London Finance &
Investment Group PLC
Annual Report and Financial Statements
30 June 2022
LONDON FINANCE & INVESTMENT GROUP PLC
(“Lonfin” or the “Company”)
Lonfin is a United Kingdom investment finance and management company. Its core portfolio centres on
quality companies in the FTSE Eurofirst 300 and S&P 500 indices. Additionally, Lonfin holds
investments in United Kingdom listed companies where it has Directors in common. Lonfin is also a
43.8% shareholder in Western Selection PLC (“Western”). Western’s share capital is admitted to trading
on the AQSE Growth Market.
Lonfin’s shares are quoted in the official lists of the London and Johannesburg stock exchanges. The
current price of the Company's shares can be found on the website of the London Stock Exchange
(www.londonstockexchange.com) and in the business section of some of the major South African
newspapers.
_______________________________
CITY GROUP PLC
(“City Group”)
City Group, which is owned by Lonfin and Western, provides office accommodation, company
secretarial, finance and head office services to both companies and to other clients requiring a London
presence, including companies in which Lonfin and Western have an investment.
The Company and its subsidiaries, all of which are incorporated in England, have their principal place
of business and their registered office at 1 Ely Place, London EC1N 6RY.
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Contents
Directors
Corporate Contacts
Summary of Net Assets
Financial Calendar
Strategic Report
Statement of Directors’ Responsibilities in Respect of the Financial Statements
Independent Auditor’s Report To The Members Of London Finance & Investment Group Plc
Consolidated Statement of Total Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Consolidated Statement of Changes in Shareholders’ Equity
Company Statement of Changes in Shareholders’ Equity
Notes to the Financial Statements
Directors’ Report
Corporate Governance Statement
Audit Committee Report
Directors’ Remuneration Report
Task Force on Climate-related financial disclosures (“TCFD”) Report
Summary of Results
NOTICE OF ANNUAL GENERAL MEETING
Proxy Form
Page
1
2
3
3
4
13
14
20
21
22
23
24
25
26
27
43
50
55
59
66
68
69
Enclosed
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Directors
D.C. MARSHALL, Chairman ♦
David Marshall joined the Board in 1971. He is the chairman of London Finance & Investment
Group PLC. David is also chairman of Western and chief executive of Marshall Monteagle PLC.
He is also a non-executive director of Industrial & Commercial Holdings PLC. He resides in South
Africa, where he has interests in listed trading, financial and property companies.
E.J. BEALE, Non-Executive ♦
Edward Beale is a Chartered Accountant and is the Financial Director of Marshall Monteagle PLC.
He was a member of the Accounting Council of the Financial Reporting Council for 6 years until
August 2013. He is currently a member, and previously was chairman, of the Corporate
Governance Expert Group of the Quoted Companies Alliance. He is a non-executive director of
Western, Brand Architekts Group PLC, Heartstone Inns Limited and Industrial & Commercial
Holdings PLC. He joined the Board in April 2016.
J.H. MAXWELL, CA, CCMI, Senior Independent Non-Executive *
John Maxwell, who is a Chartered Accountant, was appointed a Director of the Company in
November 2003. He currently serves as Chief Executive Officer of Vulcan Industries Plc and as a
non-executive director of The Grosvenor Waterside Residents Company Limited. John is Chairman
of the Remuneration and Nomination Committees.
•
F.W.A. LUCAS, BSc, PhD, Independent Non-Executive *
Frank Lucas was appointed a Director in August 1999. He is a mining geologist by profession
and one of the founding shareholders and a Director of Loeb Aron & Company Ltd. Frank is
Chairman of the Audit Committee.
•
W.H. MARSHALL, Non-Executive
Warwick Marshall joined the Board in January 2019. Warwick is a son of David Marshall and lives
in Zug, Switzerland. He established the trading division of the Monteagle Group in 1993 initially
trading in retailer branded fast moving consumer goods, and then later diversifying into metals,
minerals, logistics and trade finance. He is a director of various other group operating companies
and has extensive investment experience in his private capacity.
* Member of the Audit Committee
♦ Member of the Investment Committee
Member of the Nomination Committee
• Member of the Remuneration Committee
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Corporate Contacts
United Kingdom
Republic of South Africa
Company
Secretary
Registered
Office
City Group PLC
1 Ely Place, London,
EC1N 6RY
Tel: + 44 (0) 20 7796 9060
Company
Registered
Number
201151
11 Sunbury Park
La Lucia Ridge Office Estate
La Lucia 4051
Durban, South Africa
Tel: +27 (0)31 566 7600
Website
www.city-group.com/london-finance-investment-group-plc
Registrars
Sponsor
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
West Midlands B62 8HD
Tel: +44 (0)121 585 1131
Computershare Investor Services
(Pty.) Limited
70 Marshall Street
Johannesburg, 2001, South Africa
(P.O. Box 61051, Marshalltown 2107)
Tel: +27 11 370 5000
JSE Limited Sponsor:
Questco Corporate Advisory
Ground Floor, Block C,
Investment Place, 10th Road,
Hyde Park, 2196 Johannesburg,
South Africa
Tel: +27 11 011 9212
Independent
Auditor
PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
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London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Summary of Net Assets
At 30 June
Strategic Investments at fair value:
Western Selection Plc
Finsbury Food Group Plc
General Equity Portfolio at fair value
Tangible non-current assets
Right of use asset
Cash, bank balances and deposits
Other net current liabilities
Lease liabilities
Deferred taxation
Non-Controlling interests
2022
£000
2,751
1,206
3,957
14,055
12
81
407
(327)
(107)
(843)
(141)
2021
£000
2,712
5,490
8,202
12,081
22
145
309
(753)
(178)
(806)
(129)
Net assets attributable to shareholders, including investments
at fair value
17,094
18,893
54.8p
60.5p
0.55p
0.60p
35.5p
0.55p
0.60p
40.5p
Net assets per share
Dividends*
Interim
Proposed Final
Mid-market price on 30 June
*Information on Dividends is set out on page 7
Financial Calendar
Announcement of
Final Results for the
year ended 30 June 2022
30 September 2022
Annual General Meeting
10 November 2022
Final Dividend for 2022
Payable on 21 December 2022 to shareholders on the register of
Half year results to
31 December 2022
to be announced in February 2023
members at 9 December 2022
Interim Dividend for 2022
to be announced in February 2023
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Strategic Report
Strategy, Business Model and Investment Policy
Lonfin is an investment company whose objective is to generate growth in shareholder value in real terms
over the medium to long term whilst maintaining a progressive dividend policy.
The Group’s investment policy is to invest in a range of ‘Strategic’, ‘General Portfolio’ and from time to
time ‘Other Investments’. General Portfolio Investments comprise liquid stock market investments, both
in equity instruments and bonds, and, at the Board’s discretion, ‘Other Investments’ are typically property
and other physical assets. Strategic Investments are significant investments in smaller UK quoted
companies. These are balanced by the General Portfolio, which consists of a broad range of investments
in major USA, UK and other European companies which provides a diversified exposure to international
equity markets.
Further information on the Group’s Investment Policy can be found in the Directors’ Report on page 43.
The Group’s net assets per share for 2022 have decreased from the previous year to 54.8p and
decreased 16.2% over the last five years. Shareholders’ total dividends for 2022 remains the same at
1.15p. Information on the Group’s performance against the Board’s key performance indicators (KPIs) is
set out on page 9 of this report.
Results
Net assets have decreased to 54.8p per share (2021 – 60.5p per share)
The sale of 4,200,000 shares in Finsbury Food Group Plc for £3,445,000 has led to decrease in
value of the Strategic Investments, from £8,202,000 to £3,957,000.
The value of the General Portfolio has increased, including investment purchases and sales, over
the year, by 16.3% from £12,081,000 to £14,055,000
The fair value of the General Portfolio investments over the period has decreased by £508,000.
No significant increase in Group operating costs
A final dividend of 0.60p per share is recommended, making a total of 1.15p per share for the
year (2021 – 1.15p)
The Company and its subsidiaries (“Group”) recorded an operating profit for the year, before interest, tax
and changes to the fair value adjustments of investments of £180,000, compared to operating profit for
the previous year, before tax and changes to the fair value adjustments of investments, of £225,000. The
significant decrease in fair value of Strategic Investments that occurred during the year has led to Total
Comprehensive loss for the year of £1,439,000 compared to Comprehensive income of £3,241,000 for
the previous year. Basic and headline losses per share are (1.4)p (2021- profit of 4.8p).
Strategic Investments
The value of the Strategic Investments has decreased by £4,245,000 due to the disposal of Finsbury
Food Group Plc shares during the year and the market movements in the share prices.
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London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Strategic Report (continued)
Western Selection PLC (“Western”)
The Group holds 7,860,515 ordinary shares, being 43.8% of the issued share capital of Western. On 28
September 2022, Western announced unaudited preliminary results showing a loss after tax of £438,000
for the year to 30 June 2022 (2021 loss – £109,000). Losses per share are 2.4p (2021 - losses of 0.62p).
Western’s Board has not recommended payment of an interim or a final dividend for the year.
Western’s net assets at market value at 30 June 2022 were £9,963,000 equivalent to 56p per share,
which remains at the same level with the 56p last year.
Lonfin’s share of the net assets of Western, including the value of Western’s investments at market value,
was £4,364,000 (2021 – £4,396,000). The fair value for Western recorded in the Statement of Financial
Position is the market value of £2,751,000 (2021 - £2,712,000). This represents 15.8% (2021 – 14.2%)
of the net assets of the Group.
Western’s objective is to generate growth in value for shareholders over the medium to long-term.
Western also aspires to pay a progressive dividend, when in the best interest of the shareholders and
the Company, including ensuring any dividend paid would not have a negative effect on the ability to
maintain continued growth.
Recently, some of the Core Holdings held by Western have not performed well. The Western Board has
fully engaged with those companies’ boards to encourage change and ensure a focus on shareholder
value. Western’s Board is delighted that they have seen a recovery in value in some cases and continue
to be fully engaged investors. At present Western is not seeking to invest in new Core Holdings. Western
continues to actively invest through its treasury operations which consist of a mix of cash and debt
facilities as well as the liquid investments. These liquid investments are primarily in blue-chip companies
in the USA, UK and Europe.
Western is a strategic investment which is technically a subsidiary of the Company that has not been
consolidated due to the application of the investment entity exemption under IFRS 10.
David Marshall is the Chairman of Western and Edward Beale is non-executive director.
Western’s main Core Holdings are Crestchic Plc (formerly Northbridge Industrial Services plc) and
Kinovo Plc (formerly Bilby plc).
An extract from Western’s announcement on 28 September 2022 relating to its main Core Holdings is set
out below:
Core Holdings of Western Selection PLC
Crestchic Plc (previously Northbridge Industrial Services Plc)
Crestchic designs, manufactures and sells specialist industrial equipment to a non-cyclical customer
base. With offices or agents in the UK, USA, Dubai, Germany, Belgium, France, Australia, New
Zealand, China and Singapore, Crestchic has a global customer base. This includes utility companies,
the oil and gas sector, shipping, construction and the public sector. The product range includes
loadbanks, transformers and oil tools. Further information about Crestchic is available on their website:
www.crestchicplc.com
Crestchic, which is admitted to trading on AIM, announced its results for the year ended 31 December
2021 on 12 April 2022 and recorded a total comprehensive loss of £5,515,000 for the year (2021- total
comprehensive loss of £7,400,000). A final dividend of £0.01p was announced and paid by Crestchic
in June this year (2021 - £Nil).
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Western has disposed of 2,234,500 shares in Crestchic and now holds 1,065,500 Crestchic shares
which represents 3.6% of Crestchic’s issued share capital. Following the disposal, the market value
of this investment on 30 June 2022 was £2,024,450 (2021 - £3,828,000) which represents
approximately 20.3% (2021 – 38.1%) of Western’s net assets.
Kinovo Plc (“Kinovo”) (formerly Bilby Plc)
Kinovo is an established, and award winning, provider of gas installation, maintenance and general
building services to local authority and housing associations across London and South-East England.
They have a strategy of growing organically and by acquisition. Further information about Kinovo is
available on their website: www.kinovoplc.com.
Kinovo, which is admitted to trading on AIM, announced its results for the year ended 31 March 2022
on 19 August 2022 showing a total comprehensive loss of £10,882,000 compared to a total
comprehensive profit of £157,000 for the previous year ended 31 March 2021. Interim dividends of
£0.05p per share were paid during the year (2021 – Nil). No final dividend (2021 - £0.05p per share)
was recommended.
Western holds 7,500,000 Kinovo shares which represents 12.07% of Kinovo’s issued share capital.
The market value of this investment on 30 June 2022 was £1,125,000 (2021- £2,775,000), which
represents approximately 11.3% (2021 – 27.7%) of Western’s net assets.
Associated Companies
Finsbury Food Group plc (“Finsbury”)
Finsbury is one of the largest producers and suppliers of premium cakes, bread and morning goods in
the UK and currently supplies most of the UK's major supermarket chains. Further information about
its website:
Finsbury, whose shares are admitted
www.finsburyfoods.co.uk
trading on AIM,
is available on
to
At 30 June 2022, Lonfin held 1,800,000 Finsbury shares, representing 1.4% of Finsbury’s issued share
capital. The market value of the holding was £1,206,000 as at 30 June 2022 (cost - £517,065) and rep-
resents approximately 7% (2021 – 29%) of Lonfin’s net assets.
On 21 February 2022, Finsbury announced their interim results, with total comprehensive profit of
£4,667,000 for the 26 weeks ended 25 December 2021 (52 weeks to 26 June 2021 –£13,645,000).
A total of £154,030 in dividends were received from Finsbury during the year (2021 - £Nil).
As of 8 September 2022, all the remaining 1,800,000 shares have been disposed of.
General Portfolio
The investments comprising the General Portfolio at 30 June 2022 are listed on page 12.
The portfolio is diverse with material interests in Food and Beverages, Natural Resources, Chemicals and
Tobacco. We believe that the portfolio of quality companies we hold has the potential to outperform the
market in the medium to long term.
At 30 June 2022, the number of holdings in the General Portfolio was 40 (2021 – 36). The value of the
General Portfolio over the year has increased by £1,974,000 (2021 - increased by £2,133,000) from
£12,081,000 to £14,055,000. This 16.3% increase includes investment purchases during the year of
£5,152,000 and investment sales (including selling expenses) during the same period of £1,735,000.
The fair value of the General Portfolio investments, after adjusting for sales, has decreased by 12.2% as
at 30 June 2022.
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London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Strategic Report (continued)
Board Changes
Whilst the Board is satisfied that it has a sufficient spread of skills, experience and support within the
Board to operate the Company and to develop the Company’s investment business, the Board will
continue to seek further suitable Board candidates who can add value to the Board.
Operations, Directors and Employees
All of our operations and those of Western, with the exception of investment selection, are outsourced to
our subsidiary, City Group PLC (“City Group”). City Group also provides office accommodation, company
secretarial, finance and head office services to a number of other companies. City Group is responsible
for the initial identification and appraisal of potential new strategic investments for the Company and the
day-to-day monitoring of existing strategic investments and employs 6 people.
Further information on Directors and employees is set out in the Directors’ Report on page 48 of this
document.
Greenhouse Gas Emissions
Scope 2 emissions. During the year ended 30 June 2022, the Group’s electricity consumption for our
London office was 6 MWh equating to a carbon dioxide equivalent of 3 tonnes (1 tCO2e/employee) (2021
– 10 tonnes). The Company’s report on Task Force on Climate-related financial disclosures is set out on
page 66 of this document.
Dividend
The Board recommends a final dividend of 0.60p (ZAR 11.89206 cents) per share, making a total of 1.15p
(ZAR 22.7932 cents) per ordinary share for the year (2021 – 1.15p). Subject to shareholders’ approval at
the Company’s Annual General Meeting (“AGM”) to be held on 10 November 2022, the dividend will be
paid on 21 December 2022 to those shareholders on the register at the close of business on 9 December
2022. Shareholders on the South African register will receive their dividend in South African rand
converted from Pounds sterling (“Sterling”) at the closing rate of exchange on Thursday, 22 September
2022 being GBP1= ZAR 19.8201.
JSE Disclosure Requirements
In respect of the normal gross cash dividend, and in terms of the South African Tax Act, the following
dividend tax ruling only applies to those shareholders who are registered on the South African register on
Friday, 9 December 2022.
•
•
•
The number of shares in issue as at the dividend declaration date is 31,207,479;
The dividend has been declared from income reserves. Funds are sourced from the Company’s
main bank account in London and is regarded as a foreign dividend by South African
shareholders; and
The Company’s UK Income Tax reference number is 948/L32120.
Dividend dates:
Last date to trade (SA)
Shares trade ex-dividend (SA)
Shares trade ex-dividend (UK)
Record date (UK and SA)
Pay date
Tuesday, 6 December 2022
Wednesday, 7 December 2022
Thursday, 8 December 2022
Friday, 9 December 2022
Wednesday, 21 December 2022
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The JSE Listings Requirements require disclosure of additional information in relation to any dividend
payments.
Shareholders registered on the South African register are advised that a dividend withholding tax will be
withheld from the gross final dividend amount of ZAR 11.89206 cents per share at a rate of 20% unless
a shareholder qualifies for an exemption; shareholders registered on the South African register who do
not qualify for an exemption will therefore receive a net dividend of ZAR 9.51365 cents per share. The
dividend withholding tax and the information contained in this paragraph is only of direct application to
shareholders registered on the South African register, who should direct any questions about the
application of the dividend withholding tax to Computershare Investor Services (Pty) Limited, Tel: +27 11
370 5000.
Share certificates may not be de-materialised or re-materialised between Wednesday, 7 December 2022
and Friday 9 December 2022, both days inclusive. Shares may not be transferred between the registers
in London and South Africa during this period either.
Financial Instruments, Principal Risks and Uncertainties
The financial instruments of the Group, in addition to its investments, comprise cash to finance those
investments. The Company also has an overdraft facility with its new banking provider Credit Suisse. The
interest rate on any funds drawn down is floating interest and for the current reporting period ranges
between 4.5% and 5.5%. The Group currently has no borrowings under this facility.
As an investment company, our principal risks and uncertainties which arise from the Group’s financial
instruments are:
Stock market volatility, economic uncertainty, including inflation and energy concerns, Covid, Brexit
and the war in Ukraine
The Group’s investment performance will be affected by general economic and market conditions.
Although the Group cannot predict the level of growth in the global economy, as with most businesses,
it believes a period of weak market growth will have an adverse effect on its investments. Volatility
relating to the Group’s investments, including movements in interest rates and returns from equity and
other investments will impact upon the value of the Group’s investment portfolio.
The risk has been increased by the continued presence of Covid-19 and the emergence of new
variants, the UK/EU issues still to be resolved post Brexit, the impact on the UK and Europe of the war
in the Ukraine, global energy supply and food shortage concerns and the rising cost of living and
inflation. These factors diminish investor confidence as well as increasing market uncertainty which
can lead to a downturn in the markets. There have been large fluctuations on the stock markets in
both the United Kingdom and globally, although stock market indices have recovered substantially
since their lows in March 2021. The long-term effect continues to be on maintaining dividend policies
and on increased market volatility.
Investments and General Portfolio investments
A number of external factors outside the control of the Group, such as the continued presence of
Covid-19, post Brexit issues which remain to be resolved, the war in Ukraine, the energy supply and
food shortage concerns and rising inflation, may impact the share price performance of its
investments. Such factors could include investor sentiment, local and international stock market
conditions, divergence of results from analysts’ expectations, changes in earnings estimates by
analysts and changes in political and economic sentiment. Exchange rate movements will contribute
to the volatility of prices of foreign stocks.
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London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Strategic Report (continued)
Dividend income
The ability of the companies that we invest in to pay dividends to shareholders depends upon their
profitability, cash flow and the extent to which, as a matter of law, they have sufficient distributable
reserves from which any proposed dividends may be paid and the willingness of the boards of such
companies to pay. There can be no guarantee that the companies we invest in will be able to sustain
their dividend policies in the future.
Covid-19 has had an effect on the payment of dividends by companies and Core Holdings in particular
have not paid dividends during this period due to the uncertainty created by Covid-19. Despite this,
companies have however slowly begun to return to the payment of dividends and the Board expects
this trend to continue.
Ability to make Strategic Investments
There are limited opportunities for the Group to make strategic investments and therefore there is no
guarantee that the Group will be able to do so at a price the Directors believe will represent fair value.
Liquidity of equity investments in Strategic Investments
Strategic Investments may be made in the equity of “small cap” companies, both listed and unlisted.
There is a risk that due to the low level of liquidity in the equity of these Strategic Investments the
Group may not be able to realise its investment, either at all, or at a price the Group believes reflects
fair value.
The depth and overlap of experience of Directors means that there is no key-man dependency. Note 21
on pages 39 to 41 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.
Key Performance Indicators
Key Performance Indicators (‘KPIs’) are the yardsticks against which the Board measures the
performance of the Group. Our objectives are real growth over the long term in dividends and net assets
per share. Our performance on these KPIs is shown below. As an investment company, we have no
relevant non-financial KPIs. In addition, the Board also compares the Group’s total shareholder return
(TSR) with the TSR of the FTSE Eurofirst 100 index. A graph setting out that performance is set out on
page 61.
2022
2021
2020
2019
(restated)
Net assets per share
Change in net assets per share over 5
years
Dividends (net) per share
54.8p
60.5p
50.6p
58.5p
(16.2%)
(7.7%)
(17.6%)
17.7%
1.15p
1.15p
1.15p
1.15p
2018
65.4p
46%
1.15p
Definition of KPIs used above
Net assets per share - Net assets including investments at market value at the period end valuation
divided by the number of shares in issue at the year end.
Dividends per share - Dividends declared for the year divided by the number of shares in issue at the
year end.
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Financing Structure
The Group is financed by equity funding. However, the Board believes that a reasonable level of gearing
can enhance returns to shareholders. Accordingly, the Group has secured a bank credit facility with Credit
Suisse.
The Board currently has no plans to implement a share buy-back policy.
