Interim Results

RNS Number : 1782D

LMS Capital PLC

11 September 2008

 



11 September 2008

LMS Capital plc

Interim Results for the six months to 30 June 2008

and appointment of Nominated Adviser and Joint Broker

The Board of LMS Capital plc, ("LMS Capital" or "the Company"), is pleased to announce the Company's interim results for the six months to 30 June 2008.  

Financial highlights

• 110p Net Asset Value per share (31 December 2007: 101p) an increase of 9%

• Net Asset Value rose to £308.4 million (31 December 2007: £289.0 million)

• Net realised gains on investments were £15.5 million (six months ended 30 June 2007: net gains of £2.4 million)

• Profit for the period was £22.8 million (six months ended 30 June 2007: £7.6 million)

Operational highlights:

• Successful sale of Energy Cranes in March 2008 for an enterprise value of £142 million with net proceeds to the Company of £83 million in cash

• AssetHouse Technology sold in June 2008

• Cityspace acquired Kizoom Limited in May 2008 

Robert Rayne, Chief Executive Officer of LMS Capital, said:  

"Against the background of difficult market conditions in the first half of 2008 the Company has achieved a very satisfactory financial result for the period. The highlight of the first six months was the successful sale of Energy Cranes which resulted in a realised gain of £17.9 million. The Company's investment strategy of risk diversification in its investment portfolio has resulted in a 9% increase in net asset value per share compared to the end of 2007. Looking ahead, we continue to see new investment opportunities and our available liquid resources mean that we are well placed to take advantage of these."

Appointment of Nominated Adviser and Joint Broker

The Company announces that it has appointed JP Morgan Cazenove Limited as its Nominated Adviser with effect from today and, along with JPMorgan Cazenove Limited, Winterflood Securities Limited has been appointed as joint broker.

For further information please contact:

LMS Capital plc Robert Rayne, Chief Executive Officer Martin Pexton, Managing Director Tony Sweet, Chief Financial Officer	020 7935 3555
JP Morgan Cazenove Limited Michael Wentworth-Stanley	020 7588 2828
Brunswick Group LLP Simon Sporborg Leonora Burtenshaw	020 7404 5959

About LMS Capital 

LMS Capital plc is an independent investment company whose shares are traded on AIM. The investment portfolio comprises investments in both the US and UK, with a spread of early stage and second round technology investments, development capital and mature company buy-outs. 

www.lmscapital.com

Half year review 2008

In the six months to 30 June 2008 net asset value rose to £308.4m or 110p per share from £289m or 101p per share in December 2007. During this period the FTSE All-Share index fell by 12%.

LMS Capital maintains its objective of producing high rates of return though a risk diversified portfolio. This diversification is achieved through geographical spread, primarily the US and UK, and through investment in assets of varying maturities. The major focus is in small to medium sized companies in our preferred areas of energy, applied technology, media & leisure, medical & healthcare and real estate. 90% of investment is focused in development, growth and post IPO companies.

The Company is differentiated from other groups by the almost exclusive use of its own balance sheet. As it is not a manager of third party funds it is not constrained by the typical three to four year investment period with a similar liquidation period. Our holding periods are determined by the period necessary to optimise shareholders' returns.

Results

The interim financial information includes the consolidation of portfolio companies which are also subsidiaries ("portfolio subsidiaries"). Note 2 to the financial information shows the results and net assets of the investment management business separate from the results and net assets of the portfolio subsidiaries. 

Investment management

Net Asset Value at 30 June 2008 was £308.4 million, an increase of £19.4 million since 31 December 2007. The Net Asset Value per share was 110p (31 December 2007 - 101p).  The return on the investment portfolio for the six months ended 30 June 2008 was £25.8 million as follows:

		Six months ended	Six months  ended	Year ended
		30 June  2008	30 June  2007	31 December  2007
Gains/(losses)		£'000	£'000	£'000
Realised
Quoted securities		759	924	2,910
Unquoted securities		14,271	-	-
Funds		503	1,440	3,794
		15,533	2,364	6,704
Unrealised
Quoted securities		13,893	4,138	8,240
Unquoted securities		(7,824)	(293)	15,374
Funds		4,213	4,398	6,421
		10,282	8,243	30,035
Total		25,815	10,607	36,739

On 31 March 2008 we sold our entire interest in Energy Cranes International Limited to a management buyout team backed by Close Brothers Private Equity. This transaction placed an enterprise value on the business of £142 million and the net proceeds to LMS Capital were £82.9 million in cash resulting in a realised gain (over 31 December 2007 book value) of £17.9 million. The Company's return on equity from its investment in Energy Cranes was in excess of 4.5 times, giving an internal rate of return of approximately 40%.

