Half-Year Results for the six months to 30 June...
27 August 2009
LMS Capital plc
Half Year Results for the six months to 30 June 2009
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 2009.
Highlights
* Net Asset Value per share was 83p (31 December 2008: 89p) a decrease of 7%
* Net Asset Value was £226.0 million (31 December 2008: £241.5 million)
* The return on the investment portfolio was a loss of £10.7 million after
recording unrealised currency losses of £16.5 million
* The loss for the period was £15.5 million (six months ended 30 June 2008:
profit of £22.8 million; year ended 31 December 2008: loss of £40.8
million)
* Investment of £6.2 million in July for a 53.3% interest in Updata
Infrastructure UK Limited ("Updata") in support of a management buyout
* Successful migration of the Company's shares to trading on the Main Market
of the London Stock Exchange
Robert Rayne, Chief Executive Officer of LMS Capital, said:
"The Company is focused on building the sales and profitability of the existing
portfolio of investments while looking at attractively priced acquisitions. The
general lack of liquidity is slowing down the growth of companies but also
throwing up interesting investment opportunities. Our recent acquisition of a
controlling interest in Updata is illustrative of this. Although the business
climate in the first half of the year has been difficult, and we expect this to
continue for some time, we are well positioned to use our strong balance sheet
to acquire new investments and bolster our existing companies with add on
acquisitions."
For further information please contact:
LMS Capital plc 020 7935 3555
Robert Rayne, Chief Executive Officer
Martin Pexton, Managing Director
Tony Sweet, Chief Financial Officer
J.P. Morgan Cazenove Limited 020 7588 2828
Michael Wentworth-Stanley
Brunswick Group LLP 020 7404 5959
Simon Sporborg
Robin Tozer
Oliver Hughes
About LMS Capital
LMS Capital plc is an international investment company whose shares are listed
on the London Stock Exchange. 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
Interim management report 2009
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 sectors of energy services, applied technology, media & consumer,
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 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.
As well as continuing to evaluate new investment opportunities, during the
first six months of 2009 we have ensured that our directly managed unquoted
investments have focussed on realistic revenue targets, with adjustments to
their cost base where appropriate. In the current environment value improvement
in the existing portfolio is a priority for the Company.
Results
The half year 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.
In the six months to 30 June 2009 net asset value declined to £226.0 million or
83p per share from £241.5 million or 89p per share at 31 December 2008.
Investment management
The return on the investment portfolio for the six months ended 30 June 2009
was a loss of £10.7 million as follows:
6 months ended 30 June Year to
31 December
2009 2008 2008
£'000 £'000 £'000
Realised gains/
(losses)
Quoted securities 799 759 574
Unquoted securities - 14,271 14,620
Funds (52) 503 2,114
747 15,533 17,308
Unrealised gains/
(losses)
Quoted securities 10,485 13,893 (31,122)
Unquoted securities (11,504) (7,824) (27,506)
Funds (10,437) 4,213 4,572
(11,456) 10,282 (54,056)
Total (10,709) 25,815 (36,748)
The above figures include £16.5 million of unrealised foreign currency losses,
principally in respect of the US dollar (six months ended 30 June 2008: loss of
£0.1 million; year ended 31 December 2008: gain of £45.5 million). It is the
Board's current policy not to hedge the Company's underlying non-sterling
investments.
The movements in the investment portfolio in the six months ended 30 June 2009
were as follows:
£'000
1 January 2009 202,049
Additions in the six 16,002
months
Book value of (4,935)
realisations
Valuation adjustments 5,008
Foreign currency losses (16,464)
30 June 2009 201,660
Additions to the portfolio in the first six months of 2009 include fund calls
of £9.2 million and follow on investments of £5.9 million, principally to meet
the operating cash requirements of businesses in the unquoted portfolio. We
also invested £0.4 million in Pims Group to enable it to acquire a
complementary business in the water services business and £0.5 million to
acquire directly a minority stake in Penguin Computing which is a San Francisco
Equity Partners portfolio company. There were no additions to the quoted
portfolio.
Realisations include £1.9 million in respect of fund distributions and £3.0
million for sales of quoted securities. We sold two of our smaller US holdings
- Cantel Medical and Monogram Biosciences - and part of our holding (148,000
shares) in Venture Production. We have retained 352,000 shares in that company.