Although the Board has no intention of issuing further shares in the Company at this time, to provide
Directors with flexibility over the management of the Company’s capital, shareholders are being asked to
approve resolutions at the forthcoming AGM which would permit the Company to issue new ordinary
shares, details of which are explained in the Directors’ Report on page 47. Similar resolutions have been
approved by shareholders at the Company’s previous AGMs.
S172 Statement
In line with their duties as set out in Section 172 of the Companies Act 2006, the Directors act in a way
they consider would be most likely to promote the long term success of the Group for the benefit of its
members as a whole, whilst also having regard to the views and interests of wider stakeholders and
matters as set out in Section172 (1).
As an investment Group, the goal of the Group is to provide financial returns to the shareholders over the
long term. In this respect the Directors, at all times, have due consideration as to the potential effect of
investment decisions and the benefit they may bring to the shareholders.
Key investment decisions and matters that are of strategic importance to the Group are appropriately
informed by Section 172 factors. The Company’s website, www.city-group.com/london-finance-and-in-
vestment -group-plc, is available to all shareholders and other stakeholders and key decisions of the
Board are announced to the London Stock Exchange through a Regulatory News Service.
Due to the nature of the Group, the Company does not have executives, employees to consider as stake-
holders except in the case of the staff of City Group PLC, the Company Secretary. Accordingly, with
regards to wider stakeholders, the Directors consider the underlying strategic companies in which the
Group has invested as well as advisers and suppliers amongst the key stakeholders of the Group. In this
respect, the Directors engage with these stakeholders on a frequent basis in order to build and strengthen
such relationships. All stakeholders are encouraged to communicate with the Board through the Chair-
man or through City Group PLC.
The views of and impact upon the wider stakeholders of the Group are considered as part of the Board
decision-making process including engaging with stakeholders to ensure they have a clear understanding
of the long-term goals of the Group and how the Directors intend to achieve these goals.
The Directors are committed to upholding the highest standard of corporate governance within the Group
and to ensure that they maintain a high level of knowledge and understanding of governance require-
ments to be implemented by the Group. The Directors have also implemented policies to ensure the
integrity and sustainability of the Group is upheld.
The Directors’ Report and Corporate Governance Statement contain further details as to how the Direc-
tors undertake their decisions with regards to Section 172 of the Companies Act 2006 and the effect on
the decision making of the Board.
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London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Outlook
The UK economy continues to adapt to the effects of Covid-19 and Brexit which have led to staff shortages
across the UK and continued disruption to supply chains. The UK is now having to deal with new
challenges. The invasion of Ukraine by Russia has significantly increased geopolitical risk and created
considerable uncertainty in the UK and internationally. Supply chains have been disrupted further, interest
rates and inflation are rising rapidly and the prospect of recession is a major concern for the UK’s new
administration. Further volatility and turbulence in the markets, as interest rates continue to increase, can
be expected. The last 12 months have been challenging, and will continue to be so, for the Group’s
investments, particularly its Strategic Investments, However, the Board is pleased to see its Strategic
Investments reporting positive trading results and that one of the Strategic Investments has already
committed to return to the payment of dividends. The Board is confident that the Group has a solid base
of investments which can lead to further capital growth in the medium to long term.
Future Developments
The Group’s development and its financial performance are dependent on the success of its Investment
Strategy and the continued support of its shareholders. Against a background of challenging and
uncertain times in the markets due to the continued presence of Covid-19 and the emergence of new
variants, and the more recent concerns with the war in Ukraine, energy supply and food shortages and
the rising cost of living alongside increasing inflation, the Board continues to seek out investments which
will generate growth in shareholder value. The Board also continues to monitor and enhance the quality
of investments in the General Portfolio. The Board continues to pursue its current Investment Policy and
has no plans to make any further changes to the policy in the near future. As at 30 June 2022, the
Company held 40 investments in the General Portfolio.
By Order of the Board
City Group PLC
Company Secretary
29 September 2022
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Composition of General Portfolio
At 30 June 2022
Procter & Gamble Co
Nestle
Royal Dutch Shell B
Unilever
LVMH Moet Hennessey
Exxon Mobil Corp
Glencore PLC
Diageo
Pernod Ricard
BAE Systems
Rio Tinto
TotalEnergies
Legal & General
Heineken Holding
BHP Group
Bank of America
L'Oreal
Chemours
Compagnie Financiere Richemont
Fedex
British American Tobacco
Caterpillar
Deutsche Post
Holcim
Schindler-Holdings
Linde AG
Wells Fargo
Reckitt Benckiser Group
JPMorgan chase
Becton Dickinson & Co
Antofagasta
Phillip Morris International Inc
Wat Disney Co
Imperial Brands
BASF
3M Co
Givaudan
Otis Worldwide Corp
Anheuser Busch Inbev
Credit Agricole
Analysis by currency
Euro
Sterling
US Dollar
Swiss Franc
Australian Dollar
£000
533
480
478
477
473
465
456
450
434
415
413
411
408
405
397
386
383
370
361
346
346
340
331
327
318
307
303
303
297
284
266
257
257
256
243
234
234
222
211
178
14,055
3,118
2,885
4,294
3,360
397
14,055
The Company’s investment in overseas multinational companies provides some protection against
significant falls in the value of Sterling
%
3.8
3.4
3.4
3.4
3.4
3.3
3.2
3.2
3.1
3
2.9
2.9
2.9
2.9
2.8
2.7
2.7
2.6
2.5
2.5
2.5
2.4
2.4
2.3
2.3
2.2
2.2
2.2
2.1
2
1.9
1.8
1.8
1.8
1.7
1.7
1.7
1.6
1.5
1.3
100
22
20
31
24
3
100
12
12
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Statement of Directors’ Responsibilities in Respect of the
Financial Statements
The Directors are responsible for preparing the Strategic Report, the Directors’ Report, the Corporate
Governance Statement, the Audit Committee Report, the Directors’ Remuneration Report and the
financial statements in accordance with applicable law and regulations.
Company law requires directors to prepare financial statements for each financial year. Under that law
the Directors have elected to prepare the financial statements in accordance with UK-adopted
International Accounting Standards. 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 Group
and the Parent Company and of the profit or loss of the Group and Parent 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 UK adopted International Accounting Standards in
conformity with the requirements of the Companies Act 2006, 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 Group and Parent Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Group and Parent Company’s transactions and disclose with reasonable accuracy at any time
the financial position of the Group and Parent Company and enable them to ensure that the financial
statements and the Directors’ Remuneration Report comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. The Company does not have a website but information about the
Company is available on the website of its subsidiary, City Group. Legislation in the United Kingdom
governing the preparation and dissemination of the financial statements may differ from legislation in
other jurisdictions.
Each of the Directors whose names and functions are listed on page 1 confirms that to the best of each
person’s knowledge and belief:
•
•
•
The financial statements, prepared in accordance with UK-adopted International Accounting Stand-
ards, give a true and fair view of the assets, liabilities, financial position and profit/loss of the Group
and the Parent Company.
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 Parent Company, together with
a description of the principal risks and uncertainties that they face, and
The Annual Report, taken as a whole, is fair, balanced and understandable and provides the infor-
mation necessary for shareholders to assess the Group’s performance, business model and strat-
egy.
By Order of the Board
City Group PLC
Company Secretary
13
29 September 2022
13
_____________________________________________
Independent Auditor’s Report To The Members Of London Finance &
Investment Group Plc
Opinion
We have audited the financial statements of London Finance & Investment Group Plc (the ‘parent
company’) and its subsidiaries (the ‘group’) for the year ended 30 June 2022 which comprise the
Consolidated Statement of Total Comprehensive Income, the Consolidated and Company Statements of
Financial Position, the Consolidated and Company Statements of Cash Flows, the Consolidated and
Company Statements of Changes in Shareholders’ Equity and notes to the financial statements, including
significant accounting policies. The financial reporting framework that has been applied in their
preparation is applicable law and UK-adopted international accounting standards and as regards the
parent company financial statements, as applied in accordance with the provisions of the Companies Act
2006.
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 30 June 2022 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted
international accounting standards;
the parent company financial statements have been properly prepared in accordance with UK-
adopted international accounting standards and as applied in accordance with the provisions of
the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
group and parent company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis
of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’
assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of
accounting included:
•
•
•
Assessing management’s key assumptions in their consideration of the future financial perfor-
mance and cash flow requirements;
Assessing factors available to management including their ability to generate cash from their
investment portfolio, should that be required; and
Assessing whether management has adequately disclosed the conditions which cast significant
doubt on the ability of the group and company to continue as a going concern in the financial
statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the group’s or parent
company's ability to continue as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
14
14
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
In relation to the entities reporting on how they have applied the UK Corporate Governance Code, we
In relation to the entities reporting on how they have applied the UK Corporate Governance Code, we
In relation to the entities reporting on how they have applied the UK Corporate Governance Code, we
have nothing material to add or draw attention to in relation to the directors’ statement in the financial
have nothing material to add or draw attention to in relation to the directors’ statement in the financial
have nothing material to add or draw attention to in relation to the directors’ statement in the financial
statements about whether the director’s considered it appropriate to adopt the going concern basis of
statements about whether the director’s considered it appropriate to adopt the going concern basis of
statements about whether the director’s considered it appropriate to adopt the going concern basis of
accounting.
accounting.
accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described
Our responsibilities and the responsibilities of the directors with respect to going concern are described
Our responsibilities and the responsibilities of the directors with respect to going concern are described
in the relevant sections of this report.
in the relevant sections of this report.
in the relevant sections of this report.
Our application of materiality
Our application of materiality
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect
of misstatements. For planning and fieldwork, we consider materiality to be the magnitude by which
of misstatements. For planning and fieldwork, we consider materiality to be the magnitude by which
of misstatements. For planning and fieldwork, we consider materiality to be the magnitude by which
misstatements, including omissions, either individually or in aggregate, could reasonably be expected to
misstatements, including omissions, either individually or in aggregate, could reasonably be expected to
misstatements, including omissions, either individually or in aggregate, could reasonably be expected to
influence the economic decisions of users that are taken on the basis of the financial statements.
influence the economic decisions of users that are taken on the basis of the financial statements.
influence the economic decisions of users that are taken on the basis of the financial statements.
Misstatements below this level will not necessarily be evaluated as immaterial as we also take account
Misstatements below this level will not necessarily be evaluated as immaterial as we also take account
Misstatements below this level will not necessarily be evaluated as immaterial as we also take account
of the nature of identified misstatements, and the particular circumstances of their occurrence, when
of the nature of identified misstatements, and the particular circumstances of their occurrence, when
of the nature of identified misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements. The application of these key considerations gives rise
evaluating their effect on the financial statements. The application of these key considerations gives rise
evaluating their effect on the financial statements. The application of these key considerations gives rise
to two levels of materiality, the quantum and purpose of which are tabulated below.
to two levels of materiality, the quantum and purpose of which are tabulated below.
to two levels of materiality, the quantum and purpose of which are tabulated below.
Group Materiality
Group Materiality
Group Materiality
Materiality
Materiality
Materiality
measure
measure
measure
Materiality for the
Materiality for the
Materiality for the
financial
financial
financial
statements as a
statements as a
statements as a
whole – Based on
whole – Based on
whole – Based on
1% of invested
1% of invested
1% of invested
assets (the
assets (the
assets (the
aggregate of non-
aggregate of non-
aggregate of non-
current and current
current and current
current and current
investments)
investments)
investments)
Parent company
Parent company
Parent company
specific materiality
specific materiality
specific materiality
– classes of
– classes of
– classes of
transactions and
transactions and
transactions and
balances other
balances other
balances other
than those at fair
than those at fair
than those at fair
value – Based on
value – Based on
value – Based on
5% of estimated
5% of estimated
5% of estimated
normalised
normalised
normalised
EBITDA excluding
EBITDA excluding
EBITDA excluding
fair value
fair value
fair value
movements
movements
movements
Purpose and basis
Purpose and basis
Purpose and basis
Key considerations and
Key considerations and
Key considerations and
benchmarks
benchmarks
benchmarks
Assessing whether
financial
financial
Assessing whether
financial
Assessing whether
statements as a whole present a true
statements as a whole present a true
statements as a whole present a true
and fair view.
and fair view.
and fair view.
the
the
the
•
•
•
•
•
•
is based on
is based on
is based on
the
Materiality
the
the
Materiality
Materiality
investment balance on the basis that
investment balance on the basis that
investment balance on the basis that
this is the key driver of shareholder
this is the key driver of shareholder
this is the key driver of shareholder
value.
value.
value.
•
•
•
The value of investments;
The value of investments;
The value of investments;
The level of judgement in-
The level of judgement in-
The level of judgement in-
herent in the valuation;
herent in the valuation;
herent in the valuation;
and
and
and
The range of reasonable
The range of reasonable
The range of reasonable
alternative valuations.
alternative valuations.
alternative valuations.
Amount
£
Amount
Amount
£
£
180,000
180,000
180,000
(2021 –
(2021 –
(2021 –
203,800)
203,800)
203,800)
The level of normalised
The level of normalised
The level of normalised
earnings
earnings
earnings
27,000
27,000
27,000
(2021 –
37,540)
(2021 –
(2021 –
37,540)
37,540)
Under ISA (UK) 320 ‘Materiality in
Under ISA (UK) 320 ‘Materiality in
Under ISA (UK) 320 ‘Materiality in
Planning and Performing an Audit’,
Planning and Performing an Audit’,
Planning and Performing an Audit’,
an auditor is required to consider
an auditor is required to consider
an auditor is required to consider
whether there are one or more
whether there are one or more
whether there are one or more
classes of transactions or account
classes of transactions or account
classes of transactions or account
balances, for which misstatements
balances, for which misstatements
balances, for which misstatements
of lesser amounts than materiality
of lesser amounts than materiality
of lesser amounts than materiality
could reasonably be expected to
could reasonably be expected to
could reasonably be expected to
influence the economic decisions of
influence the economic decisions of
influence the economic decisions of
users taken on the basis of the
users taken on the basis of the
users taken on the basis of the
financial statements. This specific
financial statements. This specific
financial statements. This specific
level of materiality was used to test
level of materiality was used to test
level of materiality was used to test
non-investment related transactions
non-investment related transactions
non-investment related transactions
and balances.
and balances.
and balances.
Performance materiality represents amounts set by the auditor at less than the overall materiality to re-
Performance materiality represents amounts set by the auditor at less than the overall materiality to re-
Performance materiality represents amounts set by the auditor at less than the overall materiality to re-
duce the probability that the aggregate of uncorrected and undetected misstatements exceeds the overall
duce the probability that the aggregate of uncorrected and undetected misstatements exceeds the overall
duce the probability that the aggregate of uncorrected and undetected misstatements exceeds the overall
materiality. In setting this we consider the overall control environment and our experience from previous
materiality. In setting this we consider the overall control environment and our experience from previous
materiality. In setting this we consider the overall control environment and our experience from previous
audits which has indicated a low number of corrected and uncorrected misstatements. Based on these
audits which has indicated a low number of corrected and uncorrected misstatements. Based on these
audits which has indicated a low number of corrected and uncorrected misstatements. Based on these
factors we have set performance materiality at 80% of our overall materiality - £144,000 (2021 -
factors we have set performance materiality at 80% of our overall materiality - £144,000 (2021 -
factors we have set performance materiality at 80% of our overall materiality - £144,000 (2021 -
£163,000).
£163,000).
£163,000).
We have applied a lower level materiality in the audit of the component entities i.e. the parent company,
We have applied a lower level materiality in the audit of the component entities i.e. the parent company,
We have applied a lower level materiality in the audit of the component entities i.e. the parent company,
City Group PLC and Lonfin Investments Limited.
City Group PLC and Lonfin Investments Limited.
City Group PLC and Lonfin Investments Limited.
15
15
15
15
_____________________________________________
_____________________________________________
We agreed that we would report to the Audit Committee all audit differences in excess of 5% of
We agreed that we would report to the Audit Committee all audit differences in excess of 5% of
materiality - £9,000 (2021 - £10,100) as well as differences below that threshold that, in our view,
materiality - £9,000 (2021 - £10,100) as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
warranted reporting on qualitative grounds.
We also report on disclosure matters that we identified when assessing the overall presentation and
We also report on disclosure matters that we identified when assessing the overall presentation and
disclosure of the financial statements to the Audit Committee.
disclosure of the financial statements to the Audit Committee.
Our approach to the audit
Our approach to the audit
Our audit approach was developed by obtaining an understanding of the group’s and parent company’s
Our audit approach was developed by obtaining an understanding of the group’s and parent company’s
activities, the key functions undertaken on behalf of the Board by specialist outsourced service providers
activities, the key functions undertaken on behalf of the Board by specialist outsourced service providers
and the overall control environment. Based on this understanding, we assessed those aspects of the
and the overall control environment. Based on this understanding, we assessed those aspects of the
group and subsidiary companies transactions and balances which were most likely to give rise to a
group and subsidiary companies transactions and balances which were most likely to give rise to a
material misstatement and were most susceptible to irregularities including fraud or error. Specifically, we
material misstatement and were most susceptible to irregularities including fraud or error. Specifically, we
identified what we considered to be key audit matters and planned our audit approach accordingly.
identified what we considered to be key audit matters and planned our audit approach accordingly.
The group and all its consolidated components were subject to a full scope audit undertaken from our
The group and all its consolidated components were subject to a full scope audit undertaken from our
office based in London by a team with relevant sector experience.
office based in London by a team with relevant sector experience.
Key audit matters
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified, including those which had the greatest
material misstatement (whether or not due to fraud) we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the
effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the financial statements
engagement team. These matters were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
matters.
Key Audit
Key Audit
Matter
Matter
Valuation
Valuation
and
and
existence of
existence of
investments
investments
(note 13)
(note 13)
Reason
Reason
How our scope addressed this matter
How our scope addressed this matter
The valuation of the portfolio at 30
The valuation of the portfolio at 30
June 2022 was £18.012m (2021 -
June 2022 was £18.012m (2021 -
£21.283m), comprising a general
£21.283m), comprising a general
portfolio of listed investments and
portfolio of listed investments and
two strategic investments in
two strategic investments in
Western Selection PLC and
Western Selection PLC and
Finsbury Food Group PLC.
Finsbury Food Group PLC.
The valuation of investments, which
The valuation of investments, which
are held at fair value, was
are held at fair value, was
considered a key audit matter as
considered a key audit matter as
investments are the single most
investments are the single most
significant component of the
significant component of the
financial statements and the fair
financial statements and the fair
value movements thereon could
value movements thereon could
have a pervasive impact on the
have a pervasive impact on the
financial statements. Furthermore,
financial statements. Furthermore,
although the relevant investments
although the relevant investments
are in companies whose shares are
are in companies whose shares are
traded on recognised stock
traded on recognised stock
exchanges, the nature of those
exchanges, the nature of those
exchanges and volume of trades in
exchanges and volume of trades in
those shares may be such that
those shares may be such that
there is insufficient liquidity for bid
there is insufficient liquidity for bid
price to be a suitably reliable
price to be a suitably reliable
measure of fair value.
measure of fair value.
Our audit procedures included:
Our audit procedures included:
•
•
•
•
•
•
•
•
•
•
re-performing the calculation of the
re-performing the calculation of the
investment valuations and
investment valuations and
benchmarked key inputs and
benchmarked key inputs and
estimates to independent information
estimates to independent information
and our own research.
and our own research.
assessing, having regard to the size of
assessing, having regard to the size of
investment stake held, the impact of
investment stake held, the impact of
liquidity constraints and any unusual
liquidity constraints and any unusual
movement in observable share prices
movement in observable share prices
around the year end;
around the year end;
confirming where bid price was used,
confirming where bid price was used,
that it was the appropriate basis of fair
that it was the appropriate basis of fair
value of illiquid investments;
value of illiquid investments;
confirming there were no contra-
confirming there were no contra-
indicators, such as liquidity
indicators, such as liquidity
considerations, to suggest bid price
considerations, to suggest bid price
was not the most appropriate
was not the most appropriate
indication of fair value; and
indication of fair value; and
confirming the existence of
confirming the existence of
investments through agreeing 100% of
investments through agreeing 100% of
the investments held to Custodian
the investments held to Custodian
reports independently obtained from
reports independently obtained from
the Custodian and to share certificates
the Custodian and to share certificates
held.
held.
16
16
16
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Key Audit
Matter
Reason
Additionally, there is a risk that the
investments recorded as held by
the group may not exist.
How our scope addressed this matter
Based on the procedures we performed, we
found that the valuation of the group’s
investments was supported by the evidence
we obtained and that the group had title to the
investments reported in the financial
statements.
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information
contained within the annual report. Our opinion on the group and parent company financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we
are required to determine whether this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions 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.
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their
environment obtained in the course of the audit, we have not identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us 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.
Corporate governance statement
We have reviewed the directors' statement in relation to going concern, longer-term viability and that part
of the Corporate Governance Statement relating to the group’s and parent company's compliance with
the provisions of the UK Corporate Governance Code specified for our review by the Listing Rules.
17
17
_____________________________________________
Based on the work undertaken as part of our audit, we have concluded that each of the following elements
of the Corporate Governance Statement is materially consistent with the financial statements or our
knowledge obtained during the audit:
• Directors' statement with regards the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on page 44;
• Directors’ explanation as to their assessment of the group’s prospects, the period this
assessment covers and why the period is appropriate set out on page 44;
• Directors’ statement on whether they have a reasonable expectation that the group will be able
to continue in operation and meet its liabilities set out on page 45;
• Directors' statement that they consider the annual report and the financial statements, taken as
a whole, to be fair, balanced and understandable set out on page 55;
Board’s confirmation that it has carried out a robust assessment of the emerging and principal
risks set out on page 44;
The section of the annual report that describes the review of effectiveness of risk management
and internal control systems set out on page 57; and
The section describing the work of the Audit Committee set out on page 55.
•
•
•
Responsibilities of directors
As explained more fully in the statement of directors’ responsibilities in respect of the financial statements,
the directors are responsible for the preparation of the group and parent company financial statements
and for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for
assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:
• We obtained an understanding of the group and parent company and the sector in which they
operate to identify laws and regulations that could reasonably be expected to have a direct effect
on the financial statements. We obtained our understanding in this regard through discussions
with management, industry research, application of cumulative audit knowledge and experience
of the investment sector.