Following a strategic review of AssetHouse Technologies Limited we concluded that the development potential of the company would only be realised if it were part of a larger group operating in its business sector. Consequently in June 2008 we sold our interest in the company to Amino Technologies plc for £1.4m on a debt-free basis, payable in cash. Net cash proceeds were £0.7 million and the realised loss on sale was £3.7 million.  

The unrealised gains on quoted securities reflect principally the strong performance during the first half of the year of stocks in the energy sector and much of this amount arises on our holding of Weatherford International. The write down of £7.8 million on unquoted investments reflects our present approach to valuations in this very unstable investment market.

Additions to the investment portfolio in the first six months of 2008 were £22.3 million, including fund calls of £7.4 million and follow on investments of £10.0 million, principally to meet the operating cash requirements of those businesses. 

Fund calls include £2.0 million to San Francisco Equity Partners representing our share of its investment in Yes To Inc, an Israel-based consumer products company that owns the Yes To Carrots line of natural personal-care products, with multinational distribution.

Follow on investments include £1.9 million of acquisition finance made available to Cityspace Limited to fund its purchase of Kizoom Limited, a market leader in delivering real-time transport information to the internet and mobile devices.

New investments include positions in Gulfmark Offshore, Inc for £1.5 million. Gulfmark provides marine services to companies involved in offshore exploration and production of oil and natural gas; it is listed on the New York Stock Exchange. We also purchased an interest in Pims Group, a private UK company, for £2.5 million. Pims designs and installs pumping systems for domestic and commercial sewage and storm water. It also provides maintenance services for such systems. This is a co-investment with Inflexion 2006 Buyout Fund.

Details of our twenty largest investments by valuation at 30 June 2008 are set out on page 4.

Portfolio subsidiaries

The portfolio subsidiaries included in the interim financial information made satisfactory progress during the first half of 2008. Our software and related services businesses continue to see increasing interest in their products although the difficult economic conditions have impacted the conversion of the resulting opportunities to revenues. Offshore Tool and Energy Corporation, our specialist manufacturing business, had a disappointing start to 2008 although recent months have seen an improvement in revenue performance.

The results of Energy Cranes and AssetHouse Technology are included within discontinued operations.

Share capital

On 13 June 2008 the Company bought back 5.5 million of its ordinary shares at an average price of £0.725 per share. These shares were subsequently cancelled and the current number of ordinary shares in issue is 280,929,228.

Your Board regularly reviews the possibility of purchasing shares in the market and the Directors will use such authority if they believe, at the relevant time, that it is in the best interests of the shareholders.

Outlook

Despite the uncertain economic environment we are seeing a continuing inflow of new investment opportunities. Our available liquid resources mean that we are well placed to take advantage of these.  

The Company has a broadly-based, risk-diversified portfolio of investments and your Board is confident that the Company's strategy will result in strong medium to long-term growth in shareholder value.

