THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT MAY CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE UK'S MARKET ABUSE REGULATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, SUCH INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
LEI: 2138004UJ1TW8UCELX08
28 March 2025
LMS CAPITAL PLC
Final Results for the Year Ended 31 December 2024
The Board of LMS Capital plc ("LMS" or the "Company") is pleased to announce the Company's audited annual results for the year ended 31 December 2024.
Financial Summary
|
| 31 December 2024 | 31 December 2023 |
|
| | |
| Net asset value | £36.2m | £42.1m |
| Cash available at year end | £13.5m | £15.5m |
| | | |
| Portfolio losses | (£4.9m) | (£1.4m) |
| Net running costs | £1.7m | £1.8m |
| | | |
| Net asset value per share (p) | 44.8p | 52.2p |
| Dividends paid per share (p) | 0.925p | 0.925p |
| Dividends declared/recommended by Board (p) | nil | 0.925p |
2024 key points
· Net Asset Value ("NAV") - £36.2 million
The NAV at 31 December 2024 was £36.2 million, 44.8 pence per share (31 December 2023: £42.1 million, 52.2 pence per share).
· Dividends to Shareholders - £0.7 million, 0.925 pence per share
The Company paid a 2023 final dividend to shareholders of 0.625 pence per share in June 2024 and an interim dividend for the 2024 year of 0.3 pence per share in September 2024.
· Portfolio Movements - £4.9 million reduction
The portfolio net decrease comprises:
· Unrealised foreign exchange gains £0.2 million;
· Net fund distributions £0.8 million;
· Other movements £0.6 million;
· Unrealised losses:
o Brockton - £2.5 million
o Dacian - £2.1 million
o Opus - £0.9 million
· Offset by accrued interest of £1.0 million and net unrealised gains on other assets £0.8 million.
· Net Running Costs - £1.7 million
Net running costs, including those incurred by subsidiaries, were £1.7 million (2023: £1.8 million) and there were an additional £0.8 million (2023: £1.0 million) of investment related costs.
· Portfolio Realisations - £1.5 million
The final instalment on Medhost was received by LMS Capital (Bermuda) Limited in December 2024 (£1.5 million).
· Year End Cash Balance - £13.5 million
Cash balances at the year end, including amounts held by subsidiaries, were £13.5 million, representing 37.4% of the NAV (2023: £15.5 million and representing 38.7% of the NAV). Cash held by the Company was £11.6 million (2023: 9.0 million).
For further information please contact:
LMS Capital plc
Nick Friedlos, Managing Director
0207 935 3555
Chairman and Managing Director's Report
We are pleased to report our results for the year ended 31 December 2024.
On 13 February 2025, the Board announced that, mindful of the challenges facing the Company in terms of its size, limited secondary market liquidity and the discount to NAV at which the ordinary shares have been trading, it had determined to carry out a strategic review of the Company's future direction and was intending to consult with shareholders.
On 13 March 2025 the Company announced that following engagement with key shareholders, the Board had reached the conclusion that shareholder value would be best served by a managed realisation of the Company's assets and returns of capital over time (the "Managed Realisation")
The Board intends to publish a shareholder circular towards the end of April 2025 to convene a General Meeting at which it will seek approval from shareholders to change the Company's investment policy to permit the Managed Realisation and any related matters required.
Turning to the results for the year ended 31 December 2024:
· The 31 December 2024 NAV was £36.2 million and compares with NAV at the prior year end, 31 December 2023 of £42.1 million. Adjusting for £0.7 million dividends paid during the year, the NAV has decreased by a net £5.2 million, 12.4% during the year.
· Cash at the year end was £13.5 million. (2023: £15.5 million).
The principal underlying portfolio changes on a full-year basis were:
· A decrease of £2.5 million in Brockton Fund 1, reflecting the decision reported at the half-year to write down to nil the carrying value of the investment following the appointment of receivers to the Fund's remaining development asset in January 2024;
· A decrease of £0.9 million in the valuation of the Opus Capital Venture Partners fund. This fund has two principal remaining investments, both of which the manager believes, subject to market conditions, have good prospects for realisation;
· A decrease in Dacian of £1.3 million. This includes £0.8 million reduction reported at the half-year stage following restructuring of Dacian's balance sheet and a further reduction of £0.5 million In the second half;
· An increase in Castle View of £0.5 million. An update on retirement living and Castle View is set out below.
Other full-year movements include:
· Full-year running costs £1.7 million. Cost saving measures during the year have reduced the annual run rate of costs to approximately £1.6 million by December 2024.
· Investment costs of £0.8 million include the costs of the individuals who are focussed entirely on the operation and development of the retirement living business, together with some transitional costs associated with Castle View and professional fees in connection with the Dacian restructuring in July 2024.
· Other net income of £0.8 million, including unrealised foreign exchange gains of £0.2 million on non-portfolio assets, principally US Dollar bank accounts and bank interest of £0.6 million.
