REG-Lon.Fin.&Inv.Grp.: Unaudited Final Results <Origin Href="QuoteRef">LFI.L</Origin>
03/10/2016 10:40
Friday 30(th) September 2016
LONDON FINANCE & INVESTMENT GROUP P.L.C.
(“Lonfin”, “the Company” or “the Group”)
Unaudited Preliminary results for the year ended 30(th) June 2016
London Finance & Investment Group P.L.C. (LSE: LFI, JSE: LNF), the investment
company whose assets primarily consist of Strategic Investments and a General
Portfolio, today announces its unaudited Preliminary Results for the year
ended 30(th) June 2016.
Strategy and Business Model
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 Company invests in other companies in accordance with the Company’s
Investment Policy. In the short term, the performance of the Company can be
influenced by overall stock market performance and to ameliorate this short
term risk the Company has a combination of Strategic Investments together with
a General Portfolio. Strategic Investments are significant investments in
smaller UK quoted companies and these are balanced by a 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.
Results
* Net assets have increased over the year by 22.6% from 50.1p
per share to 61.4p per share.
* Strategic investments have increased in value over the year by
6.0%, from £11,694,000 to £12,417,000 largely due to the increase in value
of our investment in Finsbury Food Group Plc.
* Strategic investments are yielding 2.9% (2015 – 2.7%)
* The General Portfolio has increased over the year by 22.8%
from £5,801,000 to £7,125,000
* The General Portfolio is yielding 2.4% (2015 – 2.9%)
* No borrowings at 30th June 2016, compared with £1,385,000 at
30(th) June 2015
* Operating cost were broadly in line with 2015
The Company and its subsidiaries (“Group”) achieved a profit for the year,
before tax and changes to the fair value adjustments of investments, of
£1,683,000 (2015- £334,000). The profit, after positive fair value
adjustments, tax and non-controlling interest was £3,873,000 (2015 -
£1,978,000) giving a headline earnings per share of 5.2p (2015 –headline
earnings per share of 0.8p).
Strategic Investments
Western Selection P.L.C. (“Western”)
The Group owns 7,860,515 shares, being 43.8%, of the issued share capital of
Western.
On 30(th) September 2016, Western announced unaudited preliminary results
showing a profit before exceptional items of £64,000 for the year to 30(th)
June 2016 (2015 – profit before exceptional items of £159,000). Including
associates and after exceptional items and tax, earnings per share were 0.4p
(2015 – earnings per share – 15.5p).
Western has paid an interim dividend of 1.05p and proposes a final dividend of
1.05p making 2.1p for the year (2015 – 2.1p). Western’s net assets at
market value as at 30(th) June 2016 were £14,217,000 equivalent to 79p per
share, an increase of 5.3% from 75p last year.
Our share of the net assets of Western, including the value of Western’s
investments at market value, was £6,627,000 (2015 - £5,907,000). The fair
value recorded in the Statement of Financial Position is the market value of
£3,537,000 (2015 - £3,694,000). This represents 26% (2015 – 24%) of the
net assets of the Group. Western’s objective is to generate growth in
value for shareholders over the medium to long term and pay a progressive
dividend.
Western’s business model is to take sizeable minority stakes in relatively
small companies usually before or as their shares are admitted to trading on
one of the UK’s stock exchanges and have directors in common through which
they can provide advice and support for these growing companies. These may
or may not become associated companies. The aim is that these companies
(“Core Holdings”) will grow to a stage at which Western’s support is no
longer required and its stake can then be sold over time into the relevant
stock market. Companies that are targeted as Core Holdings will have an
experienced management team, a credible business model and good prospects for
growth.
Mr. D. C. Marshall is the Chairman of Western and Mr L.H. Marshall, Mr. J.M.
Robotham and Mr. E.J. Beale are non-executive directors. Western’s main
Core Holdings are Northbridge Industrial Services plc, Swallowfield plc, Bilby
Plc and Tudor Rose International Limited.
An extract from Western’s announcement relating to its main Core Holdings is
set out below:
Northbridge Industrial Services plc (“Northbridge”)
Northbridge hires and sells specialist industrial equipment to a global
customer base. It has offices or agents in the U.K., U.S.A., Dubai, Germany,
Belgium, France, Australia, Singapore, India, Brazil, Korea and Azerbaijan.
