LONDON FINANCE &
INVESTMENT GROUP P.L.C.
REPORT & ACCOUNTS
30TH JUNE
2011
LONDON FINANCE & INVESTMENT GROUP P.L.C.
(“Lonfin”)
Lonfin is a United Kingdom investment finance and management company. Its core portfolio centres
on the larger companies in the FTSE 100 and FTSE Eurofirst 300 indices. Additionally, Lonfin holds
investments in United Kingdom listed companies where it has directors in common. Lonfin is also a
43.8% shareholder in its associate Western Selection P.L.C. (“Western”), a strategic investment
company. Western’s share capital is admitted to trading on the Plus-quoted markets.
Lonfin’s shares are quoted in the official lists of the London and Johannesburg stock exchanges.
_______________________________
CITY GROUP P.L.C.
(“City Group”)
City Group, which is owned by Lonfin and Western, provides management, office and secretarial
services to both companies and to other clients requiring a London presence, including companies in
which Lonfin and Western hold investments.
_______________________________
THE CITY OF LONDON
-
-
-
-
is astride the Greenwich Meridian as the centre of the world’s global markets.
is one of the key financial centres of the world.
is at one of the crossroads of capital for the world’s largest corporations.
is an important source of capital for entrepreneurs.
1
London Finance & Investment Group P.L.C. ________________
Contents
Directors and Advisers
Results in Brief, Summary of Investments, Financial Calendar and
Analysis of Shareholders
Directors’ Report
Business Review and Key Performance Indicators
Composition of General Portfolio
Consolidated Statement of Total Comprehensive Income
Consolidated Statement of Changes in Shareholders’ Equity
Statements of Financial Position
Consolidated Statement of Cash Flow
Notes to the Accounts
Corporate Governance
Statement of Directors' Responsibilities in Respect of the Accounts
Remuneration Report
Report of the Independent Auditors
Summary of Results
Notice of Annual General Meeting
Page
2
3
4
4
11
12
13
14
16
17
30
32
33
36
38
39
Proxy Form
Enclosed
1
London Finance & Investment Group P.L.C. __________________
Directors
D.C. MARSHALL, Chairman, age 67 ♦
Mr. Marshall joined the board in 1971 and was appointed Chairman in 1984. He resides in South
Africa, where he has extensive interests in listed trading, financial and property companies. He is
the chairman of Western Selection P.L.C., an associate of Lonfin, and is a non-executive director of
Creston plc, Finsbury Food Group plc, MWB Group Holdings Plc and Northbridge Industrial
Services PLC. He is the chief executive of Marshall Monteagle PLC and chairman of Halogen
Holdings P.L.C.
F.W.A. LUCAS, BSc, PhD, Independent Non-executive, age 44 *
Dr. Lucas was appointed a director in 1999. He is a mining geologist by profession and one of the
founding shareholders and a director of Loeb Aron & Company Ltd, an authorised and regulated
investment and issuing house, which specialises in corporate finance and is a Member of the
London Stock Exchange and of PLUS Markets.
L.H. MARSHALL, Non-executive, age 40 ♦
Mr. Marshall joined the board in 2011. He is the finance director of Marshall Monteagle PLC and
has extensive investment management experience. He is a non-executive director of Hartim
Limited, Halogen Holdings P.L.C. and Heartstone Inns Limited. Mr. L.H. Marshall is the son of
Mr. D.C. Marshall, the Chairman.
J.H. MAXWELL, CA, CCMI, FRSA, Senior Independent Non-executive, age 66 *
Mr. Maxwell, who is a Chartered Accountant, was appointed a director of the Company in 2003.
He currently serves as a non-executive director of RSA Insurance Group PLC, First Assist
Insurance Services Limited and The Royal Automobile Club Motor Sports Association Limited.
J.M. ROBOTHAM, OBE, FCA, Non-executive, age 78
Mr. Robotham joined the board in 1984. He is the non-executive chairman of Marshall Monteagle
PLC and a non-executive director of Western Selection P.L.C. He is a chartered accountant and a
Member of the Securities Institute.
*
♦
Member of the audit committee
Member of the investment committee
Member of nomination committee
Secretaries and
Registered Office
United Kingdom
City Group P.L.C.
30 City Road,
London, EC1Y 2AG
Tel: 020 7448 8950
Fax: 020 7638 9426
www.city-group.com
E-mail: lonfin@city-group.com
Republic of South Africa
D.A. Greer
11 Sunbury Park,
La Lucia Ridge Office Estate
La Lucia 4051,
Durban
Tel: +27 (0)31 566 7600
Registered Number
201151
Registrars
Capita Registrars
The Registry
34 Beckenham Road.
Beckenham,
Kent, BR3 4TU
Tel: 0871 664 0300
(Calls cost 10p per minute plus network
extras,
lines are open 8.30am-5.30pm
Monday-Friday)
From outside the UK +44 20 8639 3399
2
Computershare Investor Services (Pty.) Limited
70 Marshall Street,
Johannesburg, 2001
(P.O. Box 61051, Marshalltown 2107)
Tel: +27 11 370 5000
______________________________________________________
Summary of Investments
At 30th June
Investment in associate at market value:
Western Selection P.L.C.
Strategic Investments at market value:
Finsbury Food Group plc
MWB Group Holdings Plc
General Equity Portfolio at market value
Tangible Non-current assets *
Cash, bank balances and deposits
Bank Loans
Other net assets
Non-controlling interests
Net assets, including investments at market value
Net assets per share
2011
£000
3,458
1,700
775
5,933
4,668
2,093
21
(1,816)
108
(92)
10,915
35.0p
2010
£000
2,672
1,200
795
4,667
4,225
1,575
17
(2,081)
135
(84)
8,454
27.1p
Including a leasehold property valued at £2,150,000 (2010: £1,575,000) less estimated tax payable on sale
at this value of £57,000 (2010: nil). The carrying value in the accounts is £367,000 (2010 - £377,000)
Dividends
Interim
Proposed final
0.3p
0.3p
0.3p
0.3p
Profit/(Loss) per share (excluding unrealised changes in the market value
of investments):
0.4p
(0.3)p
Financial Calendar
Interim dividend
Annual General Meeting
Final dividend for 2011
Half-year results
Analysis of Shareholders
500
1-
1,000
501-
5,000
1,001-
10,000
5,001-
50,000
10,001
100,000
50,001-
250,000
100,001-
250,001-
500,000
500,001- 1,000,000
Over 1,000,000
Paid on 1st April 2011
[ ] 2011
Payable on ● November 2011 to holders on ● October 2011.
Announced in February
Number
1,228
340
361
56
65
13
10
9
1
5
2,088
%
58.8
16.3
17.3
2.7
3.1
0.6
0.5
0.4
0.1
0.2
100.0
Total
235,666
280,203
829,337
437,401
1,640,438
966,589
1,697,185
3,203,955
635,000
21,281,705
31,207,479
%
0.7
0.9
2.7
1.4
5.3
3.1
5.4
10.3
2.0
68.2
100.0
The current price of the Company's shares can be found on the share prices pages of the Financial Times, the
Daily Telegraph and in the business section of the major South African newspapers.
3
London Finance & Investment Group P.L.C. _________________
Incorporated in England and Wales – number 201151
Directors’ Report
Business Review
Lonfin is an investment company whose assets primarily consist of three Strategic Investments and a General
Portfolio. Strategic Investments are significant investments in smaller U.K. quoted companies and these are balanced
by a General Portfolio, which consists mainly of investments in major U.K. and European equities.
At 30th June 2011, the three Strategic Investments, in which we have directors in common, were our associated
company Western Selection P.L.C. and MWB Group Holdings Plc and Finsbury Food Group plc. Detailed
comments on our Strategic Investments are given below.
Our objective is to achieve capital growth in real terms over the medium term, while maintaining a progressive
dividend policy.
Net assets including our investment property at its latest valuation net of tax have increased by 29% from 27.1p
per share to 35.0p per share
The General Portfolio is yielding 3.1 % (2010 – 2.9%) up 7%.
Borrowings are 17% (2010 - 23%) of the value of liquid stock market investments
Operating costs have been reduced.
Results
Our net assets per share as recorded in the statement of financial position have increased 26% to 29p from 23p last
year, reflecting the recovery in the associated company and Strategic Investments values. These increased in value by
29% and 24% respectively, after taking into account additions and disposals of investments. The General Portfolio
increased by 23%, outperforming the markets. These movements compare with the increases in the FTSE 100 index
of 21% and 13% in the FTSE Eurofirst 300 index over the year. In addition our investment property has been
revalued from £1,575,000 to £2,150,000 (from £1,575,000 to £2,093,000 net of tax), but accounting standards do not
permit us to include these values in the statement of financial position.
The Group achieved a profit before tax for the year of £2,145,000 (2010 - £705,000). The profit after tax and non-
controlling interest was £2,118,000 (2010 - £693,000) giving a profit per share of 6.8p (2010 –2.2p).
Strategic Investments
Western Selection P.L.C. (“Western”)
The Group owns 7,864,412 shares, being 43.8% of the issued share capital of Western.
On 6th September 2011, Western announced a profit before associates and tax of £136,000 for its year to 30th June
2011 (2010 – £128,000). Including associates and after exceptional items and tax, profits per share were 2.6p (2010
– 1.4p).
Western has paid an interim dividend of 0.65p and proposes an increased final dividend of 0.85p (2010 - 0.65p).
Western’s net assets at market value were £15,022,000, equivalent to 84p per share, an increase of 38% from 61p last
year.