Financial results for the year ended 31 December 2024
Net Asset Value ("NAV") overview
The NAV of the Company at 31 December 2024 was £36.2 million, 44.8 pence per share (31 December 2023: £42.1 million, 52.2 pence per share). The balance sheet at the year end can be summarised as follows:
| | 31 December | ||
| | 2024 | | 2023 |
| | £'m | | £'m |
| Mature Investment Portfolio (Originate from the Company's strategy prior to 2012) |
| | |
| Quoted investments | 0.1 | | 0.1 |
| Unquoted investments | 1.7 | | 1.7 |
| Funds | 5.8 | | 9.5 |
| | 7.6 | | 11.3 |
|
|
| | |
| Other Investments |
| | |
| Energy - Dacian | 9.3 | | 11.0 |
| Retirement Living - Castle View | 6.6 | | 6.1 |
| |
| | |
|
| 15.9 | | 17.1 |
|
|
| | |
| Total Investments | 23.5 | | 28.4 |
| |
| | |
| Cash and cash equivalents | 13.5 | | 15.5 |
| Other net liabilities | (0.8) | | (1.8) |
| |
| | |
| Net Assets | 36.2 | | 42.1 |
Adjusting for £0.7 million dividends paid during the year, the NAV has decreased by a net £5.2 million, 12.4%, during the year, comprising:
· Unrealised foreign exchange gains on portfolio investments denominated in foreign currencies (mainly US Dollars) £0.2 million;
· Realised and unrealised underlying net losses on portfolio investments £3.7 million, comprising:
o Castle View - £0.5 million gain;
o Brockton Fund 1 - £2.5 million write down, reported at the half-year stage, following appointment of receivers at the Fund's remaining central London residential development;
o Dacian - £1.3 net reduction of which £0.8 million was reported at the half-year stage following a reorganisation of the company's capital and a further £0.5 million in the second half of the year;
o Opus Capital Fund V - £0.9 million reduction; and
o Other net gains of £0.5 million.
· Running costs £1.7 million;
· Investment costs, relating to the development of the retirement living business and oversight of Dacian £0.8 million; and
· Interest income £0.8 million.
Running Costs
Running costs, net of Dacian fee income, for the year were £1.7 million. Based on cost saving measures implemented during the year the run rate for 2025 has been reduced to approximately £1.6 million. As part of the strategic review the Board will be looking to reduce costs further.
Investment Costs
Investment costs of £0.8 million include the costs of the individuals who are focussed entirely on the operation and development of the retirement living business, together with some transitional costs associated with Castle View and professional fees in connection with the Dacian restructuring in July 2024.
Liquidity - Cash less other net liabilities
Cash
Cash balances in the Company and its subsidiaries at 31 December 2024 were £13.5 million (31 December 2023: £15.5 million).
Net liabilities
Net liabilities in the Company and its subsidiaries of £0.8 million (31 December 2023: £1.8 million) consist primarily of deferred consideration payable on the Castle View acquisition, accruals for income taxes and other sundry costs.
Retirement Living
Castle View
LMS, though its wholly owned subsidiary LMS Retirement Living Limited, acquired its investment in Castle View Retirement Village ("Castle View") in December 2023 and has now completed its first full year of operation.
Castle View is a retirement development comprising 64 self-contained apartments close to Windsor town centre, together with communal facilities including 24 hour reception, lounges, bars, library and a restaurant facility.
Residents acquire their apartments, and the right to use the communal facilities, on 250-year leases and pay an annual service charge, which covers the day to day running of the scheme, plus a deferred fee on resale of an apartment. The deferred fee is designed to cover the costs of constructing the communal facilities, their ongoing maintenance and updating, and to provide a return on capital invested.
LMS acquired the freehold interest in Castle View, including 15 unsold apartments in December 2023 together with the operations and the right to receive the service charge fees and deferred fees in the future. The acquisition was made for £6.1 million from LMS (via its subsidiary) and £5.8 million of senior debt to be repaid from the proceeds of apartment sales.
Progress during the first year has been broadly as expected. Apartment sales were within the range of basic scenarios considered during the acquisition process, albeit at the lower end. During the year, sales of three apartments have been completed, and reservations have been taken on a further four, anticipated to complete in early 2025. As a result of the completed sales, debt has been reduced to £5.1 million.
The investment has been valued at the year end using a discounted cash flow model. The assumptions used are broadly consistent with those used to evaluate the acquisition and result in a small increase in carrying value.
Retirement Living Outlook
The acquisition of Castle View Retirement Village in Windsor, shortly before the end of 2023, represented the first step in developing an investment platform focussed on retirement living.
Underlying demand in the sector is driven by demographics in the UK. The number of 75+ year old households is expected to increase by 77% in the 25 years to 2043. This older population owns more than 40% of housing equity which can be released to finance retirement options and also free up stock for the wider family housing market.
The market is undersupplied, with relatively few developers or operators of scale and an increasing interest from institutional capital. A recent sale and leaseback transaction in the sector was the first of its kind and provides a potential model for future transactions which allow an exit for investors.
The Board continues to see opportunity in the sector, particularly in the acquisition of existing stock which offers long-term value potential but also provides attractive income. Accordingly, the Board may seek co-investment into the Company's retirement living subsidiary which could add additional assets to create a retirement living platform and ultimately enhance value.
Dacian
Initial investment
The Original Investor Group, which included and was led by LMS, invested in Dacian (a Romanian oil and natural gas production company) in 2020. LMS, through its wholly owned subsidiaries, invested $9.1 million as part of a $14.0 million financing by way of senior loan notes with a coupon of 14% per annum on a compounding basis (the "Senior Loan Notes"), and an equity subscription at nominal value giving the Company an equity stake of 32.3% in Dacian (the "Original Investment"). The Original Investor Group in total held 50% of the equity and the founding team (the "Founders") held 50%.
The Original Investor Group comprises the Company, certain third parties and three of the Company's directors, being Robert Rayne, James Wilson and Nicholas Friedlos, with the investment in 2020 having been made in accordance with the Company's published Co-Investment Policy.
Until 12 July 2024 the board of Dacian comprised two of the Company's Directors, Robert Rayne and Nicholas Friedlos, and three Dacian founder directors. Effective 12 July 2024, one of the founders resigned to be replaced by James Wilson, the Chairman of LMS.
Background to July 2024 restructure
As previously reported, Dacian had experienced lower than expected production levels through 2023 and in the first half of 2024 revenues and operating cash flows were significantly below expectations.
During the second quarter of 2024 it became clear that Dacian would benefit from additional financing to ensure it had sufficient working capital and also to ensure that it was able to meet its obligations to external debt providers and under a recently imposed Romanian solidarity tax.