• We determined the principal laws and regulations relevant to the group and parent company in
this regard to be those arising from the Listing Rules, applicable FCA rules, Corporate Govern-
ance Code, Companies Act 2006 and UK Tax legislation.
18
18
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
• We designed our audit procedures to ensure the audit team considered whether there were any
indications of non-compliance by the group and parent company with those laws and regulations.
These procedures included, but were not limited to:
o
enquiries of management, review of minutes and regulatory news service announce-
ments with respect to the group, review of any legal and regulatory correspondence,
reviewing financial statement disclosures and testing to supporting documentation with
respect to balances such as legal expenses to assess compliance with applicable laws
and regulations
• We also identified the risks of material misstatement of the financial statements due to fraud. We
considered, in addition to the non-rebuttable presumption of a risk of fraud arising from manage-
ment override of controls, that a potential management bias was identified in relation to the valu-
ation of investments. We addressed this risk by challenging the assumptions and judgments
made by management. We also reviewed the key inputs used in the valuation by benchmarking
them to independent and reliable sources (refer to KAM).
As in all of our audits, we addressed the risk of fraud arising from management override of con-
trols by performing audit procedures which included, but were not limited to: the testing of jour-
nals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale
of any significant transactions that are unusual or outside the normal course of business.
•
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities,
including those leading to a material misstatement in the financial statements or non-compliance with
regulation. This risk increases the more that compliance with a law or regulation is removed from the
events and transactions reflected in the financial statements, as we will be less likely to become aware
of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud
intentional concealment, forgery, collusion, omission or
rather than error, as fraud
misrepresentation.
involves
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Other matters which we are required to address
Following the recommendation by the Audit Committee, we were appointed by the Board on 30 November
2016 to audit the financial statements for the period ending 30 June 2017 and subsequent financial
periods. Our total uninterrupted period of engagement is 6 years, covering the periods ending 2017 to
2022.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the
parent company and we remain independent of the group and the parent company in conducting our
audit.
Our audit opinion is consistent with the additional report to the Audit Committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part
16 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 members as a body, for our audit work, for this report, or for
the opinions we have formed.
Ian Cowan (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
Date:29 September 2022
19
15 Westferry Circus
Canary Wharf
London E14 4HD
19
_____________________________________________
Consolidated Statement of Total Comprehensive Income
For the year ended 30 June
Operating Income
Notes
Dividends receivable
Management service fees
Rental and other income
(Loss)/Profits on disposal of General portfolio investments
Administrative expenses
Investment operations
Management services
Total administrative expenses
Operating profit
Unrealised changes in the carrying value of General
Portfolio investments
Other income
Interest payable
(Loss)/Profit before taxation
Tax expense
(Loss)/Profit after taxation
Non-controlling interest
(Loss)/Profit attributable to shareholders
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss
Loss on disposal of Strategic investments
Unrealised changes in the carrying value of Strategic
investments
Other taxation -
Tax on disposal of strategic investments
Total Other Comprehensive (Loss)/Income attributable to
shareholders
Total Comprehensive (Loss)/Income attributable to
owners of the parent
Reconciliation of headline earnings
Basic and diluted (loss)/earnings per share
Adjustment for the unrealised changes in the carrying
value of investments, net of tax
Headline earnings per share
3
3
3
13
4b
7
9
9
The notes on pages 27 to 42 form part of these financial statements.
2022
£000
652
327
136
(111)
1,004
(394)
(430)
(824)
180
(508)
-
(6)
(334)
(96)
(430)
(12)
(442)
(398)
(402)
(198)
(998)
(1,440)
(1.4)p
-
(1.4)p
2021
£000
326
304
154
245
1,029
(392)
(412)
(804)
225
1,651
36
(39)
1,873
(337)
1,536
(26)
1,510
-
1,911
-
1,911
3,421
4.8p
-
4.8p
20
20
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Consolidated Statement of Financial Position
At 30 June
Notes
10
11
13
13
14
16
15
17
11
16
17
18
Non-current Assets
Property, Plant and Equipment
Right of use asset
Strategic investments at fair value though other
comprehensive income
Current Assets
General portfolio investments at fair value through profit
and loss
Trade and other receivables
Cash and cash equivalents
Current Liabilities
Overdraft
Trade and other payables
Lease liabilities
Corporation tax
Net Current Assets
Non-current Liabilities
Lease liabilities
Borrowings
Deferred Taxation
Total Assets less Total Liabilities
Capital and Reserves
Ordinary share capital
Share premium
Unrealised profits and losses on investments
Share of retained realised profits and losses of
subsidiaries
Company’s retained realised profits and losses
Capital and reserves attributable to owners
Non-controlling interests
Total Capital and Reserves
Approved and authorised by the Board
On 29 September 2022
Edward Beale
Director
The notes on pages 27 to 42 form part of these financial statements.
21
2022
£000
12
81
3,957
4,050
14,055
109
407
14,571
(66)
(171)
(75)
(198)
(510)
2021
£000
22
145
8,202
8,369
12,081
125
309
12,515
-
(228)
(71)
-
(299)
14,061
12,216
(33)
-
(843)
(876)
17,235
1,560
2,320
11
5,331
7,872
17,094
141
17,235
(107)
(650)
(806)
(1,563)
19,022
1,560
2,320
4,530
4,734
5,749
18,893
129
19,022
21
_____________________________________________
Company Statement of Financial Position
At 30 June
Non-current Assets
Investments in Group companies
Current Assets
General portfolio investments at fair value through profit or
loss
Trade and other receivables
Cash and cash equivalents
Current Liabilities
Overdraft
Trade and other payables
Net Current Assets
Non-current Liabilities
Borrowings
Deferred Taxation
Total Assets less Total Liabilities
Capital and Reserves
Ordinary share capital
Share premium
Unrealised profits and losses on investments
Realised Profit and Loss
Balance at 1 July
Net Profit for the period
Dividends paid
Balance at 30 June
Equity shareholders’ funds
Notes
12
13
14
16
15
16
17
18
18
18
2022
£000
89
14,055
13
124
14,192
(66)
(90)
(156)
14,036
-
(843)
(843)
13,282
1,560
2,320
1,530
5,410
5,749
2,482
(359)
7,872
13,282
2021
£000
2,079
12,081
17
23
12,121
-
(106)
(106)
11,365
(650)
(806)
(1,456)
12,639
1,560
2,320
3,010
6,890
5,498
577
(326)
5,749
12,639
Total Comprehensive income
1,002
1,488
Under Section 408 of the Companies Act 2006, the Parent Company is exempt from the requirement to
present its own income statement.
Approved and authorised by the Board
On 29 September 2022
Edward Beale
Director
London Finance & Investment Group PLC
Registered in England and Wales – Number 201151
The notes on pages 27 to 42 form part of these financial statements.
22
22
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Consolidated Statement of Cash Flows
For the year ended 30 June
Notes
2022
£000
2021
£000
(334)
1,873
Cash flows from operating activities
(Loss)/Profit before tax
Adjustments for non-cash items -
Finance expense
Depreciation charges
Depreciation on right of use asset
Lease adjustment
Unrealised changes in the fair value of general portfolio
investments
Realised gain on disposal of general portfolio investments
Decrease in trade and other receivables
(Decrease)/Increase in trade and other payables
Taxes paid
Net cash inflow from operating activities
Cash flows from investment activity
Acquisition of general portfolio investments
Proceeds from disposal of general portfolio investments
Proceeds from disposal of strategic investments
Net cash inflow/(outflow) from investment activity
Cash flows from financing activities
Interest paid
Interest paid on lease liabilities
Repayment of lease liabilities
Equity dividends paid
Net (repayments)/drawdown of loan facilities
Net cash (outflow)/inflow from financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the
year
Net Cash and cash equivalents at end of the year
Cash and cash equivalents
Overdraft
Net Cash and cash equivalents
13
13
7
13
16
20
6
10
64
-
508
111
17
(49)
(59)
274
(5,152)
2,559
3,445
852
(5)
(9)
(71)
(359)
(650)
(1,094)
32
309
341
407
(66)
341
39
10
62
(36)
(1,196)
(700)
41
10
(51)
52
(1,706)
1,469
-
(237)
(19)
(28)
(52)
(326)
650
225
40
269
309
309
-
309
23
The notes on pages 27 to 42 form part of these financial statements
.
23
_____________________________________________
Company Statement of Cash Flows
For the year ended 30 June
Notes
13
13
7
12
16
Cash flows from operating activities
Profit before tax
Adjustments for non-cash items -
Finance (income)/expense
Unrealised changes in the fair value of general portfolio
investments
Realised gain on disposal of general portfolio investments
Decreased/(Increase) in trade and other receivables
Decrease in trade and other payables
Overseas Taxes paid
Net cash inflow/(outflow) from operating activities
Cash flows from investment activity
Acquisition of general portfolio investments
Proceeds from disposal of general portfolio investments
Net cash outflow from investment activity
Cash flows from financing activities
Interest paid
Equity dividends paid
Decrease/(Increase) in loan to subsidiary
Net (repayment)/drawdown of loan facilities
Net cash inflow from financing activities
Increase/(Decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the
year
Net Cash and cash equivalents at end of the year
Cash and cash equivalents
Overdraft
Net Cash and cash equivalents
2022
£000
1,098
(3)
508
111
4
(6)
(59)
1,653
(5,152)
2,559
(2,593)
(6)
(359)
1,990
(650)
975
35
23
58
8
(66)
58
The notes on pages 27 to 42 form part of these financial statements.
2021
£000
1,825
11
(1,197)
(700)
(1)
(18)
(51)
(131)
(1,706)
1,469
(237)
(19)
(326)
(5)
650
300
(68)
91
23
23
-
23
24
24
London Finance & Investment Group PLC
London Finance & Investment Group PLC___________
Consolidated Statement of Changes in Shareholders’ Equity
Ordinary
Share
Capital
Share
Premium
Account
Unrealised
profits and
losses on
Investments
Share of
retained
realised
profits and
losses of
Subsidiaries
Company’s
retained
realised
profits and
losses
Total
Non-
Controlling
Interests
Total
Equity
£000
£000
£000
£000
£000
£000
£000
£000
Year ended 30 June 2022
Balances at 1 July 2021
1,560
2,320
4,530
4,734
5,749
18,893
129
19,022
-
-
-
-
-
-
-
-
1,560
2,320
Profit for the Year
Other Comprehensive
Income
Total comprehensive
income
Dividends paid and total
transactions with
shareholders
Balances at 30 June
2022
Year ended 30 June 2021
Balances at 1 July 2020
1,560
2,320
Profit for the Year
Other Comprehensive
Income
Total comprehensive
income
Dividends paid and total
transactions with
shareholders
Unclaimed dividends
Balances at 30 June
2021
-
-
-
-
1,560
2,320
2,822
-
-
-
-
-
-
(1,480)
(1,444)
2,482
(442)
12
(430)
(3,039)
2,041
-
(998)
-
(998)
(4,519)
597
2,482
(1,440)
12
(1,428)
-
11
1,708
911
1,911
-
(359)
(359)
-
(359)
5,331
7,872
17,094
141
17,235
4,712
5,498)
15,798
103
15,901
22
-
22
-
-
577
1,510
26
1,536
-
1,911
-
1,911
577
3,421
26
3,447
(359)
(359)
33
33
-
-
(359)
33
1,560
2,320
4,530
4,734
5,749
18,893
129
19,022
The notes on pages 27 to 42 form part of these financial statements.
25
25
_____________________________________________
Company Statement of Changes in Shareholders’ Equity
Year ended 30 June 2022
Balances at 1 July 2021
Profit for the Year and total comprehensive
income
Dividends paid and total transactions with
shareholders
Ordinary
Share
Capital
Share
Premium
Account
Unrealised
profits and
losses on
Investments
Realised
profits
and
losses
Equity
Total
£000
£000
£000
£000
£000
1,560
2,320
3,010
5,749
12,639
-
-
-
-
(1,480)
2,482
1,002
-
(359)
(359)
Balances at 30 June 2022
1,560
2,320
1,530
7,872
13,282
Year ended 30 June 2021
Balances at 1 July 2020
Profit for the Year and total comprehensive
income
Dividends paid and total transactions with
shareholders
Unclaimed dividends
1,560
2,320
2,099
5,498
11,477
-
-
-
-
-
-
911
577
1,488
-
-
(359)
(359)
33
33
Balances at 30 June 2021
1,560
2,320
3,010
5,749
12,639
The notes on pages 27 to 42 form part of these financial statements.
26
26
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Notes to the Financial Statements
For the year ended 30 June 2022
1. Accounting Policies
The consolidated financial statements of the London Finance & Investment Group PLC have been
prepared in accordance with UK-adopted international accounting standards (‘UK-adopted IAS’) and with
Companies Act 2006.
The preparation of financial statements in conformity with UK-adopted IAS 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.
(i)
With the exception of Western, these consolidated financial statements include the results and
net assets of the Group’s subsidiaries (all of which are companies) for the year to 30 June 2022.
The non-controlling interests are wholly attributable to equity interests in subsidiaries. Western
has not been consolidated as the Directors consider that the Group, as the parent and ultimate
parent undertaking, is able to take advantage of the investment entity exemption in IFRS10.
Accordingly, the Group’s investment in Western, a Strategic Investment, is carried at fair value
with fair value movements going through the Statement of Other Comprehensive Income.
(ii)
Dividends receivable are credited to 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.
Revenue from management services is recognised when the right to such income is established
through a contract and in line with the provision of services to which they relate.
(iii)
The Company pays final and interim dividends. Dividends are recognised in the period in which
they are appropriately authorised. For interim dividends, this will mean the date on which they
are paid and, for final dividends, this will mean the date on which they are approved in general
meeting.
(iv)
Financial assets are classified by category, depending on the purpose for which the asset was
acquired. The Group’s accounting policy is as follows:
a) Fair value through income: non-derivative financial assets other than unquoted investments
and trade and other receivables are classified as strategic and general portfolio investments
and are recognised as being at fair value through Profit or Loss or Other Comprehensive
Income. They are valued using quoted bid prices and movements in value are taken to the
income statement.
Investments in the general portfolio are held at fair value through Profit or Loss with changes
in the fair value recognised in profit or loss. They are valued using quoted market prices.
Investments in the strategic portfolio are held at fair value through Other Comprehensive
Income, as elected by the Company, with changes in the fair value recognised in Other
Comprehensive Income and accumulated in the unrealised profits and losses on
investments reserve. They are valued using quoted market prices. When the investment is
disposed of or is determined to be impaired, the cumulative gain or loss previously
accumulated in the unrealised profits and losses on investments reserve is reclassified to
realised profits and losses.
27
27
_____________________________________________
1. Accounting Policies (continued)
(v)
(vi)
(vii)
(viii)
Derivative financial instruments, which have been entered into to hedge future cash flows
but which for accounting purposes are not designated as hedging instruments consist of an
Interest rate swap contract. This is initially measured at fair value and is revalued at
subsequent reporting dates using bank valuation. The interest rate swap contract has been
cancelled as at 30 June 2022.
b) Unquoted investments. These are stated at cost net of impairment provisions because fair
value cannot be readily determined. Reviews for indications of impairment are carried out at
least annually.
c) 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.
Borrowings are recognised initially at fair value and subsequently carried at amortised cost.
The charge for taxation is based on the taxable profit or loss for the year. Taxable profit or loss
differs from net profit or loss as reported in the Statement of Total Comprehensive Income. It
excludes items of income (primarily franked dividend income) and expenses 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 probable 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 in equity.
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.
Property plant and equipment - Computer and electronic equipment expenditure of less than
£2,500 is written off in the year of acquisition. All other property, plant and equipment is stated at
historical cost less depreciation. Historical cost includes expenditure that is directly attributable to
the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of any component accounted for as a separate asset is derecog-
nised when replaced. All other repairs and maintenance are charged to profit or loss during the
reporting period in which they are incurred. Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These are included in profit or loss.
Property, plant and equipment are depreciated at rates calculated to write off the cost of relevant
assets over their effective useful economic lives. Depreciation is charged at the following rates:
Leasehold improvements – over the life of the lease
Office equipment
– 20% to 33.3% on cost
28
28
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Notes to the Financial Statements (continued)
1. Accounting Policies (continued)
(ix)
Leases - At the lease commencement date, the Group recognises a right-of-use asset and a
lease liability in the Statement of Financial Position. The right-of-use asset is measured at cost,
which is made up of the initial measurement of the lease liability, any initial direct costs incurred
by the Group and an estimate of any costs to dismantle and remove the asset at the end of the
lease.
The Group depreciates the right-of-use assets on a straight-line basis from the lease commence-
ment date to the earlier of the end of the useful life of the right-of-use asset or the end of the
lease term.
The Group also assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the
lease payments unpaid at that date, discounted using the interest rate of the Group’s incremental
borrowing rate (5%).
Lease payments included in the measurement of the lease liability are made up of fixed pay-
ments, payments arising from options reasonably certain to be exercised and amounts expected
to be payable under a residual value guarantee.
If the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use
Asset.
The Group has elected to account for short-term leases and leases of low-value assets using the
practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments
in relation to these are recognised as an expense in profit or loss on a straight-line basis over the
lease term.
On the statement of financial position, right-of-use assets and lease liabilities have been
presented separately from Property, Plant and Equipment and Trade and other payables.
(x)
The Group operates a defined contribution plan which received fixed contributions from the sub-
sidiary company City Group PLC. The Group’s legal or constructive obligations for this plan is
limited to the contributions. The expense recognised in the consolidated statement of total com-
prehensive income for the period in relation to these contributions was £15,000 (see note 6).
(xi)
Cash and cash equivalents comprise cash balances
2. Changes in accounting policies and disclosures
a) New standards, amendments and interpretations adopted by the Group
No new standards, amendments or interpretations, effective for the first time for financial years
beginning on or after 1 January 2021 have had a material impact on the Group or Parent Company.
b) New standards, amendments and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for
financial periods beginning after 1 January 2022 and have not been applied in preparing these
financial statements. None of these are expected to have a significant effect on the financial
statements of the Group or Parent Company.
29
29
_____________________________________________
3. Operating profit – Segmental Analysis
The Directors manage the Group through two classes of business, Investment Operations and
Management Services, and present the segmental analysis on that basis. The segment performance
measure is operating profit.
Investment Operations
Management Services
Dividends – Listed investments
Rental and other income
(Loss)/Profits on sales of investments,
including provisions
Management services fees
Operating income
Administration expense – normal
Operating profit
2022
£000
652
-
(111)
-
541
(394)
147
2021
£000
326
-
245
-
571
(392)
179
2022
£000
-
136
-
327
463
(430)
33
2021
£000
-
154
-
304
458
(412)
46
All revenues are derived from operations within the UK. Consequently, no separate geographical segment
information is provided.
4. Administration Expenses and Other Income
a)
Administration expenses include:
Depreciation
Depreciation on Right of use asset
Auditors’ remuneration
Directors’ emoluments
Staff Costs
b)
Other income
2022
£000
10
64
31
76
460
-
2021
£000
10
62
32
76
454
36
- Audit services
- Note 5
- Note 6
- Lease
adjustment
5. Directors' Emoluments and Related Party Disclosures
The key management personnel are considered to be the Group directors. Their emoluments are detailed
in the Directors’ Remuneration Report on pages 59 to 65.
Related Party Disclosures
London Finance & Investment Group PLC (“Lonfin”) and its wholly owned subsidiary, Lonfin Investments
Limited, owns 43.8% of Western Selection PLC (“Western”).
Western is a company incorporated in England with its registered office at 1 Ely Place, London, EC1N
6RY. Under IFRS 10, Lonfin is considered to be the parent and ultimate parent undertaking of a group of
companies including Western for which Group financial statements are drawn up. Copies of these Group
financial statements have been delivered to the Registrar of Companies. Western’s financial statements
are not consolidated with this Group as the Company, as the Parent Company is able to take advantage
of the investment entity exemption in IFRS 10.
Mr. D.C. Marshall and Mr. E.J Beale are directors of Western.
30
30
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Notes to the Financial Statements (continued)
5. Directors' Emoluments and Related Party Disclosures (continued)
Mr. D.C. Marshall’s shareholdings in Lonfin, and Mr E.J. Beale’s share options, are set out in the Directors’
Report on page 45.
Lonfin and Western own City Group in the ratio 51.4% and 48.6% respectively. City Group provides office
accommodation, company secretarial, finance and head office services to both Lonfin and Western and
to various other companies in the UK and abroad most of which are associated with Lonfin and Western.
City Group operates as a shared service centre and does not seek to make a profit from the provision of
its standard services to these related parties. The various company secretarial, accounting, and directors’
fees receivable by City Group from those companies, their associates and subsidiaries, total £427,000
(2021 - £394,000) for the year under review. At the reporting date the aggregate balance due in respect
of fees invoiced was £106,000 (2021 - £83,000). Settlement is within normal credit terms.
At 30 June 2022, as disclosed in Notes 14 and 15 below, City Group owed the Company £Nil (2021 – £
Nil) and it owed City Group £31,000 (2021 - £36,000) for fees. The Company was owed £Nil (2021 -
£1,985,000) by Lonfin Investments Limited as disclosed in Note 12 below. 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.
6. Staff Costs
Other than the Directors, the Company has no staff or staff costs. All the Group’s staff, other than the
Directors, are employed by the Company’s subsidiary, City Group. Group staff costs, excluding Group
Directors’ fees which are shown in the Directors’ Remuneration Report on pages 59 to 65, were:
Salaries
Social security costs
Defined contribution pension scheme contributions
The average weekly number of staff employed, excluding Group
Directors, was:
7. Tax Expense
The tax charge for the year comprises:
Tax on overseas investment income
Deferred Tax charge
Tax charge
Other Tax
Income tax
31
2022
£000
390
55
15
460
4
2022
£000
59
37
96
198
198
2021
£000
393
46
15
454
5
2021
£000
51
286
337
-
-
31
_____________________________________________
7. Tax Expense (continued)
The tax assessed for the year is lower than the standard rate of corporation tax in the UK.
