REG - LMS Capital PLC - 2023 Final Results
19/03/2024 07:00
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RNS Number : 3862H LMS Capital PLC 19 March 2024
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LEI: 2138004UJ1TW8UCELX08
19 March 2024
LMS CAPITAL PLC
Final Results for the Year Ended 31 December 2023
The Board of LMS Capital plc (the "Company") is pleased to announce the
Company's audited annual results for the year ended 31 December 2023.
Financial Summary
31 December 2023 31 December 2022
Net asset value £42.1m £46.5m
Cash available at year end £15.5m £17.9m
Portfolio losses (£1.4m) £-m
Net running costs £1.8m £1.7m
Net asset value per share (p) 52.2p 57.7p
Dividends paid per share (p) 0.925p 0.925p
Dividends declared/recommended by Board (p) 0.925p 0.925p
2023 key points
Net Asset Value
· The net asset value ("NAV") at 31 December 2023 was £42.1 million,
52.2 pence per share (31 December 2022: £46.5 million, 57.7 pence per share).
· Adjusting for the impact of dividends to shareholders, the NAV over
the year decreased by a net £3.7 million, or 7.9%.
· The portfolio net decrease comprises:
o Unrealised foreign exchange losses £1.2 million;
o Unrealised loss on revaluation of Brockton Fund 1 £3.5 million; partly
offset by
o Realised gain on sale of Medhost £1.4 million;
o Accrued interest income on Dacian £1.4 million; and
o Net unrealised gains on other assets £0.5 million.
· We reported good progress on two fronts in December:
o Our real estate activity in the retirement living sector has enabled us to
make our first investment - Castle View Retirement Village, Windsor ("Castle
View") - which we see as a foundation for further investment in the sector;
o The sale of Medhost represents a material realisation from our mature
asset portfolio, generating $7.0 million cash in 2023, and a deferred payment
of $1.7 million with a coupon of 11.25% due in December 2024. This produced a
gain on the sale of £1.4 million which after accounting for foreign exchange
movements resulted in a net gain of £1.1 million
· Portfolio performance:
o Positives in the portfolio were the Medhost realisation and an increase in
the Elateral value;
o Dacian experienced production difficulties during the year which meant
performance fell short of its budget, but it continued to service its third
party loan note obligations, and the Board expects the debt obligations to its
investors, including LMS, to be met.
o Overall performance was impacted materially by the £3.5 million reduction
in value of the Company's holding in Brockton Fund 1. The fund's remaining
investment is a debt participation in a "Super Prime" residential development
in Mayfair, London. The scheme is complete and has achieved sales but in
January 2024 the senior lenders to the scheme appointed receivers. Brockton
continue to expect that the scheme will produce a return for Brockton Fund 1
investors, including LMS and we will keep the position under review.
Dividends
· A final dividend of 0.625 pence per share in respect of the year
ending 31 December 2022 was paid in June 2023, and an interim dividend of 0.3
pence per share for the half year ending 30 June 2023 was paid in September
2023. A final dividend for the year ending 31 December 2023 of 0.625 pence per
share is recommended by the Board and will be proposed for approval by
shareholders at the Annual General Meeting.
Net Running Costs
· Net Running costs, including those incurred by subsidiaries, were
£1.8 million (2022: £1.7 million) and there were an additional £1.0 million
(2022: £0.4 million) of investment related costs, including £0.6 million
acquisition costs relating to Castle View.
Cash balances
· Group cash balances at the year-end, including amounts held by
subsidiaries, were £15.5 million, representing 19.2 pence per share and 36.7%
of the NAV (2022: £17.9 million and 22.2 pence per share and 38.5% of the
NAV). The Company has no external debt.
Robert Rayne, Chairman, commented:
"The company had a strong end to the year with the realisation of Medhost and
the completion of our first investment in the retirement living sector,
although the write down on Brockton is disappointing.
While we continue to nurture and support all of our investments we see our
real estate activities, particularly in retirement living, as being a key area
of focus over the next period in establishing a portfolio which can deliver
our long-term goal. In particular we will be focussed on identifying
additional investment opportunities and funding partners with whom to develop
our investment platform in the retirement living sector. I look forward to
reporting further progress across our portfolio during 2024."
For further information please contact:
LMS Capital plc
Nick Friedlos, Managing Director
0207 935 3555
Chairman and Managing Director's Report
We are pleased to report our results for the year ended 31 December 2023.
· The 31 December 2023 NAV is £42.1 million and compares with
NAV at the prior year end, 31 December 2022 of £46.5 million. Adjusting for
£0.7 million dividends paid during the year, the NAV has decreased by a net
£3.7 million, 7.9%, during the year.
· There was good progress on two fronts in December:
o Our real estate activity in the retirement living sector has enabled us
to make our first investment - Castle View Retirement Village, Windsor
("Castle View") - which we see as a foundation for further investment in the
sector;
o The sale of Medhost represents a material realisation from our mature
asset portfolio, generating $7.0 million cash in 2023, and a deferred payment
of $1.7 million with a coupon of 11.25% due in December 2024. After accounting
for foreign exchange differences, this produces a net gain of £1.1 million.
· A significant contributor to the net decrease was the £3.5
million reduction in valuation of the Company's interest in Brockton Fund 1,
of which the only remaining asset is loan participation in a high-end
residential development in Mayfair, London. This reduction reflects the risks
for the development in the current market and, following the news on 26
January 2024 that the senior lender to the scheme had appointed a receiver, an
allowance for the costs of the receivership process and potential disruption
to sales. Brockton continues to expect that the scheme will generate a return
for LMS and we will keep the situation under review.
· Notwithstanding the £6.1 million investment in Castle View
and with the Medhost proceeds, cash at the year end was £15.5 million. (2022:
£17.9 Million).
· Dividend - a final dividend of 0.625 pence per share for the
year ended 31 December 2023 is recommended by the Board.
Real estate - retirement living: NAV £6.1 million (7.6 pence per share)
Our real estate activities in 2022 and 2023 have been focussed on identifying
opportunities to invest in specialist use real estate in the retirement living
sector. During this time, we have developed our knowledge and understanding
and evaluated potential acquisition opportunities.
The sector offers the opportunity for growth and allows us to deploy our real
estate investment expertise.
· Underlying demand is driven by demographics in the UK. The
number of 75+ year old households is expected to increase by 77% in the 25
years from 2018 to 2043;
· The older population owns in excess of 40% of housing equity
which can be released to finance retirement options and also free up stock for
the wider family housing market;
· The market is undersupplied, with relatively few developers
or operators of scale and an increasing interest from institutional capital.
The investment in Castle View shortly before the end of the year, represents
the first step in developing an investment platform focussed on retirement
living.
There are a variety of business models in the sector. Our goal is initially to
establish an investment platform based around Integrated Retirement
Communities ("IRC"), in which residents live independently in their own
self-contained home, with access to communal facilities and amenities and the
availability of optional support and care services, if needed.
Consideration will be given both to investment in development sites as well as
in established businesses.
The business is capital intensive but has the capability to generate long-term
income streams for investors. Our objective during 2024 is to identify further
investment opportunities alongside funding partners, to develop the investment
platform.
Mature portfolio -NAV £11.3 million (14.0 pence per share)
Medhost
We had positive news on progress in the realisation of the mature portfolio,
with the sale in December 2023, of Medhost, in which LMS had a co investment
of 9.4%. The sale produced total proceeds for LMS of $8.7 million (£6.8
million) of which $7.0 million (£5.5 million) was received in cash before the
year end and a deferred payment of $1.7 million (£1.3 million) with a coupon
of 11.25% is due in December 2024. After accounting for foreign exchange
differences, this produces a net gain of £1.1 million.
This was a minority investment, in which LMS did not have a board seat, but
LMS nonetheless maintained a dialogue with the Medhost management and the lead
fund manager encouraging the push towards an exit and so it is gratifying that
this has now been achieved.
Other mature assets
Following the Medhost sale and the reduction in valuation of Brockton, the
mature portfolio is reduced to £11.3 million, all of which originates from
the Company's strategy pre-2012. The portfolio largely comprises positions
managed by third-party managers where the Company is not able to control or
direct decision making. 92.9% of the mature portfolio is held in four
investments.
The Board balances the goals of optimising realisation value of these
investments and achieving liquidity within an acceptable time frame. The Board
keeps under review progress by the third-party managers towards realisation
and monitors opportunities to accelerate realisation of the Company's holdings
in the secondary markets.
Energy - Dacian: NAV £11.0 million (13.6 pence per share)
Although underwritten in August 2020, completion of this investment only
occurred, following local Romanian regulatory approvals, in November 2021. The
year just ended therefore represents the second full year of operation.
The business was financed at the outset with some $14.0 million of seven-year
high-coupon loan notes from investors (of which LMS was the lead investor,
investing $9.1 million) and an additional $6.0 million of third-party
three-year loan notes provided via the vendor and which are required to be
serviced in preference to the investor loan notes.
The investor loan notes also carried with them, for nominal consideration, 50%
of the equity of the business. Dividends can only be paid on the shares once
the investor loan notes and accrued interest have been paid in full.
The business was budgeted to generate sufficient cash in 2023 to meet its
service obligations on the third-party loan notes and also to start servicing
the investor notes. Actual performance in 2023 has been below budget due to a
significant engineering problem which disrupted gas production in Q2 and Q3
leading to lost revenue. Unaudited revenue, stated net of applicable royalties
and taxes, for 2023 was $19.1 million (2022: $21.6 million) and EBITDA was
$2.7 million (2022: $4.5 million).
The business has continued to service the third-party loan notes - which
should be fully repaid by November 2024, but has not generated cash this year
to service the investor notes.
Notwithstanding the difficulties of 2023, the Board expects the loan notes to
be serviced in full. At present no value is given to the equity in the
accounts.
FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2023
Net Asset Value ("NAV") overview
The NAV of the Company at 31 December 2023 was £42.1million, 52.2 pence per
share (31 December 2022: £46.5 million, 57.7 pence per share). The balance
sheet at the year end can be summarised as follows:
31 December
2023 2022
£'m £'m
Mature assets 11.3 20.8
Real estate - Retirement Living 6.1 -
Energy - Dacian 11.0 10.1
Debtor - Medhost deferred consideration 1.7 -
Cash 15.5 17.9
Other net liabilities / provisions (3.5) (2.3)
42.1 46.5
This represents a decrease of £4.4 million on the prior year and comprises:
· dividends paid of £0.7 million;
· £3.5 million decrease in valuation of Brockton Fund 1
· net increase on other portfolio investments, including
realised and unrealised amounts, of £0.7 million;
· increase of £1.4 million being accrued interest on Dacian;
· other net reductions of £2.3 million, comprising:
o £0.7 million of interest income;
o £1.8 million for running costs;
o £0.4 million of investment costs principally associated with developing
real estate deal opportunities;
o £0.6 million of one off transaction costs; and
o Taxation of £0.2 million, foreign exchange losses on non-portfolio
assets of £0.1 million and other net income of £0.1 million.
After adjusting for the 0.925 pence per share distributed as dividends during
2023, the NAV has shown a decrease on the year of 7.9%.
Mature Assets
This portfolio showed overall a net reduction in the year of £2.8 million,
made up of
· £1.2 million unrealised foreign exchange losses on US dollar
denominated investments, reflecting appreciation of sterling against the US
dollar during the year of 5.2%;
· £1.4 million realised gain on the sale of Medhost;
· £3.5 million unrealised loss on Brockton Fund 1 investments;
and
· £0.5 million unrealised gains on other mature assets.
Medhost: Realised gain £1.4 million - As discussed above, Medhost was
realised shortly before the year end. Cash consideration of $7.0 million was
received in December and a further $1.7 million is payable under a loan note
due December 2024.
Brockton Fund 1: Unrealised loss £3.5 million - Brockton Fund 1's remaining
investment is its participation in a "Super Prime" Mayfair residential
development. In reporting the Q3 NAV estimate, we reduced the valuation of our
share of the fund by £1.1 million to reflect the risk of slower sales and
higher interest costs in current market conditions. Following the decision in
January 2024 of the senior lender to the development to appoint a receiver, we
have made a further £2.4 million reduction in carrying value as at 31
December 2023.
· The 32 apartments in the scheme were completed in May 2023
and whilst prices on apartments sold to date have been good, the pace of sale
has been slower than anticipated;
· Brockton's current expectation is that all parties involved
will continue to pursue an orderly sale of the remaining apartments and that
there will ultimately be proceeds available to fund investors. We have taken
the view that at this stage, given the difficulty in estimating the likely
outcome, that it is prudent to reduce the valuation to allow for the costs of
the receivership process and any potential disruption to the sale process;
· We will keep the position under review during 2024.
Other Mature assets portfolio: Unrealised gains £0.5 million
Net underlying gains were £0.5 million, the principal elements of which were:
· Elateral - Unrealised gain £1.1 million, reflecting the
improved financial performance, and progress in sales and marketing strategy;
· GW 2001 Fund - Unrealised gain £0.2 million, reflecting
market movements in the fund's portfolio of micro-cap US companies;
· Opus Capital Venture Partners - Unrealised loss £0.9
million, reflecting reductions in the quoted market comparable companies for
the fund's two principal remaining investments; and
· Other investments - Unrealised net gains £0.1 million.
Dacian
Interest for the year of £1.4 million is payable on the Company's loan
investment in Dacian and has been accrued.
In 2021, LMS led the funding group which, including $9.1 million from LMS
itself, invested in Dacian, a Romanian oil and gas production company newly
formed to acquire and operate mature onshore energy production assets.
LMS's $9.1 million is structured principally as senior secured loan notes,
which are entitled to interest of 14% per annum gross before a withholding tax
of 10%. LMS's share of equity is 32%. The balance of the equity is held by
LMS's co-investors, 18%, and management 50%. Distributions to equity can only
occur once the senior loan notes and accrued coupon are fully repaid.
Interest accrued from the time of the investment to date on the loan amounts
to £3.8 million, against which £0.4 million of withholding tax has been
recognised in the accounts.
Running Costs
Running costs, net of Dacian fee income, for the year were £1.8 million.
Steps have been taken to make savings across a number of back office functions
which are budgeted to result in reductions in 2024.
Investment Costs
Investment costs of £1.0 million include the cost of the advisory group we
have assembled to help develop our presence in the retirement living sector,
and professional costs associated with evaluating and investigating potential
site and business acquisitions. The most significant element of cost in 2023
being the acquisition costs of Castle View.
Real estate - Castle View: 31 December 2023 NAV £6.1 million
The Company, through its wholly owned subsidiaries, completed its investment
in Castle View on 20 December 2023. The investment was structured as an
investment in the group of companies ("Castle View Group") which own the
asset. Castle View comprises a development of 64 self-contained one and two
bedroom apartments close to Windsor town centre, completed in 2018. Communal
facilities include 24 hour reception, library, lounges, roof terrace, bars,
private dining room and a restaurant facility.
Residents acquire individual apartments on 250 year leases and pay an annual
service charge, which covers the day to day running of the scheme, plus a
deferred fee on resale of an apartment. Of the 64 apartments, 49 have been
sold and 15 remain to be sold.
The value of the Castle View Group, on a debt free and cash free basis was
£11.9 million. LMS invested £6.1 million and the balance of the price was
funded by a loan of £5.8 million from Terido (part of Octopus Group). Castle
View Group owns the Castle View freehold, including the unsold apartments,
employs the team responsible for running the village and holds the right to
receive the service charge fees and deferred fees in the future. The loan is
repayable over three years from the proceeds of sale of the remaining 15
unsold apartments.
Castle View generates investment returns in two ways:
Sale of 15 unsold apartments
· Construction was completed at the end of October 2018 and in
the year from November 2018 to November 2019, 19 apartments were sold. The
pandemic and lockdowns in 2020 and 2021 impacted the rate of sales, but rates
have increased again in 2022 and 2023;
· Sales rates for new developments in the sector are recognised
to be slower than rates for regular market new build apartments and houses. We
have taken a conservative view of sales rates for the remaining apartments in
evaluating the investment but expect to maintain or improve upon the historic
rates;
· Under the current financing structure of Castle View proceeds
from apartment sales will first be used to pay down the Terido loan, as noted
above.
Deferred fees on resale of apartments
· The deferred fees are payable to Castle View, by the vendor,
out of the proceeds of resale as and when an apartment is resold. The level of
deferred fee depends on length of ownership starting at 4% and increasing to a
maximum of 20% from the beginning of the fifth year of ownership. The deferred
fee is designed to recover the costs of constructing the communal facilities,
to cover their ongoing maintenance and updating and to provide a return on the
capital invested;
· The timing and amount of the investment return from the
deferred fees will depend on the actual timing and value of resales and will
inevitably be uneven year to year. The average period of ownership in
independent retirement communities such as Castle View is eight years. Once
village occupancy is stabilised, meaning all units are sold and the pattern of
occupancy established, on average, approximately 12.5% of the scheme would be
expected to be resold each year. Allowing for the time for the village to
achieve stabilised occupancy the base case investment appraisal model shows
overall income returns in excess of 11%.
Liquidity - Cash less other net liabilities
Cash
Cash balances in the Company and its subsidiaries at 31 December 2023 were
£15.5 million (31 December 2022: £17.9 million). Net outflows were £2.4
million (31 December 2022: £2.2 million).
Net liabilities
Net liabilities in the Company and its subsidiaries of £3.5 million (31
December 2022: £2.3 million) consist primarily of deferred consideration
payable on the Castle View acquisition, accruals for income taxes, historic
carried interest liabilities for one remaining asset and other sundry costs.
DIVIDEND POLICY
The Company paid £0.7 million in dividends during the year comprising a final
dividend for the year ended 31 December 2022 of 0.625 pence per share, paid on
23 June 2023 and an interim dividend for the year ended 31 December 2023 of
0.3 pence per share paid on 12 September 2023.
A final dividend of 0.625 pence per share for the year ended 31 December 2023
is recommended by the Board. Subject to approval by shareholders at the AGM in
May 2024, the dividend will be paid to shareholders in early June 2024.
The dividend policy laid out by the Board in 2020 was to pay a dividend in
respect of each financial year equal to approximately 1.5% of the closing NAV
for that year. The proposed dividend for 2023 will amount to approximately
1.8% of closing NAV. Having regard to the Company's cash position and, whilst
the dividends currently exceed the net cash income, the Board is confident of
the Company's ability to generate future annual income and has therefore
recommended to continue the dividend at the current amount.
The Board's ambition is to increase the level of dividend and will keep the
current policy under review. The actual level of dividend each year will take
account of market conditions generally, the Company's financial position and
its distributable reserves.
LOOKING FORWARD
The Company's objective is the preservation and creation of wealth for its
shareholders over the longer term. Its target is to deliver returns, net of
costs, of between 12% and 15% over the longer period.
When the Company returned to self-management in 2020, the Board laid out a
strategy for the deployment of capital, making new investments in areas where
the Company has clear competitive advantage through its knowledge and
experience of particular sectors and its access to teams and opportunities
within those sectors. The principal areas of focus have been real estate and
energy.
We see our real estate activities, particularly in retirement living as being
a key area of focus over the next period in establishing a portfolio which can
deliver our long-term goal. In particular we will be focussed on identifying
additional investment opportunities and funding partners with whom to develop
our investment platform in the retirement living sector.
We will continue to nurture and support our other investments.