In addition, due to the value of the Senior Loan Notes, with accrued coupon, being $22.1 million at 30 June 2024, Dacian's capital structure was in a deficit position which, under Romanian law, should be rectified.
On 15 July 2024, additional Bridge Loan financing of $1.0 million for Dacian was announced in conjunction with a proposal to restructure the balance sheet and for the Senior Loan Notes invested by the Original Investor Group in 2020 to be converted to equity, subject to the necessary Romanian regulatory approvals.
The approvals are still awaited but are expected to be forthcoming.
Operations since the restructuring in July 2024
At the time of the restructuring announced on 15 July 2024, Dacian underwent a process to review and reset achievable initial production targets, adjust its cost base to reflect the reset production levels and review its production optimisation plans to focus on projects which can be funded from operational cash flow and expected to deliver steady production gains during 2025.
· Production: Production in the second half of 2024 was at an average monthly rate of 647 barrels of oil equivalent per day ("BOEPD") which was approximately 5% below expectations due largely to an interruption to gas supply in December 2024.
· Costs: Dacian continues to implement headcount reductions. Headcount at the end of the year was 162 down from 191 in January 2024 without impacting its operations.
Cashflow
Since the July 2024 restructuring Dacian has continued to meet external obligations:
· in respect of external debt, the repayments of which were approximately $0.3 million per month, which were fully repaid in November 2024; and
· its obligations under a recently imposed Romanian solidarity tax of some $0.1 million per month payable until March 2025.
Dacian's cash flow is expected to improve in Q2 2025, once the company it is free of its external debt obligations and after the tax obligations are discharged.
Against this background Dacian has sought to manage its working capital to ensure it can maintain access to supplies of spare parts, in particular replacement rods and tubes for its wells, which will ultimately enable it to stabilise and increase its production and which in turn will flow through to operating cash.
To allow for inevitable energy pricing fluctuations and to manage its working capital and plan with confidence for implementation of its production enhancement projects, Dacian has requested further advances of $0.8 million under the Bridge Loan to which certain of the original Bridge Lenders, Robert Rayne and James Wilson who are directors of the Company, have contributed. The additional advances are provided on the same terms as the Bridge Loan, being at an interest rate of 14% with a term of 30 June 2025 and an equity subscription right of 4% which is on the same basis pro rata as the original terms announced on 15 July 2024.
Assuming that the regulatory approvals for the July 2024 restructuring are received, and taking account of the additional subscription share rights granted to the providers of the original July 2024 Bridge Loan and the additional $0.8 million, the capital structure will be:
· the original investors will increase from 50% to 78.6%, of which LMS's holding will increase from 32.3% to 50.8%;
· the subscription shares for the Bridge Lenders will be 9.5%; and
· the Founders will be diluted from 50% to 11.9%.
The 78.6% of the shares held by the Original Investor Group has preferential distribution rights versus the shares held by both the Bridge Lenders and the Founders, the objective being, to the extent permissible under Romanian law, to leave the original investors as close as possible, to the position they would have been in had the Senior Loan Notes remained in place.
Outlook for Dacian
· We are pleased to announce that John Burkhart, an experienced oil industry executive will join the Dacian board as a non-executive director. John has spent the last 17 years of his career in senior leadership roles at Hunt Oil Company based in Texas. John's knowledge and experience will provide support to the Dacian team.
· Production stabilisation and enhancement:
o Dacian has provided its shareholders with a costed project by project plan to stabilise and increase production, primarily through additional investment in maintenance to reduce break downs and lost production on active oil and gas wells.
o The program overall shows an increase in average production from current levels to in excess of 900 BOEPD by the end of 2026 (or earlier if additional capital is raised).
o Assuming the program is implemented in full, and at an oil price of average $75 per barrel, the operating cash flow should be in excess of $0.3 million per month.
· The alternative energy use opportunities for the Dacian estate continue to be progressed and the Board remains optimistic that this will bring additional benefits in due course.
· The Bridge Lenders, Dacian and the Original Investor Group note that the Bridge Loan is due for repayment by 30 June 2025 and are exploring the potential extension of the Bridge Loan term and/or the potential conversion of the Bridge Loan with accrued interest into equity, in circumstances where it makes commercial sense for Dacian to do so.
Looking forward
As announced on 13 March 2025 regarding a proposed managed realisation, the Board is not proposing a dividend at this stage and will include proposals for future distributions in the circular to shareholders in April 2025.
We would like to express our appreciation for the support from our team and from the network of people with whom we work on a regular basis. We would also like to express our appreciation for the continued support of our shareholders.
| James Wilson | Nicholas Friedlos |
| Chairman | Managing Director |
Portfolio Management Review
The movement in NAV during the year was as follows:
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Opening NAV | 42,141 | | 46,541 |
| Net realised and unrealised reductions on investments | (4,504) | | (2,761) |
| Investment interest income | 1,186 | | 1,374 |
| Advisory fee income | - | | 160 |
| Dividends | (747) | | (747) |
| Overheads and other net movements | (1,921) | | (2,426) |
| Closing NAV | 36,155 | | 42,141 |
Cash realisations and new and follow-on investments from the portfolio were as follows:
| | Year ended 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Proceeds from the sale of investments | 29 | | 5,770 |
| Proceeds from redemption of convertible debt | - | | 88 |
| Distributions from funds | 894 | | 62 |
| Total - gross cash realisations | 923 | | 5,920 |
| Fund calls | (55) | | - |
| Total - net | 868 | | 5,920 |
Realisations in 2024 include distributions received from Simmons and Brockton CF (II) Scotland.