Jonathan Agnew Robert A Rayne

Chairman Chief Executive Officer

11 September 2008

LMS Capital plc

Top 20 investments by valuation - 30 June 2008

Name	Country	Activity	Book value	Book value
			30 June  2008	31 December 2007
			£'000	£'000
Weatherford International Ltd	US	Oilfield services	40,278	28,349
San Francisco Equity Partners	US	Technology, media and retail	26,398	21,731
ProStrakan Group plc	UK	Specialty pharmaceuticals	13,993	11,705
Cityspace Limited	UK	Urban information networks	12,902	12,902
Brockton Capital Fund I L.L.P.	UK	Real estate opportunity fund	11,668	11,668
Chyron Corporation	US	Media technology	7,854	7,303
Rave Reviews Cinemas	US	Cinema operator	7,131	7,253
Wesupply Limited	UK	Supply chain execution management software	6,675	6,650
Inflexion 2003 Buyout Fund	UK	Mid-market buyouts	6,093	3,666
Spectrum Equity Investors IV L.P.	US	Communications and IT	5,678	6,044
Amadeus Capital Partners II L.P.	UK	Early state technology	4,696	5,634
Venture Production plc	UK	Acquires, operates and revitalises stranded oil and gas assets	4,345	1,980
Boston Ventures L.P. VI	US	Media and leisure investment fund	4,107	4,749
BJ Services Company	US	Oil and gas field services	4,011	3,056
Entuity Limited	UK	Network management software	4,000	4,000
CopperEye Limited	UK	Indexing technology software	4,000	4,000
Vio Worldwide Limited	UK	Digital workflow	4,000	7,000
EMAC Illyrian Land Fund II	UK	Real estate fund focused on Eastern Europe	3,956	2,751
Elateral Limited	UK	Marketing software	3,500	1,500
Boston Ventures L.P. V	US	Media, publishing, communications and leisure investment fund	3,110	3,389

Consolidated income statement 

		Notes	Six months ended 30 June 2008 £'000	Six months ended 30 June 2007 £'000	Year ended 31 December 2007 £'000
				Restated	Restated
Continuing operations
Revenue from sales of goods and services		2	8,245	6,095	15,541
Gains and losses on investments			15,916	10,178	10,899
Interest income			631	548	825
Investment and other income			606	26	507
			25,398	16,847	27,772
Operating expenses			(16,310)	(10,592)	(28,810)
Profit/(loss) before finance costs			9,088	6,255	(1,038)
Finance costs			(54)	(245)	(75)
Profit/(loss) before tax			9,034	6,010	(1,113)
Taxation			(156)	(94)	(387)
Profit/(loss) from continuing operations			8,878	5,916	(1,500)
Discontinued operations
Profit from discontinued operations (net of taxation)		3	50,755	1,470	1,108
Profit/(loss) for the period			59,633	7,386	(392)
Attributable to:
Equity holders of the parent			59,744	7,127	(529)
Minority interests			(111)	259	137
			59,633	7,386	(392)
Basic earnings/(loss) per ordinary share		4	20.9p	2.5p	(0.2)p
Diluted earnings per ordinary share		4	20.6p	2.5p	-
Continuing operations
Basic earnings/(loss) per ordinary share		4	3.1p	2.0p	(0.5)p
Diluted earnings per ordinary share		4	3.1p	2.0p	-

The notes on pages 10 to 20 form part of these financial statements.

Consolidated balance sheet 

		30 June 2008	30 June 2007	31 December 2007
		£'000	£'000	£'000
Non-current assets
Property, plant and equipment		2,844	13,417	14,255
Intangible assets		32,830	42,327	71,257
Investments		208,993	201,329	183,512
Other long term assets		44	77	197
Non-current assets		244,711	257,150	269,221
Current assets
Inventories		402	4,616	5,738
Operating and other receivables		8,285	37,253	46,299
Cash and cash equivalents		70,283	13,122	14,548
Current assets		78,970	54,991	66,585
Total assets		323,681	312,141	335,806
Current liabilities
Bank overdrafts		(10)	(6)	(285)
Interest-bearing loans and borrowings		(1,438)	-	(7,842)
Operating and other payables		(5,337)	(22,444)	(29,891)
Deferred income		(2,830)	(2,251)	(2,199)
Current tax liabilities		-	-	(601)
Current liabilities		(9,615)	(24,701)	(40,818)
Non-current liabilities
Interest-bearing loans and borrowings		(1,007)	(28,006)	(36,576)
Deferred income		(2,486)	(861)	(2,582)
Deferred tax liabilities		(339)	(31)	-
Provisions		-	-	(1,384)
Non-current liabilities		(3,832)	(28,898)	(40,542)
Total liabilities		(13,447)	(53,599)	(81,360)
Net assets		310,234	258,542	254,446
Equity
Share capital		28,093	28,643	28,643
Capital redemption reserve		4,807	4,257	4,257
Merger reserve		84,083	84,083	84,083
Foreign exchange translation reserve		(263)	(980)	(867)
Retained earnings		192,710	137,963	133,047
Equity attributable to owners of the parent		309,430	253,966	249,163
Minority interest		804	4,576	5,283
Total Equity		310,234	258,542	254,446