We would like to express our appreciation for the support from our team and
from the network of people with whom we work on a regular basis. We would also
like to express our appreciation for the continued support of our
shareholders. We look forward to reporting progress to you during 2024.
Robert Rayne
Chairman
Nicholas Friedlos
Managing Director
PORTFOLIO MANAGEMENT REVIEW
Market background
Sterling had its best year against the US dollar since 2017. Having begun the
year at $1.21, the pound hit 15-month highs in July of more than $1.31 as
investors bet that UK interest rates could rise as high as 6.5%.
But sterling then fell back through the autumn, as UK inflation eased and the
City began to conclude that monetary policy would not need to be quite so
restrictive.
With inflation now down to 4.0% (CPI December 2023), and UK interest rates
probably at their peak at 5.25%, the pound ended the year at about $1.27.
Oil has had a volatile year, with prices both pushed down by fears of a global
downturn and lifted by concerns that geopolitical tensions would hurt supply.
The price of crude ended the year down by about 10%, despite the Opec cartel's
best efforts to prop up prices by cutting production. Having started January
at $86 a barrel, Brent crude finished the year about 10% lower, at $77.50.
Domestically, the outlook for 2024 looks more positive. Interest rates are
expected to begin to be cut and inflation continues to fall.
The consequences of recent developments and the impact of macroeconomic and
domestic issues will continue to be monitored closely by the Board.
Performance review
The movement in NAV during the year was as follows: 2023 2022
£'000 £'000
Opening NAV 46,541 49,109
Net realised and unrealised reductions on investments (2,761) (1,305)
Investment interest income (Dacian) 1,374 1,274
Advisory fee income 160 165
Dividends (747) (747)
Overheads and other net movements (2,426) (1,955)
Closing NAV 42,141 46,541
Cash realisations and new and follow-on investments from the portfolio were as
follows:
Year ended
31 December
2023 2022
£'000 £'000
Proceeds from the sale of investments 5,770 2
Proceeds from redemption of convertible debt 88 -
Proceeds from redemption of preference shares - 336
Distributions from funds and loan repayments 62 97
Total - gross cash realisations 5,920 435
New and follow-on investments - (428)
Fund calls - (41)
Total - net 5,920 (34)
Realisations of £5.9 million in 2023 include:
· cash proceeds of £5.5 million from the sale of Medhost;
· Proceeds from the sale of ICU of £0.2 million: and
· Other realisations of £0.2 million.
Below is a summary of the investment portfolio of the Company and its
subsidiaries, which reflects all investments held by the Group:
Year ended 31 December
2023 2022
Mature investment portfolio GBP denominated USD denominated Total GBP denominated USD denominated Total
£'000 £'000 £'000 £'000 £'000 £'000
Quoted 107 38 145 121 39 160
Unquoted 1,680 37 1,717 681 5,945 6,626
Funds 3,139 6,330 9,469 6,676 7,357 14,033
4,926 6,405 11,331 7,478 13,341 20,819
Other investments
Castle View 6,130 - 6,130 - - -
Dacian - 10.989 10,989 - 10,145 10,145
6,130 10,989 17,119 - 10,145 10,145
Total investments 11,056 17,394 28,450 7,478 23,486 30,964
Basis of valuation
Quoted investments
Quoted investments for which an active market exists are valued at the bid
price at the reporting date.
Unquoted direct investments
Unquoted direct investments for which there is no active market are valued
using the most appropriate valuation technique with regard to the stage and
nature of the investment. Valuation methods that may be used include:
· investments in an established business are valued using
revenue or earnings multiples depending on the stage of development of the
business and the extent to which it is generating sustainable revenue or
earnings;
· investments in an established business which is generating
sustainable revenue or earnings but for which other valuation methods are not
appropriate are valued by calculating the discounted cash flow of future cash
flows;
· investments in debt instruments or loan notes are determined
on a standalone basis, with the initial investment recorded at the price of
the transaction and subsequent adjustments to the valuation are considered for
changes in credit risk or market rates; and
· convertible instruments are valued by disaggregating the
convertible feature from the debt instrument and valuing it using a
Black-Scholes model.
Funds
Investments in managed funds are valued at fair value. The general partners of
the funds will provide periodic valuations on a fair value basis, the latest
available of which the Company will adopt provided it is satisfied that the
valuation methods used by the funds are not materially different from the
Company's valuation methods. Adjustments will be made to the fund valuation
where the Company believes there is evidence available for an alternative
valuation.
Performance of the investment portfolio
The return on investments for the year ended 31 December 2023 was as follows:
Year ended 31 December
2023 2022
Realised gains/ (losses) Unrealised gains/ (losses) Realised gains/ (losses) Unrealised gains/ (losses)
Total Total
Asset type £'000 £'000 £'000 £'000 £'000 £'000
Quoted (10) - (10) (1) (220) (221)
Unquoted 1,498 366 1,864 24 (1,285) (1,261)
Funds (9) (4,509) (4,518) - 108 108
1,479 (4,143) (2,664) 23 (1,397) (1,374)
(Charge)/credit for incentive plans (100) 69
(2,764) (1,305)
Operating and similar (loss)/income of subsidiaries (44,500) 1,081
(47,264) (224)
The Company historically operated carried interest arrangements in line with
normal practice in the private equity industry. These arrangements have been
in run-off since 2012 and only one investment, Medhost, remains subject to the
arrangements. Following the sale of Medhost a payment will be due based on the
cash consideration received, and a further payment will be due following
receipt of the final part of the proceeds in December 2024.The credit for
incentive plans for the Company is £3,000 and for subsidiaries a charge of
£103,000 for carried interest and other incentives relating to historic
arrangements. The charge for carried interest incentive plan is included in
the net movement on investments in the Income Statement.
Approximately 61% of the portfolio at 31 December 2023 is denominated in US
dollars (31 December 2022: 76%) and the above table includes the impact of
currency movements. In the year ended 31 December 2023, the strengthening of
sterling against the US dollar over the year as a whole resulted in an
unrealised foreign currency loss of £1.14 million (2022: unrealised gain of
£2.74 million). As a common practice in private equity investment, it is the
Board's current policy not to hedge the Company's underlying non-sterling
investments.
Quoted investments
31 December
2023 2022
Company Sector £'000 £'000
Tialis Essential IT plc UK technology 107 121
Arsenal Digital Holdings Inc US energy 10 13
Others - 28 26
145 160
The net gains and losses on the quoted portfolio arose as follows:
Year ended 31 December
Gains/(losses), net 2023 2022
£'000 £'000
Realised
Weatherford International Inc (8) -
Evolving Systems Inc (2) -
Tialis Essential IT plc - (1)
(10) (1)
Unrealised
Tialis Essential IT plc (13) (94)
Arsenal Digital Holdings Inc (4) (135)
Other quoted holdings 17 (2)
Unrealised foreign currency gains / (losses) - 11
- (220)
Total net losses (10) (221)
Unquoted investments
31 December
2023 2022
Company Sector £'000 £'000
Dacian EU energy 10,989 10,145
Castle View UK retirement living 6,130 -
Medhost Inc US technology - 5,673
Elateral UK technology 1,680 599
ICU Eyewear US consumer - 232
Tialis loan notes UK technology - 82
Cresco US consumer 37 40
18,836 16,771
The net gains and losses on the unquoted portfolio arose as follows:
Year ended 31 December
2023 2022
Gains/(losses), net £'000 £'000
Realised
Medhost Inc 1,432 24
Updata 86 -
ICU Eyewear 62 -
1,580 24
Unrealised
Tialis loan notes 6 (25)
Elateral 1,081 (645)
Medhost Inc - (691)
ICU Eyewear - (1,778)
Unrealised foreign currency (losses)/gains (803) 1,854
284 (1,285)
Total net gains/(losses) 1,864 (1,261)
Valuations are sensitive to changes in the following two inputs:
· the operating performance of the individual businesses within
the portfolio; and
· changes in the revenue and profitability multiples and
transaction prices of comparable businesses, which are used in the underlying
calculations.
Fund interests
31 December
2023 2022
General partner Sector £'000 £'000
Brockton Capital Fund 1 UK real estate 2,526 6,036
Opus Capital Venture Partners US venture capital 4,142 5,275
Weber Capital Partners US micro-cap quoted stocks 2,180 2,046
EMAC ILF EU 330 341
Simmons UK 283 262
Eden Ventures UK venture capital - 37
Other interests - 8 36
9,469 14,033
The net gains on the Company's fund portfolio for the year ended 31 December
2023 were as follows:
Year ended 31 December
Gains/(losses), net 2023 2022
£'000 £'000
Realised
San Francisco Equity Partners (9) -
(9) -
Unrealised
Opus Capital Venture Partners (896) 755
Brockton Capital Fund I (3,510) 458
Primus Capital Fund V (3) (7)
San Francisco Equity Partners - (103)
Simmons Parallel Energy 27 (144)
EMAC Illyrian Land Fund II (5) (419)
Eden Ventures (5) (457)
Weber Capital Partners Fund 1 222 (855)
Unrealised foreign currency (losses)/gains (339) 880
(4,509) 108
Total net gains (4,518) 108
Costs
Running costs for the year were £1.8 million (2022: £1.7 million) and
investment related costs being support costs for real estate and co-investment
activities, were £1.0 million (2022: £0.4 million) which includes £0.6
million of acquisition costs in relation to the Castle View investment.
Taxation
The Group tax provision for the year, all of which arose in the subsidiaries,
is £0.2 million (2022: £0.4 million). This includes £0.2 million of
withholding tax on our foreign sourced income.
Financial Resources and Commitments
At 31 December 2023 cash holdings, including cash in subsidiaries, were £15.5
million (31 December 2022: £17.9 million) and neither the Company nor any of
its subsidiaries had any external debt in either 2023 or 2022.
At 31 December 2023, subsidiary companies had commitments of £2.7 million (31
December 2022: £2.7 million) to meet outstanding capital calls from fund
interests.
