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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Lms Capital Plc | LSE:LMS | London | Ordinary Share | GB00B12MHD28 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 18.15 | 17.50 | 18.90 | 0.00 | 08:00:25 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Investment Advice | -1.54M | -3.73M | -0.0462 | -3.93 | 14.65M |
From May 2019 to May 2024
TIDMLMS
RNS Number : 3399Z
LMS Capital PLC
14 March 2017
14 March 2017
LMS Capital plc
Preliminary Results for the year ended 31 December 2016
The Board of LMS Capital plc, ("LMS Capital" or "the Company"), is today announcing the Company's preliminary results for the year ended 31 December 2016.
-- At the general meeting on 16 August 2016 shareholders voted in favour of proposals to change the Company's investment policy so that the Company may now make new investments focused on private equity opportunities. On the same date the Company appointed Gresham House Asset Management Limited ("GHAM") to manage its investment portfolio.
-- The meeting also approved a further tender offer which returned GBP6 million to shareholders, bringing to GBP161 million the amount returned since the beginning of the realisation strategy in 2012. The Company also undertook to return up to a further GBP11 million to shareholders on the basis of realisations from the existing investment portfolio.
-- The Net Asset Value at 31 December 2016 was GBP68.1 million, 71p per share (31 December 2015: GBP95.1 million, 92p per share).
-- The 23% decline in NAV per share reflects a disappointing performance from the investment portfolio, particularly in the second half of 2016. Net losses on the investment portfolio were GBP16.2 million (2015: gains of GBP6.6 million) leading to an overall loss for the year of GBP20.8 million (2015: profit of GBP0.5 million).
-- GHAM has initiated a staged approach to achieving the objectives outlined in 2016 including: optimising the value of existing assets, reducing costs and facilitating the return of capital to shareholders before investing in line with the new investment policy and seeking to grow the business.
Martin Knight, Chairman of LMS Capital, said:
"2016 was a transformational year for the Company. The performance of the investment portfolio in the second half of the year was disappointing but following the appointment of GHAM as investment manager, the Board looks forward to improved performance in 2017 and beyond."
For further information please contact:
LMS Capital plc 020 7935 3555
Martin Knight, Chairman
Gresham House Asset Management Limited 020 3837 6270
Graham Bird
J.P. Morgan Cazenove 020 7742 4000
Michael Wentworth-Stanley
Chairman's statement
2016 was a transformational year for the Company. In August shareholders voted to change the Company's investment policy and at the same time your Board, with the support of shareholders, took the decision to appoint Gresham House Asset Management Limited ("GHAM") to manage the Company's operations. The GHAM team has a successful investment track record, underpinned by proven operating and technical expertise in private and public equity investments.
The Company has also acquired shares in Gresham House plc (parent company of GHAM) to align the Company's interests in the long term with those of the Manager. The Company's interest is currently 801,985 ordinary shares and 909,908 warrants to subscribe for ordinary shares exercisable at 323.27p per share no later than 30 June 2018.
Change of investment objective
The first seven months of the year saw the continuation of the realisation strategy which the Company had been following since November 2011. However, your Board was aware that as the realisation strategy progressed and the Company reduced in size, its expense ratio would likely deteriorate. The Company could also have been seen as a forced seller of its investments impacting its ability to maximise value through longer term engagement. In consequence, potential shareholder returns from continuing with the realisation strategy were therefore likely to be lower than those achieved historically.
Your Board believed that a change in the investment objective would present an attractive alternative to the existing realisation strategy. At a general meeting on 16 August shareholders approved a change to a policy predominantly focused on private equity investment whilst optimising the value of existing assets.
At the same time shareholders approved a return of capital of GBP6 million (by way of a tender offer and associated repurchase of shares). This was completed on 1 September and brought to GBP161 million the amount returned to shareholders since November 2011.
The Company has also undertaken to make two further tender offers up to a combined maximum of GBP11 million. The first of these up to GBP6 million will be made when net realisation proceeds from the existing portfolio reach GBP12 million. Realisations since the circular sent to shareholders on 27 July 2016 have totalled GBP6.9 million and your Board and GHAM are focused on initiating and progressing sale processes for appropriate holdings.
Performance review
Net Asset Value per share at the end of 2016 was 71p, slightly higher than announced on 25 January, but a 23% decrease from 92p a year ago.
Portfolio losses (realised and unrealised) for the year before carried interest charges were GBP16.2 million (2015: gains of GBP6.6 million), the key elements of which were:
-- Unquoted investments contributed net losses of GBP15.9 million (2015: net gains of GBP10.1 million), most of which arose on three US investments - ICU Eyewear, Medhost and Nationwide Energy Partners;
-- Quoted investments generated a net loss of GBP1.3 million for the year (2015: net loss of GBP1.0 million); and
-- Our fund interests showed net gains of GBP1.0 million (2015: net loss of GBP2.5 million).
The portfolio losses for the year are stated after the impact of exchange gains of GBP11.6 million (2015: gains of GBP6.2 million), primarily due to the weakness of sterling against the US dollar.
Overhead costs were GBP3.3 million, similar to the previous year (2015: GBP3.2 million). One-off charges (including staff redundancy and surplus property costs) were GBP2.2 million; as a result of these there will be future benefits from annual overhead cost savings targeted at GBP1 million which are expected to start during the first half of 2017.
Board composition
In June we welcomed Rod Birkett as a non-executive Director. Rod has over 25 years' experience in the investment company sector.
Bernard Duroc-Danner has confirmed that he will not be standing for re-election at the forthcoming 2017 AGM and I should like to take this opportunity to thank Bernard for his contribution to the Company over the last ten years.
Following the appointment of GHAM, Nick Friedlos and Tony Sweet resigned as Directors and I should like to thank them for their role in the management of the Company. They now form part of the GHAM team managing the Company's operations.
As a result of these changes, your Board is now wholly non-executive.
Conclusion and outlook
2016 was a transformational year for the Company. The performance of the investment portfolio in the second half of the year was disappointing but following the appointment of GHAM as investment manager, the Board looks forward to improved performance in 2017 and beyond.
Martin Knight
Chairman
14 March 2017
Strategic report
LMS Capital plc is an investment company whose shares are traded on the London Stock Exchange.
Investment objective and strategy
Until 16 August 2016 the Directors of the Company were conducting an orderly realisation of the assets of the Company, in line with the strategy previously approved by shareholders at a general meeting in November 2011. The focus of the Company was to optimise realisations from the investment portfolio and return the proceeds to shareholders. No investments were made in new opportunities; follow-on investments were made in existing assets to honour commitments made at the time of the initial investment and/or to which the Company was legally obligated, or where the investment was made to protect or enhance the value of an existing asset or to facilitate its orderly realisation.
