REG - LMS Capital PLC - Half year Report and Dividend declaration
02/08/2022 07:15
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RNS Number : 5843U LMS Capital PLC 02 August 2022
1 August 2022
LMS CAPITAL PLC
Half year results for the six months ended 30 June 2022
Financial Update
· Net Asset Value ("NAV") at 30 June 2022 of £47.0 million, 58.2p per
share, compared to £49.1 million (60.8p per share) at 31 December 2021;
· net realised and unrealised portfolio losses, including £2.6 million
of foreign exchange gains, were £1.3 million;
· running costs were £0.9 million and investment related costs were
£0.2 million;
· cash proceeds of £0.4 million from realisations during the half
year;
· final dividend payment in May 2022 of 0.625 pence per share for the
year ended 31 December 2021; and
· cash at 30 June 2022 was £18.9 million (31 December 2021: £20.1
million), including £3.2 million held in subsidiaries.
Interim Dividend
· Under the Company's progressive annual dividend policy, the Board
targets a dividend in respect of each financial year of approximately 1.5% of
that year's closing net asset value.
· The Board has approved an interim dividend in respect of the
Company's financial year to 31 December 2022 of 0.3 pence per share. The
dividend will be paid on 12 September 2022 to shareholders on the share
register at close of business on 12 August 2022 (with an ex-dividend date of
11 August 2022).
Robert Rayne, Chairman, commented:
"The first six months of 2022 have been challenging due to the overall market
conditions and the consequential impact on capital markets and valuations. The
team running our most recent investment, Dacian Petroleum, are making good
progress and the business has been cash generative since day one. We continue
to focus on identifying opportunities in our three main investment themes,
energy, real estate and late stage private equity.
1 August 2022
Enquiries:
LMS Capital PLC
0207 935 3555
Robert Rayne, Chairman
Nick Friedlos, Managing Director
Statement from the Chairman and the Managing Director
We are pleased to report the financial results of the Company for the first
six months of the year 2022 and to provide an update on our portfolio and the
direction of the overall business.
After adjusting for the payment of the final dividend of 0.625 pence per share
on the 2021 year, the overall NAV at 30 June 2022 is down 3.3% from the 31
December 2021 position and down 5.7% compared to 31 March 2022.
The movements are discussed in more detail below. Overall the NAV has
benefitted from portfolio unrealised foreign exchange gains reflecting the
strengthening of the U.S. Dollar against sterling. Underlying investment
valuations overall have reduced, largely reflecting reductions in the public
market comparables and transaction evidence used in the valuation exercise
rather than adverse changes in the underlying businesses.
The Dacian team have now been operating the business for some 8 months and are
making good progress. The business is EBITDA and cash flow positive.
Principal risks
Details on the Group's principal risks and previously identified material
existing and emerging risks and how such risks are manage is available in the
LMS Capital plc Annual Report 2021 (pages 22 to 23), or online at
www.lmscapital.com. There have been no significant changes to these principal
risks or previously identified material existing and emerging risks in the
period other than as set out below.
We have continued to monitor the impact of the Russian invasion of Ukraine,
and there has been no significant direct impact on our portfolio investments.
We do not hold any investments that have operations in Russia or Ukraine. As
previously reported, Elateral, our investment in the digital marketing sector,
utilises contract staff in Ukraine, Russia and Belarus for its software
development and has implemented a plan to manage the disruption.
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2022
Net Asset Value ("NAV") overview
The NAV of the company at 30 June 2022 was £47.0 million, 58.2 pence per
share (31 December 2021 £49.1 million, 60.8 pence per share). After dividend
payments of £0.5 million, this represents a decrease of £1.6 million on the
2021 year end and comprises:
· net increase in the portfolio from £2.6 million of foreign exchange
gains from the strengthening of the US Dollar against sterling;
· net decrease of £3.9 million being unrealised net reductions in
value on the mature asset portfolio;
· increase of £0.6 million being accrued interest on Dacian;
· fee income of £0.1 million from our Dacian investment;
· running costs of £0.9 million and investment related costs of £0.2
million principally associated with developing real estate deal opportunities;
and
· other net increase £0.1 million.
The Company's NAV comprises three distinct groups of assets:
Mature Investments - 30 June 2022 NAV £20.8 million (25.8 pence per share)
The Mature Portfolio comprises investments which originate from the Company's
strategy pre-2012 and are currently managed with a view to optimising the
realisation values. It is our expectation that these assets will be
substantially realised over the next 1-3 years.
During the first half of 2022, this group of investments had realised and
unrealised net losses of £2.2 million, including foreign exchanges gains of
£1.7 million from the strengthening of the U.S. Dollar against sterling.
Unrealised portfolio losses, excluding foreign exchange gains, were £3.9
million, the principal items of which were:
· Quoted shares
Overall, our quoted portfolio showed net unrealised losses of £0.2 million
during the first half of 2022.