LMS CAPITAL PLC
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with UK adopted international accounting
standards and applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors are required to prepare the
Financial Statements in accordance with UK adopted international accounting
standards. Under company law the Directors must not approve the Financial
Statements unless they are satisfied that they give a true and fair view of
the state of affairs of the Company and of the profit or loss of the Company
for that period.
In preparing these Financial Statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and accounting estimates that are reasonable
and prudent;
· state whether they have been prepared in accordance with UK
adopted international accounting standards, subject to any material departures
disclosed and explained in the Financial Statements;
· prepare the Financial Statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business; and
· prepare a Directors' Report, a Strategic Report and
Directors' Remuneration Report which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the Financial Statements comply with the Companies
Act 2006.
They are also responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of fraud and
other irregularities. The Directors have ensured that the Annual Report and
Accounts, taken as a whole, are fair, balanced, and understandable and
provides the information necessary for shareholders to assess the position and
performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the Annual Report and the Financial
Statements are made available on a website. Financial Statements are
published on the Company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company's website is the responsibility of
the Directors. The Directors' responsibility also extends to the ongoing
integrity of the Financial Statements contained therein.
Directors' responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
· The Financial Statements have been prepared in accordance
with the applicable set of accounting standards, give a true and fair view of
the assets, liabilities, financial position and profit and loss of the
Company.
· The Annual Report includes a fair review of the development
and performance of the business and the financial position of the Company,
together with a description of the principal risks and uncertainties that they
face.
For and on behalf of the Board.
Robert Rayne
Chairman
Company Income Statement
For the year ended 31 December 2023
Year ended 31 December
2023 2022
Notes £'000 £'000
Net loss on investments 2 (47,264) (224)
Interest income 3 608 189
Other income 120 107
Dividend income 2 45,000 -
Total gain on investments (1,536) 72
Operating expenses 4 (2,196) (1,946)
Loss before tax (3,732) (1,874)
Taxation 7 - -
Loss for the year (3,732) (1,874)
Attributable to:
Equity shareholders (3,732) (1,874)
Loss per ordinary share - basic 8 (4.6)p (2.3)p
Loss per ordinary share - diluted 8 (4.6)p (2.3)p
All activities of the Company are classed as continuing.
Company Statement of Other Comprehensive Income
For the year ended 31 December 2023
Year ended 31 December
2023 2022
£'000 £'000
Loss for the year (3,732) (1,874)
Total comprehensive loss for the year (3,732) (1,874)
Attributable to:
Equity shareholders (3,732) (1,874)
Company Statement of Financial Position
As at 31 December 2023
31 December
2023 2022
Notes £'000 £'000
Assets
Non-current assets
Right-of-use assets 18 42 70
Investments 10 20,854 68,207
Amounts receivable from subsidiaries 13 15,014 5,158
Total non-current assets 35,910 73,435
Current assets
Operating and other receivables 11 135 71
Cash 12 9,027 14,542
Total current assets 9,162 14,613
Total assets 45,072 88,048
Liabilities
Current liabilities
Operating and other payables 14 (422) (428)
Amounts payable to subsidiaries 15 (2,493) (41,032)
Total current liabilities (2,915) (41,460)
Non-current liabilities
Lease liabilities 14 (16) (47)
Total non-current liabilities (16) (47)
Total liabilities (2,931) (41,507)
Net assets 42,141 46,541
Equity
Share capital 16 8,073 8,073
Share premium 508 508
Capital redemption reserve 24,949 24,949
Share-based equity 17 207 128
Retained earnings 8,404 12,883
Total equity shareholders' funds 42,141 46,541
Net asset value per ordinary share 24 52.20p 57.65p
Company Statement of Changes in Equity
For the year ended 31 December 2023
Capital Share-
Share Share redemption based Retained Total
capital premium reserve equity earnings equity
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2022 8,073 508 24,949 75 15,504 49,109
Comprehensive income for the year
Loss for the year - - - - (1,874) (1,874)
Equity after total comprehensive loss for the year 8,073 508 24,949 75 13,630 47,235
Contributions by and distributions to shareholders
Share-based payments - - - 53 - 53
Dividends - - - - (747) (747)
As at 31 December 2022 8,073 508 24,949 128 12,883 46,541
Comprehensive income for the year
Loss for the year - - - - (3,732) (3,732)
Equity after total comprehensive income for the year 8,073 508 24,949 128 9,151 42,809
Contributions by and distributions to shareholders
Share-based payments - - - 79 - 79
Dividends - - - - (747) (747)
As at 31 December 2023 8,073 508 24,949 207 8,404 42,141
Company Cash Flow Statement
For the year ended 31 December 2023
Year ended 31 December
2023 2022
Notes £'000 £'000
Cash flows from operating activities
Loss before tax (3,732) (1,874)
Adjustments for non-cash income and expense:
Equity settled share-based payments 17 79 53
Depreciation on right-of-use assets 18 28 27
Interest expense on lease 18 4 6
Losses on investments 2 47,264 224
Interest income 3 (608) (189)
Other income (120) (107)
Dividend income 2 (45,000) -
Adjustments to incentives plans 2 3 30
Exchange losses/(gains) on cash balances 17 (71)
(2,065) (1,901)
Change in operating assets and liabilities
(Increase)/decrease in operating and other receivables (53) 16
(Increase)/decrease in operating and other payables (8) 34
(Increase)/decrease in amounts receivable from subsidiaries (9,856) 33
Increase in amounts payable to subsidiaries 6,460 2,292
Net cash (used in)/from operating activities (5,522) 474
Cash flows from investing activities
Interest received 3 598 152
Other income received 120 107
Proceeds from sale of investments 86 -
Net cash from investing activities 804 259
Cash flows from financing activities
Dividends paid 9 (747) (747)
Repayment of principal lease liabilities 18 (29) (27)
Repayment of lease interest 18 (4) (6)
Net cash used in financing activities (780) (780)
Net decrease in cash (5,498) (47)
Exchange (losses)/gains on cash balances (17) 71
Cash at the beginning of the year 12 14,542 14,518
Cash at the end of the year 9,027 14,542
Notes to the Financial Statements
1. Material accounting policies
Reporting entity
LMS Capital plc ("the Company") is domiciled in the United Kingdom. These
Financial Statements are presented in pounds sterling because that is the
currency of the principal economic environment of the Company's operations.
The Company was formed on 17 March 2006 and commenced operations on 9 June
2006 when it received the demerged investment division of London Merchant
Securities plc.
Basis of preparation
These Financial Statements for the year ended 31 December 2023 have been
prepared in accordance with UK adopted International Accounting Standards.
LMS Capital plc adopted an amendment to IFRS 10 with effect from 11 January
2016, which exempts investment entities from presenting consolidated financial
statements. As a result, the Company is not required to produce consolidated
accounts and only presents the results of the Company.
The Financial Statements have been prepared on the historical cost basis
except for investments which are measured at fair value, with changes in fair
value recognised in the Income Statement.
The Company's business activities and financial position are set out in the
Strategic Report on pages 11 to 18 and in the Portfolio Management Review on
pages 19 to 23. In addition, note 19 to the financial information includes a
summary of the Company's financial risk management processes, details of its
financial instruments and its exposure to credit risk and liquidity risk.
Taking account of the financial resources available to it, the Directors
believe that the Company is well placed to manage its business risks
successfully. After making enquiries, the Directors have a reasonable
expectation that the Company has adequate resources for the foreseeable
future.
The Financial Statements are prepared on a going concern basis and the
Directors considered this and concluded that the use of the going concern
basis continued to be appropriate. The Company's business activities, together
with the factors likely to affect its future development, performance and
financial position, are set out in the Strategic Report on pages 11 to 18 and
the Portfolio Management Review on pages 19 to 23. The Directors have carried
out a robust assessment of the emerging and principal risks and concluded that
they have a reasonable expectation that the Company will continue in operation
and meet its liabilities as they fall due over a three-year period from the
date of this report. This assessment included reviewing the liquidity
forecasts of the Company that include the flexibility in the dividend policy
and lack of any external debt, the significant cash balances on hand at 31
December 2023, the expected future expenditures and commitments and the latest
report on the investment portfolio. In preparing this liquidity forecast,
consideration has been given to the expected ongoing impact of the war in
Ukraine on the Company and the wider Group as well as the potential impact on
the underlying investee companies. The Directors have considered these factors
for a period not less than 12 months from the date of this report.
New and revised accounting standards and amendments effective for the current
period
New and revised accounting standards and amendments that are effective for
annual periods beginning 1 January 2023 which have been adopted for the first
time by the Company:
• Amendments to IAS 1 - Presentation of Financial Statements
and IFRS Practice Statement 2: Disclosure of Accounting policies
• Amendments to IAS 8 - Accounting policies, Changes in
Accounting Estimates and Errors: Definition of Accounting Estimates
• Amendments to IAS 12 - Income Taxes: Deferred Tax related to
Assets and Liabilities arising from a Single Transaction
The adoption of the standards and amendments listed above did not have any
material impact on the Company's results.
These amendments have been endorsed by the EU and adopted by the UK.
There are no other standards, amendments to standards or interpretations that
are effective for annual periods beginning on 1 January 2023 that have had a
material effect on the Company's Financial Statements.
New accounting standards, amendments and interpretations not yet effective,
and which have not been early adopted
Other standards and amendments that are effective for subsequent reporting
periods beginning on or after 1 January 2024 and have not been early adopted
by the Company include:
• Amendments to IAS 1 - Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current (effective 1 January
2024).
• Amendments to IFRS 16 - Leases: Lease Liability in a Sale
and Leaseback (effective 1 January 2024).
These standards and amendments are not expected to have a significant impact
on the Financial Statements in the period of initial application and therefore
detailed disclosures have not been provided.
