REG-London Finance & Investment Group Plc: Half-year Report
01/03/2024 07:15
London Finance & Investment Group PLC
(“Lonfin” or the “Company’”)
Unaudited Condensed Interim Financial statements for the six months ended 31
December 2023
and dividend declaration
The Company today announces its unaudited interim results and interim dividend
declaration for the six months ended 31 December 2023 (the “Interim
Statement”).
Introduction
As an investment company, Lonfin’s target is to achieve growth in
shareholder value in real terms over the medium to long term while maintaining
a progressive dividend policy. In the short term, our results can be
influenced by overall stock market performance, particularly the valuation of
our Strategic Investments. Whilst we have not identified any suitable
Strategic Investments for acquisition in recent years, we continue to believe
that a combination of Strategic Investments and a General Portfolio is the
most effective way of achieving our aims; whilst keeping this under review.
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 and the benefits of socially responsible long-term investment.
As at 31 December 2023 we held only one Strategic Investment, Western
Selection PLC.
Results
Lonfin’s net assets per share increased by 19.1% to 70.3p at 31 December
2023 from 59.2p at 30 June 2023. We have made some changes to our General
Portfolio Investments, investing additional net cash of £723,000 and
realising profit of £509,000. The fair value of our General Portfolio
increased by 8% compared with increases of 3% in both the FTSE 100 index and
the FTSEurofirst 300 Index respectively, over the half year. At the close of
business on 23 February 2024, our net asset value was 70.6p per share.
The profit before tax for the Company and its subsidiaries (the “Group”)
for the half year was £572,000 including revaluation of General Portfolio
investments only (2022 - £1,313,000), resulting in earnings per share of 1.5p
(2022: earnings per share 3.1p).
The Group’s total comprehensive profit after tax and minority interest,
including revaluation of all investments, was £3,639,000 (2022: £943,000)
Strategic Investments
Western Selection PLC (“Western”)
As at 31 December 2023, the Company owned 7,860,515 Western shares,
representing 43.8% of Western’s issued share capital.
On 28 December 2023, Western announced its intention to return cash to
shareholders at 80.5 per share by means of a return of surplus capital (the
“Return of Capital”). The Return of Capital was to be effected by means of
a capital reduction. The Board of Western determined that the most effective
way to achieve this was for Western’s admission to trading on the AQSE
Growth Market to be cancelled and for Western to be re-registered as a private
limited company.
Western’s proposals were approved by shareholders at General Meetings held
on 25 January and 16 February 2024. Under the Return of Capital, Lonfin
elected to retain 45,786 ordinary shares in Western which will represent 43.8%
of Western’s reduced issued share capital. Subsequent to the period end,
Lonfin received £6,291,000 in cash in exchange for the ordinary shares it
chose not to retain, and these shares have now been cancelled. Western will
continue to operate as a private company and the Western Board will work on
the realisation of its illiquid investments in Industrial & Commercial
Holdings PLC (“ICH”) and City Group PLC (“City Group”) .
The market value of the Company’s investment in Western at 31 December 2023,
based on the 80.5p per share return of capital, was £6,328,000 representing
28.5% of the net assets of the Group (30 June 2023: £3,144,000).
Edward Beale and Warwick Marshall are non-executive directors of Western.
General Portfolio
Lonfin’s general portfolio is diverse with a spread of high-quality
equities, as shown in the composition of our General Portfolio at the end of
this announcement. . We believe that the portfolio of quality companies we
hold has the potential to outperform the market in the medium to long term.
Board Changes
Mr. David Marshall, the current Chairman, has decided to step down from his
role as Chairman and as a member of the Lonfin Board with effect from 29
February 2024. David has been with the Company since 1971 and the Board
wishes to express its profound gratitude to David for his contribution to and
stewardship of the Company during this time.
The Board is pleased to announce that Mr Warwick Marshall has agreed to be
appointed as the new Chairman of the Company with effect from 29 February
2024.
Warwick is a non-executive director of the Board, the Chief Executive Officer
of Marshall Monteagle PLC and is also a director of various other group
operating companies. Warwick has extensive investment experience in his
private capacity and brings his extensive skills, knowledge and experience to
his new role as Chairman of Lonfin. The Board welcomes Warwick and thanks
him for taking on the responsibility of Chairman.
