REG-London Finance & Investment Group Plc: Annual Financial Report
26/09/2024 11:00
LONDON FINANCE & INVESTMENT GROUP PLC
Final Results
26 September 2024
LONDON FINANCE & INVESTMENT GROUP PLC
(“Lonfin”, “the Company” or “the Group”)
Final Results for the year ended 30 June 2024
and Final Dividend Declaration
London Finance & Investment Group PLC. (LSE: LFI, JSE: LNF), the investment
company whose assets primarily consist of a General Portfolio of global blue
chip equity stocks, today announces its audited Final Results for the year
ended 30 June 2024 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’.
‘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 in the Company’s 2024 Annual Report & Accounts.
The Group’s net assets for 2024 have increased from £18,640,000 for the
previous year (restated) to £22,343,000 and have increased 41.5% over the
last five years. Shareholders’ total dividends for 2024 will be 1.2p per
share. Information on the Group’s performance against the Board’s key
performance indicators (KPIs) is set out in the Strategic Report in the
Company’s 2024 Annual Report & Accounts.
Results
Net assets per share have increased to 71.6p (2023 – 59.2p per
share)
The restructuring of Western Selection, which is our only
Strategic investment, resulted in a return of capital of £6,291,000 and a
decrease in value of the Strategic Investments, from £3,144,000 to £36,858.
The value of the General Portfolio has decreased, including investment
purchases and sales, over the year, by 9.4% from £15,496,000 to £14,032,000.
The unrealised fair value adjustment to the General Portfolio
investments over the period has decreased by £1,925,000.
The decrease in Group operating costs is mainly a result of lower
office costs
A final dividend of 0.60p per share is recommended, making a total
of 1.2p per share for the year (2023 – 1.15p)
The Company and its subsidiaries (the “Group”) recorded an operating
profit for the year, before interest, tax, profit on bargain purchase and
changes to the fair value adjustments of investments of £3,830,000, compared
to operating profit for the previous year, before tax and changes to the fair
value adjustments of investments, of £762,000. Basic and headline earnings
per share are 13.6p (2023 restated – 5.7p).
Western Selection Ltd (“Western”)
The Company’s remaining strategic investment has decided to cease operations
and return capital to shareholders. As a consequence, in February 2024, we
received £6,291,000 and subsequent to the year- end a further £92,000. To
assist in this process, in June 2024, the Company acquired Western’s
shareholding in City Group for £50,000, bringing ownership up to 100%, and
Western’s shareholding in Industrial & Commercial Holdings plc for £50,000.
The shareholding in Industrial & Commercial Holdings plc was subsequently sold
in August 2024 for £50,000.
At 30 June 2024, the Group held 45,786 ordinary shares, being 43.8% of the
issued share capital of Western.
Following the year-end, Western shareholders approved a final return of
capital and a capital reduction. As a result, Western’s issued share capital
has reduced from 104,555 ordinary shares to one ordinary share which is held
by the Company’s subsidiary, Lonfin Investments Limited, Steps will now be
taken to wind up Western.
Western did not pay an interim dividend this year and does not propose a final
dividend (2023 – Nil).
General Portfolio
The portfolio is diverse with material interests in Food and Beverages,
Natural Resources and Chemicals. 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 2024, the number of holdings in the General Portfolio was 31 (2023
– 37). The value of the General Portfolio over the year has decreased by
£1,464,000 (2023 - increased by £1,441,000) from £15,496,000 to
£14,032,000. This 9.4% decrease includes investment purchases during the year
of £6,512,000 and investment sales (including selling expenses) during the
same period of £8,891,000.
As at 30 June 2024, the fair value of the General Portfolio investments, after
adjusting for sales, has decreased by 44.3%.
Directors, Operations and Employees
On 1 March 2024, it was announced that Mr. David Marshall had stepped down
from his role as Chairman and retired from the Board.
David Marshall has been with the Company since 1971, and the Board wishes to
express its profound gratitude to David for his contribution to and his
stewardship of the Company throughout this period.