Customers include 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 announced its unaudited interim results for the six months ended
30th June 2016 on 29th September 2016 and recorded a loss after tax of
£2,338,000 for the period.
Western acquired a further 1,323,632 Northbridge shares during the year for
£964,000 bringing its holding to 3,223,632 shares. Western’s holding is
now 12.45% of Northbridge’s issued share capital. The value of this
investment at 30th June 2016 was £2,772,000 (2015 - £3,895,000) being 19%
(2015 - 29%) of Western’s net assets.
Mr D. C. Marshall is 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 their
website: www.swallowfield.com
Swallowfield announced its annual results to 25th June 2016 on 20th September
2016 and recorded a profit after tax of £2,001,000 compared to a profit of
£746,000 for the comparable period last year.
Dividends of £52,000 were received from Swallowfield during the year (2015
– nil). A final dividend of 2.3p per share has been declared and Western
will receive a further £46,000.
Western acquired a further 130,851 Swallowfield shares during the year for
£203,000. At the reporting date, Western owned 2,000,000 Swallowfield
shares which was 11.9% of Swallowfield’s issued share capital. The market
value of this investment on 30th June 2016 had increased to £3,400,000 from
the value at 30th June 2015 of £2,019,000. The value of this investment is
24% (2015 - 15%) of Western’s net assets.
On 23(rd) September 2016, Western sold 200,000 Swallowfield shares for
£520,000 (before selling expenses).
Mr E. J. 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. They have a strategy of
growing organically and by acquisition. Further information about Bilby is
available on their website: www.bilbyplc.com.
In July 2015, the Company invested £1,500,000 in acquiring 1,875,000 shares
in Bilby and in April 2016, a further investment of £545,000 for 462,088
Bilby shares. Western now holds 2,337,088 shares, which is 5.9% of Bilby’s
issued share capital. The market value of this investment on 30th June 2016
was £2,968,000 which is 21% of Western’s net assets.
Bilby announced its results for the year ended 31st March 2016 on 14th July
2016 showing a profit after tax of £954,000 compared to a profit of
£1,426,000 for the 14 month period ended 31(st) March 2015. Dividends of
£58,000 were received from Bilby during the year. Bilby announced a final
dividend of 2.00p per share which was paid in September 2016 which provided
Western with further income of £46,700.
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.
Western holds 49.5% of the issued share capital of Tudor Rose International,
which has a 31st December year end and which generated trading profits before
tax in the year to 30th June 2016 of £71,000. Turnover in the period was
£18,542,000 (2015 - £18,022,000).
Western’s share of a profit after tax, including a charge for disallowed tax
losses, for the twelve months to 30th June 2016 was 35,000 (2015 – loss of
£5,000) and the book value of the investment at 30th June 2016 was
£1,290,000 (2015 - £1,223,000) being 9% (2015 - 9%) of Western’s net
assets.
Western has two nominees on the Board of Tudor Rose International: Mr E. J.
Beale and Mr L. H. Marshall.
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 is available on its
website:
www.finsburyfoods.co.uk
During the year Lonfin disposed of 2,000,000 shares in Finsbury for
£1,984,000 realising a profit of £1,408,000. At 30(th) June 2016, Lonfin
held 8,000,000 Finsbury shares, representing 6.1% of Finsbury’s issued share
capital. The market value of the holding was £8,880,000 as at 30(th) June
2016 (cost - £2,300,000) and represents 46% (2015 – 51%) of Lonfin’s net
assets.
On 19th September 2016, Finsbury announced audited profits on continuing
operations after tax and minority interests of £8,504,000 for the 52 weeks
period ended 2 July 2016 (2015 - £6,620,000).
Finsbury paid an interim dividend of 0.93p and has recommended to its
shareholders a final dividend of 1.87p per share, making 2.80p for the year
(2015 – 2.5p).