Outlook
£6,291,000 has just been received from Western Selection and, over time,
these funds will be utilised to increase the General Portfolio. This
substantial increase in the General Portfolio will increase dividend income.
The economic outlook globally remains uncertain so the General Portfolio will
remain invested in major blue chip international stocks.
The Board has declared an interim dividend of 0.60p per share (2022: 0.55p).
1 March 2024
Interim Dividend
The Board recommends an interim gross dividend of 0.60p per share (14.39034 SA
cents) (2022: 0.55p) which will be paid on Thursday 4 April 2024 to those
members registered at the close of business on Friday 22 March 2024 (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 22 February
2024, being GBP 1 = SA Rand 23.98390.
JSE Disclosure Requirements
In respect of the normal gross cash dividend, and in terms of the South
African Tax Act, the dividend tax ruling set out below only applies to those
shareholders who are registered on the South African register on Friday 22
March 2024. 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 14.39034 SA cents;
* The interim net dividend is 11.51227 SA cents;
* The dividend has been declared from income reserves, which funds are sourced
from the Company’s main bank account in Switzerland 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) Monday 18 March 2024
Shares trade ex-dividend (SA) Tuesday 19 March 2024
Shares trade ex-dividend (UK) Thursday 21 March 2024
Record date (SA and UK) Friday 22 March 2024
Dividend Payment date Thursday 4 April 2024
Share certificates may not be de-materialised or re-materialised between
Tuesday 19 March 2024 and Friday 22 March 2024, both dates inclusive. Shares
may not be transferred between the registers in London and South Africa during
this period either.
The JSE Listing Requirements require disclosure of the following additional
information in relation to any dividend payments.
Dividend tax ruling
Shareholders registered on the South African register are advised that the
dividend withholding tax will be withheld from the gross final dividend amount
of 14.39034 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 11.51227
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 in South Africa. Tel: +27 11 370 5000.
Statement of Directors’ responsibility
The Directors confirm that, to the best of their knowledge:
- the unaudited interim results for the six months ended 31
December 2023, have been prepared in accordance with IAS 34, ‘Interim
financial reporting’, as adopted by the UK; 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 Suite 1.01, Central
Court, 25 Southampton Buildings, London, WC2A 1AL.
This announcement contains information that was previously classified as
inside information for the
purposes of the UK Market Abuse Regulation. 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 JSE Sponsor to the Company: Questco Corporate Advisory Proprietary Limited +44(0) 20 3709 8740
Condensed Consolidated Statement of Total Comprehensive Income
Notes Half year ended Year Ended
31 December 30 June
2023 2022 2023
£000 £000 £000
Operating Income
Dividends receivable 241 243 586
Management service fees 192 179 352
Rental and other income 25 64 97
Profit on disposal of General portfolio investments 7 52 - 633
510 486 1,668
Administrative expenses
Investment operations (187) (225) (495)
Management services (205) (203) (411)
Total administrative expenses (392) (428) (906)
Operating profit 118 58 762
Unrealised changes in the carrying value of General Portfolio investments 7 453 1,259 956
Net interest income/( expense) 1 (4) (7)
Profit before taxation 572 1,313 1,711
Tax expense (110) (315) (312)
Profit after taxation 462 998 1,399
Non-controlling interest (6) (18) (16)
Profit attributable to shareholders 456 980 1,383
Other comprehensive income –
Profit on sales of Strategic Investments - 119 118
Unrealised changes in the carrying value of Strategic Investments 3,183 (79) 393
Corporation tax expense on these items - (77) (146)
Total other comprehensive (expense)/income 3,183 (37) 365
Total comprehensive income attributable to shareholders 3,639 943 1,748
Basic, Diluted and Headline earnings per share 1.5p 3.1p 4.4p
Interim dividend 0.60p 0.55p 0.55p
Final dividend - - 0.60p
Total in respect of the period 0.60p 0.55p 1.15p
Condensed Consolidated Statement of Changes in Shareholders’ Equity
Ordinary Share Capital Share Premium Account Unrealised Profits and Losses on Investments Share of Retained profits and losses of Subsidiaries Retained Realised Profits & Losses Total Non-Controlling Interests Total Equity