Below is a summary of the investment portfolio of the Company and its subsidiaries, which reflects all investments held by the Group:
| | 31 December 2024 | 31 December 2023 | |||||
| Mature investment portfolio | GBP denominated £'000 | USD denominated £'000 | Total £'000 | | GBP denominated £'000 | USD denominated £'000 | Total £'000 |
| Quoted | 54 | 5 | 59 | | 107 | 37 | 144 |
| Unquoted | 1,680 | 56 | 1,736 | | 1,680 | 38 | 1,718 |
| Funds | 293 | 5,584 | 5,877 | | 3,139 | 6,330 | 9,469 |
| | 2,027 | 5,645 | 7,672 | | 4,926 | 6,405 | 11,331 |
| |
|
|
| | | | |
| Other investments | GBP denominated £'000 | USD denominated £'000 | Total £'000 | | GBP denominated £'000 | USD denominated £'000 | Total £'000 |
| Dacian | - | 9,258 | 9,258 | | - | 10,989 | 10,989 |
| Castle View | 6,553 | - | 6,553 | | 6,130 | - | 6,130 |
| | 6,553 | 9,258 | 15,811 | | 6,130 | 10,989 | 17,119 |
| Total investments | 8,580 | 14,903 | 23,483 | | 11,056 | 17,394 | 28,450 |
Basis of valuation:
Quoted investments
Quoted investments for which an active market exists are valued at the closing bid price at the reporting date.
Unquoted direct investments
Unquoted direct investments for which there is no active market are valued using the most appropriate valuation technique with regard to the stage and nature of the investment.
Valuation methods that may be used include:
· investments in an established business are valued using revenue or earnings multiples depending on the stage of development of the business and the extent to which it is generating sustainable revenue or earnings;
· investments in an established business which is generating sustainable revenue or earnings but for which other valuation methods are not appropriate are valued by calculating the discounted value of future cash flows;
· investments in debt instruments or loan notes are determined on a standalone basis, with the initial investment recorded at the price of the transaction and subsequent adjustments to the valuation are considered for changes in credit risk or market rates; and
· convertible instruments are valued by disaggregating the convertible feature from the debt instrument and valuing it using a Black-Scholes model.
Funds
Investments in managed funds are valued at fair value. The general partners of the funds will provide periodic valuations on a fair value basis, the latest available of which the Company will adopt provided it is satisfied that the valuation methods used by the funds are not materially different from the Company's valuation methods. Adjustments will be made to the fund valuation where the Company believes the evidence available supports an alternative valuation.
Performance of the investment portfolio
The return on investments for the year ended 31 December was as follows:
| | Year ended 31 December | |||||
| | 2024 | 2023 | ||||
|
| Realised | Unrealised |
| Realised | Unrealised |
|
|
| gains/(losses) | gains/(losses) | Total | gains/(losses) | gains/(losses) | Total |
| Asset type | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| |
|
|
|
|
|
|
| Quoted | 6 | (62) | (56) | (10) | - | (10) |
| Unquoted | - | (1,690) | (1,690) | 1,498 | 366 | 1,864 |
| Funds | 457 | (3,210) | (2,753) | (9) | (4,509) | (4,518) |
| | 463 | (4,962) | (4,499) | 1,479 | (4,143) | (2,664) |
| |
|
|
| | | |
| Charge for incentive plans |
| (5) | | | (100) | |
| Income and fair value adjustments on investment portfolio | (4,504) | | | (2,764) | ||
| Net operating and other expenses of subsidiaries | (8,520) | | | (44,500) | ||
| | (13,024) | | | (47,264) | ||
The Company historically operated carried interest arrangements in line with normal practice in the private equity industry. These arrangements have been in run-off since 2012 and only one investment, Medhost, remained subject to the arrangements. Following the sale of Medhost a payment was due based on the cash consideration received in 2023, and a further payment was due following receipt of the final part of the proceeds in December 2024. The charge for incentive plans for the Company is £nil and for subsidiaries £5,000 for carried interest and other incentives relating to historic arrangements. The charge for the carried interest incentive plan is included in the net movement on investments in the Income Statement.
Approximately 63% of the portfolio at 31 December 2024 was denominated in US Dollars (31 December 2023: 61%) and the above table includes the impact of currency movements. In the year ended 31 December 2024, the weakening of sterling against the US Dollar resulted in an unrealised foreign currency gain of £0.2 million (2023: unrealised loss of £1.1 million). 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
| |
| 31 December | ||
| |
| 2024 | | 2023 |
| Company | Sector | £'000 | | £'000 |
| Tialis Essential IT plc | UK technology | 54 | | 107 |
| Arsenal Digital Holdings Inc | US energy | 5 | | 10 |
| Weatherford International Inc | US energy | - | | 27 |
| |
| 59 | | 144 |
The changes in valuation on the quoted portfolio arose as follows:
| |
| Year ended 31 December | ||
| |
| 2024 | | 2023 |
| Gains/(losses), net | £'000 | | £'000 | |
| Realised |
|
| | |
| Weatherford International Inc |
| 6 | | (8) |
| Evolving Systems Inc |
| - | | (2) |
|
|
| 6 | | (10) |
| Unrealised |
|
| | |
| Tialis Essential IT plc |
| (54) | | (13) |
| Arsenal Digital Holdings Inc |
| (4) | | (4) |
| Other quoted holdings |
| (2) | | 17 |
| Unrealised foreign currency losses | (2) | | - | |
| | (62) | | - | |
| Total net losses | (56) | | (10) | |
Unquoted investments
| |
| 31 December | ||
| |
| 2024 | | 2023 |
| Company | Sector | £'000 | | £'000 |
| Dacian | Romanian energy | 9,258 | | 10,989 |
| Castle View | Retirement living | 6,553 | | 6,130 |
| Elateral | UK technology | 1,680 | | 1,680 |
| Cresco | US consumer | 56 | | 38 |
| |
| 17,547 | | 18,837 |
The changes in valuation on the unquoted portfolio arose as follows:
| |
| Year ended 31 December | ||
| |
| 2024 | | 2023 |
| Gains/(losses), net | £'000 | | £'000 | |
| Realised |
|
| | |
| Medhost Inc |
| - | | 1,432 |
| Updata |
| - | | 86 |
| ICU Eyeware |
| - | | 62 |
| |
| - | | 1,580 |
| Unrealised |
| | | |
| Dacian | (2,112) | | - | |
| Castle View | 241 | | - | |
| Cresco | 18 | | - | |
| Elateral |
| | 1,081 | |
| Tialis loan notes |
| | 6 | |
| Unrealised foreign currency gains/(losses) | 163 | | (803) | |
| | (1,690) | | 284 | |
| Total net (losses)/gains | (1,690) | | 1,864 | |
Valuations are sensitive to changes in the following inputs:
· the operating performance of the individual businesses within the portfolio;
· changes in the revenue and profitability multiples and transaction prices of comparable businesses, which are used in the underlying calculations;
· changes in the estimated future cash flows of the individual businesses which are derived based on judgemental inputs (see note 20 for further details); and
· the discount rates applied to valuations.