At a general meeting on 16 August 2016 shareholders voted to change the Company's investment policy from the realisation strategy to a new policy focused predominantly on private equity investment. At the same time Gresham House Asset Management Limited ("GHAM" or "the Manager") was appointed by the Board to manage the Company's assets.
The Company's investment objective is to achieve total returns over the medium to longer term, principally through capital gains and supplemented with the generation of a longer term income yield. The Company is targeting a return on equity, after running costs, of between 12% and 15% per annum over the long term on new capital invested.
The disposal proceeds of the Company's existing portfolio less amounts required for working capital and net of anticipated further returns of capital to shareholders (see below) will be invested in accordance with the investment policy.
New investments will be primarily focused on direct private equity investments and specialist asset classes (including funds managed by GHAM), with the majority of the portfolio expected to be invested in direct private equity opportunities.
No investment in any single company will (at the time of investment) represent more than 15% of the Company's net assets. Any investment in securities of a single company or investment fund, which represents more than 10% of the Company's net assets at the time the investment is made, requires the Board's approval.
The Company may invest in public or private securities; investments may be made in the form of, inter alia, equity, equity-related instruments, derivatives and indebtedness. The Company may hold controlling or non-controlling positions and may invest directly or indirectly. The Company may also invest in Gresham House plc, to benefit from the potential growth of GHAM.
The Company is not restricted to specific sectors; its assets are and will continue to be predominantly invested in the United Kingdom, Europe and North America, with an increasing focus on the United Kingdom.
Indebtedness of the Company will not exceed 25% of net assets measured at the time of drawdown. The Company had no indebtedness at 31 December 2016 or at the date of this report.
Further returns to shareholders
In the circular to shareholders dated 27 July 2016 the Company undertook to make two further returns of capital to shareholders by way of tender offers. These returns of capital will in total represent 50% of the net proceeds of further disposals of assets in the Company's existing portfolio made after the date of the circular. These further tenders will be for a maximum of GBP11 million and distributions of up to GBP6 million and up to GBP5 million are expected to be made. Both these future tender offers will be at a five per cent discount to the net asset value of the Company at the relevant time.
It is intended that the first of the tender offers will return up to GBP6 million to shareholders (after net realisation proceeds from the Company's existing portfolio, after the date of the Circular, exceed GBP12 million). It is intended that the second of the tender offers will return up to GBP5 million to shareholders (after net realisation proceeds from the Company's existing portfolio, after the date of this Circular, exceed GBP22 million in total).
Portfolio management
The Company's operations are managed by Gresham House Asset Management Limited ("GHAM") who was appointed as the Manager on 16 August 2016. GHAM manages the Company's assets and investments in accordance with guidelines determined by the Directors and as specified in a formal portfolio management agreement. Further information about GHAM can be found in the Manager's review.
In order to comply with the requirements of the AIFMD, the Company has appointed an alternative investment fund manager ("AIFM"). In due course, the Company's AIFM will be GHAM, once GHAM has obtained a variation of its permissions under Part 4A of FSMA to enable it to act as a full-scope UK AIFM. For an initial period, however, before GHAM has obtained this permission, the Company has appointed G10 Capital Limited, a specialist provider of regulated services, as its initial AIFM and G10 Capital has delegated certain functions in relation to the portfolio management of the Company's assets to GHAM.
The Company has appointed Ipes (UK) Limited as its depositary.
Under the AIFM and portfolio management agreement, the Manager is entitled to an annual management fee as follows:
a) 1.50% of the net asset value of the Company, to the extent that the Company's net assets under management are GBP100 million or less;
b) 1.25% of the net asset value of the Company, to the extent that the Company's net assets under management exceed GBP100 million but are GBP150 million or less: and
c) 1.00% of the net asset value of the Company to the extent that Company's net assets under management exceed GBP150 million.
The Manager is also entitled to a performance fee on new investments which is designed to align the interests of GHAM, as portfolio manager, with those of the Company. If certain hurdle return requirements are satisfied, GHAM earns a performance fee of 15% of the gain in the net asset value of new investments made after 16 August 2016. No performance fee will be payable in respect of investments held at the date of GHAM's appointment.
GHAM is the regulated subsidiary of Gresham House plc, the specialist asset manager quoted on the London Stock Exchange. Its investment team has a successful track record, underpinned by proven operating and technical expertise. GHAM adopts a differentiated and rigorous approach to private and public equity investments through its specialist asset management strategies which are focused on capitalising on the growth in demand for alternative investment strategies, illiquid assets and for discretionary co-investment.
A dedicated investment committee of GHAM is responsible for the Company's portfolio and oversees the investment appraisal process in relation to investments made in respect of the Company's portfolio. The Company has the right to nominate a member to this committee and as at the date of this report has exercised that right.
The committee assesses existing assets and new investment opportunities and is also responsible for approving due diligence costs, abort costs exposure, capital allocation and appropriate risk management.
All investment opportunities are appraised by the investment team and a short list of deals progresses for review by the Investment Committee. The Investment Committee assist in due diligence, investment appraisal and the team can leverage their extensive network as required.
Representatives of GHAM are available to attend all meetings of the Board and provide regular reports on the investment portfolio and the affairs of the Company generally. The performance of each underlying investment is monitored regularly with commentary on trends and risks both company specific and market related. GHAM may also have representatives on the boards of portfolio investment companies.
Distribution policy
In future the Company intends to return in the region of 30% of annual cash realised profits from new investments and in so doing, to generate a dividend yield over the longer term.
Performance
The following are the key performance indicators ("KPIs") considered by the Board and the Manager in assessing the Company's performance against its objectives. These KPIs are:
Return on equity over the long term
The Company's objective is to achieve a return on equity (on new investments) of between 12% and 15% per year over the long term.
The NAV per ordinary share total return
The Company's net asset value per share total return was negative for the year ended 31 December 2016. This compared with 16.8% for the FTSE All-Share Index.
The share price total return
The Company's share price total return was negative over the year ended 31 December 2016.
Further information on the Company's performance is given in the Chairman's Statement and the Manager's review.
Personnel
The average number of Directors and staff was as follows:
Hot Features
Premium
2016 2015
--------------------- ------------------- -------------------
Male Female Total Male Female Total
--------------------- ---- ------ ----- ---- ------ -----
Directors 6 - 6 6 - 6
Senior management - - - - - -
Other staff members 1 3 4 2 5 7
--------------------- ---- ------ ----- ---- ------ -----
7 3 10 8 5 13
--------------------- ---- ------ ----- ---- ------ -----
Environment
The Company has a limited direct impact upon the environment and there are few environmental risks associated with the Company's activities.