£000 £000 £000 £000 £000 £000 £000 £000
Period ended 31 Dec 2023
Balances at 1 July 2023 1,560 2,320 225 4,906 9,472 18,483 157 18,640
Profit for the Period - - 1 1 454 456 6 462
Other Comprehensive Income - - 3,183 - - 3,183 - 3,183
Total comprehensive income - - 3,184 1 454 3,639 6 3,645
Dividends paid to shareholders - - - - (187) (187) - (187)
Balances at 31 Dec 2023 1,560 2,320 3,409 4,907 9,739 21,935 163 22,098
Ordinary Share Capital Share Premium Account Unrealised Profits and Losses on Investments Share of Retained profits and losses of Subsidiaries Retained Realised Profits & Losses Total Non-Controlling Interests Total Equity
£000 £000 £000 £000 £000 £000 £000 £000
Period ended 31 Dec 2022
Balances at 1 July 2022 1,560 2,320 11 5,331 7,872 17,094 141 17,235
Profit for the Period - - 916 17 47 980 18 998
Other Comprehensive Income - - (79) 42 - (37) - (37)
Transfer of gain on disposal of investments at fair value through other comprehensive income to retained earnings - - (689) 689 - - - -
Total comprehensive income - - 148 748 47 943 961
Dividends paid and total transactions with shareholders - - - - (187) (187) - (187)
Balances at 31 Dec 2022 1,560 2,320 159 6,079 7,732 17,850 159 18,009
Condensed Consolidated Statement of Financial Position
31 December 30 June
Notes 2023 2022 2023
£000 £000 £000
Non-current assets
Property, plant and equipment 3 7 3
Right of use of leased offices - 49 17
Investments at fair value through other comprehensive income 6 6,328 2,673 3,144
6,331 2,729 3,164
Current assets
Listed investments at fair value through profit or loss 6,7 16,736 16,113 15,496
Trade and other receivables 198 127 100
Cash and cash equivalents 211 624 1,264
17,145 16,864 16,860
Current liabilities
Trade and other payables falling due within one year (97) (109) (151)
Lease liability - (70) (33)
Corporation tax liability (263) (275) (188)
(360) (454) (372)
Net Current Assets 16,785 16,410 16,488
Non-current liabilities
Deferred taxation (1,018) (1,130) (1,012)
Total Assets less Total Liabilities 22,098 18,009 18,640
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 3,409 159 225
Share of retained profits and losses of subsidiaries 4,907 6,079 4,906
Company’s retained realised profits and losses 9,739 7,732 9,472
Total Capital and Reserves attributable to owners 21,935 17,850 18,483
Non-controlling equity interest 163 159 157
22,098 18,009 18,640
Net assets per share 70.3p 57.2p 59.2p
Number of shares in issue 31,207,479 31,207,479 31,207,479
Condensed Consolidated Statement of Cash Flows
Half year ended Year ended
31 December 30 June
2023 2022 2023
£000 £000 £000
Cash flows from operating activities
Profit before tax 572 1,313 1,711
Adjustments for non-cash items-
Net finance (income)/expense (1) 4 7
Depreciation charges 4 5 9
Depreciation on right of use of asset 11 32 64
Profit on early lease termination (15) - -
Unrealised changes in the fair value of General Portfolio investments (7) (1,202) (679)
Profit on sales of General Portfolio investments (509) (57) (911)
Foreign exchange - 10 -
(Increase)/Decrease in trade and other receivables (98) (19) 8
Decrease in trade and other payables (54) (63) (20)
Taxes paid (28) (28) (300)
Net cash outflow from operating activities (125) (5) (111)
Cash flows from investment activity
Acquisition of IT equipment (4) - -
Acquisition of current investments (2,979) (1,785) (4,258)
Proceeds from disposal of current investments 2,256 988 4,407
Proceeds from disposal of strategic investments - 1,325 1,325
Net cash (outflow)/inflow from investment activity (727) 528 1,474
Cash flows from financing
Net Interest received/(paid) 1 (2) (1)
Interest paid on lease liabilities - (3) (5)
Repayment of lease liabilities (15) (37) (75)
Equity dividends paid (187) (187) (359)
Net cash outflow from financing (201) (229) (440)
(Decrease)/Increase in cash and cash equivalents (1,053) 293 923
Cash and cash equivalents at the beginning of the period/year 1,264 341 341
Effects of exchange rate changes on cash and cash equivalents - (10) -
Cash and cash equivalents at end of the period 211 624 1,264
Notes to the condensed financial statements
1. Basis of preparation
This condensed interim financial report has been prepared in accordance with
the accounting policies contained in the Company’s 2023 Annual Report and
Accounts except for our Strategic holding valuation as explained in
“Estimates and judgments” below. This condensed interim financial report
complies with the UK-adopted IAS 34 ‘Interim financial reporting’. The
financial information contained in this report has not been audited or
reviewed by the Company’s auditors.