Fund interests
| |
| 31 December | ||
| |
| 2024 | | 2023 |
| General partner | Sector | £'000 | | £'000 |
| Brockton Capital Fund 1 | UK real estate | - | | 2,526 |
| Opus Capital Venture Partners | US venture capital | 3,329 | | 4,142 |
| GW 2001 Fund | US quoted micro-caps | 2,243 | | 2,180 |
| EMAC ILF | Europe real estate | 292 | | 330 |
| Simmons Parallel Energy | UK energy | 1 | | 283 |
| Other interests |
| 12 | | 8 |
| |
| 5,877 | | 9,469 |
The changes in valuation on the Company's fund portfolio arose as follows:
| |
| Year ended 31 December | ||
| |
| 2024 | | 2023 |
| Gains/(losses), net | £'000 | | £'000 | |
| Realised |
|
| | |
| Brockton CF (II) Scotland |
| 457 | | - |
| San Francisco Equity Partners |
| - | | (9) |
|
|
| 457 | | (9) |
| Unrealised |
|
| | |
| Brockton Capital Fund 1 |
| (2,526) | | (3,510) |
| Opus Capital Venture Partners |
| (870) | | (896) |
| GW 2001 Fund |
| 24 | | 222 |
| Simmons Parallel Energy |
| 104 | | 27 |
| Eden Ventures |
| - | | (5) |
| Others (net) |
| (13) | | (8) |
| Unrealised foreign currency gains/(losses) | 71 | | (339) | |
| | (3,210) | | (4,509) | |
| Total fair value decreases | (2,753) | | (4,518) | |
Costs
Running costs for the year were £1.7 million (2023: £1.8 million) and investment related costs being support costs for real estate and co-investment activities, were £0.8 million (2023: £1.0 million).
Taxation
The Group tax provision for the year, all of which arose in the subsidiaries, is £0.1 million (2023: £0.2 million). This includes £0.1 million of withholding tax on foreign sourced income.
Financial Resources and Commitments
At 31 December 2024 cash holdings, including cash in subsidiaries, were £13.5 million (31 December 2023: £15.5 million) and neither the Company nor any of its subsidiaries had any external debt in either 2024 or 2023.
At 31 December 2024, subsidiary companies had commitments of £2.5 million (31 December 2023: £2.7 million) to meet outstanding capital calls from fund interests.
LMS CAPITAL plc
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with UK adopted international accounting standards and applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Financial Statements in accordance with UK adopted international accounting standards. Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these Financial Statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and prudent;
· state whether they have been prepared in accordance with UK adopted international accounting standards, subject to any material departures disclosed and explained in the Financial Statements;
· prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and
· prepare a Directors' Report, a Strategic Report and Directors' Remuneration Report which comply with the requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors have ensured that the Annual Report and Accounts, taken as a whole, are fair, balanced, and understandable and provides the information necessary for shareholders to assess the position and performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the Annual Report and the Financial Statements are made available on a website. Financial Statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the Financial Statements contained therein.
Directors' responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
· The Financial Statements have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company.
· The Annual Report includes a fair review of the development and performance of the business and the financial position of the Company, together with a description of the principal risks and uncertainties that they face.
For and on behalf of the Board.
James Wilson
Chairman
Company Income Statement
For the year ended 31 December 2024
| |
| Year ended 31 December | ||
| |
| 2024 | | 2023 |
|
| Notes | £'000 | | £'000 |
| Net loss on investments | 2 | (13,024) | | (47,264) |
| Interest income | 3 | 1,416 | | 608 |
| Other income | | 427 | | 120 |
| Dividend income | 2 | 8,000 | | 45,000 |
| Total loss on investments | | (3,181) | | (1,536) |
| Interest payable | 4 | (331) | | - |
| Operating expenses | 5 | (1,842) | | (2,196) |
| Loss before tax | | (5,354) | | (3,732) |
| Taxation | 8 | - | | - |
| Loss for the year | | (5,354) | | (3,732) |
| | |
| | |
| Attributable to: | |
| | |
| Equity shareholders | | (5,354) | | (3,732) |
| | |
| | |
| Loss per ordinary share - basic | 9 | (6.6)p | | (4.6)p |
| Loss per ordinary share - diluted | 9 | (6.6)p | | (4.6)p |
All activities of the Company are classed as continuing.
