| Fri 4 Nov 2011, 13:00 | | LNF - London Finance & Investment Group P.L.C. - Proposed Disposal of |
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LNF
LOJM
LNF - London Finance & Investment Group P.L.C. - Proposed Disposal of
Investment Property
London Finance & Investment Group P.L.C.
(Incorporated in England - No. 201151)
Code : LNF ISSN: GB0002994001
("the Company")
Proposed Disposal of Investment Property
The Company is pleased to announce that it has agreed, subject to
Shareholder approval, to dispose of the Company`s property in Rutland
Gate, Knightsbridge, London (the `Property`) for a cash consideration
of GBP2.625 million (the "Disposal"). The purchaser, Rutland Property
Holdings Limited, and the Company have now exchanged contracts and
therefore the Company will proceed towards completion once Shareholder
approval has been obtained.
As the Disposal represents more than 25% of the market capitalisation
of the Company, the Company is required by the Listing Rules to seek
Shareholder approval of the Disposal as a class 1 transaction. Such
Shareholder approval will be sought at a General Meeting to be held
shortly; Notice of the General Meeting will be contained in a Circular
to Shareholders which is being drafted and will be mailed to
Shareholders once the Circular has been approved by the relevant
regulatory authorities.
Details of the Property
The Property was carried in the Company`s books on 30 June 2011 at
GBP367,000 but was valued in July 2011 at GBP2,150,000 on an open
market basis in accordance with valuation standards issued by the Royal
Institution of Chartered Surveyors. An updated Property Valuation
report will be included in the Circular.
The Property is leased to Marshall Monteagle PLC, a company controlled
by trusts associated with Mr. D.C. Marshall and Mr. J.M. Robotham,
Directors of the Company. The Property has been let on the basis that
the tenant meets all costs related to the Property and pays a rent
which up to 1 January 2009 was GBP27,000 p.a., from 1 January 2009 to
30 September 2011 was GBP40,000 p.a. and from 1 October 2011 has been
increased to GBP53,000. No costs relating to the Property such as
maintenance and repairs have been borne by the Company i.e. the rental
income is both the gross and net income from the Property. As a
consequence of the Disposal, rental income from the Property will
decline by GBP53,000 in the next 12 months. This would have been a
return of 2.5% based on the July 2011 valuation of the Property.
If the sale proceeds are not re-invested, and the bulk of the proceeds
are used to repay all of the Company`s borrowings, the Directors
estimate that the effect on earnings will be a reduction of
approximately GBP15,000 per annum assuming that interest earned on
surplus cash deposits is 1% and base rates remain at 0.5%. Each extra
1% that can be earned on the surplus cash deposits will increase after
tax earnings by approximately GBP3,000 per annum. If all the Disposal
proceeds are re-invested and achieve a similar yield (3.6% before tax)
to the Company`s existing General investment portfolio, earnings will
increase by approximately GBP23,000 per annum. The actual effect on
earnings will depend on the extent and speed with which sale proceeds
are re-invested.
Completion of the Disposal will provide the Company with:
- cash proceeds of approximately GBP2.35 million (net of
transaction costs and tax);
- a strengthened balance sheet reflecting the cash proceeds;
- reduced exposure to a single property which represented in
excess of one-fifth of the assets of the Company;
- an opportunity to redeploy capital in line with the
investment policy of the Company.
The Company will make a further announcement when the Circular has been
posted to Shareholders.
4 November 2011
Sasfin Capital
(a division of Sasfin Bank Limited)
Enquiries:
London Finance & Investment Group P.L.C.
Lloyd Marshall
Tel: 020 7448 8950
Beaumont Cornish Limited, Sponsor
Roland Cornish
Tel: 0207 628 3396
Date: 04/11/2011 13:00:01 Produced by the JSE SENS Department.
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