On 1 March 2024, it was also announced that Mr Warwick Marshall had been
appointed as the new Chairman of the Company with effect from 29 February
2024.
All of the Group’s operations, 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 5 people.
Dividend
The Board recommends a final dividend of 0.60p (ZAR 13.92988 cents) per share,
making a total of 1.20p (ZAR 27.85976 cents) per ordinary share for the year
(2023 – 1.15p). Subject to shareholders’ approval at the Company’s
Annual General Meeting (“AGM”) to be held on 28 November 2024, the
dividend will be paid on Wednesday, 18 December 2024 to those shareholders on
the register at the close of business on Friday, 6 December 2024. 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,19 September 2024 being GBP1= ZAR 23.21646.
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, 6
December 2024.
* 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, 3 December 2024
Shares trade ex-dividend (SA) Wednesday, 4 December 2024
Shares trade ex-dividend (UK) Thursday, 5 December 2024
Record date (UK and SA) Friday, 6 December 2024
Pay date Wednesday, 18 December 2024
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 13.92988 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 11.14390 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 Proprietary Limited, Tel: +27 11 370 5000.
Share certificates may not be de-materialised or re-materialised between
Wednesday 4 December 2024 and Friday 6 December 2024, both days inclusive.
Shares may not be transferred between the registers in London and South Africa
during this period either.
Outlook
Early in 2022, Russia invaded Ukraine and, at the date of this report, the war
between Russia and Ukraine shows no sign of abating.
The staunch defence put up by the Ukrainians has been remarkable. Casualties
are estimated by the United Kingdom’s Ministry of Defence to total in the
hundreds of thousands.
Extensive dis-investment by Western companies from Russia coupled to sanctions
levied by many nations, including the United Kingdom, on Russia have led to
economic dislocations worldwide and also significant derivative effects have
been felt in the energy markets.
On 7 October 2023, the world saw horrific terrorist attacks by Hamas, the
government of Gaza, on Israel. These attacks and those of Hezbollah, another
Islamist militia in Lebanon, as well as those of the Houthi in Yemen on
commercial shipping in the Red Sea and on Israel, has led to severely
heightened global tensions. Iran has carried out combined mass ballistic
missile, drone and rocket attacks on Israel and these have been, to date,
repulsed by a coalition of countries including the United Kingdom.
The conflicts between Hamas, Hezbollah and the Houthis - all proxies of Iran -
versus Israel shows no sign of abating either and there is no way of
determining at this stage how potentially maximalist positions can be
ameliorated downwards. It is hard to negotiate with terrorists no doubt and
especially so when moral clarity is subjected to the fogs of war.
Chinese data also points to a diminution in the historical growth rates
previously achieved and a polarised election campaign with no clear front
runner in the world’s only true superpower - the United States - adds
political uncertainty to the global mix.
In this context, respected commentators the world over give a myriad of
differing views on the effect these global issues have on equities, bonds and
other investments.
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. The cost of being a listed company continues to rise inexorably,
and the Board is reviewing methods of achieving a step change in size in order
that costs become more proportionate to the size of the business and/or to
make savings wherever possible in the general and administrative costs burden.
audit costs have risen at rates that exceed inflation by a large quantum and
so the frictional costs of merely being listed erode, to a degree, the
advantages of common purpose in a listing – for the smaller company. The
Board continues to seek out investments which will generate growth in
shareholder value. Innovations in medicine especially in pharmacology continue
to be made and can result in spectacular outperformances. Similar
outperformances in some technology and software stocks are also increasingly
in evidence and the global nature of these behemoth successful companies has
also given them specific size advantages that further lead to productivity and
synergistic effects of some magnitude. The Board continues to pursue its
current Investment Policy and will advise shareholders of any proposed
changes.