Company Statement of Other Comprehensive Income
For the year ended 31 December 2024
| |
| Year ended 31 December | ||
| |
| 2024 | | 2023 |
|
|
| £'000 | | £'000 |
| | |
| | |
| Loss for the year | | (5,354) | | (3,732) |
| Other comprehensive income | | - | | - |
| Total comprehensive loss for the year | | (5,354) | | (3,732) |
| | |
| | |
| Attributable to: | |
| | |
| Equity shareholders | | (5,354) | | (3,732) |
Company Statement of Financial Position
As at 31 December 2024
| |
| 31 December | ||
| |
| 2024 | | 2023 |
|
| Notes | £'000 | | £'000 |
| Assets | |
| | |
| Non-current assets | |
| | |
| Right-of-use assets | 19 | 14 | | 42 |
| Investments | 11 | 7,842 | | 20,854 |
| Amounts receivable from subsidiaries | 14 | 17,805 | | 15,014 |
| Total non-current assets | | 25,661 | | 35,910 |
| Current assets | |
| | |
| Operating and other receivables | 12 | 231 | | 135 |
| Cash and cash equivalents | 13 | 11,646 | | 9,027 |
| Total current assets | | 11,877 | | 9,162 |
| Total assets | | 37,538 | | 45,072 |
| Liabilities | |
| | |
| Current liabilities | |
| | |
| Operating and other payables | 15 | (462) | | (422) |
| Amounts payable to subsidiaries | 16 | (921) | | (2,493) |
| Total current liabilities | | (1,383) | | (2,915) |
| Non-current liabilities | |
| | |
| Lease liabilities | 15 | - | | (16) |
| Total non-current liabilities | | - | | (16) |
| Total liabilities | | (1,383) | | (2,931) |
| Net assets | | 36,155 | | 42,141 |
| | |
| | |
| Equity | |
| | |
| Share capital | 17 | 8,073 | | 8,073 |
| Share premium | | 508 | | 508 |
| Capital redemption reserve | | 24,949 | | 24,949 |
| Shares to be issued | 18 | 322 | | 207 |
| Retained earnings | | 2,303 | | 8,404 |
| Total equity shareholders' funds | | 36,155 | | 42,141 |
| | |
| | |
| Net asset value per ordinary share | 25 | 44.79p | | 52.20p |
Company Statement of Changes in Equity
For the year ended 31 December 2024
| |
|
| Capital | Shares |
|
|
| | Share | Share | redemption | to be | Retained | Total |
|
| capital | premium | reserve | issued | earnings | equity |
| | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| | | | | | | |
| Balance at 1 January 2023 | 8,073 | 508 | 24,949 | 128 | 12,883 | 46,541 |
| | | | | | | |
| Comprehensive income for the year |
|
|
|
|
|
|
| Loss for the year | - | - | - | - | (3,732) | (3,732) |
| Equity after total comprehensive income for the year | 8,073 | 508 | 24,949 | 128 | 9,151 | 42,809 |
|
|
|
|
|
|
|
|
| Contributions by and distributions |
|
|
|
|
|
|
| Share-based payments | - | - | - | 79 | - | 79 |
| Dividends (note 10) | - | - | - | - | (747) | (747) |
| As at 31 December 2023 | 8,073 | 508 | 24,949 | 207 | 8,404 | 42,141 |
|
|
|
|
|
|
|
|
| Comprehensive income for the year |
|
|
|
|
|
|
| Loss for the year | - | - | - | - | (5,354) | (5,354) |
| Equity after total comprehensive income for the year | 8,073 | 508 | 24,949 | 207 | 3,050 | 36,787 |
|
|
|
|
|
|
|
|
| Contributions by and distributions |
|
|
|
|
|
|
| Share-based payments | - | - | - | 115 | - | 115 |
| Dividends (note 10) | - | - | - | - | (747) | (747) |
| As at 31 December 2024 | 8,073 | 508 | 24,949 | 322 | 2,303 | 36,155 |
Company Cash Flow Statement
For the year ended 31 December 2024
| |
| Year ended 31 December | ||
| |
| 2024 | | 2023 |
|
| Notes | £'000 | | £'000 |
| Cash flows from operating activities | |
| | |
| Loss before tax | | (5,354) | | (3,732) |
|
Adjustments for non-cash income and expenses: |
| | | |
| Equity settled share-based payments | 18 | 115 | | 79 |
| Depreciation of right-of-use assets | 19 | 28 | | 28 |
| Interest expense on lease | 19 | 2 | | 4 |
| Losses on investments | 2 | 13,024 | | 47,264 |
| Interest income | 3 | (1,416) | | (608) |
| Interest payable | 4 | 331 | | - |
| Dividend income | 2 | (8,000) | | (45,000) |
| Adjustments to incentive plans | 2 | (12) | | 3 |
| Exchange differences on cash balances | | (6) | | 17 |
| | | (1,288) | | (1,945) |
| Changes in operating assets and liabilities | |
| | |
| Increase in operating and other receivables | | (93) | | (53) |
| Increase/(decrease) in operating and other payables | | 55 | | (8) |
| Increase in amounts receivable from subsidiaries | | (1,987) | | (9,856) |
| Increase in amounts payable to subsidiaries | | 6,097 | | 6,460 |
| Net cash from/(used in) operating activities | | 2,784 | | (5,402) |
| Cash flows from investing activities | |
| | |
| Interest received | 3 | 609 | | 598 |
| Proceeds from sale of investments | | - | | 86 |
| Net cash from investing activities | | 609 | | 684 |
| Cash flows from financing activities | |
| | |
| Dividends paid | 10 | (747) | | (747) |
| Repayment of principal lease liabilities | 19 | (31) | | (28) |
| Repayment of lease interest | 19 | (2) | | (5) |
| Net cash used in financing activities | | (780) | | (780) |
| Net increase/(decrease) in cash | | 2,613 | | (5,498) |
| Exchange gains/(losses) on cash balances | | 6 | | (17) |
| Cash and cash equivalents at the beginning of the year | 13 | 9,027 | | 14,542 |
| Cash and cash equivalents at the end of the year | 13 | 11,646 | | 9,027 |
Cash flows from investing activities have been restated to exclude the movement relating to other income received of £120,000 for the year ended 31 December 2023 and to disclose this within the net cash on operating activities reflecting the nature of the cash flows. There is no impact on other line items in the Cash Flow Statement.
