REG-Lon.Fin.&Inv.Grp.: Half-yearly Report <Origin Href="QuoteRef">LFI.L</Origin>
23/02/2016 13:40
London Finance & Investment Group P.L.C.
Interim Results
Lonfin (LSE: LFI, JSE: LNF) today announces its unaudited interim results for
the six months ended 31st December 2015 and dividend declaration.
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 2015, we held two Strategic Investments in which we have board
representation: our associated company Western Selection P.L.C. and Finsbury
Food Group plc. Detailed comments on our Strategic Investments are given below.
Results
Our net assets per share increased 16.0% to 58.1p at 31st December 2015 from
50.1p at 30th June 2015. Our Strategic Investments, adjusting for the disposal
of part of the investment in Finsbury Foods, which realised a profit of £
1,409,000, increased in value by 14.0% during the period, reflecting a strong
performance in Finsbury Food's share price. Our General Portfolio increased by
4.5%, compared with decreases of 3.8% and 4.5% in the FTSE 100 index and the
FTSEurofirst 300 Index respectively, over the half year. At the close of
business on 22nd February 2016, our net asset value was 57.5p per share.
The Group profit before tax for the half year was £3,296,000 compared to a
profit of £1,017,000 for the same period last year, which reflects the profit
realised from the disposal of part of the investment in, and the unrealised
profit arising from the strong performance of, Finsbury. Our profit after tax
and minority interest was £2,683,000 (2014: £810,000) giving profits per share
of 8.6p (2014: 2.6p).
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.
On 22nd February 2016, Western announced a profit after tax of £77,000 for its
half year to 31st December 2015 and a profit per share of 0.4p (2014: profit
1.2p). Western's net assets at market value were £14,272,000 equivalent to 80p
per share, an increase of 6% from 75p at 30th June 2015. Western has announced
an interim dividend of 1.05p per share (prior year: 1.05p).
The market value of the Company's investment in Western at 31st December 2015
was £3,537,000 representing 19% of the net assets of Lonfin. The
underlying value of the investment in Western, valuing Western's own
investments at market value, was £6.3 million (30th June 2015: £5.9 million).I
am the Chairman of Western and Mr. Robotham is a Non-Executive Director.
Western's principal core holdings are in Northbridge Industrial Services plc,
Swallowfield plc, Bilby Plc and Hartim Limited. Extracts from Western's
announcement on its core holdings are set out below:
Northbridge Industrial Services plc ("Northbridge")
Northbridge hires and sells specialist industrial equipment to a
non-cyclical customer base. With offices or agents in the U.K., U.S.A.,
Dubai, Germany, Belgium, France, Australia, Singapore, India, 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,
generators, compressors, loadcells and oil tools. Further information
about Northbridge is available on their website:
www.northbridgegroup.co.uk.
Northbridge's latest results, for the half year to 30th June 2015, showed a
loss after tax of £1,936,000 (2014: £2,568,000 profit).
Northbridge declared an interim dividend of 1p per share (2014: 2.2p.
During the period we increased our investment in Northbridge by 600,000
shares at a cost of £422,000 and Western now owns 2,500,000 shares,
representing 13.57% of the total voting rights in Northbridge's issued
share capital. The market value of this investment at 31st December 2015
was £2,050,000 (30th June 2015: £3,895,000), representing 14% of Western's
assets.
I am a Non-Executive Director of Northbridge.
Swallowfield plc ("Swallowfield")
Swallowfield is a market leader in the development, formulation,
manufacture and supply of cosmetics, toiletries and related household
products for global brands and retailers operating in the cosmetics,
personal care and household goods market. Further information about
Swallowfield is available on its website: www.swallowfield.com.
Swallowfield announced its annual results to 30th June 2015 in September
2015 showing a profit after tax of £746,000 compared to a profit of £
157,000 for the prior year. We received a dividend from Swallowfield
during the period of £37,383 (2014 - Nil).
Western owns 1,869,149 shares in Swallowfield (16.5% of their issued share
capital). The market value of the Company's holding in Swallowfield on
31st December 2015 was £3,570,000 (30th June 2015: £2,019,000),
representing 25% of the Company's assets.