The financial statements on pages 6 to 20 were approved by the Board on 11 September 2008 and were signed on its behalf by:                        

RA Rayne

Director

The notes on pages 10 to 20 form part of these financial statements.

Consolidated statement of

recognised income and expense

	Six months ended 30 June 2008 £'000	Six months ended 30 June 2007 £'000	Year ended 31 December 2007 £'000
Exchange differences on translation of foreign operations	(392)	(80)	56
Net (loss)/income recognised directly in equity	(392)	(80)	56
Profit/(loss) for the period	59,633	7,386	(392)
Total recognised income and expense	59,241	7,306	(336)
Attributable to:
Equity holders of the parent	59,352	7,074	(469)
Minority interests	(111)	232	133
	59,241	7,306	(336)

The notes on pages 10 to 20 form part of these financial statements.

  Consolidated cash flow statement 

	Notes	Six months ended 30 June 2008 £’000	Six months ended 30 June 2007 £’000	Year ended 31 December 2007 £'000
Cash flows from operating activities
Profit/(loss) for the period		59,633	7,386	(392)
Adjustments for:
Depreciation		587	942	2,190
Gains on investments		(15,916)	(10,178)	(10,899)
Gain on discontinued operations, net of income tax		(49,436)	-	-
Translation differences		(378)	299	53
Share based payments		568	288	3,522
Finance costs		54	820	2,445
Interest income		(631)	(548)	(918)
Income tax expense		156	1,048	3,055
		(5,363)	57	(944)
Change in inventories		(9,990)	3,779	4,224
Change in trade and other receivables		13,456	(5,718)	(12,183)
Change in trade and other payables		(7,268)	(3,952)	1,977
		(9,165)	(5,834)	(6,926)
Interest paid		-	(820)	(2,445)
Income tax paid		-	(1,371)	(2,997)
Net cash used in operating activities		(9,165)	(8,025)	(12,368)
Cash flows from investing activities
Interest received		631	548	918
Acquisition of property, plant and equipment		(1,389)	(1,924)	(4,764)
Proceeds from disposals of property, plant and equipment		2	-	2,757
Disposal of discontinued operations, net of cash disposed of	3	80,543	-	-
Acquisition of investments		(17,758)	(28,066)	(54,671)
Acquisition of subsidiaries		(1,500)	(1,610)	(12,388)
Proceeds from sale of investments		7,247	20,675	46,849
Net cash from/(used in) investing activities		67,776	(10,377)	(21,299)
Cash flows from financing activities
Repurchase of own shares		(4,021)	-	-
Drawdown of interest bearing loans		1,474	1,952	18,364
Interest paid		(54)	-	-
Net cash from financing activities		(2,601)	1,952	18,364
Net decrease in cash and cash equivalents		56,010	(16,450)	(15,303)
Cash and cash equivalents at the beginning of the period		14,263	29,566	29,566
Cash and cash equivalents at the end of the period		70,273	13,116	14,263
Cash and cash equivalents above comprise
Cash and cash equivalents		70,283	13,122	14,548
Bank overdrafts		(10)	(6)	(285)
Cash and cash equivalents at the end of the period		70,273	13,116	14,263

The notes on pages 10 to 20 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 financial statements are presented in pounds sterling because that is the currency of the principal economic environment of the Company's operations. The consolidated financial statements of the Company for the six months ended 30 June 2008 comprise the Company and its subsidiaries (together "the Group").

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. Consolidated financial statements were prepared for the nine months ended 31 December 2006 to reflect the two step demerger process: this comprised an initial common control transaction followed by a subsequent demerger of the Group. 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. In order to present information that is consistent with other investment companies, the results of the Group's investment business on a stand alone basis are set out in Note 2. 