IFRS 2 - Share-based payment
IFRS 2 - Share-based payment requires an entity to recognise equity-settled
share-based payments measured at fair value at the date of grant. The fair
value determined at the grant date of the equity-settled share-based payments
is expensed over the vesting period, together with a corresponding increase in
other capital reserves, based upon the Company's estimate of the shares that
will eventually vest, which involves making assumptions about any performance
and service conditions over the vesting period. Non-vesting conditions and
market vesting conditions are factored into the fair value of the options
granted. The vesting period is determined by the period of time the relevant
participant must remain in the Company's employment before the rights to the
shares transfer unconditionally to them. The total expense is recognised over
the vesting period, which is the period over which all the specified vesting
conditions are to be satisfied. At the end of each period, the Company revises
its estimates on the number of awards it expects to vest based on the service
conditions.
Any awards granted are to be settled by the issuance of equity are deemed to
be equity settled share-based payments, accounted for in accordance with IFRS
2 - Share-based payment.
Where the terms of an equity-settled transaction are modified, as a minimum,
an expense is recognised as if the terms had not been modified. In addition,
an expense is recognised for any increase in the value of the transaction as a
result of the modification, as measured at the date of modification.
Where an equity-settled transaction is cancelled, it is treated as if it had
vested on the date of the cancellation, and any expense not yet recognised for
the transaction is recognised immediately. However, if a new transaction is
substituted for the cancelled transaction and designated as a replacement
transaction on the date that it is granted, the cancelled and new transactions
are treated as if they were a modification of the original transaction, as
described in the previous paragraph.
Accounting for subsidiaries
The Directors have concluded that the Company has all the elements of control
as prescribed by IFRS 10 - Consolidated Financial Statements in relation to
all its subsidiaries and that the Company continues to satisfy the three
essential criteria to be regarded as an investment entity as defined in IFRS
10, IFRS 12 - Disclosure of lnterests in Other Entities and IAS 27 - Separate
Financial Statements. The three essential criteria are such that the entity
must:
• obtain funds from one or more investors for the purpose of
providing these investors with professional investment management services;
• commit to its investors that its business purpose is to
invest its funds solely for returns from capital appreciation, investment
income or both; and
• measure and evaluate the performance of substantially all of
its investments on a fair value basis.
In satisfying the second essential criteria, the notion of an investment time
frame is critical. An investment entity should not hold its investments
indefinitely but should have an exit strategy for their realisation. Although
the Company has invested in equity interests that have an indefinite life, it
invests typically for a period of up to 10 years. In some cases, the period
may be longer, depending on the circumstances of the investment, however,
investments are not made with intention of indefinite hold. This is a common
approach in the private equity industry.
Subsidiaries are therefore measured at fair value through profit or loss, in
accordance with IFRS 13 - Fair Value Measurement and IFRS 9 - Financial
instruments.
The Company's subsidiaries, which are wholly-owned and over which it exercises
control, are listed in note 23.
Use of estimates and judgements
The preparation of the Financial Statements require management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates. Estimates and
underlying assumptions are reviewed on an ongoing basis; revisions to
accounting estimates are recognised in the period in which the estimates are
revised and in any future periods affected.
The areas involving significant judgements are:
· valuation technique selected in estimating fair value of
unquoted investments - note 10;
· valuation technique selected in estimating fair value of
investments held in funds - note 10; and
· recognition of deferred tax asset for carried forward tax
losses - note 7.
The areas involving significant estimates are:
· estimated inputs used in calculating fair value of unquoted
investments - note 10; and
· estimated inputs used in calculating fair value of
investments held in funds - note 10.
Estimates and judgements are continually evaluated. They are based on
historical experience and other factors, including expectations of future
events that may have financial impact on the entity and that are believed to
be reasonable under the circumstances.
Investments in subsidiaries
The Company's investments in subsidiaries are stated at fair value which is
considered to be the carrying value of the net assets of each subsidiary. On
disposal of such investments, the difference between net disposal proceeds and
the corresponding carrying amount is recognised in the Income Statement.
Valuation of investments
The Company and its subsidiaries manage their investments with a view to
profit from the receipt of dividends, interest income and increase in fair
value of equity investments which can be realised on sale. Therefore, all
quoted, unquoted and managed fund investments are designated at fair value
through profit or loss which can be realised on sale and carried in the
Statement of Financial Position at fair value.
Fair values have been determined in accordance with the International Private
Equity and Venture Capital Valuation ("IPEV") Guidelines. These guidelines
require the valuer to make judgments as to the most appropriate valuation
method to be used and the results of the valuations.
Each investment is reviewed individually with regard to the stage, nature and
circumstances of the investment and the most appropriate valuation method
selected. The valuation results are then reviewed and any amendment to the
carrying value of investments is made as considered appropriate.
Quoted investments
Quoted investments for which an active market exists are valued at the bid
price at the reporting date.
Unquoted direct investments
Unquoted direct investments for which there is no active market are valued
using the most appropriate valuation technique with regard to the stage and
nature of the investment. Valuation methods that may be used include:
· investments in an established business are valued using
revenue or earnings multiples depending on the stage of development of the
business and the extent to which it is generating sustainable revenue or
earnings;
· investments in an established business which is generating
sustainable revenue or earnings but for which other valuation methods are not
appropriate are valued by calculating the discounted cash flow of future
revenue or earnings;
· investments in debt instruments or loan notes are determined
on a standalone basis, with the initial investment recorded at the price of
the transaction and subsequent adjustments to the valuation are considered for
changes in credit risk or market rates;
· convertible instruments are valued by disaggregating the
convertible feature from the debt instrument and valuing it using a
Black-Scholes model; and
· the Company has adopted the IPEV guidelines issued in
December 2023.
Funds
Investments in managed funds are valued at fair value. The general partners of
the funds will provide periodic valuations on a fair value basis, the latest
available of which the Company will adopt provided it is satisfied that the
valuation methods used by the funds are not materially different from the
Company's valuation methods. Adjustments will be made to the fund valuation
where the Company believes there is evidence available for an alternative
valuation.
Carried interest
The Company historically offered its executives, including Board executives,
the opportunity to participate in the returns from successful investments. A
variety of incentive and carried interest arrangements were put in place
during the years up to and including 2011. No new schemes have been introduced
since. As is commonplace in the private equity industry, executives may, in
certain circumstances, retain their entitlement under such schemes after they
have left the employment of the Company. The liability under such incentive
schemes is accrued if its performance conditions, measured at the reporting
date, would be achieved if the remaining assets in that scheme were realised
at their fair value at the reporting date. An accrual is made equal to the
amount which the Company would have to pay to any remaining scheme
participants from a realisation of the reported value at the reporting date.
Foreign currencies
Transactions in foreign currencies are recorded at the rate of exchange at the
date of transaction. Monetary assets and monetary liabilities denominated in
foreign currencies at the reporting date are reported at the rates of exchange
prevailing at that date and exchange differences are included in the Income
Statement.
Intercompany receivables
The Company measured intercompany receivables and other receivables at fair
value less any expected credit losses. Expected credit losses are measured
through a loss allowance at an amount equal to:
· the 12-month expected credit losses (expected credit losses
from possible default events within 12 months after the reporting date); or
· full lifetime expected credit losses (expected credit losses
from all possible default events over the life of the financial instrument).
A loss allowance for full lifetime expected credit losses is required for
intercompany receivables and other receivables if the credit risk has
increased significantly since initial recognition.
Impairment losses on financial assets carried at amortised cost are reversed
in subsequent periods if the expected credit losses decrease.
Cash
Cash comprises cash on hand and demand deposits.
Dividend payable
Dividend distribution to the shareholders is recognised as a liability in
Financial Statements when approved at an annual general meeting by the
shareholders. Interim dividend approved during the year is recorded upon
payment.
Income
Gains and losses on investments
Realised and unrealised gains and losses on investments are recognised in the
Income Statement in the period in which they arise.
Interest income
Interest income is recognised as it accrues using the effective interest
method.
Dividend income
Dividend income is recognised on the date the Company's right to receive
payment is established.
Expenditure
Income tax expense
Income tax expense comprises current and deferred tax. Income tax expense is
recognised in the Income Statement except to the extent that it relates to
items recognised in other comprehensive income or directly in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the reporting date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet liability approach,
providing for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is measured at the tax rates that are expected to be
applied to the temporary differences when they reverse, based on the laws that
have been enacted or substantively enacted by the reporting date. A deferred
tax asset is recognised to the extent that it is probable that future taxable
profits will be available against which temporary differences can be utilised.
Deferred tax assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be
realised.
Additional income taxes that arise from the distribution of dividends are
recognised at the same time as the liability to pay the related dividend is
recognised.
2. Net gains/ losses on investments
Gains and losses on investments were as follows:
Year ended 31 December
2023 2022
Investment portfolio of the Company Realised Unrealised Total Realised Unrealised Total
Asset type £'000 £'000 £'000 £'000 £'000 £'000
Unquoted 86 - 86 - - -
86 - 86 - - -
Credit for incentive plans 3 30
89 30
Investment portfolio of subsidiaries
Asset type
Quoted (10) - (10) (1) (220) (221)
Unquoted 1,412 366 1,778 24 (1,285) (1,261)
Funds (9) (4,509) (4,518) - 108 108
1,393 (4,143) (2,750) 23 (1,397) (1,374)
Total 1,479 (4,143) (2,661) 23 (1,397) (1,344)
(Charge)/credit for incentive plans (103) 39
(2,764) (1,305)
Operating and similar (loss)/income of subsidiaries* (44,500) 1,081
(47,264) (224)
*Includes operating and legal costs and taxation charges of subsidiaries.
