LFI London Finance & Investment Group Plc

London Finance & Investment Group PLC

(‘Lonfin’ or the ‘Company’)

Unaudited Interim Results for the six months ended 31^st December 2019 and interim dividend declaration

The Company today announces its unaudited interim results and interim dividend declaration for the six months ended 31^st December 2019 (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 benefits of socially responsible long-term investment and consideration of ESG issues is integrated in its investment decision-making processes.

At 31^st December 2019, 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 6.7% to 63p at 31^st December 2019 from 59p at 30^th June 2019. Our Strategic Investments increased in value by 19% during the period. Our General Portfolio increased by 0.2%, compared with increases of 1.6% and 7.2% in the FTSE 100 index and the FTSEurofirst 300 Index respectively, over the half year. At the close of business on 31^st January 2020, our net asset value was 62.6p per share.

The Group profit before tax for the half year was £91,000 compared to a restated loss of £727,000 for the same period last year. Our total comprehensive profit after tax and minority interest was £1,478,000 (2018 restated: £876,000) giving an earnings per share of 0.33p (2018 restated: loss per share 1.67p).

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 16^th September 2019, Finsbury announced profits on continuing operations after tax of £10,293,000 for the 52 weeks ended 29^th June 2019 (2018: £3,164,000).

Finsbury also announced that a final dividend of 2.34p per share would be paid in December 2019 which provided Lonfin with income of £140,400.

At 31^st December 2019, 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 2019 was £5,880,000 (30^th June 2019: £4,020,000) representing 30% 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 21^st February 2020, Western announced a loss before tax of £221,000 for the half year to 31^st December 2019 (2018: loss before tax of £427,000) and a loss per share of 0.7p (2018: loss per share of 2.4p). Western’s net assets at market value were £10,666,000 equivalent to 59p per share. Western also announced that it was not recommending the payment of an interim dividend (2018: 1.1p per share).

The market value of the Company’s investment in Western at 31^st December 2019 was £3,144,000 representing 16% of the net assets of Lonfin (30^th June 2019: £3,576,000). Our share of the net assets of Western, including the value of Western’s investments at market value, was £4,672,000 (30^th June 2019 - £5,005,000).

I am the Chairman of Western and Edward Beale is a non-executive director.

Western’s main Core Holdings are Northbridge Industrial Services Plc, Brand Architekts Group Plc (formerly, Swallowfield PLC), Bilby Plc and Tudor Rose International Limited.

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 loadbanks, 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 30^th June 2019, showed a loss after tax of £122,000 for the period (2018: loss after tax of £1,472,000). No interim dividend payment was recommended (2018: none).

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 2019 was £4,455,000 (30^th June 2019: £4,900,500), representing 41.7% 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. Brand Architekts has developed both organically and through acquisition a portfolio of brands that are owned and managed by the Brand Architekts group. Further information about Brand Architekts, which is admitted to trading on AIM, is available on its website: www.brandarchitektsplc.com

Brand Architekts announced its annual results for the 52 weeks ended 29^th June 2019 on 30^th September 2019 showing an adjusted profit after tax of £1,590,000 compared to an adjusted profit after tax of £1,932,000 for the comparable period last year. Brand Architekts also announced that a final dividend of 4.35p per share would be paid in December 2019 which provided Western with income of £56,550. 

Western owns 1,300,000 Brand Architekts shares which represent 7.6% of Brand Architekts’ issued share capital). The market value of this investment at 31^st December 2019 was £1,976,000 (30^th June 2019: £2,502,000), representing 18.5% of Western’s net assets.

Edward Beale, a director of Western, 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 2019 on 19^th December 2019 showing a profit after tax of £542,000 (2018: £1,133,000). Bilby also announced that it would not be recommending the payment of an interim dividend.

Western invested an additional £400,000 in a private placing undertaken by Bilby in November 2019 acquiring an additional 3,636,363 shares at a price of 11p per share.

Western owns 6,336,363 Bilby shares, which represent 10.8% of Bilby’s issued share capital.  The market value of this investment at 31^st December 2019 was £1,711,000 (30^th June 2019: £877,000) representing 16.0% of Western’s net assets.

Tudor Rose International Limited (“Tudor Rose International”)

Tudor Rose International works closely with a number of leading UK branded fast-moving consumer goods companies, offering a complete sale, 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.

As announced in our Final Results on 30^th September 2019, this investment has been fully provided against.

Edward Beale and David Marshall, both directors of Western, are non-executive directors of Tudor Rose International.

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 2019, the number of holdings in the General Portfolio was 30 (2018: 30).

Outlook

The Company’s investment performance since the year end has been affected by the volatility in the markets and by the reduction in value of our Strategic Holdings. Although global stock markets have shown resilience and strength over the course of the last year, they are now close to all-time highs at a time when there is continued economic and political uncertainty. Accordingly, the Board remains cautious about the potential impact of major geo-political risks, including the outcome of future trading relationships with the EU, and expects to see continued volatility in the equity and currency markets. These may impact further on the value of our investments.

The Board has declared an interim dividend of 0.55p per share (2018: 0.55p).

24^th February 2020

D.C. MARSHALL

Chairman

Interim Dividend

The Board recommends an interim gross dividend of 0.55p per share (10.73127 SA cents) (2018: 0.55p) which will be paid on Friday 3^rd April 2020 to those members registered at the close of business on Friday 13^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 Tuesday, 18^th February 2020, being GBP 1 = SA Rand 19.5114.

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, 13^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 10.73127 SA cents;
• The interim net dividend is 8.58502 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:

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 10.73127 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 8.58502 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 11^th March 2020 and Friday 13^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 2019, 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:

Consolidated Statement of Total Comprehensive Income (Unaudited)

Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)

Consolidated Statement of Financial Position (Unaudited)

Consolidated Statement of Cash Flows (Unaudited)

Reconciliation of net cash flow to movement in net debt

Notes: -

Composition of General Portfolio