Basis of preparation

These condensed consolidated financial statements have been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards as adopted for use in the European Union ("Adopted IFRS"). These financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2007, which were prepared in accordance with Adopted IFRS.

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 2007.

During the financial year ended 31 December 2007 the Group decided to adopt early IFRS 8: Operating Segments ("IFRS 8"), which defines requirements for the disclosure of financial information of an entity's operating segments. IFRS 8 replaces IAS 14: Segment Reporting. It follows the 'management approach', which requires the disclosure of segment information based on the internal reports regularly reviewed by management in order to assess each segment's performance and to allocate resources to them. IFRS 8 is effective for reporting periods beginning on or after 1 January 2009. Early adoption is permitted.

Notes to the financial information

1.    Principal accounting policies (continued)

Basis of consolidation

The financial statements comprise the financial statements of the Company and its subsidiary undertakings up to 30 June 2008. The Company's subsidiary undertakings fall into two categories:

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

• 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 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. Note 6 includes details of the companies concerned. 

Discontinued operations

A discontinued operation is a component of the Group's business that represents a separate 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 income statement is re-presented as if the operation had been discontinued from the start of the comparative period.

Notes to the financial information

2.    Operating segments

The information below has been prepared using the definition of an operating segment in IFRS 8: Operating Segments which sets out the requirements for the disclosure of financial information of an entity's operating segments. IFRS 8 requires an entity to present segment information on the same basis as the financial information which is reviewed regularly by management to assess performance and to 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, together with the adjustments arising from the summarised results and financial position of the portfolio subsidiaries. Adjustments for Energy Cranes International Limited ("Energy Cranes") are shown separately because of the size of this business relative to the others.

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.

Consolidated income statement

Six months ended 30 June 2008
			Reconciliation
				Discontinued operations
		Investment management	Portfolio subsidiaries	Energy Cranes	Other	Consolidation adjustments	Group total
		£'000	£'000	£'000	£'000	£'000	£'000
Revenues from sales of goods and services to external customers		-	8,245	-	-	-	8,245
Gains and losses on investments		25,815	-	-	-	(9,899)	15,916
Interest income		611	34	-	-	(14)	631
Investment and other income		606	-	-	-	-	606
Finance costs		-	(1,423)	-	-	1,369	(54)
Continuing operations		22,814	(5,423)	-	-	(8,513)	8,878
Discontinued operations		-	-	57,556	(6,801)	-	50,755
Profit/(loss) for the period		22,814	(5,423)	57,556	(6,801)	(8,513)	59,633

Notes to the financial information

2.    Operating segments (continued)

Six months ended 30 June 2007 (Restated)
			Reconciliation
				Discontinued operations
		Investment management	Portfolio subsidiaries	Energy Cranes	Other	Consolidation adjustments	Group total
		£'000	£'000	£'000	£'000	£'000	£'000
Revenues from sales of goods and services to external customers		-	6,095	-	-	-	6,095
Gains and losses on investments		10,607	(429)	-	-	-	10,178
Interest income		546	2	-	-	-	548
Investment and other income		597	-	-	-	(571)	26
Finance costs		-	(245)	-	-	-	(245)
Continuing operations		7,585	(1,435)	-	-	(234)	5,916
Discontinued operations		-	-	2,003	(1,104)	571	1,470
Profit/(loss) for the period		7,585	(1,435)	2,003	(1,104)	337	7,386

Year ended 31 December 2007 (Restated)
			Reconciliation
				Discontinued operations
		Investment management	Portfolio subsidiaries	Energy Cranes	Other	Consolidation adjustments	Group total
		£'000	£'000	£'000	£'000	£'000	£'000
Revenues from sales of goods and services to external customers		-	15,541	-	-	-	15,541
Gains and losses on investments		36,739	(260)	-	-	(25,580)	10,899
Interest income		814	11	-	-	-	825
Investment and other income		1,508	-	-	-	(1,001)	507
Finance costs		-	(1,564)	-	-	1,489	(75)
Continuing operations		29,836	(6,256)	-	-	(25,080)	(1,500)
Discontinued operations		-	-	1,425	(2,095)	1,778	1,108
Profit/(loss) for the year		29,836	(6,256)	1,425	(2,095)	(23,302)	(392)