Our share of the net assets of Western including the value of Western’s investments at market value, was £6.6 million
(2010 - £4.8 million). The fair value recorded in the statement of financial position is the market value of £3,458,000
(2010 - £2,672,000). This represents 37% of the net assets of the Group.
Mr. D. C. Marshall is the Chairman of Western and Mr. Robotham and Mr. Beale, the chief executive of our
subsidiary company (City Group P.L.C.), are non-executive directors. Western has strategic investments in Creston
plc, Northbridge Industrial Services plc, Swallowfield plc and Hartim Limited. An extract from Western’s
announcement of its strategic investments is set out below:
Creston plc
Creston is a marketing services group whose strategy is to grow within its sector both by organic growth and
through selective acquisition to become a substantial, diversified marketing services group. The audited results for
4
______________________________________________________
the year to 31st March 2011, show a profit after tax of £10,400,000 (2010 - £5,133,000), equivalent to fully diluted
earnings of 12.39p per share (2010 – 8.74p). Western maintained it’s holding of 3,000,000 shares in Creston (4.9%)
with a value at 30th June 2011 of £3,390,000 (2010 - £2,752,000) being 23% (2010 - 25%) of Western’s assets.
Northbridge Industrial Services PLC
Northbridge was formed for the purpose of acquiring companies that hire and sell specialist industrial equipment
supplying a non-cyclical customer base including utility companies, the public sector and the oil and gas industries.
In particular it will seek to acquire specialist businesses that have the potential for expansion into complete
outsourcing providers. Sales are made to the U.K., U.S.A., Brazil, Singapore, Germany, UAE and Korea;
Northbridge also has subsidiaries operating in Perth, Dubai and Azerbaijan.
Northbridge announced profits of £3,036,000 for the year ended 31st December 2010 (2009 - £1,571,000) and
declared a final dividend of 3.05p per share, making 4.6p for the year (2009 – 4.1p).
Northbridge acquired Tasman Oil Tools Pty Ltd, based in Perth, Western Australia, which specialises in the
rental of equipment for the onshore and off-shore oil industry throughout Australia, after raising
approximately £8 million by way of an open offer. Western took up 325,000 shares in that offer at a cost of
£406,250, increasing its holding to 2,200,000 shares in Northbridge, which is 14.19% of the issued share capital.
The value of the investment at 30th June 2011 was £6,094,000 (2010 - £2,508,000) being 40% (2010 - 23%) of
Western’s assets.
Swallowfield plc
Swallowfield is involved 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. Swallowfield announced its interim results to January 2011 showing a profit after tax of £519,000
compared to £533,000 for the comparable period last year. Dividends of £116,000 (2010 - £87,000) were received
from Swallowfield during the year.
Western increased its holding in Swallowfield during the year and since the year end. At 31 st August 2011 it owns
1,868,149 shares which is 16.52% of the issued share capital. The market value of the Company’s holding in
Swallowfield on 30th June 2011 was £1,922,000 (2010 - £1,816,000), being 13% (2010 - 17%) of Western’s net
assets.
Swallowfield has had turnover of £52.4 million, £49.1 million and £44.8 million over the last three years and despite
this their market capitalisation remains at £13 million. Whilst Western has played a role in bringing about some
changes to the board during the year, we believe there may still be scope for improvement, and Western will
continue to monitor board performance.
Investments in Associates
Hartim Limited
Hartim is the unquoted holding company for Tudor Rose International Limited (“TRI”) which was founded in 1984.
It 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, TRI sells into 78 countries worldwide
including USA, Spain, Portugal, Italy, Czech Republic, Russia, Turkey, South Africa, Saudi Arabia, UAE, Malaysia,
Australia and China. Hartim has recently acquired a distribution business in Australia to improve the service that it
can offer to principals.
Western holds 49.5% of Hartim, which has a 31st December year end and achieved profits in 2010 of £540,000 after
tax on turnover of £22,282,000. Western’s share of the consolidated profit after tax for the twelve months to 30th
June 2011 was £337,000 (2010 – £150,000) and the book value of the investment at 30th June 2011 was £1,465,000
(2010 - £1,129,000), being 10% (2010 - 10%) of Western’s assets.
MWB Group Holdings Plc (“MWB”)
The Group holding in MWB was unchanged from the 2 million shares held at June 2010, representing 1.22% of
MWB’s issued share capital. The market value at 30th June 2011 was £775,000 (2010 - £795,000), compared with
the book value of £1,681,000, and represents 8% (2010 – 11%) of the net assets of the Group.
MWB is in the process of maturing and realising its assets for the benefit of all stakeholders through an orderly
disposal programme.
Mr. D.C. Marshall is a non-executive director of MWB.
5
London Finance & Investment Group P.L.C. __________________
Finsbury Food Group plc (“Finsbury”)
The Group holding in Finsbury remains at 8 million shares, representing 15.18% of their share capital. The market
value of the holding was £1,700,000 on 30th June 2011 (cost - £1,893,000) and represents 18% of the net assets of the
Group.
Finsbury is one of the largest producers and suppliers of premium cakes, bread and morning goods in the UK. The
Group currently supplies most of the UK's major supermarket chains, including Asda, Co-op, Morrisons, Sainsbury,
Somerfield, Tesco and Waitrose.
Mr. D.C. Marshall and Mr. Beale, the Chief Executive of our subsidiary company City Group P.L.C., are non-
executive directors of Finsbury.
General Portfolio
The investments comprising the General Portfolio at 30th June 2011 are listed on page 11. The General Portfolio is
well spread with material interests in Food and Beverages, Oil, 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, especially in respect of our Western European holdings.
The number of holdings in the General Portfolio has decreased to 23 from 25. We have decreased the amount
invested in the General Portfolio by £464,000 (2010: decreased by £669,000) over the year.
We have a £2 million bank facility, and at 30th June 2011 had net borrowings of £1.8 million. This leaves £200,000
available for further investment when the Board feels appropriate. The increase in value of our investments over the
period has decreased borrowings as a percentage of the market value of all stock market investments from 23% to 17
%.
Operations & Employees
All of our operations and those of our associate, Western, except investment selection, are outsourced to our
subsidiary, City Group P.L.C. City Group also provides office accommodation, company secretarial and head office
finance services to a number of other U.K., Jersey and Luxembourg clients. City Group has responsibility for the
initial identification and appraisal of potential new strategic investments for the Group and the day to day monitoring
of existing strategic investments.
Dividend
The Board recommend a final dividend is 0.3p, making 0.6 p per share for the year (2010 - 0.6p). Subject to
member’s approval, the dividend will be paid on ● November 2011 to those members on the register at the close of
business on ● October 2011. Shareholders on the South African register will receive their dividend in South African
rand converted from sterling at the closing rate of exchange on ● October 2011.
Outlook
The outlook for stock markets remains very uncertain. We will continue to adopt a cautious stance, with our general
portfolio invested in the best European companies.
6
______________________________________________________
Financial Instruments & Risks
The financial instruments of the Group, in addition to the investment portfolio, comprise borrowings to finance those
investments and cash. As an investment company our principal risks arise from the Group’s financial instruments,
and are market price risk, interest rate risk and liquidity risk. The depth of experience of directors means that there is
no key-man dependency. Note 20 also sets out the policies of the Board, which have remained substantially
unchanged for the year under review, for managing risks associated with its financial instruments. In addition the
Group is exposed to investment risk arising from the selection of investments which it mitigates by drawing on the
investment experience of its directors.
Trends in Key Performance Indicators
Key Performance Indicators (“KPIs”) are the yardsticks against which the Board measures the performance of the
Company. Our objectives are real growth over the long term in dividends and net assets per share. Comments on the
movement of these indicators over the year are detailed above.
Net assets per share
Dividends (net) per share
2011
35.0p
0.6p
2010
27.1p
0.60p
2009
25.1p
Nil
2008
39.0p
1.20p
Definition of KPIs used above
Net Assets per share - Net assets including investments at market value and long leasehold properties at their most
recent valuation divided by the number of shares in issue at the year end. This definition has changed in the year to
include our investment property at its most recent valuation, rather than its carrying value in the statement of financial
position, and comparatives have been restated.
Dividends per share - Dividends declared for the year.
Directors
A list of the directors of the Company is shown on page 2. The interests in the Company’s shares of the directors
who have held office in the period from 1 July 2011 were as follows:
D.C. Marshall – Beneficial
- Non-beneficial *
F.W.A. Lucas †
J.M. Robotham – Beneficial
- Non-beneficial *
J.H. Maxwell
L. H. Marshall (Appointed 3rd August 2011)
30th June 2011
Shares
2,301,000
10,589,693
142,500
30,000
11,717,474
65,000
-
30th June 2010
Shares
2,301,000
10,589,693
75,000
30,000
11,067,693
65,000
-
* These holdings arise as the individuals concerned are trustees and/or directors of entities that hold shares in the
Company. The non-beneficial interest of Mr. Robotham overlaps with the non-beneficial interest of Mr. D.C.
Marshall.
† Of this figure Dr. Lucas owns 60,000 shares personally and 82,500 shares are owned by Loeb Aron & Company
Ltd, of which Dr. Lucas is a director and shareholder.
There have been no changes in directors' share interests between 1st July 2011 and the date of this report.
The appointment or removal of directors is determined by shareholders at a General Meeting. Between General
Meetings the Board may appoint additional directors who are required to stand for election at the next General
Meeting. Mr L. H. Marshall has been appointed by the Board in this manner and is standing for election at the
Annual General Meeting. In addition the Company’s Articles of Association require one third of directors to stand
for re-election every year, accordingly Dr. F.W.A. Lucas retires by rotation and, being eligible, offers himself for re-
election at the Annual General Meeting.
