividends in 2021 if conditions allow.
At 31(st) December 20120 Lonfin held 6,000,000 Finsbury shares, which
represent 4.6% of Finsbury’s issued share capital. The market value of this
investment at 31(st) December 2020 was £4,560,000 (30(th) June 2020:
£3,540,000 representing 26% of Lonfin’s net assets.
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 19 February 2021, Western announced a loss before tax of £261,000 for the
half year to 31(st) December 2020 (2019: loss before tax of £221,000) and a
loss per share of 1.5p (2019: loss per share of 1.2p). Western’s net assets
at market value were £8,512,000 equivalent to 47p per share. Western also
announced that it was not recommending the payment of an interim dividend
(2019: £Nil).
The market value of the Company’s investment in Western at 31(st) December
2020 was £2,751,000 representing 16% of the net assets of Lonfin (30(th) June
2020: £2,751,000). Our share of the net assets of Western, including the
value of Western’s investments at market value, was £3,728,000 (30(th) June
2020 - £3,560,000).
I am the Chairman of Western and Edward Beale is a non-executive director.
Western’s current main Core Holdings are Northbridge Industrial Services Plc
and Bilby Plc .
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 load banks, transformers and oil tools. Further information
about Northbridge, which is admitted to trading on AIM, is available on its
website: www.northbridgegroup.co.uk
Northbridge’s latest results, for the half year to 30th June 2020, showed a
profit before tax excluding exceptional cost of £35,000 for the period (2019:
loss after tax of £122,000). No interim dividend payment was recommended
(2019: none).
Northbridge released an announcement on the 8(th) December 2020 stating the
board are confident that despite the challenges of Covid-19 the Company would
be profitable before exceptionable cost and that they shall be starting 2021
with a record new-year order book for the sale of load banks.
Western owns 3,300,000 Northbridge shares which represent 11.8% of
Northbridge’s issued share capital. The market value of this investment at
31(st) December 2020 was £3,300,000 (30(th) June 2020: £ 2,739,000),
representing 38.8% of Western’s net assets.
Brand Architekts Group Plc (“Brand Architekts”)
Brand Architekts (formerly, Swallowfield plc) is a beauty brands business
specialising in the delivery of innovative products to consumers and
retailers. Their business model changed substantially with the sale of the
contract manufacturing business in 2019 and ceased to meet the Company’s
investment criteria.
Western sold its entire shareholding of 1,300,000 shares in Brand Architekts
on 28(th) September 2020 realising £1,425,000.
Edward Beale is a non-executive director of Brand Architekts.
Bilby Plc (“Bilby”)
Bilby is an award-winning provider of gas and electrical installation,
maintenance and general building services to local authority and housing
associations predominantly in London and South East England. It has a strategy
of growing organically and by acquisition. Further information about Bilby,
which is admitted to trading on AIM, is available on its website:
www.bilbyplc.com.
Bilby announced its interim results for the six-month period to 30(th)
September 2020 on 1st December 2020 showing a loss after tax of £155,000
(2018: profit - £542,000). Bilby also announced that it would not be
recommending the payment of an interim dividend.
Since the end of the period the Company has purchased an additional 350,000
shares in the Company.
Western now owns 6,686,363 Bilby shares, which represent 11.34% of Bilby’s
issued share capital. The market value of this investment at 31(st) December
2020 was £1,520,727 (30(th) June 2020: £1,235,590) representing 17.9% of
Western’s net assets.
General Portfolio
Lonfin’s general 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 2020, the number of holdings in the General Portfolio was
33 (2019: 30).
The company has unused borrowing facilities of £1,450,000 at 31 December 2020
which can be drawn on to fund additional investment.
Outlook
The Company’s investment performance since the year end has been affected by
issues including Covid-19, Brexit, volatility in the markets and by the
reduction in value of our Strategic Holdings.
Covid-19 continues to affect countries across the world with a second wave
having led to many countries entering into further lockdowns including the UK
on 6 January 2021. With the approval of 2 different vaccines and the national
rollout of the vaccination program it is hoped that all UK citizens should
have received their first vaccine by Autumn 2021. Whilst this should allow
businesses to return to normal trading and the UK Government continues to
provide support for business during this lockdown, the long-term consequences
of this are yet to be seen.
The UK’s transition period with the EU ended on 31 December 2020 with a
trade deal having been approved on 24(th) December 2020. At this stage it is
too early to assess how this may have affected core holdings and their trading
and therefore uncertainty remains about the full impact of Brexit on the
Company.
Accordingly, the Board remains cautious at this time and shall continue to
monitor equity and currency markets for potential future volatility that has
the potential to impact further on the value of our investments.
The Board has declared an interim dividend of 0.55p per share (2019: 0.55p).
