Half Yearly Report

RNS Number : 5142J

LMS Capital PLC

08 August 2012

 



 8 August 2012

LMS Capital plc

Half Year Results for the six months to 30 June 2012

The Board of LMS Capital plc, ("LMS Capital" or "the Company"), is pleased to announce the Company's half year results for the six months to 30 June 2012.

·     Net Asset Value per share at 30 June 2012 was 88p (31 December 2011: 90p). Net Asset Value was £240.6 million (31 December 2011: £245.0 million).

·     The consolidated loss from continuing operations for the period (including portfolio subsidiaries) was £3.9 million (2011: profit of £5.2 million).

·     The investment portfolio showed a net loss of £1.2 million (2011: net gain of £9.5 million) including the effect of unrealised currency net losses of £1.2 million (2011: net losses of £4.4 million).

·     Proceeds of realisations in the period were £10.1 million (2011: £40.6 million), principally distributions from funds of £8.3 million (2011: £6.0 million). Other realisations in 2011 were sales of quoted investments and sales of fund positions in the secondary market.

·     Costs in the investment management business have been reduced to a level considered appropriate to the asset realisation strategy.

·     Outstanding commitments to funds were £10.7 million at the end of June 2012, down from £18.9 million at the end of 2011.

·     As at 30 June 2012 the investment management business had cash of £32.9 million (31 December 2011: £30.6 million) and no borrowings (31 December 2011: £nil).

Richard Christou, Chairman of LMS Capital, said: 

"To date in 2012 the investment portfolio has generally performed satisfactorily given market conditions as the Company implements the asset realisation strategy approved by shareholders last November. We believe that the investment portfolio has the potential to release significant cash to shareholders in the medium term.

We have reduced ongoing costs in the investment management business and implemented a realisation plan for the portfolio with the aim of announcing a first distribution to shareholders in the latter part of this year. The economic background remains difficult, but the Board is focussed on optimising value and cash flow for the benefit of all shareholders."

For further information please contact:

LMS Capital plc                                                                                                 020 7935 3555

Nick Friedlos, Director

Tony Sweet, Chief Financial Officer

J.P. Morgan Cazenove                                                                                   020 7742 4000

Michael Wentworth-Stanley

MHP Communications                                                                                  020 3128 8100

Tim McCall

Katie Hunt

About LMS Capital

LMS Capital is an investment company which, following a General Meeting on 30 November 2011, is undertaking a realisation strategy with the aim of achieving a balance between an efficient return of cash to shareholders and optimising the value of the Company's investments. Its investment portfolio consists of small to medium sized companies in the consumer, energy and business services sectors.

www.lmscapital.com

Half year review 2012

Overview

The Company's focus is to implement the strategy approved by shareholders at the general meeting on 30 November 2011, to conduct an orderly realisation of the assets of the Company in a manner that seeks to achieve a balance between an efficient return of cash to shareholders and maximising the value of the Company's investments.

Accordingly, no investments have been or will be made in new opportunities; follow-on investments will be made in existing assets to honour commitments made at the time of the initial investment and/or to which the Company is legally obligated, or where the investment is made to protect or enhance the value of an existing asset or to facilitate its orderly realisation. The portfolio as a whole is being managed with a view to progressively returning funds to shareholders over a period of time.

In the first six months of 2012 the Directors have:

·     reviewed and prioritised the realisation prospects for each portfolio holding; and

·     taken action to reduce the cost structure of the investment management business to a level considered more appropriate to the asset realisation strategy - this has principally taken the form of headcount reductions.

The Company's performance to date in 2012 (including its revised cost structure) is in line with the above plan. Despite the difficult economic conditions, the Company's investments are continuing to perform satisfactorily and our focus is on transforming this performance into suitably timed realisations at appropriate valuations. The Directors continue to monitor opportunities within the secondary market (in particular for its fund interests) but do not currently believe that accepting discounted values for investments to achieve earlier cash proceeds is in the best interests of shareholders within the overall objectives of the realisation strategy.

There are active sales processes underway on certain of the Company's investments. In current market conditions it is particularly difficult to predict the outcome in terms of timing and proceeds; however the directors remain satisfied with progress to date.

