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LONDON FINANCE INVESTMENT GROUP by jolinmilioncherie

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									     L ONDON FINANCE &
I NVESTMENT G ROUP P.L.C.




    REPORT & ACCOUNTS
        30TH J UNE   2002
               LONDON FINANCE & INVESTMENT GROUP P.L.C.

Lonfin is a United Kingdom investment finance and management company. Its core
portfolio centres around the largest growth companies contained in the FTSE 100 and
Euro 500 indices. Lonfin holds investments in two United Kingdom listed companies
where it has board representation. Lonfin is also the dominant shareholder in its
associate Western Selection P.L.C., a strategic investment company. Western’s shares
and warrants are admitted to dealing on the Alternative Investment Market in
London.

Lonfin’s shares and warrants are quoted in the official lists of the London and
Johannesburg Stock Exchanges.




                                 CITY GROUP P.L.C.


City Group, which is owned by Lonfin and Western, provides management, office and
secretarial services to both companies and to other clients requiring a London
presence, including companies in which Lonfin and Western hold investments.




                              THE CITY OF LONDON


–   is astride the Greenwich Meridian as the world’s twenty four hour markets
    develop.

–   is home to the English language, which dominates the world of international
    business.

–   is the most diverse financial centre of the world.

–   is the crossroads of capital for the world’s largest corporations

–   is the nursery of capital for entrepreneurs.
Contents


                                                                               Page


      Directors and Advisers                                                      2


      Net Assets and Results in Brief                                             3


      Financial Calendar                                                          3


      Analysis of Shareholders                                                    3


      Chairman's Review                                                          4-7


      Report of the Directors                                                   8-10


      Statement of Directors’ Responsibilities in Respect of the Accounts         11


      Corporate Governance                                                     11-12


      Report of the Auditors                                                     13


      Consolidated Profit and Loss Account                                       14


      Balance Sheets                                                             15


      Consolidated Cash Flow Statement                                           16


      Notes to the Accounts                                                    17-26


      Summary of Results                                                         27


      General Equity Portfolio                                                   28


      Notice of Annual General Meeting                                         29-30


      Proxy Form                                                            Enclosed



                                                                                  1
London Finance & Investment Group P.L.C.

Directors         D.C. MARSHALL, Chairman, age 58
                  Mr. Marshall joined the board in 1971 and was appointed Chairman in 1984. He resides in South
                  Africa, where he has extensive interests in listed trading, financial and property companies. He
                  is the chairman of Western Selection P.L.C., an associate of London Finance & Investment Group.
                  He is also chairman of Creston plc and Marylebone Warwick Balfour Group Plc and is a non-
                  executive director of Finsbury Food Group plc and The Sanctuary Group PLC. He is the chief
                  executive of Monteagle Holdings S.A., chairman of Falcon Investment Holdings S.A. and a non-
                  executive director of Conafex Holdings S.A.
                  R.A. GOOD, Non-Executive, age 77*
                  Mr. Good joined the board in 1994. After spending fifteen years as a jobber on the London Stock
                  Exchange he was, from 1966 to 1981, a director of Keyser Ullman Limited, merchant bankers,
                  with responsibility for investment management development. Until 1996 he was chairman of
                  Throgmorton Dual Trust P.L.C., and New Throgmorton Trust (1983) P.L.C. and a director of The
                  Throgmorton Trust P.L.C.
                  DR. F.W.A.A. LUCAS, Non-executive, age 34
                  Dr. Lucas was appointed a director in 1999. He is a mining geologist by profession and is the
                  founding shareholder and managing director of Loeb Aron & Company Ltd, an investment and
                  issuing house which specialises in smaller listed and un-listed companies operating in mining
                  and the physical sciences.

                  J.M. ROBOTHAM, OBE, FCA, Non-executive, age 69*
                  Mr. Robotham joined the board in 1984. He is the non-executive chairman of Monteagle
                  Holdings S.A. and a non-executive director of Falcon Investment Holdings S.A., Marylebone
                  Warwick Balfour Group Plc, and Western Selection P.L.C. He is a chartered accountant and a
                  member of the Securities Institute, associated with J.M. Finn & Co., who are stockbrokers to the
                  Group.
                  *Member of the audit committee
                  United Kingdom                            Republic of South Africa
Secretaries and   CITY GROUP P.L.C.                         P.N. LONSDALE
Registered        25 City Road,                             11 Sunbury Park,
Office            London, EC1Y 1BQ                          La Lucia 4051,
                  Tel: 020 7448 8950                        Durban
                  Fax: 020 7638 9426                        Tel: 031 566 7600
                  www.City-Group.com
                  E-mail: Lonfin@City-Group.com
Registrars        C.I. REGISTRARS LIMITED,                  COMPUTERSHARE INVESTOR SERVICE LIMITED
                  Cresta House, Alma Street,                11 Diagonal Street,
                  Luton,                                    Johannesburg, 2001
                  Bedfordshire, LUI 2PU                     (P.O. Box 1053, Johannesburg 2000)
                  Tel: 01582 405333                         Tel: 011 370 5000
Auditors          ARTHUR GODDARD & CO
                  Chartered Accountants
                  2 St John’s Place
                  St John’s Square,
                  London, EC1M 4NP
Bankers           COUTTS & CO
                  188 Fleet Street,
                  London, EC4A 2HT
Stockbrokers      J.M. FINN & CO.
                  Salisbury House,
                  London Wall,
                  London, EC2M 5TA
Registered
Number            201151                                    SA Registered No. 80/05550/06




2
Net Assets
                                                                                                 2002              2001
At 30th June                                                                                     £000              £000

Principal investments at market value:
  Western Selection P.L.C.                                                                       2,380            3,418
  Megalomedia plc                                                                                1,032            1,161
  Marylebone Warwick Balfour Group Plc                                                           2,820            5,160
                                                                                     ––––––––––––––       ––––––––––––––
                                                                                                 6,232            9,739
General equity portfolio at market value                                                         4,210            5,469
Tangible fixed assets                                                                              471              493
Cash, bank balances and deposits                                                                    26               32
Bank Loan                                                                                       (1,200)            (900)
Other net liabilities                                                                             (153)            (910)
Minority interests                                                                                 (63)             (55)
                                                                                     ––––––––––––––       ––––––––––––––
Net assets, including investments at market value                                                9,523           13,868
                                                                                     ––––––––––––––       ––––––––––––––
Net assets per share, including investments at market values                                      37.2p             54.3p

The market value of net assets is stated before any taxation which may arise on disposal.


Results in Brief
Year ended 30th June                                                                             2002              2001
                                                                                                 £000              £000

Profit attributable to members:                                                                    44             1,045
                                                                                     ––––––––––––––       ––––––––––––––
Dividend                                                                                         0.80p            1.20p
(Loss)/earnings per share before exceptional items                                             (0.68)p            0.94p
Earnings per share                                                                               0.17p            4.09p



Financial Calendar
Annual General Meeting                       Wednesday 2nd October at 10.00 a.m.
Dividend for 2002                            Paid on 4th October 2002 to holders on 13th September 2002
Half-year results                            Announced in February


Analysis of Shareholders
                                                                                              Total
                                           Number                    %                Shareholding                    %
      1-           499                       1,203                 49.8                     204,809                  0.8
    500 -          999                         382                 15.8                     245,393                  1.0
  1,000 -        9,999                         720                 29.8                   1,695,319                  6.6
 10,000 -       49,999                          84                  3.5                   1,690,210                  6.6
 50,000 -       99,999                          13                  0.5                     876,546                  3.4
100,000 -      249,999                           6                  0.3                     914,037                  3.6
250,000 -      499,999                           3                  0.1                   1,315,000                  5.1
  Over         500,000                           5                  0.2                  18,674,080                 72.9
                                    –––––––––––––               –––––––               –––––––––––––             –––––––
                                             2,416                100.0                     25,615,394            100.0
                                    –––––––––––––               –––––––               –––––––––––––             –––––––

The current price of the Company’s shares can be found on the share prices pages of the Financial Times, the Daily
Telegraph and in the business section of the major South African newspapers.




                                                                                                                      3
London Finance & Investment Group P.L.C.


Chairman’s Review

Introduction
          As an investment company our short term results are very heavily influenced by overall stock market
          performance. The results for the year are disappointing but we continue to believe that a combination of
          Strategic Investments and a General Portfolio will enable us to achieve real growth in shareholder value
          over the longer term. Strategic Investments are significant investments in smaller UK quoted companies
          and these are balanced by a General Portfolio which mainly consists of investments in major U.K. and
          European equities.
          At 30th June 2002, we held three Strategic Investments in which we have board representation: our
          associated company Western Selection P.L.C., Marylebone Warwick Balfour Group Plc and Megalomedia
          plc. Detailed comments on our Strategic Investments are given below.
          Subsequent to the year end we sold all of our investment in Merrydown for £662,000 realising a profit of
          £123,000 because we had not been able to reconcile managements’ objectives for the company with our
          view of its future development. This investment has been included in the General Portfolio.

Results
          The Group made a profit before tax for the year of £60,000 compared with £1,060,000 last year. These
          figures include our share of Western Selection P.L.C.’s exceptional profits of £219,000 this year and
          £805,000 last year. Our operating profits have declined by £329,000 to £27,000 as a result of lower dividend
          income and provisions required to mark down General Portfolio investments from cost to market value.
          Our profit after tax and minority interest was £44,000 (2001: £1,045,000) giving earnings per share of 0.2p
          (2001 – 4.1p).
          As explained further below, our dividend income from Strategic Investments has fallen substantially and
          we do not anticipate that it will increase in the short term, nor do we expect a significant increase in
          dividend income from our General Portfolio investments. We have reluctantly decided to recommend to
          shareholders a reduced dividend for the year of 0.8p per share (2001 – 1.1p) so as to match anticipated net
          cash inflows more closely with cash payments to shareholders.
          Our net assets per share have fallen 31% to 37.2p at 30th June 2002 from 54.3p last year. Our Strategic
          Investments have fallen in value by 36% and our General Portfolio by 20%. This compares with falls in the
          FTSE 100 index of 17.5% over the year and in the FTSE Eurotop 100 index of 24.8% over the year.