Substantial Interests
In addition to the directors’ shareholdings shown above, the Company has been notified under Section 808 of the
Companies Act 2006 of the following interests in 3% or more of its shares:
W.T. Lamb Holdings Limited
Philip J. Milton & Company PLC
IFG Trust Company (Jersey) Limited *
* The trustees have discretion over how to vote these shares.
7
Shareholding
4,600,000
2,081,308
1,200,000
% interest
14.7
6.7
3.8
London Finance & Investment Group P.L.C. __________________
Corporation Taxes Act 2010
The company is not a close company as defined in this Act.
Auditors
A resolution to re-appoint Steele Robertson Goddard as Auditors will be proposed at the Annual General Meeting in
accordance with Section 489 of the Companies Act 2006.
The Directors have taken all the steps that they ought to have taken to make themselves aware of any information
needed by the Company’s Auditors for the purposes of their audit and to establish that the Auditors are aware of that
information. The Directors are not aware of any relevant audit information of which the Auditors are unaware.
Payment of Suppliers
The Company does not follow any code or statement on payment practice, but the policy of the Company is to abide
by such payment terms as are agreed with suppliers within the terms of supply. The Company does not have a
significant level of trade creditors.
Financing Structure
The Group is financed by a mixture of debt and equity. The Board believes that a reasonable level of gearing can
enhance returns to shareholders. The Group has bank facilities of £2 million which expire in April 2013.
At 30th June 2011 the Company had only one class of share, namely Ordinary Shares of 5p each, of which there were
31,207,479 in issue. The rights and obligations attached to these shares are set out in the Company’s Articles which
may only be amended by a vote of shareholders at a General Meeting. Each share entitles the holder to one vote on
each shareholder resolution. There are no special arrangements or restrictions relating to any of these shares, whether
in terms of transfers, voting or other rights, or relating to changes in control of the company.
In 2008 the Company issued Warrants to shareholders which allowed shareholders to subscribe for additional
Ordinary Shares in the company during the period to 1st November 2010. The unexercised Warrants lapsed on the
Final Exercise Date of 1st November 2010.
To provide directors with flexibility over the management of the Company’s capital, shareholders are being asked to
approve resolutions at the AGM which would permit the Company to issue new shares as explained below. Similar
resolutions were approved at the last AGM.
Special Business to be transacted at the Annual General Meeting
In addition to the ordinary business to be transacted at the Annual General Meeting of the Company referred to in
resolutions 1 to 6 of the Notice of Meeting, the Directors propose certain special business as set out in Resolutions 7
and 8 for the purposes summarised below:
Resolution 7 - Authority to allot shares - Ordinary resolution
A resolution will be proposed, as an ordinary resolution, at the forthcoming Annual General Meeting, to renew the
Directors authority to allot shares up to the level of the authorised share capital. If passed, this resolution will grant
the Directors power to allot authorised but unissued capital for a maximum period of 15 months.
Resolution 8 - Pre-emption rights - Special resolution
Section 570 of the Companies Act 2006 requires that, when Directors propose to allot shares for cash, they must first
offer such shares to existing shareholders in proportion to their existing shareholdings, unless powers have previously
been given to the directors under section 563 of the Act to disapply these provisions. The directors consider it
desirable for shareholders to approve this disapplication until the next Annual General Meeting, in order to permit the
allotment of shares for cash in limited circumstances to persons other than shareholders. This limited disapplication
will be in respect of 1,560,000 shares equal to 5% of the issued share capital of the Company.
The Directors have no present intention of issuing any part of the unissued share capital and no issue will be made
which would effectively alter the control of the Company without the approval of the shareholders in general meeting.
29th September 2011
8
By Order of the Board
CITY GROUP P.L.C.
Secretaries
London Finance & Investment Group P.L.C. __________________
Composition of General Portfolio
at 30th June 2011
Nestle
Royal Dutch Shell
British American Tobacco
L'Oreal
Henkel
Schindler-Holdings
Heineken
ABB
BASF
Pernod-Ricard
Koninklijke
Investor
Carlsberg
Novartis
Diageo
Danone
Imperial Tobacco
Beiersdorf
Unilever
Holcim
BHP Billiton
Total
Reckitt Benckiser
Analysis by currency of share price
Euro
Sterling
Swiss franc
Swedish kroner
Danish kroner
£000
264
243
238
227
220
217
217
213
212
212
209
199
198
198
188
186
184
182
176
174
172
170
169
%
5.7
5.2
5.1
4.9
4.7
4.7
4.7
4.6
4.5
4.5
4.5
4.3
4.2
4.2
4.0
4.0
3.9
3.9
3.8
3.7
3.7
3.6
3.6
4,668
100
£000
%
1,835
1,370
1,066
199
198
39.3
29.4
22.8
4.3
4.2
4,668
100.0
9
London Finance & Investment Group P.L.C. __________________
Consolidated Statement of Comprehensive Income
For the year ended 30th June
Dividends - Listed investments
Interest receivable
Rental and other income
Profits realised on sales of investments
Management services fees
Operating income
Administration expenses
Operating profit
Unrealised changes in the carrying value of investments
Interest payable
Profit on ordinary activities before taxation
Tax on result of ordinary activities
Profit on ordinary activities after taxation
Non-controlling interest
Profit for the financial year attributable to members of the holding
company
Other comprehensive income
Total comprehensive income attributable to shareholders
Reconciliation of headline earnings
Basic profit per share
Adjustment for the unrealised changes in the carrying value of investments, net
of tax
Headline profit/(loss) per share
All profits and losses are on continuing activities.
Notes
3
2
1. iii)
6
7
8
8
2011
£000
251
-
94
266
398
1,009
(749)
260
1,995
(110)
2,145
(19)
2,126
(8)
2,118
-
2,118
6.8 p
(6.4)p
0.4 p
2010
£000
174
1
86
119
405
785
(757)
28
791
(114)
705
(18)
687
6
693
-
693
2.2 p
(2.5)p
(0.3)p
The notes on pages 16 to 29 form part of these accounts.
10
_____________________________________________________
Consolidated Statement of Changes in Shareholders’ Equity
Ordinary
Share
Capital
£000
Share
premium
account
£000
Revaluation
Reserve
£000
Unrealised
profits/(losses)
on investments
£000
Share of
undistributed
results of
Subsidiaries
and associates
£000
Retained
realised
profits &
losses
£000
Non-
Controlling
interests
£000
Total
equity
£000
Total
£000
Year ended 30th June 2010
Balances at 1st July 2009
1,560
2,318
330
Total comprehensive income
Interim dividend paid
Total transactions with shareholders
-
-
-
-
-
-
-
-
-
(4,538)
791
-
-
747
44
-
-
6,239
6,656
(142)
693
(93)
(93)
(93)
(93)
90
(6)
-
-
6,746
687
(93)
(93)
Balances at 30th June 2010
1,560
2,318
330
(3,747)
791
6,004
7,256
84
7,340
Year ended 30th June 2011
Balances at 1st July 2010
1,560
2,318
330
Total comprehensive income
Shares issued
Dividends paid
Total transactions with shareholders
-
-
-
-
-
2
-
2
-
-
-
-
(3,747)
1,997
-
-
-
791
113
-
-
-
6,004
7,256
8
-
(187)
(187)
2,118
2
(187)
(185)
84
8
-
-
7,340
2,126
2
(187)
(185)
Balances at 30th June 2011
1,560
2,320
330
(1,750)
904
5,825
9,189
92
9,281
The notes on pages 16 to 29 form part of these accounts.
11
London Finance & Investment Group P.L.C. __________________
Consolidated Statement of Financial Position
At 30th June
Non-current Assets
Tangible assets
Investments
Current Assets
Listed investments
Trade and other receivables
Bank balance and deposits
Current Liabilities
Notes
9
11(a)
11(b)
12
2011
£000
367
5,933
6,300
4,668
260
21
4,949
2010
£000
377
4,667
5,044
4,225
294
17
4,536
Trade and other payables: falling due within one year
13
(1,968)
(2,240)
Net Current Assets
2,981
2,296
Total Assets less Current Liabilities
9,281
7,340
Capital and Reserves
Called up share capital
Share premium account
Revaluation reserve
Unrealised profits and losses on investments
Share of retained realised profits and losses of subsidiaries
and associates
Company’s retained realised profits and losses
15
Non-controlling equity interests
1,560
2,320
330
(1,750)
904
5,825
9,189
92
9,281
1,560
2,318
330
(3,747)
791
6,004
7,256
84
7,340
Approved and authorised by the Board on 29th September 2011.
D.C. Marshall
Director
The notes on pages 16 to 29 form part of these accounts.
12
_______________________________________________________
Company Statement of Financial Position
at 30th June
Non-current Assets
Tangible assets
Investments in Group companies
Current Assets
Listed investments
Trade and other receivables
Bank balance
Notes
9
10
11(b)
12
2011
£000
367
7,726
8,093
4,668
38
-
4,706
2010
£000
377
7,832
8,209
4,225
58
-
4,283
Current Liabilities
Trade and other payables: falling due within one year
13
(1,915)
(2,159)
Net Current Assets
Total Assets less Current Liabilities
Deferred taxation
2,791
2,124
10,884
10,333
-
-
10,884
10,333
Capital and Reserves
Called up share capital
Share premium account
Revaluation reserve
Unrealised profits and losses on investments
Realised profits and losses
Equity shareholders' funds
15/16
16
16
16
1,560
2,320
330
849
5,825
10,884
1,560
2,318
330
121
6,004
10,333
Approved and authorised by the Board on 29th September 2011.