Results

The only additions to the portfolio in the first six months of 2012 were capital calls by funds which amounted to £3.8 million (2011: £8.9 million). Distributions from our fund interests were £8.3 million (2011: £6.0 million). We also sold one of our fund interests for £1.0 million (a 4% premium to our book value) which reduced our outstanding capital commitments by £3.8 million.

At 30 June 2012 we had net cash of £32.9 million (31 December 2011: £30.6 million) and uncalled commitments to funds of £10.7 million (31 December 2011: £18.9 million). This reduction in our uncalled fund commitments is a result of fund calls in the first half of the year as well as the sale of the interest referred to above.

For the six months to 30 June 2012, the return on our portfolio was as follows:

		Six months ended 30 June				Year ended 31 December
		2012		2011		2011
Gains/(losses)		£'000		£'000		£'000
Quoted securities		(2,771)		(982)		(7,728)
Direct investments		(177)		6,862		12,995
Funds		1,714		3,632		3,467
		(1,234)		9,512		8,734
Being:
Realised gains/(losses), net		182		5,361		6,358
Unrealised gains/(losses), net		(1,416)		4,151		2,376
Total		(1,234)		9,512		8,734

Approximately 65% of the portfolio at 30 June 2012 is denominated in US dollars (31 December 2011: 65%) and the above table includes the impact of currency movements. In the six months ended 30 June 2012 the slight weakening of the US dollar against pound sterling resulted in an unrealised foreign currency loss of £1.2 million (2011: unrealised loss of £4.4 million). It remains the Board's policy not to hedge the Company's underlying non-sterling investments.

The loss on our quoted portfolio reflects the net impact of the changes in the capital markets during the period and is principally attributable to our holding in Weatherford International.

The loss on direct investments reflects the results of the directors' valuation as at 30 June 2012. As set out above, the portfolio has continued to perform satisfactorily; the valuation exercise did not result in a significant change in the aggregate valuation.

Details of our largest investments by valuation at 30 June 2012, representing about 74% of the total portfolio, are set out on page 6.

Portfolio subsidiaries

The half year financial information includes the consolidation of portfolio companies which are also subsidiaries ("portfolio subsidiaries"). Note 2 to the financial information includes an analysis of the results and net assets of the investment management business and reconciles these to the consolidated results including the portfolio subsidiaries.

The increase in consolidated revenues for the first six months of 2012 compared to the corresponding period in 2011 reflects the overall improved performance of the portfolio subsidiaries as well as the inclusion of 365iTMS, acquired in September 2011, which also accounts for the increase in consolidated operating expenses compared to the first half of 2011. The consolidated loss from continuing operations (compared to the consolidated profit in the corresponding period last year) reflects the consolidated loss on the investment portfolio of £1.9 million (2011: profit of £6.7 million).

As regards the individual companies:

·     Updata's revenues in the first half were £12.4 million, an 11% increase on the corresponding period last year. The business continues to increase the proportion of revenues earned from higher margin recurring rental business, compared to installation income earned at the inception of a contract. For the company's financial year ended 30 June 2012, rental revenues were 78% of total revenues, compared with 65% a year ago.

·     Nationwide Energy Partners grew revenues by 20% compared to the first half of 2011 which resulted in an EBITDA improvement of 12% for the same period.

·     Entuity's revenues recovered after a disappointing second half of 2011 which was characterised by challenging market conditions. Revenues for the first six months of 2012 were 18% ahead of the second half of 2011.

·     At Wesupply revenues were 10% higher than the first half last year and the company continues to trade profitably.

·     365iTMS (acquired in September 2011) continues to trade in line with our expectations at acquisition.

Principal risks and uncertainties

There are a number of risks which could adversely affect the business of the Group, the most significant of which in the context of current market conditions are:

·     The Group is subject to economic factors (such as the market demands of the sectors in which its investments operate) which may negatively impact the performance and growth rates of the Company's investments which may result in the Company's Net Asset Value and net income declining.

·     A lack of liquidity in the capital markets and an increased aversion to risk on the part of potential buyers could mean that the Company may not be able to realise its investments in line with planned timings and values. This could impact the timing and amount of capital returned to shareholders under the Company's asset realisation strategy.

·     The Group is subject to the impact of changes in market prices for its quoted investments, as well as to movements in interest rates and exchange rates. A significant proportion of our investment portfolio is denominated in a currency other than pounds sterling, principally US dollars. It remains the Board's policy not to hedge the Company's underlying non-sterling investments.