Risk management and principal risks and uncertainties
On 16 August 2016 the Company appointed G10 Capital Limited ("G10 Capital"), an independent investment manager, as its AIFM to act in accordance with the Company's investment objective and the AIFMD rules. This includes portfolio management and risk management services. At the same time GHAM was appointed to perform on behalf of G10 Capital day-to-day portfolio management services.
GHAM is responsible for the ongoing process of identifying, evaluating, monitoring and managing the risks facing the Company. The Board keeps G10 Capital's and GHAM's performance of these responsibilities under review as part of its overall responsibility for ensuring that the Company has an effective risk management and internal control framework.
On behalf of the Board the Audit Committee has responsibility for ensuring that the Company has an effective process to identify, document and assess those risks which might impact the Company's performance and its achievement of its strategy.
The Board has carried out a robust assessment of the principal risks facing the Company throughout the year ended 31 December 2016, including those that would threaten its business model, future performance, solvency or liquidity. A summary of the principal risks and uncertainties that could have a material adverse effect on the Company's strategy, performance and financial condition is set out below.
Principal risks Consequences Company procedures
Market risk
Economic instability, Economic conditions Regular monitoring
political uncertainty may result in of the trading,
and low growth reduced demand cash flows
in the markets for the products and prospects
where the Company's and services (including
investments operate. supplied by exit opportunities)
Lack of liquidity investee companies. of the investment
in capital markets. Such a negative portfolio to
impact on performance identify the
and growth rates impact on individual
may result in investments
lower individual and on the
company valuations Company's strategy.
resulting in
a decline of
the Company's
NAV and its
failure to meet
its return targets
and investment
objective.
Volatility in At 31 December The Board regularly
listed equity 2016 69% of receives reports
prices, foreign the Company's on the Company's
currency rates investment portfolio foreign currency
and interest was denominated exposure in
rates. in US dollars. its investment
Movements in portfolio.
the USD/GBP The Company
exchange rate does not currently
have a significant hedge its underlying
impact on the non-sterling
Company's NAV. investments.
Investment risk
Investments fail Poor performance Regular monitoring
to perform in by portfolio of the trading
line with original companies may of individual
expectations result in the companies in
or management's Company not the investment
plans. Investment meeting its portfolio as
performance may investment return well as of
be impacted by objectives or the Company's
competition, its realisation overall investment
regulatory changes and cash distribution performance.
or other market plans. This
developments. could impact
the NAV and
the market's
view of the
Company's prospects,
with a consequent
negative impact
on its share
price
----------------------- ----------------------
Where the Company
has only minority
stakes in investments
it may not be
able to influence
performance initiatives
or exit strategy.
------------------------- ----------------------- ----------------------
Financial risk
Many of the Company's Failure to meet Working capital
investments produce future financial requirements
little or no obligations (including
recurring income (including capital exposure to
and the timing calls to funds) uncalled fund
of realisations could expose commitments)
to provide working the Company are reviewed
capital and liquidity to potential regularly.
cannot be ascertained legal action
with certainty. and/or loss
of value (to
a fund investment).
----------------------- ----------------------
The Company has
made investments
in private equity
funds under the
terms of which
it may be obliged
to make further
capital contributions.
Whilst the maximum
amount of the
future commitment
is known, the
timing of such
capital contributions
cannot be predicted
with certainty.
------------------------- ----------------------- ----------------------
Operational risk
Failure of the Reputational The Audit Committee,
Company's internal damage and/or on behalf of
processes and financial loss. the Board,
systems to ensure regularly reviews
that it complies the systems
with all legal, in respect
regulatory and of the principal
financial reporting operational
obligations. risks, as well
as reports
on the Company's
related risk
management
procedures.
------------------------- ----------------------- ----------------------
Viability statement
The Directors have assessed the Company's current position and prospects as described in the Chairman's Statement and the Manager's review, as well as the principal risks and uncertainties set out above.
The Directors concluded that the appropriate period for this assessment should be the three years commencing 1 January 2017 since this timeframe reflects the Company's internal planning horizon as well as that of most of the companies in which it is invested. Given the illiquid nature of much of its investment portfolio, investment/divestment decisions tend to reflect a time period which can be up to three years.
In performing their assessment the Directors considered principally:
1. The Company's liquidity forecast for the three years from 1 January 2017; and
2. The Manager's latest report on the investment portfolio which includes (for every Board meeting) an assessment of operational issues as well as broader market factors and each asset's cash needs (if any) and likely future cash generation (amount and timing).
The Directors' consideration of these reports was made against the background of the following considerations:
-- Many of the Company's investments are in private companies for which the timing and amount of income and/or
realisation is uncertain;
-- The Board has reviewed the liquidity of the Company and considered commitments to private equity investments,
long-term cash flow projections and the potential availability of gearing. It has also satisfied itself that
assumptions regarding future cash inflows are reasonable;
-- The Company has undertaken to make further returns of capital to shareholders. These future returns will be made
only after ensuring that the Company has retained sufficient cash or other liquid resources to meet its working
capital requirements, including its obligations in the form of uncalled capital commitments to its fund
interests;
-- The Board has also considered likely downside risk in the value of marketable securities where realisations of
these form part of the liquidity forecast. This risk typically includes factors impacting the price of the
security and the exchange rate against GBP sterling of the currency in which it is denominated;
-- In making its assessment, the Board has taken into account the threats to the Company's solvency or liquidity
incorporated I the Principal risks and uncertainties and satisfied itself that they are being addressed as
outlined above.
Taking account of the above factors the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of this assessment.
For and on behalf of the Board
Martin Knight
Chairman
14 March 2017
Manager's review
Transition to external manager
GHAM has made significant progress since being appointed investment manager in August. With input from the LMS Capital Board it has adopted a staged approach toward achieving the objectives outlined in 2016.
The 'first stage' has been to transition to external management, including:
-- Implementing a new investment process and governance structure, including the newly appointed Investment Committee;
-- Detailed review of portfolio holdings to frame future strategy and drive potential growth and liquidity opportunities;
-- Significant engagement with the management teams of underlying portfolio investments in order to identify catalysts for stabilisation, value creation and long term growth. This includes members of GHAM joining the Boards of Entuity, Elateral, Nationwide Energy Partners and 365iTMS;
-- Appointing external administrators and driving targeted annualised cost savings.
The 'second stage' of development is focused on realisation and return of capital to shareholders alongside investing appropriately to optimise the value of the portfolio where there is a clear plan for longer term value creation with portfolio companies.
The 'third stage' will be focused primarily on new investment in direct private equity opportunities at the smaller end of the market, leveraging the expertise, experience and network of the investment team and newly formed Investment Committee. The team will also seek to scale the Company appropriately to generate additional shareholder value.
