Net Asset Value(s) 3rd Quarter 2020 update

RNS Number : 3998D

LMS Capital PLC

28 October 2020

 

28   October 2020

LMS Capital plc

Third Quarter 2020 Update

LMS Capital plc ("LMS" or "the Company"), the investment company, is issuing the following update covering the period from 1 July 2020 to date.

Financial Highlights

• Unaudited Net Asset Value ("NAV") at 30 September 2020 was £47.0 million (58.2p per share). This compares to £46.5 million (57.6p per share) at 30 June 2020;

• At the half year the Company announced the initiation of a progressive annual dividend policy targeting a dividend equal to approximately 1.5% of each financial year's closing NAV, subject to the Company's liquidity, investment income generated, distributable profits and market conditions.  The first interim dividend under this policy, of £0.2 million (£0.3p per share) was paid to shareholders in September 2020;

• Cash at 30 September was £22.0 million. This is after having funded £7.0 million of cash for its previously announced $9 million investment in Dacian petroleum ("Dacian") - see below.

Investment in Dacian

• On 12 August 2020 the Company announced that it was leading an investor group which has conditionally agreed to finance the acquisition by Dacian from OMV Petrom, the Romanian oil company, of a business operating 40 onshore oil and gas fields located in Romania;

• Completion of the acquisition by Dacian is conditional upon Dacian obtaining certain Romanian Government regulatory approvals. During September, in accordance with the investment agreement, the investor group were called to deposit funds to be held pending conclusion of the approval process;

• The Dacian team has reported to the investor group that, whilst not yet completed, the approval process is proceeding well and it is their current expectation that the necessary approvals will be obtained and the transaction will complete before the current contractual backstop date in early January 2021; and

• LMS will provide a further update to the market once the approval process is completed.

Unaudited Net Asset Value at 30 September 2020

The increase in the NAV over the quarter arises from £1.7 million of unrealised gains on the investment portfolio, offset by £0.5 million of portfolio foreign exchange losses from the weakening of the US Dollar against the sterling, overheads of £0.4 million and other non-portfolio foreign exchange losses of £0.1 million.

The 30 September 2020 NAV is summarised below:

	Unaudited 30 June 2020		Unaudited 30 September 2020
	£ millions
Quoted Investments	0.5		0.4
Unquoted Investments	8.8		8.3
Funds	10.0		10.8
Subtotal Investment portfolio	19.3		19.5
Cash	29.0		22.0
Dacian Investment - Funds Deposited	-		7.0
Other Net Assets/Liabilities	(1.8)		(1.5)
Net Asset Value	46.5		47.0

The NAV at the end of September is based on the valuation of the Company's investments as at 30 June 2020, adjusted for transactions in the three months ended 30 September 2020, price movements on quoted securities, movements in foreign currency exchange rates, cash calls and distributions from funds, and latest information from third party fund managers.

The following table summarises the change in NAV for the third quarter:

	£ millions
Unaudited NAV as at 30 June 2020	46.5
Unrealised Portfolio Gains	1.7
Unrealised Portfolio Foreign Exchange Losses	(0.5)
Overheads	(0.4)
Unrealised Other Foreign Exchange Losses	(0.1)
Interim Dividend	(0.2)
Unaudited NAV as at 30 September 2020	47.0

The portfolio net unrealised gains of £1.7 million,excluding foreign exchange movements, are summarised below.

Quoted Investments

The Company ' s quoted investment valuations reduced by a net £ 0.2 million during the third quarter of 2020. This comprised unrealised underlying market price reductions of £0.2 million during the quarter, primarily from a decline in the market price of IDE Group Holdings plc.

Unquoted Investments

The Company ' s unquoted investments include assets managed by SFEP, YesTo and ICU Eyewear, and our direct holdings in Medhost, Elateral and Northbridge Industrial Services plc.

Total unquoted investment unrealised gains were £0.7 million for the quarter. Primus Capital, the lead fund manager on Medhost, increased its latest valuation resulting in an unrealised gain of £0.6 million for the third quarter on the Company's holding in Medhost. Other net gains were £0.1 million.

Funds

The Company's fund investments include its holding in Brockton Capital Fund 1, Opus Capital and three other smaller fund interests.

Total fund unrealised gains were £1.2 million for the third quarter as fund valuations increased, primarily from Opus, and an escrow distribution from a previous exit. The carrying value of the funds is based on the latest information from the respective fund managers, generally the 30 June 2020 fund valuation reports.

Portfolio Realisations

Realisations from the portfolio during the quarter were £1.0 million, comprising a loan repayment from ICU Eyewear of £0.8 million plus other fund distributions and escrow proceeds of £0.2 million from a previous exit.

Liquidity and Outlook

The Company continues to maintain significant cash balances, £22.0 million   at 30 September, after depositing cash to fund the Dacian transaction, and remains highly cautious about the way its liquid resources are deployed.

The Company is reviewing opportunities with its real estate teams, George Capital and Cavera, but capital has not yet been deployed. The Company has a pipeline of opportunities for other investments.

Movements in prices of quoted securities and foreign exchange rates since 30 September 2020 have not been material.

The information contained in this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon publication of this announcement, this inside information is now considered to be in the public domain.

For further information, please contact:

LMS Capital PLC

Robert Rayne, Chairman

Nick Friedlos, Managing Director

Tel [phone]

Shore Capital

Robert Finlay

Tel [phone]

Notes to Editors

LMS Capital plc is a fully listed investment company which aims to preserve and create wealth through investment and co-investment from family offices, high net worth investors and others.  LMS expects to deliver an overall total return, net of costs, over the longer term of 12%-15% per annum, of which an element will include an annual distribution.

LMS focuses on investing in real estate, energy and late-stage private equity, areas in which the company has had demonstrable success for over 40 years, derived from a long history of investing, a depth of understanding and long-term relationships.

LMS works with experienced management teams to deliver exceptional opportunities and 'hard to access' assets not available via larger funds, enabling wealth creation through nurturing and careful management. LMS' philosophy of co-investment has led to the establishment of a formal network of partners, LMS Co-invest Co., which is a wholly owned subsidiary and is resourced to develop co-investment relationships and activity.  This model harnesses experience, capital and access to specialist investment teams to create enhanced returns.

 

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