Mr Beale is a Non-Executive Director of Swallowfield.
Bilby Plc
In July 2015 we invested £1,500,000 in acquiring 1,875,000 shares in Bilby
which is 5.5% of their issued share capital.
Bilby is an established, and award winning, provider of gas installation,
maintenance and general building services to local authority and housing
associations across London and South East England. They have a strategy of
growing organically and by acquisition. Further information about Bilby is
available on their website: www.bilbyplc.com.
Bilby announced its interim results for the six month period to 30
September 2015 on 9th December 2015 showing a profit after tax of £55,000.
Bilby paid a final dividend of 2.32p per share in August 2015 which
provided us with income of £43,500 and an interim dividend of 0.75p per
ordinary share in January 2016 which provided us with an income of £14,063.
The market value of the Company's holding in Bilby on 31st December 2015
was £2,775,000, representing 19% of the Company's assets.
Hartim Limited ("Hartim")
Hartim offers a complete export sales, marketing and logistical service to
a number of well known UK branded fast moving consumer goods companies.
This investment is accounted for as an associated company.
Our share of Hartim's estimated results for the period ended 31st December
2015 is a profit after tax of £51,000 (2014 - £23,000).
At 31st December 2014, Western owned 49.5% of Hartim. The carrying value
of the Company's equity investment in Hartim on 31st December 2015 was £
613,000 (2014: £591,000) representing 4% of the Company's assets. In
addition, loans of £660,000 (equivalent to a further 5% of the Company's
assets) have been made to Hartim and its executive directors.
Mr. Beale is a Non-Executive Director of Hartim.
Finsbury Food Group plc ("Finsbury Food")
Finsbury Food is a leading manufacturer of cakes and bread to the major UK
multiple grocers and recently acquired the Fletchers Group, suppliers of fresh
and frozen bread and morning goods to the major UK multiple grocers and the UK
foodservice sector. Further information about Finsbury Food is available on
its website: www.finsburyfoods.co.uk.
In October 2015, the Group disposed of 2,000,000 shares in Finsbury Food for £
1,985,000 and now holds 8,000,000 shares, representing 6.25% of their issued
share capital. The market value of our holding was £9,040,000 on 31st December
2015 compared to a cost of £2,300,000; this represents 50% of the net assets of
Lonfin.
Finsbury Food will be announcing their interim results on 16th March 2016.
Mr Beale is a Non-Executive Director of Finsbury Food.
General Portfolio
The list of investments included in the General Portfolio is set out at the end
of this announcement. We continue to hold 26 investments, having taken £60,000
out of the amount invested.
Outlook
The Board expect to see a continuation of the volatility in equity and
currency markets and remain cautious about the remainder of the year.
The Board has declared an interim dividend of 0.50p per share (prior year:
0.50p).
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 2015,
have been prepared in accordance with IAS 34 as adopted by the EU; and
- the interim management report includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R of the Disclosure and Transparency Rules.
By order of the Board
David C. Marshall
Chairman
Interim Dividend
The declared interim dividend is 0.50p per share (ZAR 10.73075 cents) (prior
year: 0.50p) and will be paid on Friday, 8th April 2016 to those members
registered at the close of business on Friday 18th March 2016 (SA and UK).
Shareholders on the South African register will receive their dividend in South
African Rand converted from sterling at the closing rate of exchange on 22nd
February 2016.
The issued number of shares as at the declaration date is 31,207,479.
The Company's UK Income Tax reference number is 948/L32120.
This dividend should be regarded as a foreign dividend by South African
shareholders.
Salient dates for dividend
Last day to trade (SA) Friday, 11th March 2016
Shares trade ex dividend (SA) Monday, 14th March 2016
Shares trade ex dividend (UK) Thursday, 17th March 2016
Record date (SA and UK) Friday, 18th March 2016
Pay date Friday, 8th April 2016
Share certificates may not be dematerialised or rematerialised between Monday,
14th March 2016 and Friday 18th March 2016, both dates inclusive. Shares may
not be transferred between registers during this period either.