Unrealised gains/(losses) in the first half of the year were as follows:
Valuation Currency Total
£'000 £'000 £'000
Quoted securities 14,504 (4,019) 10,485
Unquoted securities (8,612) (2,892) (11,504)
Funds (884) (9,553) (10,437)
5,008 (16,464) (11,456)
The valuation losses on unquoted securities reflect the results of the
directors' valuation as at 30 June 2009. They include a write down of £2.8
million in respect of CopperEye after a disappointing trading performance in
the first half of the year and write downs of £1.8 million on Rave Reviews
Cinemas and £1.7 million on 7 Global based on comparable market factors.
Details of our twenty largest investments by valuation at 30 June 2009 are set
out on page 6.
Prostrakan Group plc (in which the Company holds 17.6 million shares, being
8.79% of its issued share capital) recently announced its 2009 half year
results which were in line with expectations and its share price has increased
significantly between the end of June and the date of this report.
On 13 July 2009 we announced that we had acquired a 53.3% interest in Updata
Infrastructure UK Limited ("Updata") for £6.2 million in a management buyout.
Updata designs, builds and manages cost-effective high-capacity broadband
networks for public sector organisations in the UK. The company differentiates
itself from its competitors through its culture of excellence in customer
service.
Also in July we sold part of our interest in Inflexion 2006 Buyout Fund for
approximately £1 million in cash; this transaction also reduced our outstanding
commitment to this fund by £1.4 million.
On 24 July 2009 Viking Moorings, an investment within the Inflexion 2003 Buyout
Fund, was sold in a secondary buyout producing proceeds to the Company of £2.5
million.
Portfolio subsidiaries
The portfolio subsidiaries included in the half year financial information made
satisfactory progress during the first half of 2009. Of particular note was
Wesupply Limited's success in being selected by Sainsbury's as the
business-to-business (B2B) platform for connectivity to 4,000 of its suppliers.
Offshore Tool and Energy Corporation (our specialist manufacturing business)
showed good progress in the first half of the year as it expands its product
offering to the water industry as well as serving its existing oil and gas
markets.
The increase in consolidated operating expenses (which include cost of sales)
in the first half of 2009 compared to the corresponding period in the prior
year is principally a result of higher revenues and the inclusion of the
results of Citizen Limited in the first half of 2009 following its becoming a
subsidiary in the second half of 2008.
Admission to the Official List
On 30 June 2009 the Company's shares commenced trading on the London Stock
Exchange's Main Market for listed securities. The Board believes that this
migration to the Official List will have a number of benefits for shareholders,
including offering investors greater liquidity.
Principal risks and uncertainties
The principal risks and uncertainties that affect the Group are described on
page 71 of the Group's Annual Report for the year ended 31 December 2008. These
are still considered the most relevant risks and uncertainties which the Group
faces and they could have an impact on the Group's performance in the second
half of the financial year.
We expect the difficult business environment to continue at least for the rest
of 2009 with, in particular, a scarcity of traditional sources of finance and
low levels of realisations by our fund interests. Movements in exchange rates
and in the prices of our quoted portfolio could have a significant impact on
our results in the second half.