On 27th September 2016, Lonfin sold 1,000,000 Finsbury shares for £1,200,000
(before selling expenses) and, on 29(th) September 2016, Lonfin sold a further
1,000,000 Finsbury shares for £1,250,000 (before selling expenses). Lonfin
now holds 6,000,000 Finsbury shares which represent 4.6% of Finsbury’s
issued share capital.
.Mr. Beale is a non-executive director of Finsbury.
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 the year end the number of holdings in the General Portfolio was 26. We
have decreased the amount invested in the General Portfolio over the year by
£20,000 (2015 - increased by £100,000).
Operations and Employees
All of our operations and those of our associated company, Western, except
investment selection, are outsourced to our subsidiary, City Group Limited
(“City Group”). City Group also provides office accommodation, company
secretarial and head office finance services to a number of other U.K. and
Jersey companies. City Group has responsibility 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 8 people.
Save for the appointment of Mr E.J. Beale in April 2016, all directors of the
Company and the directors of its subsidiaries are unchanged from last year and
are male. The Group has set a target of 25% female members of the Company’s
Board and female candidates will be considered on their merits when vacancies
arise. The Board has enlarged during the year through the appointment of Mr
E.J. Beale, the chief executive of City Group, and since this was an internal
appointment, no female candidates were considered. Excluding directors, 4 of
the 6 other employees of the Group at 30(th) June 2016 were female (30(th)
June 2015 - 4 of 6).
Outlook
We believe our mix of Strategic Investments and a General Portfolio gives us
every chance of outperforming the broader market in the medium to long term
notwithstanding any short term volatility in markets, currencies and
commodities.
30(th) September 2016
The annual report and accounts will shortly be finalised 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 P.L.C.: 020 7796
9060
(David Marshall/Edward Beale)
Johannesburg Sponsor:
Sasfin Capital (a division of Sasfin Bank Limited)
Consolidated Statement of Total Comprehensive Income
For the year ended 30(th) June
2016 2015
Notes £000 £000
Dividends – Listed investments 550 487
Rental and other Income 82 82
Profits realised on sales of investments 1,448 175
Management service fees 252 233
Operating income 2,332 977
Administration expenses (649) (643)
Operating Profit 1,683 334
Unrealised changes in the carrying value of investments 2,643 2,049
Interest payable (16) (48)
Profit on ordinary activities before taxation 4,310 2,335
Tax on result of ordinary activities (437) (357)
Profit on ordinary activities after taxation 3,873 1,978
Non-controlling interest (15) (10)
Profit for the financial year attributable to members of the holding company 3,858 1,968
Other comprehensive Income - -
Total comprehensive income attributable to shareholders 3,858 1,968
Reconciliation of headline earnings
Basic earnings per share 1 12.4p 6.3p
Adjustment for the unrealised changes in the carrying value of investments, net of tax (7.2)p (5.5)p
Headline earnings per share 1 5.2p 0.8p
All profits and losses are on continuing activities
Consolidated Statement of Changes in Shareholders’ Equity
Ordinary Share capital £000 Share Premium Account £000 Un-realised Profit on Investments £000 Share of Undistributed Results of Subsidiaries £000 Retained realised Profits & Losses £000 Total £000 Non-controlling Interests £000 Total Equity £000
Year ended 30 (th)June 2015
Balances at 1 (st)July 2014 1,560 2,320 4,585 (294) 5,779 13,950 65 14,015
Total Comprehensive Income - - 1,719 320 (71) 1,968 10 1,978
Dividends paid - - - - (296) (296) - (296)
Total transactions with shareholders - - - - (296) (296) - (296)
Balances at 30 (th)June 2015 1,560 2,320 6,304 26 5,412 15,622 75 15,697
Year ended 30 (th)June 2016
Balance a 1 (st)July 2015 1,560 2,320 6,304 26 5,412 15,622 75 15,697
Total Comprehensive Income - - 2,235 1,795 (172) 3,858 15 3,873
Dividends paid - - - - (312) (312) - (312)
Total transactions with shareholders - - - - (312) (312) - (312)
Balance at 30 (th)June 2016 1,560 2,320 8,539 1,821 4,928 19,168 90 19,258
Consolidated Statement of Financial Position
2016 2015
£000 £000
At 30 (th)June
Non-current Assets