·     The ability to retain capable people is of fundamental importance to the Group's strategy and the loss of key staff could adversely affect investment returns. The Group operates in a competitive industry and aims to remunerate staff in line with market practice.

Further details of the risks and uncertainties that affect the Group are described on pages 18 and 19 of the Group's Annual Report for the year ended 31 December 2011.

Outlook

The Directors believe that the investment portfolio has the potential to release significant cash to shareholders in the medium term. The economic background remains very difficult, particularly for small private companies of the type constituting much of the portfolio, but the Company is focussed on optimising value and cash flow for the benefit of shareholders.

It remains the aim of the Directors to announce a first distribution to shareholders in the latter part of this year.

Nick Friedlos

Director

8 August 2012

LMS Capital plc                                                                                                          Appendix

Principal investments by valuation - 30 June 2012

Name	Geography	Type	Sector	Date of initial investment	Book value £'000
HealthTech Holdings	US	Unquoted	Technology	2007	25,320
Method Products*	US	Unquoted	Consumer	2004	18,762
Weatherford International	US	Quoted	Energy	1984	16,579
Apogee Group	UK	Unquoted	Technology	2010	13,500
Brockton Capital	UK	Fund	Property	2006	13,127
Updata Infrastructure UK	UK	Unquoted	Technology	2009	12,650
Nationwide Energy Partners	US	Unquoted	Energy	2010	10,445
BV Investment Partners	US	Funds	Buyouts	1996	8,889
Yes To, Inc*	US	Unquoted	Consumer	2008	8,254
Rave Reviews Cinemas	US	Unquoted	Consumer	2002	6,408
Penguin Computing*	US	Unquoted	Technology	2004	5,344
Primus Capital	US	Funds	Business services	2000	5,304
Voreda Capital	UK	Fund	Property	2008	5,263
Luxury Link*	US	Unquoted	Internet commerce	2006	5,029
Entuity	UK	Unquoted	Technology	2000	4,000

*San Francisco Equity Partners manages these investments.

 Condensed consolidated income statement

				Six months ended 30 June
				2012	2011
		Notes		£'000	£'000
Continuing operations
Revenue from sales of goods and services		2		29,963	25,025
Gains and losses on investments				(1,871)	6,724
Interest income				35	22
Other income from investments				42	1,437
				28,169	33,208
Operating expenses				(30,908)	(27,002)
(Loss)/profit before finance costs				(2,739)	6,206
Finance costs				(399)	(691)
(Loss)/profit before tax				(3,138)	5,515
Taxation				(799)	(316)
(Loss)/profit from continuing operations				(3,937)	5,199
Discontinued operations
Profit from discontinued operations (net of taxation)		3		-	1,065
(Loss)/profit for the period				(3,937)	6,264
Attributable to:
Equity holders of the parent				(4,258)	5,749
Non-controlling interests				321	515
				(3,937)	6,264
(Loss)/earnings per ordinary share - basic		4		(1.6)p	2.1p
(Loss)/earnings per ordinary share - diluted		4		(1.6)p	2.1p
Continuing operations
(Loss)/earnings per ordinary share - basic		4		(1.6)p	1.7p
(Loss)/earnings per ordinary share - diluted		4		(1.6)p	1.7p

The notes 1-8 form part of these financial statements.

Condensed consolidated statement of

comprehensive income

		Six months ended 30 June
		2012	2011
		£'000	£'000
(Loss)/profit  for the period		(3,937)	6,264
Exchange differences on translation of foreign operations		99	(529)
Total comprehensive (loss)/profit for the period		(3,838)	5,735

Attributable to:
Owners of the parent		(3,964)	5,220
Non-controlling interests		126	515
		(3,838)	5,735

The notes 1-8 form part of these financial statements.

