LFI London Finance & Investment Group Plc

 
TIDMLFI 
 
4 November 2011 
 
                   London Finance & Investment Group P.L.C. 
 
                           ("LFIG" or 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 GBP2.625million (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 GBP 
27,000 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. 
 
Enquiries: 
 
London Finance & Investment Group P.L.C. 
 
Lloyd Marshall 
 
Tel: 020 7448 8950 
 
Beaumont Cornish Limited, Sponsor 
 
Roland Cornish 
 
Tel: 0207 628 3396 
 
 
 
END 
 

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