Strategic Investments
Western Selection P.L.C. (“Western”)
          The Company owns 17,611,928 shares, being 40.48% of the issued share capital, and 3,238,072 warrants
          (exerciseable at 16p each to 2006), of Western. On 30th July 2002 Western announced a profit after tax and
          exceptional items of £277,000 for its year to 30th June 2002, a fall in earnings per share to 0.6p from 4.66p, and
          a 8.7% increase in dividend to 0.50p (2001 – 0.46p). Western’s net assets at market value were £9.6 million,
          equivalent to 22.1p per share, a fall of 27% from 30.2p last year, mainly due to falls in the share price of
          Creston plc and The Sanctuary Group plc.
          The market value of the Company’s investment in Western at 30th June 2002 was £2.4 million and the book
          value was £4.1 million. At market value this represents 25% of the net assets of the Company. The underlying
          value of the Company’s investment in Western, valuing Western’s own investments at market value, was
          £3.9 million (2001 – £5.3 million).
          I am the Chairman of Western and Mr. Robotham is a non-executive director. Western has strategic
          investments in The Sanctuary Group PLC, Creston plc and Swallowfield plc and has recently made a new
          Strategic Investment in Doctors Direct plc prior to its introduction to OFEX.
          Western has recently reported on its Strategic Investments as follows:

          Creston plc
          Creston's objective is to build the company both organically and through acquisition to become a substantial marketing
          services group, operating in the U.K. and Europe.



4
The results for the year to 31st March 2002 show a profit of £138,000 (2001 – £1,690,042 – this is not comparable
as the nature of the business has changed, as shareholders were informed last year). The directors of Creston believe
the outlook remains positive and are looking to make further acquisitions during the coming year.

The Company owns 1,600,000 shares and 308,264 warrants, being 14% of Creston's issued share capital and 16%
of the warrants. The market value of the Company’s holding in Creston on 30th June 2002 was £896,000 (2001 –
£1,320,000), being 8% of the Company’s net assets.

I am the non-executive chairman of Creston.

The Sanctuary Group PLC
Sanctuary is a diversified international media group specialising in the ownership and commercial exploitation of
Intellectual Property Rights (IPR) within the field of entertainment. In the Group’s view, valuable IPRs are those
that have an international appeal over a considerable amount of time, so that the business can be planned around
long-term and predictable revenue streams. In Records, the recorded music division, the Group avoids many of the
traditional risks associated with IPR exploitation by concentrating on established artists with known fan bases and
hence predictable sales levels. In the area of Artist Services, the Group works for a percentage of the artist’s revenue
and, as such, is effectively risk-free. In Screen, the production of family television series such as The Tribe, all
programmes developed by the Group are funded through third party mechanisms in exchange for a minority
participation in the profits.

Sanctuary’s last published results were for six months to 31st March 2002 and showed a profit of £2,912,000
(31st March 2001 – £2,324,000).

At 1st July 2001, Western owned 4,000,000 shares and 3,131,264 warrants. During the year, 1,131,264 shares were
sold and the proceeds were re-invested by exercising the Sanctuary warrants. This increased our shareholding in
Sanctuary to 6,000,000 shares being 2% of the issued share capital. The market value of the Company’s holding in
Sanctuary on 30th June 2002 was £2,895,000 (2001 – £4,495,000), being 27% of the net assets of the Company.

I am no longer the Chairman of Sanctuary but remain a non-executive Director.

Swallowfield plc
Swallowfield has a long history of developing and producing aerosol, cosmetic and toiletry products stretching back
to 1950. As one of Europe’s premier contract manufacturers of toiletries and cosmetics it offers an unrivalled breadth
of product capabilities. Their skill in design, developing and producing gift packs and themed product ranges
compliments their production capability.

Swallowfield has changed its year end from 31st December to 30th June and its latest published results are for the
interim 12 month period to 31st December 2001 which showed a profit of £1,839,000 (2000 – £1,823,000).

At 1st July 2001 we owned 530,000 shares in Swallowfield. During the year we acquired an additional 270,000
shares at a cost of £222,000 to bring our total holding to 800,000 shares being 7% of the issued share capital. The
market value of the Company’s holding in Swallowfield on 30th June 2002 was £716,000 (2001 – £559,000) being
7% of the net assets of the Company.

Doctors Direct plc
Doctors Direct recently announced that it was seeking to raise £1,000,000 and apply for its shares to be traded on
OFEX. We have committed to invest £350,000 in this fund raising. During the year, we invested £100,000 in new
shares in Doctors Direct to provide funding in the period up to floatation and also purchased shares with a value of
£50,000 from the Chief Executive of Doctors Direct. Further details of Western’s involvement in Doctors Direct are
included in their Prospectus.

We are pleased to be making our investment in Doctors Direct, as the company continues to flourish due to the
increasing demand for private medical services.




                                                                                                                      5
London Finance & Investment Group P.L.C.


Chairman’s Review (continued)

Marylebone Warwick Balfour Group Plc (“MWB”)
         The Company owns 3 million shares in MWB, representing 2.13% of its issued share capital. The market
         value at 30th June 2002 was £2.8 million, compared with the book value of £2.5 million, which represents
         29% of the net assets of the Company.
         MWB's operating divisions comprise:
         1. MWB Business Exchange which provides serviced office accommodation;
         2. the Hotels Division that owns the Malmaison chain of hotels and the Howard Hotel in London and is
            developing hotels in Park Lane London and Argyle Street Glasgow and constructing an hotel at West
            India Quay, London;.
         3. the Liberty Division that represents MWB’s 68.3% ownership of the Liberty store in London;.
         4. the Fund Management Division is a leading manager specialising in commercial leisure property
            assets;
         5. the Asset Management Division comprises owns three properties at Cannon Street, Marble Arch
            Tower and Old Bailey London as well as commercial and industrial properties; and
         6. the Project Management Division which currently has projects underway at West India Quay and
            Royal Victoria Docks in London.
         On 27th March, 2002 MWB announced its interim results for the six months ended 31st December 2001, a
         major change in the direction of its business and a share placing to raise £20 million before expenses that
         has been successfully completed. The results disclosed losses of £12.5 million before exceptional items and
         write-downs of £92 million. These losses reduced shareholders' funds to 141p per share and 142p per share
         on a fully diluted basis compared with 204p and198p respectively a year earlier.
         In view of the worsening economic environment and its impact upon business activities, MWB decided to
         mature and realise its assets for the benefit of all stakeholders through an orderly disposal programme. MWB
         intends to implement a cash distribution programme, that should be completed by December 2005. It is
         targeting gross cash returns in excess of 200p per share which will be distributed in a tax efficient and
         transparent manner. No interim dividend was declared in respect of the half year ended 31st December 2001.
         Realisations have commenced and MWB recently announced the profitable sale of its interest in the
         Cannon Street, property for £53.5 million, the sale of the Teesside Leisure Park, Stockton-on-Tees for
         £17 million payable in cash and the residential development site at Royal Victoria Docks for £20 million.
         Brian Myerson, who is associated with the Active Value Funds has been appointed non-executive
         chairman and I will continue to remain on the MWB board as a non-executive director.

Megalomedia plc (“Megalomedia”)
         At 30th June 2002, the Company owned 4,300,000 shares in Megalomedia, representing 25.11% of
         Megalomedia’s issued share capital. In addition, the Company owns 1,433,333 warrants, representing
         25.11% of the warrants. The warrants were issued during the year for no consideration on the basis of one
         warrant for every three shares held and each warrant gives the holder the right to subscribe for one
         Megalomedia share at 30p each in the years 2002 to 2007. The market value of our holding was £1.0 million
         on 30th June 2002 compared to a cost of £600,000.
         As shareholders were advised last year, Megalomedia, was a cash shell seeking a new business for
         acquisition. Subsequent to our year end, on 22nd July 2002, the company announced that it had entered
         into conditional agreements to acquire the issued share capital of Memory Lane Cakes Limited for
         £9.5 million to be satisfied by payment of £8.5 million in cash and the issue of 3,333,333 new ordinary
         shares. Following this announcement, we purchased 200,000 shares on 24th July 2002, increasing our
         holding to 4,500,000 shares. The acquisition of Memory Lane Cakes and change of name of the company
         from Megalomedia to Finsbury Food Group plc was approved by its shareholders on 16th August 2002.
         Subject to the fulfilment of certain requirements, it is expected that completion and the change of name
         will take place by 30th August 2002. After completion, our shareholding will represent 21.5% of the
         increased share capital of Megalomedia following the issue of the shares as consideration for the purchase
         of the new business.
         Memory Lane Cakes is a supplier of boxed ambient cakes to most of the UK's major supermarket chains.
         Ambient cakes are baked cakes that have not been frozen and are generally retailed at room temperature.


6
          Asda, Safeway, Sainsbury Somerfield and Tesco are major customers of Memory Lane Cakes accounting
          for over 90% of sales in the 43 weeks to 27th April 2002. The turnover for that period was £29.6 million
          (Year to 30th June 2001 – £31.4 million) and the operating profit was £1.2 million (2001 – 1.4 million).
          On completion, Megalomedia will have repositioned itself as a speciality foods business focused on niche
          markets. Its directors believe that the UK food sector is increasingly polarised between substantial
          manufacturers and a large number of smaller independent businesses and believe that, in this
          environment, opportunities exist to acquire and develop profitable niche businesses. Megalomedia's
          directors, of which I am one, continue to review the sector and seek further suitable acquisitions.