The information contained in this interim financial report does not constitute
statutory accounts within the meaning of the Companies Act 2006. The statutory
accounts of the Company and its subsidiaries (the “Group”) for the year
ended 30 June 2023 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.
The Group had only one operating lease and the right of use of asset and lease
liability were estimated based on a 5% discount factor and the cash flow
predicted over 5-year lease life. The Income statement has also been affected
with additional depreciation and interest charges which replace the rent
costs. The lease was terminated on 31 August 2023. At 31 December 2023 the
Group has no operating leases.
New standards and interpretations
A number of new standards and amendments to standards and interpretations are
effective for financial periods beginning after 1 January 2023 and have not
been applied in preparing these condensed interim consolidated financial
statements. None of these are expected to have a significant effect on the
financial statements of the Group.
Estimates and judgements
When preparing the condensed interim consolidated financial statements,
management undertakes a number of judgements, estimates and assumptions about
recognition and measurement of assets, liabilities, income and expenses. The
actual results may differ from the judgements, estimates and assumptions made
by management, and will seldom equal the estimated results. The judgements,
estimates and assumptions applied in the condensed interim consolidated
financial statements, including the key sources of estimation uncertainty,
were the same as those applied in the Group’s last annual financial
statements for the year ended 30 June 2023.
At 31 December 2023 the valuation of our strategic investment, Western
Selection PLC, was based on 80.5p per share and not on a quoted market price
as per our Accounting policy. This is as a result of the Return of Capital
proposals, set out in Western’s circular, published on 28 December 2023,
which advised that there would be a return of surplus capital of 80.5p per
share available to all Western shareholders in respect of some or all of
their shareholdings in Western. This is the basis on which the Company’s
investment in Western has been valued at 80.5 per share.
2. Earnings per share
Earnings per share are based on the profit on ordinary activities after
taxation and non-controlling interests of £456,000 (2022: £980,000) and on
31,207,479 shares (2022: 31,207,479 shares) being the weighted average of
number of shares in issue during the period. 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 £456,000 (2022: £980,000) and on 31,207,479
shares (2022: 31,207,479 shares) being the weighted average of number of
shares in issue during the period.
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 7and 8 of the Company’s 2023 Annual
Report and Accounts. The key risks and mitigating activities include the
following:
* Stock market volatility, and economic uncertainty;
* Dividend income; and
* Ability to make strategic investments;
5. Reconciliation of net cash flow to movement in net debt
At start Cash Non-cash At end of
of Period Flow Movement Period
Half year ended £000 £000 £000 £000
31 December 2023
Cash at bank 1,264 (1,053) - 211
Lease liability (33) 33 - -
Net cash and cash equivalents 1,231 (1,020) - 211
31 December 2022
Cash at bank 407 227 (10) 624
Overdraft (66) 66 - -
Lease liability (108) 40 (2) (70)
Net cash and cash equivalents 233 333 (12) 554
30 June 2023
Cash at bank 407 857 - 1,264
Overdraft (66) 66 - -
Lease liability (108) (80) (5) (33)
Net cash and cash equivalents 407 1,003 (5) 1,231
6. Financial Instruments
Financial assets and liabilities are classified in their entirety into one of
the three levels determined on the basis of the lowest input that is
significant to the fair value measurement.