Condensed consolidated statement

of financial position

			30 June 2012	31 December 2011
	Notes		£'000	£'000
Non-current assets
Property, plant and equipment			6,549	6,931
Intangible assets			35,106	33,381
Investments	5		181,591	185,201
Other long-term assets			20	20
Non-current assets			223,266	225,533
Current assets
Inventories			110	200
Operating and other receivables			15,199	14,881
Cash and cash equivalents			37,878	34,858
Current assets			53,187	49,939
Total assets			276,453	275,472
Current liabilities
Interest-bearing loans and borrowings			(3,069)	(2,420)
Operating and other payables			(14,321)	(10,163)
Deferred income			(7,026)	(7,221)
Current tax liabilities			(1,108)	(1,406)
Current liabilities			(25,524)	(21,210)
Non-current liabilities
Interest-bearing loans and borrowings			(10,633)	(9,406)
Deferred income			(1,962)	(1,777)
Deferred tax liabilities			(200)	(469)
Other long-term liabilities			(1,844)	(2,222)
Non-current liabilities			(14,639)	(13,874)
Total liabilities			(40,163)	(35,084)
Net assets			236,290	240,388
Equity
Share capital			27,380	27,268
Share premium account			470	17
Capital redemption reserve			5,635	5,635
Merger reserve			84,083	84,083
Foreign exchange translation reserve			1,214	1,115
Retained earnings			114,224	118,794
Equity attributable to owners of the parent			233,006	236,912
Non-controlling interests			3,284	3,476
Total equity			236,290	240,388

The financial statements on pages 7 to 19 were approved by the Board on 8 August 2012 and were signed on its behalf by:                                                                                               

N Friedlos

Director

The notes 1-8 form part of these financial statements.

Condensed consolidated statement

of changes in equity

Six months ended 30 June 2012           

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Merger reserve £'000	Translation reserve £'000	Retained earnings £'000	Total £'000	Non-controlling interests £'000	Total equity £'000
Balance at 1 January 2012	27,268	17	5,635	84,083	1,115	118,794	236,912	3,476	240,388
Total comprehensive income for the period
Loss for the period	-	-	-	-	-	(4,258)	(4,258)	321	(3,937)
Other comprehensive loss	-	-	-	-	99	-	99	(195)	(96)
Changes in ownership interests
Distributions to non-controlling interests	-	-	-	-	-	-	-	(318)	(318)
Transactions with owners, recorded directly in equity
Shares issued in the period	112	453	-	-	-	-	565	-	565
Share-based payments	-	-	-	-	-	(312)	(312)	-	(312)
Balance at 30 June 2012	27,380	470	5,635	84,083	1,214	114,224	233,006	3,284	236,290

Six months ended 30 June 2011

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Merger reserve £'000	Translation reserve £'000	Retained earnings £'000	Total £'000	Non-controlling interests £'000	Total equity £'000
Balance at 1 January 2011	27,265	-	5,635	84,083	899	117,827	235,709	3,121	238,830
Total comprehensive income for the period
Profit for the period	-	-	-	-	-	5,749	5,749	515	6,264
Other comprehensive loss	-	-	-	-	(529)	-	(529)	-	(529)
Changes in ownership interests
Distributions to non-controlling interests	-	-	-	-	-	-	-	(331)	(331)
Transactions with owners, recorded directly in equity
Shares issued in the period	2	20				-	22	-	22
Share-based payments	-	-	-	-	-	420	420	-	420
Balance at 30 June 2011	27,267	20	5,635	84,083	370	123,996	241,371	3,305	244,676

The notes 1-8 form part of these financial statements.

Condensed consolidated cash flow statement

			Six months ended 30 June
			2012	2011
			£'000	£'000
Cash flows from operating activities
(Loss)/profit for the period			(3,937)	6,264
Adjustments for:
Depreciation and amortisation			1,951	1,759
Losses/(gains) on investments			1,871	(6,724)
Gain on sale of discontinued operations, net of income tax			-	(1,166)
Translation differences			87	597
Share based payments, net of options exercised			253	420
Finance costs			399	691
Interest income			(35)	(22)
Income tax expense			799	316
			1,388	2,135
Change in inventories			90	1,155
Change in trade and other receivables			(318)	1,176
Change in trade and other payables			327	(927)
			1,487	3,539
Interest paid			(399)	(691)
Income tax paid			(1,097)	(1,363)
Net cash (used in) / from operating activities			(9)	1,485
Cash flows from investing activities
Interest received			35	22
Acquisition of property, plant and equipment			(1,418)	(1,749)
Acquisition of intangible assets			(2,029)	(463)
Disposals of property, plant and equipment			51	81
Disposal of discontinued operations, net of cash disposed of			-	310
Acquisition of investments			(4,532)	(9,706)
Acquisition of subsidiaries			-	(773)
Proceeds from sale of investments			9,446	48,276
Net cash from investing activities			1,553	35,998
Cash flows from/(used in) financing activities
Issue of new shares			-	22
Drawdown of interest bearing loans			2,367	-
Repayment of interest bearing loans			(491)	(13,983)
Distribution to non-controlling interests			(318)	-
Disposal of non-controlling interest without a change in control			-	(331)
Net cash from/(used in) financing activities			1,558	(14,292)
Net increase in cash and cash equivalents			3,102	23,191
Effect of exchange rate fluctuations			(82)	(224)
Cash and cash equivalents at the beginning of the period			34,858	13,229
Cash and cash equivalents at the end of the period			37,878	36,196
Cash and cash equivalents above comprise
Cash and cash equivalents			37,878	36,196
Bank overdrafts			-	-
Cash and cash equivalents at the end of the period			37,878	36,196