Shareholders are hereby advised that the exchange rate to be used will be GBP 1
= ZAR 21.4615. This has been calculated as the average of the bid/ask spread
at 16.00 (United Kingdom time) being the close of business on 22nd February
2016. Consequently, the dividend of 0.50p will be equal to ZAR 10.73075 cents.
The JSE Listings Requirements require disclosure of additional information in
relation to any dividend payments.
Shareholders registered on the South African register are reminded that the
dividend withholding tax will be withheld from the gross final dividend amount
of ZAR 10.73075 cents per share at a rate of 15%, unless a shareholder
qualifies for an exemption; shareholders registered on the South African
register who do not quality for an exemption will receive a net dividend of ZAR
9.12114 cents per share. The dividend is payable in cash as a 'Dividend' (as
defined in the South African Income Tax Act, 58 of 1962, as amended) by way of
a payment out of income reserves. The dividend withholding tax and the
information contained in this paragraph is only of direct application to
shareholders registered on the Johannesburg register, who should direct any
questions about the application of the dividend withholding tax to
Computershare Investor Services (Pty) Limited, Tel: +27 11 373-0004.
Unaudited Consolidated Statement of Comprehensive Income
Half year ended Year ended
31st December 30th June
2015 2014 2015
£000 £000 £000
Operating Income
Dividends received 270 197 487
Rental and other income 41 82
41
Profit on sales of investments, including 1,448 91 175
provisions
1,759 329 744
Management services income 122 108 233
1,881 437 977
Administrative expenses
Investment operations (175) (171) (345)
Management services (112) (111) (298)
Total administrative expenses (287) (282) (643)
Operating profit 1,594 155 334
Unrealised changes in the carrying value of 1,718 879 2,049
investments
Interest payable (16) (17) (48)
Profit on ordinary activities before taxation 3,296 1,017 2,335
Tax on result of ordinary activities (588) (188) (357)
Profit on ordinary activities after taxation 2,708 829 1,978
Non-controlling interest (25) (19) (10)
Total comprehensive income - profit attributable 2,683 810 1,968
to members of the holding company
Reconciliation of headline earnings
Earnings per share 8.6p 2.6p 6.3p
Adjustment for unrealised changes in the (3.6)p (2.8)p (5.5)p
carrying value of investments and exceptional
items, net of tax
Headline earnings per share 5.0p (0.2)p 0.8p
Interim dividend 0.50p 0.50p
0.50p
Final dividend 0.50p
Total in respect of the year 1.00p
Unaudited Consolidated Changes in Shareholders' Equity
31st December 30th June
2015 2014 2015
£000 £000 £000
Total comprehensive income attributable to 2,683 810 1,968
members
Dividends paid to equity shareholders (162) (141) (296)
2,521 669 1,672
Equity shareholders' funds at start of period 15,622 13,950 13,950
Equity shareholders' funds at end of period 18,143 14,619 15,622
Unaudited Consolidated Statement of Financial Position
31st December 30th June
2015 2014 2015
£000 £000 £000
Non-current assets
Tangible assets 26 35 31
Principal investments:-
Finsbury Food Group Plc 9,040 5,900 8,000
Western Selection P.L.C. 3,537 4,559 3,694
12,603 10,494 11,725
Current assets
Listed investments 6,040 5,899 5,801
Trade and other receivables 232 252 218
Cash, bank balances and deposits 649 83 115
6,921 6,234 6,134
Total Assets 19,524 16,728 17,859
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 7,439 5,280 6,304
Share of undistributed profits and losses of 767 (125) 26
subsidiaries and associates
Company's retained realised profits and losses 6,057 5,584 5,412
Equity shareholders funds 18,143 14,619 15,622
Trade and other payables falling due within 256 1,729 1,720
one year
Deferred taxation 1,025 296 442