Investment approach
As a result of changes in 2016 to the investment policy, new investment is now focused predominantly on private equity investment using the experience of the GHAM team in asset management, private equity and public markets:
-- The manager will invest in and partner with management teams of profitable and cash generative businesses to create value, targeting an annual return on equity of 12% -15% net of costs over the long-term;
-- The focus will primarily be on smaller private companies below GBP50 million enterprise value where the manager believes there to be significant market inefficiencies which create opportunities for superior long-term returns and to leverage the experience of the investment team;
-- The focus is on optimising the value of existing holdings and where growth prospects are clear to preserve and support value creation.
Market background
Equity markets were strong in 2016, especially in Q4, both in the UK and US, despite significant political uncertainty with Brexit and the US presidential election, and pedestrian global growth. Expectations of fiscal loosening, increased expenditure on infrastructure, a shift in focus to deregulation and reflationary pressures buoyed the stock markets in the UK and US.
Last year also saw continued strong private equity activity. New capital raised for Private Equity has been significant over the last three years as pension funds, endowments and institutions increase allocations to private equity, seeking above market returns. Valuations have been driven to levels last seen in 2006/2007 with average multiples reaching around 14x EBITDA in 2015 and remaining in excess of 10x in 2016.
A research study recently published by Preqin shows that 40% of investors surveyed intend to invest more capital in private equity over the next year than in the last, compared with only 11% that plan to invest less. Almost half (48%) of respondents plan to increase their allocations to private equity over the longer term; a further 46% will maintain their allocations. Importantly these are some of the highest levels seen over the past six years.
This is driving increasing competition for deals, with the availability of debt resulting in continued high prices and valuations, particularly we believe at the larger end of the market.
High valuations, increasing allocation and fund raising and increased competition for deals means private equity firms have record levels of uninvested funds, particularly for the larger enterprise value deals.
However, we believe that there are significant inefficiencies at the smaller end of the market, focusing on established smaller private companies between GBP25 and GBP50 million enterprise value that are often overlooked, where there can be less competition for deals and valuations are attractive. They tend to be off radar for venture and early stage funding providers and sub-threshold for mid-market private equity investors. This creates an opportunity to generate superior long term returns.
Performance review
On 16 August 2016 GHAM was appointed to manage the affairs of the Company. This is the first annual report since that appointment and since the change in investment strategy approved by shareholders at the general meeting on 16 August 2016.
This review covers:
1. The first seven months of the year during which the Company was undertaking a realisation strategy; and
2. Progress with implementation of the new investment objective since 16 August 2016.
Change in accounting policy
With effect from 1 January 2016, the Company has adopted the amendment to IFRS 10 (Consolidated Financial Statements) which requires it to report its operating subsidiaries (which act as the intermediate holding companies of the investment portfolio) at fair value rather than consolidate them as previously. Amounts reported for the year ended 31 December 2015 have been restated - there was no change to 2015 reported net asset value.
Realisations in 2016
These were as follows:
Year ended 31 December
2016 2015
GBP'000 GBP'000
---------------------- ----------- -----------
Cash realisations
from the investment
portfolio - gross 10,602 43,731
Cash realisations
from the investment
portfolio - net 9,040 41,409
Cash returned to
shareholders 6,000 40,000
------------------------ ----------- -----------
Net cash realisations from the portfolio were as follows:
2016 2015
GBP'000 GBP'000
------------------------------ -------- --------
Sales of investments 5,927 29,350
Capital restructurings
and loan repayments - 2,756
Distributions from funds 4,675 11,625
------------------------------ -------- --------
Total - gross 10,602 43,731
Fund calls (438) (390)
Other follow-on investments (851) (804)
Carried interest payments (273) (1,128)
------------------------------ -------- --------
Total - net 9,040 41,409
------------------------------ -------- --------
The principal follow-on investments were:
-- GBP522,000 (US$750,000) to ICU Eyewear to provide working capital and funding for new customer trials; and
-- GBP300,000 to provide working capital for Elateral, a UK direct investment.
Net realisations of GBP9,040,000 in 2016 bring to GBP159,529,000 the total of such net realisations since the commencement of the realisation strategy on 1 January 2012. Including the GBP6.0 million returned to shareholders in 2016, total cash returned during the same period was GBP161.0 million.
Realisations after the change in investment strategy were GBP1,974,000 to the end of 2016. To date in 2017 realisations from the portfolio have been GBP4,925,000 including the following:
-- The Company has concluded an agreement to a two stage sale of Nationwide Energy Partners for total consideration of GBP7,703,000 (US$9,500,000), which was the Company's carrying value at the end of 2016. The stage 1 payment of US$4,500,000 was received on 23 January 2017. The second and final stage will be settled either as a one off payment of US$5,000,000 in January 2018 or a loan note repayable with interest in instalments over 4 years.
-- The Company has also agreed the realisation of its long term and successful holdings in the Weber Capital funds at an amount equal to the Company's carrying value at the end of 2016. The realisation is expected to complete in stages during the first half of 2017. The first stage has been completed and proceeds of US$1,300,000 have been received. The balance is due to be paid in the second quarter of 2017.
Performance of the investment portfolio
Below is a summary of the Company's investment portfolio:
31 December 2016 31 December 2015
------------ ---------------------------- ----------------------------
UK US Total UK US Total
Asset type GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ -------- -------- -------- -------- -------- --------
Quoted 2,481 2,995 5,476 1,564 8,197 9,761
Unquoted 9,384 21,987 31,371 12,347 33,765 46,112
Funds 11,149 25,436 36,585 18,602 21,168 39,770
------------ -------- -------- -------- -------- -------- --------
23,014 50,418 73,432 32,513 63,130 95,643
------------ -------- -------- -------- -------- -------- --------
The Company's principal investments at 31 December 2016 comprising 80% of the total portfolio were:
Name Geography Sector Carrying % of
value Net asset
31 December value
2016 2015 2016
GBP'000 GBP'000
Quoted investments
Weatherford
International US Energy 2,909 8,064 4.2%
Gresham House UK Financial 2,481 - 3.6%
Unquoted investments
Medhost Inc US Technology 12,070 14,157 17.7%
Elateral UK Technology 3,900 4,250 5.7%
Entuity UK Technology 3,000 4,500 4.4%
365iTMS UK Technology 2,100 3,500 3.1%
Fund investments
San Francisco
Equity Partners
Penguin Computing* US Technology 10,133 6,834 14.9%
Yes To, Inc* US Consumer 8,387 7,089 12.3%
Others
Brockton Capital UK Property 6,651 12,339 9.8%
Opus Capital
Venture Partners US Technology 4,505 5,424 6.6%
Eden Venture
Partners UK Technology 2,964 4,085 4.4%
* includes holdings by SFEP and co-investments held by the Company
Basis of valuation:
-- Quoted investments - bid price of security quoted on relevant securities exchange;
-- Unquoted investments - multiple of revenues or earnings of comparable quoted companies with appropriate discounts for marketability;
-- Fund interests - based on amounts reported by the general partner unless the reported value is not in line with the Company's valuation policy.