· Unquoted investments
Our unquoted portfolio recorded net unrealised losses of £2.9 million:
o Medhost, where we continue to follow the valuation of Primus, the lead
investment manager, shows an unrealised loss of £1.1 million as the fund
manager reduced its most recent valuation. Medhost operates in a mature market
and it continues to be cash generative and perform in line with budget;
o ICU shows an unrealised loss of £1.4 million, reflecting a decrease in
the valuation based on current market conditions and indicative valuations
during the early stages of an exit process currently underway; and
o Elateral reduced by £0.4 million during the first half of 2022. The
company has historically focused on winning key multinational clients, which
it has generally been successful in retaining. However, the sales cycle to
such clients is slow and achieve its valuation potential the company needs to
demonstrate more rapid revenue growth, in particular in the SME sector. The
write down reflects the company's need for working capital support, over and
above what was expected, whilst it implements a new sales growth plan.
· Fund investments
Our fund investments showed net unrealised losses of £0.8 million for the
half year:
o Opus increased by £0.9 million, primarily due to the increase in the fund
manager's valuation of one of its key remaining assets;
o our investment in Brockton has increased by £0.4 million, mainly
reflecting the unwinding of the discount in our discounted cash flow
valuation;
o our investment in Weber decreased by £1.1 million due to performance of
the U.S. microcap equities held in the fund;
o Eden recorded an unrealised loss of £0.4 million as the fund manager
wrote down its last remaining investment to its anticipated exit value;
o our investment in EMAC was written down by £0.4 million due to prevailing
market conditions and as the fund has encountered challenges in selling its
remaining assets; and
o other fund investments recorded net unrealised losses of £0.2 million.
New Investments - 30 JUNE 2022 NAV £9.4 million (11.7 pence per share)
New Investments comprise the Company's investment in Dacian, which has now
been operating for 7 months to the end of June 2022 and continues to make good
progress. Energy prices are substantially higher than when the deal was
originally underwritten in August 2020. Set against this is a significant well
maintenance backlog that has created a number of interruptions to production
in the early months of operation and has diverted the team from some of its
planned workover projects that have been identified to increase production.
The team is gradually managing the reactive maintenance needs, conducting some
workover projects and has managed to increase production since its initial
operations in November 2021. The business is EBITDA positive and cash
generative to date.
During the first half of 2022, this investment had unrealised net foreign
exchange gains of £0.9 million from the strengthening of the U.S. Dollar
against sterling.
The Company's accrued interest on the loans through which the investment is
structured have added £0.6 million to NAV in the first half of 2022.
The Company has also benefitted from £0.1 million being the first six months
of fee income from Dacian. This income offsets our running costs.
Liquidity - Cash less other net liabilities
Cash
Cash balances in the Company and its subsidiaries at 30 June 2022 were £18.9
million (31 December 2021: £20.1 million).
Significant outflows during the six months were £1.6 million, the cash
portion of running costs and investment related costs, £0.5 million of
dividend payments, £0.3 million of new capital invested in Elateral and £0.1
million of fund calls.
Portfolio inflows were £0.4 million and include a £0.3 million distribution
from Medhost for the redemption of preferred shares plus accrued interest and
£0.1 million of other fund distributions.
Net Liabilities
Net liabilities of £2.2 million consist primarily of accruals for income
taxes, historic carried interest liabilities for one remaining asset and other
sundry costs.
DIVIDEND POLICY
A final dividend of 0.625 pence per share for the year ended 31 December 2021
was approved by shareholders at the AGM in May 2022 and paid in early June
2022.
The Board has approved the interim dividend for the 2022 year of 0.3 pence per
share to be paid on 12 September 2022 to shareholders on the share register at
close of business on 12 August 2022 (with an ex-dividend date of 11 August
2022).
NEW INVESTMENT
We continue to focus on our three themes, energy, real estate and - where
there is some cross over with our two main themes - later stage private
equity.
In energy, we anticipate further opportunities to invest with the Dacian team
in late life oil and gas production opportunities, although the priority for
the team for the rest of this year is to focus on "bedding in" the initial
acquisition.
On the real estate development side we see opportunities in developing
specialist use real estate and to that end have been looking at retirement
living as a sector with strong demand drivers and where our real estate land
assembly and planning skills can be deployed. We are investigating several
potential sites, but in evaluating those sites are mindful of the current
escalating construction costs and general economic uncertainty. This is a
medium to long-term project and we will only take sites forward if we are
clear that the risk adjusted returns are acceptable and consistent with the
Company's overall returns criteria.
On the real estate investment side we anticipate opportunities arising in the
coming months to acquire assets arising and are positioning ourselves to be
able to take advantage of market conditions. The focus will be on smaller lot
sizes, where we believe there is less competition from other buyers, and
across sectors where we see value.
CONCLUSION AND OUTLOOK
The first half of 2022 was challenging due to overall market conditions and
the consequential impact on capital markets and valuations. The Company's
objective remains the preservation and creation of wealth for its shareholders
with a target to deliver returns, net of costs, of between 12% and 15% over
the longer period.
Looking forward our focus remains:
· to support the Dacian team in developing a clear operating plan to
achieve the production objectives envisaged at the time the investment was
made;
· execute on the opportunities with our real estate teams; and
· continue to focus on realising the investments in our mature
portfolio, where opportunities to do so arise.
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 to you further on our progress
Robert Rayne
Chairman
Nicholas Friedlos
Managing Director
1 August 2022
PORTFOLIO MANAGEMENT REVIEW
Introduction
During the first half of 2022, the Company recorded net realised and
unrealised losses on its mature portfolio investments of £1.3 million,
including £2.6 million of foreign exchange gains, and an additional £0.6
million of accrued interest income on its new portfolio investment, Dacian
Petroleum. Portfolio realisations totalled £0.4 million during the period,
primarily from £0.3 million of cash distributions from Medhost for the
redemption of preferred shares and £0.1 million from other fund
distributions.