  Notes to the financial information

2.    Operating segments (continued)

Consolidated statement of net assets

30 June 2008
			Reconciliation
		Investment management	Portfolio subsidiaries	Consolidation adjustments	Group total
		£'000	£'000	£'000	£'000
Property, plant and equipment		334	2,510	-	2,844
Intangible assets		-	1,165	31,665	32,830
Investments		238,747	79	(29,833)	208,993
Other non-current assets		-	44	-	44
Non-current assets		239,081	3,798	1,832	244,711
Cash and cash equivalents		68,571	1,712	-	70,283
Other current assets		3,239	5,448	-	8,687
Total assets		310,891	10,958	1,832	323,681
Total liabilities		(1,804)	(42,325)	30,682	(13,447)
Net assets/(liabilities)		309,087	(31,367)	32,514	310,234

The net asset value of the investment management business at 30 June 2008 includes £308,368,000 attributable to the equity holders of the parent and £719,000 attributable to minority interests.

30 June 2007
		Reconciliation
		Portfolio subsidiaries
	Investment management	Energy Cranes	Other	Consolidation adjustments	Group total
	£'000	£'000	£'000	£'000	£'000
Property, plant and equipment	20	11,550	1,847	-	13,417
Intangible assets	-	18,688	-	23,639	42,327
Investments	255,953	-	237	(54,861)	201,329
Other non-current assets	-	77	-	-	77
Non-current assets	255,973	30,315	2,084	(31,222)	257,150
Cash and cash equivalents	10,250	1,681	1,191	-	13,122
Other current assets	2,305	34,785	4,779	-	41,869
Total assets	268,528	66,781	8,054	(31,222)	312,141
Total liabilities	(1,570)	(43,826)	(28,677)	20,474	(53,599)
Net assets/(liabilities)	266,958	22,955	(20,623)	(10,748)	258,542

The net asset value of the investment management business at 30 June 2007 includes £266,239,000 attributable to the equity holders of the parent and £719,000 attributable to minority interests.

Notes to the financial information

2.    Operating segments (continued)

31 December 2007
		Reconciliation
		Portfolio subsidiaries
	Investment management	Energy Cranes	Other	Consolidation adjustments	Group total
	£'000	£'000	£'000	£'000	£'000
Property, plant and equipment	311	11,197	2,747	-	14,255
Intangible assets	-	32,497	-	38,760	71,257
Investments held at fair value through profit or loss	282,120	-	200	(98,808)	183,512
Interests in joint ventures	-	197	-	-	197
Non-current assets	282,431	43,891	2,947	(60,048)	269,221
Cash and cash equivalents	8,240	5,060	1,248	-	14,548
Other current assets	1,557	43,878	6,602	-	52,037
Total assets	292,228	92,829	10,797	(60,048)	335,806
Total liabilities	(2,504)	(71,391)	(40,954)	33,489	(81,360)
Net assets/(liabilities)	289,724	21,438	(30,157)	(26,559)	254,446

The net asset value of the investment management business at 31 December 2007 includes £289,005,000 attributable to the equity holders of the parent and £719,000 attributable to minority interests.

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

	As at and for the six months ended 30 June 2008		As at and for the six months ended 30 June 2007		As at and for the year ended  31 December 2007
	Gains/(losses) on investments	Fair value at period end	Gains/(losses) on investments	Fair value at period end	Gains/(losses) on investments	Fair value at period end
	£'000	£'000	£'000	£'000	£'000	£'000
Type of security
UK
Quoted	2,013	21,695	(4,723)	24,885	(6,680)	17,476
Unquoted	6,929	49,066	-	93,109	16,203	116,551
Funds	2,577	33,071	-	21,102	1,866	28,579
Total UK	11,519	103,832	(4,723)	139,096	11,389	162,606
US
Quoted	12,639	58,578	9,785	43,630	17,830	46,348
Unquoted	(482)	15,239	(293)	12,460	(829)	15,371
Funds	2,139	61,098	5,838	60,767	8,349	57,795
Total US	14,296	134,915	15,330	116,857	25,350	119,514
Total portfolio	25,815	238,747	10,607	255,953	36,739	282,120