D.C. Marshall
Registered in England and Wales – Number 201151
Director
The notes on pages 16 to 29 form part of these accounts.
13
London Finance & Investment Group P.L.C. __________________
Consolidated Statement of Cash Flow
For the year ended 30th June
Notes
Cash flows from operating activities
Profit before tax
Adjustments for non-cash and non-operating activities -
Finance expense
Depreciation charges
Unrealised changes in the fair value of investments
2011
£000
2,145
110
10
(1,995)
(1,875)
Taxes paid
6
(19)
Changes in working capital
Decrease in trade and other receivables
(Decrease) in trade and other payables
Decrease in current asset investments
Net cash inflow from operating activities
Cash flows from financing
Shares issued
Interest paid
Equity dividends paid
Net repayment of loan facilities
Net cash outflow from financing
Increase/(Decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at end of the year
34
(6)
285
313
564
2
(110)
(187)
(265)
(560)
4
17
21
18
18
2010
£000
705
114
13
(791)
(664)
(18)
15
(122)
669
562
585
-
(114)
(93)
(475)
(682)
(97)
114
17
The notes on pages 16 to 29 form part of these accounts.
14
______________________________________________________
Notes to the Accounts
For the year ended 30th June 2011
1. Accounting Policies
(i)
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 Acts 2006 applicable to companies reporting under
IFRS. The accounts are prepared on the historical cost basis, except for certain assets and liabilities which are
measured at fair value, in accordance with IFRS.
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates
and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and
expenses. The estimates and associated assumptions are based on historical experience and other factors that are
believed to be reasonable under the circumstances, the results of which form the basis for making judgements about
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if applicable. The most significant techniques for estimation are described in the
accounting policies below. These policies have been applied consistently to all of the years presented, unless
otherwise stated.
At the date of authorisation of these financial statements the International Accounting Standards Board (IASB) and
the International Financial Reporting Interpretations Committee (IFRIC) have issued new standards and
interpretations and amended or revised standards, to be applied to financial statements with periods commencing
either on or after 1 July 2011 (see note 21). The Company has not opted for early adoption for those which have been
endorsed by the EU. The Directors do not expect that the adoption of these, where applicable, would have a material
impact on the Company’s financial statements in the period of initial application
(ii)
These consolidated accounts include the results of the subsidiaries (all of which are companies) for the year to 30th
June 2011. Results of subsidiaries are included from their effective date of acquisition to their effective dates of
disposal. The non-controlling interests are wholly attributable to equity interests in subsidiaries. Under Section 396
of the Companies Act 2006, the Company is exempt from the requirement to present its own income statement.
(iii) The consolidated accounts include the group’s investment in its associated company, which is classified as at fair
value through income, through which all movements are now reflected. Such investments continue to be carried at a
value determined by the prices available from the markets on which the instruments involved are traded.
(iv) Revenue is recognised only when it is probable that the economic benefits associated with the transaction will flow
to the entity. However, when an uncertainty arises about the collectability of an amount already included in revenue,
the uncollectable amount, or the amount in respect of which recovery has ceased to be probable, is recognised as an
expense, rather than as an adjustment of the amount of revenue originally recognised.
(v) Dividends receivable are taken to the credit of the income statement in respect of listed shares when the shares are
quoted ex dividend and in respect of unlisted shares when the dividend is declared.
(vi) All borrowing costs are recognised in the income statement in the period in which they are incurred.
(vii) Depreciation is provided on Non-current assets so as to write them off over their estimated useful lives. Computer
and electronic equipment expenditure of less than £2,500 is written off in the year of acquisition. The annual rates of
depreciation are
Long Leasehold property
Equipment
2% straight line
25% straight line
15
London Finance & Investment Group P.L.C. __________________
Notes to the Accounts (continued)
For the year ended 30th June 2011
1. Accounting Policies (continued)
(viii) Financial assets are classified by category, depending on the purpose for which the asset was acquired. The
company’s accounting policy is as follows:
a)
b)
c)
Fair value through income: Non-derivative financial assets other than unquoted investments and trade and
other receivables are classified as associates, strategic and general portfolio investments and are recognised as
being fair value through income. They are valued using quoted prices and movements in value are taken to the
income statement.
Unquoted investments. These are stated at cost net of impairment provisions because market value cannot be
readily determined. Reviews for indications of impairment are carried out at least annually.
Trade and other receivables. The carrying amounts approximate to their fair values, the transactions giving
rise to these balances arising in the normal course of trade and standard industry terms.
(ix) Cash and cash equivalents comprise cash balances and deposits.
(x)
The charge for taxation is based on the taxable profit for the year. Taxable profit differs from net profit as reported in
the income statement. It excludes items of income (primarily franked dividend income) and expense that are never
taxable or deductible and items which are taxable or deductible in other years.
Deferred taxation is provided on the full liability method, at tax rates that are expected to apply, for temporary
differences arising between the treatment of certain items for taxation and accounting purposes. Deferred tax assets
are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable
taxable profits from which the underlying timing differences can be deducted. Taxation charges or recoveries are
recognised in the income statement, or directly to equity when related to items recognised directly to equity.
(xi) The Group makes pension contributions to the pension plans of certain employees which are defined contribution
(money purchase) schemes. A defined contribution plan is a post-employment benefit plan under which an entity pays
contributions into a separate entity and will have no legal or constructive obligation to pay further amounts.
Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in
the periods during which services are rendered by employees.
(xii) Transactions denominated in foreign currencies are translated at the exchange rate at the date of the transaction.
Foreign currency assets and liabilities at the year-end are translated at year-end exchange rates.
16
_______________________________________________________
2. Operating profit - Segmental Analysis
Dividends - Listed investments
Interest receivable
Rental and other income
Profits on sales of investments, including provisions
Management services fees
Operating income
Administration expenses – normal
Operating profit/(loss)
Investment
Operations
Management
Services
2011
£000
251
-
40
266
-
557
(314)
243
2010
£000
174
-
40
119
-
333
(293)
40
2011
£000
-
-
54
-
398
452
(435)
17
2010
£000
-
1
46
-
405
452
(464)
(12)
All revenues are derived from operations within the United Kingdom. Consequently no separate geographical
segment information is provided.
3. Administration Expenses
Normal administration expenses include:
Depreciation
Auditors' remuneration - audit services
- non-audit services
Directors' emoluments – Note 4
Staff costs - Note 5
Group
2011
£000
10
18
4
40
438
2010
£000
13
18
3
43
507
4. Directors' Emoluments and Related Party Disclosures
The key management personnel are considered to be the Group directors. Their emoluments are detailed in the
Remuneration Report on pages 34 to 36.
Related Party Disclosures
London Finance & Investment Group P.L.C. and its wholly owned subsidiary ("Lonfin"), holds 43.8% of its associate
Western Selection P.L.C. (“Western”) of which Mr. D.C. Marshall, Mr. Robotham and Mr. Beale, the chief executive
of our subsidiary company (City Group P.L.C.), are directors. Mr. D.C. Marshall and Mr. Robotham's shareholdings
in Lonfin are set out in the accompanying director’s report.
Lonfin and/or Western hold shares in MWB Group Holdings Plc, Finsbury Food Group plc, Creston plc and
Northbridge Industrial Services PLC. Mr. D.C. Marshall is a director of Creston plc, Finsbury Food Group plc,
MWB Group Holdings Plc and Northbridge Industrial Services PLC and Mr. Beale is a director of Finsbury Food
Group plc.
Mr. D. C. Marshall and Mr. L. H. Marshall are directors and Mr. Robotham is the chairman of Marshall Monteagle
PLC, and both Mr D. C. Marshall and Mr J. M. Robotham are shareholders in Marshall Monteagle, which in turn is a
substantial shareholder in Halogen Holdings P.L.C. Mr. D. C. Marshall is chairman of Halogen and Mr L. H.
Marshall and Mr. Beale are directors of Halogen. Monteagle paid an annual rental of £40,000 (2010: £40,000) and
bears all expenses in respect of a leasehold property owned by Lonfin. Monteagle has agreed to a rent increase with
effect from 1st October 2012 to £53,000.
Lonfin and Western own City Group P.L.C. in the ratio 51.43% and 48.57% respectively. City Group P.L.C.
provides offices and secretarial and administrative services to various companies in the United Kingdom and abroad
most of which are associated with Lonfin and Western including all of the above companies.
17
London Finance & Investment Group P.L.C. __________________
Notes to the Accounts (continued)
For the year ended 30th June 2011
4. Directors' Emoluments and Related Party Disclosures (continued)
City Group operates as a shared cost centre and does not seek to make a profit from the provision of its standard
services to these related parties. The various secretarial, accounting, and directors fees received by City Group
P.L.C. from those companies, their associates and subsidiaries, total £354,000 (2010 - £377,000) for the year under
review. At the statement of financial position date the aggregate balance due in respect of fees invoiced was
£129,000 (2010 - £100,000) and no fees had been paid in advance (2010 - £48,000 paid in advance). Settlement is
within normal credit terms.
Other than as disclosed above no director was interested in any contract between the directors, the company and any
other related party that subsisted during or at the end of the financial year.
5.
Staff Costs
Staff costs, excluding those relating to the Director’s shown in the Remuneration Report on pages 34 to 36:
Salaries
Social security costs
The average weekly number of staff employed, including directors, was:
6.