Merrydown plc (“Merrydown”)
          At 30th June 2001, we held 1,100,000 shares in Merrydown plc and during the year acquired a further 250,000
          shares to bring our holding to 1,350,000 shares, representing 5.2% of Merrydown’s issued share capital.
          Merrydown is a leading cider producer and also manufactures the Schloer range of soft drinks, which is
          widely distributed through supermarkets. Sales of Schloer increased by 34% to £11.4million in the year
          ended 31st March 2002. This is 60% of the total Merrydown sales for the year of £18.9 million and reflects
          the continuing shift in emphasis of the company from cider to soft drinks.
          Merrydown’s profit before tax for the year ended 31st March 2002 was £0.8 million compared to
          £1.0 million for 2001 and earnings per share were 2.0p, down from 2.9p in the previous year. At 31st March
          2002 Merrydown had no borrowings and £3.3 million in cash. It also had £0.7 million of property held for
          resale. Shareholders funds were 50p per share at 31st March 2002, which compares favourably with our
          average purchase price of 39.3p.
          During the year, following meetings with members of the Board of Merrydown, we decided to put our
          shareholding up for sale and have therefore included this holding in the General Portfolio at the balance
          sheet date. We believed that directors were taking too much remuneration out of the business relative to
          its size, performance and returns to shareholders. Also they did not share our view of the most appropriate
          means for the exploitation of Merrydown's brands in order to generate shareholder value. Subsequent to
          the year end, we sold the entire holding in Merrydown, realising cash of £662,000 and a profit of £123,000.

General Portfolio
          The main constituents of the General Portfolio at 30th June 2002 are listed on page 28. The General Portfolio
          is dominated by four sectors: banking and insurance; food, beverages and consumer goods; pharmaceuticals
          and healthcare, and oil, natural resources and utilities. These four sectors accounted for 86% of the portfolio
          by value at 30th June 2002. We believe that the companies in these sectors in which we have invested have
          the potential to outperform the market in the medium to long term.
          We continue to take a cautious view of the stock markets in the short term and the General Portfolio has
          therefore been reduced in size over the year from a cost of £3.5 million to £3.3 million, with a corresponding
          reduction in creditors.
          Our £2 million bank facility requires us to maintain a General Portfolio the value of which exceeds [twice]
          our borrowings. The value of our General Portfolio at 30th June was substantially in excess of the bank’s
          minimum requirement and the excess has improved further since the receipt of the proceeds on the sale of
          our investment in Merrydown.

The year ahead
          Our long standing strategy is to achieve increasing value for shareholders from a number of Strategic
          Investments whose quoted value may well be volatile, and a General Portfolio of leading shares in
          companies which operate on a global basis.
          The outlook for both the short and medium term is uncertain and, with our low gearing, we have
          positioned ourselves to take advantage of any investment opportunities that may arise.

                                                                                                     D.C. MARSHALL
                                                                                                            Chairman
         23rd August 2002



                                                                                                                       7
London Finance & Investment Group P.L.C.


Report of the Directors
            The directors have pleasure in submitting their report together with the audited accounts for the year
            ended 30th June 2002.

Operating and Financial Review
            The company operated as an investment finance and management company throughout the year through
            subsidiaries and an associated undertaking in the United Kingdom. The Group generates income from
            dividends and realised profits from its investment portfolios, and from fees for the provision of
            management services. Details of investments are set out on page 28 of this report.

Results
            The consolidated profit, before tax was £60,000 for the year compared with £1,060,000 for the previous year
            to 30th June 2001. Earnings attributable to members of the Company were £44,000 (0.17p per share),
            compared with £1,045,000 (4.09p per share) for 2001.

            At 30th June 2002 the net assets attributable to shareholders, including investments at market value, before
            providing for any tax that might arise on realisation of investments, were £9,523,000 (2001 – £13,868,000).
            This was equal to 37.2p per share (2001 – 54.3p). An analysis of assets is set out on page 3.

Dividend
            The recommended dividend is 0.8p per share (2001 – 1.2p). Subject to member’s approval, the dividend
            will be paid on 4th October 2002 to those members registered at the close of business on 13th September
            2002. Shareholders on the South African register will receive their dividend in South African Rand
            converted from sterling at the closing rate of exchange on 30th August 2002.

Investment Review
            A detailed review of our strategic investments and general portfolio is contained in the Chairman’s review
            on pages 4 to 7.

            The market value of the strategic investments, which are held as fixed assets and which are listed on a
            recognised stock exchange, was £6.2 million at 30th June 2002 (2001 – £9.7 million). The market value of
            the general portfolio investments, including Merrydown, which are also listed on recognised stock
            exchanges, was £4.2 million at 30th June 2002 (2001 – £5.5 million). At 30th June 2002 the Company had
            drawn down £1.2 million of the loan facility (2001 – £0.9 million).

Directors
            A list of the directors of the Company is shown on page 2. The interests of the directors who have held
            office during the year in the shares and warrants to subscribe, were as follows:

                                                                      30th June 2002                  1st July 2001
                                                                  Shares      Warrants            Shares       Warrants
            D.C. Marshall – Beneficial                          2,301,000        466,544       2,301,000         466,544
                          – Non-beneficial                      4,602,000        933,090       4,602,000         933,090
            R.A. Good                                                   –              –               –               –
            F.W.A.A. Lucas                                         25,000              –          25,000               –
            J.M. Robotham                                          10,000         10,000          10,000           2,000
            There have been no changes in directors’ share interests between 1st July 2002 and the date of this report.

            In accordance with the Articles of Association, Mr. Robotham retires at the Annual General Meeting by
            rotation and, being eligible, offers himself for re-election.




8
Substantial Interests
           The Company has been notified under Section 211 of the Companies Act 1985 of the following interests in
           3% or more of its shares:

                                                                                            Shareholding       % interest
           Hambros Bank (Nominees) Limited                                               4,427,500 shares          17.28
           W.T. Lamb Holdings Limited                                                    4,000,000 shares          15.62
           Exeter Investment Group plc                                                   1,810,000 shares            7.07
           Philip J Milton & Company Plc                                                 1,121,748 shares            4.38

Fixed Assets
           The changes in fixed assets during the year are detailed in notes 11 and 13.

Economic and Monetary Union
           The anticipated costs to the Company relating to the possible introduction of the Euro by the United
           Kingdom would be negligible.

Warrants
           During the year, 66,636 warrants were exercised and an equivalent number of shares were subsequently
           issued. The number of Warrants currently in issue is 4,344,626. Warrants are exercisable at 25p each 28 days
           after any of the Annual General Meetings of the Company held in the years 2002 to 2005 inclusive. A
           separate notice is sent to the registered holders of outstanding warrants reminding them of their
           subscription rights shortly before each of the relevant Annual General Meetings.

           At present, the Terms and Conditions of the Warrants state “To the extent not then exercised, all
           subscription rights shall lapse on the day following the date falling 28 days after the Annual General
           Meeting of the Company in the year 2005 (or if such date is not a business day, the next following business
           day). Currently, Warrant holders have an opportunity to exercise their Warrants once a year on the day
           falling 28 days after the Annual General Meeting in each of the years to 2005. After the exercise date in
           2005, any Warrants not exercised will lapse and cease to be of any value.

           Your Directors believe that, when the Warrants expire in 2005, there may be a number of Warrants not
           exercised and, as a result, the Company will not benefit from the proceeds arising from the exercise of
           those Warrants. The Directors would like to ensure that as many Warrants as possible are exercised in
           order to raise funds for investment by the Company. The Directors would like to have the power to be able
           to place any Warrants not exercised with institutions or individuals who would then subscribe for new
           shares at the exercise price of 25p each, thus ensuring that the Company receives the full amount of
           expected income from the Warrants.

           Accordingly, an amendment to the terms and conditions of the warrants will be proposed for the approval
           of Warrantholders at a separate General Meeting of Warrantholders to be held immediately after the
           Annual General Meeting. This amendment, if approved, will leave Warrantholders’ rights unchanged but
           will take effect at the point at which any Warrants not exercised are due to lapse. A separate letter outlining
           the above facts will be sent to all Warrantholders.

Income and Corporation Taxes Act 1988
           The company is not a close company as defined in Section 414 of this Act.

Auditors
           Arthur Goddard & Co., Chartered Accountants, are willing to continue as auditors of the company and a
           resolution will be proposed at the Annual General Meeting for their re-appointment in accordance with
           Section 385(2) of the Companies Act 1985.




                                                                                                                        9
London Finance & Investment Group P.L.C.


Financial Instruments
         The financial instruments of the Group, in addition to the investment portfolio, comprise borrowings to
         finance those investments and cash.
         The main risks arising from the Group’s financial instruments are interest rate risk and liquidity risk. The
         Board reviews and agrees policies, which have remained substantially unchanged for the year under
         review, for managing both of these risks. The policies are summarised below.
         Interest Rate Risk – The Group finances its operations through a mixture of retained profits and bank
         borrowings, in pounds sterling, at a floating rate of interest. The Group’s policy is to keep all of its
         borrowings at floating rates of interest.
         Liquidity Risk – The Group’s policy is that its borrowings should be flexible and available over the
         medium term. The bank borrowings are by way of a loan facility of £2 million, reducing to £1 million in
         December 2005 and ending on 31st December 2006. 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
         periods when the market may not be prepared to deal at realistic prices in unusually large blocks of certain
         shares and this particularly applies to our three Strategic Investment holdings. The Company maintains a
         General Portfolio of investment holdings within normal market size and which have aggregate market
         values in excess of the borrowings at any point in time.

Payment of Suppliers
         The Company does not follow any code or statement on payment practice, but the policy of the Company
         is to abide by such payment terms as are agreed with suppliers within the terms of supply. At the balance
         sheet date there were 35 days purchases outstanding (2001: 32), calculated on the ratio of trade creditors
         to total purchases.