Market background
The first half of 2022 began with the UK economy returning to pre-pandemic
levels but was soon impacted by global events that changed the direction and
outlook of the global economy and capital markets. The Russia invasion of
Ukraine and renewed Covid-19 lockdowns in China created upward pressure on
commodity prices and continued the existing supply chain constraints.
Significant inflation, both in the UK and globally, has created concern that a
global recession may be forthcoming. The Bank of England has increased
interest rates four times in the first half of 2022 and further increases are
anticipated in the second half of 2022. Sterling weakened against the U.S.
Dollar during the period and global equity markets saw declines, with the FTSE
100 down nearly 3%, while the U.S. S&P 500 Index declined nearly 21%. The
FTSE AIM 100 and SmallCap indices declined 31% and 16%, respectively.
The risk of further inflation and a possible recession create further
uncertainly for the remainder of 2022. The Board and the Company continue to
closely monitor the economic environment and capital markets, including the
impact this has on the investment portfolio and its valuations.
Performance review
The movement in NAV during the six months ended 30 June was as follows:
Six months ended 30 June
2022 2021
£'000 £'000
Opening NAV 49,109 47,923
(Losses)/gains on investments portfolio (1,256) 1,215
Investment interest income 598 -
Dividends (505) (484)
Overheads and other net movements (985) (1,062)
Closing NAV 46,961 47,592
Cash realisations and new and follow-on investments from the portfolio were as
follows:
Six months ended 30 June
2022 2021
£'000 £'000
Proceeds from redemption of convertible debt - 750
Proceeds from redemption of preference share 353 -
Distributions from funds and loan repayments 68 1,687
Total - gross cash realisations 421 2,437
New and follow-on investments (263) -
Fund calls (105) (43)
Total - net 53 2,394
Realisations of £0.4 million in 2022 include:
· £0.3 million from Medhost for the redemption of the preferred shares
and accrued interest; and
· £0.1 million of distributions from Brockton and Simmons.
The fund calls are primarily for SFEP management fees.
Below is a summary of the investment portfolio of the Company and its
subsidiaries, which reflects all investments held by the group:
30 June 31 December
2022 2021
Mature investment portfolio UK US Total UK US Total
£'000 £'000 £'000 £'000 £'000 £'000
Quoted 145 37 182 218 165 383
Unquoted 717 5,943 6,660 924 7,744 8,668
Funds 6,669 7,301 13,970 7,242 6,687 13,929
7,531 13,281 20,812 8,384 14,596 22,980
New investment portfolio UK US Total UK US Total
£'000 £'000 £'000 £'000 £'000 £'000
Quoted - - - - - -
Unquoted - 9,433 9,433 - 7,958 7,958
Funds - - - - - -
- 9,433 9,433 - 7,958 7,958
Total investments 7,531 22,714 30,245 8,384 22,554 30,938
Basis of valuation:
Quoted investments
Quoted investments for which an active market exists are valued at the closing
bid price at the reporting date.
Unquoted direct investment
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 or based on recent indicative offers for investments
with an exit strategy. 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 six months ended 30 June 2022 was as
follows:
Six months ended 30 June 2022 Six months ended 30 June 2021
Realised Unrealised Realised Unrealised
gains gains/(losses) Total losses gains/(losses) Total
Asset type £'000 £'000 £'000 £'000 £'000 £'000
Quoted - (201) (201) - 88 88
Unquoted 24 (1,123) (1,099) (5) (745) (750)
Funds - 44 44 - 1,877 1,877
24 (1,280) (1,256) (5) 1,220 1,215
Credit for incentive plans 85 43
(1,171) 1,258
Net gains/(losses) on foreign currency 763 (168)
Net operating and other (76) (116)
expenses of subsidiaries
(484) 974
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 £13,000 and for subsidiaries is a credit of £72,000 for
carried interest and other incentives relating to historic arrangements. The
credit for the carried interest incentive plan is included in the Net
gains/losses on Investments in the Income Statement.
Approximately 75% of the portfolio at 30 June 2022 is denominated in US
dollars (31 December 2021: 73%) and the above table includes the impact of
currency movements. In the first six months of 2022, the strengthening of the
US dollar against sterling resulted in a significant unrealised foreign
currency gain of £2.6 million (2021: unrealised loss of £0.2 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
30 June 31 December
2022 2021
Company Sector £'000 £'000
IDE Group Holdings UK technology 145 218
Arsenal Digital Holdings Inc US energy 17 139
(formerly Global Green Solutions)
Others - 20 26
182 383
The net gains and losses on the quoted portfolio arose as follows:
Six months ended 30 June
Gains/(losses), net 2022 2021
£'000 £'000
Unrealised
IDE Group Holdings (73) 127
Arsenal Digital Holdings Inc (130) (44)
(formerly Global Green Solutions)
Other quoted holdings (9) 6
Unrealised foreign currency gains/(losses) 11 (1)
Total net (losses)/gains (201) 88
The main decrease in the quoted portfolio was due to a decline in the share
price of IDE Group Holdings and Global Green Solutions, which was consolidated
into Arsenal Digital Holdings Inc. Arsenal Digital Holdings is an illiquid
investment traded on the U.S. OTC market, and we are exploring options to
secure our liquidity.