During the year the Company and its subsidiaries carried out an exercise to
settle the debtor and creditor balances that had accumulated over a period of
years between companies within the Group. This will achieve a simplification
of accounting within the Group. Settlement of the balances was achieved
through offsetting debtor and creditor amounts where appropriate and through
the declaration of dividends by various subsidiary companies to holding
companies within the Group. As part of this exercise a dividend of
£45,000,000 was declared by LMS Capital Group Limited to LMS Capital plc.
The assets of LMS Capital plc increased by the amount of the dividend but as a
result of this a reduction in the fair value of the investments in
subsidiaries has been recognised. This exercise had no overall net effect on
the net assets of the Company.
The Company operates carried interest arrangements in line with normal
practice in the private equity industry. The credit for incentive plans for
the Company is £3,000 (2022: £30,000) and other incentives relating to
historic arrangements. The charge for subsidiaries is included in the net
gains/ losses on investments in the Income Statement.
3. Interest income
Year ended 31 December
2023 2022
£'000 £'000
Bank interest 608 189
608 189
4. Operating expenses
Operating expenses comprise administrative expenses and include the
following:
Year ended 31 December
2023 2022
£'000 £'000
Directors' remuneration (note 5) 832 726
Staff expenses (note 6) 467 462
Depreciation on right-of-use assets 28 27
Other administrative expenses 761 670
Foreign currency exchange differences 17 (24)
Auditor's remuneration
Fees to Company auditor 91 85
- parent company 91 67
- interim review for LMS Capital plc - 18
2,196 1,946
Audit fees for the subsidiaries of £73,000 (2022: £103,700) were directly
charged to subsidiaries.
5. Directors' Remuneration
Year ended 31 December
2023 2022
£'000 £'000
Directors' remuneration 657 584
Directors' social security contributions 86 77
Share-based payments 59 39
Directors' other benefits 30 26
832 726
The highest paid Director was Nicholas Friedlos 442 367
(2022 - Nicholas Friedlos)
The Directors are considered to be the only key management personnel.
6. Staff Expenses
Year ended 31 December
2023 2022
£'000 £'000
Wages and salaries 366 378
Employers' social security contributions 50 54
Share-based payments 20 13
Pension costs 23 11
Employees' other benefits 8 6
467 462
Pensions costs are amounts payable to employees' defined contribution pension
plans and are recognised on an accruals basis as they are incurred.
The average number of staff was as follows:
2023 2022
Directors 5 5
Staff 4 4
Total 9 9
7. Taxation
Year ended 31 December
2023 2022
£'000 £'000
Current tax expense
Current year - -
Total tax expense - -
Year ended 31 December
Reconciliation of tax expense
2023 2022
£'000 £'000
Loss before tax (3,732) (1,874)
Corporation tax using the Company's domestic (877) (356)
tax rate - 23.5% (2022: 19%)
Expenses not deductible / non-taxable income 534 47
Capital allowances 53 (3)
Company relief (91) 476
Deferred tax asset not recognised 56 85
Group relief surrendered / (received) 325 (249)
Total tax expense - -
As at year end, there are cumulative potential deferred tax assets of £2.516
million (2022: £2.377 million) in relation to the Company's cumulative tax
losses of £10.064 million (2022: £9.510 million). It is uncertain when the
Company will generate sufficient taxable profits in the future to utilise
these amounts and therefore no deferred tax asset has been recognised in the
current or prior year.
8. Loss per ordinary share
The calculation of the basic and diluted earnings per share, in accordance
with IAS 33, is based on the following data:
Year ended 31 December
2023 2022
£'000 £'000
Loss
Loss for the purposes of loss per share
being net loss attributable to equity holders of the parent (3,732) (1,874)
Number Number
Number of shares
Weighted average number of ordinary shares for the
purposes of basic loss per share 80,727,450 80,727,450
Loss per share Pence Pence
Basic (4.6) (2.3)
Diluted (4.6) (2.3)
The Company share awards will be dilutive when the Company makes a profit.
9. Dividends paid
Dividends declared during the year ending 31 December 2023 are as follows.
Dividend date Payment Date Dividend Dividend
£'000 per share
pence
Final dividend payment for 2021 27 May 2022 23 June 2022 505 0.6250
Interim dividend payment for 2022 12 August 2022 12 September 2022 242 0.3000
Total as at 31 December 2022 747 0.9250
Final dividend payment for 2022 26 May 2023 23 June 2023 505 0.6250
Interim dividend payment for 2023 11 August 2023 12 September 2023 242 0.3000
Total as at 31 December 2023 747 0.9250
A final dividend of 0.625p per share is recommended by the Board and, subject
to approval by shareholders at the AGM on 15 May 2024, will be paid out in
early June 2024.
10. Investments
The Company's investments comprised the following:
Year ended 31 December
2023 2022
£'000 £'000
Total investments 20,854 68,207
These comprise:
Investment portfolio of subsidiaries 28,450 30,964
Other net (liabilities)/assets of subsidiaries (7,596) 37,243
20,854 68,207
The carrying amounts of the subsidiaries' investment portfolios were as
follows:
Year ended 31 December
2023 2022
Investment portfolio of subsidiaries £'000 £'000
Asset type
Quoted 144 160
Unquoted 18,837 16,771
Funds 9,469 14,033
28,450 30,964
Other net (liabilities)/assets of subsidiaries (7,596) 37,243
20,854 68,207
The movements in the investment portfolio were as follows:
Quoted securities Unquoted securities Funds Other net assets / (liabilities) of subsidiaries Total
£'000 £'000 £'000 £'000 £'000
Balance at 1 January 2022 383 16,626 13,929 37,523 68,461
Accrued interest - 1,274 - - 1,274
Purchases - 427 - - 427
Proceeds from disposal (2) - - - (2)
Distributions from partnerships - (375) (56) - (431)
Contribution to partnerships - 80 52 - 132
Fair value adjustments (221) (1,261) 108 - (1,374)
Other movements - - - (280) (280)
Balance at 31 December 2022 160 16,771 14,033 37,243 68,207
Quoted securities Unquoted securities Funds Other net assets / (liabilities) of subsidiaries Total
£'000 £'000 £'000 £'000 £'000
Balance at 1 January 2023 160 16,771 14,033 37,243 68,207
Accrued interest - 1,373 - - 1,373
Purchases - 6,130 - - 6,130
Proceeds from disposal (6) (7,301) - - (7,307)
Distributions from partnerships - - (55) - (55)
Contribution to partnerships - - 9 - 9
Fair value adjustments (10) 1,864 (4,518) - (2,664)
Dividends paid (note 2) - - - (45,000) (45,000)
Other movements - - - 161 161
Balance at 31 December 2023 144 18,837 9,469 (7,596) 20,854
The following table analyses investments carried at fair value at the end of
the year, by the level in the fair value hierarchy into which the fair value
measurement is categorised. The different levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets;
Level 2: inputs other than quoted prices included within level 1 that are
observable for the asset, either directly (i.e., as prices) or indirectly
(i.e., derived from prices); and
Level 3: inputs for the asset that are not based on observable market data
(unobservable inputs such as trading comparables and liquidity discounts).
Fair value measurements are based on observable and unobservable inputs.
Observable inputs reflect market data obtained from independent sources, while
unobservable inputs reflect the Company's view of market assumptions in the
absence of observable market information (see note 19 - Financial risk
management).
The Company's investments are analysed as follows:
31 December
2023 2022
£'000 £'000
Level 1 - -
Level 2 - -
Level 3 20,854 68,207
20,854 68,207
Level 3 includes:
31 December
2023 2022
£'000 £'000
Investment portfolio of subsidiaries 28,450 30,964
Other net (liabilities)/assets of subsidiaries (7,596) 37,243
20,854 68,207
Investment portfolio of subsidiaries includes quoted investments of £144,000
(2022: £160,000).
There were no transfers between levels during the year ending 31 December
2023.
11. Operating and other receivables
31 December
2023 2022
£'000 £'000
Other receivables and prepayments 135 71
135 71
12. Cash
31 December
2023 2022
£'000 £'000
Bank balances 1,451 201
Demand deposits 7,576 14,341
9,027 14,542
13. Amounts receivable from subsidiaries
31 December
2023 2022
£'000 £'000
Amounts receivable from subsidiaries 15,014 5,158
15,014 5,158
Amounts receivable from subsidiaries are intercompany loans repayable on
demand and are interest free.
During the year the Company and its subsidiaries carried out an exercise to
settle the debtor and creditor balances that had accumulated over a period of
years between companies within the Group (see note 2).
14. Operating and other payables
31 December
2023 2022
£'000 £'000
Carried interest provision - 9
Trade payables 19 41
Lease liabilities 31 28
Other non-trade payables and accrued expenses 372 350
422 428
Other long-term lease liabilities 16 47
438 475
The Company operates carried interest arrangements in line with normal
practice in the private equity industry, calculated on the assumption that the
investment portfolio is realised at its year end carrying amount. As at 31
December 2023, £nil (2022: £9,000) has been accrued for in the Company and
£523,000 (2022: £419,000) has been accrued for in the subsidiaries. Carried
interest accrued for in the subsidiaries is included in the amounts owing to
subsidiaries in the Statement of Financial Position.
15. Amounts payable to subsidiaries
31 December
2023 2022
£'000 £'000
Amounts payable to subsidiaries 2,493 41,032
2,493 41,032
Amounts payable to subsidiaries are intercompany loans repayable on demand and
are interest free.
During the year the Company and its subsidiaries carried out an exercise to
settle the debtor and creditor balances that had accumulated over a period of
years between companies within the Group (see note 2).
16. Capital and reserves
Share capital
2023 2023 2022 2022
Ordinary shares Number £'000 Number £'000
Balance at the beginning of the year 80,727,450 8,073 80,727,450 8,073
Balance at the end of the year 80,727,450 8,073 80,727,450 8,073
The Company's ordinary shares have a nominal value of 10p per share and all
shares in issue are fully paid up.