Tangible assets 22 31
Investments 12,417 11,694
12, 439 11,725
Current Assets
Listed Investments 7,125 5,801
Trade and other receivables 272 218
Cash at bank 588 115
7,985 6,134
Current Liabilities
Trade and other payables falling due within the year (316) (1,720)
Net Current Assets 7,669 4,414
Deferred Taxation (850) (442)
Total Assets less Current Liabilities 19,258 15,697
Capital and Reserves
Called up Share Capital 1,560 1,560
Share Premium account 2,320 2,320
Un-realised profits and losses on investments 8,539 6,304
Share of retained realised profits and losses of subsidiaries 1,821 26
Company’s retained realised profits and losses 4,928 5,412
19,168 15,622
Non-controlling equity interests 90 75
19,258 15,697
All profits and losses are on continuing activities
Company Statement of Financial Position
2016 2015
At 30 (th)June 2016 £000 £000
Non-current Assets
Investments in Group companies 3,847 6,203
3,847 6,203
Current Assets
Listed investments 7,125 5,801
Trade and other receivables 27 19
Cash at bank 451 71
7,603 5,891
Current Liabilities
Trade and other payables: falling due within the year (93) (1,597)
Net Current Assets 7,510 4,294
Deferred Taxation (330) (442)
Total Assets less Current Liabilities 11,027 10,055
Capital and Reserves
Called up share capital 1,560 1,560
Share premium account 2,320 2,320
Unrealised profits and losses on investments 2,219 763
Realised profits and losses 4,928 5,412
Equity shareholders’ funds 11,027 10,055
Consolidated Statement of Cash Flow
Notes 2016 2015
£000 £000
Cash flows from operating activities
Profit/(Loss) before tax 4,310 2,335
Adjustments for non-cash and non-operating activities -
Finance expense 16 48
Depreciation charges 9 8
Profit on non-current investment (1,408) -
Unrealised changes in the fair value of investments (2,643) (2,049)
284 342
Taxes paid (28) (26)
Changes in working capital
(Increase)/decrease in trade and other receivables (54) 27
Increase/(decrease) in trade and other payables 96 (5)
Decrease in current asset investments 20 100
62 122
Cash flows from investment activity
Disposal/(Purchase) of strategic investment 1,984 (593)
Net cash outflow from investment activity 1.984 (593)
Cash flows from financing
Interest paid (16) (48)
Equity dividends paid (312) (296)
Net drawdown/(repayment) of loan facilities (1,500) 575
Net cash inflow/(outflow) from financing (1,828) 231
Decrease in cash and cash equivalents 473 76
Cash and cash equivalents at the beginning of the year 115 39
Cash and cash equivalents at end of the year 588 115
Notes:
1. Basic earnings per share are based on the profit on
ordinary activities after taxation and non-controlling interests and on
31,207,479 shares (2015 – 31,207,479) being the weighted average of the
number of shares in issue during the year.
Headline earnings are required to be disclosed by the JSE.
Headline earnings per share are based on the ordinary activities after
taxation and non-controlling interests, before unrealised changes in the fair
value of investments net of tax, of £1,623,000 (2015 - £250,000) and on
31,207,479 (2015 – 31,207,479) shares being the weighted average of number
of shares in issue during the year.
2. The net assets per share are calculated taking investments at
market value and on 31,207,479 shares (2015 – 31,207,479) being the weighted
average of the number of shares in issue during the year.
3. The financial information in this preliminary announcement
of audited group results does not constitute the company’s statutory
accounts for the years ended 30(th) June 2016 or 30(th) June 2015 but is
derived from those accounts. The accounts have been prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted by the
European Union and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS. The accounts are prepared on the historical
cost bases, except for certain assets and liabilities which are measured at
fair value, in accordance with IFRS and comply with IAS 34. The audited
accounts for the group for the year ended 30(th) June 2015 were reported on
with an unqualified audit report and have been delivered to the Registrar of
Companies.
Copies of this notification are held at the Company’s office, 6 Middle
Street, London, EC1A 7JA (tel. 020 7796 9060) and are available for a period
of 14 days from the date of this announcement.
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