Outlook
We are seeing a continuing inflow of new investment opportunities and 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
27 August 2009
LMS Capital plc - Top 20 investments by valuation 30 June 2009
Investment Geography Type of Date of Cost £ Book Effective % of
Investment initial 000 Value equity net
investment £000 interest assets
1 Weatherford US Quoted 2001 19,923 24,112 <1% 11%
International
Ltd
Oilfield
services
2 Method Products US Fund 2004 6,308 19,227 13% 8%
portfolio
Consumer company
products
3 Prostrakan UK Quoted 1999 23,717 15,226 8.7% 7%
Group plc
Specialty
pharmaceuticals
4 Rave Reviews US Unquoted 2002 6,406 6,029 13% 3%
Cinemas
Cinema
operations
5 KizoomLimited UK Unquoted 1997 21,456 6,000 94% 3%
(formerly
Cityspace
Limited)
Transport
information
services
6 Wesupply UK Unquoted 2000 18,886 5,508 99% 2%
Limited
Supply chain
connectivity
software
7 Penguin US Fund 2004 5,088 4,943 19% 2%
Computing portfolio
Linux server company
systems
8 Gulfmark US Quoted 2008 6,689 4,160 <1% 2%
Offshore Inc
International
offshore
services
9 Luxury Link US Fund 2006 2,460 3,707 14% 2%
portfolio
Internet company
commerce
10 Elateral UK Unquoted 2000 7,160 3,500 40% 2%
Limited
Marketing
software
11 Healthcare US Unquoted 2007 2,471 3,014 8% 1%
Management
Systems Inc
Hospital
information
systems
12 Entuity Limited UK Unquoted 2000 10,757 3,000 68% 1%
Network
management
software
13 Coppereye UK Unquoted 2001 13,205 3,000 76% 1%
Limited
Indexing
technology
software
14 Pims Group UK Unquoted 2008 2,905 2,905 10% 1%
Waste water
systems and
services
15 Venture UK Quoted 2007 2,370 2,854 <1% 1%
Production plc
Operation of
stranded oil
and gas assets
16 Yes To, Inc US Fund 2008 2,499 2,377 11% 1%
portfolio
Consumer company
products
17 Telespree US Unquoted 1999 3,830 2,185 25% 1%
Communications
Network
solutions for
mobile devices
18 Chyron US Quoted 1995 1,438 2,131 17.8% 1%
Corporation
Media
technology
19 BJ Services US Quoted 2007 3,627 2,050 <1% 1%
Oil and gas
field services
20 CitizenLimited UK Unquoted 2002 20,850 2,000 84% 1%
(trading as Vio
)
Advertising
workflow
services
Condensed consolidated income statement
Notes Six months Six
ended months
ended
30 June
2009 30 June
2008
£'000
£'000
Continuing operations
Revenue from sales of goods and 2 13,293 8,245
services
Gains and losses on investments 2 (4,665) 15,916
Interest income 135 631
Investment and other income 135 606
8,898 25,398
Operating expenses (22,198) (16,310)
(Loss)/profit before finance (13,300) 9,088
costs
Finance costs (153) (54)
(Loss)/profit before tax (13,453) 9,034
Taxation (127) (156)
(Loss)/profit from continuing (13,580) 8,878
operations
Discontinued operations
Profit from discontinued 3 - 50,755
operations (net of taxation)
(Loss)/profit for the period (13,580) 59,633
Attributable to:
Equity holders of the parent (13,580) 59,744
Minority interests - (111)
(13,580) 59,633
Basic (loss)/earnings per 4 (5.0)p 20.9p
ordinary share
Diluted (loss)/earnings per 4 (5.0)p 20.6p
ordinary share
Continuing operations
Basic (loss)/earnings per 4 (5.0)p 3.1p
ordinary share
Diluted (loss)/earnings per 4 (5.0)p 3.1p
ordinary share
The notes on pages 12 to 20 form part of these financial statements.
Condensed consolidated statement of
comprehensive income
Six months Six months
ended ended
30 June 30 June
2009 2008
£'000 £'000
(Loss)/profit for the period (13,580) 59,633
Exchange differences on translation of foreign (395) (392)
operations
Total comprehensive (loss)/income for the period (13,975) 59,241
Attributable to:
Equity holders of the parent (13,975) 59,352
Minority interests - (111)
(13,975) 59,241
The notes on pages 12 to 20 form part of these financial statements.