The return on investments for 2016 was as follows:
Restated
2016 2015
--------------------------- ------------------------------------------ ------------------------------------------
Realised Unrealised Realised Unrealised
gains/(losses) gains/(losses) Total gains/(losses) gains/(losses) Total
Asset type GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- --------------- --------------- -------- --------------- --------------- --------
Quoted 9 (1,291) (1,282) 1,511 (2,479) (968)
Direct - (15,879) (15,879) 8,948 1,142 10,090
Funds 491 492 983 2,518 (5,025) (2,507)
--------------------------- --------------- --------------- -------- --------------- --------------- --------
500 (16,678) (16,178) 12,977 (6,362) 6,615
--------------- --------------- --------------- ---------------
Credit/(charge) for
incentive plans 737 (1,951)
--------------------------- --------------- --------------- -------- --------------- --------------- --------
(15,441) 4,664
Operating and similar
expenses of subsidiaries (720) (949)
--------------------------- --------------- --------------- -------- --------------- --------------- --------
(16,161) 3,715
--------------------------- --------------- --------------- -------- --------------- --------------- --------
The credit for incentive plans includes GBP737,000 (2015: charge GBP1,348,000) for carried interest and GBPnil (2015: charge GBP603,000) in respect of the Executive Directors' incentive plan.
Approximately 69% of the portfolio at 31 December 2016 is denominated in US dollars (31 December 2015: 66%) and the above table includes the impact of currency movements. In the year ended 31 December 2016, the strengthening of the US dollar against pound sterling (year on year) resulted in an unrealised foreign currency gain of GBP11,319,000 (2015: unrealised gain of GBP3,565,000). As is common practice in private equity investment, it is the Board's current policy not to hedge the Company's underlying non-sterling investments.
Quoted investments
The loss on the quoted portfolio arose as follows:
2016 2015
Gains/(losses), net GBP'000 GBP'000
----------------------------------- -------- --------
Realised
Weatherford International (158) 709
ChyronHego Corporation - 777
Bond International 155 -
Other quoted holdings 10 -
Dividend income 2 25
----------------------------------- -------- --------
9 1,511
----------------------------------- -------- --------
Unrealised
Weatherford International (1,781) (2,927)
Bond International 71 93
Other quoted holdings (205) (220)
Unrealised foreign currency gains 624 575
----------------------------------- -------- --------
(1,291) (2,479)
----------------------------------- -------- --------
Total net losses (1,282) (968)
----------------------------------- -------- --------
During the year the Company sold 700,000 shares (2015: 426,000 shares) of its opening holding of 1,419,000 shares of a long term holding in Weatherford International for net proceeds of GBP3,820,000 (2015: GBP3,839,000). The losses on this investment during the year (both realised and unrealised) reflect the continuing pressure on this company's share price during 2016.
Other sales during the year:
-- The Company sold its entire holding in Imperial Innovations Group (now renamed Touchstone Innovations) for net proceeds of GBP865,000, a GBP39,000 uplift on the 2015 closing value; and
-- The Company sold 550,000 shares (around 70% of its holding) in Bond International Software for net proceeds of GBP678,000, a gain of GBP155,000 over the opening 2016 value. This left 227,850 shares to participate in the liquidation of the company; the first distribution from the liquidators - GBP287,000 - was received in January 2017; the final distribution is not expected to be a significant amount.
The Company acquired its interest in Gresham House plc in line with the proposals set out in the circular to shareholders dated 27 July 2016 and at the end of the year held:
-- 801,985 ordinary shares; and
-- 909,908 warrants to subscribe for ordinary shares exercisable at 323.27p per share. The warrants are exercisable no later than 30 June 2018.
Direct investments
There were no purchases or sales of unquoted investments during 2016. The unrealised net loss was GBP15,879,000 (2015: unrealised net gain of GBP1,142,000), after unrealised foreign currency gains of GBP6,454,000 (2015: gains of GBP1,959,000).
Valuations are sensitive to changes in the following two inputs:
-- The operating performance of the individual businesses within the portfolio; and
-- Changes in the revenue and profitability multiples and transaction prices of comparable businesses, which are used in the underlying calculations.
In most cases the multiples used this year are similar to those prevailing at the end of 2015 and therefore the unrealised gains or losses set out in the table below arise principally as a result of the companies' performance.
Valuation movements were as follows:
Unrealised gain/(loss)
-------------------------------------
2016 2015
Name GBP'000 GBP'000
------------------------------------- ------------ -----------
ICU Eyewear (9,165) -
Medhost (4,878) -
Nationwide Energy Partners (3,521) (1,497)
Entuity (1,878) 40
365iTMS (1,400) 1,000
Elateral (650) (300)
Others, net (841) (60)
Unrealised foreign currency
gains 6,454 1,959
-------------------------------------- ------------ -----------
Total net unrealised (losses)/gains (15,879) 1,142
-------------------------------------- ------------ -----------
Comments on individual companies are set out below.
Medhost
Medhost is a co-investment with one of the Company's fund interests, Primus Capital, who are the lead investment manager. The business faced challenging market conditions during 2016 which impacted its profitability and resulted in a write down of the carrying value compared to last year. The Company has based its carrying value on the carrying value reported by the general partner.
ICU Eyewear
The business encountered difficult trading conditions in 2016 and has exited a potential sales process. It requires additional capital, the source of which has not yet been determined. Consequently, the Company has fully written off its interest.
Nationwide Energy Partners ("NEP")
In December 2016 the Company reached conditional agreement to sell its interest back to the founder in a two stage transaction. The stage 1 payment of $4.5 million was due and received in January 2017. The second and final stage will be settled either as a one off payment of $5 million in January 2018 or a loan note repayable with interest in instalments over 4 years. The 31 December carrying value is based on amounts receivable under this two stage deal.
Entuity
The pressure on revenues seen in 2015 continued during 2016 and in the first quarter LMS Capital appointed an interim chairman at Entuity to conduct a strategic review of the business which also led to the search for a new CEO. These issues resulted in the write down of the Company's carrying value at the half year.
The actions taken following the completion of the strategic review are expected to bring benefits in 2017 but were unable to affect the decline in revenues in 2016. As a result the Company has made a further write down of its carrying value for the business at the end of the year. The new CEO took up his post in February 2017 and GHAM has appointed a new investment director to work with the board of Entuity to stabilise and focus on future value growth.
365iTMS
The company successfully completed its first acquisition in the first half of 2016 but experienced a slowdown in its core business during the second half of the year. As a result of the impact of this on its profitability, the Company's carrying value has been reduced accordingly. The recently appointed GHAM investment director is focusing with management on strategic options which would enable a return to profitable growth and maximise equity value.
