LMS Capital PLC NAV Estimate as at 31 December 2021 (0606A)

TIDMLMS

RNS Number : 0606A

LMS Capital PLC

31 January 2022

31 January 2022

LMS CAPITAL PLC

NAV Estimate as at 31 December 2021

LMS Capital plc (the "Company") the listed investment company provides the following update and estimate of net asset value ("NAV") as at 31 December 2021.

Net Asset Value Estimate

The Company has commenced the year end valuation review process which is based on the latest performance updates from portfolio companies and third-party fund manager valuations.

The Board currently estimates that the year end NAV will be in the region of GBP49.1 million (60.8p per share). This NAV estimate, which represents an increase of GBP1.9 million (after adding back dividends paid) on the prior year, reflects information currently available to the Board on the performance and prospects of individual investments in the Company's portfolio and is subject to further evaluation as well as completion of the annual audit. The valuation methodology and policy adopted is consistent with prior years and is in line with IPEV guidelines.

The estimated 31 December 2021 NAV is summarised below:

 
                                 Preliminary      Unaudited         Audited 
                                  31 December    30 June 2021   31 December 2020 
                                     2021 
                                                    GBP 000s 
                                ------------------------------------------------ 
 MATURE ASSET PORTFOLIO                22,979          21,415             22,193 
                                -------------  --------------  ----------------- 
 NEW INVESTMENTS - DACIAN               7,958               0                  0 
                                -------------  --------------  ----------------- 
 Total Investment Portfolio            30,937          21,415             22,193 
                                -------------  --------------  ----------------- 
 
 Cash                                  20,113          21,372             20,591 
                                -------------  --------------  ----------------- 
 Other Net Assets/Liabilities         (1,949)           4,805              5,139 
                                -------------  --------------  ----------------- 
 Net Asset Value                       49,101          47,592             47,923 
 Pence per Share                        60.8p           59.0p              59.4p 
                                -------------  --------------  ----------------- 
 

Overview

-- The 31 December 2021 estimate of GBP49.1 million compares with GBP47.6 million being the unaudited NAV to 30 June 2021. NAV at the prior year end, 31 December 2020 was GBP47.9 million. Adjusting for GBP0.7 million dividends paid during the year, the NAV has increased by GBP1.9 million during the year.

-- We are pleased to be issuing this NAV update having now completed the Dacian transaction, whereby the Company has acquired senior loans and equity in Dacian's business comprising onshore, late life, oil and gas production assets in Romania. The investment is structured as unsecured senior loans which carry a coupon of 14% per annum and a subscription for share capital for a nominal sum. The senior loans are expected to be repaid with interest over approximately 4 years. LMS holds $9.1 million of the 14% senior loans and 32% of the outstanding ordinary shares.

-- Some 15 months' interest income has been recognised on Dacian following that deal's completion in November 2021. This represents a pre-tax return of 18% in the year on the amount set side in September 2020 to pre-fund that investment. The Board expects the investment to meet or exceed the Company's medium-term return targets over its life.

-- The unrealised gains shown during the year on the mature asset portfolio are in line with expectations. This portfolio is held in the expectation of realisation in a 1 to 3 year period.

-- The Board is aware of the impact on overall returns of the Company's uninvested cash and is focussed on developing opportunities to deploy capital that will meet or exceed its target return of 12% to 15% per year.

-- Running costs remain strictly controlled since the return to self-management. The Board expects to see a reduction in net running costs in the range of 5% to 10% in 2022 as the benefits of income from the Company's co-investment activities begin to be realised.

The Company will be issuing its full year end results in March and will provide a detailed update on the portfolio at that stage.

NAV changes

The NAV has increased by GBP2.2 million during the fourth quarter. Overall for the year as a whole, the Company's NAV, after adding back dividends paid, has increased by GBP1.9 million. The principal components of the full year increase are described below.

-- Excluding the effect of foreign exchange rate changes, the mature asset portfolio showed a net unrealised gain of GBP2.6 million in the year, representing a return of 12% on the opening value of the portfolio. The principal elements were:

o An increase of GBP1.5 million in Brockton reflecting the unwinding of the discounted cash flows;

o An increase of GBP0.8 million in Weber Capital Partners, a US listed company fund;

o An increase of GBP0.4 million in the Opus Capital Venture Partners fund;

o An increase of GBP0.2 million in the value of Medhost;

o A decrease of GBP0.7 million in YesTo related to the winding up of the business. YesTo has been fully written off in the second half of 2021; and

o Other portfolio net gains were GBP0.4 million.

-- Interest income of GBP1.2 million on the Dacian senior loans from September 2020 through the end of 2021. The Dacian investment was conditionally funded by investors in September 2020, pending completion. Completion occurred in November 2021 and under the terms of the Dacian investment agreement, once completion occurs, interest accrues to investors from the date of the original funding.

   --    Other movements were a net reduction of GBP1.9 million and include the following: 

o Full year running costs were GBP1.8 million;

o Investment support costs (support costs for real estate and co-investment activities) were GBP0.3 million; and

o Unrealised foreign exchange gains of GBP0.2 million on non-portfolio assets, principally US Dollar bank accounts, due to the weakening of the US dollar against the sterling.

Further information on the performance of the portfolio, underlying investment valuations and changes during the year will be included in the Company's audited results for the year ended 31 December 2021, which it expects to announce in March 2022.

Outlook

The Company continues to have significant cash balances, GBP20.1 million at 31 December 2021 (31 December 2020: GBP20.6 million), and remains focussed on identifying opportunities to deploy capital in its areas of expertise - real estate, energy and late-stage private equity. Notwithstanding the impact and uncertainties around the Coronavirus pandemic, the Company made progress during 2021, particularly with the closing of the Dacian transaction in November 2021 and in building a pipeline of opportunities with its real estate industry partners. Further updates on the Company's portfolio will be included in the Company's final results announcement in March 2022.

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

For further information please contact:

LMS Capital PLC

Nick Friedlos, Managing Director

0207 935 3555

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January 31, 2022 01:59 ET (06:59 GMT)