The differences are explained below:
(Loss)/Profit on ordinary activities before taxation
Taxation at 19% (2021 – 19%)
Effects of:
Non-taxable items – fair values and franked income
Withholding tax
Loss carried (forward)/utilised
Tax rate increase to 25%
Tax charged
2022
£000
(334)
(64)
150
59
(251)
202
96
2021
£000
1,873
356
(289)
51
217
-
337
Dividends received from UK companies are recognised in the income statement net of their associated
tax credit.
Factors affecting the tax charge in future years From 1 April 2023, the Corporation Tax main rate will
increase gradually for profits over £50,000 reaching 25% for profits over £250,000. The Group’s future
tax charge, and effective tax rate are affected by this announcement and the ability of the Group to utilise
the accumulated capital losses which at present have been taken into account when evaluating the
Group’s deferred tax liability. Based on current tax legislation and investment management strategy, the
Directors are satisfied that the Group’s capital losses can be utilised and retain value.
On 23 September 2022 the Chancellor announced that the Corporation Tax rate will remain at 19%, this
is not yet substantively enacted.
8. Dividends
Amounts recognised as distributions to the shareholders of the Company in the year were as follows:
Final dividend for the prior year ended 30 June (per share)
Interim dividend for the current year ended 30 June (per share)
2022
0.60p
0.55p
2021
0.60p
0.55p
The total dividends paid and to be paid in 2022 and 2021 were £359,000 (1.15p per share) and £359,000
(1.15p per share) respectively. A final dividend in respect of the year ended 30 June 2022 of 0.60p per
share is to be proposed at the AGM to be held on 10 November 2022. These financial statements do not
reflect this dividend.
9. Earnings per share
Reconciliation of headline earnings
Basic and headline (loss)/earnings per share, based on the loss
attributable to the shareholders after tax and non-controlling interests
of £442,000 (2021 – profit £1,510,000) and on 31,207,479 shares
issued
Diluted (loss)/earnings per share, based on the loss attributable to the
shareholders after tax and non-controlling interests of £442,000 (2021
– profit £1,510,000) and on 31,207,479 shares issued plus 80,000
share options granted in 2016.
2022
2021
(1.4)p
4.8p
(1.4)p
4.8p
32
32
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Notes to the Financial Statements (continued)
10. Property, Plant and Equipment
Group
At cost – 1 July 2021
Additions in the year
Disposals in the year
30 June 2022
Depreciation
Balance – 1 July 2021
Charges for the year
Disposals in the year
30 June 2022
Net book amount 30 June 2022
Net book amount 30 June 2021
The office equipment is held by a subsidiary company.
11. Leases
Office
Equipment
£000
84
-
-
84
62
10
-
72
12
22
The Group has an operating lease commitment in respect of an office property entered into in October
2018 which terminates in October 2028. The Directors have made the decision to take advantage of the
5-year break clause in the lease agreement available to the Company. The Company has guaranteed the
obligations under this lease.
Right of use asset – Office
Cost
At 1 July
Adjustment to cost
At 30 June
Depreciation
Balance – 1 July
Lease adjustment
Charges for the year
Depreciation 30 June
Net book amount 30 June
33
2022
£000
322
-
322
(177)
-
(64)
(241)
81
2021
£000
620
(298)
322
(108)
(7)
(62)
(177)
145
33
_____________________________________________
11. Leases (continued)
Lease Liabilities
Current
Non-Current
Total Lease Liabilities
Maturity Analysis
Less than one year
One to five years
Amounts recognised in the Consolidated Statement of Total
Comprehensive Income
Interest charged on lease liabilities
Gain in lease adjustment
2022
£000
75
33
108
75
33
9
-
2021
£000
71
107
178
71
107
29
36
12. Investment in Group companies
Operating subsidiaries incorporated and operating in England and consolidated in these financial
statements.
Principal Activities
Percentage of
Equity
2022
£000
2021
£000
Management
services
Investment holding
51.4%
100%
Held by the Company – at cost
City Group PLC
Lonfin Investments Limited
Loan to subsidiary at 1 July
Amount borrowed/(repaid) in the
year
Loan to subsidiary before
provision as at 30 June
89
-
1,990
(1,990)
-
89
89
-
1,985
5
1,990
2,079
The address of the registered office of these subsidiaries is 1 Ely Place, London EC1N 6RY.
34
34
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Notes to the Financial Statements (continued)
13. Investments
Cost at 1 July 2021
Opening unrealised gain/(losses)
Opening valuation as at 1 July 2021
Movements in the year
Purchases
Sales - proceeds
Realised gain on disposal
Net unrealised gains transferred to realised gain on
disposal
Unrealised fair value gains/(losses) in the year
Closing valuation at 30 June 2022
Cost at 30 June 2022
Unrealised gain/(losses) at 30 June 2022
Closing valuation at 30 June 2022
Cost at 1 July 2020
Opening unrealised gain/(losses)
Opening valuation as at 1 July 2020
Movements in the year
Purchases
Sales - proceeds
Realised gain on disposal
Net unrealised gains transferred to realised gain on
disposal
Unrealised fair value losses in the year
Closing valuation at 30 June 2021
General
Portfolio
£000
Strategic Holdings
Western
Selection
£000
Finsbury
Food Group
£000
6,975
5,106
12,081
5,152
(2,559)
824
(935)
(508)
14,055
10,392
3,663
14,055
6,038
3,910
9,948
1,706
(1,469)
700
(455)
1,651
12,081
6,159
(3,447)
2,712
-
-
-
-
39
2,751
6,159
(3,408)
2,751
6,159
(3,408)
2,751
-
-
-
-
(39)
2,712
1,723
3,767
5,490
-
(3,445)
2,239
(2,637)
(441)
1,206
517
689
1,206
1,723
1,817
3,540
-
-
-
-
1,950
5,490
Western Selection PLC, a subsidiary undertaking, is traded on the AQSE Growth Market and is
incorporated and operates in the UK with a financial year end of 30 June.
At 30 June 2022 and 30 June 2021, Western had 17,949,872 ordinary shares of 40p each in issue, of
which 7,860,515 shares (43.8%) are held by the Company’s wholly owned subsidiary, Lonfin Investments
Limited.
35
35
_____________________________________________
13. Investments (continued)
Extracts from Western’s unaudited results are as follows:
Loss after tax
Non-current assets
Current assets
Liabilities within one year
Capital
Reserves
Share Premium account
Capital Reserve account
Value of investment in Western at Net asset value per share
Value of investment in Western at market value
Net asset value per share
Middle market price per share on 30 June
14. Trade and other receivables
Trade debtors
Other debtors
Prepayments and accrued income
15. Trade and other payables
Group companies
Other creditors
Trade creditors
Accruals
Derivative financial instrument
Group
2022
£000
81
1
27
109
Group
2022
£000
-
55
31
85
-
171
2021
£000
105
-
20
125
2021
£000
-
94
14
102
18
228
2022
£000
(438)
3,199
6,815
(51)
7,180
2,654
3
4,364
2,751
56p
35p
Company
2022
£000
-
-
13
13
Company
2022
£000
31
1
17
41
-
90
2021
£000
(111)
6,777
4,045
(790)
7,180
2,654
3
4,396
2,712
56p
34.5p
2021
£000
-
-
17
17
2021
£000
36
-
11
41
18
106
36
36
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Notes to the Financial Statements (continued)
16. Borrowings
Current
Overdraft
Non-current
Bank revolving credit facility
Group
2022
£000
66
-
2021
£000
-
650
Company
2022
£000
66
-
2021
£000
-
650
During the year, the Company decided to switch its banking provider to Credit Suisse. As a result, the
revolving credit facility with Coutts & Co was repaid and discontinued. In its place, the Company has
agreed an overdraft facility with Credit Suisse, with current interest of 4.5% to 5.5% on overdrawn
balances.
17. Deferred taxation
The Group has provided £843,000 in respect of potential taxation on unrealised investment gains (2021
- £806,000). This is after taking into account available tax losses of £Nil (2021: £164,000) and increase
in the corporation tax rate to 25% from 1 April 2023.
Balance at 1 July
Profit or Loss
Other Comprehensive Income
Balance at 30 June
Group
2022
£000
806
37
-
843
Group
2021
£000
520
286
-
806
Company
2022
£000
806
37
-
843
Company
2021
£000
520
286
-
806
Deferred tax has been provided at a weighted average of 25% (2021: 19%).
18. Share Capital and Reserves
Allotted, issued and fully paid ordinary shares of 5p each
31,207,479 at 1 July 2021 and 30 June 2022
Company and Group
2022
£000
2021
£000
1,560
1,560
The Group and the Company’s capital comprises its shareholders’ equity. Our objective is to manage
capital in a manner that enables the continued payment of dividends to be achieved.
The following describes the nature and purpose of each reserve within shareholders’ equity: -
37
37
_____________________________________________
18. Share Capital and Reserves (continued)
Ordinary share capital
Share premium
Unrealised profits and losses on
investments
Share of retained realised profits
and losses of subsidiaries
Retained realised profits and
losses
Description and purpose
Nominal value of issued share capital.
Amount subscribed for share capital in excess of nominal
value, less issue expenses.
Cumulative unrealised gains and losses on investments.
The Group’s share of cumulative undistributed post-
acquisition gains and losses of subsidiaries recognised in
the income statement.
Realised profits of the Group and 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 and
Company Statement of Financial Positions on pages 21 and 22 and the Consolidated Statement of
Changes in Shareholders’ Equity on page 25.
Capital management
Capital is defined as the Company’s ordinary share capital and reserves as detailed above.
The primary objective of the Group's capital management is to ensure that it maintains healthy capital
ratios in order to support its business and maximise shareholder value.
To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders
or issue or repurchase shares. No changes were made to the objectives, policies or processes for
managing share capital during the period ended 30 June 2022.
Share Options
The Group has had two long-term incentive plans established to incentivise full-time employees and
directors of City Group and to recognise outstanding efforts or achievements, or otherwise to attract,
motivate or retain staff: The Group’s Unapproved Employee Benefit Scheme (which terminated on 29
September 2019) and a more recent scheme, the Group’s Company Share Option Plan.
On 29 February 2016 options over 80,000 ordinary shares in the Company, with an exercise price of
37.5p per share, were granted under the rules of the Group’s Company Share Option Plan. The options
granted may be exercised no later than the tenth anniversary of the date of grant and had not been
exercised as at 30 June 2022. The fair value of these options at the date of grant was estimated using
the Black-Scholes model to be £9,000 and, as this is not material, no expense has been booked for these
share options.
19. Pension Schemes
The Group makes pension contributions 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 disclosed in Note 6. No pension contributions are provided for the Directors.
38
38
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Notes to the Financial Statements (continued)
20. Reconciliation of consolidated net cash flow to movement in net debt
Group
2021/2022
Cash at bank
Overdraft
Borrowings
Lease liability
Net Debt
2020/2021
Cash at bank
Borrowings
Lease liability
Net Debt
At start
of year
£000
309
-
(650)
(178)
(519)
269
-
(571)
(302)
Cash
Non-cash
Flow transactions
£000
£000
-
98
-
(66)
-
650
(10)
80
762
(10)
40
(650)
80
(530)
-
-
313
313
At end
of year
£000
407
(66)
-
(108)
233
309
(650)
(178)
(519)
21. Financial Instruments
Set out below is 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 Directors monitor its performance against
these objectives on a continuous basis and through bi-monthly reports of the investment’s portfolio and
cash position.
IFRS 13 requires disclosure of fair value measurements under the following hierarchy:
Financial assets and liabilities are classified in their entirety into one of the three levels determined on
the basis of the lowest input that is significant to the fair value measurement.
Listed prices (unadjusted) in active markets for identical assets or liabilities – Level 1
Values other than listed prices included within Level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices) – Level 2
Values for the asset or liability that are not based on observable market data (that is unobservable
inputs) – Level 3.
The categories of financial instruments used by the Group to achieve its objectives as set out in the
Directors’ Report are:
39
39
_____________________________________________
21. Financial Instruments (continued)
Financial assets
At fair value through Other comprehensive income
Non-current investments (strategic investments)
At fair value through profit or loss
Current asset investments (listed investments)
Loans and receivables at amortised costs
Trade and other receivables
Cash at bank
Financial liabilities
At amortised costs
Trade and other payables (including corporation tax)
Lease liabilities
Borrowings
At fair value through profit or loss
Derivative financial instrument
Fair Value
Hierarchy
Level
2022
£000
2021
£000
1
1
n/a
n/a
n/a
n/a
n/a
2
3,957
8,202
14,055
12,081
82
407
171
108
66
-
105
309
210
178
650
18
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.
The effective rate of interest on borrowings for the year was 2.85% (2021 – 2.85%) and on deposits was
nil. The sensitivity of the Group to a 1% change in interest rates would have been £4,816 in the current
year (2021 – £3,800).
In order to minimise the impact from possible interest rate fluctuations the Company entered into an
Interest rate swap agreement with Coutts & Co on 1 October 2018. This facility has been discontinued
during the year.
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
US Dollar
Danish kroner
Australian Dollar
2022
£000
3,119
3,360
4,294
-
397
11,170
2021
£000
3,726
1,767
2,520
395
-
8,408
The sensitivity to a 1% change in the sterling exchange rate would be to increase or decrease the fair
values as set out by £110,596 in aggregate (2021 - £83,247).
40
40
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Notes to the financial statements (continued)
21. Financial Instruments (continued)
Liquidity Risk
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 the
shares of Western and Finsbury Food Group Plc .
The Group 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 such
investments must have an aggregate fair value of at least 167% of borrowings at any point in time.
Market Risk
The Group is exposed to market risk through the equity investments in other companies. The Group
maintains a spread of investments over various sectors and monitors performance continuously as
described above. The majority of the General Portfolio 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 Group’s circumstances.
The sensitivity to each 1% decrease in the value investments would result in the fair values of non-current
asset investments decreasing by £40,000 (2021 - £82,000) and a corresponding decrease in the
unrealised profits reserve. A 1% increase, would, on the same basis, increase fair values and increase
the unrealised profits reserve. The same percentage increase/decrease in the current asset investments
would increase/decrease carrying values by £140,600 (2021 - £120,800) and unrealised profits reserve
(or earnings where a decline was below cost) by an equal amount.
The Directors consider 1% to be a basis for the sensitivity analysis due to the diversified spread of
investments over a range of liquid markets.
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 net of impairment provisions are taken through the income statement.
Market value has been used for the valuation of Western despite the low liquidity of this investment
because shares have traded at a relatively stable price with low volatility, and there is no better indicator
available for fair value.
The fair value of short-term deposits, borrowings 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 Group’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.
41
41
_____________________________________________
_____________________________________________
_____________________________________________
22. Related Undertakings
22.Related Undertakings
22. Related Undertakings
In accordance with section 409 of the Companies Act 2006, a full list of related undertakings, the country
In accordance with section 409 of the Companies Act 2006, a full list of related undertakings, the country
In accordance with section 409 of the Companies Act 2006, a full list of related undertakings, the country
of incorporation and the percentage of equity owned, directly or indirectly, as at 30 June 2022, is disclosed
of incorporation and the percentage of equity owned, directly or indirectly, as at 30 June 2022, is disclosed
of incorporation and the percentage of equity owned, directly or indirectly, as at 30 June 2022, is disclosed
below:
below:
below:
Company
Company
Company
Lonfin Investments Limited
Lonfin Investments Limited
Lonfin Investments Limited
City Group PLC
City Group PLC
City Group PLC
Western Selection PLC*
Western Selection PLC*
Western Selection PLC*
*No individual investor has control of the company
*No individual investor has control of the company
*No individual investor has control of the company
23. Post Balance Sheet Events
23.Post Balance Sheet Events
23. Post Balance Sheet Events
Country % ownership
Country % ownership
Country % ownership
United
United
United
Kingdom
Kingdom
Kingdom
United
United
United
Kingdom
Kingdom
Kingdom
United
United
United
Kingdom
Kingdom
Kingdom
100%
100%
100%
51.4%
51.4%
51.4%
43.8%
43.8%
43.8%
As of 8 September 2022, all the remaining 1,800,000 shares in Finsbury Food Group Plc have been
As of 8 September 2022, all the remaining 1,800,000 shares in Finsbury Food Group Plc have been
As of 8 September 2022, all the remaining 1,800,000 shares in Finsbury Food Group Plc have been
disposed of.
disposed of.
disposed of.
42
42
42
42
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Directors’ Report
The Directors present their Report for the year ended 30 June 2022. Much of the information previously
provided as part of the Directors’ Report is now required, under company law, to be presented as part of
the Strategic Report which is set out on pages 4 to 12.
This Directors’ Report includes the information required to be included under the Companies Act or, where
provided elsewhere, an appropriate cross-reference is given. The Corporate Governance Statement,
approved by the Board, is provided on pages 50 to 54 and is incorporated by reference herein.
Results, Future Developments, Dividends, & Financial Instruments
A review of the Group’s operations and performance during the financial year, setting out the position at
the year-end, significant changes in the year, significant events after the financial year end, an indication
of the outlook for the future, proposed dividends and the Group’s policy in relation to financial instruments
is contained in the Strategic Report.
Investment Policy
The Group’s investment policy is to invest in a range of “strategic” investments, a “general portfolio”
consisting of liquid stock market investments, both in equity instruments and bonds, and, at the Board’s
discretion, ‘other investments’, typically property and other physical assets. This investment policy is
designed to achieve the Group’s objectives of capital growth in real terms over the medium term, while
maintaining a progressive dividend policy.
Both “strategic” and “general portfolio” investments can be in any industry sector. “Strategic” investments
are significant minority positions in UK small cap companies which can be either quoted or unquoted; to
diversify risk the policy is to maintain a number of such investments. Most investments will be in shares
of companies that are publicly traded but investments can also be made in publicly traded and untraded
debt or equity instruments of companies that are strategic investments. The “general portfolio” aims to
further diversify risk through a spread of investments and a target of between 30 and 40 holdings in some
of the world’s largest quoted companies.
The intention is for between 30% and 70% of the overall investment portfolio with a maximum limit of 80%
to be in “strategic” and “other” investments immediately following such investment, with the balance of
the portfolio, to be in the “general portfolio”. “Other investments” will be limited to 50% of the overall value
of the investment portfolio, measured immediately following such investment. No one “strategic
investment” or “other investment” will represent more than 30% and 50% respectively of the value of all
investments immediately following the making of such investment and no one “general portfolio”
investment will represent more than 10 per cent of the value of the “general portfolio” at the time of such
investment.
Within these parameters, changes in strategic and other investments are decided on by the Board and
changes to the general portfolio are decided on by the Board or, between Board meetings, by an
Investment Committee of the Board. The investment guidelines within which the Investment Committee
operates allow the Investment Committee discretion within the parameters set by the Investment Policy.
The investment mix and level of borrowings are reviewed at each Board meeting.
The Group’s gearing is limited at or below 60% of the total value of investments.
43
43
_____________________________________________
Going Concern
As a result of the UK’s vaccination programmes we are now able to live with the continued presence of
Covid-19 although there is the threat of new variants and government action may be required again to
contain the spread of the virus. More pressing concerns at present are the post Brexit issues to be
resolved with the EU, the impact on the UK and Europe of the war in Ukraine, the energy supply and food
shortages, the sharp rises in the cost of living and inflation and the prospect of recession. We await news
of the government’s plans to address these issues. These issues will significantly impact on the UK over
the coming months, and we expect further fluctuations in the stock markets and increased volatility.
Nevertheless, we are confident in the quality of our investments and that notwithstanding the current
uncertainty and what troubles lie ahead our investments will enable us to achieve our objective of
generating growth in shareholder value in the medium to long term.
In response to these uncertainties, the Board has sought to minimise the risks to the Group and are
actively monitoring the performance of the Group’s investments on a monthly basis. Due to the relatively
low cost of operating the Group compared to the high value of assets held and that the Group has access
to funds that will allow the Group and Parent Company to continue trading, the Board is satisfied that the
Group shall continue to be able to meet its financial obligations as they fall due both in the short and
longer term. The Board will continue to seek out investment opportunities that will enhance the financial
performance of the Group.
The Board continues to adopt the going concern basis of accounting in the preparation of these financial
statements.
Risk Management and Principal Risks
A description of the principal risks which arise from the Group’s financial instruments is set out in the
Strategic Report on pages 8 and 9 and in Note 21 to the Financial Statements (Financial Instruments) on
pages 39 to 41.
Viability Statement
In accordance with the provisions of the UK Corporate Governance Code, the Board has assessed the
viability of the Group. The Group is a long-term investor and the Board believes it is appropriate to assess
the Group’s viability over a five-year period which reflects the Board’s long-term investment approach.
The Board believes this five-year period reflects a proper balance between the long-term horizon and the
inherent uncertainties of looking to the future.
In assessing the viability of the Group, the Board has carried out a robust assessment of the following
factors:
•
•
•
•
•
the principal risks and uncertainties facing the Group as set out in the Strategic Report on pages
8 and 9;
the potential operational and financial impacts of these risks and uncertainties are severe, but
plausible scenarios together with the effectiveness of any mitigating actions;
the Group’s current position and strategy;
the liquidity of the Group’s Investment Portfolio; and
the Board’s risk appetite.
The Board has also considered such matters as significant economic or stock market volatility, a sub-
stantial reduction in the liquidity of the portfolio or changes in investor sentiment, all of which could have
an impact on the Group’s prospects and viability in the future.
44
44
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Directors’ Report (continued)
Directors’ Report (continued)
Directors’ Report (continued)
Taking into account all of these factors, the Group’s current position and the potential impact of the prin-
Taking into account all of these factors, the Group’s current position and the potential impact of the prin-
Taking into account all of these factors, the Group’s current position and the potential impact of the prin-
cipal risks and uncertainties faced by the Group, the Board has concluded that it has a reasonable ex-
cipal risks and uncertainties faced by the Group, the Board has concluded that it has a reasonable ex-
cipal risks and uncertainties faced by the Group, the Board has concluded that it has a reasonable ex-
pectation that the Group will be able to continue in operation and meet its liabilities as they fall due over
pectation that the Group will be able to continue in operation and meet its liabilities as they fall due over
pectation that the Group will be able to continue in operation and meet its liabilities as they fall due over
the five-year period to 30 June 2027.
the five-year period to 30 June 2027.
the five-year period to 30 June 2027.