Unquoted investments
30 June 31 December
2022 2021
Company Sector £'000 £'000
Dacian EU energy 9,433 7,959
Medhost Inc US technology 5,299 5,997
Elateral UK technology 636 817
ICU Eyewear* US consumer 605 1,746
IDE loan notes UK technology 81 107
Cresco US consumer 39 -
16,093 16,626
*These are co-investments with SFEP
The net gains and losses on the unquoted portfolio arose as follows:
Six months ended 30 June
2022 2021
Gains/(losses), net £'000 £'000
Realised
Medhost 24 -
Northbridge - (5)
24 (5)
Unrealised
Yes To - 2
IDE Group (27) 45
Elateral (443) -
Medhost (1,032) (320)
ICU Eyewear (1,376) (361)
Unrealised foreign currency gains/(losses) 1,755 (111)
(1,123) (745)
Total net losses (1,099) (750)
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.
Comments on individual companies are set out below.
Medhost
Medhost is a co-investment with funds of Primus Capital. Medhost's financial
performance in 2022 is expected to be profitable and cash generative. A recent
transaction comparable in the sector was lower, resulting in a decrease to the
valuation by the fund manager for the period.
Elateral
The Company provided funding of £0.3 million in loan notes to Elateral during
the first six months of 2022 for working capital requirements. The additional
funding provided by the Company and other investors was part of a plan to
provide Elateral with working capital while it implements a new sales growth
plan. The write down reflects the company's need for working capital support,
over and above what was expected, whilst it implements a new sales growth
plan.
ICU Eyewear
The decline in the ICU valuation reflects the decline in current market
conditions and indicative valuations during the early stages of an exit
process currently underway.
Fund interests
30 June 31 December
2022 2021
General partner Sector £'000 £'000
Brockton Capital Fund 1 UK real estate 5,979 5,635
Opus Capital Venture Partners US venture capital 5,405 3,948
Weber Capital Partners US micro-cap quoted stocks 1,848 2,644
EMAC ILF EU real estate 368 733
Simmons UK energy 245 381
Eden Ventures UK venture capital 76 494
San Francisco Equity Partners US consumer 14 55
Other interests - 35 39
13,970 13,929
The net gains and losses on the Company's funds portfolio for the six months
ended 30 June 2022 were as follows:
Six months ended 30 June
Gains/(losses), net 2022 2021
£'000 £'000
Unrealised
Opus Capital Venture Partners 931 422
Brockton Capital Fund I 401 792
San Francisco Equity Partners ("SFEP") (89) 64
Simmons Parallel Energy (154) 48
Eden Ventures (418) 122
Weber Capital Partners (1,063) 552
Others (net) (392) (4)
Unrealised foreign currency gains 828 (119)
Total net gains 44 1,877
San Francisco Equity Partners
LMS is the majority investor in SFEP as opposed to the other fund interests
where the Company has only a minority stake. SFEP no longer has significant
assets and holds a small interest in ICU, which is currently in an exit
process.
Other funds
· Brockton Capital Fund I - the Company's investment represents its
share (via the Brockton Fund) of preferred debt investments in a Super Prime
central London residential development. The investment showed an increase in
the valuation of £0.4 million for the first half of 2022 due to unrealised
gains from the unwinding of the discount rate as the investment is valued on a
discounted cash flow basis;
· Weber Capital - holds U.S. publicly traded micro-cap securities and
showed an unrealised loss of £1.1 million reflecting a decrease in the
underlying equity prices;
· Opus Capital - a U.S. venture fund, showed an unrealised gain of
£0.9 million from valuation gains on one of its two main assets; and
· Eden Ventures - the remaining asset is in an exit process, and the
unrealised loss of £0.4 million reflects the decrease in value of its sole
remaining asset.
Costs
Group costs for the period (including £0.9 million incurred by the Company
and £0.2 million by subsidiaries) were £1.1 million (30 June 2021: £1.0
million) which include running costs of £0.9 million and investment related
costs of £0.2 million for support costs for real estate and co-investment
activities.
Taxation
The Group tax provision for the period, all of which arose in the
subsidiaries, is £0.6 million (30June 2021: £0.1 million).
Financial Resources and Commitments
At 30 June 2022 cash holdings, including cash in subsidiaries, were £18.9
million (31December 2021: £20.1 million) and neither the Company nor any of
its subsidiaries had any external debt.
At 30 June 2022, subsidiary companies had commitments of £2.7 million (31
December 2021: £2.7 million) to meet outstanding capital calls from fund
interests.
LMS CAPITAL PLC
1 August 2022
LMS Capital plc
Unaudited Condensed Income Statement
Six months ended 30 June
2022 2021
Notes £'000 £'000
Net (losses)/gains on investments 2 (484) 974
Interest income 37 22
Other income 49 8
Total (losses)/gains on investments (398) 1,004
Operating expenses (940) (938)
Net (loss)/gain on foreign currency (331) 72
(Loss)/profit before tax (1,669) 138
Taxation - -
(Loss)/profit for the period (1,669) 138
Attributable to:
Equity shareholders (1,669) 138
(Loss)/profit per ordinary share - basic 3 (2.1) 0.2p
(Loss)/profit per ordinary share - diluted 3 (2.1) 0.2p
The notes on pages 20 to 34 form part of these Financial Statements.