Condensed consolidated statement of financial position
30 June 31 December
2009 2008
Notes £'000 £'000
Non-current assets
Property, plant and equipment 2,994 3,216
Intangible assets 5 26,741 26,798
Investments 180,176 179,546
Other long term assets 24 15
Non-current assets 209,935 209,575
Current assets
Inventories 392 319
Operating and other receivables 6,556 8,309
Cash and cash equivalents 27,822 42,615
Current assets 34,770 51,243
Total assets 244,705 260,818
Current liabilities
Bank overdrafts (185) -
Interest-bearing loans and borrowings (1,860) (1,656)
Operating and other payables (8,691) (10,335)
Deferred income (2,035) (3,426)
Current tax liabilities (741) (410)
Current liabilities (13,512) (15,827)
Non-current liabilities
Interest-bearing loans and borrowings (787) (1,170)
Deferred income (2,871) (2,697)
Deferred tax liabilities (36) (41)
Other long-term liabilities (18) -
Non-current liabilities (3,712) (3,908)
Total liabilities (17,224) (19,735)
Net assets 227,481 241,083
Equity
Share capital 27,265 27,265
Capital redemption reserve 5,635 5,635
Merger reserve 84,083 84,083
Foreign exchange translation reserve 817 1,212
Retained earnings 109,534 122,741
Equity attributable to owners of the parent 227,334 240,936
Minority interest 147 147
Total Equity 227,481 241,083
The financial statements on pages 7 to 20 were approved by the Board on 27
August 2009 and were signed on its behalf by:
RA Rayne
Director
The notes on pages 12 to 20 form part of these financial statements.
Condensed consolidated statement of changes in equity
Six months ended 30 June 2009
Share Capital Merger Foreign e Retained Total Minority Total
capital xchange earnings equity
redemption reserve £'000 interest
£'000 translation £'000 £'000
reserve £'000 £'000
reserve
£'000
£'000
Balance at 1 27,265 5,635 84,083 1,212 122,741 240,936 147 241,083
January 2009
Loss for the - - - - (13,580) (13,580) - (13,580)
period
Other - - - (395) - (395) - (395)
comprehensive
income/(loss)
Share based - - - - 373 373 - 373
payments
Balance at 27,265 5,635 84,083 817 109,534 227,334 147 227,481
30 June 2009
Six months ended 30 June 2008
Share Capital Merger Foreign e Retained Total Minority Total
capital xchange earnings equity
redemption reserve £'000 interest
£'000 translation £'000 £'000
reserve £'000 £'000
reserve
£'000
£'000
Balance at 1 28,643 4,257 84,083 (867) 133,047 249,163 5,283 254,446
January 2008
Profit for - - - - 59,744 59,744 (111) 59,633
the period
Other - - - (392) - (392) - (392)
comprehensive
income/(loss)
Disposal of - - - 996 3,372 4,368 (4,368) -
portfolio
subsidiaries
Share based - - - - 568 568 - 568
payments
Repurchase of (550) 550 - - (4,021) (4,021) - (4,021)
own shares
Balance at 28,093 4,807 84,083 (263) 192,710 309,430 804 310,234
30 June 2008
The notes on pages 12 to 20 form part of these financial statements.
Condensed consolidated cash flow statement
Six months Six months
ended ended
30 June 30 June
2009 2008
£'000 £'000
Cash flows from operating activities
(Loss)/profit for the period (13,580) 59,633
Adjustments for:
Depreciation and amortisation 591 587
Losses/(gains) on investments 4,665 (15,916)
Gain on discontinued operations, net - (49,436)
of income tax
Loss on disposal of Fixed Assets 28 -
Translation differences 370 (355)
Share based payments 373 568
Finance costs 153 54
Interest income (135) (631)
Income tax expense 127 156
(7,408) (5,340)
Change in inventories (72) (9,990)
Change in trade and other receivables 1,753 13,456
Change in trade and other payables (2,646) (7,268)
(8,373) (9,142)
Interest paid (153) (54)
Net cash used in operating activities (8,526) (9,196)
Cash flows from investing activities
Interest received 135 631
Acquisition of property, plant and (544) (1,389)
equipment
Proceeds from disposals of property, 2 2
plant and equipment
Disposal of discontinued operations, - 80,543
net of cash
Acquisition of investments (10,958) (17,758)
Acquisition of subsidiaries - (1,500)
Proceeds from sale of investments 5,308 7,247
Net cash (used in)/from investing (6,057) 67,776
activities
Cash flows from financing activities
Repurchase of own shares - (4,021)
(Repayment)/drawdown of interest (179) 1,474
bearing loans
Net cash used in financing activities (179) (2,547)
Net (decrease)/increase in cash and (14,762) 56,033
cash equivalents
Effect of exchange rate fluctuations (216) (23)
Cash and cash equivalents at the 42,615 14,263
beginning of the period
Cash and cash equivalents at the end 27,637 70,273
of the period
Cash and cash equivalents above
comprise
Cash and cash equivalents 27,822 70,283
Bank overdrafts (185) (10)
Cash and cash equivalents at the end 27,637 70,273
of the period
The notes on pages 12 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
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 2009 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 and have not been audited. The comparative figures
for the financial year ended 31 December 2008 are not the Company's statutory
accounts for that financial year. Those accounts have been reported on by the
Company's auditors and delivered to the Registrar of Companies. The report of
the auditors was (i) unqualified (ii) did not include a reference to any
matters to which the auditors drew attention to by way of emphasis without
qualifying their report, and (iii) did not contain a statement under section
237(2) or (3) of the Companies Act 1985.