Events after the reporting date
Events after the reporting date
Events after the reporting date
With the exception of the sale of all remaining shares in our Strategic Investment Finsbury Food Group
With the exception of the sale of all remaining shares in our Strategic Investment Finsbury Food Group
With the exception of the sale of all remaining shares in our Strategic Investment Finsbury Food Group
Plc, there have been no significant post-balance sheet events since the year-end.
Plc, there have been no significant post-balance sheet events since the year-end.
Plc, there have been no significant post-balance sheet events since the year-end.
Directors’ and Directors’ Interests
Directors’ and Directors’ Interests
Directors’ and Directors’ Interests
A list of the present directors of the Company is shown on page 1.
A list of the present directors of the Company is shown on page 1.
A list of the present directors of the Company is shown on page 1.
A list of all the directors who served during the year and their beneficial interests (and those of their
A list of all the directors who served during the year and their beneficial interests (and those of their
A list of all the directors who served during the year and their beneficial interests (and those of their
connected persons) in the Company’s ordinary shares as at 30 June 2021 and 2022 is set out below:
connected persons) in the Company’s ordinary shares as at 30 June 2021 and 2022 is set out below:
connected persons) in the Company’s ordinary shares as at 30 June 2021 and 2022 is set out below:
D.C. Marshall *
D.C. Marshall *
D.C. Marshall *
F.W.A. Lucas †
F.W.A. Lucas †
F.W.A. Lucas †
J.H. Maxwell
J.H. Maxwell
J.H. Maxwell
E.J. Beale
E.J. Beale
E.J. Beale
W.H. Marshall *
W.H. Marshall *
W.H. Marshall *
30 June 2022
30 June 2022
30 June 2022
30 June 2021
30 June 2021
30 June 2021
No. of Ordinary Shares
No. of Ordinary Shares
No. of Ordinary Shares
12,890,693
12,890,693
12,890,693
Shares
Shares
Shares
162,500
162,500
162,500
65,000
65,000
65,000
-
-
-
12,890,693
12,890,693
12,890,693
No. of Ordinary Shares
No. of Ordinary Shares
No. of Ordinary Shares
12,890,693
12,890,693
12,890,693
162,500
162,500
162,500
65,000
65,000
65,000
-
-
-
12,890,693
12,890,693
12,890,693
*
*
*
†
†
†
These holdings arise as the individuals concerned are/were trustees and/or directors of entities that hold/held ordinary
These holdings arise as the individuals concerned are/were trustees and/or directors of entities that hold/held ordinary
These holdings arise as the individuals concerned are/were trustees and/or directors of entities that hold/held ordinary
shares in the Company. The interest of Mr.W.H.Marshall, overlaps with the interest of Mr. D.C. Marshall. Neither Mr D.C.
shares in the Company. The interest of Mr.W.H.Marshall, overlaps with the interest of Mr. D.C. Marshall. Neither Mr D.C.
shares in the Company. The interest of Mr.W.H.Marshall, overlaps with the interest of Mr. D.C. Marshall. Neither Mr D.C.
Marshall nor Mr W. H. Marshall had any beneficial interest in these shares (2019 – nil).
Marshall nor Mr W. H. Marshall had any beneficial interest in these shares (2019 – nil).
Marshall nor Mr W. H. Marshall had any beneficial interest in these shares (2019 – nil).
Of this figure, Dr. F.W.A. Lucas owns 80,000 ordinary shares personally and 82,500 ordinary shares are owned by Loeb
Of this figure, Dr. F.W.A. Lucas owns 80,000 ordinary shares personally and 82,500 ordinary shares are owned by Loeb
Of this figure, Dr. F.W.A. Lucas owns 80,000 ordinary shares personally and 82,500 ordinary shares are owned by Loeb
Aron & Company Ltd, of which Dr. F.W.A. Lucas is a director and shareholder.
Aron & Company Ltd, of which Dr. F.W.A. Lucas is a director and shareholder.
Aron & Company Ltd, of which Dr. F.W.A. Lucas is a director and shareholder.
On 29 February 2016, Mr E.J. Beale, being an eligible employee under the rules of the London Finance
On 29 February 2016, Mr E.J. Beale, being an eligible employee under the rules of the London Finance
On 29 February 2016, Mr E.J. Beale, being an eligible employee under the rules of the London Finance
& Investment Group Company Share Option Plan, was granted options over 80,000 ordinary shares with
& Investment Group Company Share Option Plan, was granted options over 80,000 ordinary shares with
& Investment Group Company Share Option Plan, was granted options over 80,000 ordinary shares with
an exercise price of 37.5p per share. The options granted may be exercised no later than the tenth
an exercise price of 37.5p per share. The options granted may be exercised no later than the tenth
an exercise price of 37.5p per share. The options granted may be exercised no later than the tenth
anniversary of the date of grant.
anniversary of the date of grant.
anniversary of the date of grant.
There have been no changes in directors' share interests between 1 July 2022 and the date of this report.
There have been no changes in directors' share interests between 1 July 2022 and the date of this report.
There have been no changes in directors' share interests between 1 July 2022 and the date of this report.
There are no requirements or guidelines for Directors to acquire and own shares in the Company.
There are no requirements or guidelines for Directors to acquire and own shares in the Company.
There are no requirements or guidelines for Directors to acquire and own shares in the Company.
Subject to the Company’s Articles of Association, the appointment or removal of directors is determined
Subject to the Company’s Articles of Association, the appointment or removal of directors is determined
Subject to the Company’s Articles of Association, the appointment or removal of directors is determined
by shareholders at a General Meeting. Between General Meetings, the Board may appoint additional
by shareholders at a General Meeting. Between General Meetings, the Board may appoint additional
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. In addition, the Company’s
directors who are required to stand for election at the next General Meeting. In addition, the Company’s
directors who are required to stand for election at the next General Meeting. In addition, the Company’s
Articles of Association require all the Directors of the Company to offer themselves for re-election on an
Articles of Association require all the Directors of the Company to offer themselves for re-election on an
Articles of Association require all the Directors of the Company to offer themselves for re-election on an
annual basis. Accordingly, this year, Mr D.C. Marshall, Dr F.W.A. Lucas, Mr J.H. Maxwell, Mr E.J. Beale
annual basis. Accordingly, this year, Mr D.C. Marshall, Dr F.W.A. Lucas, Mr J.H. Maxwell, Mr E.J. Beale
annual basis. Accordingly, this year, Mr D.C. Marshall, Dr F.W.A. Lucas, Mr J.H. Maxwell, Mr E.J. Beale
and Mr W. H. Marshall will retire and being eligible, offer themselves for re-election as directors at the
and Mr W. H. Marshall will retire and being eligible, offer themselves for re-election as directors at the
and Mr W. H. Marshall will retire and being eligible, offer themselves for re-election as directors at the
AGM on 10 November 2022.
AGM on 10 November 2022.
AGM on 10 November 2022.
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45
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Substantial Interests
As at 26 September 2022, the Company was
aware of the following interests in 3% or more
of its issued ordinary share capital: Identity of
person or group
Lynchwood Nominees Limited
W.T. Lamb Investments Limited
Winterflood Client Nominees Limited
No. of Ordinary
Shares
Percentage of issued
Ordinary Share capital
14,928,832
4,629,000
2,769,824
47.8%
14.8%
8.8%
No changes to the significant holdings set out above have been notified to the Company between 1 July
2022 and 26 September 2022.
Independent Auditor
The respective responsibilities of the Directors and the Independent Auditor, PKF Littlejohn LLP, in
connection with the financial statements appear on pages 14 to 19.
Each Director has taken all the steps that they ought to have taken as a director including making
appropriate enquiries of fellow Directors to make themselves aware of any information needed by the
Company’s Independent Auditor for the purposes of its audit and to establish that the Independent Auditor
is aware of that information. The Directors are not aware of any relevant audit information of which the
Independent Auditors are unaware.
The Committee meets each year with the Independent Auditor. The Company’s Independent Auditor,
PKF Littlejohn LLP, provided a detailed planning report in advance of the annual audit work. The
Committee was able to review PKF Littlejohn LLP’s detailed planning report prior to commencement of
the audit work and, following completion of their audit work, the Committee discussed with PKF Littlejohn
LLP their audit report and findings. During these discussions, the Committee was able to review the level
and scope of materiality adopted by PKF Littlejohn LLP in the audit process. At the Company’s
forthcoming AGM to be held on 10 November 2022 a resolution will be proposed that PKF Littlejohn LLP
be re-appointed as the Company’s Independent Auditor following the AGM.
Ian Cowan has held the role of audit engagement partner for the Company for a collective period of five
years. The Board and the Audit Committee have approved an extension to the engagement term of the
Senior Statutory Auditor responsible for the audit opinion in relation to London Finance & Investment
Group Plc. The term was extended for a further year and was made to safeguard the quality of the audit.
The Audit Committee is satisfied that this extension does not in any way prejudice the objectivity and
independence of the audit.
Corporate Governance
Information on the Company’s corporate governance can be found in the Corporate Governance
Statement on pages 50 to 54.
The Company’s Articles of Association may only be amended by special resolution and are available on
the Company’s website at www.city-group.com/london-finance-investment-group.plc
Annual General Meeting (AGM)
The Notice of the AGM, to be held on 10 November 2022, can be found on pages 69 to 70 and sets out
the business to be considered at the meeting. Resolutions 1 to 11 will be proposed as Ordinary
Resolutions and Resolution 12 will be proposed as a Special Resolution. Certain elements of the business
relating to these Resolutions are explained below:
46
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London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Directors’ Report (continued)
Resolution 3
Directors’ Remuneration Policy
The Company’s Remuneration Policy needs to be put to a binding shareholders’ vote at least once every
three years. The Company’s current Remuneration Policy was approved at the Company’s AGM in 2019.
Accordingly, a proposed Directors’ remuneration Policy will be put to a binding shareholders’ vote at the
Company’s forthcoming AGM on 10 November 2022.
Resolution 4
Directors’ Remuneration Report
The annual report on Directors’ Remuneration, as set out in the Directors’ Remuneration Report on pages
59 to 65 provides information on the Directors’ remuneration. Resolution 4 proposes the approval of the
Directors’ Remuneration Report, other than the part containing the proposed Directors’ Remuneration
Policy, which will be the subject of Resolution 3.
Resolutions 5, 6, 7, 8 and 9
Re-election of Directors
The Directors, David Marshall, Dr Frank Lucas, John Maxwell, Edward Beale and Warwick Marshall, are
subject to annual re-election. Accordingly, each of these Directors will retire at the AGM on 10 November
2022 and each offers himself for re-election as a director of the Company. The Board has confirmed,
following a performance review of the Directors and the Chairman, that each of the Directors, subject to
re-election, continues to perform effectively and demonstrates commitment to his role. Further information
relating to their experience and background can be found on page 1 of this document.
Resolution 10
Re-appointment of the Independent Auditor
It is proposed that PKF Littlejohn LLP be re-appointed as the Company’s Independent Auditor to continue
in office following the AGM on 10 November 2022.
Resolution 11
Allotment of share capital
Resolution 11 provides authority to allot shares in accordance with section 551 of the Companies Act
2006 in the period up to the conclusion of the Company’s AGM in 2023. If passed, this resolution would
enable the Directors to allot shares (and to grant rights to subscribe for or convert any security into shares
in the Company) up to a maximum nominal amount of £189,626 (being 3,792,521 ordinary shares) which
is the amount of the Company’s authorised but unissued share capital. The Directors have no specific
plans to allot any ordinary shares in the Company.
Resolution 12
Disapplication of pre-emption rights
Resolution 12 will empower the Directors to allot ordinary shares for cash, pursuant to the authority
granted by Resolution 11, on a non-pre-emptive basis (a) in connection with a rights issue or open offer
and (b) (otherwise than in connection with a rights issue or open offer) up to a maximum nominal value
of £78,000 (being 1,560,000 ordinary shares) representing approximately 5% of the issued ordinary share
capital of the Company as at 26 September 2022 (being the latest practicable date prior to publication of
this report). The power given by this resolution shall expire upon the expiry of the authority conferred by
Resolution 11 set out above, Although the Directors will be entitled to make offers or agreements before
the expiry of that power which would or might require equity securities to be allotted.
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.
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47
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_____________________________________________
Recommendation
Recommendation
The Board believes that the approval of Resolutions 1 to 12 will promote the success of the Company
The Board believes that the approval of Resolutions 1 to 12 will promote the success of the Company
and is in the best interests of the Company and its shareholders as a whole.
and is in the best interests of the Company and its shareholders as a whole.
The Board unanimously recommends that you vote in favour of Resolutions 1 to 11 as the Directors intend
The Board unanimously recommends that you vote in favour of Resolutions 1 to 11 as the Directors intend
to do in respect of their own beneficial holdings which as at the date of this Annual Report, amount in
to do in respect of their own beneficial holdings which as at the date of this Annual Report, amount in
aggregate to 145,000 ordinary shares, representing approximately 0.46% of the ordinary shares currently
aggregate to 145,000 ordinary shares, representing approximately 0.46% of the ordinary shares currently
in issue.
in issue.
Relationship Agreement
Relationship Agreement
In compliance with the Listing Rules, the Company has entered into a Relationship Agreement with David
In compliance with the Listing Rules, the Company has entered into a Relationship Agreement with David
Marshall, the Company’s Chairman, in his capacity as a Trustee of a controlling shareholder of the
Marshall, the Company’s Chairman, in his capacity as a Trustee of a controlling shareholder of the
Company as defined by the Listing Rules. The Company has complied with the independence provisions
Company as defined by the Listing Rules. The Company has complied with the independence provisions
contained in the Relationship Agreement throughout the year ended 30 June 2022 and so far as the
contained in the Relationship Agreement throughout the year ended 30 June 2022 and so far as the
Company is aware, the controlling shareholder has complied with the provisions and also the procurement
Company is aware, the controlling shareholder has complied with the provisions and also the procurement
obligation contained in the Relationship Agreement.
obligation contained in the Relationship Agreement.
Material Agreements
Material Agreements
There are no agreements which the Company is party to that might affect its control following a takeover
There are no agreements which the Company is party to that might affect its control following a takeover
bid; and there are no agreements between the Company and the Directors concerning compensation for
bid; and there are no agreements between the Company and the Directors concerning compensation for
loss of office.
loss of office.
Other than the Relationship Agreement referred to above, the Board is not aware of any contractual
Other than the Relationship Agreement referred to above, the Board is not aware of any contractual
agreements which ought to be disclosed in the Directors’ Report.
agreements which ought to be disclosed in the Directors’ Report.
Business Relationships
Business Relationships
The Directors consider the underlying strategic companies in which the Group has invested as well as
The Directors consider the underlying strategic companies in which the Group has invested as well as
advisers and suppliers amongst the key stakeholders of the Group. In this respect, the Directors engage
advisers and suppliers amongst the key stakeholders of the Group. In this respect, the Directors engage
with these stakeholders on a frequent basis in order to build and strengthen such relationships. All stake-
with these stakeholders on a frequent basis in order to build and strengthen such relationships. All stake-
holders are encouraged to communicate with the Board through the Chairman or through the Company
holders are encouraged to communicate with the Board through the Chairman or through the Company
Secretary
Secretary
The views of and impact upon the wider stakeholders of the Group are considered as part of the Board
The views of and impact upon the wider stakeholders of the Group are considered as part of the Board
decision-making process including engaging with stakeholders to ensure they have a clear understanding
decision-making process including engaging with stakeholders to ensure they have a clear understanding
of the long-term goals of the Group and how the Directors intend to achieve these goals.
of the long-term goals of the Group and how the Directors intend to achieve these goals.
Operations, Directors and Employees
Operations, Directors and Employees
All of our operations and those of Western, with the exception of investment selection, are outsourced to
All of our operations and those of Western, with the exception of investment selection, are outsourced to
our subsidiary, City Group PLC (“City Group”). City Group also provides office accommodation, company
our subsidiary, City Group PLC (“City Group”). City Group also provides office accommodation, company
secretarial, finance and head office services to a number of other companies. City Group is responsible
secretarial, finance and head office services to a number of other companies. City Group is responsible
for the initial identification and appraisal of potential new strategic investments for the Company and the
for the initial identification and appraisal of potential new strategic investments for the Company and the
day to day monitoring of existing strategic investments and employs 6 people.
day to day monitoring of existing strategic investments and employs 6 people.
The table below provides the gender split at different levels of the Board and employees within the
The table below provides the gender split at different levels of the Board and employees within the
Company’s business, including City Group, as at 30 June 2022, together with comparator data for the
Company’s business, including City Group, as at 30 June 2022, together with comparator data for the
previous year.
previous year.
Male number and percentage
Male number and percentage
2022
2022
2021
2021
Female number and percentage
Female number and percentage
2021
2022
2022
2021
Board
Board
5 (100%)
5 (100%)
5 (100%)
5 (100%)
0
0
0
0
Senior managers
Senior managers
1 (33.3%)
1 (33.3%)
1 (33.3%)
1 (33.3%)
2 (66.6%)
2 (66.6%)
2 (66.6%)
2 (66.6%)
All employees and Board
All employees and Board
7 (70%)
7 (70%)
7 (70%)
7 (70%)
3 (30%)
3 (30%)
3 (30%)
3 (30%)
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48
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Directors’ Report (continued)
Directors’ Service Contracts and Letters of Appointment
None of the Directors has a service contract with the Company. Each of the Directors has received a
Letter of Appointment from the Company in respect of his services under the terms of the Company’s
Articles of Association.
The appointment of each of the Directors is pursuant to the terms of a Letter of Appointment which, after
completion of an initial term of three years, continues, subject to the approval of the Board and annual re-
election, until terminated by either party in accordance with the termination provisions contained in the
Letter of Appointment. In the event of termination of a Director’s appointment, there is no compensation
payment for loss of office.
The Chairman’s and the Non-Executive Directors’ Letters of Appointment are available for inspection at
the registered office of the Company, 1 Ely Place, London EC1N 6RY.
Directors’ and Officers’ Liability Insurance
During the year, the Company has maintained insurance cover for its directors and officers under a
Directors’ and Officers’ liability insurance policy.
Each of the Directors has the benefit, under the Company’s Articles of Association, of an indemnity, to
the extent permitted by the Companies Act 2006, against any liability incurred by him or her in defending
the Company.
Political and Charitable Donations
No political or charitable donations have been made during this last financial year.
Environmental, Social and Human Rights Issues
The Board does not consider that there is any further information relating to environmental matters,
employees, social, community and human rights issues that it is necessary to report for an understanding
of the development, performance or position of the Company’s business.
By Order of the Board
City Group PLC
Company Secretary
29 September 2022
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Corporate Governance Statement
Corporate Governance Policy
Corporate Governance is the process by which companies are controlled and directed to achieve the
objectives of the organisation. Key to the achievement of objectives is having clarity about the objective
and the right people in place. Processes and structures are of secondary importance as, without a focus
on outcomes and without the right people, it is only by chance that objectives will be met.
The UK Listing Authority requires UK premium listed companies to comply with the UK Corporate
Governance Code (the “Code”), updated from time to time by the Financial Reporting Council (“FRC”),
which focuses on processes and structures, and which is deemed to constitute best practice in Corporate
Governance for most companies. Directors are required to report to shareholders on how the Company
applies the principles of the Code and confirm that the Company complies with the Code’s provisions or
explain why it does not. In July 2018, the Code’s Principles and Provisions were revised further by the
FRC to simplify the Code and enhance requirements for governance structures and processes. The 2018
Code Principles and Provisions apply to companies whose accounting periods commence on or after 1
January 2019. Accordingly, for the year ended 30 June 2022, the Company has applied the principles of
the 2018 UK Corporate Governance Code and confirms its compliance with those principles or has duly
explained any non-compliance.
The JSE Limited (“Johannesburg Stock Exchange” or “JSE”) requires that JSE listed companies report
on their compliance with the Code of Corporate Practices and Conduct (“King Code”) contained in the
King Report on Corporate Governance. Currently, all JSE listed companies are required to comply with
the disclosure requirements and principles of the King Code as set out the King IV Report. As the
Company’s primary listing is on the Main Market of the London Stock Exchange and, as such, is required
to comply with the Code, the Company is not required to comply with the King Code as well.
Compliance
This Corporate Governance Statement describes how the Company applies the principles set out in 2018
UK Corporate Governance Code (the “Code”). The Company has been in full compliance with the Code
throughout the year ended 30 June 2022.
Composition of the Board
The Board comprises the Chairman, David Marshall, Senior Independent Non-Executive Director, John
Maxwell, Dr Frank Lucas, Edward Beale and Warwick Marshall. All of the Directors are Non-Executive
Directors.
Independence of the Chairman
The Board has reviewed the independence of the Chairman in respect of David Marshall having served
more than nine years on the Board. The Board consider David Marshall to be an effective Chairman who
continues to use independent judgement in his role and brings a wealth of experience to the role. The
Board are, therefore, satisfied that David Marshall should continue in hie role as Chairman.
Independence of the Directors
The Board has reviewed the independence of the non-executive directors and John Maxwell and Dr Frank
Lucas are considered by the Board to be independent despite the fact that both have served on the Board
for more than nine years.
The Board has concluded that John Maxwell and Dr Frank Lucas both continue to demonstrate the
essential characteristics of independence expected by the Board. In reaching this decision, the Board
also took into account the fact that Dr Frank Lucas is a director of Loeb Aron & Company Limited which
acted as NEX Exchange Growth Market (now the AQSE Growth Market) corporate adviser to Western
until June 2018.
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London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Corporate Governance Statement (continued)
Conflicts of Interest
The Articles of Association reflect the codification of certain directors’ duties arising from the Companies
Act 2006 and in particular the duty for directors to avoid conflicts of interest. The Board has a process in
order for Directors to report conflicts of interest or potential conflicts of interest.