LMS Capital plc
Unaudited Condensed Statement of Other Comprehensive Income
Six months ended 30 June
2022 2021
£'000 £'000
(Loss)/profit for the period (1,669) 138
Other comprehensive income - -
Total comprehensive (loss)/profit for the period (1,669) 138
Attributable to:
Equity shareholders (1,669)
138
The notes on pages 20 to 34 form part of these Financial Statements.
LMS Capital plc
Unaudited Condensed Statement of Financial Position
30 June 31 December
2022 2021
Notes £'000 £'000
Assets
Non-current assets
Right of use assets 83 97
Investments 5 67,963 68,461
Amounts receivable from subsidiaries 4,957 5,191
Total non-current assets 73,003 73,749
Current assets
Operating and other receivables 133 51
Cash and cash equivalents 15,725 14,518
Total current assets 15,858 14,569
Total assets 88,861 88,318
Liabilities
Current liabilities
Operating and other payables (286) (394)
Amounts payable to subsidiaries (41,553) (38,740)
Total current liabilities (41,839) (39,134)
Non-current liabilities
Other long-term liabilities (61) (75)
Total non-current liabilities (61) (75)
Total liabilities (41,900) (39,209)
Net assets 46,961 49,109
Equity
Share capital 8,073 8,073
Share premium 508 508
Capital redemption reserve 24,949 24,949
Share-based equity 101 75
Retained earnings 13,330 15,504
Total equity shareholders' funds 46,961 49,109
Net asset value per ordinary share 58.17 60.83p
The Financial Statements on pages 20 to 34 were approved by the Board on 1
August 2022 and were signed on its behalf by:
Nicholas Friedlos
Director
The notes on pages 20 to 34 form part of these Financial Statements.
LMS Capital plc
Unaudited Statement of Changes in Equity
Six months ended 30 June 2022
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 loss for the period
Loss for the period - - - - (1,669) (1,669)
Equity after total comprehensive 8,073 508 24,949 75 13,835 47,440
loss for the period
Contributions by and distributions
to shareholders
Share-based payments - - - 26 - 26
Dividends (note 4) - - - - (505) (505)
Balance at 30 June 2022 8,073 508 24,949 101 13,330 46,961
Six months ended 30 June 2021
Capital Share-
Share Share redemption based Retained Total
capital premium reserve equity earnings equity
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2021 8,073 508 24,949 34 14,359 47,923
Comprehensive income for the period
Profit for the period - - - - 138 138
Equity after total comprehensive 8,073 508 24,949 34 14,497 48,061
income for the period
Contributions by and distributions
to shareholders
Share-based payments - - - 15 - 15
Dividends (note 4) - - - - (484) (484)
Balance at 30 June 2021 8,073 508 24,949 49 14,013 47,592
The notes on pages 20 to 34 form part of these Financial Statements.
LMS Capital plc
Unaudited Condensed Statement of Cash flow
Six months ended 30 June
2022 2021
Notes £'000 £'000
Cash flows from operating activities
(Loss)/profit for the period (1,669) 138
Adjustments for non-cash income and expense:
Equity settled share-based payment 26 15
Depreciation on right of use assets 14 14
Interest expense on lease 3 4
Losses/(gains) on investments 2 484 (974)
Other income (37) (22)
Interest income (49) (8)
Adjustments to incentives plans 13 6
Exchange (gain)/loss on cash and cash equivalents (69) 7
(1,284) (820)
Change in operating assets and liabilities
Increase in operating and other receivables (71) (8)
Decrease in operating and other payables (116) (70)
Decrease/(increase) in amounts receivable from subsidiaries 234 (328)
Increase/(decrease) in amounts payable to subsidiaries 2,813 -
Net cash from/(used in) operating activities 1,576 (1,226)
Cash flows from investing activities
Interest received 26 22
Other income received 49 8
Proceeds from redemption of loan investment - 750
Net cash from investing activities 75 780
Cash flows from financing activities
Dividend paid 4 (505) (484)
Repayment of principal lease liabilities (5) (19)
Repayment of lease interest (3) -
Net cash used in financing activities (513) (503)
Net increase/(decrease) in cash and cash equivalents 1,138 (949)
Exchange gain/(loss) on cash and cash equivalents 69 (7)
Cash and cash equivalents at the beginning of the period 14,518 16,385
Cash and cash equivalents at the end of the period 15,725 15,429
The notes on pages 20 to 34 form part of these Financial Statements.
LMS Capital plc
Notes to the unaudited financial information
1. Principal accounting policies
Reporting entity
LMS Capital plc ("the Company") is domiciled in the United Kingdom. These
condensed Financial Statements are presented in pounds sterling because that
is the currency of the principal economic environment of the Company's
operations.
These condensed interim Financial Statements do not comprise statutory
accounts within the meaning of section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2021 were approved by the
board of directors on 9 March 2022 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was unqualified, did
not contain an emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006.
The Financial statements have been reviewed in accordance with International
Standards on Review Engagements 2410.
The Company was formed on 7 March 2006 and commenced operations on 9 June 2006
when it received the demerged investment division of London Merchant
Securities.