The notes 1-8 form part of these financial statements.

Notes to the financial information

1.        Principal accounting policies

Reporting entity

LMS Capital plc ("the Company") is domiciled in the United Kingdom. These condensed consolidated financial statements are presented in pounds sterling because that is the currency of the principal economic environment of the Company's operations. The condensed consolidated financial statements of the Company for the six months ended 30 June 2012 comprise the Company and its subsidiaries (together "the Group").

These condensed consolidated financial statements do not constitute the statutory accounts of the Group within the meaning of section 434(3) and 435(3) of the Companies Act 2006. The comparative figures for the financial year ended 31 December 2011 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor and delivered to the registrar of companies. The report of the auditor on the Company's statutory accounts for the financial year ended 31 December 2011 was (i) unqualified and (ii) drew attention by way of emphasis without qualifying their report to the accounts no longer being prepared on a going concern basis and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

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. The consolidated financial statements are prepared as if the Group had always been in existence. The difference between the nominal value of the Company's shares issued and the amount of the net assets acquired at the date of demerger has been credited to merger reserve.

The Company is an investment company but because it holds majority stakes in certain investments it is required to prepare group accounts that consolidate the results of such investments. The results of the Group's investment business on a standalone basis are set out in Note 2.

Statement of compliance

These condensed consolidated financial statements have been prepared in accordance with IAS 34: Interim Financial Reporting as adopted by the EU. 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 2011 which were prepared in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRS").

As required by the Disclosure and Transparency Rules of the Financial Services Authority, the condensed consolidated financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2011.

In previous years, the condensed consolidated financial statements have been prepared on a going concern basis. However, on 30 November 2011 the shareholders approved a change in the investment policy of the Company with the objective of conducting an orderly realisation of the assets of the Company in a manner that seeks to achieve a balance between an efficient return of cash to shareholders and maximising the value of the Company's investments. As the Directors intend to liquidate the Company following the realisation and settlement of the remaining net assets, which may be over a number of years, these condensed consolidated financial statements have not been prepared on a going concern basis. No adjustments were necessary to the investment valuations included in these condensed consolidated financial statements as a consequence of the change in the basis of preparation.

Taking account of the financial resources available to the Group, the directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook. After making enquiries the directors have a reasonable expectation that the Company and the Group have adequate resources for the foreseeable future.

These condensed consolidated financial statements were approved by the Board of Directors on 8 August 2012.

Significant accounting policies

Except as described below, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 December 2011.

Basis of consolidation

The financial statements comprise the financial statements of the Company and its subsidiary undertakings up to 30 June 2012. The Company's subsidiary undertakings fall into two categories:

o  Investment companies through which the Group conducts its investment activities; and

o  Certain portfolio companies which form part of the Group's investment activities but which, by virtue of the size of the Group's shareholding or other control rights, fall within the definition of subsidiaries under Adopted IFRS ("portfolio subsidiaries"). The portfolio subsidiaries are included within the consolidated financial information although they continue to be managed by the Group as investments held for capital appreciation.

Use of estimates and judgements

The preparation of condensed consolidated financial statements requires 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

Discontinued operations

A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier.  When an operation is classified as a discontinued operation, the comparative consolidated income statement is restated as if the operation has been discontinued from the start of the comparative period.