All Directors are required to notify the Company Secretary, City Group, of any situations, or potential
situations where they consider that they have or may have a direct or indirect interest or duty that conflicts
or may possibly conflict with the interests of the Company.
Appointment, election and re-election of Directors
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 generally a Board decision.
Subject to the Company’s Articles of Association, the appointment or removal of Directors is ultimately
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.
The Company’s Articles of Association require that all new directors seek election to the Board at the next
AGM after their appointment. In addition, at every AGM, all members of the Board, other than newly
appointed Directors who are subject to election, are subject to annual re-election and there is, therefore,
no requirement at the forthcoming AGM or in the future for any Directors to retire by rotation.
Resolutions approving the re-election and election of each of the Directors will be proposed to
shareholders at the forthcoming AGM. The Board has reviewed the skills and experience of each and
supports their re-election.
As a long-term investment company, it is appropriate for the 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 is 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.
As an investment company, all matters, and all decisions are reserved for the Board except for any matter
specifically delegated to a Board committee or any operational decisions of the Company’s subsidiary
undertakings.
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.
Board Operation
As an investment company, the Company’s Board is comprised of Non-Executive Directors. It has no
Chief Executive or any other Executive Directors. The Non-Executive Chairman leads the Board and
ensures that it deals with all aspects of its role. He is responsible for the effective performance of the
Board through control of the Board’s agenda and the running of its meetings. The Chairman organises
opportunities for the Directors to spend time with each other on an informal basis to improve
communication and relations between Directors, subject to constraints imposed as a result of Covid-19.
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_____________________________________________
The Board, through review of the management reports, scrutinises the performance of the Company
The Board, through review of the management reports, scrutinises the performance of the Company
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.
against the objective of real growth in shareholder value over the long term.
against the objective of real growth in shareholder value over the long term.
As an investment company, all matters, and all decisions are reserved for the Board except for any matter
As an investment company, all matters, and all decisions are reserved for the Board except for any matter
As an investment company, all matters, and all decisions are reserved for the Board except for any matter
specifically delegated to a Board Committee or any operational decisions of the Company’s subsidiary
specifically delegated to a Board Committee or any operational decisions of the Company’s subsidiary
specifically delegated to a Board Committee or any operational decisions of the Company’s subsidiary
undertakings.
undertakings.
undertakings.
A representative of City Group, the Company Secretary, attends all Board meetings to record proceedings
A representative of City Group, the Company Secretary, attends all Board meetings to record proceedings
A representative of City Group, the Company Secretary, attends all Board meetings to record proceedings
and is available at all times to advise on any corporate governance issues that arise. The Company
and is available at all times to advise on any corporate governance issues that arise. The Company
and is available at all times 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
Secretary is also responsible to the Chairman for the efficient organisation of Board and Committee
Secretary is also responsible to the Chairman for the efficient organisation of Board and Committee
meetings including circulation of papers in advance of meetings and the provision of management,
meetings including circulation of papers in advance of meetings and the provision of management,
meetings including circulation of papers in advance of meetings and the provision of management,
regulatory and financial information. Management reports including cash movements, portfolio
regulatory and financial information. Management reports including cash movements, portfolio
regulatory and financial information. Management reports including cash movements, portfolio
movements and valuations are regularly circulated to all Directors for review.
movements and valuations are regularly circulated to all Directors for review.
movements and valuations are regularly circulated to all Directors for review.
The Board met on five occasions during the year; there were also two Audit Committee meetings, one
The Board met on five occasions during the year; there were also two Audit Committee meetings, one
The Board met on five occasions during the year; there were also two Audit Committee meetings, one
Remuneration Committee meeting and one Nomination Committee meeting during the year. All such
Remuneration Committee meeting and one Nomination Committee meeting during the year. All such
Remuneration Committee meeting and one Nomination Committee meeting during the year. All such
meetings were quorate and followed a formal agenda.
meetings were quorate and followed a formal agenda.
meetings were quorate and followed a formal agenda.
Attendance at the Board meetings and the Audit, Remuneration and Nomination Committee meetings
Attendance at the Board meetings and the Audit, Remuneration and Nomination Committee meetings
Attendance at the Board meetings and the Audit, Remuneration and Nomination Committee meetings
during the year is shown in the following table:
during the year is shown in the following table:
during the year is shown in the following table:
Board
Board
Board
Audit
Audit
Audit
Committee
Committee
Committee
Remuneration
Remuneration
Remuneration
Committee
Committee
Committee
Nomination
Committee
Nomination
Nomination
Committee
Committee
No. of meetings in the year to
No. of meetings in the year to
No. of meetings in the year to
30 June 2022
30 June 2022
30 June 2022
D.C. Marshall
D.C. Marshall
D.C. Marshall
F.W.A. Lucas
F.W.A. Lucas
F.W.A. Lucas
J.H. Maxwell
J.H. Maxwell
J.H. Maxwell
E.J. Beale
E.J. Beale
E.J. Beale
W. H. Marshall
W. H. Marshall
W. H. Marshall
The Board’s Committees
The Board’s Committees
The Board’s Committees
The Board now has four committees:
The Board now has four committees:
The Board now has four committees:
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
2
2
2
-
-
-
2
2
2
2
2
2
2
2
2
-
-
-
1
1
1
-
-
-
1
1
1
1
1
1
-
-
-
-
-
-
1
1
1
-
-
-
1
1
1
1
1
1
-
-
-
-
-
-
The Investment Committee is chaired by David Marshall and its other member is Edward Beale. The
The Investment Committee is chaired by David Marshall and its other member is Edward Beale. The
The Investment Committee is chaired by David Marshall and its other member is Edward Beale. The
Nomination Committee is chaired by John Maxwell and its other member is Dr Frank Lucas. The Audit
Nomination Committee is chaired by John Maxwell and its other member is Dr Frank Lucas. The Audit
Nomination Committee is chaired by John Maxwell and its other member is Dr Frank Lucas. The Audit
Committee is chaired by Dr Frank Lucas and its other member is John Maxwell. Both members of the
Committee is chaired by Dr Frank Lucas and its other member is John Maxwell. Both members of the
Committee is chaired by Dr Frank Lucas and its other member is John Maxwell. Both members of the
Audit Committee have recent and relevant financial experience. The Remuneration Committee is
Audit Committee have recent and relevant financial experience. The Remuneration Committee is
Audit Committee have recent and relevant financial experience. The Remuneration Committee is
chaired by John Maxwell and its other member is Dr Frank Lucas.
chaired by John Maxwell and its other member is Dr Frank Lucas.
chaired by John Maxwell and its other member is Dr Frank Lucas.
Committee Meetings are held independently of Board meetings and invitations to attend are extended by
Committee Meetings are held independently of Board meetings and invitations to attend are extended by
Committee Meetings are held independently of Board meetings and invitations to attend are extended by
the committee chairmen to other Directors and the Group’s advisers as appropriate.
the committee chairmen to other Directors and the Group’s advisers as appropriate.
the committee chairmen to other Directors and the Group’s advisers as appropriate.
Investment Committee
Investment Committee
Investment Committee
The Investment Committee takes responsibility, between Board Meetings, for the investment decisions
The Investment Committee takes responsibility, between Board Meetings, for the investment decisions
The Investment Committee takes responsibility, between Board Meetings, for the investment decisions
relating to the Company’s General Portfolio which consists of a broad range of investments in major USA,
relating to the Company’s General Portfolio which consists of a broad range of investments in major USA,
relating to the Company’s General Portfolio which consists of a broad range of investments in major USA,
UK and other European companies which provides a diversified exposure to international equity markets.
UK and other European companies which provides a diversified exposure to international equity markets.
UK and other European companies which provides a diversified exposure to international equity markets.
All investment decisions are then implemented on the Company’s behalf by City Group which also carries
All investment decisions are then implemented on the Company’s behalf by City Group which also carries
All investment decisions are then implemented on the Company’s behalf by City Group which also carries
out required valuation and accounting work.
out required valuation and accounting work.
out required valuation and accounting work.
Audit Committee
Audit Committee
Audit Committee
The Audit Committee has a number of specific responsibilities including reviewing the Group’s financial
The Audit Committee has a number of specific responsibilities including reviewing the Group’s financial
The Audit Committee has a number of specific responsibilities including reviewing the Group’s financial
statements and supporting documentation and all audit related matters.
statements and supporting documentation and all audit related matters.
statements and supporting documentation and all audit related matters.
A separate report from the Audit Committee is set out on pages 55 to 58.
A separate report from the Audit Committee is set out on pages 55 to 58.
A separate report from the Audit Committee is set out on pages 55 to 58.
52
52
52
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London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Corporate Governance Statement (continued)
Nomination Committee
The Nomination Committee, which meets from time to time, 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.
Remuneration Committee
The Remuneration Committee reviews, determines and recommends to the Board the future
Remuneration Policy for the Chairman of the Board and the Directors. The Remuneration Committee will
consider base fees and, where appropriate, salaries, annual and long-term incentive entitlements and
awards and, where appropriate, pension arrangements. In determining the remuneration policy for the
Board, the Remuneration Committee takes into account many factors having regard to the requirements
of the Code.
The aggregate remuneration of Directors is limited by the Company’s Articles of Association and this
aggregate amount and the Company’s Remuneration Policy can only be changed by the Company in
General Meeting. The current rates of remuneration are set out in detail in the Directors’ Remuneration
Report on pages 62 to 63. The remuneration of the Executive Directors and employees of the Company’s
subsidiary, City Group, is determined by the Board of City Group, which includes David Marshall and
Edward Beale. No Director is involved in the determination of his own pay.
New Directors’ Induction
New Directors receive an induction programme which includes legal and regulatory responsibilities,
information on the Group’s operations and investment company industry matters.
Performance Evaluation
The Board evaluates its own performance and that of its committees and its Chairman and individual
Directors through the annual completion and review of questionnaires. All Directors are encouraged to
maintain personal continuing professional education programmes and all Directors are entitled to receive
relevant and appropriate training if required.
The Board is satisfied, having concluded its most recent evaluations, that each Director’s performance
continues to be effective and that each Director remains fully committed to the Company. Furthermore,
the Board is satisfied that its Committees, as currently constituted, continue to be effective.
Board Succession and Diversity
In evaluating the performance of the Board and its members, the Board reviews its structure and whether
it has the right mix of relevant skills, diversity and experience for the effective conduct of the Company’s
business.
The Board has set a target of 25% female members for the Company’s Board and female candidates will
be considered on their merits when vacancies arise. There are no female Board members or senior
management members at present.
53
53
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Internal Control and Risk Management
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.
Board decisions are implemented on a day-to-day basis by the subsidiary company, City Group. The
framework for internal financial control established in that company has been reviewed by the Board and
is regarded as effective.
The Board, through the 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 directors of City Group which provides day to day administration and
accounting services to the Group.
The reporting and review procedures provide assurance to the Board as to the adequacy and
effectiveness of internal controls. The Board recognises 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.
Auditors
The Board, through the Audit Committee, has developed a professional working relationship with its
Independent Auditor, PKF Littlejohn LLP, which was appointed at the Company’s AGM in November
2016.
Shareholder Communications
The Board strives to present a fair, balanced and understandable assessment of the Group’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 John Maxwell,
the Senior Independent Non-Executive Director, is also always available should a shareholder wish to
draw any matters to his attention.
The AGM 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 ahead of the AGM and 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. Shareholders are also encouraged, if they have
any questions or enquiries to make contact with the Company at any time during the year by contacting
the Company Secretary, City Group PLC (1 Ely Place, London EC1N 6RY; Tel: 020 7796 9060).
David Marshall
Chairman
29 September 2022
54
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London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Audit Committee Report
Audit Committee
The members of the Audit Committee (the “Committee”) are Dr Frank Lucas (Chairman) and John
Maxwell. Both members are considered to be independent and neither member has any conflicts of
interest. Both Dr Frank Lucas and John Maxwell have recent and relevant financial experience.
The Committee meets at least twice a year to consider the Group’s financial reporting and reports from
the Company’s Independent Auditor.
The terms of reference for the Committee, which are available on request and on the Company
Secretary’s website, are reviewed and re-assessed on an annual basis.
Responsibilities
The main responsibilities of the Committee are:
•
•
•
•
•
•
•
•
•
•
to review the half yearly and annual financial statements of the Group, the accounting policies
applied therein and compliance with financial and regulatory reporting requirements.
to assess whether the annual report and financial statements, taken as a whole, is fair, balanced
and understandable and provide the information necessary for shareholders to assess the
Group’s position and performance, its business model and strategy.
to meet with the Independent Auditor to review its proposed audit programme of work and the
findings of the Independent Auditor on completion of its work. The Committee also uses these
meetings as an opportunity to assess the effectiveness of the audit process.
if appropriate, to develop and implement policy on the engagement of the Independent Auditor
to supply non-audit services.
to make recommendations to the Board in relation to the appointment or re-appointment of the
Independent Auditor and to approve its remuneration and the terms of its engagement.
to monitor and review annually
the
effectiveness, resources and qualification.
Independent Auditor’s
independence, objectivity,
to review and monitor the internal control systems and risk management systems (including non-
financial risks) on which the Group is reliant.
to consider annually whether there is a need for the Group to have its own internal audit function.
to review the arrangements in place whereby management, office and Group secretarial services
are provided to the Group and whereby management and staff may, in confidence, raise concerns
about possible improprieties in matters of financial reporting or other matters (‘whistleblowing’)
and
to report to the Board from time to time on any significant financial reporting issues and the views
and judgements the Committee might have or make in connection with such issues and in
connection with the preparation of the Group’s financial statements.
Audit Committee Activities
The Audit Committee met on two occasions in the year ended 30 June 2022, in September 2021 and in
February 2022. In the course of such meetings the Committee has also met with the rest of the Board.
The Audit Committee has undertaken the following activities in the year ended 30 June 2022 in discharge
of its responsibilities:
55
55
_____________________________________________
Financial Statements
In accordance with the provisions of the Code, financial statements issued by the Company need to
comply with the requirement for such statements to be ‘fair, balanced and understandable’. With this in
mind, the Committee reviewed and considered the draft 2022 Annual Report & Financial Statements as
a whole and subsequently made recommendations to the Board and City Group, the Company Secretary.
The Committee considers the revised 2022 Annual Report & Financial Statements to be ‘fair, balanced
and understandable’.
The Group’s 2022 interim results and report were also reviewed and considered by the Committee prior
to publication in February 2022.
Valuations
Listed investments are a significant component of the Group’s investment business and are also a
significant feature in the Group’s financial statements. The Committee has reviewed the Group’s valuation
policy for its investments. All such investments are listed in active stock markets and the Committee
considers that the Group’s General Portfolio Investments are substantially liquid. The Group’s
investments are valued using independent pricing sources, in accordance with the stated accounting
policies and these have been reviewed by the Committee. The Committee also considered the valuation
basis for Strategic Investments, which are quoted on junior UK stock markets, to be appropriate,
notwithstanding their illiquidity.
Going concern and viability statements
The Committee assessed whether it was appropriate to prepare the Group’s 2022 Annual Report &
Financial Statements, and the 2022 Interim results and report, on a going concern basis and, following
such assessments, made recommendations to the Board whose conclusions were included in the Interim
results and report published in February 2022 and are set out in the Directors’ Report on page 44.
The Group’s assets consist substantially of equity shares in companies listed on recognised stock
exchanges and in most circumstances are realisable within a short timescale. The Committee and the
Board believe it is appropriate to continue to adopt the going concern basis in the preparation of the
financial statements and they consider that the Group has a very low level of costs and has adequate
resources to continue in operational existence for the foreseeable future.
The Committee also assessed the viability of the Group. After reviewing the Group’s Strategic
Investments and General Portfolio investments, its gearing and considering the impact of volatility in stock
markets, currencies and commodities, the Committee was satisfied that the viability statement, which
relates to a period of five years ending 30 June 2027, could be made in the 2022 Annual Report &
Financial Statements for the reasons set out in the Directors’ Report on page 44.
Significant Risks and Issues
The significant accounting issue considered by the Committee during the year in relation to the Group's
financial statements was the valuation of investments particularly with reference to the on-going effects
of Covid-19.
A further significant risk is to ensure the General Portfolio accounted for in the financial statements reflects
ownership of the relevant securities.
The incomplete or inaccurate recognition of income in the financial statements are also risks. Internal
control systems, including reconciliations are in place to ensure income is fully accounted for.
56
56
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Audit Committee Report (continued)
Internal control
The Board as whole is responsible for the Group’s system of internal control and for reviewing its
effectiveness. The system is designed to manage rather than eliminate the risk of failure to achieve the
Group’s business objectives and can only provide reasonable and not absolute assurance against
material misstatement or loss.
The Committee has also, in the course of the financial year ended 30 June 2022, reviewed the Group’s
internal control processes and is satisfied that no significant areas of weakness have been identified and
that the existing processes and controls are appropriate having regard to the Group’s investment
business.
In particular, the Committee reviews reports from its subsidiary, City Group, to ensure that internal
controls over the Group’s investments are adequate. The Group’s audit includes independent
confirmation of the existence of all investments and the valuation of investments to external price sources.
Audit process and the Independent Auditor
PKF Littlejohn LLP was appointed as the Company’s new Independent Auditor at the Company’s AGM
in November 2016 and was re-appointed as the Company’s Independent Auditor at the Company’s AGMs
in 2017 to 2020 and at the AGM in December 2021.
The Committee meets each year with the Independent Auditor. The Company’s Independent Auditor,
PKF Littlejohn LLP, provided a detailed planning report in advance of the annual audit work. The
Committee was able to review PKF Littlejohn LLP’s detailed planning report prior to commencement of
the audit work and, following completion of their audit work, the Committee discussed with PKF Littlejohn
LLP their audit report and findings. In the course of these discussions, the Committee was able to review
the level and scope of materiality adopted by PKF Littlejohn LLP in the audit process.
Audit effectiveness
The Committee reviews annually the audit process conducted by PKF Littlejohn LLP and considers its
effectiveness. In the course of its review, the Committee will consider the quality of the PKF Littlejohn
LLP staff, the appropriateness of the audit methodology as applied to the Company’s business activities
and the level of challenge from PKF Littlejohn LLP and the quality of reporting to the Board and the
Committee. As part of its evaluation, the Committee also obtains assurance from PKF Littlejohn LLP on
the quality of its audit work.
Non-audit work
In order to safeguard the Independent Auditor’s independence and objectivity, City Group, the Company
Secretary, maintains a schedule of specific non-audit work activities which are carried out independently
of the Independent Auditor. City Group has confirmed to the Committee that PKF Littlejohn LLP has not
carried out any non-audit work activities on behalf of the Company in the year ended 30 June 2022 or
since the year-end.
Re-appointment of PKF Littlejohn LLP as Independent Auditor
PKF Littlejohn LLP was re-appointed as the Company’s Independent Auditor at last year’s AGM. The
Committee has concluded that PKF Littlejohn LLP have provided an effective audit and the Committee
has recommended to the Board the re-appointment of PKF Littlejohn LLP as the Group’s Independent
Auditor at the Company’s forthcoming AGM.
The Board and the Audit Committee have approved an extension to the engagement term of the Senior
Statutory Auditor responsible for the audit opinion in relation to London Finance & Investment Group Plc.
The term was extended for a further year and was made to safeguard the quality of the audit. The Audit
Committee is satisfied that this extension does not in any way prejudice the objectivity and independence
of the audit.
57
57
_____________________________________________
Relations with Shareholders
The Board places great importance on communication with shareholders and up to date information can
be obtained on the Group through City Group, the Company Secretary. The Group’s Annual Report &
Financial Statements is sent to shareholders and the Annual Report & Financial Statements and the
Company’s Interim results and report can be downloaded from City Group’s website www.city-
group.com/london-finance-investment-group-plc
Dr Frank Lucas
Chairman of the Audit Committee
29 September 2022
58
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London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Directors’ Remuneration Report
Remuneration Committee
The members of the Committee are John Maxwell (Chairman) and Dr Frank Lucas. Both members are
considered to be independent and neither member has any conflicts of interest. Both John Maxwell and
Dr Frank Lucas have recent and relevant financial experience.
The Committee meets at least once a year to consider the remuneration arrangements for the Directors
and senior managers. The Committee will ensure that the arrangements are aligned to the Company’s
strategy, the aim of which is to promote long term sustainable success and generate growth in
shareholder value in real terms over the medium to long term whilst maintaining a progressive dividend
policy. The Committee reviews, considers and makes recommendations on changes to the Directors’
remuneration policy in the future.
The terms of reference for the Committee, which are available on request and on the Company
Secretary’s website, are reviewed and re-assessed on an annual basis.
Key Objectives of the Committee
The key objectives of the Committee in reviewing the Company’s Remuneration Policy and making
recommendations to the Board as to changes in the policy are as follows:
•
•
•
•
•
remuneration for the current Directors, all of whom are Non-Executive Directors, should be
competitive, but not excessive, in order to motivate and retain its Directors and grow the Group
successfully
remuneration packages for new Non-Executive Directors or Executive Directors, should the
appointment of Executive Directors be considered appropriate, should be competitive but not
excessive, in order to attract, motivate and retain such Directors and grow the Group successfully
remuneration of Executive Directors, if the appointment of Executive Directors is considered
appropriate, should be linked to the long-term performance of the Group’s business
any performance related remuneration for Executive Directors should be set so as to align the
interests of the Executive Directors with those of the shareholders
In determining remuneration arrangements for the Directors, the Committee will also take into
consideration the pay and employment conditions in other parts of the Group
The Form of the Directors’ Remuneration Report
The Directors’ Remuneration Report has been prepared in accordance with the Directors' Remuneration
Report Regulations and also meets the relevant requirements of the UK Listing Authority Listing Rules.
The Directors’ Remuneration Report comprises three sections:
•
•
•
a remuneration policy, which sets out the framework for remuneration arrangements for the
Directors;
an annual report on Directors’ remuneration, which sets out all payments made to the Directors
during the year; and
an annual statement by the Chairman of the Remuneration Committee, John Maxwell.
A resolution for the approval of the Directors’ Remuneration Report for the year ended 30 June 2021 was
put to shareholders at the AGM last year and was approved with 14,354,113 votes in favour and 2,379
votes against.