Taxation
The tax charge for the year comprises:
Tax on overseas investment income
2011
£000
399
39
438
11
2010
£000
461
46
507
12
19
18
The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The differences are
explained below :
Profit on ordinary activities before taxation
Taxation at 27.5% (2010 - 28%)
Effects of:
Non taxable items and franked income
Loss carried forward
Permanent differences
Tax charge for the year
2,145
590
(617)
43
3
19
705
197
(205)
22
4
18
All of the tax charge for the year is tax deducted from the dividends of overseas companies. Dividends received from
U.K. companies are recognised in the income statement net of their associated tax credit.
7.
Profit attributable to members of the holding company
Dealt with in the accounts of: The holding company
The subsidiary undertakings
18
2011
£000
737
1,381
2,118
2010
£000
776
(83)
693
_______________________________________________________
8.
Earnings per share
Earnings per share are based on the profit on ordinary activities after taxation and
non-controlling interests of £2,118,000 (2010 – £693,000) and on 31,205,694 (2010 –
31,201,446) shares being the weighted average of number of shares in issue during the
year.
2011
2010
6.8p
2.2p
At 30th June 2010 the 3,741,963 warrants in issue were not dilutive. There were no warrants in issue at 30th June
2011.
Headline earnings are required to be disclosed by the JSE
Headline earnings/(loss) per share are based on the on ordinary activities after taxation
and non-controlling interests, before unrealised changes in the fair value of
investments, of £123,000 (2010 – loss (£98,000) and on 31,205,694 (2010 –
31,201,446) shares being the weighted average of number of shares in issue during the
year.
0.4p
(0.3)p
9.
Tangible assets
At Valuation - 1st July 2010
At cost – 1st July 2010
30th June 2011
Depreciation
Balance - 1st July 2010
Charges for the year
30th June 2011
Net book amount 30th June 2011
Net book amount 30th June 2010
Long
Leasehold
Residential
Property
£000
Office
Equipment
£000
500
-
500
123
10
133
367
377
-
47
47
47
-
47
-
-
Total
£000
500
47
547
170
10
180
367
377
The group has adopted the transitional provisions of IFRS 1, under the cost model option, such that it will retain the
valuation of the long leasehold property under UK GAAP. There will therefore be no future revaluations incorporated
in the accounts. An independent valuation of the long leasehold residential property was obtained on 14th July 2011
from Lewis Doyle, Chartered Surveyors, which valued the property at £2,150,000 (November 2008 valuation:
£1,575,000), on an open market basis in accordance with Valuation Standards issued by the Royal Institution of
Chartered Surveyors. A sale at this value would result in capital gains tax payable, net of offset of tax losses, of
£57,000 (November 2008 nil). The office equipment is held by a subsidiary company. Summary details of the lease
granted on the long leasehold residential property are set out in note 19.
10.
Investment in group companies
Operating subsidiaries, incorporated and operating in England and consolidated in these financial statements.
Held by the Company - at cost
City Group P.L.C.
Lonfin Investments Limited
- Loan to subsidiary
Percentage
of equity
51.4
100
2011
£000
89
-
7,637
7,726
2010
£000
89
-
7,743
7,832
Principal activities
Management services
Investment holding
No provision has been made against the recoverability of the loan to subsidiary because the Board considers the
underlying value of the investments held by the subsidiary to be sufficient to ensure the repayment of the loan.
19
London Finance & Investment Group P.L.C. __________________
Notes to the Accounts (continued)
For the year ended 30 June 2011
11.
Investments
(a) held as non-current assets
(i) Listed associated undertaking (Western Selection P.L.C.)
Shares at cost – brought forward
Disposal during year
Fair value adjustment – unrealised losses
Market value at 30th June
(ii) Other listed investments (MWB Group Holdings plc and Finsbury Food
Group plc)
At cost, 1st July 2010
Fair value adjustment – unrealised losses
Market value at 30th June
Total at 30th June 2011
(b) Held as current assets
(i) Listed investments (General Portfolio)
At cost
Fair value adjustment – unrealised gains
Market value at 30th June
2011
£000
Group
6,161
(2)
(2,701)
3,458
3,574
(1,099)
2,475
5,933
2010
£000
6,161
-
(3,489)
2,672
3,574
(1,579)
1,995
4,667
Company and Group
2,529
2,139
4,668
2,904
1,321
4,225
Associated undertaking
(c)
Western Selection P.L.C., the associated undertaking, is a strategic investment company traded on Plus Markets and
incorporated and operating in Great Britain with a financial year end of 30th June 2011.
At 30th June 2011 it had 17,949,872, ordinary shares of 40p each in issue, of which 43.8% are owned by the
Company’s wholly owned subsidiary, Lonfin Investments Limited.
Extracts from Western’s results are:-
Profit after tax
Non current asset investments
Current assets
Liabilities due within one year
Net asset value per share
Middle market price per share on 30th June
467
14,118
132
843
84p
46.5p
256
9,332
365
41
61p
33.5p
20
______________________________________________________
12. Trade and other receivables
Group
Company
Trade debtors
Other debtors
Prepayments and accrued income
2011
£000
151
74
35
260
2010
£000
170
80
44
294
13. Trade and other payables – amounts falling due within one year
Bank loans
Group companies
Other taxes
Other creditors
Trade creditors
Accruals
1,816
-
4
-
30
118
1,968
2,081
-
16
64
11
68
2,240
2011
£000
27
-
11
38
1,816
34
-
-
16
49
1,915
2010
£000
49
-
9
58
2,081
44
-
-
9
25
2,159
The Company’s loan facilities are secured by a charge over certain of the Company’s listed investments and its
investment property.
14. Deferred taxation
The Group has a potential deferred tax liability on the excess arising on the revaluation of leasehold property and on
unrealised gains on investments which are reflected in equity. The liability is stated net of potential relief which
would then become available, as set out below:-
Balance at 1 July 2010 and 30 June 2011
-
-
-
-
The main components of deferred tax assets and liabilities are as follows:
Deferred tax assets
Losses
6
6
6
6
6
6
6
6
Deferred tax liabilities
Unrealised gains on investments
Property revaluation surplus*
-
6
6
This is calculated based on the carrying value of the property in the accounts and not on the most recent
valuation of the property. If the investment property was sold at its most recent valuation of £2,150,000
(November 2008 £1,575,000) tax of £57,000, after available losses, (2008 nil) would become payable.
-
6
6
-
6
6
-
6
6
15. Share Capital and Reserves
Authorised equity share capital
40,000,000 shares of 5p each
Allotted, issued and fully paid shares of 5p each
31,202,037 At 1st July
5,442 Warrants exercised
31,207,479 At 30th June
21
2011
2010
Company and Group
£000
£000
2,000
2,000
1,560
-
1,560
1,560
-
1,560
London Finance & Investment Group P.L.C. __________________
Notes to the Accounts (continued)
For the year ended 30th June 2011
15. Share Capital and Reserves (continued)
There were 3,741,963 warrants to subscribe for shares outstanding at 30th June 2010. 5,442 warrants were exercised
in the year and all remaining unexercised warrants lapsed in the year.
The Group & Company’s capital comprises its shareholders’ equity. Our objective of managing capital in a manner
that enables the continued payment of dividends is being achieved.
The following describes the nature and purpose of each reserve within shareholders’ equity:-
Share capital
Share premium
Revaluation reserve
Description and purpose
Nominal value of issued share capital
Amount subscribed for share capital in excess of nominal value.
Excess of valuation of the long leasehold property over cost, prior to adoption of
IFRS 1 (see note 9).
Unrealised profits and losses on
investments
Cumulative unrealised gains and losses on investments.
Share of undistributed profits of
subsidiaries and associates
The Company’s share of cumulative undistributed post-acquisition gains and
losses of subsidiaries and associates recognised in the income statement.
Realised profits and losses
Realised profits of the Company less realised losses and unrealised losses other
than on investments.
The balances and movements on each of the above reserves are disclosed in the Consolidated Statement of Total
Comprehensive Income and Changes in Shareholders’ Equity on page 13 and the Company’s Statement of
Comprehensive Income and Changes in Shareholders’ Equity below.
16. Company Statement of Comprehensive Income and Changes in Shareholders’ Equity
Year ended 30th June 2010
Ordinary
share
capital
£000
Share
premium
account
£000
Revaluation
reserve
£000
Unrealised
profits and
(losses) on
investments
£000
Realised
profits
and
(losses)
£000
Total
£000
Balances at 1st July 2009
1,560
2,318
330
(797)
6,239
9,650
Total comprehensive income
Dividends paid in respect of the previous
year
Total transactions with shareholders
-
-
-
-
-
-
-
-
-
918
(142)
776
-
-
(93)
(93)
(93)
(93)
Balances at 30th June 2010
1,560
2,318
330
121
6,004
10,333
Year ended 30th June 2011
Balances at 1st July 2010
Total comprehensive income
Shares issued
Dividends paid in respect of the previous
year
Total transactions with shareholders
1,560
2,318
330
-
-
-
-
-
2
-
2
-
-
-
-
121
728
-
-
-
6,004
10,333
8
-
(187)
(187)
736
2
(187)
(185)
Balances at 30th June 2011
1,560
2,320
330
849
5,825
10,884
22
_______________________________________________________
17. Pension Schemes
The Group makes pension contribution to the personal pension schemes of certain employees which are money
purchase schemes and for which it has no responsibility for unfunded liabilities. Amounts paid are included within
salaries in Note 5.
18. Reconciliation of consolidated net cash flow to movement in net debt
2010/2011
Cash at bank
Bank loan
2009/2010
Cash at bank
Bank loan
19. Operating leases
At start
of year
£000
17
(2,081)
(2,064)
114
(2,556)
(2,442)
Cash
flow
£000
4
265
269
(97)
475
378
At end
of year
£000
21
(1,816)
(1,795)
17
(2,081)
(2,064)
a)
b)
The Group has an operating lease commitment in respect of an office property entered into on 12th July 2010
and terminating on 12th April 20145. Payments of £48,750 were recognised in the year and the minimum
amount payable in the next twelve months is £48,750. The Company has guaranteed the obligations under this
lease.
