LONDON FINANCE & INVESTMENT GROUP PLC - Annual Financial Report

Lon.Fin.&Inv.Grp.

Annual Financial Report

London Finance & Investment Group P.L.C.  (‘Lonfin’ or the ‘Company’)

Annual Report and Accounts and Annual General Meeting

The Company announces that, in accordance with Listing Rule 9.6.1., the following documents have today been submitted to the UK Listing Authority and will shortly be available for inspection via the National Storage Mechanism at www.hemscott.com/nsm.do:

• Annual Report and Accounts for the year ended 30^th June 2016 (‘the Annual Report and Accounts 2016’);
• Notice of Annual General Meeting (included within the Annual Report and Accounts 2016) of the Company to be held at 11.00 am on 30^th November 2016 at 6 Middle Street, London EC1A 7JA; and
• Form of Proxy for the 2016 Annual General Meeting (included within the Annual Report and Accounts 2016).

The above documents have been posted to shareholders. The Annual Report and Accounts 2016 and Notice of Annual General Meeting are also available on the website of City Group P.L.C., the Company Secretary, at www.city-group.com.

The Company's financial statements and information on important events that have occurred during the financial year and their impact on the financial statements were included in the Company’s preliminary announcement released on 30^th September 2016.  That information, together with the information set out below, extracted from the Annual Report and Accounts 2016, constitutes the material required by Disclosure and Transparency Rule 6.3.5. which is to be communicated to the media in full unedited text through a Regulatory Information Service.  This announcement is not a substitute for reading the full Annual Report and Accounts 2016.  Page and note references in the text below refer to page numbers and notes in the Annual Report and Accounts 2016.

Appendix

Business Environment, Financial Instruments & Principal Risks and Uncertainties

The financial instruments of the Group, in addition to its investments, comprise cash and borrowings to finance those investments.

As an investment company our principal risks and uncertainties arise from the Group’s financial instruments, and are:

Stock market volatility and economic uncertainty

The Company’s investment performance will be affected by general economic and market conditions. Although the Company 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 Company’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.

Possible volatility of share prices of investments

A number of factors outside the control of the Company 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.

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.

Ability to make strategic investments

There are limited opportunities for the Company to make strategic investments and therefore there is no guarantee that the Company will be able to do so at a price the directors believes 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 Company may not be able to realise its investment, either at all, or at a price the Company believes reflects fair value.

The depth and overlap of experience of directors means that there is no key-man dependency.  Note 20 on page 26 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 Company is exposed to investment risk arising from the selection of investments which it mitigates by drawing on the investment experience of its directors.

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.

Related Party Disclosures

Lonfin and its wholly owned subsidiary, Lonfin Investments Limited, owns 43.8% of its associated company, Western Selection PLC (‘Western’), of which Mr. D.C. Marshall, Mr L.H. Marshall, Mr. J. M. Robotham and Mr. E.J Beale are directors.  Mr. D.C. Marshall and Mr. J. M. Robotham's shareholdings in Lonfin are set out in the accompanying Directors’ Report.

Lonfin and Western hold shares in Finsbury Food Group Plc and Northbridge Industrial Services Plc respectively.  Mr. D.C. Marshall is a director of Northbridge Industrial Services plc and Mr. E. J. Beale is a director of Finsbury Food Group Plc.

Mr. D. C. Marshall and Mr. L. H. Marshall are directors and Mr. E.J. Beale is the non-executive Chairman of Marshall Monteagle PLC and Mr D. C. Marshall and Mr J. M. Robotham are shareholders in Marshall Monteagle PLC which in turn is a substantial shareholder in Halogen Holdings PLC.  Mr. D. C. Marshall is Chairman of Halogen Holdings PLC and Mr L. H. Marshall and Mr. E. J. Beale are directors of Halogen Holdings PLC.

Lonfin and Western own City Group PLC (‘City Group’) in the ratio 51.4% and 48.6% respectively.  City Group provides offices and company secretarial and administrative services to various companies in the UK and abroad most of which are associated with Lonfin and Western including all of the above companies.

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 received by City Group from those companies, their associates and subsidiaries, total £255,000 (2015 - £204,000) for the year under review.  At the reporting date the aggregate balance due in respect of fees invoiced was £85,000 (2015 - £194,000) and no fees have been paid in advance (2015 - nil). Settlement is within normal credit terms.

As disclosed in Notes 12 and 13, the Company was owed £6,000 from City Group on current account and it owed City Group £45,000 for fees.  The Company was also owed £3,758,000 by Lonfin Investments Limited as disclosed in Note 10.

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.

Statement of Directors’ Responsibilities in Respect of the Accounts

As set out above, the following responsibility statement is repeated here solely for the purpose of complying with Disclosure and Transparency Rule 6.3.5. This statement relates to and is extracted from page 37 of the Annual Report and Accounts 2016. Responsibility is for the full Annual Report and Accounts 2016 not the extracted information presented in this announcement or the preliminary announcement released on 30^th September 2016.

The directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year.  Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.  Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• prepare financial statements in accordance with IFRSs as adopted by the European Union       subject to any material departures disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006.  They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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 IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group and the Company; and
• the Directors’ Report contained in the Annual Report includes a fair review of the development and performance of the business and the position of the Group and the Company, together with a description of the principle risks and uncertainties that they face.
• Considers that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy.

Enquiries to:

London Finance & Investment Group P.L.C.:                    020 7796 9060

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