22(nd) February 2021
D.C. MARSHALL
Chairman
Interim Dividend
The Board recommends an interim gross dividend of 0.55p per share (11.04609 SA
cents) (2019: 0.55p) which will be paid on Thursday 25th March 2020 to those
members registered at the close of business on Friday 12(th) March 2020 (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
Monday 15(th) February 2020, being GBP 1 = SA Rand 20.0838.
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,
12(th) March 2020. All other shareholders are exempt.
*
The number of shares in issue now and as at the interim dividend declaration
date is 31,207,479;
*
The interim gross dividend is 11.04609 SA cents;
*
The interim net dividend is 8.836872 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 9 (th)March 2020
Shares trade ex-dividend (SA) Wednesday 10 (th)March 2020
Shares trade ex-dividend (UK) Thursday 11 (th)March 2020
Record date (SA and UK) Friday 12 (th)March 2020
Dividend Payment date Thursday 25th March 2020
The JSE Listing Requirements require disclosure of additional information in
relation to any dividend payments.
Shareholders registered on the South African register are advised that the
dividend withholding tax will be withheld from the gross final dividend amount
of 11.04609 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 8.836872
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
Share certificates may not be de-materialised or re-materialised between
Wednesday 10(th) March 2020 and Friday 12(th) March 2020, both dates
inclusive. Shares may not be transferred between the registers in London and
South Africa 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(st) December 2020,
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
The information communicated within this announcement was deemed to constitute
inside information as
stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the
publication of this
announcement, this information is considered to be in the public domain.
The directors of the Company accept responsibility for the contents of this
announcement.
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
2020 2019 2020
£000 £000 £000
Operating Income
Dividends receivable 119 271 425
Rental and other income 75 75 150
Profit on sales of investments 61 - 68
Management service fees 159 139 284
414 485 927
Administrative expenses
Investment operations (203) (221) (417)
Management services (196) (170) (380)
Total administrative expenses (399) (391) (797)
Operating profit 15 94 130
Unrealised changes in the carrying value of General Portfolio investments 855 21 (700)
Interest payable (22) (24) (62)
Profit/(Loss) before taxation 848 91 (632)
Tax income/(expense) (167) 28 (164)
Profit/(Loss) after taxation 681 119 (796)
Non-controlling interest (12) (14) (11)
Profit/(Loss) attributable to shareholders 669 105 (807)
Other comprehensive income/(expense) –
Unrealised changes in the carrying value of Strategic Investments 1,020 1,428 (1,305)
Other taxation -
Deferred tax - (52) -
Total other comprehensive income/(expense) 1,020 1,376 (2,112)
Total comprehensive income/(expense) attributable to shareholders 1,689 1,481 (1,305)
Basic, Diluted and Headline earnings/(loss) per share 2.1p 0.3p (2.59)p
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 2020
Balances at 1 (st)July 2020 1,560 2,320 1,708 4,712 5,498 15,798 103 15,901
Profit for the Period - - 492 10 167 669 12 681
Other Comprehensive Income - - 1,020 - - 1,020 - 1,020
Total comprehensive income - - 1,512 10 167 1,689 12 1,701
Dividends paid to shareholders - - - - (187) (187) - (187)
Unclaimed dividends written back - - - - 33 33 - 33
Balances at 31 (st)Dec 2020 1,560 2,320 3,220 4,722 5,511 17,333 115 17,448
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 2019
Balances at 1st July 2019 1,560 2,320 6,085 4,574 3,739 18,278 100 18,378
IFRS 16 adjustment - - - (9) - (9) (8) (17)
Restated Balance at 1st July 2020 1,560 2,320 6,085 4,565 3,739 18,269 92 18,361
Profit/(Loss) for the Period - - 60 153 (108) 105 14 119
Other Comprehensive Income - - 1,376 - - 1,376 - 1,376
Total comprehensive income - - 1,436 153 (108) 1,481 14 1,495
Dividends paid and total transactions with shareholders - - - - (187) (187) - (187)
Balances at 31st Dec 2019 1,560 2,320 7,521 4,718 3,444 19,563 106 19,669
Consolidated Statement of Financial Position (Unaudited)
31 (st)December 30 (th)June
2020 2019 2020
£000 £000 £000
Non-current assets
Property, plant and equipment 26 34 31
Right of use of leased offices 481 537 512
Strategic investments 7,311 9,024 6,291
7,818 9,595 6,834
Current assets
Listed investments 10,898 11,404 9,948
Trade and other receivables 128 157 166
Cash and cash equivalents 423 317 269
11,449 11,878 10,383
Current liabilities
Trade and other payables falling due within one year (157) (164) (225)
Borrowings (450) (625) -
Lease liability (53) (50) (52)