Statement of compliance
These condensed Financial Statements have been prepared in accordance with IAS
34: Interim Financial Reporting. They do not include all of the information
required for full annual Financial Statements and should be read in
conjunction with the annual Financial Statements for the year ended 31
December 2021 which were prepared in accordance with UK adopted International
Financial Reporting Standards.
As required by the Disclosure and Transparency Rules of the Financial Conduct
Authority, the condensed Financial Statements have been prepared applying the
accounting policies and presentation that were applied in the preparation of
the Company's published Financial Statements for the year ended 31 December
2021.
Basis of preparation
This condensed interim financial report for the half-year reporting period
ended 30 June 2022 has been prepared in accordance with the UK-adopted
International Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Consistent with the year ended 31 December 2021, 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 satisfies the criteria to be regarded as an investment entity
as defined in IFRS 10, IFRS 12 "Disclosure of Interests in Other Entities" and
IAS 27 "Consolidated and Separate Financial Statements". Subsidiaries are
therefore measured at fair value through profit or loss, in accordance with
IFRS 13 "Fair Value Measurement" and IFRS 9 "Financial Instruments:
Recognition and Measurement".
LMS Capital plc
Notes to the unaudited financial information (continued)
1. Principal accounting policies (continued)
Going concern
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 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 30 June 2022, the
expected future expenditures and commitments and the latest report on the
investment portfolio.
IFRS 16 - Leases
In June 2020, the Company entered into lease agreement with The Rayne
Foundation. The interest rate used by the Company is based on the incremental
borrowing rate of 6.5%. The term of the lease is 5 years and when the
Company renegotiates the contractual terms of a lease with the lessor, the
accounting depends on the nature of the modification:
• if the renegotiation results in one or more additional assets
being leased for an amount commensurate with the standalone price for the
additional rights-of-use obtained, the modification is accounted for as a
separate lease in accordance with the above policy;
• in all other cases where the renegotiated increases the scope of
the lease (whether that is an extension to the lease term, or one or more
additional assets being leased), the lease liability is remeasured using the
discount rate applicable on the modification date, with the right-of-use asset
being adjusted by the same amount; and
• if the renegotiation results in a decrease in the scope of the
lease, both the carrying amount of the lease liability and right-of-use asset
are reduced by the same proportion to reflect the partial of full termination
of the lease with any difference recognised in profit or loss. The lease
liability is then further adjusted to ensure its carrying amount reflects the
amount of the renegotiated payments over the renegotiated term, with the
modified lease payments discounted at the rate applicable on the modification
date. The right-of-use asset is adjusted by the same amount.
LMS Capital plc
Notes to the unaudited financial information (continued)
1. Principal accounting policies (continued)
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. 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.
Per the management share plan, the vesting period for any awards issued can be
up to 5 years and subject to certain conditions. The first awards were issued
in the year ended 31 December 2020 and there have been no new issuances in the
period ended 30 June 2022.
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 Interests 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
LMS Capital plc
Notes to the unaudited financial information (continued)
1. Principal accounting policies (continued)
Accounting for subsidiaries (continued)
· measure and evaluate the performance of substantially all of its
investments on a fair value basis.
ln satisfying the second essential criteria, the notion of an investment
timeframe 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 ten years. ln 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 8.
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 5;
· valuation technique selected in estimating fair value of investment
held in Funds - note5; and
· valuation model used to value equity award scheme.
The areas involving significant estimates are:
· estimate inputs used in calculating fair value of unquoted
investments - note 5;
· estimated inputs used in calculating fair value of investment held in
Funds - note 5;
· estimates in calculating the fair value of equity awards; and
· estimate percentage of incremental borrowing rate on lease liability.
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.
LMS Capital plc
Notes to the unaudited financial information (continued)
1. Principal accounting policies (continued)
Use of estimates and judgements (continued)
There were no material revisions to the significant judgements and estimates
compared to the Annual Financial Statements for the year ending 31 December
2021.
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 and increase in fair value of equity
investments which can be realised on sale. Therefore, all quoted, unquoted and
managed fund investments are 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.
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 or based on recent indicative offers for investments
with an exit strategy. 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 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; and
· convertible instruments are valued by disaggregating the convertible
feature from the debt instrument and valuing it using a Black-Scholes model.
LMS Capital plc
Notes to the unaudited financial information (continued)
1. Principal accounting policies (continued)
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 balance
sheet date, would be achieved if the remaining assets in that scheme were
realised at their fair value at the balance sheet date. An accrual is made
equal to the amount which the Company would have to pay to any remaining
scheme participants from a realisation at the balance sheet value at the
balance sheet date. Employer's national insurance, where applicable, is also
accrued.
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.
Right of use assets
Right of use assets are initially measured at the amount of the lease
liability. Subsequent to initial measurement, lease liabilities increase as a
result of interest charged at a constant rate on the balance outstanding and
are reduced for lease payments made. Right-of-use assets are amortised on a
straight-line basis over the remaining term of the lease.
Intercompany receivables
The Company measured intercompany receivables and other receivables at
amortised cost less expected credit losses.
Financial assets held at amortised cost
The Company recognises trade receivables as financial assets classified at
amortised cost. These are recognised initially at fair value. Subsequent to
initial recognition, these are measured at amortised cost, less any expected
credit losses.