Special Business to be transacted at the Annual General Meeting
         In addition to the ordinary business to be transacted at the Annual General Meeting of the Company
         referred to in resolutions 1 to 4 of the Notice of Meeting, the Directors propose certain special business as
         set out in Resolutions 5 to 7 for the purposes summarised below:
          Resolution 5 – Increase of Authorised Share Capital – Ordinary resolution
         The directors recommend that the authorised share capital be increased from £1,500,000 to £1,750,000 by
         the creation of 5,000,000 shares of 5p each. This increase is proposed so that there is an adequate margin
         of authorised but unissued share capital following the exercise of the warrants. Assuming all warrants are
         exercised, there would be less than 40,000 shares unissued and the directors believe that the proposed
         increase will give the Company sufficient flexibility for the future.
          Resolution 6 – Authority to allot shares – Ordinary resolution
         The Directors were given authority at the Annual General Meeting in October 2001 under the Companies
         Act 1985 (“the Act”) to allot shares up to the level of the authorised share capital. A resolution will be
         proposed, as an ordinary resolution, at the forthcoming Annual General Meeting, to renew the Directors
         authority to allot shares up to the level of the authorised share capital thereby giving them powers to
         conduct the business of the Company with appropriate flexibility. Resolution number 5, if passed, will
         grant the Directors power to allot authorised but unissued capital until 1st October 2007.
          Resolution 7 – Pre-emption rights – Special resolution
         Section 89 of the Act requires that, when Directors propose to allot shares for cash, they must first offer
         such shares to existing shareholders in proportion to their existing shareholdings, unless powers have
         previously been given to the Directors under Section 95 of the Act to disapply these provisions. The
         Directors consider it desirable for shareholders to approve this disapplication until the next Annual
         General Meeting, in order to permit the allotment of shares for cash in limited circumstances to persons
         other than shareholders. This limited disapplication will be in respect of 1,280,769 shares equal to 5% of
         the issued share capital of the Company.
         The Directors have no present intention of issuing any part of the unissued share capital and no issue will
         be made which would effectively alter the control of the Company without the approval of the
         shareholders in general meeting.

                                                                                               By Order of the Board
                                                                                                CITY GROUP P.L.C.
                                                                                                           Secretaries
          28th August 2002


10
Statement of Directors’ Responsibilities in Respect of the
Accounts
      Company law requires the directors to prepare financial statements for each financial year which give a
      true and fair view of the state of affairs of the Company and the Group and for the profit or loss of the
      Group for that year. In preparing those financial statements, the directors are required to:

      (a)   select suitable accounting policies and then apply them consistently;

      (b) make judgements and estimates that are reasonable and prudent;

      (c)   state whether applicable accounting standards have been followed, subject to any material
            departures that are disclosed and explained in the financial statements;

      (d) prepare the financial statements on the going concern basis unless it is inappropriate to presume that
          the Group will continue in business.

      The directors are responsible for keeping proper accounting records which disclose with reasonable
      accuracy at any time the financial position of the Group and to enable them to ensure that the financial
      statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of
      the Group and hence for taking reasonable steps for the prevention and detection of fraud and other
      irregularities.


Corporate Governance
      In June 1998, the London Stock Exchange published the Principles of Good Governance and Code of Best
      Practice (the Combined Code) which embraces the work of the Cadbury, Greenbury and Hampel
      committees and became effective in respect of accounting periods ending on or after December 1998.

      The Financial Services Authority requires that listed companies incorporated in the UK should state in
      their report and accounts whether they comply with the Combined Code and identify and give reasons
      for any areas of non-compliance.

      The Company follows the code wherever it is reasonable to do so. It operates an effective board, which
      comprises four directors, three of whom are non-executive and independent, namely Messrs R.A. Good,
      F.W.A.A. Lucas and J.M. Robotham, who is the senior non-executive director. The appointment of directors
      is a matter for the entire Board and there is, therefore, no nomination committee. Each director is required
      to retire every three years in accordance with the Articles of Association and re-appointment is not
      automatic. The Board meets regularly, on a formal basis at least quarterly, and retains full and effective
      control over the Company.

      The Audit Committee comprises only two members, Mr. J.M. Robotham and Mr. R.A. Good, and the
      auditors are invited to attend their meetings. A separate investment committee comprising Mr. D.C.
      Marshall and Mr. R.A. Good is established which meets on a timely basis.

      The Board has given full consideration to the best practice provisions relating to remuneration policy,
      service contracts and compensation recommended in the Combined Code, within the context of the
      Group. The Company has no Remuneration Committee because the company has no employees and the
      remuneration of each Director is limited by the Articles of Association and set out in detail in the statutory
      accounts which are approved by shareholders in General Meeting. None of the directors has a service
      contract with the Company. There are no share options in issue.

      The Board is aware of the requirements of the code and the need for appropriate controls and systems to
      safeguard the Company’s assets. However full compliance with the code is not possible because of the size
      and resource constraints within the Company and because of the relative cost benefit assessment of
      putting in place the additional procedures or functions.




                                                                                                                 11
London Finance & Investment Group P.L.C.


Corporate Governance (continued)
       The directors formally acknowledge their responsibility for establishing effective control within the
       Group. In this context, control is defined as all those policies, processes, tasks and behaviours established
       to ensure business objectives are achieved most cost effectively, assets and shareholder value are
       safeguarded, laws, regulations and policies are complied with. Controls can provide reasonable but not
       absolute assurance that the risks identified are adequately managed to achieve business objectives and
       minimise material errors, losses, fraud or breaches of laws or regulations.

       Directors participate in ongoing processes, complying with the Turnbull Guidance, for identifying,
       evaluating and managing the Group’s significant risks. There is a well-established system of internal
       controls set within a framework of clearly defined structures and accountabilities with well understood
       policies and procedures; supported by training, budgeting, reporting and review procedures. The Group
       has defined guidelines for investment appraisal, having regard to yield and capital growth. Board
       decisions are implemented on a day to day basis by the subsidiary company, City Group P.L.C., the Group
       secretary. The financial records of the Group are maintained by City Group P.L.C.. The framework for
       internal financial control established in that company has been reviewed by the Board and is regarded as
       effective. Management accounts are reviewed at Board meetings and regular reports of cash movements,
       portfolio movements and valuations are distributed to the directors by City Group P.L.C. The reporting
       and review procedures provide routine assurance to the Board as to the adequacy and effectiveness of
       internal controls. The Board recognise that it is not possible to divide some functions as would be the case
       in larger organisations and accepts that close supervision is necessary. The directors have considered the
       need for an internal audit function and do not believe that one is appropriate because monitoring
       processes are applied to give reasonable assurance to the Board that the systems of internal control are
       functioning as intended.

       An annual self-assessment of risk has been performed which has identified the areas in which the Group
       is most exposed to risk, considered the financial implications and assessed the adequacy and effectiveness
       of their control. The Board has discussed the results of this review and the directors can therefore confirm
       that they have reviewed the effectiveness of the company’s system of internal control.

       The directors, after making enquiries, have a reasonable expectation that the Company has adequate
       resources to continue in operational existence for the foreseeable future. They therefore continue to adopt
       the going concern basis in preparing the accounts.

       The Johannesburg Stock Exchange requires that companies report on their compliance with Code of
       Corporate Practices and Conduct contained in the King Report on Corporate Governance. The Board has
       reviewed the matter and recorded that in so far as those matters contained in the King report are of
       concern to the company, in complying with the Combined Code, it is satisfied that the Group complies
       with the requirements of the King Report.




12
Report of the Independent Auditors
          TO THE MEMBERS OF LONDON FINANCE & INVESTMENT GROUP P.L.C.

Financial Statements
          We have audited the financial statements on pages 14 to 26 which have been prepared under the historical
          cost convention as modified by the revaluation of certain fixed assets and the accounting policies set out
          on page 17.

Respective responsibilities of the directors and auditors
          As described on page 11, the company’s directors are responsible for the preparation of the financial
          statements in accordance with applicable United Kingdom law and accounting standards. Our
          responsibilities, as independent auditors, are established in the United Kingdom by statute, the Auditing
          Practices Board, the Listing Rules of the Financial Services Authority and by our profession’s ethical
          guidance.
          We report to you our opinion as to whether the financial statements give a true and fair view and are
          properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion,
          the directors’ report is not consistent with the financial statements, if the Company has not kept proper
          accounting records, if we have not received all the information and explanations that we require for our
          audit, or if information specified by law or the Listing Rules regarding directors’ remuneration and
          transactions is not disclosed.
          We review whether the corporate governance statement on pages 11 and 12 reflects the Company’s
          compliance with the seven provisions of the Combined Code specified for our review by the Financial
          Services Authority, and we report if it does not. We are not required to consider whether the Board’s
          statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the
          Group’s corporate governance procedures or its risk and control procedures.
          We read other information in the Annual Report and consider whether it is consistent with the audited
          financial statements. This other information only comprises the Results in Brief, the Chairman’s Review,
          the Report of the Directors, the Corporate Governance Statement, the Summary of Results and the General
          Equity Portfolio. We consider the implications for our report if we become aware of any apparent
          misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend
          to any other information.

Basis of Opinion
          We conducted our review in accordance Auditing Standards issued by the Auditing Practices Board. An
          audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the
          financial statements. It also includes an assessment of the significant estimates and judgements made by
          the directors in the preparation of the financial statements, and of whether the accounting policies are
          appropriate to the Group’s circumstances, consistently applied and adequately disclosed.
          We planned and performed our audit so as to obtain all the information and explanations which we
          considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
          financial statements are free from material misstatement, whether caused by fraud or other irregularity or
          error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in
          the financial statements.