(660) (839) (277)
Net Current Assets 10,789 11,039 10,106
Non-current liabilities
Lease liability (491) (557) (519)
Deferred taxation (668) (408) (520)
Total Assets less Total Liabilities 17,448 19,669 15,901
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 3,220 7,521 1,708
Share of retained profits and losses of subsidiaries 4,722 4,718 4,712
Company’s retained realised profits and losses 5,511 3,444 5,498
Total Capital and Reserves attributable to owners 17,333 19,563 15,798
Non-controlling equity interest 115 106 103
17,448 19,669 15,901
Net assets per share 55.5p 63.0p 50.6p
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
2020 2019 2020
£000 £000 £000
Cash flows from operating activities
Profit/(Loss) before tax 848 91 (632)
Adjustments for non-cash items-
Finance expense 22 24 62
Depreciation charges 5 5 10
Depreciation on right of use of asset 31 31 62
Unrealised changes in the fair value of investments (639) (21) 1,265
Realised gain on disposal of investments (277) - (633)
Decrease in trade and other receivables 38 37 10
Decrease in trade and other payables (67) (68) (7)
Taxes paid (20) (11) (39)
Net cash (outflow)/inflow from operating activities (59) 88 98
Cash flows from investment activity
Acquisition of property, plant and equipment - - (2)
Acquisition of current investments (856) - (163)
Disposal of current investment 821 - 966
Net cash (outflow)/inflow from investment activity (35) - 801
Cash flows from financing
Interest paid (8) (9) (31)
Interest paid on lease liabilities (14) (14) (31)
Repayment of lease liabilities (26) (26) (49)
Equity dividends paid (187) (187) (359)
Unclaimed dividends 33 - -
Net drawdown/(repayment) of loan facilities 450 225 (400)
Net cash inflow/(outflow) from financing 248 (11) (870)
Increase in cash and cash equivalents 154 77 29
Cash and cash equivalents at the beginning of the year 269 240 240
Cash and cash equivalents at end of the year 423 317 269
Reconciliation of net cash flow to movement in net debt
At start Cash Non-cash At end of
of Period Flow Transactions Period
Half year ended £000 £000 £000 £000
31 (st)December 2020
Cash at bank 269 154 - 423
Borrowings - (450) - (450)
Lease liability (571) 40 (13) (544)
Net cash and cash equivalents (302) (256) (13) (571)
31 (st)December 2019
Cash at bank 240 77 - 317
Borrowings (400) (225) - (625)
Lease liability (632) 40 (15) (607)
Net cash and cash equivalents (792) (108) (15) (915)
30 (th)June 2020
Cash at bank 240 29 - 269
Borrowings (400) 400 - -
Lease liability (632) 80 (19) (571)
Net cash and cash equivalents (792) 509 (19) (302)
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 2020 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.
This report has been prepared in accordance with the accounting policies contained in the Group’s 2020 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.
The Group has only one operating lease and the right of use of asset and lease liability have been estimated based on 5% discount factor and the cash flow predicted over 10-year lease life. The Income statement has also been affected with additional
depreciation and interest charges which replace the rent costs. The Group has chosen to apply the full retrospective approach in transitioning to the new accounting standard.
2. Earnings/loss per share: Earnings/loss per share are based on the profit on ordinary activities after taxation and non-controlling interests of £669,000 (2019: £105,000) and on 31,207,479 (2019: 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 of £ (2019: £105,000) and on 31,207,479 (2019: 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 8-9 of the Group’s 2020 Annual
Report and Accounts. The key risks and mitigating activities have not changed from these: - Stock market volatility, economic uncertainty and Brexit; - Possible volatility of share prices of Strategic Investments and General Portfolio investments; -
Dividend income; - Ability to make strategic investments; and - Liquidity of equity investments in strategic investments.
Composition of General Portfolio
Value
£000 %
L'Oreal 587 5.4
Antofagasta 576 5.3
LVMH Moët Hennessy 549 5.0
Nestle 521 4.8
Pernod Ricard 485 4.5
Procter & Gamble 458 4.2
Brown-Forman 447 4.1
Unilever 443 4.1
Heineken Holdings 441 4.0
Schindler-Holdings 425 3.9
Givaudan 370 3.4
Diageo 367 3.4
Henkel 341 3.1
Reckitt Benckiser Group 321 2.9
AP Moeller-Maersk 311 2.9
Phillip Morris International 308 2.8
Danone 289 2.7
3M 281 2.6
Deutsche Post 272 2.5
Compagnie Financière Richemont 271 2.5
British American Tobacco 265 2.4
Becton Dickinson & Co 256 2.3
Linde 248 2.3
Anheuser Busch INBEV 244 2.2
BASF 243 2.2
Rio Tinto 228 2.1
Royal Dutch Shell 227 2.1
BHP Group 218 2.0
Legal & General 205 1.9
Exxon Mobil 199 1.8
Otis Worldwide 188 1.7
Raytheon 178 1.6
Imperial Brands 136 1.3
10,898 100.0
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