TIDMLMS
RNS Number : 2320L
LMS Capital PLC
29 April 2020
29 April 2020
LMS Capital plc
1(st) Quarter 2020 Update
LMS Capital plc (the " Company " ), the listed investment
company, stated in its year end results announcement on 15 April
2020 that, whilst at that stage it was not able to quantify the
impact, it expected the valuations of its portfolio to be reduced
at 31 March 2020 as a result of the disruption to businesses and
financial markets from the Coronavirus pandemic. The Company has
now completed the necessary work to make an estimate of the impact
of this and the results are set out below as an update covering the
period from 31 December 2019 to date.
The Company has significant cash balances. During April it has
considered it prudent to convert to cash those of its quoted
investments that were relatively liquid.
Financial Highlights
-- Unaudited Net Asset Value ("NAV") at 31 March 2020 was
GBP44.4 million (55.0p per share);
-- This compares to GBP52.6 million (65.1p per share) being the
31 December 2019 reported NAV of GBP56.0 million adjusted for the
special dividend of GBP3.4 million, declared in December 2019 but
paid in early January 2020; and
-- Cash at 31 March 2020 was GBP22.2 million. Taking account of
the proceeds of realisation of quoted shares during April, plus
normal monthly working capital movements, cash balances at 27 April
2020 were approximately GBP28 million (34.7p per share).
Unaudited Net Asset Value at 31 March 2020
The reductions in the portfolio value represent approximately an
18% reduction in the value of quoted investments, and a reduction
of 30% in the underlying valuation of the unquoted direct
investments and fund investments, offset by approximately 3%
unrealised foreign exchange gains on these assets.
The unaudited NAV at 31 March 2020 is based on the value of the
Company ' s investments at 31 December 2019, adjusted for:
- Transactions in the first three months of the year, including
sales of quoted securities and cash calls or distributions from
funds;
- Price movements on quoted securities;
- Movements in foreign currency exchange rates; and
- Estimated change in the value of unquoted investments and
funds based on information available to the Board.
31 March NAV comprises
Audited Unaudited
31 December 2019 31 March 2020
GBP000s
-----------------------------------
Quoted securities UK and
US 8,421 6,897
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Unquoted investments managed
by San Francisco Equity
Partners 4,395 2,283
------------------ ---------------
Unquoted directly held investments
in UK and US 7,888 6,024
------------------ ---------------
Other fund investments UK
and US 11,537 8,433
------------------ ---------------
Subtotal Investment portfolio 32,241 23,637
------------------ ---------------
Cash 26,587 22,184
------------------ ---------------
Other net assets/liabilities (2,870) (1,429)
------------------ ---------------
Net asset value 55,958 44,392
------------------ ---------------
Quoted securities
The Company's principal quoted holdings at 31 March 2020
comprised its shares in Gresham House and Solaredge which together
represented 95% of the quoted portfolio.
The Company ' s quoted investment valuations reduced by a net
GBP 1.5 million (18%) , during the first quarter of 2020. This
comprised unrealised underlying market price reductions of GBP1.6
million, offset by unrealised foreign exchange gains of GBP0.1
million. In addition, the Company realised a loss of GBP0.1 million
on quoted shares sold during the quarter. The reduction reflects
declines in both the UK and US equity markets due to the impact of
the Coronavirus pandemic.
During April the Company has realised the remainder of its
shares in Gresham House and approximately two-thirds of its holding
in Solaredge. The realisations produced proceeds of GBP6.2 million
compared to 31 March 2020 values of GBP5.9 million.
Unquoted investments managed by San Francisco Equity Partners (
" SFEP")
The Company ' s unquoted investments managed by SFEP comprise
two assets, YesTo and ICU Eyewear.
The valuation of these assets has reduced by GBP2.1 million as a
result of a reduction in the carrying value of YesTo. YesTo had
previously reset its business plan to a significantly reduced level
of sales, which was reflected in the write down of this investment
in December 2019 . The 2020 estimated sales are now projected to be
further negatively impacted by the Coronavirus pandemic, and YesTo
has indicated it will need additional funding imminently, the terms
of which are under discussion. The carrying value has been adjusted
to reflect the deterioration in the company's trading and the
uncertainty around the financing negotiations.
The carrying value of ICU Eyewear is unchanged from the 31
December 2019 position.
Unquoted investments held directly
Directly held unquoted investments include holdings in Medhost,
Elateral and Northbridge Industrial Services PLC.
The valuation of the Company ' s directly held unquoted
investments decreased GBP 1.9 million during the quarter,
comprising a GBP 2.2 million reduction in the underlying value of
the investments, offset by GBP 0.3 million of unrealised foreign
currency gains.
The reductions reflect the impact of the Coronavirus pandemic on
the underlying businesses as well as the impact on public market
valuation multiples.
Funds
The Company's fund investments include its holding in Brockton
Capital Fund 1, Opus Capital and three other smaller fund
interests.
Valuations reduced by a net GBP2.4 million during the first
quarter, comprising a GBP 2.7 million reduction in underlying asset
value offset by GBP 0.3 million of unrealised foreign currency
gains. The carrying value of the funds is based on information from
the fund manager, generally the 31 December 2019 fund valuation
reports, overlaid with an estimate by the Company of the potential
impact on those values of the Coronavirus pandemic during the first
quarter of 2020.
The Company received cash and "in specie" distributions from its
funds of GBP0.7 million in the first quarter.
Liquidity
At 31 March 2020 the Company and its subsidiaries had cash
balances of GBP22.2 million.
As noted above, during April the Company realised the bulk of
its quoted holdings. Cash balances at 27 April 2020 were
approximately GBP28 million reflecting the realisation proceeds
from sales of quoted shares and normal monthly working capital
movements.
Movements in prices of quoted securities and foreign exchange
rates since 31 March 2020 have not been material.
Outlook
As stated in its 15 April announcement, whilst the Board's
overall objectives have not changed, the landscape in which these
will be pursued as a result of the Coronavirus pandemic will change
profoundly.
The Company has significant cash balances and has considered it
prudent during April to convert to cash, those of its quoted
investments that were relatively liquid. The Company remains highly
cautious about the way its liquid resources are deployed. It will
continue to build relationships and develop opportunities, but
these will be viewed in the context of the Coronavirus pandemic and
its impact on businesses and financial markets, including a
potentially prolonged recession. The Board is also mindful of its
stated intentions in relation to a return of capital and to future
dividend payments. At present it is keeping under review its
options, pending greater clarity on liquidity from the existing
unquoted asset pool, the ability to generate income from new
investments to cover, at least in part, a dividend and some
indication of how the current economic uncertainty may begin to
settle. Further updates on our distribution policy will be provided
in announcements over the coming months.
The information contained in this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon publication of this
announcement, this inside information is now considered to be in
the public domain.
For further information, please contact:
LMS Capital PLC
Robert Rayne, Chairman
Nick Friedlos, Managing Director
Tel +44 207 935 3555; +44 7802 686584
Shore Capital
Robert Finlay
Tel +44 207 408 4050
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
QRFPPUUWCUPUGMR
(END) Dow Jones Newswires
April 29, 2020 02:00 ET (06:00 GMT)
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