Opinion
          In our opinion the financial statements give a true and fair view of the state of affairs of the Company and
          of the Group at 30th June 2002 and of the profit and cashflow of the Group for the year then ended and
          have been properly prepared in accordance with the Companies Act 1985.
                                                                                       ARTHUR GODDARD & CO
                                                                                            Chartered Accountants
                                                                                               Registered Auditors
          2 St John’s Place,
          St John’s Square,
          LONDON EC1M 4NP

          28th August 2002


                                                                                                                   13
London Finance & Investment Group P.L.C.


Consolidated Profit and Loss Account
For the year ended 30th June
                                                                                             2002            2001
                                                                              Notes          £000            £000

Operating Income
 Investment operations                                                             2          276             620
 Managment services                                                                2          495             425
Administrative expenses
 Investment operations                                                           3-5         (263)           (273)
 Management services                                                             3-5         (481)           (416)
                                                                                        ––––––––––    ––––––––––
Operating profit                                                                               27              356
Share of result of associated undertaking – normal                                            (98)              16
                                          – exceptional                                       219              805
Interest payable                                                                   6          (88)            (117)
                                                                                        ––––––––––    ––––––––––
Profit on ordinary activities before taxation                                                  60            1,060
Tax on result of ordinary activities                                               7           (9)             (12)
                                                                                        ––––––––––    ––––––––––
Profit on ordinary activities after taxation                                                   51            1,048
Equity minority interest                                                                       (7)              (3)
                                                                                        ––––––––––    ––––––––––
Profit attributable to members of the holding company                              8           44            1,045
Proposed dividend                                                                            (205)            (307)
                                                                                        ––––––––––    ––––––––––
Retained (loss)/profit for the financial year                                      9         (161)            738
                                                                                        ––––––––––    ––––––––––

Earnings per share                                                                10          0.17p       4.09p
(Loss)/earnings per share excluding exceptionals                                  10        (0.68)p       0.94p
Fully diluted earnings per share                                                  10          0.17p       3.93p
There are no recognised gains or losses other than the above profits and accordingly no separate statement
of recognised gains and losses is shown.
All profits and losses are on continuing activities.
There is no difference in either year between the above profit and the profit on an historical cost basis.




The notes on pages 17 to 26 form part of these accounts.


14
Balance Sheets
at 30th June
                                                                        Group                   Company
                                                                2002            2001         2002      2001
                                                Notes           £000            £000         £000      £000

Fixed Assets
  Tangible assets                                   11           471              493         457          467
  Investments in Group companies                    12             –                –       6,127        6,154
  Investments                                     13(a)        7,741            7,607           –            –
                                                           ––––––––––     ––––––––––    ––––––––––   ––––––––––
                                                               8,212            8,100       6,584        6,621
                                                           ––––––––––     ––––––––––    ––––––––––   ––––––––––
Current Assets
 Listed investments                              13(b)         2,743            3,443       2,743        3,443
 Unlisted investments                            13(b)            43               43          43           43
 Debtors                                           14            187              157          45           44
 Bank balance and deposits                                        26               32          20           17
                                                           ––––––––––     ––––––––––    ––––––––––   ––––––––––
                                                               2,999            3,675       2,851        3,547
Current Liabilities
 Creditors: falling due within one year            15         (1,583)        (2,010)       (1,551)      (1,972)
                                                           ––––––––––     ––––––––––    ––––––––––   ––––––––––
Net Current Assets                                             1,416            1,665       1,300        1,575
                                                           ––––––––––     ––––––––––    ––––––––––   ––––––––––
Total Assets less Current Liabilities                          9,628            9,765       7,884        8,196
                                                           ––––––––––     ––––––––––    ––––––––––   ––––––––––
Capital and Reserves
  Called up share capital                          17          1,281            1,277       1,281        1,277
  Share premium account                            18            975              962         975          962
  Reserves                                         19            361              361         480          480
  Profit and loss account                           9          6,948            7,109       5,148        5,477
                                                           ––––––––––     ––––––––––    ––––––––––   ––––––––––
Equity shareholders’ funds                         20          9,565            9,709       7,884        8,196
  Minority equity interests                                       63               56           –            –
                                                           ––––––––––     ––––––––––    ––––––––––   ––––––––––
                                                               9,628            9,765       7,884        8,196
                                                           ––––––––––     ––––––––––    ––––––––––   ––––––––––



Approved by the Board on 28th August 2002.



D.C. MARSHALL           Director




The notes on pages 17 to 26 form part of these accounts.


                                                                                                            15
London Finance & Investment Group P.L.C.


Consolidated Cash Flow Statement
For the year ended 30th June
                                                                                    2002         2001
                                                                       Notes        £000         £000

Cash (outflow)/inflow on operating activities                             22         (71)         888
                                                                               ––––––––––   ––––––––––
Returns on investments and servicing of finance
Dividends received                                                                   243          374
Interest paid                                                                        (78)        (105)
                                                                               ––––––––––   ––––––––––
Net cash inflow from returns on investments and servicing of finance                 165          269
                                                                               ––––––––––   ––––––––––


Taxation                                                                              (5)          (6)
                                                                               ––––––––––   ––––––––––
Investing activities
Tangible fixed assets   – purchased                                                    –           (3)
Fixed asset investments – purchased                                                 (107)        (532)
                        – proceeds on disposal                                         3          238
                                                                               ––––––––––   ––––––––––
Net cash outflow from investment activities                                         (104)        (297)
                                                                               ––––––––––   ––––––––––


Equity dividend paid – Company                                                      (307)        (281)
Financing
Share capital issued                                                                  16            6
Net drawdown/(repayment) of loan facility                                            300         (600)
                                                                               ––––––––––   ––––––––––
Net cash inflow/(outflow) from financing                                             316         (594)
                                                                               ––––––––––   ––––––––––
Decrease in cash                                                          23          (6)         (21)
                                                                               ––––––––––   ––––––––––




The notes on pages 17 to 26 form part of these accounts.


16
Notes to the Accounts
For the year ended 30th June 2002

1.   Accounting Policies
       (i)    These accounts have been prepared under the historical cost convention including the
              revaluation of investments transferred within the group, in accordance with all applicable
              accounting and financial reporting standards. The Group has adopted the applicable Financial
              Reporting Standards which came into force during the year; FRS 18 “Accounting Policies” and
              FRS 19 “Deferred Tax”.
       (ii)   These consolidated accounts include the results of the subsidiaries (all of which are companies)
              for the year to 30th June 2002. Results of subsidiaries are included from their effective date of
              acquisition to their effective dates of disposal. The minority interests are wholly attributable to
              equity interests in subsidiaries. Under Section 230(4) of the Companies Act, the Company is
              exempt from the requirement to present its own profit and loss account.
       (iii) The consolidated accounts include the group share of the undistributed profits of its associated
             companies (“equity accounting”). Results of associates are included from their effective date of
             acquisition to their effective dates of disposal.
       (iv) Dividends receivable are taken to the credit of the profit and loss account in respect of listed
            shares when the shares are quoted ex dividend, and in respect of unlisted shares when the
            dividend is declared.
       (v)    Depreciation is provided on fixed assets so as to write them off over their estimated useful lives.
              Computer equipment expenditure of less than £2,500 is written off in the year of acquisition.
              The annual rates of depreciation are:
              Leasehold property      2% straight line
              Equipment               25% straight line
              Motor vehicles          33 1/3% reducing balance
       (vi) Fixed asset investments are shown at cost less amounts written off and are written down below
            cost where the market value has depreciated substantially and in the opinion of the directors is
            unlikely to recover. Current asset investments are shown at the lower of individual cost and
            market value.
       (vii) Deferred taxation is provided on the full liability method for timing differences arising between
             the treatment of certain items for taxation and accounting purposes. Deferred tax assets are
             recognised only to the extent that the directors consider that it is more likely than not that there
             will be suitable taxable profits from which the underlying timing differences can be deducted.
             The implementation of FRS 19 has not resulted in any change to profits or net assets for the
             current or prior years.
       (viii) The Group makes pension contributions to the pension schemes of certain employees which are
              money purchase schemes and to which it has no responsibility for unfunded liabilities.
       (ix) 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.




                                                                                                              17
London Finance & Investment Group P.L.C.


Notes to the Accounts (continued)
For the year ended 30th June 2002

2.   Operating profit – Segmental Analysis
                                                                    Investment                Management
                                                                    Operations                   Services
                                                                  2002       2001            2002         2001
                                                                  £000       £000            £000         £000

            Dividends – Listed investments                          153          294            –            –
                        – Unlisted investments                        9           10            –            –
            Interest receivable                                       1            7            –            5
            Rental and other income                                  27           27            9            7
            Profits on sales of investments,
              including provisions                                    86         282             –            –
            Management services fees                                   –            –         486          413
                                                              ––––––––––   ––––––––––   ––––––––––   ––––––––––
            Operating income                                        276          620          495          425
            Administration expenses                                (263)        (273)        (481)        (416)
                                                              ––––––––––   ––––––––––   ––––––––––   ––––––––––
            Operating profit                                          13         347            14           9
                                                              ––––––––––
                                                              ––––––––––   ––––––––––
                                                                           ––––––––––   ––––––––––
                                                                                        ––––––––––   ––––––––––


3.   Administration Expenses
                                                                                             2002         2001
                                                                                             £000         £000
            Administrative expenses include:
            Depreciation                                                                       22           27
            Auditors’ remuneration – audit services                                            14           13
                                       – non-audit services                                     2            3
            Directors’ emoluments as set out in Note 4                                         46           48
            Staff costs as set out in Note 5                                                  431          354

4.   Directors’ Emoluments and Staff Costs
            The emoluments of the directors, including the chairman were:
            Fees (including fees waived)                                                       46           48
            The emoluments of the directors were:
            D.C. Marshall (£15,000 (2001 – £15,000) waived see below)                    Nil               Nil
            R.A. Good                                                                       8                 8
            J.M. Robotham                                                                  16                18
            F.W.A.A. Lucas (£7,500, excluding V.A.T., ceded to his primary employer)     Nil
                                                                                   ––––––––––
                                                                                                           Nil
                                                                                                     ––––––––––
                                                                                        ––––––––––   ––––––––––

            The services of the Chairman are supplied by an overseas company, in which none of the
            directors are beneficially interested.
            Related Party Disclosures
            London Finance & Investment Group P.L.C. and its wholly owned subsidiary (“Lonfin”), holds
            40.48% of its associate Western Selection P.L.C. (“Western”) of which Mr. Marshall and Mr.
            Robotham are directors. Mr. Marshall and Mr. Robotham’s shareholdings in Lonfin are set out
            in the accompanying director’s report.
            Lonfin and/or Western hold shares in Marylebone Warwick Balfour Group Plc, Megalomedia
            plc, Creston plc, Doctors Direct plc and The Sanctuary Group PLC. Mr. Marshall and Mr.
            Robotham are directors of Marylebone Warwick Balfour Group Plc and Mr. Marshall is a
            director of Creston plc, Doctors Direct plc, Megalomedia plc and The Sanctuary Group PLC.