2.        Operating segments

The information below has been prepared using the definition of an operating segment in IFRS 8: Operating Segments. The Group determines and presents information on operating segments based on the information that is provided internally to the directors to enable them to assess performance and allocate resources.

As an investment company, the Group's primary focus is on the performance of its investment management business. Financial information for this segment is prepared on the basis that all investments are accounted for at fair value.

The information set out below therefore presents summarised financial information for the investment management business on a standalone basis, together with the adjustments arising from the summarised results and financial position of the portfolio subsidiaries.

The consolidation adjustments included below reflect the adjustments necessary to restate the portfolio subsidiaries from the basis included in the investment management segment (investments carried at fair value) to full consolidation in the Group's financial statements.

Segment profit or loss

	Six months ended 30 June 2012
		Reconciliation
	Investment management	Portfolio subsidiaries	Consolidation adjustments	Group total
	£'000	£'000	£'000	£'000
Revenues from sales of goods and services	-	29,963	-	29,963
Gains and losses on investments	(1,234)	-	(637)	(1,871)
Interest income	28	7	-	35
Other income from investments	376	-	(334)	42
Finance costs	-	(1,181)	782	(399)
Continuing operations	(4,650)	220	493	(3,937)
(Loss)/profit for the period	(4,650)	220	493	(3,937)

Six months ended 30 June 2011
		Reconciliation
	Investment management	Portfolio subsidiaries	Discontinued operations	Consolidation adjustments	Group total
	£'000	£'000	£'000	£'000	£'000
Revenues from sales of goods and services	-	25,025	-	-	25,025
Gains and losses on investments	9,512	-	-	(2,788)	6,724
Interest income	16	6	-	-	22
Other income from investments	1,502	2	-	(67)	1,437
Finance costs	(179)	(1,714)	-	1,202	(691)
Continuing operations	7,033	163	-	(1,997)	5,199
Discontinued operations	-	-	1,065	-	1,065
Profit/(loss) for the period	7,033	163	1,065	(1,997)	6,264

Segment net assets

30 June 2012
			Reconciliation
		Investment management	Portfolio subsidiaries	Consolidation adjustments	Group total
		£'000	£'000	£'000	£'000
Property, plant and equipment		702	5,847	-	6,549
Intangible assets		-	18,903	16,203	35,106
Investments		214,856	-	(33,265)	181,591
Other non-current assets		-	20	-	20
Non-current assets		215,558	24,770	(17,062)	223,266
Cash and cash equivalents		32,853	5,025	-	37,878
Other current assets		1,477	13,901	(69)	15,309
Total assets		249,888	43,696	(17,131)	276,453
Total liabilities		(9,294)	(50,123)	19,254	(40,163)
Net assets/(liabilities)		240,594	(6,427)	2,123	236,290

The net asset value of the investment management business at 30 June 2012 is wholly attributable to the equity holders of the parent.

31 December 2011
		Reconciliation
	Investment management	Portfolio subsidiaries	Consolidation adjustments	Group total
	£'000	£'000	£'000	£'000
Property, plant and equipment	759	6,172	-	6,931
Intangible assets	-	17,369	16,012	33,381
Investments	218,476	-	(33,275)	185,201
Other non-current assets	-	20	-	20
Non-current assets	219,235	23,561	(17,263)	225,533
Cash and cash equivalents	30,602	4,256	-	34,858
Other current assets	2,516	12,629	(64)	15,081
Total assets	252,353	40,446	(17,327)	275,472
Total liabilities	(7,360)	(46,775)	19,051	(35,084)
Net assets/(liabilities)	244,993	(6,329)	1,724	240,388

The net asset value of the investment management business at 31 December 2011 is wholly attributable to the equity holders of the parent.

The carrying amount and gain and losses of the investments of the investment management business can be further analysed as follows:

	30 June 2012				31 December 2011
	UK	US	Total		UK	US	Total
Asset type	£'000	£'000	£'000		£'000	£'000	£'000
Funds	30,958	70,233	101,191		32,610	72,361	104,971
Quoted	961	20,380	21,341		860	23,339	24,199
Unquoted	44,576	47,748	92,324		42,570	46,736	89,306
	76,495	138,361	214,856		76,040	142,436	218,476