Elateral
Elateral has invested heavily in recent years to re-engineer and upgrade its technology platform as a precursor to retaining and growing its multinational client base. The company has made good progress in 2016 and is seeing year on year growth in underlying recurring revenue in its financial year to March 2017.
The write down of the Company's carrying value principally reflects changes to the funding structure in the second half of the year whereby Elateral's working capital funding has been supplemented by a short term loan from a third party, reducing the need for additional capital from existing investors. GHAM has appointed an investment director to work with management to maintain the growth momentum in revenues.
Fund interests
The return on the Company's funds portfolio for the year was a net gain of GBP983,000 (2015: net loss of GBP2,507,000) including unrealised foreign currency gains of GBP4,240,000 (2015: GBP1,031,000).
Fund investments are valued using latest general partner valuations.
The Company's principal fund interests are:
31 December
2016 2015
---------------------- --------------------------
General partner Sector GBP'000 GBP'000
---------------------- -------------------------- ------- -------
San Francisco
Equity Partners US consumer & technology 16,748 11,752
Brockton Capital UK property 6,651 12,339
Opus Capital Venture
Partners US venture capital 4,505 5,424
Weber Capital US micro-cap quoted
Partners stocks 3,784 3,263
Eden Ventures UK venture capital 2,964 4,085
Other interests - 1,933 2,907
---------------------- --------------------------- ------- -------
36,585 39,770
------------------------------------------------- ------- -------
Gains/(losses) on fund interests were as follows:
2016 2015
Gains/(losses), net GBP'000 GBP'000
----------------------------------- -------- --------
San Francisco Equity Partners 1,993 (3,264)
Brockton Capital (2,518) (2,829)
Opus Capital Venture Partners (1,415) 1,245
Weber Capital 459 526
Eden Ventures (1,189) 276
Amadeus Capital Partners - (922)
Boston Ventures 4 (1,081)
Voreda 86 1,527
Inflexion Private Equity 184 608
Other funds, net (861) 376
Unrealised foreign currency gains 4,240 1,031
Total gains/(losses), net 983 (2,507)
----------------------------------- -------- --------
San Francisco Equity Partners ("SFEP")
LMS Capital is the majority investor in SFEP (as opposed to the other fund interests where the Company has only a minority stake). SFEP has two remaining investments:
-- Penguin Computing - fund carrying value GBP8,685,000. The company's revenues grew strongly (in line with expectations), reflecting the benefit of a major contract win in the previous year;
-- Yes To - fund carrying value GBP7,622,000. 2016 was the first year of a turnaround plan for the business under a new CEO appointed in 2015. 2016 results were in line with that plan.
Other fund interests
-- In April 2016 Brockton Capital completed the partial realisation of the principal remaining asset in the fund, a high end central London residential development not due for completion for several years. As part of these arrangements the fund was able to make a distribution to investors - the Company received GBP3,304,000. At the end of the year, the carrying value of the Company's interest in the fund was written down by GBP2,518,000 to reflect current market circumstances resulting in uncertainty over the timing and value of future distributions;
-- Opus Capital, a US venture fund, made stock distributions in kind during 2016 totalling GBP594,000; this and a downward valuation of the portfolio reduced the Company's interest by around GBP1.4 million and was partly offset by unrealised foreign currency gains;
-- The Company's interest in Weber Capital Partners includes two funds, both of which performed well in 2016. The Company has agreed with the fund manager that its positions in both funds will be liquidated during the first half of 2017;
-- Eden Ventures' portfolio performed below expectations during the year which is reflected in the reduction in the carrying value of the Company's interest compared to last year.
Other income statement items
As well as the investment portfolio return, the loss for the year of GBP20.8 million (2015: profit of GBP0.5 million) includes the following:
-- Directors' and other fees from portfolio companies were GBP48,000 (2015: GBP55,000);
-- The recurring overhead costs in 2016 (including amounts incurred by subsidiaries) were GBP3,301,000 (2015:
GBP3,229,000);
-- One-off costs associated with the change in investment strategy and transition to external management were
GBP2,157,000 (2015: GBP823,000);
-- Interest income for the year was GBP20,000 (2015: GBP78,000).
Taxation
There is no tax charge for the year ended 31 December 2016 or 2015 - in both years tax deductible expenses exceed taxable income. The excess of these tax deductible expenses have been surrendered to subsidiaries of the Company to offset taxable income in those companies.
Financial resources and commitments
Including cash in subsidiaries, cash holdings were GBP1,632,000 (31 December 2015: GBP6,105,000) with no debt. Since the end of 2016 to the date of this report cash realisations from the portfolio have been GBP4,925,000.
At 31 December 2016 subsidiary companies had commitments of GBP3,577,000 (31 December 2015: GBP3,961,000) to meet outstanding capital calls from fund interests.
Outlook
GHAM has engaged with portfolio companies and is working with the management teams to identify catalysts for growth, to drive long term value creation. The Company is committed to return up to GBP11 million to shareholders from realisations of the existing portfolio and we are focused on progressing and initiating sale processes for certain holdings. Alongside any return to shareholders we will look to access and reinvest primarily in direct private equity opportunities at the smaller end of the market, leveraging the expertise and experience of our investment team and Investment Committee.