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. 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.
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 2008, 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 2008, except as set out below for the changes in
presentation required by revised IAS 1: Presentation of Financial Statements
(2007), which became effective as of 1 January 2009.
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 to continue in operational existence for the foreseeable
future. Accordingly they continue to adopt the going concern basis in preparing
the condensed consolidated financial statements for the six months ended 30
June 2009.
Notes to the financial information
1. Principal accounting policies (continued)
These condensed consolidated financial statements were approved by the Board of
Directors on 27 August 2009.
Operating segments
The Group adopted IFRS 8: Operating Segments ("IFRS 8") early with effect from
the financial year ended 31 December 2007. IFRS 8 defines requirements for the
disclosure of financial information of an entity's operating segments and is
effective for reporting periods beginning on or after 1 January 2009.
Basis of consolidation
The condensed consolidated financial statements comprise the financial
statements of the Company and its subsidiary undertakings up to 30 June 2009.
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 10 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.
Presentation of financial statements
The Group applies revised IAS 1: Presentation of Financial Statements (2007),
which became effective as of 1 January 2009. This change in accounting policy
only impacts presentation aspects; there is no impact on net assets and
earnings per share.
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.
In preparing these condensed consolidated financial statements, 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 as at and for the year ended 31 December
2008.
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. 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 stand alone basis as a
single segment, 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 in
the prior periods 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.
Segment profit or loss
Six months ended 30 June 2009
Reconciliation
Investment Portfolio Consolidation Group
management total
subsidiaries adjustments
£'000 £'000 £'000 £'000
Revenues from - 13,293 - 13,293
sales of goods and
services
to external
customers
Gains and losses (10,709) - 6,044 (4,665)
on investments
Interest income 133 2 - 135
Investment and 135 - - 135
other income
Finance costs - (3,345) 3,192 (153)
Profit/(loss) for (15,474) (7,342) 9,236 (13,580)
the period
Notes to the financial information
2. Operating segments (continued)
Six months ended 30 June 2008
Reconciliation
Discontinued
operations
Investment Portfolio Energy Other Consolidation Group
management total
subsidiaries Cranes adjustments
£'000 £'000 £'000 £'000 £'000 £'000
Revenues from - 8,245 - - - 8,245
sales of goods
and services
to external
customers
Gains and losses 25,815 - - - (9,899) 15,916
on investments
Interest income 611 34 - - (14) 631
Investment and 606 - - - - 606
other income
Finance costs - (1,423) - - 1,369 (54)
Continuing 22,814 (5,423) - - (8,513) 8,878
operations
Discontinued - - 57,556 (6,801) - 50,755
operations
Profit/(loss) for 22,814 (5,423) 57,556 (6,801) (8,513) 59,633
the period
Segmentnet assets
30 June 2009
Reconciliation
Investment Portfolio Consolidation Group
management subsidiaries total
adjustments
£'000 £'000 £'000 £'000
Property, plant and 220 2,774 - 2,994
equipment
Intangible assets - 3,140 23,601 26,741
Investments 201,660 - (21,484) 180,176
Other non-current assets - 24 - 24
Non-current assets 201,880 5,938 2,117 209,935
Cash and cash equivalents 26,030 1,792 - 27,822
Other current assets 801 6,147 - 6,948
Total assets 228,711 13,877 2,117 244,705
Total liabilities (2,531) (74,403) 59,710 (17,224)
Net assets/(liabilities) 226,180 (60,526) 61,827 227,481
The net asset value of the investment management business at 30 June 2009
includes £226,033,000 attributable to the equity holders of the parent and £
147,000 attributable to minority interests.