18
           Mr. Marshall is a director and Mr. Robotham is the chairman of Monteagle Holdings S.A., and
           both are shareholders in Monteagle, which in turn is a substantial shareholder in Falcon
           Investment Holdings S.A. and Conafex Holdings S.A. Mr. Marshall is chairman of Falcon and
           a director of Conafex and Mr. Robotham is a director of Falcon. Monteagle pays an annual rental
           of £27,000 (2001 – £27,000) in respect of a leasehold property owned by Lonfin. These companies
           are all registered in Luxembourg and operate internationally.
           Lonfin and Western own City Group P.L.C. in the ratio 51.43% and 48.57% respectively. City
           Group P.L.C. provides offices and secretarial and administrative services to various companies
           in the United Kingdom and abroad which are either associated with Lonfin and Western and/or
           Mr. Marshall and Mr. Robotham, including all of the above companies. The various secretarial
           and accounting fees received by City Group P.L.C. from those companies, their associates and
           subsidiaries, total £482,000 (2001 – £398,000) for the year under review. At the balance sheet date
           the aggregate balance due in respect of fees invoiced was £105,000 (2001 – £83,000) and advance
           fees paid were £2,000 (2001 – £55,000), settlement of which is within normal credit terms.
           Mr. Robotham is an associate of J.M. Finn & Co., who are the Company’s stockbrokers. As an
           associate Mr. Robotham receives 32% of the commission on transactions introduced by him.
           During the year the Company paid £16,000 commission to J.M. Finn & Co.
           Other than as disclosed above no director was interested in any contract between the directors,
           the company and any other related party which subsisted during or at the end of the financial
           year.

5.   Staff Costs
                                                                                            2002         2001
                                                                                            £000         £000
           Staff costs, excluding those relating to the Directors shown in Note 4, are:
           Salaries                                                                       390             320
           Social security costs                                                            41              34
                                                                                    ––––––––––      ––––––––––
                                                                                             431          354
                                                                                       ––––––––––   ––––––––––
           The average weekly number of staff employed, including directors, was: ––––––––––
                                                                                          13               12
                                                                                                    ––––––––––


6.   Interest payable
           Bank interest                                                                       79         105
           Share of associated undertakings’ interest payable                                   9           12
                                                                                       ––––––––––   ––––––––––
                                                                                              88          117
                                                                                       ––––––––––   ––––––––––




                                                                                                           19
London Finance & Investment Group P.L.C.


Notes to the Accounts (continued)
For the year ended 30th June 2002

7.   Taxation
                                                                                       2002          2001
                                                                                       £000          £000
            The tax charge for the year comprises:
            Tax on overseas investment income                                             (5)           (6)
            Share of associated undertaking’s taxation                                    (4)           (6)
                                                                                  ––––––––––    ––––––––––
                                                                                          (9)         (12)
                                                                                  ––––––––––    ––––––––––

            The tax assessed for the year is lower than the standard rate of
              corporation tax in the UK.
            The differences are explained below:
            Profit on ordinary activities before taxation                                60         1,060
                                                                                  ––––––––––    ––––––––––
            Taxation at 30%                                                             (18)         (318)
            Effects of:
            Non taxable franked income                                                   66           113
            Other rates of foreign taxes                                                 (2)           (4)
            Depreciation in excess of capital allowances                                 (5)           (4)
            (Loss)/utilised carried forward                                             (49)          202
            Permanent differences                                                        (1)           (1)
                                                                                  ––––––––––    ––––––––––
            Tax charge for the year                                                       (9)         (12)
                                                                                  ––––––––––
                                                                                  ––––––––––    ––––––––––

            All of the tax charge for the year is tax deducted from the dividends of overseas companies.
            Dividends received from U.K. companies are recognised in the profit and loss account net of
            their associated tax credit.

8.   Profit attributable to members of the holding company
                                                                                       2002          2001
                                                                                       £000          £000
            Dealt with in the accounts of: The holding company                         (123)            (2)
                                           The subsidiary undertakings                  140           314
                                           Western as an associated undertaking           27          733
                                                                                  ––––––––––    ––––––––––
                                                                                         44         1,045
                                                                                  ––––––––––    ––––––––––


9.   Statement of retained profit
            Retained profit at beginning of year
              Company                                                                 5,477         5,786
              Subsidiary undertakings                                                 1,735         1,421
              Associated undertakings                                                  (103)         (836)
                                                                                  ––––––––––    ––––––––––
                                                                                      7,109         6,371
            Retained (loss)/profit for the year                                        (161)          738
                                                                                  ––––––––––    ––––––––––
            Retained profit at end of year                                            6,948         7,109
                                                                                  ––––––––––    ––––––––––
              Company                                                                 5,148         5,477
              Subsidiary undertakings                                                 1,876         1,735
              Associated undertakings                                                    (76)        (103)
                                                                                  ––––––––––    ––––––––––
                                                                                      6,948         7,109
                                                                                  ––––––––––    ––––––––––




20
10.   (Loss)/Earnings per share
                                                                                           2002         2001
           (Loss)/earnings per share are based on the profit on ordinary activities
           taxation and minority interests and on 25,592,026 (2001 – 25,540,767)
           shares after being the weighted average of number of shares in issue
           during the year.

             Including exceptional items                                                  0.17p        4.09p
                                                                                      ––––––––––   ––––––––––


             Excluding exceptional items of £219,000 (2001 – £805,000)                  (0.68)p        0.94p
                                                                                      ––––––––––   ––––––––––

           Diluted earnings per share are calculated on the results on ordinary
           activities after taxation and minority interests and on 25,879,413
           (2001 – 26,562,002) shares, being the weighted average of ordinary
           shares, together with the weighted average of dilutive outstanding
           warrants in issue.                                                             0.17p        3.93p
                                                                                      ––––––––––   ––––––––––


11.   Tangible assets
                                                              Long
                                                          Leasehold
                                                         Residential    Office          Motor
                                                           Property Equipment          Vehicles        Total
                                                               £000      £000             £000         £000

           At Valuation – 1st July 2001                          500              –            –         500
           At cost – 1st July 2001                                  –          189           35          224
           Additions                                                –             –            –            –
           Disposals                                                –             –            –            –
                                                           ––––––––––    ––––––––––   ––––––––––   ––––––––––
           30th June 2002                                        500           189           35          724
                                                           ––––––––––    ––––––––––   ––––––––––   ––––––––––
           Depreciation
           Balance – 1st July 2001                                33           163           35          231
           Charges for the period                                 10            12             –           22
           Disposals                                                –             –            –            –
                                                           ––––––––––    ––––––––––   ––––––––––   ––––––––––
           30th June 2002                                         43           175           35          253
                                                           ––––––––––    ––––––––––   ––––––––––   ––––––––––
           Net book amount
            30th June 2002                                       457            14            –          471
                                                           ––––––––––    ––––––––––   ––––––––––   ––––––––––
           Net book amount
            30th June 2001                                       467            26            –          493
                                                           ––––––––––    ––––––––––   ––––––––––   ––––––––––

           The long leasehold residential property is situated in the United Kingdom and held by the
           parent. The long lease was acquired on 24th February 1998 and runs for 999 years from
           24th June 1991. The property was valued by Frank Morris Associates, surveyors on
           18th September 1997 at £450,000. The directors are of the opinion that the value of this property,
           following the acquisition of the long leasehold, is £500,000. The other fixed assets are held by a
           subsidiary company. The historical cost of the long leasehold property is £214,000 and the
           accumulated depreciation is £50,000.




                                                                                                          21
London Finance & Investment Group P.L.C.


Notes to the Accounts (continued)
For the year ended 30th June 2002

12.   Investment in group companies
            Operating subsidiaries, incorporated and operating in England and consolidated in these
            financial statements.
                                         Percentage              2002            2001
                                           of equity             £000            £000    Principal activities
            Held by the Company – at cost
              Lonfin Investments Limited       100.0                 –              –    Investment holding
              City Group PLC                    51.4                89             89    Management services
            Loan to subsidiary                                  6,038
                                                            ––––––––––
                                                                               6,065
                                                                           ––––––––––
                                                                6,127            6,154
                                                            ––––––––––     ––––––––––

            The loan to the subsidiary was to finance the acquisition of fixed asset investments.