LMS Capital plc
Notes to the unaudited financial information (continued)
1. Principal accounting policies (continued)
Financial assets held at amortised cost (continued)
Expected credit losses for these financial assets are measured using the
simplified approach to the credit loss model. Under the simplified credit loss
model approach, a provision is recognised based on the expectation of default
rates over the full lifetime of the financial assets without the need to
identify significant increases on credit risk on these assets.
Cash and cash equivalents
Cash, for the purpose of the cash flow statement, comprises of cash in hand
and cash equivalents.
Cash equivalents are short-term highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value.
Financial liabilities
The Company's financial liabilities include operating and other payables.
These are initially recognised at fair value. Subsequent measurement is at
amortised cost using the effective interest method.
Dividend payable
Dividend distributions to shareholders are recognised as a liability in the
Company's Financial Statements when approved at an Annual General Meeting by
the shareholders for final dividends. Interim dividends are recognised when
paid.
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 of current and deferred tax. Income tax expense
is recognised in the income statement except to the extent that it relates to
items recognized in other comprehensive income or directly in equity.
LMS Capital plc
Notes to the unaudited financial information (continued)
1. Principal accounting policies (continued)
Expenditure (continued)
Income tax expense (continued)
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 (losses)/gains on investments
The gains and losses on investments were as follows:
Six months ended 30 June 2022 Six months ended 30 June 2021
Realised Unrealised Realised Unrealised
gains gains/(losses) Total losses gains/(losses) Total
Asset type £'000 £'000 £'000 £'000 £'000 £'000
Quoted - (201) (201) - 88 88
Unquoted 24 (1,123) (1,099) (5) (745) (750)
Funds - 44 44 - 1,877 1,877
24 (1,280) (1,256) (5) 1,220 1,215
Credit for incentive plans 85 43
(1,171) 1,258
Net gains/(losses) on foreign currency 763 (168)
Net operating and other (76) (116)
expenses of subsidiaries
(484) 974
Net operating and other expenses of subsidiaries includes interest income of
£0.6 million (June 2021: £nil) from Dacian Petroleum investment.
LMS Capital plc
Notes to the unaudited financial information (continued)
3. (Loss)/profit per ordinary share
The calculation of the basic and diluted profit per share, in accordance with
IAS 33, is based on the following data:
Six months ended
30 June 2022 30 June 2021
£'000 £'000
(Loss)/profit
(Loss)/profit for the purpose of net profit per share attributable to equity (1,669) 138
holders of the parent
Number of shares
Weighted average number of ordinary shares for
the purposes of basic profit per share 80,727,450 80,727,450
(Loss)/profit per share
Basic (2.1p) 0.2p
Diluted (2.1p) 0.2p
4. Dividends
Dividends declared during the period ending 30 June 2022 and 30 June 2021 are
as follows.
Dividend date Payment date Dividend Pence per share
£'000
Final dividend payment for 2020 21 May 2021 14 June 2021 484 0.600
Total as at 30 June 2021 484 0.600
Final dividend payment for 2021 27 May 2022 17 Jun 2022 505 0.625
Total as at 30 June 2022 505 0.625
The Board has approved the interim dividend for the 2022 year of 0.3 pence per
share to be paid on 12 September 2022.
LMS Capital plc
Notes to the unaudited financial information (continued)
5. Investments
The Company's investments comprised the following:
30 June 31 December
2022 2021
£'000 £'000
Total investments 67,963 68,461
These comprise:
Investment portfolio of subsidiaries 30,245 30,938
Other net assets of subsidiaries 37,718 37,523
67,963 68,461
The carrying amounts of the investments of the Company's subsidiaries were as
follows:
30 June 31 December
Investments portfolio of subsidiaries 2022 2021
Asset type £'000 £'000
Quoted 182 383
Unquoted 16,093 16,626
Funds 13,970 13,929
Investment portfolio of subsidiaries 30,245 30,938
Other net assets of subsidiaries 37,718 37,523
67,963 68,461
The movements in the investment portfolio were as follows:
Quoted Unquoted
securities securities Funds Total
£'000 £'000 £'000 £'000
Balance at 1 January 2021 197 10,138 11,858 22,193
Purchases - 8,394 - 8,394
Proceeds from disposal - (750) - (750)
Distributions from partnerships - (1,586) (445) (1,916)
Contribution to partnerships - 115 43 158
Fair value adjustments 186 (95) 2,473 2,564
Reclassification of withholding tax* - 410 - 410
Balance at 31 December 2021 383 16,626 13,929 30,938
Balance at 1 January 2022 383 16,626 13,929 30,938
Purchases - 900 - 900
Proceeds from disposals - (375) - (375)
Distributions from partnerships - - (67) (67)
Contribution to partnership - 41 64 105
Fair value adjustments (201) (1,099) 44 (1,256)
Balance at 30 June 2022 182 16,093 13,970 30,245
LMS Capital plc
Notes to the unaudited financial information (continued)
5. Investments (continued)
*As at 31 December 2020, unquoted securities investment fair value included a
provision for withholding tax on distributions. This distribution was received
in the first quarter of 2021 and the remaining estimated withholding tax
liability of £0.4 million was reclassified to current liabilities as at 31
December 2021.
