TIDMLMS
RNS Number : 4394B
LMS Capital PLC
30 January 2020
30 January 2020
LMS Capital plc
Company Update and NAV Estimate as at 31 December 2019
LMS Capital plc (the "Company") the listed Investment Company
provides the following Company update and estimate of net asset
value as at 31 December 2019.
Company update
The new Board appointed on 28 November 2019 is pleased to report
that in the two months since the shareholder meeting the Company
has commenced making the necessary changes to transition to
internal management.
- As reported in its announcement on 29 November 2019, the
Company submitted a request to the FCA for registration as an AIFM,
which is necessary for internal management. The Company was
notified on 20 December 2019 that the FCA is minded to approve the
application for registration as an AIFM, subject to the Company
agreeing early termination of the Gresham House Asset Management
Limited ("GHAM") contract;
- On 29 January 2020, the Company agreed with GHAM to terminate
the GHAM contract with immediate effect upon the entry of the
Company on the register of small registered UK AIFMs maintained by
the FCA, at which point the Company will be internally managed. The
Company expects this to happen imminently;
- The Company is actively considering a number of proposals
which may lead to investments during the first half of 2020;
and
- In addition, prior its appointment the new Board indicated it
would pay a special dividend of 4.25p per share if appointed. This
dividend was paid on 15 January 2020.
Further information on the Company's new internal management
arrangements, investment approach and its pipeline of opportunities
will be provided in the Company's full results announcement in
March 2020.
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 net asset value ("NAV"),
after deducting GBP3.4 million (4.25p per share) for the special
dividend paid on 15 January 2020, will be in the region of GBP52.6
million (65.1p per share). Prior to accounting for the dividend,
NAV at 31 December 2019 would be in the region of GBP56.0 million
(69.4p per share); this compares to GBP58.7 million (72.7p per
share) at 30 September 2019, GBP59.1 million (73.3p per share) at
30 June 2019 and GBP60.3 million (74.7p per share) at 31 December
2018.
This estimate 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 GBP3.1 million reduction in NAV, before accounting for the
special dividend, compared to the half year comprises the following
principal elements:
-- A reduction in the investment portfolio of GBP(0.6), being
unrealised foreign exchange losses arising from the weakening of
the US Dollar compared to sterling in the period 30 June 2019 to 31
December 2019;
-- Realised foreign currency gains of GBP0.6 million on the sale
of US Dollars principally from the sale of Entuity in August
2019;
-- Excluding the effect of foreign exchange rate changes, the
portfolio showed a net loss of GBP(0.6) million in the second half
of 2019:
o an increase of GBP2.5 million in the net proceeds on the sale
of Entuity in August, with a corresponding increase in the NAV,
over and above the net proceeds anticipated in the 30 June 2019
valuation;
o an increase of GBP1.2 million in the market valuation of
quoted stocks, principally Solaredge and IDE Group;
o other portfolio gains of GBP0.6 million;
o a reduction of GBP(2.8) million in the value of YesTo. This
reduction reflects a deterioration in trading during 2019, the
requirement to make changes in the company's management and
operating structure and the need to provide additional working
capital finance;
o a reduction of GBP(2.1) million in the value of Medhost
reflecting a corresponding reduction in value by Primus, the lead
investment manager, in its latest available fund report; and
-- Other movements were a reduction of GBP2.5 million being:
o Overheads of GBP1.1 million in the second half of 2019. Full
year 2019 overheads were GBP1.8 million (GBP1.5 million in 2018)
and increased over the prior year primarily due to the cessation in
August 2019 of a credit of GBP0.3 million per year, as required by
GAAP, arising from amortising shares received by the Company from
GHAM at the inception of the management contract;
o One-off exceptional costs of GBP1.4 million, in relation to
the resetting of the Company's investment strategy and its return
to internal management;
The one-off exceptional costs arise from the review of the
investment management arrangements which culminated in the General
Meeting on 28th November 2019. They include:
-- the costs of the former independent directors in running a
tender process for the Company's investment management arrangements
(as referenced in the Company's announcement on 26 July 2019);
-- the costs of the circular and other shareholder
communications, both for and against the proposals, leading up to
the general meeting;
-- other advisory costs incurred by the parties in the course of
seeking to resolve the differences of view as to the investment
management arrangements for the Company; and
-- provision for amounts payable to GHAM for the period January
2020 to May 2020 in accordance with the termination arrangements
agreed between the Company and GHAM.
Further information on the performance of the portfolio,
underlying investment valuations and changes during the current
year will be included in the Company's audited results for the year
ended 31 December 2019, which it expects to announce in March
2020.
Group cash balances at 31 December 2019 were GBP26.7
million.
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 020 7935 3555 or 0207 938
2440
Shore Capital
Robert Finlay 0207 405 4850
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDFLFLILTIIVII
(END) Dow Jones Newswires
January 30, 2020 05:21 ET (10:21 GMT)
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