13.   Investments
                                                                         Group                   Company
                                                                 2002            2001         2002      2001
                                                                 £000            £000         £000      £000
            (a) Held as Fixed Assets
            (i) Listed associated undertaking
            Shares at cost                                      4,298          4,298             –               –
            Fair value adjustment brought forward                (150)          (150)
            Shares of post acquisition losses                    (103)          (836)             –            –
            Share of retained results for the year                  27           733              –            –
                                                            ––––––––––     ––––––––––    ––––––––––   ––––––––––
            (Market value £2,380,000 (2001 – £3,418,000))       4,072            4,045           –               –
                                                            ––––––––––     ––––––––––    ––––––––––   ––––––––––

            (ii) Other listed investments
            At cost, 1st July 2001                              3,562          3,187              –            –
            Additions during the year                             107            532              –            –
            Disposals during the year                                –          (157)             –            –
                                                            ––––––––––     ––––––––––    ––––––––––   ––––––––––
            (Market value £4,520,000 (2001 – £6,750,000))       3,669            3,562           –               –
                                                            ––––––––––     ––––––––––    ––––––––––   ––––––––––
            Total at 30th June 2002                             7,741
                                                            ––––––––––
                                                                                 7,607
                                                                           ––––––––––
                                                                                                 –
                                                                                         ––––––––––   ––––––––––
                                                                                                                 –

            (b) Held as Current Assets
            (i) Listed investments
            At cost                                             2,890          3,482         2,890        3,482
            Reduction in value                                   (147)            (39)        (147)          (39)
                                                            ––––––––––     ––––––––––    ––––––––––   ––––––––––
            Total at 30th June 2002                             2,743            3,443       2,743        3,443
                                                            ––––––––––     ––––––––––    ––––––––––   ––––––––––
            (Market value £3,542,000 (2001 – £5,040,000))
            (ii) Unlisted investments
            Shares at cost                                          43             55            43           55
            Disposals during year                                    –
                                                            ––––––––––
                                                                                  (12)
                                                                           ––––––––––
                                                                                                  –
                                                                                         ––––––––––
                                                                                                             (12)
                                                                                                      ––––––––––
            Total at 30th June 2001                                43              43           43              43
                                                            ––––––––––     ––––––––––    ––––––––––   ––––––––––




22
13.   Investments (continued)
            (c) Associated undertaking
            Western Selection P.L.C., the associated undertaking, is a strategic investment company
            incorporated and operating in Great Britain with a financial year end of 30th June 2002.
            It has 43,511,532 ordinary shares in issue with a nominal value of 10p each, of which 40.48%
            are owned by the Company’s wholly owned subsidiary, Lonfin Investments Limited.
                                                                                             2002         2001
                                                                                             £000         £000
            Group share of:
            Operating (loss)/profit – normal                                                  (98)          16
                                    – exceptional                                             219          805
            Fixed asset investments                                                         4,086        4,042
            Current assets                                                                     56           30
            Liabilities due within one year                                                  (468)        (418)
            The Company’s wholly owned subsidiary, Lonfin Investments Limited, owns 4,300,000 shares
            and 1,433,333 warrants in Megalomedia plc (“Megalomedia”), representing 25.11% of the issued
            share capital of that company. The investment is not accounted for as an associated company
            because the disposition of the other shareholdings does not give a significant influence. The
            aggregate share capital and reserves of Megalomedia at 31st March 2002 were £5,169,000 and its
            loss for the year then ended was £329,000.

14.   Debtors
                                                                        Group                   Company
                                                                2002            2001         2002      2001
                                                                £000            £000         £000      £000

            Trade debtors                                        107              83             –            –
            Other debtors                                          26             24            23           21
            Prepayments and accrued income                         54             50            22           23
                                                           ––––––––––     ––––––––––    ––––––––––   ––––––––––
                                                                 187             157           45           44
                                                           ––––––––––     ––––––––––    ––––––––––   ––––––––––


15.   Creditors – amounts falling due within on year
            Bank loan                                          1,200            900         1,200          900
            Group companies                                         –              –          112          179
            Other taxes                                            16             19             2            2
            Other creditors                                        38             29            14           17
            Trade creditors                                        60           679              3         543
            Accruals                                               64             76            15           24
            Proposed dividend                                    205
                                                           ––––––––––
                                                                                307
                                                                          ––––––––––
                                                                                              205
                                                                                        ––––––––––
                                                                                                           307
                                                                                                     ––––––––––
                                                               1,583            2,010       1,551        1,972
                                                           ––––––––––     ––––––––––    ––––––––––   ––––––––––

            The Company’s loan facility is secured by a charge over part of the Company’s General
            Portfolio of listed investments.

16.   Deferred taxation
            The Group has unrecognised deferred tax assets in respect of Corporation Tax losses carried
            forward and Capital Tax losses, subject to agreement of tax computations with the Inland
            Revenue, which at current rates amount to £173,000 and £41,000 respectively. No provision has
            been made for the excess arising on the revaluation of leasehold property or for unrealised
            capital losses on investments. At current rates these would amount to approximately £54,000
            and £473,000 respectively.



                                                                                                            23
London Finance & Investment Group P.L.C.


Notes to the Accounts (continued)
For the year ended 30th June 2002

17.   Share Capital
                                                                                             2002            2001
                                                                                             £000            £000

            Authorised: 30,000,000 Ordinary shares of 5p each                               1,500            1,500
                                                                                        ––––––––––     ––––––––––
            Allotted, issued and fully paid shares of 5p each
                 25,548,758 At 1st July 2001                                                1,277          1,276
                     66,636 Warrants exercised during year                                       4              1
            ––––––––––––––––                                                            ––––––––––     ––––––––––
                 25,615,394    At 30th June 2002                                            1,281            1,277
            ––––––––––––––––                                                            ––––––––––     ––––––––––

            There are 4,344,626 Warrants to subscribe for shares outstanding. Each Warrant gives the holder
            the right to subscribe for one share of 5p each in the Company at a fixed price of 25p per share.
            Warrants are exercisable on a date falling 28 days after the Annual General Meeting of the
            Company in the years 2002 to 2005, after which time all outstanding subscription rights shall
            lapse.
            There are no outstanding options.

18.   Share Premium Account
            Balance at 1st July                                                               962            957
            Premium on warrants exercised                                                       13              5
                                                                                        ––––––––––     ––––––––––
            Balance at 30th June                                                              975             962
                                                                                        ––––––––––     ––––––––––


19.   Reserves
                                                                         Group                  Company
                                                                 2002            2001        2002      2001
                                                                 £000            £000        £000      £000

            Revaluation reserve:
            Balance brought forward and carried forward           330             330         330             330
                                                            ––––––––––     ––––––––––   ––––––––––     ––––––––––
            Other reserves:
            Balance brought forward and carried forward            31
                                                            ––––––––––
                                                                                  31
                                                                           ––––––––––
                                                                                              150
                                                                                        ––––––––––
                                                                                                              150
                                                                                                       ––––––––––
            Total reserves                                        361            361          480             480
                                                            ––––––––––     ––––––––––   ––––––––––     ––––––––––


20.   Reconciliation of movement in shareholders’ funds
                                                                                                     Group
                                                                                             2002            2001
                                                                                             £000            £000

            Profit for the financial year                                                       44         1,045
            Proposed dividend                                                                (205)          (307)
            Shares issued during the year                                                       17              6
                                                                                        ––––––––––     ––––––––––
                                                                                             (144)           744
            Opening equity shareholders’ funds                                              9,709
                                                                                        ––––––––––
                                                                                                           8,965
                                                                                                       ––––––––––
            Closing equity shareholders’ funds                                              9,565            9,709
                                                                                        ––––––––––     ––––––––––




24
21.   Pension Schemes
           The Group makes pension contribution to the pension schemes of certain employees which are
           money purchase schemes and for which it has no responsibility for unfunded liabilities.

22.   Reconciliation of operating profit to net cash flow from operating activities
                                                                                                 Group
                                                                                         2002            2001
                                                                                         £000            £000

           Operating profit                                                                 27           356
           Dividends receivable                                                          (162)          (304)
           Depreciation charges                                                             22             27
           Profit on sales of fixed assets investments                                      (3)           (81)
           Increase in debtors                                                             (30)           (11)
           (Decrease)/Increase in creditors                                              (625)           622
           Decrease in current asset investments                                          700            279
                                                                                    ––––––––––     ––––––––––
           Net cash (outflow)/inflow from operating activities                            (71)           888
                                                                                    ––––––––––     ––––––––––


23.   Reconciliation of net cash flow to movement in net debt
                                                                        At start        Cash         At end
                                                                        of year         flow         of year
                                                                           £000         £000            £000
           2001/2002
           Cash at bank                                                      32             (6)            26
           Bank loan                                                       (900)         (300)         (1,200)
                                                                      ––––––––––    ––––––––––     ––––––––––
                                                                           (868)         (306)        (1,174)
                                                                      ––––––––––    ––––––––––     ––––––––––
           2000/2001
           Cash at bank                                                       53           (21)           32
           Bank loan                                                      (1,500)         600           (900)
                                                                      ––––––––––    ––––––––––     ––––––––––
                                                                          (1,447)         579            (868)
                                                                      ––––––––––    ––––––––––     ––––––––––


24.   Operating lease
           The group has an operating lease commitment in respect of an office property as follows:
           2-5 years   Term of lease: from 8th August 1999 to 25th March 2008, with an option to break on
                       8th August 2004.
                       Minimum amount payable in the next 12 months: £30,000.




                                                                                                          25
London Finance & Investment Group P.L.C.


Notes to the Accounts (continued)
For the year ended 30th June 2002

25.   Financial Instruments
            The Directors Report on pages 8 to 10 provides an explanation of the role that financial
            instruments have had during the year in creating or changing the risks the Group faces in its
            activities. The explanation summarises the objectives and policies for holding or issuing
            financial instruments and similar contracts, and the strategies for achieving their objectives that
            have been followed during the year.
            The Company has taken advantage of the option under Financial Reporting Standard 13 –
            “Derivatives and Other Financial Instruments: Disclosures” to exclude short-term debtors and
            creditors, other than those relating to currency exposure, from the detailed disclosures.
            Interest Rate Profile
            The Group’s principle financial assets are its investment portfolios. The investment portfolios
            consist of equity investments, for which an interest rate profile is not relevant.
            Borrowings represent a Sterling loan at a variable interest rate.
            Currency Exposures
            The table below shows the Group’s currency exposures. Such exposures comprise the monetary
            assets, at book values, that are not traded in Sterling.
                                                                                             2002         2001
            Currency                                                                         £000         £000
            Euro                                                                              198          198
            Swiss franc                                                                       644          761
            U.S. Dollar                                                                       157
                                                                                        ––––––––––
                                                                                                           157
                                                                                                     ––––––––––
                                                                                              999        1,116
                                                                                        ––––––––––   ––––––––––

            Borrowing Facilities
            The company has a loan facility of £2,000,000 at 30 June 2002, the company had drawn down
            £1,200,000 of this facility.
            Fair values
            The fair value of the Investment Portfolio is determined by the prices available from the
            markets on which the instruments involved are traded. The differences between book value and
            market value are disclosed in Note 13 to these financial statements.