Notes to the Financial Statements
1. Material accounting policies
Reporting entity
LMS Capital plc ("the Company") is a public limited company limited by shares incorporated in the United Kingdom and registered in England with company number 5746555. The address of the registered office is 3 Bromley Place, London W1T 6DB.
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 plc.
Basis of preparation
These Financial Statements for the year ended 31 December 2024 have been prepared in accordance with UK adopted International Accounting Standards. The Financial Statements are presented in sterling which is also the Company's functional currency.
LMS Capital plc adopted an amendment to IFRS 10 with effect from 11 January 2016, which exempts investment entities from presenting consolidated financial statements. As a result, the Company is not required to produce consolidated accounts and only presents the results of the Company.
The Financial Statements have been prepared on the historical cost basis except for investments which are measured at fair value, with changes in fair value recognised in the Income Statement.
The Company's business activities and financial position are set out in the Strategic Report on pages 11 to 19 and in the Portfolio Management Review on pages 20 to 25. In addition, note 20 to the financial information includes a summary of the Company's financial risk management processes, details of its financial instruments and its exposure to credit risk and liquidity risk. Taking account of the financial resources available to it, the Directors believe that the Company is well placed to manage its business risks successfully. After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources for the foreseeable future.
Going concern
The Company's business activities, together with the factors likely to affect its future development, performance and financial position, are set out in the Strategic Report on pages 11 to 19 and the Portfolio Management Review on pages 20 to 25. The Directors have carried out a robust viability assessment of the emerging and principal risks and concluded that they have a reasonable expectation that the Company will continue in operation and meet its liabilities as they fall due over a three-year period from the date of this report. This assessment included reviewing the liquidity forecasts of the Company that include the flexibility in the dividend policy and lack of any external debt, the significant cash balances on hand at 31 December 2024, the expected future expenditures and commitments and the latest report on the investment portfolio. In preparing this liquidity forecast, consideration has been given to the expected ongoing impact of the war in Ukraine on the Company and the wider Group as well as the potential impact on the underlying investee companies. The Directors have considered these factors for a period not less than 12 months from the date of approval of these Financial Statements.
The Directors acknowledge that they intend to publish a circular during April 2025 to convene a General Meeting at which it will seek approval from shareholders to change the Company's investment policy to permit the Managed Realisation.
In making their assessment, the Directors also considered the possible outcomes of the shareholder vote:
· The shareholders do not approve the change in the Company's investment policy. In this scenario, the Company will continue with the current investment strategy, and there is a reasonable expectation that the Company will continue in operation and meet its liabilities as they fall due.
· The shareholders approve the change in the Company's investment policy. In this scenario, it is expected that the Managed Realisation will take place over time which is likely to be a period greater than 12 months from the date of this report. In addition, the Directors have a reasonable expectation that the Company will meet its liabilities as they fall due over the period of the Managed Realisation. In the event that the change in investment policy is approved by the shareholders, future financial information will be prepared on a basis other than going concern as required by UK adopted International Accounting Standards. However, the Directors do not currently anticipate that this change will result in any changes to the recognition, measurement and/or classification of the Company's assets and liabilities included in the Balance Sheet.
Based on this assessment, the Directors consider that, although there is an uncertainty due to the upcoming shareholder vote at the proposed General Meeting in relation to the Managed Realisation, the Company will remain a going concern for a period of at least 12 months from the date of approval of the Financial Statements and have therefore prepared the Financial Statements on a going concern basis. The Financial Statements do not include any adjustments that would result from the basis of preparation being inappropriate.
New and revised accounting standards and amendments effective for the current period
New and revised accounting standards and amendments that are effective for annual periods beginning 1 January 2024 which have been adopted for the first time by the Company:
• Amendments to IAS 1 - Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (effective 1 January 2024)
• Amendments to IFRS 16 - Leases: Lease Liability in a Sale and Leaseback (effective 1 January 2024)
The adoption of the standards and amendments listed above did not have any material impact on the Company's results.
These amendments have been endorsed by the EU and adopted by the UK.
There are no other standards, amendments to standards or interpretations that are effective for annual periods beginning on 1 January 2024 that have had a material effect on the Company's Financial Statements.
New accounting standards, amendments and interpretations not yet effective, and which have not been early adopted
Other standards and amendments that are effective for subsequent reporting periods beginning on or after 1 January 2025 and have not been early adopted by the Company include:
• Lack of Exchangeability (Amendment to IAS 21 - The Effects of Changes in Foreign Exchange Rates) (effective 1 January 2025)
• Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 - Financial Instruments and IFRS 7) (effective 1 January 2026)
• Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 and IFRS 7) (effective 1 January 2026)
• IFRS 18 - Presentation and Disclosure in Financial Statements (effective 1 January 2027)
• IFRS 19 - Subsidiaries without Public Accountability: Disclosures. (effective 1 January 2027)
These standards and amendments are not expected to have a significant impact on the Financial Statements in the period of initial application and therefore detailed disclosures have not been provided. The Board is still assessing the potential impact of IFRS 18 - Presentation and Disclosure in Financial Statements.
IFRS 2 - Share-based Payment
IFRS 2 - Share-based Payment requires an entity to recognise equity-settled share-based payments measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed over the vesting period, together with a corresponding increase in other capital reserves, based upon the Company's estimate of the shares that will eventually vest, which involves making assumptions about any performance and service conditions over the vesting period. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. The vesting period is determined by the period of time the relevant participant must remain in the Company's employment before the rights to the shares transfer unconditionally to them. The total expense is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied. At the end of each period, the Company revises its estimates on the number of awards it expects to vest based on the service conditions.