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company.
Share premium account
The Company's share premium account arose on the exercise of share options in
prior years.
Capital redemption reserve
The capital redemption reserve comprises the nominal value of shares purchased
by the Company out of its own profits and cancelled.
17. Share awards
Awards were made in accordance with the LTIP arrangements approved by
shareholders at the Annual General Meeting held on 17 May 2023.
Employee Share Incentive Plan
On 15 August 2023, the Remuneration Committee approved the issue of 686,064
nil-cost options.
The options vest to 15 August 2026 and have both a performance and a
continuous service condition attached to them.
Performance condition
The Performance Condition for the Award shall be determined by reference to
the Company's performance in deploying its available uninvested capital at 31
December 2022. The level of performance and hence the amount of the Award that
vests will be determined at the discretion of the Remuneration Committee.
The targets for deployment of Investible Capital are:
(a) At least 50% of Investible Capital should have been
Deployed by 31 December 2024;
(b) 100% of Investible capital should have been Deployed
by 31 December 2025.
(c) The investments into which capital has been Deployed
should be performing satisfactorily, taking account of the relatively early
stage of such investments at the time the Performance Conditions are assessed.
For the purposes of this award Investible Capital has been set at £12.4
million.
IFRS 2: Share-based Payment addresses the accounting for the Share Plan. This
sets out the definition of a share-based payment and in this case the Share
Plan is classified as an equity settled transaction with cash alternatives,
the Company has the discretion to settle the liability fully or partly in
cash. Since there is no present obligation to settle the award in cash, the
scheme will be accounted for as equity settled.
Both the performance condition and the service condition, which is to be
employed for three years from the effective date of award, are considered to
be non-market vesting condition per IFRS 2. On this basis the Share Plan will
be recognised at fair value at the date of the award and will be amortised
over the life of the plan on a straight-line basis.
The LMS Capital plc share price on the date of the award was 21p. This gives a
fair value of the award at the date of issue of £144,073.
Management expect the performance condition to be met and the award to vest in
full. In the event the performance condition is not met, the Remuneration
Committee has the discretion to settle the awards in full.
As there is a service condition attached to the Share Plan, an estimate of
whether there will be leavers is required over the vesting period. In this
instance there is no expectation that any members of staff will leave within
three years and as such 100% of the award will be used to recognise the
expense over three years.
Weighted average fair value per award
Number of awards
Outstanding at 1 January 2023 - -
Granted 686,064 £0.21
Outstanding at 31 December 2023 686,064 £0.21
Exercisable at year end -
Value Creation Plan
At the Annual General Meeting on 17 May 2023, shareholders approved the
proposed amendments to the VCP whereby the original units awarded in 2020
would be cancelled and a smaller number of new units would be issued. 384
new units were awarded on 14 June 2023.
Grant date Type of award Number of shares awarded Fair value/ Vesting conditions Final vesting date
share
14 June 2023 Shares 384 £461 Awards vest quarterly over five years provided the employee is still in 14 June 2028
service of the Company.
Number of awards Weighted average fair value per award
Outstanding at 1 January 2022 625 £413.48
Granted - -
Outstanding at 31 December 2022 625 £413.48
Units cancelled (625) £413.48
New units issued 384 £461.00
Outstanding at 31 December 2023 384 £461.00
Exercisable at year end -
18. Leases
Lease commitments
The Company leases office space and information with regards to this lease is
outlined below:
Rental lease asset £'000
Balance at 1 January 2022 97
Depreciation for the year (27)
Balance at 31 December 2022 70
Depreciation for the year (28)
Balance as at 31 December 2023 42
Rental lease liability £'000
Balance at 1 January 2022 102
Unwinding of the discount on lease liability 6
Payments for lease (33)
Balance at 31 December 2022 75
Unwinding of the discount on lease liability 4
Payments for lease (33)
Balance as at 31 December 2023 46
19. Financial risk management
Financial instruments by category
The following tables analyse the Company's financial assets and financial
liabilities in accordance with the categories of financial instruments in IFRS
9. Assets and liabilities outside the scope of IFRS 9 are not included in the
table below:
31 December
2023 2022
Fair Value through profit or loss Measured at amortised cost Total Fair Value through profit or loss Measured at amortised cost Total
Financial assets £'000 £'000 £'000 £'000 £'000 £'000
Investments 20,854 - 20,854 68,207 - 68,207
Amounts receivable from subsidiaries - 15,014 15,014 - 5,158 5,158
Operating and other receivables - 120 120 - 60 60
Cash - 9,027 9,027 - 14,542 14,542
Total 20,854 24,161 45,015 68,207 19,760 87,967
31 December
2023 2022
Fair Value through profit or loss Measured at amortised cost Total Fair Value through profit or loss Measured at amortised cost Total
Financial liabilities £'000 £'000 £'000 £'000 £'000 £'000
Operating and other payables - 392 392 - 400 400
Amounts payable to subsidiaries - 2,493 2,493 - 41,032 41,032
Lease liabilities - 46 46 - 75 75
Total - 2,931 2,931 - 41,507 41,507
Intercompany payables to subsidiaries are all repayable on demand thus there
are no discounted contractual cash flows to present.
The Company has exposure to the following risks from its use of financial
instruments:
· credit risk;
· liquidity risk; and
· market risk.
This note presents information about the Company's exposure to each of the
above risks, its policies for measuring and managing risk, and its management
of capital.
Credit risk
Credit risk is the risk of the financial loss to the Company if a counterparty
to a financial instrument fails to meet its contractual obligations and arises
principally from the Company's receivables and its cash.
31 December
2023 2022
£'000 £'000
Amounts receivable from subsidiaries 15,014 5,158
Operating and other receivables 120 60
Cash 9,027 14,542
24,161 19,760
The Company limits its credit risk exposure by only depositing funds with
highly rated institutions. Cash holdings at 31 December 2023 and 2022 were
held in institutions currently rated A or better by Standard and Poor. Given
these ratings, the Company does not expect any counterparty to fail to meet
its obligations and therefore, no allowance for impairment is made for bank
deposits.
The loss allowance as at 31 December 2023 and 31 December 2022 was determined
as follows for trade receivables:
More than More than More than
Current 30 days past due 60 days past due 120 days past due Total
2023 £'000 £'000 £'000 £'000 £'000
Other receivables 120 - - - 120
Total 120 - - - 120
More than More than More than
Current 30 days past due 60 days past due 120 days past due Total
2022 £'000 £'000 £'000 £'000 £'000
Other receivables 60 - - - 60
Total 60 - - - 60
The Company recognised credit losses of the full value of receivable for trade
receivables not recovered after four months. As at 31 December 2023, the
Company does not have an outstanding trade receivable (2022: £nil).
For the year ending 31 December 2023, the Company did not witness significant
increase in the credit risk since the initial recognition of the outstanding
receivable from subsidiaries and other receivables, therefore, no expected
losses were recognised during the year (2022: £nil).
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its
financial obligations as they fall due. The Company's financing requirements
are met through a combination of liquidity from the sale of investments and
the use of cash resources.
The following table shows an analysis of the undiscounted financial
liabilities by remaining expected maturities as at 31 December 2023 and 31
December 2022.
Financial liabilities:
Up to 3-12 1-5 Over Total
3 months months years 5 years
2023 £'000 £'000 £'000 £'000 £'000
Operating and other payables 392 - - - 392
Amount payable to subsidiaries 2,493 - - - 2,493
Lease liabilities 7 23 16 - 46
Total 2,892 23 16 - 2,931
Up to 3-12 1-5 Over Total
3 months months years 5 years
2022 £'000 £'000 £'000 £'000 £'000
Operating and other payables 400 - - - 400
Amount payable to subsidiaries 41,032 - - - 41,032
Lease liabilities 6 22 47 - 75
Total 41,438 22 47 - 41,507
In addition, some of the Company's subsidiaries have uncalled capital
commitments to funds of £2,661,000 (2022: £2,674,000) for which the timing
of payment is uncertain (see note 20).
Market risk
Market risk is the risk that changes in market prices such as foreign exchange
rates, interest rates and equity prices will affect the Company's income or
the value of its holdings of financial instruments. The Company aims to manage
this risk within acceptable parameters while optimising the return.
Currency risk
The Company is exposed to currency risk on those of its investments which are
denominated in a currency other than the Company's functional currency which
is pounds sterling. The only other significant currency within the investment
portfolio is the US dollar; approximately 76% of the investment portfolio is
denominated in US dollars.
The Company does not hedge the currency exposure related to its investments.
The Company regards its exposure to exchange rate changes on the underlying
investment as part of its overall investment return and does not seek to
mitigate that risk through the use of financial derivatives.
The Company is exposed to translation currency risk on sales and purchases
which are denominated in a currency other than the Company's functional
currency. The currency in which these transactions are denominated is
principally US dollars.
The Company's exposure to foreign currency risk was as follows:
31 December
2023 2022
GBP USD Other GBP USD Other
£'000 £'000 £'000 £'000 £'000 £'000
Investments 2,847 17,394 613 44,118 23,486 603
Amounts receivable from subsidiaries 15,014 - - 5,157 1 -
Right-of-use assets 42 - - 70 - -
Operating and other receivables 135 - - 71 - -
Cash 8,680 347 - 14,228 314 -
Operating and other payables (438) - - (440) (35) -
Amount payable to subsidiaries (2,493) - - (41,014) (18) -
Gross exposure 23,787 17,741 613 22,190 23,748 603
Forward exchange contracts - - - - - -
Net exposure 23,787 17,741 613 22,190 23,748 603
The aggregate net foreign exchange profit recognised in profit or loss were:
31 December
2023 2022
£'000 £'000
Net foreign exchange (loss)/profit on investment (1,141) 2,769
Net foreign exchange (loss)/profit on non-investments (42) 439
Total net foreign exchange (loss)/profit recognised in profit before income (1,183) 3,208
tax for the year
At 31 December 2023, the rate of exchange was USD $1.27 = £1.00 (2022: $1.21
= £1.00).