Notes to the financial information

2.    Operating segments (continued)

Revenues        

The Group's revenues to external customers comprise: 

			Six months ended  30 June  2008	Six months ended  30 June  2007	Year  ended  31 December 2007
			£'000	£'000	£'000
				Restated	Restated
Continuing operations
Software and related services			5,715	1,607	5,530
Specialist manufacturing			2,530	4,488	10,011
			8,245	6,095	15,541

Geographical information

			Six months ended  30 June  2008	Six months ended  30 June  2007	Year  ended  31 December 2007
Revenues			£'000	£'000	£'000
				Restated	Restated
Continuing operations
United Kingdom			4,345	603	3,211
United States of America			2,071	3,944	11,346
Other countries			1,829	1,548	984
			8,245	6,095	15,541

			30 June  2008	30 June  2007	31 December 2007
Non-current assets			£'000	£'000	£'000
United Kingdom			109,794	123,229	115,442
United States of America			134,917	133,261	152,629
Other countries			-	660	1,150
			244,711	257,150	269,221

Geographical information on revenue is based on the location of customers and on assets is based on the location of the assets. 

Major customers

Revenues from one customer of the Group's specialist manufacturing operations represented approximately 9% of the Group's total revenues for the six months ended 30 June 2008.

Notes to the financial information

3.    Discontinued operations

In March 2008 the Group sold its entire interest in Energy Cranes International Limited and in June 2008 the Group sold its entire interest in AssetHouse Technology limited. These businesses were not discontinued operations or classified as held for sale as at 31 December 2007 and the comparative income statements have been re-presented to show the discontinued operations separately from continuing operations.

Results of discontinued operations

			Six months ended  30 June  2008	Six months ended  30 June  2007	Year  ended  31 December 2007
			£'000	£'000	£'000
Revenues			33,142	55,193	114,243
Expenses			(31,240)	(52,769)	(110,467)
Results from operating activities			1,902	2,424	3,776
Taxation			(583)	(954)	(2,668)
Results from operating activities, net of tax			1,319	1,470	1,108
Gain on sale of discontinued operations, net			49,436	-	-
Tax on gain on sale of discontinued operations			-	-	-
Profit for the period			50,755	1,470	1,108
Basic earnings per ordinary share			17.8p	0.5p	0.4p
Diluted earnings per ordinary share			17.5p	0.5p	0.4p

Cash flows from/(used in) discontinued operations

			Six months ended  30 June  2008	Six months ended  30 June  2007	Year  ended  31 December 2007
			£'000	£'000	£'000
Net cash (used in)/from operating activities			(8,977)	(3,075)	1,609
Net cash used in investing activities			(849)	(1,871)	(16,325)
Net cash from financing activities			7,375	1,904	15,497
Net cash from/(used in) discontinued operations			(2,451)	(3,042)	781

Effect of disposal on the financial position of the Group

			30 June  2008
			£'000
Property, plant and equipment			12,216
Intangible assets			39,587
Investments			527
Other non-current assets			-
Inventories			15,326
Trade and other receivables			25,763
Cash and cash equivalents			3,043
Bank overdrafts			-
Interest bearing loans and borrowings			(43,447)
Trade and other payables			(10,813)
Provisions and accruals			(8,052)
Net assets and liabilities			34,150

Notes to the financial information

3.    Discontinued operations (continued)

Effect of disposal on the financial position of the Group (continued)

			30 June  2008
			£'000
Consideration received, satisfied in cash			83,586
Cash disposed of			(3,043)
Net cash inflow			80,543

4.    Earnings/(loss) per ordinary share

Basic

The calculation of basic earnings/(loss) loss per ordinary share is based on the profit of £59,744,000 (six months ended 30 June 2007: profit of £7,127,000; year ended 31 December 2007: loss of £529,000), being the profit/(loss) for the period attributable to the parent, divided by the weighted average number of ordinary shares in issue during the period 285,888,244 (six months ended 30 June 2007: 286,429,228; year ended 31 December 2007: 286,429,228).