Gresham House Asset Management Limited
14 March 2017
Income statement
Restated
Year ended Year ended
31 December 31 December
------------ ------------
2016 2015
Notes GBP'000 GBP'000
-------------------------- ----- ------------ ------------
Net (losses)/gains
on investments 3 (16,161) 3,715
Directors' and other
fees from investments 48 55
Interest income 20 78
--------------------------- ----- ------------ ------------
(16,093) 3,848
Operating expenses (4,738) (3,393)
--------------------------- ----- ------------ ------------
(Loss)/profit before
tax (20,831) 455
Taxation - -
-------------------------- ----- ------------ ------------
(Loss)/profit for the
year (20,831) 455
--------------------------- ----- ------------ ------------
Attributable to:
Equity shareholders (20,831) 455
--------------------------- ----- ------------ ------------
(Loss)/earnings per
ordinary share - basic 4 (20.6)p 0.3p
(Loss)/earnings per
ordinary share - diluted 4 (20.6)p 0.3p
--------------------------- ----- ------------ ------------
Statement of other comprehensive income
Restated
Year ended Year ended
31 December 31 December
------------- -------------
2016 2015
GBP'000 GBP'000
----------------------------------- ------------- -------------
(Loss)/profit for the year (20,831) 455
Other comprehensive income - -
Total comprehensive (loss)/profit
for the year (20,831) 455
------------------------------------ ------------- -------------
Attributable to:
Equity shareholders (20,831) 455
------------------------------------ ------------- -------------
Statement of financial position
Restated
31 December 31 December
------------ ------------
2016 2015
Notes GBP'000 GBP'000
--------------------------------- ------- ------------ ------------
Non-current assets
Property, plant and equipment 32 261
Investments 148,312 220,505
Non-current assets 148,344 220,766
------------------------------------------- ------------ ------------
Current assets
Operating and other receivables 248 156
Cash and cash equivalents 1,249 4,083
------------------------------------------- ------------ ------------
Current assets 1,497 4,239
------------------------------------------- ------------ ------------
Total assets 149,841 225,005
------------------------------------------- ------------ ------------
Current liabilities
Operating and other payables (4,078) (1,472)
Amounts payable to subsidiaries (76,743) (125,622)
------------------------------------------- ------------ ------------ Current liabilities (80,821) (127,094) ------------------------------------------- ------------ ------------ Non-current liabilities Provisions and other liabilities (904) (2,820) Non-current liabilities (904) (2,820) ------------------------------------------- ------------ ------------ Total liabilities (81,725) (129,914) ------------------------------------------- ------------ ------------ Net assets 68,116 95,091 ------------------------------------------- ------------ ------------ Equity Share capital 9,644 10,358 Share premium 508 508 Capital redemption reserve 23,378 22,664 Retained earnings 34,586 61,561 ------------------------------------------- ------------ ------------ Total equity shareholders' funds 68,116 95,091 ------------------------------------------- ------------ ------------
Statement of changes in equity
Capital
Share Share redemption Merger Translation Retained Total
capital premium reserve reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ---------- ---------- ------------ --------- ------------ ----------- ----------
Balance at
1 January
2015 as previously
reported 14,525 508 18,497 35,422 812 65,344 135,108
Effect of
change in
accounting
policy (note
2) - - - (35,422) (812) 36,234 -
===================== ========== ========== ============ ========= ============ =========== ==========
Balance at
1 January
2015 as restated 14,525 508 18,497 - - 101,578 135,108
Total comprehensive
income for
the year
Profit for
the year - - - - - 455 455
Transactions
with owners,
recorded directly
in equity
Repurchase
of shares (4,167) - 4,167 - - (40,472) (40,472)
Balance at
31 December
2015 10,358 508 22,664 - - 61,561 95,091
Total comprehensive
income for
the year
Loss for the
year - - - - - (20,831) (20,831)
Transactions
with owners,
recorded directly
in equity
Repurchase
of shares (714) - 714 - - (6,144) (6,144)
Balance at
31 December
2016 9,644 508 23,378 - - 34,586 68,116
--------------------- ---------- ---------- ------------ --------- ------------ ----------- ----------
Cash flow statement
Restated
Year ended Year ended
31 December 31 December
------------- -------------
2016 2015
GBP'000 GBP'000
------------------------------------ ------------- -------------
Cash flows from operating
activities
(Loss)/profit for the year (20,831) 455
Adjustments for:
Depreciation 233 127
Losses/(gains) on investments 16,161 (3,715)
Interest income (20) (78)
(4,457) (3,211)
Change in operating and other
receivables (92) (20)
Change in operating and other
payables (120) (1,260)
Change in amounts payable
to subsidiaries 9,585 45,792
------------------------------------- ------------- -------------
Net cash from operating activities 4,916 41,301
------------------------------------- ------------- -------------
Cash flows from investing
activities
Interest received 19 78
Purchase of investments (1,621) -
Acquisition of property,
plant and equipment (4) (1)
Net cash (used in)/from investing
activities (1,606) 77
------------------------------------- ------------- -------------
Cash flows from financing
activities
Repurchase of own shares (6,144) (40,472)
------------------------------------- ------------- -------------
Net cash used in financing
activities (6,144) (40,472)
------------------------------------- ------------- -------------
Net (decrease)/increase in
cash and cash equivalents (2,834) 906
Cash and cash equivalents
at the beginning of the year 4,083 3,177
Cash and cash equivalents
at the end of the year 1,249 4,083
------------------------------------- ------------- -------------
Notes
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 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.
Basis of preparation
This financial information has been prepared in accordance with International Financial Reporting Standards as adopted for use in the European Union ("Adopted IFRS") although the financial information in this announcement is not sufficient to comply with Adopted IFRS. The accounting policies adopted are consistent with those of the previous financial year except;
1. as set out in Note 2 with effect from 1 January 2016 the Company has adopted the amendment to IFRS 10 (Consolidated Financial Statements) which requires the Company to report its operating subsidiaries (which act as the intermediate holding companies of the investment portfolio) at fair value rather than consolidate them as previously; and
2. following the change in investment strategy the financial statements for 2016 have been prepared on a going concern basis.
The financial statements have been prepared on the historical cost basis except for investments held at fair value through profit or loss which are measured at fair value.
The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2016 or 2015 but is derived from those accounts. Statutory accounts for 2015 have been delivered to the registrar of companies, and those for 2016 will be delivered in due course. The auditor has reported on those accounts; their report on the accounts for 2016 was (i) unqualified and (ii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The auditor's report on the accounts for 2015 was (i) unqualified (ii) drew attention by way of emphasis without qualifying their report to the accounts not being prepared on a going concern basis and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
2. Change in accounting policy
With effect from 1 January 2016, the Company has adopted the amendment to IFRS 10 (Consolidated Financial Statements) which requires it to report its operating subsidiaries (which act as the intermediate holding companies of the investment portfolio) at fair value rather than consolidate them as previously.