Non-controlling equity interest 100 84 75
19,524 16,728 17,859
Net assets per share 58.1p 46.4p 50.1p
Number of shares in issue 31,207,479 31,207,479 31,207,479
Unaudited Consolidated Statement of Cash Flow
Half year ended Year ended
31st December 30th June
2015 2014 2015
£000 £000 £000
Profit before taxation 3,296 1,017 2,335
Adjustments for non-cash and non-operating
expenses:-
Depreciation charges 3 4 8
Profit on non-current asset disposal (1,409) - -
Unrealised changes in the carrying value of
fixed asset investments (1,718) (879) (2,049)
Net interest paid 16 17 48
(3,108) (858) (1,993)
Taxation paid (5) (4) (26)
Changes in working capital:-
(Increase)/Decrease in debtors (15) (8) 27
Increase/(Decrease) in creditors 39 (244) (5)
Decrease in current asset investments 20 67 100
44 (185) 122
Cash outflow on operating activities 227 (30) 438
Investment activities
Disposal of part of/purchase of additional (593)
shares in, strategic investment 1,985 (593)
Net cash outflow from investment activities 1,985 (593)
(593)
Cash flows from financing
Net interest paid (16) (17) (48)
Drawdown of loan facilities (1,500) 825 575
Equity dividends paid (162) (141) (296)
Net cash inflow/(outflow) from financing (1,678) 667 231
Increase/(Decrease) in cash and cash 534 76
equivalents 44
Cash and cash equivalents at start of period 115 39 39
Cash and cash equivalents at end of period 649 83 115
Reconciliation of net cash flow to movement in net debt
At start Cash At end of
of period Flow Period
Half year ended 31st December £000 £000 £000
2015
Cash at bank 115 534 649
Bank loan (1,500) 1,500 -
(1,385) 2,034 649
2014
Cash at bank 39 44 83
Bank loan (650) (825) (1,475)
(611) (781) (1,392)
Year ended 30th June 2015
Cash at bank 39 76 115
Bank loan (925) (575) (1,500)
(886) (499) (1,385)
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 2015 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 Company's Annual Report and Accounts 2015, International
Financial Reporting Standards and comply with IAS34.
2. Earnings per share:
The calculation of earnings per share is based on the weighted average number
of shares in issue for the period and the profit on ordinary activities after
tax.
3. Going Concern:
Based on the Group's cash flow forecasts and projections, 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 remain on pages 8-9 of the Group's Annual Report and
Accounts 2015. The key risks and mitigating activities have not changed from
these:
- Stock market vulnerability and economic uncertainty;
- Possible volatility of share prices of investments;
- Dividend income;
- Ability to make strategic investments; and
- Liquidity of equity investments in strategic investments.
Composition of General Portfolio
31st December 2015
Value
£000 %
British American Tobacco 330 5.5
Investor 328 5.4
Imperial Tobacco 319 5.3
Heineken 317 5.2
Schindler-Holdings 315 5.2
Reckitt Benckiser 309 5.1
Nestle 307 5.1
Henkel 300 5.0
Pernod-Ricard 269 4.5
Diageo 269 4.5
Philip Morris International 266 4.4
Unilever 258 4.3
L'Oreal 244 4.0
Anheuser Busch Inbev 233 3.9
Novartis 195 3.2
3M 191 3.2
Exxon 190 3.2
Danone 186 3.1
BASF 181 3.0
Procter & Gamble 179 3.0
Chevron 164 2.7
ABB 162 2.7
United Technologies 156 2.6
Givaudan 151 2.5
Linde 118 2.0
LVMH 103 1.7
6,040 100.0
END
Copyright © 2016 PR Newswire Association, LLC. All Rights ReservedRecent news on London Finance & Investment
See all newsREG-London Finance & Investment Group Plc: Change of Date for the Suspension of Shares
AnnouncementREG-London Finance & Investment Group Plc: Result of Court Hearing
AnnouncementREG - FTSE Russell Lon.Fin.&Inv.Grp. - London Finance & Investment Group
AnnouncementREG-London Finance & Investment Group Plc: General Meeting Result
AnnouncementREG-London Finance & Investment Group Plc: Return of Capital Proposals
Announcement