The Group lets out its long leasehold residential property on a monthly lease under which the tenant pays all
maintenance and operating costs. There has been no indication that the tenant will not continue on this basis
in the future.
20. Financial Instruments
The Directors set out below an explanation of the role that financial instruments have had during the year in creating
or changing the risks the Group faces in its activities. The explanation summarises the objectives and policies for
holding or issuing financial instruments and similar contracts, and the strategies for achieving their objectives that
have been followed during the year. The Company monitors its performance against these objectives on a continuous
basis and through bi-monthly reports of the investments portfolio and cash position.
The categories of financial instruments used by the Company to achieve its objectives as set out in the directors’
report are –
Financial assets
At fair value through income
Non-current investments
Current asset investments
Loans and receivables
Trade and other receivables
Cash at bank
Financial liabilities
Trade and other payables
Bank overdrafts
23
2011
£000
5,933
4,668
260
21
152
1,816
2010
£000
4,667
4,225
294
17
159
2,081
London Finance & Investment Group P.L.C. __________________
Notes to the Accounts (continued)
For the year ended 30th June 2011
20. Financial Instruments (continued)
Interest Rate Profile
The Group finances its operations through a mixture of retained profits and bank borrowings, in pounds sterling.
Drawings under the facility are at a rate fluctuating with base rate. An additional facility of £1.4million was arranged
to enable the Group to increase the investment in Western following its warrant offer in 2008. The balance of
£400,000 outstanding on this facility at the start of the year has been repaid.
The effective rate of interest for the year was 5.6% (2010 – 4.8%). The sensitivity of the Group to a 1% change in
interest rates would have been £20,000 in the current year. (2010 - £24,000)
The Group’s principal financial assets are its investment portfolios. The investment portfolios consist of equity
investments, for which an interest rate profile is not relevant. Interest is not charged on trade and other receivables
nor incurred on trade and other payables.
Currency Exposures
The table below shows the Group’s currency exposures. Such exposures comprise the monetary assets, at fair values,
that are not traded in Sterling.
Currency
Euro
Swiss franc
Danish kroner
Swedish kroner
2011
£000
1,836
1,066
199
198
3,299
2010
£000
1,613
1,073
166
152
3,004
The sensitivity to a 1% change in the sterling exchange rate would be to increase or decrease the fair values as set out
by £33,000 in aggregate (2010 - £30,000)
Liquidity Risk – The Group’s policy is that its borrowings should be flexible and available over the medium term.
The bank borrowings are by way of a loan facility of £2 million ending on 30th April 2013. The Group holds
investments, most of which are listed on recognised stock exchanges. In normal markets these are, by their nature,
liquid. However, there are long periods when the market may not be prepared to deal at realistic prices in unusually
large blocks of certain shares and this particularly applies to our three Strategic Investment holdings. The company
maintains a General Portfolio of investment holdings within normal market size and which have aggregate market
values in excess of the borrowings at any point in time. The policy is these have an aggregate market value of at least
150% of borrowings at any point in time.
Market Risk
The Company is exposed to market risk through the equity investments in other companies. The Company maintains
a spread of investments over various sectors and monitors performance continuously as described above. The
majority of the investments are in companies with good levels of liquidity. The future values of these investments will
fluctuate because of changes in interest rates and other market factors.
Reviews for indications of permanent impairment are carried out at least annually. The directors believe that the
exposure to market price risk from these activities is acceptable in the Company’s circumstances.
The sensitivity to each 1% decrease in the value of investments would result in the fair values of non current asset
investments decreasing by £59,000 (2010 - £47,000) and a corresponding increase in the unrealised profits reserve.
A 1% increase, would, on the same basis, increase fair values and decrease the unrealised profits reserve. The same
percentage increase/decrease in the current asset investments would increase/decrease carrying values by £47,000
(2010 - £42,000) and unrealised profits reserve (or earnings where a decline was below cost) by an equal amount.
24
______________________________________________________
20. Financial Instruments (continued)
Fair Value
Investments within the general and strategic portfolios are carried at fair values determined by the prices available
from the markets on which the instruments involved are traded. Unlisted investments are stated at cost net of
impairment provisions because fair value cannot be readily determined. Movements in fair value value, net of
impairment provisions, are taken through the income statement
The fair value of short term deposits, overdrafts and trade and other receivables and payables approximates to the
carrying amount because of the short maturity of these instruments.
Credit risk
No concentration of credit risk exists in the Company’s principal financial assets, and credit risk is minimised as the
counter-parties are institutions with high credit ratings. There has been no impairment of trade and other debtors
during the year, there are no provisions against these assets and none are past their due date.
21.
International Financial Reporting Standards
As indicated in note 1, at the date of authorisation of these financial statements the IASB and the International
Financial Reporting Interpretations Committee (IFRIC) have issued interpretations and amended or revised standards,
to be applied to financial statements with periods commencing either on or after 1st July 2011 as follows. None of
these are expected to have an impact on the financial statements.
Revised IAS 24
Amendments
14 and IAS 19
Improvements to IFRSs
to IFRIC
IFRS 9
IFRS 10
IFRS 11
IFRS 12
IFRS 13
Mandatory for
periods
beginning
1 January 2011
1 January 2011
1 January 2011
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
Description
Simplification of definition of related parties
Treatment of early payments of contributions to
cover funding requirements
Clarification of requirements and eliminating
inconsistencies
Classification and measurement of financial
assets – replacing part of IAS 39
Consolidated financial arrangements
Joint arrangements
Disclosure of interests in other entities
Fair value measurement
Endorsed
by EU
Yes
Yes
Yes
Yes
No
No
No
No
25
_______________________________________________________
Corporate Governance
Corporate Governance is the process by which companies are controlled and directed. The UK Listing Authority
requires UK listed companies to comply with principles of the UK Corporate Governance Code (the Code), the
detailed provisions of which constitutes best practice in Corporate Governance. Directors are required to report to
shareholders on how the Company applies the principles and confirm that the Company complies with the Code’s
provisions or explain why it does not.
The JSE requires that companies report on their compliance with Code of Corporate Practices and Conduct contained
in the King Report on Corporate Governance. The Board has reviewed the matter and recorded that in so far as those
matters contained in the King report are of concern to the company, in complying with the Combined Code, it is
satisfied that the Group complies with the requirements of the King Report.
Composition of the Board
The Board comprises the Chairman, David Marshall, Senior Independent Non-executive director, John Maxwell,
Michael Robotham, Frank Lucas and Lloyd Marshall. John Maxwell and Frank Lucas are considered to be
independent. Brief biographies of all directors are set out on page 2 of the accounts.
Responsibility for the process of appointment of directors rests with the Board acting on the recommendations of the
Nomination Committee. The removal of directors is a Board decision. The Board reviews the need for succession
planning on a regular basis.
The Company’s Articles of Association require that all new directors seek election to the Board at the next Annual
General Meeting after their appointment. In addition, all directors are required to stand down after three year terms
and submit themselves for re-election.
As a long term investment company it is appropriate for directors to serve on the board for more than a single term,
subject to continuing satisfactory performance. Given the small size of the board, this results in infrequent changes to
the composition of the Board.
Workings of the Board
The Board are collectively responsible to shareholders for the success of the Group. Entrepreneurial leadership is
provided by capitalising on the skills and experience of the investment committee allied to the strategic vision and
expertise of other Board members.
The Board operates through three committees, the Investment Committee comprising David Marshall, Lloyd
Marshall and Michael Robotham, the Nomination Committee comprising Michael Robotham and Frank Lucas, and
the Audit Committee comprising Frank Lucas and John Maxwell. All decisions not specifically delegated to a
Committee are reserved for the Board. There is no Remuneration Committee as there are no executive directors. The
remuneration of directors other than the Chairman is limited by the Company’s Articles of Association at a maximum
of £10,000 each, unless approved at some other sum by the Company in General Meeting. The current rates of
remuneration are set out in detail in the statutory accounts. The remuneration of the executive directors and
employees of the Company’s subsidiary, City Group P.L.C., is determined by the board of City Group, which
includes David Marshall, Lloyd Marshall and Michael Robotham.
Committee meetings are held independently of Board meetings and invitations to attend are extended by the
committee chairman to other directors, the group’s advisers and management as appropriate.
As an investment company, there is no Chief Executive. The Chairman is responsible for the effective performance
of the Board through control of the Board’s agenda and running of its meetings. The Chairman organises
opportunities for directors to spend time with each other on an informal basis to improve communication and
relations between directors.
A representative of the Company Secretaries attends all Board meetings to record proceedings and is available at any
time to advise on any corporate governance issues that arise. The Company Secretary is also responsible to the
Chairman for the efficient organisation of Board and Committee meetings including circulation of papers in advance
of meetings. Management reports including cash movements, portfolio movements and valuations are regularly
circulated to all directors for review.
26
London Finance & Investment Group P.L.C. __________________
Corporate Governance (continued)
The Board met on six occasions during the year following a formal agenda. It met two further times by telephone for
ad-hoc reasons (bank facility and exercise of warrants). Attendance at board meetings during the year is shown in the
following table:
Board (scheduled)
Audit Committee
No. of meetings
in year
6
1
D.C. Marshall
F.W.A. Lucas
J.H. Maxwell
J.M. Robotham
6
-
6
1
6
-
6
1
The Nomination Committee did not meet during the year as there was no requirement for it to meet.