59
59
_____________________________________________
Directors’ Remuneration Policy
The current Remuneration Policy for the Directors was approved by shareholders at the Company’s AGM
held in November 2019. The Company’s Remuneration Policy needs to be put to a binding shareholders’
vote at least once every three years. Accordingly, the Company’s Remuneration Policy will be put to a
binding shareholders’ vote at the Company’s forthcoming AGM on 10 November 2022
The Committee has reviewed the Company’s Remuneration Policy and has considered whether changes
to the policy should be made at this time. The Committee does not consider it appropriate to propose any
revisions to the current policy.
The Directors’ Remuneration Policy is as follows:
Salaries and fees
The Company’s Board has no Executive directors and is entirely comprised of Non-Executive Directors.
The Company’s Remuneration Policy at present is to pay fixed fees to these Directors. No salaries are
payable and there is no variable element of pay for the Directors.
The level of Directors’ fees is set with a view to attract, motivate and retain talented individuals. The
maximum amount of a Director’s fee will be set by the Board from time to time, following recommendations
from the Committee, and increases will not be higher than inflation unless this can be justified having
regard to the performance of the Group or additional responsibilities taken on by Directors.
The Group’s policy for future increases in Directors’ fees is similar to the policy for increases in salaries
to City Group employees but in the case of Directors’ fees the reviews will be performed every 3-5 years,
with a review having taken place in July 2018. A review of Directors’ fees will be conducted following
publication of the Company’s 2022 Annual Report & Financial Statements.
Long term Incentive Schemes
Save for the Group’s Company Share Option Plan, the Group has no other long-term incentive schemes.
The Group has no plans to adopt any further long-term incentive schemes in the future, although the
Board will keep such schemes under review in the light of changing legislation.
The Group’s Company Share Option Plan was established, in September 2006, to incentivise full-time
employees and directors of City Group and to recognise outstanding efforts or achievements, or otherwise
to attract, motivate or retain staff.
Edward Beale has been the only Director to receive option awards. Edward Beale was awarded options
on 29 February 2016 over 80,000 shares, prior to his appointment to the Board, and these options may
be exercised at any time prior to 1 March 2026.
Bonuses or other Discretionary Payments
The Company does not make bonus payments or other discretionary payments to any of the Directors.
Part of the profits of City Group (currently 50%) are allocated to a staff bonus pool.
Pensions and other Benefits
The Directors are covered by the Company’s directors’ and officers’ liability insurance cover which is
renewed annually. Other than this insurance cover, no other benefits, such as pension contributions,
private medical health cover, death in service insurance, life insurance or company cars are provided for
the Directors.
60
60
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Directors’ Remuneration Report (continued)
Remuneration on Appointment to the Board
It is anticipated that new Non-Executive Directors will be remunerated on a similar basis to existing
Directors. No additional payments will be made to such Directors.
The Company has no Executive Directors at present and there is no intention in the immediate future to
appoint any Executive Directors. However, should it be appropriate in the future to recruit an Executive
Director, the remuneration package offered will be designed to attract high quality individuals and will be
commensurate with those available in the market at the time of recruitment for persons with similar
experience and any equity incentive arrangements proposed to be granted on appointment will be subject
to shareholder approval.
The remuneration package offered in respect of an Executive Director could include fixed and variable
bonuses, pension contributions, private medical health cover, death in service insurance, travel and other
allowances as well as a basic salary.
Loss of Office
The Chairman and the Directors have no entitlement to compensation for loss of office as Directors of the
Company.
City Group
The remuneration paid to the directors and employees of the Company's subsidiary, City Group, in the
year ended 30 June 2022 was reviewed and considered by the Board of City Group, which includes David
Marshall and Edward Beale.
Performance Graph
Lonfin Total Shareholder Return v FTSE Eurofirst 100 Index
EuroFirst 100
London Finance & Investment Group
The above graph shows Lonfin's Total Shareholder Return (TSR) performance compared to the TSR of
the FTSE Eurofirst 100 index over the past five years. The Group’s main activity is that of an investment
Group and the Board believes that because the Group’s General Portfolio concentrates on FTSE 100
companies, or European equivalent, this index is best suited as the comparator index. The Group is not
a part of the FTSE Eurofirst 100 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 three-month
basis in order to reduce the volatility associated with spot prices.
61
61
_____________________________________________
Annual Report on Directors’ Remuneration
The following report sets out details of remuneration paid to the Chairman and the Directors in the financial
year ended 30 June 2022 and describes how the Company’s Remuneration Policy will be implemented
for the year ending 30 June 2023.
A list of all the Directors who served the Company in the financial year ended 30 June 2022 and their
beneficial interests (and those of their connected persons) in the Company’s ordinary shares as at 30
June 2021 and 2022 is set out in the Directors’ Report on page 45 of this document.
Chairman’s Remuneration
As the Company has no Chief Executive Officer the table below shows the total remuneration of the
Chairman, David Marshall, for the 5 years to 30June 2022 (all of which have been audited) by way of
comparison with the total return to shareholders illustrated in the Performance Graph set out above.
The table and related information below, which have been audited, also shows the total remuneration
expected to be paid to the Chairman in the year ending 30 June 2023.
The Chairman’s remuneration is by way of fixed fees only. He receives no variable pay element or equity
incentives or taxable benefits.
David Marshall, Non-Executive Chairman,
Total fees paid
Year ended 30 June
2018
2019
2020
2021
2022
Year ending 30 June
2023
£
18,000
18,000
20,000
20,000
20,000
Total fees expected to be paid
20,000
The Chairman, David Marshall, cedes his Director’s fees to Marshall Monteagle PLC. The Chairman
receives no other payment or benefits from the Company.
Directors’ Remuneration
The Company’s Board is entirely comprised of Non-Executive Directors and the Company’s
Remuneration Policy at present is to pay fixed fees to these Directors. No salaries are payable and there
is no variable element of pay for the Directors.
The table and related information set out below, which have been audited, shows the fees paid to David
Marshall, the Chairman, and the Directors, in the year ended 30 June 2022, compared with the fees paid
to the Chairman and the Directors in the previous year. The table also shows the fees expected to be
paid to the Chairman and the Directors in the year ending 30 June 2023.
62
62
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Directors’ Remuneration Report (continued)
Directors’ Remuneration Report (continued)
Directors’ Remuneration Report (continued)
Directors’ Remuneration Report (continued)
Directors’ Remuneration Report (continued)
Directors’ Remuneration Report (continued)
Non-Executive Directors
Non-Executive Directors
Non-Executive Directors
Non-Executive Directors
Non-Executive Directors
Non-Executive Directors
Mr. D. C. Marshall
Mr. D. C. Marshall
Mr. D. C. Marshall
Mr. D. C. Marshall
Mr. D. C. Marshall
Mr. D. C. Marshall
Mr. J.H. Maxwell
Mr. J.H. Maxwell
Mr. J.H. Maxwell
Mr. J.H. Maxwell
Mr. J.H. Maxwell
Mr. J.H. Maxwell
Dr. F.W.A. Lucas
Dr. F.W.A. Lucas
Dr. F.W.A. Lucas
Dr. F.W.A. Lucas
Dr. F.W.A. Lucas
Dr. F.W.A. Lucas
Mr E.J. Beale ⧫
Mr E.J. Beale ⧫
Mr E.J. Beale ⧫
Mr E.J. Beale ⧫
Mr E.J. Beale ⧫
Mr E.J. Beale ⧫
Mr W.H. Marshall
Mr W.H. Marshall
Mr W.H. Marshall
Mr W.H. Marshall
Mr W.H. Marshall
Mr W.H. Marshall
Total fees payable
Total fees payable
Total fees payable
Total fees payable
Total fees payable
Total fees payable
Year ending
Year ending
Year ending
Year ending
Year ending
Year ending
30 June 2023
30 June 2023
30 June 2023
30 June 2023
30 June 2023
30 June 2023
£
£
£
£
£
£
20,000
20,000
20,000
20,000
20,000
20,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
76,000
76,000
76,000
76,000
76,000
76,000
Total fees paid
Total fees paid
Total fees paid
Total fees paid
Total fees paid
Total fees paid
Year ended
Year ended
Year ended
Year ended
Year ended
Year ended
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
£
£
20,000
20,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
76,000
76,000
£
£
£
£
20,000
20,000
20,000
20,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
76,000
76,000
76,000
76,000
Year ended
Year ended
Year ended
Year ended
Year ended
Year ended
30 June 2021
30 June 2021
30 June 2021
30 June 2021
30 June 2021
30 June 2021
£
£
20,000
20,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
76,000
76,000
£
£
£
£
20,000
20,000
20,000
20,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
14,000
76,000
76,000
76,000
76,000
In the two years ended 30 June 2022:
In the two years ended 30 June 2022:
In the two years ended 30 June 2022:
In the two years ended 30 June 2022:
In the two years ended 30 June 2022:
In the two years ended 30 June 2022:
Mr Marshall has ceded his Director’s fees to Marshall Monteagle PLC.
Mr Marshall has ceded his Director’s fees to Marshall Monteagle PLC.
Mr Marshall has ceded his Director’s fees to Marshall Monteagle PLC.
Mr Marshall has ceded his Director’s fees to Marshall Monteagle PLC.
Mr Marshall has ceded his Director’s fees to Marshall Monteagle PLC.
Mr Marshall has ceded his Director’s fees to Marshall Monteagle PLC.
Dr F.W.A. Lucas has ceded his Director’s fees to Loeb Aron & Co Limited.
Dr F.W.A. Lucas has ceded his Director’s fees to Loeb Aron & Co Limited.
Dr F.W.A. Lucas has ceded his Director’s fees to Loeb Aron & Co Limited.
Dr F.W.A. Lucas has ceded his Director’s fees to Loeb Aron & Co Limited.
Dr F.W.A. Lucas has ceded his Director’s fees to Loeb Aron & Co Limited.
Dr F.W.A. Lucas has ceded his Director’s fees to Loeb Aron & Co Limited.
♦
♦
♦
♦
♦
♦
Mr E.J. Beale has ceded his Director’s fees to Marshall Monteagle PLC
Mr E.J. Beale has ceded his Director’s fees to Marshall Monteagle PLC
Mr E.J. Beale has ceded his Director’s fees to Marshall Monteagle PLC
Mr E.J. Beale has ceded his Director’s fees to Marshall Monteagle PLC
Mr E.J. Beale has ceded his Director’s fees to Marshall Monteagle PLC
Mr E.J. Beale has ceded his Director’s fees to Marshall Monteagle PLC
The remuneration of the Chairman and the Directors for the year ending 30 June 2023 will be at the same
The remuneration of the Chairman and the Directors for the year ending 30 June 2023 will be at the same
The remuneration of the Chairman and the Directors for the year ending 30 June 2023 will be at the same
The remuneration of the Chairman and the Directors for the year ending 30 June 2023 will be at the same
The remuneration of the Chairman and the Directors for the year ending 30 June 2023 will be at the same
The remuneration of the Chairman and the Directors for the year ending 30 June 2023 will be at the same
level as for the year ended 30 June 2022.
level as for the year ended 30 June 2022.
level as for the year ended 30 June 2022.
level as for the year ended 30 June 2022.
level as for the year ended 30 June 2022.
level as for the year ended 30 June 2022.
The Group’s policy for future increases in fees to the Directors is similar to the policy for increases in
The Group’s policy for future increases in fees to the Directors is similar to the policy for increases in
The Group’s policy for future increases in fees to the Directors is similar to the policy for increases in
The Group’s policy for future increases in fees to the Directors is similar to the policy for increases in
The Group’s policy for future increases in fees to the Directors is similar to the policy for increases in
The Group’s policy for future increases in fees to the Directors is similar to the policy for increases in
salary to City Group employees save that in the case of Directors’ fees the reviews will be performed
salary to City Group employees save that in the case of Directors’ fees the reviews will be performed
salary to City Group employees save that in the case of Directors’ fees the reviews will be performed
salary to City Group employees save that in the case of Directors’ fees the reviews will be performed
salary to City Group employees save that in the case of Directors’ fees the reviews will be performed
salary to City Group employees save that in the case of Directors’ fees the reviews will be performed
every 3-5 years. A review of Directors’ fees was conducted prior to the finalisation of the Company’s 2022
every 3-5 years. A review of Directors’ fees was conducted prior to the finalisation of the Company’s 2022
every 3-5 years. A review of Directors’ fees was conducted prior to the finalisation of the Company’s 2022
every 3-5 years. A review of Directors’ fees was conducted prior to the finalisation of the Company’s 2022
every 3-5 years. A review of Directors’ fees was conducted prior to the finalisation of the Company’s 2022
every 3-5 years. A review of Directors’ fees was conducted prior to the finalisation of the Company’s 2022
Annual Report & Financial Statements.
Annual Report & Financial Statements.
Annual Report & Financial Statements.
Annual Report & Financial Statements.
Annual Report & Financial Statements.
Annual Report & Financial Statements.
Directors’ and Group Employees’ Remuneration compared to Shareholders’ dividends
Directors’ and Group Employees’ Remuneration compared to Shareholders’ dividends
Directors’ and Group Employees’ Remuneration compared to Shareholders’ dividends
Directors’ and Group Employees’ Remuneration compared to Shareholders’ dividends
Directors’ and Group Employees’ Remuneration compared to Shareholders’ dividends
Directors’ and Group Employees’ Remuneration compared to Shareholders’ dividends
The table below compares the total remuneration paid to the Board and the Group’s employees to the
The table below compares the total remuneration paid to the Board and the Group’s employees to the
The table below compares the total remuneration paid to the Board and the Group’s employees to the
The table below compares the total remuneration paid to the Board and the Group’s employees to the
The table below compares the total remuneration paid to the Board and the Group’s employees to the
The table below compares the total remuneration paid to the Board and the Group’s employees to the
distributions paid to shareholders by way of dividends in the last three years.
distributions paid to shareholders by way of dividends in the last three years.
distributions paid to shareholders by way of dividends in the last three years.
distributions paid to shareholders by way of dividends in the last three years.
distributions paid to shareholders by way of dividends in the last three years.
distributions paid to shareholders by way of dividends in the last three years.
The Board’s and the Group’s employees’ total remuneration for the three years ended 30 June 2022,
The Board’s and the Group’s employees’ total remuneration for the three years ended 30 June 2022,
The Board’s and the Group’s employees’ total remuneration for the three years ended 30 June 2022,
The Board’s and the Group’s employees’ total remuneration for the three years ended 30 June 2022,
The Board’s and the Group’s employees’ total remuneration for the three years ended 30 June 2022,
The Board’s and the Group’s employees’ total remuneration for the three years ended 30 June 2022,
which has been audited, is set out below.
which has been audited, is set out below.
which has been audited, is set out below.
which has been audited, is set out below.
which has been audited, is set out below.
which has been audited, is set out below.
Year ended 30 June
Year ended 30 June
Year ended 30 June
Year ended 30 June
Year ended 30 June
Year ended 30 June
2020
2020
2020
2020
2020
2020
2021
2021
2021
2021
2021
2021
2022
2022
2022
2022
2022
2022
The Board and employees of
The Board and employees of
The Board and employees of
The Board and employees of
The Board and employees of
The Board and employees of
the Group’s total remuneration
the Group’s total remuneration
the Group’s total remuneration
the Group’s total remuneration
the Group’s total remuneration
the Group’s total remuneration
(audited)
(audited)
(audited)
(audited)
(audited)
(audited)
£
£
£
£
£
£
468,000
468,000
468,000
468,000
468,000
468,000
530,000
530,000
530,000
530,000
530,000
530,000
536,000
536,000
536,000
536,000
536,000
536,000
Dividends paid to Shareholders
Dividends paid to Shareholders
Dividends paid to Shareholders
Dividends paid to Shareholders
Dividends paid to Shareholders
Dividends paid to Shareholders
(audited)
(audited)
(audited)
(audited)
(audited)
(audited)
£
£
359,000
359,000
359,000
359,000
359,000
359,000
£
£
£
£
359,000
359,000
359,000
359,000
359,000
359,000
359,000
359,000
359,000
359,000
359,000
359,000
Directors’ interests in the Company
Directors’ interests in the Company
Directors’ interests in the Company
Directors’ interests in the Company
Directors’ interests in the Company
Directors’ interests in the Company
The interests of the Directors (and their connected persons) at 30 June 2022 are as set out in the table
The interests of the Directors (and their connected persons) at 30 June 2022 are as set out in the table
The interests of the Directors (and their connected persons) at 30 June 2022 are as set out in the table
The interests of the Directors (and their connected persons) at 30 June 2022 are as set out in the table
The interests of the Directors (and their connected persons) at 30 June 2022 are as set out in the table
The interests of the Directors (and their connected persons) at 30 June 2022 are as set out in the table
in the Directors’ Report on page 45.
in the Directors’ Report on page 45.
in the Directors’ Report on page 45.
in the Directors’ Report on page 45.
in the Directors’ Report on page 45.
in the Directors’ Report on page 45.
63
63
63
63
63
63
63
_____________________________________________
Long term Incentive Schemes
No option awards under the Group’s Company Share Option Plan have been made to any of the Directors
or employees of the Group in the year ended 30 June 2022 and no option awards are envisaged for the
year ending 30 June 2023.
None of the Directors or current employees of the Group have received option awards under the
Company’s Group Share Option Plan in the past save for Edward Beale who, being at the time an eligible
employee under the rules of the Group’s Company Share Option Plan, on 29 February 2016 was granted
options over 80,000 ordinary shares in the Company with an exercise price of 37.5p per share. These
options may be exercised at any time prior to 1 March 2026. This information has been audited. Further
information on the valuation of these options is set out in Note 18 to the Financial Statements, Share
Capital and Reserves.
Bonuses or other Discretionary Payments
No bonuses or other discretionary payments have been made by the Group to any of the Directors in the
year ended 30 June 2022 and no bonuses or other discretionary payments will be paid in the year ending
30 June 2023. This information has been audited.
Pensions and other Benefits
No pension contributions have been paid in respect of any of the Directors in the year ended 30 June
2022 and no pension contributions will be paid by the Company in the year ending 30 June 2023. This
information has been audited.
Loss of Office
No payments or commitments in respect of payments in respect of loss of office have been paid to any
Director in the year ended 30 June 2022 and no such payments will be paid in the year ending 30 June
2023. This information has been audited.
Remuneration on Appointment to the Board
No payments or commitments in respect of payments in respect of any Board appointments have been
paid in the year ended 30 June 2022. This information has been audited.
It is anticipated that, if new Non-Executive Directors are appointed in the year ending 30 June 2023 or in
subsequent years, they will be remunerated on a similar basis to the fees which are then paid to the
existing Directors and no additional payments will be made.
Should it be considered appropriate to appoint an Executive Director to the Board in the year ending 30
June 2023 or in subsequent years, the remuneration package to be offered will be in line with the policy
for Executive Directors as set out in the Directors Remuneration Policy above.
City Group
The remuneration payable to the executive directors and employees of the Company's subsidiary, City
Group, for the year ended 30 June 2023 will be reviewed and considered by the Board of City Group,
which includes David Marshall and Edward Beale.
64
64
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Annual Statement by John Maxwell, Chairman of the Remuneration Committee
On behalf of the Board, I am pleased to present the Directors’ Remuneration Report for the year ended
30 June 2022.
I confirm that the Directors’ Remuneration Policy, set out above, summarises the Company’s
Remuneration Policy which needs to be put to a binding shareholders’ vote at the Company’s AGM to be
held on 10 November 2022.
At this time, the Board is comprised wholly of Non-Executive Directors, including the Chairman, who only
receive director’s fees, the scale of which is limited by the provisions of the Company’s Articles of
Association. Notwithstanding the scale of fees received by each of the Directors, the Board as a whole
is committed to promoting the success of the Company and the growth in the Company’s net assets and
the dividends paid to shareholders.
I also confirm that the Annual Report on Directors’ Remuneration set out above summarises the entire
remuneration paid to members of the Board for the year ended 30 June 2022 and the remuneration
arrangements for the Board for the year ending 30 June 2023. A resolution to approve the Directors’
Remuneration Report (other than the part containing the Directors’ Remuneration Policy), will be
proposed at the Company’s AGM to be held on 10 November 2022 at which the Company’s Financial
Statements will be approved.
This Directors’ Remuneration Report was approved by the Board and signed on its behalf by:
John Maxwell
Chairman of the Remuneration Committee
29 September 2022
65
65
_____________________________________________
Task Force on Climate-related financial disclosures (“TCFD”)
Report
This is our first year reporting against the TCFD disclosures and recommendations. Our disclosures are
not yet fully aligned with the TCFD recommendations. Whilst the Company is a small investment business
we will look to refine and develop our approach to and our understanding of our climate-related financial
risks and opportunities with a view to meeting the TCFD recommendations in full by 2024.
Governance
The management of our investments is the responsibility of the Board.
The assessment and management of the Company’s principal risks and new and emerging risks, includ-
ing climate-related risks, is a matter for the Audit Committee which, in conjunction with the Investment
Committee, reviews these in relation to the Company’s investments and its business operation and re-
views the Company’s approach, policies and actions in relation to its risks which are then raised and
discussed with the Board.
The Board has overall responsibility for the Company’s investment management and risk management
including the extent of climate-related risks and opportunities.
Strategy
The Company’s Investment Committee, in conjunction with the Board, will consider Strategic Investment
opportunities, that is, investments in smaller UK quoted companies which have capable management and
good opportunities for growth. In considering investment in such companies, the Company will aim to
acquire significant minority holdings and to be represented on their boards where the Company’s man-
agement can use its experience and skills to assist in the development of these companies. We will use
our influence with all such companies whether they be existing or new investments, to ensure that climate
impacts are assessed, and strategies and processes are considered to address them.
Our Strategic Investments are balanced by the Company’s General Portfolio, which consists of a broad
range of investments in major USA, UK and other European companies which provides a diversified
exposure to international equity markets. Given the size and value of our General Portfolio investments,
we expect that the management of these global companies will ensure that climate-change impacts are
fully assessed, and appropriate strategies and processes are put in place to achieve net zero emissions
by 2050 or sooner.