26 September 2024
The Company’s 2024 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 3709 8740
Warwick Marshall/Edward Beale)
Johannesburg Sponsor:
Questco Corporate Advisory: +27 11 011 9212
Consolidated Statement of Total Comprehensive Income
For the year ended 30 June
Restated*
Operating Income 2024 2023
£000 £000
Dividends receivable 614 586
Management service fees 361 352
Rental and other income 138 97
Profit on disposal of General portfolio investments 403 633
Profit on disposal of Western Selection 3,183 -
4,699 1,668
Administrative expenses
Investment operations (425) (495)
Management services (444) (411)
Total administrative expenses (869) (906)
Operating profit 3,830 762
Unrealised changes in the carrying value of General Portfolio investments 512 956
Unrealised changes in the carrying value of Western Selection 1 393
Profit on bargain purchase 83 -
Interest payable 6 (7)
Profit before taxation 4,432 2,104
Income tax expense (222) (312)
Profit after taxation 4,210 1,792
Non-controlling interest 24 (16)
Profit attributable to shareholders 4,234 1,776
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss
Profit on disposal of Strategic investments - 118
Unrealised changes in the carrying value of Strategic investments - -
Other taxation -
Income tax on disposal of strategic investments - (146)
Total Other Comprehensive (Loss)/Income attributable to shareholders - (28)
Total Comprehensive Income attributable to owners of the parent 4,234 1,748
Reconciliation of headline earnings
Basic and diluted earnings per share 13.6p 5.7p
Adjustment for the unrealised changes in the carrying value of investments, net of tax - -
Headline earnings per share 13.6p 5.7p
*Correction of error, see note 3
Consolidated Statement of Financial Position
Restated* Restated*
30 Jun 2024 30 Jun 2023 1 Jul 2022
£000 £000 £000
Non-current Assets
Property, Plant and Equipment 3 3 12
Right of use asset - 17 81
Strategic investments at fair value though profit or loss 37 3,144 2,751
Strategic investments at fair value though other comprehensive income - - 1,206
40 3,164 4,050
Current Assets
General portfolio investments at fair value through profit or loss 14,032 15,496 14,055
Investment held for sale 50 - -
Trade and other receivables 59 100 109
Cash and cash equivalents 9,460 1,264 407
23,601 16,860 14,571
Current Liabilities
Overdraft - - (66)
Trade and other payables (149) (151) (171)
Lease liabilities - (33) (75)
Current tax liabilities (581) (188) (198)
(730) (372) (510)
Net Current Assets 22,871 16,488 14,061
Non-current Liabilities
Lease liabilities - - (33)
Deferred tax liabilities (568) (1,012) (843)
(568) (1,012) (876)
Total Assets less Total Liabilities 22,343 18,640 17,235
Capital and Reserves
Ordinary share capital 1,560 1,560 1,560
Share premium 2,320 2,320 2,320
Unrealised profits and losses on investments 1,850 225 11
Share of retained realised profits and losses of subsidiaries 160 4,906 5,331
Company’s retained realised profits and losses 16,453 9,472 7,872
Capital and reserves attributable to owners 22,343 18,483 17,094
Non-controlling interests - 157 141
Total Capital and Reserves 22,343 18,640 17,235
*Correction of error, see note 3
Consolidated Statement of Cash Flows
For the year ended 30 June
Restated*
2024 2023
£000 £000
Cash flows from operating activities
Profit before tax 4,432 2,104
Adjustments for non-cash items -
Finance expense (6) 7
Depreciation charges 4 9
Depreciation on right of use asset 11 64
Unrealised changes in the fair value of general portfolio investments 1,925 (679)
Unrealised changes in the fair value of Western Selection (1,816) (393)
Realised gain on disposal of investments (4,207) (911)
Gain on bargain purchase (83) -
Lease termination adjustment (12) -
Decrease in trade and other receivables 42 8
Decrease in trade and other payables (2) (20)
Taxes paid (272) (300)
Net cash (outflow)/inflow from operating activities 16 (111)
Cash flows from investment activity
Acquisition of general portfolio investments (6,512) (4,258)
Acquisition of Minority Interest in subsidiary (50) -
Acquisition of other investments – held for sale (50) -
Proceeds from disposal of general portfolio investments 8,891 4,407
Proceeds from disposal of strategic investments 6,291 1,325
Acquisition of equipment (4) -
Net cash inflow from investment activity 8,566 1,474
