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RNS Number : 0606A LMS Capital PLC 31 January 2022
31 January 2022
LMS CAPITAL PLC
NAV Estimate as at 31 December 2021
LMS Capital plc (the "Company") the listed investment company provides the
following update and estimate of net asset value ("NAV") as at 31 December
2021.
Net Asset Value Estimate
The Company has commenced the year end valuation review process which is based
on the latest performance updates from portfolio companies and third-party
fund manager valuations.
The Board currently estimates that the year end NAV will be in the region of
£49.1 million (60.8p per share). This NAV estimate, which represents an
increase of £1.9 million (after adding back dividends paid) on the prior
year, reflects information currently available to the Board on the performance
and prospects of individual investments in the Company's portfolio and is
subject to further evaluation as well as completion of the annual audit. The
valuation methodology and policy adopted is consistent with prior years and is
in line with IPEV guidelines.
The estimated 31 December 2021 NAV is summarised below:
Preliminary Unaudited Audited
31 December 2021 30 June 2021 31 December 2020
£ 000s
MATURE ASSET PORTFOLIO 22,979 21,415 22,193
NEW INVESTMENTS - DACIAN 7,958 0 0
Total Investment Portfolio 30,937 21,415 22,193
Cash 20,113 21,372 20,591
Other Net Assets/Liabilities (1,949) 4,805 5,139
Net Asset Value 49,101 47,592 47,923
Pence per Share 60.8p 59.0p 59.4p
Overview
· The 31 December 2021 estimate of £49.1 million compares with £47.6
million being the unaudited NAV to 30 June 2021. NAV at the prior year end, 31
December 2020 was £47.9 million. Adjusting for £0.7 million dividends paid
during the year, the NAV has increased by £1.9 million during the year.
· We are pleased to be issuing this NAV update having now completed the
Dacian transaction, whereby the Company has acquired senior loans and equity
in Dacian's business comprising onshore, late life, oil and gas production
assets in Romania. The investment is structured as unsecured senior loans
which carry a coupon of 14% per annum and a subscription for share capital for
a nominal sum. The senior loans are expected to be repaid with interest over
approximately 4 years. LMS holds $9.1 million of the 14% senior loans and 32%
of the outstanding ordinary shares.
· Some 15 months' interest income has been recognised on Dacian
following that deal's completion in November 2021. This represents a pre-tax
return of 18% in the year on the amount set side in September 2020 to pre-fund
that investment. The Board expects the investment to meet or exceed the
Company's medium-term return targets over its life.
· The unrealised gains shown during the year on the mature asset
portfolio are in line with expectations. This portfolio is held in the
expectation of realisation in a 1 to 3 year period.
· The Board is aware of the impact on overall returns of the Company's
uninvested cash and is focussed on developing opportunities to deploy capital
that will meet or exceed its target return of 12% to 15% per year.
· Running costs remain strictly controlled since the return to
self-management. The Board expects to see a reduction in net running costs in
the range of 5% to 10% in 2022 as the benefits of income from the Company's
co-investment activities begin to be realised.
The Company will be issuing its full year end results in March and will
provide a detailed update on the portfolio at that stage.
NAV changes
The NAV has increased by £2.2 million during the fourth quarter. Overall for
the year as a whole, the Company's NAV, after adding back dividends paid, has
increased by £1.9 million. The principal components of the full year increase
are described below.
· Excluding the effect of foreign exchange rate changes, the mature
asset portfolio showed a net unrealised gain of £2.6 million in the year,
representing a return of 12% on the opening value of the portfolio. The
principal elements were:
o An increase of £1.5 million in Brockton reflecting the unwinding of the
discounted cash flows;
o An increase of £0.8 million in Weber Capital Partners, a US listed
company fund;
o An increase of £0.4 million in the Opus Capital Venture Partners fund;
o An increase of £0.2 million in the value of Medhost;
o A decrease of £0.7 million in YesTo related to the winding up of the
business. YesTo has been fully written off in the second half of 2021; and
o Other portfolio net gains were £0.4 million.
· Interest income of £1.2 million on the Dacian senior loans from
September 2020 through the end of 2021. The Dacian investment was
conditionally funded by investors in September 2020, pending completion.
Completion occurred in November 2021 and under the terms of the Dacian
investment agreement, once completion occurs, interest accrues to investors
from the date of the original funding.
· Other movements were a net reduction of £1.9 million and include the
following:
o Full year running costs were £1.8 million;
o Investment support costs (support costs for real estate and co-investment
activities) were £0.3 million; and
o Unrealised foreign exchange gains of £0.2 million on non-portfolio
assets, principally US Dollar bank accounts, due to the weakening of the US
dollar against the sterling.
Further information on the performance of the portfolio, underlying investment
valuations and changes during the year will be included in the Company's
audited results for the year ended 31 December 2021, which it expects to
announce in March 2022.
Outlook
The Company continues to have significant cash balances, £20.1 million at 31
December 2021 (31 December 2020: £20.6 million), and remains focussed on
identifying opportunities to deploy capital in its areas of expertise - real
estate, energy and late-stage private equity. Notwithstanding the impact and
uncertainties around the Coronavirus pandemic, the Company made progress
during 2021, particularly with the closing of the Dacian transaction in
November 2021 and in building a pipeline of opportunities with its real estate
industry partners. Further updates on the Company's portfolio will be included
in the Company's final results announcement in March 2022.
The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulation (EU) No.
596/2014. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.
For further information please contact:
LMS Capital PLC
Nick Friedlos, Managing Director
0207 935 3555
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