The Group’s strategic aim is to generate growth in shareholder value in real terms over the long term through a mix of
investments and utilising a prudent level of bank borrowing. The investment mix and level of gearing are reviewed at
each Board meeting. All major investment decisions are taken by the Board. The Investment Committee has
delegated authority within certain limits for the management of the General Portfolio between Board meetings.
The Board, through review of the management reports, scrutinises the performance of the company against the
objective of real growth in shareholder value over the long term.
The directors are required to bring to the Board’s attention any interest that they may have on matters under
discussion, and may then be excluded from some or all deliberation on those matters, as is deemed appropriate in the
circumstances.
New directors receive an induction programme and all directors are encouraged to maintain personal continuing
professional education programmes
The Board evaluates its own performance and that of its committees and individual directors.
Audit Committee
The board, through its audit committee, annually reviews all material internal controls, including financial,
operational and compliance controls, and risk management systems. As a result of this review, procedures are
adopted which mitigate those risks which have not been specifically accepted under the Group’s investment policy.
The responsibility on a day to day basis for maintaining a sound system of internal controls rests with the executive
directors of City Group P.L.C. which provides day to day administration and accounting services to the Group.
There is a well-established system of internal controls set within a framework of clearly defined structures and
accountabilities with well understood policies and procedures; supported by training, budgeting, reporting and review
procedures. The Group has defined guidelines for investment appraisal, having regard to yield and capital growth.
Board decisions are implemented on a day to day basis by the subsidiary company, City Group P.L.C. The
framework for internal financial control established in that company has been reviewed by the Board and is regarded
as effective. The reporting and review procedures provide routine assurance to the Board as to the adequacy and
effectiveness of internal controls. The Board recognise that it is not possible to divide some functions as would be
the case in larger organisations and accepts that close supervision is necessary. The directors have considered the
need for an internal audit function and do not believe that one is appropriate because monitoring processes are
applied to give reasonable assurance to the Board that the systems of internal control are functioning as intended.
An annual self-assessment of risk is performed which identifies the areas in which the Group is most exposed to risk,
considers the financial implications and assesses the adequacy and effectiveness of their control. The Board has
discussed the results of this review and the directors can therefore confirm that they have reviewed the effectiveness
of the company’s system of internal control.
The Board maintains an appropriate relationship with the Group’s auditors through the Audit Committee. The
auditors do not provide any non-audit services other than limited advice on taxation matters.
27
_______________________________________________________
Nomination Committee
The Board has formed a Nomination Committee which has been charged with nominating suitable candidates for the
Board to consider recommending to the shareholders for appointment as Directors of the Company. Changes to the
composition of the Board are not anticipated to occur on a frequent basis. Whenever a change is anticipated, a job
description for the role will be agreed by the Nomination Committee, taking into account the expertise available to
the Group from the other members of the Board and the need to acquire any specific capabilities. The Nomination
Committee will then undertake whatever process is most appropriate for the identification of suitable candidates and
their assessment, taking into account any other commitments candidates might have. Appointments will be made on
merit against objective criteria.
Going Concern
The directors, after making enquiries, have a reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. They therefore continue to adopt the going concern basis
in preparing the accounts.
Shareholder Communications
The Board strives to present a balanced and understandable assessment of the Company’s position and prospects in
all interim and other price-sensitive public reports and in reports to regulators as well as in the information required
to be presented by statutory requirements. The Chairman welcomes comments on the quality of reports and any areas
for improvement.
Shareholder communication centres primarily on the publication of annual and interim accounts and occasional press
releases and trading updates. The Chairman is available for discussions with shareholders throughout the year and
particularly at the time of results announcements. Mr J. H. Maxwell, the senior independent non-executive director is
also always available should anyone wish to draw any matters to his attention.
The Annual General Meeting provides a forum for discussion by Shareholders with the Board. Shareholders are
encouraged to attend the AGM and to participate in proceedings by asking questions during the formal part of the
meeting, voting on the resolutions put to the meeting and providing Board members with their views in informal
discussions after the meeting.
Statement of Directors' Responsibilities in Respect of the Accounts
The directors are responsible for preparing the directors’ report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have elected to prepare the financial statements in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the
financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company
and of the profit or loss of the company for that period.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare financial statements in accordance with IFRSs as adopted by the European Union , subject to any
material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
28
London Finance & Investment Group P.L.C. __________________
Corporate Governance (continued)
Each of the Directors whose names and functions are listed on page 2 confirms that to the best of each person’s
knowledge and belief:
the financial statements, prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of
the assets, liabilities, financial position and profit of the Group and Company; and
the Directors’ Report contained in the Annual Report includes a fair review of the development and
performance of the business and the position of the Group and the Company, together with a description of the
principle risks and uncertainties that they face.
29
_______________________________________________________
Remuneration Report
This report has been prepared in accordance with the Directors' Remuneration Report Regulations and also meets the
relevant requirements of the Listing Rules of the Financial Services Authority. A resolution to approve the report will
be proposed at the Annual General Meeting of the Company at which the financial statements will be approved.
All members of the Board in attendance at the Annual General Meeting will be available to answer shareholders’
questions about directors’ remuneration.
Unaudited Information
Remuneration Committee
The Company has no Remuneration Committee because, given the size of the Group, it is not considered appropriate
to form a separate remuneration committee of the Board. The remuneration payable to the executive directors and
employees of the Company's subsidiary, City Group P.L.C., is considered by the board of City Group, which includes
Mr. D.C. Marshall, Mr L. H. Marshall and Mr. J.M. Robotham.
Remuneration Policy
The Company's remuneration policy is as set out in Articles of Association and applies to both executive and non-
executive directors. Briefly, it limits the remuneration of directors to £10,000 and allows for higher payments to be
made to the Executive Chairman.
Approved Share Option Scheme
This scheme was created to incentivise full time employees and directors of the Company’s subsidiary City Group.
Performance conditions are attached to options granted which include targets for growth in shareholder value. The
115,384 options granted under this scheme in 2007 are exercisable at 52p at any time up to 27th March 2017.
Unapproved Employee Benefit Scheme
This scheme was set up to incentivise full time employees and directors of the Company’s subsidiary City Group. No
awards have yet been made under this scheme. To minimise operating costs, the shares held by this scheme have
been transferred into an umbrella fund covering a number of different companies.
30
London Finance & Investment Group P.L.C. __________________
Remuneration Report (continued)
Performance Graph
Lonfin Total Shareholder Return v FTSE Eurofirst 300 Index
[LEAVE SPACE FOR NEW GRAPH TO BE INSERTED]
The above graph shows London Finance & Investment Group P.L.C.'s Total Shareholder Return (TSR) performance
compared to the TSR of the FTSE Eurofirst 300 index over the past five years. The Company’s main activity is that
of an investment company and the Board believes that because the portfolio concentrates on FTSE 100 companies, or
European equivalents, that this index is best suited as the comparator index. The Company is not a part of the FTSE
Eurofirst 300 Index, being a member of the FTSE Fledgling index which is not deemed an appropriate comparator as
it contains many small companies of varying nature.
TSR is defined as the percentage change over the period in market price assuming the reinvestment of income and
funding of liabilities of the theoretical holding. TSR has been calculated on a one-month averaging basis in order to
reduce the volatility associated with spot prices.
Audited Information
Service Contracts
None of the Directors has a service contract with the Company.
Directors’ Remuneration
The directors’ remuneration is by way of directors fees only and during the year comprised:
Non-executive Chairman
Mr D.C. Marshall
Non-executive directors
Mr. J.H. Maxwell
Dr. F.W.A. Lucas
Mr. J.M. Robotham
2011
Total
£
2010
Total
£
10,000
*
10,000
7,500
7,500
15,000
40,000
†
♣
7,500
7,500
17,500
42,500
*
†
♣
Mr. Marshall ceded his fees of £10,000 (2010 - £10,000) for the year to an overseas company which supplies
his services and in which none of the directors are beneficially interested. The Chairman received no other
payment or benefits from the Company.
Dr Lucas ceded his fees of £7,500 (2010 - £7,500) to his primary employer.
Of this sum, £7,500 (2010 - £7,500) relates to Mr. Robotham's fees paid by the Company and the balance is in
respect of fees received from the subsidiary, City Group P.L.C.
31
_________________________________________________
Each Director is required to retire by rotation every three years in accordance with the Articles of Association and re-
appointment is not automatic.
The Company does not make bonus payments to any director.
In addition, Mr L. H. Marshall, who was appointed a director of the Company on 3 August 2011, was a full time
employee of our subsidiary City Group P.L.C. until his appointment as finance director of Marshall Monteagle PLC
on 1st October 2010. In the period from 1 July 2010 until 30 September 2010 he was paid £16,740 by City Group
(year ended 30 June 2010: £75,142). Mr L.H. Marshall’s directors fees are payable to his primary employer,
Marshall Monteagle PLC.
Share Options
Except as noted below, none of the directors have any options over shares of the Company.
Mr L. H. Marshall was granted Approved Share Options while an employee of City Group, He has options over
57,692 shares exercisable at 52p at any time prior to 27th March 2017.
Long Term Incentives
The Company will consider these in the light of changing legislation, but has no plans to adopt long-term incentives,
other than the Approved Share Option Scheme and Unapproved Employee Benefit Scheme referred to above.
Pensions
There are no Company contributions payable to the executive or non-executive directors in respect of pensions.
29th September 2011
On behalf of the Board
DAVID MARSHALL
Chairman
32
London Finance & Investment Group P.L.C. __________________
Report of the Independent Auditors
To the members of London Finance & Investment Group P.L.C.