Cash flows from financing activities
Net Interest received/(paid) 6 (1)
Interest paid on lease liabilities - (5)
Repayment of lease liabilities (15) (75)
Equity dividends paid (374) (359)
Net cash outflow from financing activities (383) (440)
Increase in cash and cash equivalents 8,196 923
Cash and cash equivalents at the beginning of the year 1,264 341
Net Cash and cash equivalents at end of the year 9,460 1,264
*Correction of error, see note 3
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 2024
Balances at 1 July 2023 1,560 2,320 225 4,906 9,472 18,483 157 18,640
Profit for the Year - - 1,625 (4,746) 7,355 4,234 (24) 4,210
Total comprehensive income - - 1,625 (4,746) 7,355 4,234 (24) 4,210
Acquisition of Non-Controlling Interest - - - - - - (133) (133)
Dividends paid and total transactions with shareholders - - - - (374) (374) - (374)
Balances at 30 June 2024 1,560 2,320 1,850 160 16,453 22,343 - 22,343
Year ended 30 June 2023 Restated*
Balances at 1 July 2022 1,560 2,320 11 5,331 7,872 17,094 141 17,235
Profit for the Year - - 903 (1,086) 1,959 1,776 16 1,792
Other Comprehensive Income - - (689) 661 - (28) - (28)
Total comprehensive income - - 214 (425) 1,959 1,748 16 1,764
Dividends paid and total transactions with shareholders - - - - (359) (359) - (359)
Balances at 30 June 2023 1,560 2,320 225 4,906 9,472 18,483 157 18,640
*Correction of error, see note 3
Notes:
1. Reconciliation of basic and headline (loss)/earnings
Basic and headline (loss)/earnings per share, based on the profit attributable
to the shareholders after tax and non-controlling interests of £4,234,000
(2023 (Restated) – a profit of £1,776,000) and on 31,207,479 shares issued.
Diluted (loss)/earnings per share, based on the profit attributable to the
shareholders after tax and non-controlling interests of £4,234,000 (2023
(Restated) –a profit of £1,776,000) 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 (2023 – 31,207,479) being the weighted average of the
number of shares in issue during the year.
1. Change of accounting policy and Correction of error
The Group previously accounted for its investment in Western Selection Ltd as
held at fair value though Other Comprehensive Income, as elected by the
company. The unrealised gains and losses were accumulated under the unrealised
investment reserve and on disposal, the cumulative gain or loss in the
investments reserve was reclassified to retained earnings.
Following a review, the Group has reconsidered its accounting treatment. This
treatment was incorrect as the investment in Western is not consolidated
because of the IFRS 10 investment entity exemption. Any investment not
consolidated under the IFRS 10 investment exemption is required to be held at
fair value through profit or loss.
The error has been corrected by restating the affected financial statements
for the prior periods as follows:
There has been no effect on the Statement of financial position.
Statement of Total comprehensive income (extract)
Operating Income 2023 Profit Increase/ (Decrease 2023 Restated
£000 £000 £000
Unrealised changes in the carrying value of Western Selection - 393 393
Profit before taxation 1,711 393 2,104
Income tax expense (312) - (312)
Profit after taxation 1,399 393 1,792
Non-controlling interest (16) - (16)
Profit attributable to shareholders 1,383 393 1,776
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss
Profit on disposal of Strategic investments 118 - 118
Unrealised changes in the carrying value of Strategic investments 393 (393) -
Other taxation -
Income tax on disposal of strategic investments (146) - (146)
Total Other Comprehensive (Loss)/Income attributable to shareholders 365 (393) (28)
Total Comprehensive Income attributable to owners of the parent 1,748 - 1,748
1. Financial information
The financial information in this preliminary announcement does not constitute
the Company’s statutory accounts for the year ended 30 June 2024 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
2024 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.
1. Copies of this Announcement
Copies of this announcement are held at the Company’s registered office,
Central Court, Suite 1.01, 25 Southampton Buildings, London WC2A 1AL (tel. 020
3709 8740) and are available for a period of 14 days from the date of this
announcement.
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