The impact of this change in accounting policy on the income statement for the year ended 31 December 2015 is set out below:
Year ended 31 December 2015
------------------------------------------
Impact of
Consolidated change in
As previously accounting Company
reported policy Restated
GBP'000 GBP'000 GBP'000
-------------------------- ---------------- ------------ ----------
Net gains on investments 4,664 (949) 3,715
Directors' and other
fees from investments 55 - 55
Interest income 78 - 78
--------------------------- ---------------- ------------ ----------
4,797 (949) 3,848
Operating expenses (4,052) 659 (3,393)
--------------------------- ---------------- ------------ ----------
Profit before tax 745 (290) 455
Taxation (294) 294 -
--------------------------- ---------------- ------------ ---------- Profit for the year 451 4 455 --------------------------- ---------------- ------------ ---------- Attributable to: Equity shareholders 451 4 455 Earnings per ordinary share - basic 0.3p - 0.3p Earnings per ordinary share - diluted 0.3p - 0.3p --------------------------- ---------------- ------------ ----------
The impact of this change in accounting policy on the statement of financial position at 31 December 2015 is set out below:
31 December 2015
-----------------------------------------
Consolidated Impact of
As previously change in
reported accounting Company
policy Restated
GBP'000 GBP'000 GBP'000
---------------------------- --------------- ------------ ----------
Non-current assets
Property, plant
and equipment 261 - 261
Investments 95,643 124,862 220,505
Non-current assets 95,904 124,862 220,766
----------------------------- --------------- ------------ ----------
Current assets
Operating and other
receivables 602 (446) 156
Cash and cash equivalents 6,105 (2,022) 4,083
----------------------------- --------------- ------------ ----------
Current assets 6,707 (2,468) 4,239
----------------------------- --------------- ------------ ----------
Total assets 102,611 122,394 225,005
----------------------------- --------------- ------------ ----------
Current liabilities
Operating and other
payables (3,985) 2,513 (1,472)
Amounts payable
to subsidiaries - (125,622) (125,622)
Current tax liabilities (715) 715 -
----------------------------- --------------- ------------ ----------
Current liabilities (4,700) (122,394) (127,094)
----------------------------- --------------- ------------ ----------
Non-current liabilities
Provisions and other
long-term liabilities (2,820) - (2,820)
----------------------------- --------------- ------------ ----------
Non-current liabilities (2,820) - (2,820)
----------------------------- --------------- ------------ ----------
Total liabilities (7,520) (122,394) (129,914)
----------------------------- --------------- ------------ ----------
Net assets 95,091 - 95,091
----------------------------- --------------- ------------ ----------
Equity
Share capital 10,358 - 10,358
Share premium 508 - 508
Capital redemption
reserve 22,664 - 22,664
Merger reserve 23,918 (23,918) -
Foreign exchange
translation reserve 816 (816) -
Retained earnings 36,827 24,734 61,561
----------------------------- --------------- ------------ ----------
Total equity shareholders'
funds 95,091 - 95,091
----------------------------- --------------- ------------ ----------
The impact of this change in accounting policy on the statement of cash flows for the year ended 31 December 2015 is set out below:
Year ended 31 December
2015
----------------------------------- --------------------------------------------
Impact
Consolidated of change
As previously in accounting Company
reported policy Restated
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Profit for the year 451 4 455
Adjustments for:
Depreciation and amortisation 127 - 127
Net gains on investments (4,664) 949 (3,715)
Translation differences (329) 329 -
Interest income (78) - (78)
Income tax expense 294 (294) -
(4,199) 988 (3,211)
Dividends received - 31,308 31,308
Change in operating and
other receivables (361) 341 (20)
Change in operating and
other payables (2,206) 946 (1,260)
Change in amounts payable
to subsidiaries - 14,484 14,484
----------------------------------- --------------- --------------- ----------
(6,766) 48,067 41,301
Income tax paid (72) 72 -
----------------------------------- --------------- --------------- ----------
Net cash (used in)/from
operating activities (6,838) 48,139 41,301
----------------------------------- --------------- --------------- ----------
Cash flows from investing
activities
Interest received 78 - 78
Acquisition of property,
plant and equipment (1) - (1)
Acquisition of investments (1,194) 1,194 -
Proceeds from sale of investments 43,731 (43,731) -
Other income from investments 1,310 (1,310) -
Net cash from investing
activities 43,924 (43,847) 77
----------------------------------- --------------- --------------- ----------
Cash flows from financing
activities
Repurchase of own shares (40,472) - (40,472)
----------------------------------- --------------- --------------- ----------
Net cash used in financing
activities (40,472) - (40,472)
----------------------------------- --------------- --------------- ----------
Net (decrease)/increase
in cash and cash equivalents (3,386) 4,292 906
Cash and cash equivalents
at the beginning of the
year 9,158 (5,981) 3,177
Effect of exchange rate
fluctuations on cash held 333 (333) -
----------------------------------- --------------- --------------- ----------
Cash and cash equivalents
at the end of the year 6,105 (2,022) 4,083
----------------------------------- --------------- --------------- ----------
3. Net gains on investments
Gains and losses on investments were as follows:
Restated
Year ended 31 December Year ended 31
2016 December 2015
--------------------------------- --------------------------------
Gains/(losses) Gains/(losses)
Realised Unrealised Total Realised Unrealised Total
Asset type GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- --------- ----------- --------- --------- ----------- --------
Quoted 9 (1,291) (1,282) 1,511 (2,479) (968)
Unquoted direct - (15,879) (15,879) 8,948 1,142 10,090
Funds 491 492 983 2,518 (5,025) (2,507)
----------------- --------- ----------- --------- --------- ----------- ========
500 (16,678) (16,178) 12,977 (6,362) 6,615
--------- ----------- --------- -----------
Credit/(charge)
for incentive
plans 737 (1,951)
--------- --------
(15,441) 4,664
Operating
and similar
expenses of
subsidiaries* (720) (949)
----------------- --------- ----------- --------- --------- ----------- --------
(16,161) 3,715
----------------- --------- ----------- --------- --------- ----------- --------
*Includes operating and legal costs and taxation charges of subsidiaries
The credit/(charge) for incentive plans includes (i) a credit of GBP179,000 (2015: charge of GBP1,348,000) for carried interest and GBPnil (2015: charge of GBP603,000) in respect of the Executive Directors' incentive plan.
4. (Loss)/earnings per ordinary share
The calculation of the basic and diluted earnings per share, in accordance with IAS 33, is based on the following data:
Year ended 31
December
--------------------------------------- ----------------------------
Restated
2016 2015
GBP'000 GBP'000
--------------------------------------- ------------- -------------
(Loss)/earnings
(Loss)/earnings for the purposes
of (loss)/earnings per share being
net (loss)/profit attributable
to equity holders of the parent (20,831) 455
--------------------------------------- ------------- -------------
Number of shares Number Number
--------------------------------------- ------------- -------------
Weighted average number of ordinary
shares for the
purposes of basic (loss)/earnings
per share 101,203,640 143,424,774
--------------------------------------- ------------- -------------
Effect of dilutive potential ordinary
shares:
Share options and performance shares* - 78,531
--------------------------------------- ------------- -------------
Weighted average number of ordinary
shares for the
purposes of diluted (loss)/earnings
per share 101,203,640 143,503,305
--------------------------------------- ------------- -------------
(Loss)/earnings per share Pence Pence
--------------------------------------- ------------- -------------
Basic (20.6) 0.3
Diluted (20.6) 0.3
--------------------------------------- ------------- -------------
*There are no potentially dilutive shares in 2016 since the Company has made a loss
5. Capital commitments
31 December
---------------------------------- ------------------
2016 2015
GBP'000 GBP'000
---------------------------------- -------- --------
Outstanding commitments to funds 3,577 3,961
---------------------------------- -------- --------
The outstanding commitments to funds comprise unpaid calls in respect of funds where a subsidiary of the Company is a limited partner.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LFFLLVRIVLID
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March 14, 2017 03:01 ET (07:01 GMT)
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