In the short to medium term, the Board has assessed that the most significant impact to our Strategic
Investments and our General Portfolio investments as a result of climate-change related risks will be the
costs to the investee companies of meeting regulatory changes and adjusting to market change and
changing consumer behaviour. The Board also anticipates that some of the investee companies will iden-
tify and benefit from sustainable climate-change related opportunities.
As our Strategic Investments and General Portfolio investments come from a broad range of sectors, the
Board has assessed that a climate change related stress scenario of 2°C or lower is unlikely to impact
the viability of the Group over the short to medium term.
The Company’s business operation is simple and straight-forward: the Company operates from leased
premises on the edge of the City of London with no employees or staff save for the staff of our company
secretary, City Group. On review of the risks to our operation, the Board has concluded that it would not
be impacted by any material climate change related risks in the short to medium term.
66
66
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Risk Management
The Board and the Audit Committee will review the Company’s actual and emerging risks and risk man-
agement processes each year. Depending on the level of risks assessed, the Audit Committee and the
Board will consider and agree actions to mitigate these risks.
We will work with the management of our Strategic Investments to encourage them to measure and
reduce climate change related risks. We will monitor and maintain sufficient diversification in our General
Portfolio of investments to mitigate climate change related risks associated with those investments.
The Board has not carried out a detailed assessment of the climate-change risks that might affect our
business operation. Although the options for energy efficiency improvements for our offices are limited,
we will be assessing whether it is possible to switch to renewable tariffs from 100% renewable sources.
The Company will seek to achieve net-zero emissions by 2030 and with this target in mind we will examine
opportunities to increase efficiencies and reduce energy consumption in our business operation.
Metrics and Targets
The key measure used to assess the progress of our investments and our own business operation in
reducing environmental impacts is carbon emissions.
The Company and its subsidiaries have no Scope 1 emissions and given the size and nature of the
Company’s investment business and there being little or no business travel, the Company has not previ-
ously needed to report on Scope 3 emissions.
In recent years, the Company has managed and reported on its Scope 2 emissions. During the year
ended 30 June 2022, the Group’s electricity consumption for our London office was 6 MWh 1 equating to
a carbon dioxide equivalent of 3 tonnes. (1 Co2e/employee) (2021 – 10 tonnes). The risks associated
with increasing energy costs at our London office can be managed as these are low relative to the net
assets of the Group.
Excluded from Scope 3 emissions are a proportionate share of the Scope 1 and Scope 2 emissions of
companies that we are invested in where our shareholding is less than 0.01% of the issued share capital,
since we are unable to have any influence over the emissions of those companies. Those companies are
all major multinationals which will have their own plans for achieving net zero emissions by 2050 or earlier,
and the diversified nature of the General Portfolio means that the Company’s exposure to climate related
risks from these investments is minimal.
We will continue to manage and report on the Group’s Scope 1 (if any) and Scope 2 emissions with a
target of reducing emissions to net-zero as soon as possible and no later than 2050. We will engage with
the management of our Strategic Investments to encourage them to achieve net-zero emissions by 2050
or earlier. We will continue to factor climate change related risk into our investment decision making
process.
67
67
_____________________________________________
Summary of Results
For the five years ended 30 June 2022
Consolidated Statement of Financial
Position
Issued share capital
Share premium and other reserves
Company’s retained realised profits
Shareholders’ funds (all equity)
Non-controlling interest
Disposition of Capital
Non-current assets
Current assets
Listed investments (General Portfolio)
Other current assets
Cash and deposits
Liabilities and deferred tax
Net assets per share
Dividend per share
2022
£000
2021
£000
2020
£000
2019
£000
2018
£000
1,560
7,662
7,872
17,094
141
17,235
1,560
11,584
5,749
18,893
129
19,022
1,560
8,740
5,498
15,798
103
15,901
1,560
12,960
3,749
18,269
92
18,361
1,560
14,583
4,253
20,396
105
20,501
4,050
8,369
6,834
8,203
10,663
14,055
109
1,156
15,320
(2,135)
17,235
54.8p
1.15p
12,081
125
309
12,515
(1,862)
19,022
9,948
166
269
10,383
(1,316)
15,901
11,383
194
240
11,817
(1,659)
18,361
10,676
251
304
11,231
(1,393)
20,501
60.5p
1.15p
50.6p
1.15p
58.6p
1.15p
65.7p
1.15p
68
68
London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
NOTICE OF ANNUAL GENERAL MEETING
NOTICE is hereby given that the Annual General Meeting of London Finance & Investment Group
PLC (the “Company”) will be held at the offices of City Group PLC, 1 Ely Place, London EC1N 6RY
on Wednesday 10 November 2022 at 12.30 p.m. (14.30 p.m. South Africa time).
In order to ensure the safety of those planning to attend the Annual General Meeting and that the appro-
priate safety arrangements are in place, it is requested that shareholders inform City Group, the Company
Secretary of their intention to attend the Annual General Meeting by email to mail@citygroup.com.
If shareholders do not wish to attend, we strongly encourage you to appoint the Chairman as your proxy
and submit the proxy form as soon as possible. Questions may also be submitted by email and re-
sponses. will be provide subsequent to the meeting.
Resolutions
The Resolutions to be voted upon at the Annual General Meeting are as follows:
To consider and, if thought fit, pass the following resolutions, of which Resolutions 1 to 11 will be proposed
as Ordinary Resolutions and Resolution 12 will be proposed as a Special Resolution.
1.
To receive the financial statements for the year ended 30 June 2022, together with the reports of
the Directors and the Independent Auditor thereon.
2.
3.
4.
5.
6.
7.
8.
9.
To declare a final dividend for the year ended 30 June 2022 of 0.60 pence for each ordinary share
in the capital of the Company.
To approve the Directors’ Remuneration Policy in the form set out in the Directors’ Remuneration
Report contained in the Company’s Annual Report and Financial Statements for the year ended
30 June 2022.
To approve the Directors’ Remuneration Report, other than the part containing the Directors’
Remuneration Policy, in the form set out in the Company’s Annual Report and Financial
Statements for the year ended 30 June 2022.
To re-elect Mr D.C. Marshall as a Director, who, is subject to annual re-election and who retires
and offers himself for re-election.
To re-elect Dr F.W.A. Lucas as a Director, who is subject to annual re-election and who retires
and offers himself for re-election
To re-elect Mr J. H. Maxwell as a Director, who is subject to annual re-election and who retires
and offers himself for re-election.
To re-elect Mr E. J. Beale as a Director, who is subject to annual re-election and who retires and
offers himself for re-election.
To re-elect Mr W. H. Marshall as a Director, who. is subject to annual re-election and who retires
and offers himself for re-election.
10.
To re-appoint PKF Littlejohn LLP as the Company’s Independent Auditor and to authorise the
Directors to agree its remuneration.
69
69
_____________________________________________
11.
12.
(a)
THAT the directors be generally and unconditionally authorised, pursuant to and in accordance
with section 551 of the Companies Act 2006, to exercise all the powers of the Company to allot
shares in the Company and to grant rights to subscribe for, or to convert any security into
shares in the Company (‘Rights’) up to an aggregate nominal amount of £189,626 (being
3,792,521 ordinary shares), provided that this authority shall expire at the conclusion of the
Annual General Meeting of the Company to be held in 2023, save that the Company shall be
entitled to make offers or agreements before the expiry of this authority which would or might
require shares to be allotted or Rights to be granted after such expiry and the Directors shall be
entitled to allot shares and grant Rights pursuant to any such offers or agreements as if this
authority had not expired; and all unexercised authorities previously granted to the Directors to
allot shares and grant Rights be and are hereby revoked.
THAT,
subject to the passing of Resolution 11 set out above, the Directors be empowered, pursuant to
section 570 and section 573 of the Companies Act 2006, to allot equity securities, within the
meaning of section 560 of that Act, for cash pursuant to the authority conferred by Resolution 11,
as if section 561(1) of that Act did not apply to any such allotment, provided that this power shall
be limited to:
(i)
the allotment of shares in the Company in connection with or pursuant to an offer by way
of rights, bonus issues or similar issues to the holders of ordinary shares 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 all or part 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
(ii)
the allotment to any person or persons (otherwise than in connection with a rights issue)
of equity securities up to an aggregate nominal amount of £78,000 (being 1,560,000
ordinary shares), representing approximately 5% of the issued ordinary share capital of
the Company;
(b)
the power given by this resolution shall expire upon the expiry of the authority conferred by
Resolution 11 set out above, save that the Directors shall be entitled to make offers or
agreements before the expiry of such power which would or might require equity securities to be
allotted after such expiry and the Directors shall be entitled to allot equity securities pursuant to
any such offers or agreements as if the power conferred hereby had not expired; and
(c)
words and expressions defined in or for the purposes of Part 17 of the Companies Act 2006 shall
bear the same meaning herein.
By Order of the Board
City Group PLC
Company Secretary
1 Ely Place
London EC1N 6RY
29 September 2022
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London Finance & Investment Group PLC___________
London Finance & Investment Group PLC
Notes
1.
2.
3
4.
5.
6.
7.
8.
9.
A Form of Proxy is enclosed.
Shareholders are encouraged to nominate the Chairman as their proxy.
To be valid the form of proxy should be completed and returned so as to reach the Company’s
Registrars, Neville Registrars Limited, Neville House, Steelpark Road, Halesowen, West
Midlands, B62 8HD, U.K., for those shareholders on the UK branch of the register, or
Computershare Proprietary Limited, at 15 Biermann Avenue, Rosebank, Johannesburg 2196,
South Africa or Private Bag X9000, Saxonwold 2132, South Africa, for those shareholders on the
South African branch of the register, not later than 12.30 p.m. (14.30 p.m. South Africa time) on
8 November 2022.
Any member or his/her proxy, with the right to attend the Meeting has the right to submit any
question, relating to the business of the Meeting, to the City Group, the Company Secretary, at
mail@city-group.com. All questions should be received by 12.30 p.m. (14.30 p.m. South Africa
time) on 8 November 2022
Only shareholders registered in the register of members of the Company as at 18.00 p.m. (20.00
p.m. South Africa time) on 7 November 2022 shall be entitled to vote by proxy at the Meeting in
respect of the number of shares registered in their name at such time as long as their proxy form
is submitted within the deadline.
In the case of joint holders, the vote of the senior holder who tenders a vote by proxy shall be
accepted to the exclusion of the votes of the other joint holders and, for this purpose, seniority
shall be determined by the order in which the names stand in the register of members of the
Company in respect of the relevant joint holding.
Copies of Directors’ letters of appointment are available on request to the Company Secretary,
City Group, by making the request to mail@city-group.com.
As at the date of the Annual Report, the Company’s issued share capital consists of 31,207,479
ordinary shares, carrying one vote each. Accordingly, the total voting rights in the Company are
31,207,479.
The information required to be published by section 311(A) of the Companies Act 2006
(information about the contents of this Notice and numbers of shares in the Company and voting
rights exercisable at the Meeting and details of any shareholders’ statements, members’
resolutions and members’ items of business received after the date of this Notice) may be found
at www.city-group.com/london-finance-investment-group-plc
10.
Shareholders satisfying the thresholds in section 527 of the 2006 Act can require the Company
to publish a statement on its website setting out any matter relating to (a) the audit of the
Company’s accounts (including the Auditor’s report and the conduct of the audit) that are to be
laid before the Meeting; or (b) any circumstances connected with an Auditor of the Company
ceasing to hold office since the last AGM, which the members propose to raise at the meeting.
The Company cannot require the shareholders requesting the publication to pay its expenses.
Any statement placed on the website must also be sent to the Company’s Auditors no later than
the time it makes its statement available on the website. The business which may be dealt with
at the Meeting includes any statement that the Company has been required to publish on its
website pursuant to this right.
Note: For shareholders registered on the South African branch of the register:
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_____________________________________________
_____________________________________________
_____________________________________________
11.
11.
11.
A Form of Proxy is attached for the convenience of any certificated or dematerialised Lonfin
A Form of Proxy is attached for the convenience of any certificated or dematerialised Lonfin
A Form of Proxy is attached for the convenience of any certificated or dematerialised Lonfin
shareholders with own-name registrations who cannot attend the Meeting, but who wish to be
shareholders with own-name registrations who cannot attend the Meeting, but who wish to be
shareholders with own-name registrations who cannot attend the Meeting, but who wish to be
represented thereat. To be valid completed Forms of Proxy must be received by the transfer
represented thereat. To be valid completed Forms of Proxy must be received by the transfer
represented thereat. To be valid completed Forms of Proxy must be received by the transfer
secretaries of the Company, Computershare Proprietary Limited, at 15 Biermann Avenue
secretaries of the Company, Computershare Proprietary Limited, at 15 Biermann Avenue
secretaries of the Company, Computershare Proprietary Limited, at 15 Biermann Avenue
Rosebank, Johannesburg 2196 or at Private Bag X9000, Saxonwold, 2132, South Africa by no
Rosebank, Johannesburg 2196 or at Private Bag X9000, Saxonwold, 2132, South Africa by no
Rosebank, Johannesburg 2196 or at Private Bag X9000, Saxonwold, 2132, South Africa by no
later than 12.30 p.m. (14.30 p.m. South Africa time) on 8 November 2022.
later than 12.30 p.m. (14.30 p.m. South Africa time) on 8 November 2022.
later than 12.30 p.m. (14.30 p.m. South Africa time) on 8 November 2022.
All beneficial owners of Lonfin shares who have dematerialised their shares through a CSDP or
All beneficial owners of Lonfin shares who have dematerialised their shares through a CSDP or
All beneficial owners of Lonfin shares who have dematerialised their shares through a CSDP or
broker, other than those with own-name registration, and all beneficial owners of shares who hold
broker, other than those with own-name registration, and all beneficial owners of shares who hold
broker, other than those with own-name registration, and all beneficial owners of shares who hold
certificated shares through a nominee, must provide their CSDP, broker or nominee with their
certificated shares through a nominee, must provide their CSDP, broker or nominee with their
certificated shares through a nominee, must provide their CSDP, broker or nominee with their
voting instructions, in accordance with the agreement between the beneficial owner and the
voting instructions, in accordance with the agreement between the beneficial owner and the
voting instructions, in accordance with the agreement between the beneficial owner and the
CSDP, broker or nominee as the case may be. Should such beneficial owners wish to attend the
CSDP, broker or nominee as the case may be. Should such beneficial owners wish to attend the
CSDP, broker or nominee as the case may be. Should such beneficial owners wish to attend the
meeting in person they must request their CSDP, broker or nominee to issue them with the
meeting in person they must request their CSDP, broker or nominee to issue them with the
meeting in person they must request their CSDP, broker or nominee to issue them with the
appropriate letter of authority. If shareholders who have not dematerialised their shares or who
appropriate letter of authority. If shareholders who have not dematerialised their shares or who
appropriate letter of authority. If shareholders who have not dematerialised their shares or who
have dematerialised their shares with own-name registration and who are entitled to attend and
have dematerialised their shares with own-name registration and who are entitled to attend and
have dematerialised their shares with own-name registration and who are entitled to attend and
vote at the Meeting do not deliver proxy forms to the transfer secretaries timeously, such
vote at the Meeting do not deliver proxy forms to the transfer secretaries timeously, such
vote at the Meeting do not deliver proxy forms to the transfer secretaries timeously, such
shareholders will nevertheless at any time prior to the commencement of the voting on the
shareholders will nevertheless at any time prior to the commencement of the voting on the
shareholders will nevertheless at any time prior to the commencement of the voting on the
resolutions at the Meeting be entitled to lodge the form of proxy in respect of the Meeting, in
resolutions at the Meeting be entitled to lodge the form of proxy in respect of the Meeting, in
resolutions at the Meeting be entitled to lodge the form of proxy in respect of the Meeting, in
accordance with the instructions therein with the Chairman of the Meeting.
accordance with the instructions therein with the Chairman of the Meeting.
accordance with the instructions therein with the Chairman of the Meeting.
Record Dates:
Record Dates:
Record Dates:
Please take note of the following important dates
Please take note of the following important dates
Please take note of the following important dates
Record date for the purpose of determining which shareholders of the
Record date for the purpose of determining which shareholders of the
Record date for the purpose of determining which shareholders of the
Company are entitled to receive Notice of the Annual General Meeting
Company are entitled to receive Notice of the Annual General Meeting
Company are entitled to receive Notice of the Annual General Meeting
(‘the notice record date’)
(‘the notice record date’)
(‘the notice record date’)
Annual Report published on SENS and posting date
Annual Report published on SENS and posting date
Annual Report published on SENS and posting date
The last date to trade in order to be eligible to participate in and vote at
The last date to trade in order to be eligible to participate in and vote at
The last date to trade in order to be eligible to participate in and vote at
the Annual General Meeting
the Annual General Meeting
the Annual General Meeting
Record date for the purpose of determining which shareholders of the
Record date for the purpose of determining which shareholders of the
Record date for the purpose of determining which shareholders of the
Company are entitled to participate in and vote at the Annual General
Company are entitled to participate in and vote at the Annual General
Company are entitled to participate in and vote at the Annual General
Meeting (‘the voting record date’)
Meeting (‘the voting record date’)
Meeting (‘the voting record date’)
Last day for lodging forms of proxy by 14.30 p.m. (SA time)
Last day for lodging forms of proxy by 14.30 p.m. (SA time)
Last day for lodging forms of proxy by 14.30 p.m. (SA time)
Date of the Annual General Meeting at 14.30 p.m. (SA time)
Date of the Annual General Meeting at 14.30 p.m. (SA time)
Date of the Annual General Meeting at 14.30 p.m. (SA time)
Result of Annual General Meeting published on SENS
Result of Annual General Meeting published on SENS
Result of Annual General Meeting published on SENS
2022
2022
2022
Friday, 23 September
Friday, 23 September
Friday, 23 September
Friday, 7 October
Friday, 7 October
Friday, 7 October
Tuesday,1 November
Tuesday,1 November
Tuesday,1 November
Friday, 4 November
Friday, 4 November
Friday, 4 November
Monday, 8 November
Monday, 8 November
Monday, 8 November
Wednesday 10 November
Wednesday 10 November
Wednesday 10 November
Wednesday, 10 November
Wednesday, 10 November
Wednesday, 10 November
Change of Address:
Change of Address:
Change of Address:
Members are requested to advise the United Kingdom Registrars, Neville Registrars Limited, or the South
Members are requested to advise the United Kingdom Registrars, Neville Registrars Limited, or the South
Members are requested to advise the United Kingdom Registrars, Neville Registrars Limited, or the South
African Registrars, Computershare Investor Services (Pty.) Limited, of any change of address.
African Registrars, Computershare Investor Services (Pty.) Limited, of any change of address.
African Registrars, Computershare Investor Services (Pty.) Limited, of any change of address.
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London Finance & Investment Group PLC
London Finance & Investment Group PLC___________
FORM OF PROXY
I/We,……………………………………………………………………………………………………….
……………………………………………………………………………………………………………..
(for South African Shareholders only:
Telephone number:………………………………….Mobile phone number:……..………………….
Email address…………………………………………………………………………………………....).
being (a) member(s) of the above-named company (the “Company”) hereby appoint the chairman of the
Annual General 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 10 November 2022 at 12:30 p.m. (14.30 p.m. South Africa time) and at any adjournment
thereof.
I / We hereby authorise and instruct my/our proxy to vote (or abstain from voting) 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.
RESOLUTIONS
Ordinary Resolutions
For
Against
Withheld
✃
1. To receive the financial statements for the year ended 30
June 2022, together with the reports of the directors and
auditors thereon.
2. To declare a final dividend for the year ended 30 June 2022.
3. To approve the proposed Directors’ Remuneration Policy.
4. To approve the Directors’ Remuneration Report (excluding
the Director’s Remuneration Policy).
5. To re-elect Mr D.C. Marshall as a director.
6. To re-elect Dr F.W.A. Lucas as a director.
7. To re-elect Mr J. H. Maxwell as a director.
8. To re-elect Mr. E. J. Beale as a director.
9. To re-elect Mr W. H. Marshall as a director.
10. To re-appoint PKF Littlejohn LLP as Auditor of the
Company and to authorise the Directors to agree its
remuneration.
11. To authorise the directors to allot shares under Section 551
of the Companies Act 2006.
Special Resolution
12. To disapply pre-emption rights.
Dated………………………………………2022
Signature……………………………………
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London Finance & Investment Group PLC
_____________________________________________
Notes
1.
2.
3.
4.
6.
7.
8.
The shareholders are encouraged to nominate the Chairman as their proxy.
Please indicate with a cross in the appropriate box on your Form of Proxy how you wish your
votes to be cast at the Meeting. If you do not make a specific direction, the proxy will vote (or
abstain from voting) at his or her discretion. On any other business which properly comes before
the Meeting (including any motion to amend any resolution or to adjourn the Meeting) the proxy
will vote or abstain at his or her discretion.
The ‘withheld’ vote box on the Form of Proxy is provided to enable you to abstain on any particular
resolution. However, it should be noted that a ‘withheld’ vote is not a vote in law and will not be
counted in the calculation of the proportion of votes ‘for’ and ‘against’ a resolution but will be
counted to establish if a quorum is present.
To be valid your signed and dated Form of Proxy, and power of attorney or other authority (if
any), must be received at the offices of the Company’s Registrars:
• Neville Registrars Limited, Neville House, Steelpark Road, Halesowen, West Midlands,
B62 8HD UK; or
•
the South African Registrars, Computershare Proprietary Limited:
o by hand or by mail to 15 Biermann Avenue, Rosebank, Johannesburg 2196,
South Africa; or
by mail to Private Bag X9000, Saxonwold 2132, South Africa
o
not later than 12:30 p.m. (14.30 p.m. South Africa time) on Monday, 8 November 2022. (See
Note 11 to the Notice above).
Completion and return of this Form of Proxy will be taken as your final votes where the Chairman
has been appointed as the proxy.
In the case of a corporate shareholder, this Form of Proxy should either be executed by the
company under seal or under the hand of two authorised signatories or a director in the presence
of a witness (whose name, address and occupation should be stated).
In the case of joint holders, the vote of the first-named in the register of members of the Company
will be accepted to the exclusion of that of other joint holders.
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