	Six months ended 30 June 2012				Six months ended 30 June 2011
	Realised gains/(losses)	Unrealised gains/(losses)	Total		Realised gains/(losses)	Unrealised gains/(losses)	Total
Asset type	£'000	£'000	£'000		£'000	£'000	£'000
Funds	(274)	1,988	1,714		56	3,576	3,632
Quoted	4	(2,775)	(2,771)		5,333	(6,315)	(982)
Unquoted	452	(629)	(177)		(28)	6,890	6,862
	182	(1,416)	(1,234)		5,361	4,151	9,512

Revenues                   

The Group's revenues to external customers comprise:

				Six months ended 30 June
				2012	2011
				£'000	£'000
Continuing operations
IT services and software				22,386	16,095
Specialist manufacturing				14	2,697
Energy and related services				7,563	6,233
				29,963	25,025

3.        Discontinued operations

In April 2011 the Group sold its entire interests in CopperEye Limited and Kizoom Limited.  

Results of discontinued operations

			Six months ended 30 June
			2012	2011
			£'000	£'000
Revenues			-	392
Expenses			-	(493)
Results from operating activities			-	(101)
Taxation			-	-
Results from operating activities, net of tax			-	(101)
Gain on sale of discontinued operations, net			-	1,166
Tax on gain on sale of discontinued operations			-	-
Gain for the period			-	1,065
Basic earnings per ordinary share			-	0.4p
Diluted earnings per ordinary share			-	0.4p

4.        (Loss)/earnings per ordinary share

The calculation of the basic and diluted (loss)/earnings per share, in accordance with IAS 33, is based on the following data:

			Six months ended
		30 June 2012	30 June 2011
		£'000	£'000
Earnings
(Loss)/earnings for the purposes of earnings per share being net (loss)/profit attributable to equity holders of the parent		(4,258)	5,749
(Loss)/earnings for the purposes of continuing earnings per share being net (loss)/profit from continuing operations attributable to equity holders of the parent		(4,258)	4,684
Number of shares		Number	Number
Weighted average number of ordinary shares for the purposes of basic earnings per shares		272,997,489	272,651,265
Effect of dilutive potential ordinary shares:
Share options and performance shares		2,794,451	7,292,531
Weighted average number of ordinary shares for the purposes of diluted earnings per share		275,791,940	279,943,796
(Loss)/earnings per share
Basic		(1.6)p	2.1p
Diluted		(1.6)p	2.1p
(Loss)/earnings per share - continuing operations
Basic		(1.6)p	1.7p
Diluted		(1.6)p	1.7p

There was no dilution effect on the loss for the six months ended 30 June 2012.

5.        Investments

The Group's investments comprise:

			Carrying amount
			30 June 2012		31 December 2011
			£'000		£'000
Quoted securities			21,341		24,198
Unquoted securities			59,059		56,032
Funds			101,191		104,971
			181,591		185,201

6.        Capital commitments

			30 June 2012		31 December 2011
			£'000		£'000
Outstanding commitments to funds			10,718		18,894
			10,718		18,894

The outstanding commitments to funds comprise unpaid calls in respect of funds where a member of the Group is a limited partner.

7.        Related party transactions

Transactions with related parties during the period were consistent in nature and scope with those disclosed in Note 29 to the Group's annual financial statements for the year ended 31 December 2011.

8.        Contingent liabilities

The Company has guaranteed the indebtedness of certain of the Group's investments; the amount outstanding under these arrangements at 30 June 2012 was £540,000 (31 December 2011: £517,000).

Statement of directors' responsibilities

The Directors who served during the six months ended 30 June 2012 and their respective responsibilities are as set out on pages 10 and 11 of the Group's Annual Report for the year ended 31 December 2011.

We confirm that to the best of our knowledge:

a      the condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU; 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 consolidated 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 Group during that period; and any changes in the related party transactions described in the last annual report that could do so.

N Friedlos                                                                                           AC Sweet

Director                                                                                               Chief Financial Officer

8 August 2012

Independent review report to LMS Capital plc

Introduction

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 2012 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and the related explanatory notes. This condensed set of financial statements has not been prepared on the going concern basis for the reason set out in note 1 to the condensed set of financial statements. 

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. 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 Ireland) 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.

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 2012 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

Iain Bannatyne

for and on behalf of KPMG Audit Plc
Chartered Accountants
8 Salisbury Square

London EC4Y 8BB

8 August 2012

 

END

 

 

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