The calculation of basic earnings/(loss) loss per ordinary share for continuing operations is based on the profit of £8,989,000 (six months ended 30 June 2007: profit of £5,916,000; year ended 31 December 2007: loss of £1,381,000), being the profit/(loss) for the period attributable to the parent, divided by the weighted average number of ordinary shares in issue during the period of 285,888,244 (six months ended 30 June 2007: 286,429,228; year ended 31 December 2007: 286,429,228).

Diluted 

The calculation of diluted earnings per ordinary share is based on the profit of £59,744,000 (six months ended 30 June 2007: profit of £7,127,000), divided by the weighted average number of ordinary shares in issue during the period of 290,184,682 (six months ended 30 June 2007: 290,759,266) after taking account of the potential dilutive effect of share options issued under the Company's share option plans. There was no dilution effect in the year ended 31 December 2007.

The calculation of diluted earnings per ordinary share for continuing operations is based on the profit of £8,989,000 (six months ended 30 June 2007: profit of £5,916,000) divided by the weighted average number of ordinary shares in issue during the period of 290,184,682 (six months ended 30 June 2007: 290,759,266) after taking account of the potential dilutive effect of share options issued under the Company's share option plans. There was no dilution effect in the year ended 31 December 2007.

Notes to the financial information

5.    Reconciliation of movement in capital and reserves

	Share capital £’000	Capital Redemption Reserve £’000	Merger Reserve £’000	Translation Reserve £’000	Retained earnings £’000`	Total £’000	Minority interest £'000	Total equity £'000
Balance at 31 December 2006	28,643	4,257	84,083	(927)	130,548	246,604	4,344	250,948
Total recognised income and expense	-	-	-	60	(529)	(469)	133	(336)
Share based payments	-	-	-	-	3,028	3,028	494	3,522
Minority interest on acquisitions	-	-	-	-	-	-	312	312
Balance at 31 December 2007	28,643	4,257	84,083	(867)	133,047	249,163	5,283	254,446
Total recognised income and expense	-	-	-	(392)	59,744	59,352	(111)	59,241
Disposal of portfolio subsidiaries	-	-	-	996	3,372	4,368	(4,368)	-
Share based payments	-	-	-	-	568	568	-	568
Repurchase of own shares	(550)	550	-	-	(4,021)	(4,021)	-	(4,021)
Balance at 30 June 2008	28,093	4,807	84,083	(263)	192,710	309,430	804	310,234

Notes to the financial information 

6.    Subsidiaries

The subsidiaries comprising the Group's investment management business (as set out in Note 2) are as follows:

Name	Country of incorporation	Holding %	Activity
International Oilfield Services Limited	Bermuda	100	Investment holding
Lion Investments Limited	England and Wales	100	Investment holding
Lion Property Investments Limited	England and Wales	100	Investment holding
Lioness Property Investments Limited	England and Wales	100	Investment holding
LMS Capital (Bermuda) Limited	Bermuda	100	Investment holding
LMS Capital (ECI) Limited	England and Wales	100	Investment holding
LMS Capital (General Partner) Limited	Bermuda	100	Investment holding
LMS Capital Group Limited	England and Wales	100	Investment holding
LMS Capital (GW) Limited	Bermuda	100	Investment holding
LMS Capital Holdings Limited	England and Wales	100	Investment holding
LMS Tiger Investments Limited	England and Wales	100	Investment holding
LMS Tiger Investments (II) Limited	England and Wales	100	Investment holding
Tiger Investments Limited	England and Wales	100	Investment holding
Westpool Investment Trust plc	England and Wales	100	Investment holding

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

Name	Country of incorporation	Holding %	Activity
Cityspace Limited	England and Wales	94	Urban digital networks and intelligent transport systems
CopperEye Limited	England and Wales	76	Specialised search solutions for business transaction data
Entuity limited	England and Wales	68	Network management software
Offshore Tool and Energy Corporation	United States of America	100	Specialist engineering design and fabrication
Wesupply Limited	England and Wales	99	Supply chain management software

 

END

 

 

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