The following table analyses investments carried at fair value at the end of
the period, 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.
The significant unobservable inputs used at 30 June 2022 in measuring
investments categorised as level 3 in this note are considered below:
1. Unquoted securities (carrying value £16.1 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 5 times dependent on the business
of each individual company, its performance and the sector in which it
operates; and
· revenue multiples in the range 0.5-1.5 times, also dependent on
attributes at individual investment level.
2. Investments in funds (carrying value £14.0 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 30 June 2022). The Company also carries
out its own review of individual funds and their portfolios to satisfy
ourselves that the underlying valuation bases are consistent with our 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.
LMS Capital plc
Notes to the unaudited financial information (continued)
5. Investments (continued)
The valuation of the investments in subsidiaries makes use of multiple
interdependent significant unobservable inputs and it is impractical 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 Company's investments are analysed as follows:
30 June 31 December
2022 2021
£'000 £'000
Level 1 - -
Level 2 - -
Level 3 67,963 68,461
67,963 68,461
The reconciliation between opening and closing balance of level 3 assets are
presented in the table below:
30 June 31 December
2022 2021
£'000 £'000
Opening balance 68,461 65,235
Unrealised (loss)/gains (1,280) 2,564
Purchases, sales, issues and settlements 782 662
Closing balance 67,963 68,461
Level 3 amounts include £30,245,000 (2021: £30,938,000) relating to the
investment portfolios of subsidiaries including quoted investments of
£182,000 (2021: £383,000) and £37,718,000 (2021: £37,523,000) in relation
to the other net assets of subsidiaries.
There were no transfers between levels during the period ending 30 June 2022.
If the valuation for level 3 category investments declined by 10% from the
amount at the reporting date, with all other variables held constant, the
profit for the six months ended 30June 2022 would have decreased by £6.8
million (2021: £6.8 million). An increase in the valuation of level 3
category investments by 10% at the reporting date would have an equal and
opposite effect.
LMS Capital plc
Notes to the unaudited financial information (continued)
6. Capital commitments
30 June 31 December
2022 2021
£'000 £'000
Outstanding commitments to funds 2,681 2,665
2,681 2,665
The outstanding commitments to funds comprise of unpaid calls in respect of
funds where a subsidiary of the Company is a Limited Partner.
As of 30 June 2022, the Company has no other contingencies or commitments to
disclose (2021: £nil).
7. Related party transactions
The related parties of LMS Capital plc are its Directors.
The salary paid for the Directors of the Company for the period was £232,180
(June 2021: £232,180) and the Directors fee of the subsidiaries was £23,742
(June 2021: £21,734).
On 24 June 2020, the Company entered into a lease agreement with The Rayne
Foundation in respect of the premises comprising its principal office. During
the period, the Company paid rent of £8,195 (June 2021: £24,585) to The
Rayne Foundation. Robert Rayne is the Chairman of The Rayne Foundation.
As at 30 June 2022, the following shareholders of the Company that are related
to LMS Capital Plc had the following interests in the issued shares of the
Company:
30 June 31 December
2022 2021
Share Holders Number of Shares Number of Shares
R Rayne 2,670,124 Ordinary Shares 2,670,124 Ordinary Shares
N Friedlos 161,410 Ordinary Shares 161,410 Ordinary Shares
P Harvey 20,000 Ordinary Shares 20,000 Ordinary Shares
G Stedman 20,000 Ordinary Shares 20,000 Ordinary Shares
LMS Capital plc
Notes to the unaudited financial information (continued)
8. 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 Trading
LMS Co-Invest Limited England and Wales 100 Trading
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.
9. Net asset value per share
The net asset value per ordinary shares in issue are as follows:
30 June 31 December
2022 2021
£'000 £'000
Net asset value (£'000) 46,961 49,109
Number of ordinary shares in issue 80,727,450 80,727,450
Net asset value per share (in pence) 58.17 pence 60.83 pence
LMS Capital plc
Notes to the unaudited financial information (continued)
10. Subsequent Event
There are no subsequent events that would materially affect the interpretation
of these Financial Statements.
Statement of Directors' responsibilities
The Directors listed on pages 24-35 of the Company's Annual Report for the
period ended 30 December 2021 continued in office during the six months ended
30 June 2022.
We confirm that to the best of our knowledge:
a the condensed Financial Statements have been prepared in accordance
with UK adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority; and
b the interim management report includes a fair review of the
information required by:
i DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred
during the first six months of the current financial year
and their impact on the condensed Financial Statements, and
a description of the principal risks and uncertainties for
the remaining six months of the year; and
ii DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first
six months of the current financial year and that have materially affected the
financial position or performance of the Company during that period; and any
changes in the related party transactions described in the last annual report
that could do so.
Nicholas Robert Friedlos
Director
1 August 2022
INDEPENDENT REVIEW REPORT TO LMS CAPITAL PLC
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2022 is not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2022 which comprises Condensed Income Statement, Condensed Statement of
Other Comprehensive Income, Condensed Statement of Financial Position,
Statement of Changes in Equity and the Condensed Cash Flow Statement and all
accompanying notes.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the company are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the company to
cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority and for
no other purpose. No person is entitled to rely on this report unless such a
person is a person entitled to rely upon this report by virtue of and for the
purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility
for this report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
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