A 10% strengthening of the US dollar against the pound sterling would have
increased equity and increased profit by £2.0 million at 31 December 2023
(2022: increased equity and increased profit by £2.6 million). This assumes
that all other variables, in particular interest rates, remain constant. A
weakening of the US dollar by 10% against the pound sterling would have
decreased equity and decreased the profit for the year by £1.6 million (2022:
decreased equity and decreased the profit for the year by £2.2 million). This
level of change is considered to be reasonable based on observations of
current conditions.
Interest rate risk
At the reporting date, the Company's cash is exposed to interest rate risk and
the sensitivity below is based on these amounts.
An increase of 100 basis points in interest rates at the reporting date would
have increased equity by £118,000 (2022: increase of £145,000) and increased
the profit for the year by £118,000 (2022: increased the profit £145,000). A
decrease of 100 basis points would have decreased equity and increased the
loss for the year by the same amounts. This level of change is considered to
be reasonable based on observations of current conditions.
Fair values
All items not held at fair value in the Statement of Financial Position have
fair values that approximate their carrying values.
Other market price risk
Equity price risk arises from equity securities held as part of the Company's
portfolio of investments. The Company's management of risk in its investment
portfolio focuses on diversification in terms of geography and sector, as well
as type and stage of investment.
The Company's investments comprise unquoted investments in its subsidiaries.
The subsidiaries' investment portfolios comprise investments in quoted and
unquoted equity and debt instruments. Quoted investments are quoted on the
main stock exchanges in London and New York. A proportion of the unquoted
investments are held through funds managed by external managers.
As is common practice in the venture and development capital industry, the
investments in unquoted companies are structured using a variety of
instruments including ordinary shares, preference shares and other shares
carrying special rights, options and warrants and debt instruments with and
without conversion rights. The investments are held for resale with a view to
the realisation of capital gains. Generally, the investments do not pay
significant income.
The significant unobservable inputs used at 31 December 2023 in measuring
investments categorised as level 3 in note 11 are considered below:
1. Unquoted securities (carrying value £18.8 million) are valued
using the most appropriate valuation technique such as a revenue-based
approach, an earnings-based approach, or a discounted cash flow approach.
These investments are sensitive to both the overall market and industry
specific fluctuations that can impact multiples and comparable company
valuations. In most cases the valuation method uses inputs based on comparable
quoted companies for which the key unobservable inputs are:
· EBITDA multiples of approximately five times dependent on the
business of each individual company, its performance and the sector in which
it operates;
· revenue multiples in the range 0.30-1.5 times, also dependent on
attributes at individual investment level; and
· discounts applied of up to 50%, to reflect the illiquidity of
unquoted companies compared to similar quoted companies. The discount used
requires the exercise of judgement taking into account factors specific to
individual investments such as size and rate of growth compared to other
companies in the sector.
2. Investments in funds (carrying value £9.5 million) are valued using
reports from the general partners of the fund interests with adjustments made
for calls, distributions and foreign currency movements since the date of the
report (if prior to 31 December 2023). The Company also carries out its own
review of individual funds and their portfolios to satisfy themselves that the
underlying valuation bases are consistent with the basis of valuation and
knowledge of the investments and the sectors in which they operate. However,
the degree of detail on valuations varies significantly by fund and, in
general, details of unobservable inputs used are not available.
Two of the Company's subsidiaries' underlying investments are valued using
discounted cash flow ("DCF") models. The table below shows the effect on
profit / (loss) of increasing or decreasing the discount rate used on the
valuation on these investments. The base-case discount rate used is 30% and a
change to 20% or 40% is considered to be reasonable possible change for the
purpose of the sensitivity analysis.
31 December
2023 2022
£'000 £'000
Effect of change in discount rate to 20% 740 1,643
Effect of change in discount rate to 40% (517) (1,201)
The valuation of the investments in subsidiaries makes use of multiple
interdependent significant unobservable inputs and it is not meaningful to
sensitise variations of any one input on the value of the investment portfolio
as a whole. Estimates and underlying assumptions are reviewed on an ongoing
basis, however, inputs are highly subjective. Changes in any one of the
variables, earnings or revenue multiples or illiquidity discounts could
potentially have a significant effect on the valuation.
The reported values of the level 3 investments would change, should there be a
change in the underlying assumptions and unobservable inputs driving these
values. The Company has performed a sensitivity analysis to assess the overall
impact of a 10% movement in these reported values of investments, on the
profit for the year. The effect on loss is shown in the table below:
31 December
2023 2022
£'000 £'000
Effect of 10% decrease in investment value (2,000) (6,800)
Effect of 10% increase in investment value 2,000 6,800
Capital management
The Company's total capital at 31 December 2023 was £42.1 million (2022:
£46.5 million) comprising equity share capital and reserves. The Company had
no borrowings at 31 December 2023 (2022: £nil).
In order to meet the Company's capital management objectives, the Board
monitors and reviews the broad structure of the Company's capital on an
ongoing basis. This review includes:
· Working capital requirements and follow-on investment capital
for portfolio investments, including calls from funds;
· Capital available for new investments; and
· The annual dividend policy and other possible distributions
to shareholders.
20. Capital commitments
31 December
2023 2022
£'000 £'000
Outstanding commitments to funds 2,661 2,674
The outstanding capital commitments to funds comprise unpaid calls in respect
of funds where a subsidiary of the Company is a limited partner.
As of 31 December 2023, the Company has no other contingencies or commitments
to disclose (2022: £nil).
21. Related party transactions
During the year, the Company paid rent of £32,780 (2022: £32,780) to The
Rayne Foundation for its office space. Robert Rayne is the Chairman of The
Rayne Foundation.
During the year the following transactions occurred with Group companies:
31 December 2023 Advanced to Received from Dividends/ fees received Balance due from/ (due to)
£ £ £ £
LMS Capital Group Limited 45,012,930 45,000,000 45,000,000 31,930
LMS Capital Holdings Limited 45,175,126 30,325,581 - (2,188,698)
LMS Co-Invest Limited 150,956 301,327 120,130 63,737
Lion Investments Limited 418,911 535,127 - 4,516,306
Tiger Investments Limited 6,436 - - (1,128)
LMS Tiger Investments (II) Limited 10,551,301 10,580,158 - 1,828
Cavera Limited 46,790 5,000 - 243,047
LMS Retirement Living Limited 5,750,326 - - 5,750,326
Lioness Property Investments Limited 6,848,764 - - 4,407,579
Lion Property Investments Limited 6,469 - - (300,948)
Westpool Investment Trust plc 11,900,544 - - (674)
LMS Capital (Bermuda) Limited 12,750,211 3,796,079 - (1,355)
International Oilfield Services Limited 10,001,614 9,681,266 - -
31 December 2022 Advanced to Received from Fees received Balance due from/ (due to)
£ £ £ £
LMS Capital Group Limited 9,500 - - 19,000
LMS Capital Holdings Limited 142,819 135,319 - (17,038,244)
LMS Co-Invest Limited 175,583 28,097 106,220 214,107
Lion Investments Limited 126,490 409,960 - 4,632,521
Tiger Investments Limited 4,500 - - (7,564)
LMS Tiger Investments (II) Limited 4,500 - - 30,685
Cavera Limited 73,346 - - 201,257
Lioness Property Investments Limited 4,500 56,325 - (2,441,185)
Lion Property Investments Limited 4,545 - - (307,417)
Westpool Investment Trust plc 316,041 514,946 - (11,901,218)
LMS Capital (Bermuda) Limited 10,596 2,052,882 - (8,955,487)
International Oilfield Services Limited - - - (320,348)
Details of Directors' remuneration is disclosed in note 5.
22. Subsequent events
There are no subsequent events that would materially affect the interpretation
of these Financial Statements.
23. Subsidiaries
The Company's subsidiaries are as follows:
Name Country of incorporation Holding % Activity
International Oilfield Services Limited Bermuda 100 Investment holding
LMS Capital (Bermuda) Limited Bermuda 100 Investment holding
LMS Capital Group Limited England and Wales 100 Investment holding
LMS Capital Holdings Limited England and Wales 100 Investment holding
Lioness Property Investments Limited England and Wales 100 Investment holding
Lion Property Investments Limited England and Wales 100 Investment holding
Lion Investments Limited England and Wales 100 Investment holding
Lion Cub Property Investments Limited England and Wales 100 Dormant
Tiger Investments Limited England and Wales 100 Investment holding
LMS Tiger Investments (II) Limited England and Wales 100 Investment holding
Westpool Investment Trust plc England and Wales 100 Investment holding
Cavera Limited England and Wales 100 Dormant
LMS Co-Invest Limited England and Wales 100 Trading
LMS Retirement Living Limited England and Wales 100 Investment holding
The registered office addresses of the Company's subsidiaries are as follows:
Subsidiaries incorporated in England and Wales: 3 Bromley Place, London,
United Kingdom, W1T 6DB.
Subsidiaries and partnerships incorporated in Bermuda: Clarendon House, 2
Church Street, Hamilton HM 11, Bermuda.
24. Net asset value per share
The net asset value per ordinary shares in issue are as follows:
31 December
2023 2022
NAV (£'000) 42,141 46,541
Number of ordinary shares in issue 80,727,450 80,727,450
NAV per share (in pence) 52.20 57.65
NAV per share is considered to be an Alternative Performance Measure ("APM").
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AnnouncementREG - LMS Capital PLC - Holding(s) in Company
AnnouncementREG - LMS Capital PLC - Notice of AGM
AnnouncementREG - LMS Capital PLC - 2023 Final Results
AnnouncementREG - LMS Capital PLC - Holding(s) in Company
Announcement