26
Summary of Results
                                                 Year           Year          Year          Year       6 mths
                                               Ended          Ended         Ended         Ended        Ended
                                            30th June      30th June     30th June     30th June    30th June
                                                 2002           2001          2000          1999         1998
                                                 £000           £000          £000          £000         £000
Consolidated Profit and Loss
Operating income
Dividends, interest and other income               686           763           768           662          306
Surplus on investments                              86           282           325            67           67
Operating expenses                                (745)         (689)         (701)         (637)        (281)
Interest payable                                   (79)         (105)         (104)          (74)         (50)
                                             ––––––––––    ––––––––––    ––––––––––    ––––––––––   ––––––––––
Group income before tax                             (52)         251           288            18           42
Taxation                                             (5)           (6)          (11)         260            31
                                             ––––––––––    ––––––––––    ––––––––––    ––––––––––   ––––––––––
Group income after tax                              (57)         245           277           278           73
Share of profits of associates                     108           803           345           139          112
Minorities                                           (7)           (3)           (1)          10            (2)
                                             ––––––––––    ––––––––––    ––––––––––    ––––––––––   ––––––––––
Earnings attributable to shareholders                44        1,045           621           427          183
Dividends                                         (205)         (307)         (281)         (255)        (128)
                                             ––––––––––    ––––––––––    ––––––––––    ––––––––––   ––––––––––
Transfer (from)/to reserves                       (161)          738           340           172           55
                                             ––––––––––    ––––––––––    ––––––––––    ––––––––––   ––––––––––

Consolidated Balance Sheet
Issued share capital                             1,281         1,277         1,276         1,276        1,276
Share premium and other reserves                 1,336         1,323         1,318         1,317        1,317
Profit and loss account                          6,948         7,109         6,371         6,031        5,859
                                             ––––––––––    ––––––––––    ––––––––––    ––––––––––   ––––––––––
Shareholders’ funds (all equity)                 9,565         9,709         8,965         8,624        8,452
Minority interests                                   63            56            53            52           62
                                             ––––––––––    ––––––––––    ––––––––––    ––––––––––   ––––––––––
                                                 9,628         9,765         9,018         8,676        8,514
                                             ––––––––––    ––––––––––    ––––––––––    ––––––––––   ––––––––––

Disposition of Capital
Fixed Assets                                     8,212         8,100         7,016         6,317        6,936
                                             ––––––––––    ––––––––––    ––––––––––    ––––––––––   ––––––––––

Current assets
Listed investments                              2,743          3,443         3,710         3,724        2,991
Unlisted investments and other current assets     230            200           201           276          228
Cash and deposits                                   26             32            53            95           30
                                            ––––––––––     ––––––––––    ––––––––––    ––––––––––   ––––––––––
                                                 2,999         3,675         3,964         4,095        3,249
                                             ––––––––––    ––––––––––    ––––––––––    ––––––––––   ––––––––––
Liabilities and deferred tax                    (1,583)       (2,010)       (1,962)       (1,736)      (1,671)
                                             ––––––––––    ––––––––––    ––––––––––    ––––––––––   ––––––––––
                                                 9,628         9,765         9,018         8,676        8,514
                                             ––––––––––    ––––––––––    ––––––––––    ––––––––––   ––––––––––

Net assets attributable to shareholders
 before tax on unrealised gains, taking
 investments at market value                     9,523        13,868        12,774         9,137       12,074

Net assets per share                             37.2p         54.3p         50.1p         35.8p        47.3p
Earnings per share                               0.17p         4.09p         2.43p         1.67p        0.72p
Dividend (net) per share                         0.80p         1.20p         1.10p         1.00p        0.50p




                                                                                                           27
London Finance & Investment Group P.L.C.


Market Value of General Portfolio at 30th June 2002
                                                   £000        %

Merrydown                                           668     15.87
UTi Worldwide                                       306      7.27
Unilever                                            299      7.10
Nestlé                                              229      5.44
Diageo                                              213      5.06
Barclays Bank                                       177      4.20
UBS                                                 171      4.06
The Shell Transport & Trading Company               149      3.54
Lloyds TSB                                          144      3.42
ING Groep                                           140      3.33
Cadbury Schweppes                                   138      3.28
HSBC Holding                                        136      3.23
AstraZeneca                                         136      3.23
BOC Group                                           122      2.90
Anglo American                                      122      2.90
Novartis                                            115      2.73
GlaxoSmithKline                                     113      2.68
J. Sainsbury                                        107      2.54
Roche Holdings                                       99      2.35
Prudential                                           90      2.14
Fortis                                               84      2.00
Credit Suisse Group                                  83      1.97
CGNU                                                 79      1.88
Boots Company                                        78      1.85
Land Securities                                      78      1.85
Smiths Group                                         72      1.71
Zurich Financial                                     62      1.47
                                           –––––––––––––   –––––––
                                                  4,210     100.0
                                           –––––––––––––   –––––––




28
Notice of Meeting
      NOTICE is hereby given that the ANNUAL GENERAL MEETING of London Finance &
      Investment Group P.L.C. will be held at the Honourable Artillery Company, Armoury House,
      City Road, London EC1 on Wednesday 2nd October 2002 at 10.00 p.m. for the following
      purposes:
      1.   To receive the directors’ report and accounts for the year ended 30th June 2002.
      2.   To declare a dividend
      3.   To re-elect Mr. J.M. Robotham a director.
      4.   To re-appoint the auditors Arthur Goddard & Co. and to authorise the Directors to fix their
           remuneration.
      Special Business
      5.   To consider and, if thought fit, pass the following Resolution which will be proposed as an
           Ordinary Resolution:
           THAT the authorised share capital of the Company be increased from £1,500,000 to
           £1,750,000 by the creation of 5,000,000 shares of 5p each.
      6.   To consider and, if thought fit, pass the following resolution which will be proposed as an
           ordinary resolution:
           “THAT the Board be and is hereby generally and unconditionally authorised to exercise all
           the powers of the Company to allot relevant securities (within the meaning of Section 80 of
           the Companies Act 1985) up to an aggregate nominal amount of £219,230 provided that this
           authority will expire on 1st October 2007, save that the Company may before such expiry
           make an offer or agreement which would or might require relevant securities to be allotted
           after such expiry and the Board may allot relevant securities in pursuance of such offer or
           agreement as if the authority conferred hereby had not expired.”
      7.   To consider and, if thought fit, pass the following resolution which will be proposed as a
           special resolution:
           “THAT
           (a) in accordance with Section 95(1) of the Companies Act 1985 the Directors be and are
               hereby given power to allot securities pursuant to the authority conferred by the
               Ordinary Resolution numbered 5 passed at the Annual General Meeting held on 2nd
               October 2001, as and when the same becomes effective as if sub-section (1) of Section
               89 of the Companies Act 1985 did not apply to any such allotment, provided that:
               (i)   the power hereby conferred shall be limited;
                     (aa) to the allotment of equity securities in connection with or pursuant to an offer
                          by way of rights to the holders of Shares of 5p each in the capital of the
                          Company and other persons entitled to participate therein in proportion (as
                          nearly as may be) to such holders' holdings of such shares (or, as appropriate,
                          to the numbers of such shares which such other persons are for those
                          purposes deemed to hold) subject only to such exclusions or other
                          arrangements as the Directors may feel necessary or expedient to deal with
                          fractional entitlements or legal or practical problems under the laws or the
                          requirements of any recognised regulatory body in any territory; and




                                                                                                       29
London Finance & Investment Group P.L.C.

                           (bb) to the allotment (otherwise than pursuant to sub-paragraph (i) (aa) of this
                                proviso) of equity securities up to an aggregate nominal amount of £64,038
                                representing 5 per cent. of the issued share capital:
                      (ii) the power hereby granted shall expire on the date of the next Annual General
                           Meeting of the Company after the passing of this Resolution or on 1st January
                           2004 if earlier:
                 (b) the said power shall allow and enable the Directors to make an offer or agreement
                     before the expiry of that power which would or might require equity securities to be
                     allotted after such expiry and the Directors may allot equity securities in pursuance of
                     such offer or agreement as if the said power had not expired:
                 (c) words and expressions defined in or for the purposes of Part IV of the Companies Act
                     1985 shall bear the same meaning herein”
                                                                                               By Order of the Board,
25 City Road,                                                                                     CITY GROUP P.L.C.
London EC1Y 1BQ.                                                                                          Secretaries
28th August 2002




Notes       A member entitled to attend and vote at the meeting may appoint one or more proxies to attend and, on
            a poll, to vote on his behalf.

            A proxy need not be a member of the company.

            A form of proxy is enclosed. To be valid it should be completed and returned so as to reach the registered
            office of the company not less than 48 hours before the time fixed for the meeting. Completion of a form
            of proxy does not preclude a member from subsequently attending and voting in person.

            The register of directors’ shareholdings will be available for inspection by members at the registered office
            of the company during usual business hours on any weekday (public holidays excepted), from the date of
            this notice until the date of the annual general meeting and at the place of the meeting, from 9.15 a.m. until
            the conclusion thereof.

Change of   Members are requested to advise the United Kingdom Registrars, C.I. Registrars Limited, or the South
Address     Registrars, Computershare Investor Services Limited of any change of address.




30
London Finance & Investment Group P.L.C.




                                           31
Perivan Financial Print 200088

								
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