We have audited the group and parent company financial statements of London Finance & Investment Group P.L.C. for the
year ended 30th June 2011 which comprise the Consolidated and Parent Company Statements of Financial Position, the
Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Equity and the Consolidated
Statements of Cash Flow and related notes. The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the company's members, as a body, in accordance with Sections 495, 496 and 497 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters
we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the company and the company's shareholders as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement on page 32, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices
Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error.
This includes an assessment of: whether the accounting policies are appropriate to the group’s and the parent company’s
circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting
estimates made by the directors; and the overall presentation of the financial statements.
Opinion on financial statements
In our opinion the financial statements:
give a true and fair view of the state of the group’s and of the parent company’s affairs as at 30th June 2011 and of the
group’s and the parent company’s profit (loss) for the year then ended;
the financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as
regards the group financial statements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006; and
the information given in the Directors’ Report for the financial year for which the financial statements are prepared is
consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
33
_________________________________________________
Under the Listing Rules we are required to review:
the directors’ statement, set out on page 31, in relation to going concern;
the part of the Corporate Governance Statement relating to the company’s compliance with the nine provisions of the
June 2008 Combined Code specified for our review; and
certain elements of the report to shareholders by the Board on directors’ remuneration.
Haydn Wood (Senior Statutory Auditor)
For and on behalf of Steele Robertson Goddard
Chartered Accountants and Statutory Auditors
London, United Kingdom
29th September 2011
34
London Finance & Investment Group P.L.C. __________________
Summary of Results
For the five years ended 30 June 2011
Consolidated Statement of financial position
Issued share capital
Share premium and other reserves
Company’s retained realised profits
Shareholders' funds (all equity)
Non-controlling interests
Disposition of Capital
Long Leasehold Property
Other Non-current Assets
Current assets
Listed investments
Other current assets
Cash and deposits
Liabilities and deferred tax
2011
£000
2010
£000
2009
£000
2008
£000
2007
£000
1,560
3,530
5,825
10,915
92
11,007
2,093
5,933
8,026
4,668
260
21
4,949
1,560
890
6,004
8,454
84
8,538
1,575
4.667
6,242
4,225
294
17
4,536
1,560
45
6,239
7,844
90
7,934
1,560
4,064
6,539
12,163
101
12,264
1,560
12,578
6,475
20,613
95
20,708
1,575
4,797
6,372
3,976
309
114
4,399
506
8,784
9,290
509
18,305
18,814
5,726
319
36
6,081
6,564
184
87
6,835
(1,968)
11,007
(2,240)
8,538
(2,837)
7,934
(3,107)
12,264
(4,941)
20,708
Net assets per share
Dividend per share
35.0p
27.1p
25.1p
39.0p
66.1p
0.6p
0.6p
Nil
1.20p
1.10p
The comparative figures have been restated to include the long leasehold investment property at its latest valuation net of
attributable tax.
35
_________________________________________________
Notice of Annual General Meeting
NOTICE is hereby given that the ANNUAL GENERAL MEETING of London Finance & Investment Group
P.L.C. (the “Company”) will be held at the offices of City Group P.L.C., 30 City Road, London, EC1Y 2BQ on
[ ] November 2011 at 10.00 a.m. for the following purposes:-
1.
2.
3.
4.
5.
6.
To receive the Directors' Report and Accounts for the year ended 30th June 2011.
To receive and adopt the Remuneration Report for the year ended 30th June 2011.
To declare a dividend.
To re-elect Dr. F.W.A. Lucas a director.
To elect Mr. L.H. Marshall a director.
To re-appoint the auditors Steele Robertson Goddard and to authorise the Directors to fix their
remuneration.
Special Business
To consider and, if thought fit, pass the following Resolution which will be proposed as an Ordinary
Resolution:-
7.
That the Directors be and are hereby generally and unconditionally authorised to exercise all the powers
of the Company to allot relevant securities (within the meaning of Section 551 of the Companies Act
2006 (“the Act”)) up to a maximum nominal amount of £439,898 (representing 8,797,963 shares) to such
persons at such times and on such terms as they think proper during the period expiring at the end of the
next annual general meeting of the Company to be held after the date of the passing of this resolution or,
if earlier, fifteen months from the date of the passing of this resolution; and that the Company be and is
hereby authorised to make prior to the expiry of such period referred to in paragraph (i) above any offer
or agreement which would or might require relevant securities to be allotted after the expiry of the said
period that the Directors may allot relevant securities in pursuance of any such offer or agreement
notwithstanding the expiry of the authority given by this resolution.
To consider and, if thought fit, pass the following Resolution which will be proposed as a Special Resolution:
8.
That
(a)
in accordance with Section 570 of the Companies Act 2006 the Directors be and are hereby given
power to allot shares pursuant to the authority conferred by the Ordinary Resolution numbered 5
passed at the Annual General Meeting held on 30th September 2011, as and when the same becomes
effective as if Section 563 of the Companies Act 2006 did not apply to any such allotment,
provided that:
(i)
the power hereby conferred shall be limited;
(aa)
to the allotment of shares in the Company in connection with or pursuant to an offer
by way of rights, bonus issues or other similar issues to the holders of Shares of 40p
each in the capital of the Company and other persons entitled to participate therein in
proportion (as nearly as may be) to such holders' holdings of such shares (or, as
appropriate, to the numbers of such shares which such other persons are for those
purposes deemed to hold) subject only to such exclusions or other arrangements as the
Directors may feel necessary or expedient to deal with (i) fractional entitlements or
legal or practical problems under the laws or the requirements of any recognised
regulatory body in any territory (ii) underwriting of such an issue and (iii) applications
by shareholders for equity instruments offered to other shareholders as part of such an
issue, but not taken up by other shareholders; and
36
_________________________________________________
(bb)
to the allotment (otherwise than pursuant to sub-paragraph (i) (aa) of this proviso) of
shares in the Company up to an aggregate nominal amount of £78,000 (1,560,000
shares) representing 5 per cent. of the issued share capital;
(ii)
the power hereby granted shall expire on the earlier of the conclusion of the next Annual
General Meeting of the Company or the date falling 15 months after the date of the passing
of this resolution;
(b)
the said power shall allow and enable the Directors to make an offer or agreement before the expiry
of that power which would or might require shares in the Company to be allotted after such expiry
and the Directors may allot shares in the Company in pursuance of such offer or agreement as if the
said power had not expired
(c) words and expressions defined in or for the purposes of Part 17 of the Companies Act 2006 shall
bear the same meaning herein"
30 City Road,
London EC1Y 2AG.
28th September 2011
By Order of the Board,
CITY GROUP P.L.C.
Secretaries
Notes A member entitled to attend and vote at the meeting may appoint one or more proxies to attend and, on a poll, to vote
on his behalf.
A proxy need not be a member of the company.
A form of proxy is enclosed. To be valid it should be completed and returned so as to reach the Secretaries, City
Group P.L.C. at 30 City Road, London, EC1Y 2AG, U.K. not less than 48 hours before the time for the meeting.
Completion of a form of proxy does not preclude a member from subsequently attending and voting in person.
The register of directors’ shareholdings will be available for inspection by members at the registered office of the
company during usual business hours on any weekday (public holidays excepted), from the date of this notice until
the date of the annual general meeting and at the place of the meeting, from 9.15 a.m. until the conclusion thereof.
Change of Members are requested to advise the United Kingdom Registrars, Capita Registrars, or the South African
Address
Registrars, Computershare Investor Services (Pty.) Limited of any change of address.
37
London Finance & Investment Group P.L.C. __________________
Form of Proxy
I / We, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
being (a) member(s) of the above-named company hereby appoint the chairman of the meeting, failing whom
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
as my / our proxy to vote for me / us on my / our behalf at the Annual General Meeting of the Company to be held on [ ]
November 2011 and at any adjournment thereof.
1/We hereby authorise and instruct my/our proxy to vote as indicated below on the resolutions to be proposed at such
meeting. Unless otherwise directed the proxy will vote or abstain from voting as he thinks fit.
For
Against
Abstain
RESOLUTIONS
To adopt the reports and accounts.
To adopt the Remuneration Report
To declare a dividend.
To re-elect Dr. F.W.A. Lucas a director.
To elect Mr. L.H. Marshall a director
To appoint the auditors and to authorise the Directors to fix their remuneration
SPECIAL BUSINESS
Ordinary Resolution
To authorise the directors to allot securities.
Special Resolution
To authorise the directors to allot securities (subject to limitation) as if pre-
emption rights did not apply.
Dated . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes
(i)
(ii)
(iii)
This proxy must be lodged at the offices of the Secretaries, City Group P.L.C., 30 City Road, London, EC1Y 2AG, U.K., or the
South African registrars, Computershare Investor Services (Pty.) Limited, 70 Diagonal Street, Johannesburg 2001, (P.O. Box
61051, Marshalltown 2107) South Africa not later than 48 hours before the time of the meeting, together if appropriate with the
power of attorney or other authority under which it is signed or a notarially certified copy of such power or authority.
In the case of a corporation this proxy should be given under its Common Seal or, if none, should be signed by the attorney or
officer duly authorised.
In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the
exclusion of the votes of the other joint holders. For this purpose seniority is determined by the order in which the names stand in
the Register of Shareholders in respect of joint holdings.
(iv)
If it is desired to appoint as proxy any person other than the chairman of the meeting, the name and address of such person should
be inserted in the relevant place, reference to the chairman deleted, and the alteration initialled.
(v)
A proxy need not be a shareholder.
38