Notes to the financial information
2. Operating segments (continued)
31 December 2008
Reconciliation
Investment Portfolio Consolidation Group
management subsidiaries total
adjustments
£'000 £'000 £'000 £'000
Property, plant and 288 2,928 - 3,216
equipment
Intangible assets - 3,196 23,602 26,798
Investments held at fair 202,049 1 (22,504) 179,546
value through profit or loss
Other non-current assets - 15 - 15
Non-current assets 202,337 6,140 1,098 209,575
Cash and cash equivalents 41,293 1,322 - 42,615
Other current assets 309 8,319 - 8,628
Total assets 243,939 15,781 1,098 260,818
Total liabilities (2,283) (70,604) 53,152 (19,735)
Net assets/(liabilities) 241,656 (54,823) 54,250 241,083
The net asset value of the investment management business at 31 December 2008
includes £241,509,000 attributable to the equity holders of the parent and £
147,000 attributable to minority interests.
The carrying amount and gain and losses of the investments of the investment
management business can be further analysed as follows:
30 June 2009 31 December 2008
UK US Total UK US Total
Asset type £'000 £'000 £'000 £'000 £'000 £'000
Funds 30,926 67,824 98,750 29,911 72,390 102,301
Quoted 20,597 33,814 54,411 19,409 27,097 46,506
Unquoted 32,569 15,930 48,499 33,686 19,556 53,242
84,092 117,568 201,660 83,006 119,043 202,049
Six months ended 30 June 2009 Six months ended 30 June
2008
Realised Unrealised Total Realised Unrealised Total
gains/ gains/ gains gains/
(losses) (losses) (losses)
Asset type £'000 £'000 £'000 £'000 £'000 £'000
Funds (52) (10,437) (10,489) 503 4,213 4,716
Quoted 799 10,485 11,284 759 13,893 14,652
Unquoted - (11,504) (11,504) 14,271 (7,824) 6,447
747 (11,456) (10,709) 15,533 10,282 25,815
Notes to the financial information
2. Operating segments (continued)
Revenues
The Group's revenues to external customers comprise:
Six months Six months
ended ended
30 June 30 June
2009 2008
£'000 £'000
Continuing operations
Software and related services 8,411 5,715
Specialist manufacturing 4,882 2,530
13,293 8,245
3. Discontinued operations
There were no disposals constituting discontinued operations in the six months
ended 30 June 2009. 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. Full details of these transactions
were included in note 9 to the Group's annual financial statements for the year
ended 31 December 2008.
4. (Loss)/earnings per ordinary share
Basic
The calculation of basic (loss)/earnings per ordinary share is based on the
loss of £13,580,000 (six months ended 30 June 2008: profit of £59,744,000),
being the (loss)/profit for the period attributable to the parent, divided by
the weighted average number of ordinary shares in issue during the period
272,640,952 (six months ended 30 June 2008: 285,888,244).
The calculation of basic (loss)/earnings per ordinary share for continuing
operations is based on the loss of £13,580,000 (six months ended 30 June 2008:
profit of £8,989,000) being the (loss)/profit for the period attributable to
the parent, divided by the weighted average number of ordinary shares in issue
during the period of 272,640,952 (six months ended 30 June 2008: 285,888,244).
Diluted
There was no dilution effect in the six months ended 30 June 2009.
The calculation of diluted earnings per ordinary share for the six months ended
30 June 2008 is based on the profit of £59,744,000, divided by the weighted
average number of ordinary shares in issue during the period of 290,184,682
after taking account of the potential dilutive effect of share options issued
under the Company's share option plans.
The calculation of diluted earnings per ordinary share for continuing
operations for the six months ended 30 June 2008 is based on the profit of £
8,989,000 divided by the weighted average number of ordinary shares in issue
during the period of 290,184,682 after taking account of the potential dilutive
effect of share options issued under the Company's share option plans.