Listed prices (unadjusted) in active markets for identical assets or
liabilities – Level 1.
Values other than listed prices included within Level 1 that are observable
for the asset or liability, either directly (that is, as prices) or indirectly
(that is, derived from prices) – Level 2.
Values for the asset or liability that are not based on observable market data
(that is unobservable inputs) –Level 3.
1. Financial Instruments (continued)
The categories of financial instruments used by the Group are:
Fair Value Half year ended Year ended
Hierarchy Level 31 December 30 June
2023 2022 2023
Financial assets £000 £000 £000
At fair value through Other comprehensive income
Non-current investments (strategic investments) 1 6,328 2,673 3,144
At fair value through profit or loss
Current asset investments (listed investments) 1 16,736 16,113 15,496
Loans and receivables at amortised costs
Trade and other receivables (excluding non-financial assets) n/a 180 104 73
Cash at bank n/a 211 624 1,264
Financial liabilities
At amortised costs
Trade and other payables n/a (97) (109) (151)
Lease liabilities n/a - (70) (33)
7. Listed investments at fair value through profit and loss
(“General Portfolio”)
Half year ended Year ended
31 December 30 June
2023 2022 2023
£000 £000 £000
Cost 11,154 10,392 10,392
Opening unrealised gains 4,342 3,663 3,663
Balance brought forward 15,496 14,055 14,055
Purchases 2,979 1,785 4,258
Sales proceeds (2,256) (988) (4,407)
Realised gain on disposal 509 57 911
Net unrealised gains transferred to realised gain on disposal (445) (57) (277)
Unrealised fair value gains in the period 453 1,259 956
Balance carried forward 16,736 16,113 15,496
8. Events after the reporting period
On 28 December 2023, Western announced its intention to return cash to
shareholders at 80.5 per share by means of a return of surplus capital (the
“Return of Capital”). The Return of Capital was to be effected by means of
a capital reduction. The Board of Western determined that the most effective
way to achieve this was for Western’s admission to trading on the AQSE
Growth Market to be cancelled and for Western to be re-registered as a private
limited company.
Western’s proposals were approved by shareholders at General Meetings held
on 25 January and 16 February 2024. Under the Return of Capital, Lonfin
elected to retain 45,786 ordinary shares in Western which will represent 43.8%
of Western’s reduced issued share capital. Lonfin received £6,291,000 in
cash in exchange for the ordinary shares it chose not to retain, and these
shares have now been cancelled. Western will continue to operate as a private
company and the Western Board will work on the realisation of its illiquid
investments in Industrial & Commercial Holdings PLC and City Group PLC.
Composition of General Portfolio
Value
£000 %
Rio Tinto 583 3.5
Legal & General 564 3.4
Unilever 488 2.9
Linde AG 480 2.9
Holcim 479 2.9
Aviva 474 2.8
TotalEnergies SE 470 2.8
Shell 468 2.8
BHP Group 459 2.7
Nestle 455 2.7
Reckitt Benckiser Group 449 2.7
Imperial Brands 445 2.7
Kraft Heinz 443 2.6
Michelin 439 2.6
Coca-Cola 437 2.6
Heineken Holding 427 2.6
Procter & Gamble Co 417 2.5
Deere & Co 414 2.5
L'Oreal 410 2.5
Mercedes-Benz Group 407 2.4
Schindler 400 2.4
Pernod Ricard 399 2.4
Bank of America 397 2.4
British American Tobacco 397 2.4
Chevron Corp 397 2.4
LVMH Moet Hennessey 390 2.3
JPMorgan Chase 388 2.3
Exxon Mobil Corp 386 2.3
BAE Systems 382 2.3
Nutrien Ltd 378 2.3
Diageo 364 2.2
Microsoft 357 2.1
Barclays 354 2.1
NatWest 346 2.1
Glencore 344 2.1
BASF 331 2.0
Caterpillar 322 1.9
Halliburton 322 1.9
Deutsche Post 319 1.9
Fedex 288 1.7
Otis Worldwide Corp 267 1.6
16,736 100
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