Notes to the financial information
5 Intangible assets
Software Goodwill Total
Licence
£'000 £'000 £'000
Cost
Balance at 1 January 2008 - 75,922 75,922
Acquisitions through - 1,159 1,159
business combinations
Disposals of businesses - (39,586) (39,586)
Balance at 30 June 2008 - 37,495 37,495
Balance at 1 January 2009 2,088 40,656 42,744
and 30 June 2009
Accumulated impairment
lossesand amortisation
Balance at 1 January 2008 - 4,665 4,665
and 30 June 2008
Balance at 1 January 2009 57 15,889 15,946
Amortisation 57 - 57
Impairment loss - - -
Balance at 30 June 2009 114 15,889 16,003
Carrying amounts
At 1 January 2008 - 71,257 71,257
At 30 June 2008 - 32,830 32,830
At 1 January 2009 2,031 24,767 26,798
At 30 June 2009 1,974 24,767 26,741
For the purpose of impairment testing, goodwill is allocated to each portfolio
subsidiary which represents the lowest level within the Group at which the
goodwill is monitored for internal management purposes. The recoverable amount
of each unit has been determined on the basis of its fair value less costs to
sell or value in use, whichever is the greater.
6. Capital commitments
30 June 31
2009 December
2008
£'000 £'000
Outstanding commitments to funds 64,473 71,104
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 2008.
Notes to the financial information
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 2009
was £2.1 million (31 December 2008: £2.3 million).
9. Subsequent events
On 10 July 2009 the Group acquired a 53.3% interest in Updata Infrastructure UK
Limited for consideration of £6.2 million which was settled in cash.
10. Subsidiaries
The subsidiaries comprising the Group's investment management business (as set
out in Note 2) are as follows:
Name Country of Holding Activity
incorporation
%
LMS Capital Group Limited England and Wales 100 Investment holding
Lion Cub Investments Limited England and Wales 100 Dormant
Lion Cub Property Investments England and Wales 100 Investment holding
Limited
LMS Capital Holdings Limited England and Wales 100 Investment holding
LMS Capital (ECI) Limited England and Wales 100 Investment holding
Lion Investments Limited England and Wales 100 Investment holding
LMS Capital (Bermuda) Limited Bermuda 100 Investment holding
LMS Capital (GW) Limited Bermuda 100 Investment holding
LMS Capital (General Partner) Bermuda 100 Investment holding
Limited
Tiger Investments Limited England and Wales 100 Investment holding
LMS Tiger Investments (II) England and Wales 100 Investment holding
Limited
International Oilfield Bermuda 100 Investment holding
Services Limited
Westpool Investment Trust plc England and Wales 100 Investment holding
LMS Tiger Investments Limited England and Wales 100 Investment holding
Lion Property Investments England and Wales 100 Investment holding
Limited
Lioness Property Investments England and Wales 100 Investment holding
Limited
In addition to the above, the Group's carried interest arrangements are
operated through three limited partnerships (LMS Capital 2007 LP, LMS Capital
2008 LP and LMS Capital 2009 LP) which are registered in Bermuda.
Notes to the financial information
10. Subsidiaries (continued)
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 Holding Activity
incorporation
%
Offshore Tool and United States 100 Specialist engineering design
Energy Corporation of America and fabrication
Citizen Limited England and 84 Services to the advertising,
Wales publishing and graphic arts
industries
Entuity limited England and 68 Network management software
Wales
Wesupply Limited England and 99 Supply chain management
Wales software
CopperEye Limited England and 76 Specialised search solutions
Wales for business transaction data
Kizoom Limited England and 94 Intelligent transport
Wales information networks
(formerly Cityspace
Limited)
Statement of directors' responsibilities
We confirm that to the best of our knowledge:
* the condensed consolidated financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
and
* the interim management report includes a fair review of the information
required by:
* 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
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
* 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.
RA Rayne AC Sweet
Chief Executive Officer Chief Financial Officer
27 August 2009
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
2009 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. 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 34 Interim 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 2009 is not prepared, in all
material respects, in accordance with IAS 34 as adopted by the EU and the DTR
of the UK FSA.
Anthony Cecil
for and on behalf of KPMG Audit Plc
Chartered Accountants
8 Salisbury Square
London EC4Y 8BB
27 August 2009