Any awards granted are to be settled by the issuance of equity are deemed to be equity settled share-based payments, accounted for in accordance with IFRS 2 - Share-based Payment.
Where the terms of an equity-settled transaction are modified, as a minimum, an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification.
Where an equity-settled transaction is cancelled, it is treated as if it had vested on the date of the cancellation, and any expense not yet recognised for the transaction is recognised immediately. However, if a new transaction is substituted for the cancelled transaction and designated as a replacement transaction on the date that it is granted, the cancelled and new transactions are treated as if they were a modification of the original transaction, as described in the previous paragraph.
Accounting for subsidiaries
The Directors have concluded that the Company has all the elements of control as prescribed by IFRS 10 - Consolidated Financial Statements in relation to all its subsidiaries and that the Company continues to satisfy the three essential criteria to be regarded as an investment entity as defined in IFRS 10, IFRS 12 - Disclosure of lnterests in Other Entities and IAS 27 - Separate Financial Statements. The three essential criteria are such that the entity must:
• Obtain funds from one or more investors for the purpose of providing these investors with professional investment management services;
• Commit to its investors that its business purpose is to invest its funds solely for returns from capital appreciation, investment income or both; and
• Measure and evaluate the performance of substantially all of its investments on a fair value basis.
In satisfying the second essential criteria, the notion of an investment time frame is critical. An investment entity should not hold its investments indefinitely but should have an exit strategy for their realisation. Although the Company has invested in equity interests that have an indefinite life, it invests typically for a period of up to 10 years. In some cases, the period may be longer, depending on the circumstances of the investment, however, investments are not made with intention of indefinite hold. This is a common approach in the private equity industry.
Subsidiaries are therefore measured at fair value through profit or loss, in accordance with IFRS 13 - Fair Value Measurement and IFRS 9 - Financial Instruments.
The Company's subsidiaries, which are wholly owned and over which it exercises control, are listed in note 24.
Use of estimates and judgements
The preparation of the Financial Statements require 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. Estimates and underlying assumptions are reviewed on an ongoing basis; revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
The areas involving significant judgements are:
· valuation technique selected in estimating fair value of unquoted investments - note 11;
· valuation technique selected in estimating fair value of investments held in funds - note 11;
· recognition of deferred tax asset for carried forward tax losses - note 8; and
· going concern - note 1.
The areas involving significant estimates are:
· estimated inputs used in calculating fair value of unquoted investments - note 11; and
· estimated inputs used in calculating fair value of investments held in funds - note 11.
Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have financial impact on the entity and that are believed to be reasonable under the circumstances.
Segmental reporting
The Board has considered the requirements of IFRS 8 - Operating Segments and is of the view that the Company is engaged in a single segment business, which is one of investing activities, and that therefore the Company has only a single operating segment.
Investments in subsidiaries
The Company's investments in subsidiaries are stated at fair value which is considered to be the carrying value of the net assets of each subsidiary. On disposal of such investments, the difference between net disposal proceeds and the corresponding carrying amount is recognised in the Income Statement.
Valuation of investments
The Company and its subsidiaries manage their investments with a view to profit from the receipt of dividends, interest income and increase in fair value of equity investments which can be realised on sale. Therefore, all quoted, unquoted and managed fund investments are designated at fair value through profit or loss which can be realised on sale and carried in the Statement of Financial Position at fair value.
Fair values have been determined in accordance with the International Private Equity and Venture Capital Valuation ("IPEV") Guidelines. These guidelines require the valuer to make judgments as to the most appropriate valuation method to be used and the results of the valuations.
Each investment is reviewed individually with regard to the stage, nature and circumstances of the investment and the most appropriate valuation method selected. The valuation results are then reviewed and any amendment to the carrying value of investments is made as considered appropriate.
Quoted investments
Quoted investments for which an active market exists are valued at the bid price at the reporting date.
Unquoted direct investments
Unquoted direct investments for which there is no active market are valued using the most appropriate valuation technique with regard to the stage and nature of the investment. Valuation methods that may be used include:
· investments in an established business are valued using revenue or earnings multiples depending on the stage of development of the business and the extent to which it is generating sustainable revenue or earnings;
· investments in an established business which is generating sustainable revenue or earnings but for which other valuation methods are not appropriate are valued by calculating the discounted cash flow of future revenue or earnings;
· investments in debt instruments or loan notes are determined on a standalone basis, with the initial investment recorded at the price of the transaction and subsequent adjustments to the valuation are considered for changes in credit risk or market rates;
· convertible instruments are valued by disaggregating the convertible feature from the debt instrument and valuing it using a Black-Scholes model; and
· the Company has adopted the IPEV guidelines issued in December 2022.
Funds
Investments in managed funds are valued at fair value. The general partners of the funds will provide periodic valuations on a fair value basis, the latest available of which the Company will adopt provided it is satisfied that the valuation methods used by the funds are not materially different from the Company's valuation methods. Adjustments will be made to the fund valuation where the Company believes there is evidence available for an alternative valuation.
Carried interest
The Company historically offered its executives, including Board executives, the opportunity to participate in the returns from successful investments. A variety of incentive and carried interest arrangements were put in place during the years up to and including 2011. No new schemes have been introduced since. As is commonplace in the private equity industry, executives may, in certain circumstances, retain their entitlement under such schemes after they have left the employment of the Company. The liability under such incentive schemes is accrued if its performance conditions, measured at the reporting date, would be achieved if the remaining assets in that scheme were realised at their fair value at the reporting date. An accrual is made equal to the amount which the Company would have to pay to any remaining scheme participants from a realisation of the reported value at the reporting date.
Foreign currencies
Transactions in foreign currencies are recorded at the rate of exchange at the date of transaction. Monetary assets and monetary liabilities denominated in foreign currencies at the reporting date are reported at the rates of exchange prevailing at that date and exchange differences are included in the Income Statement.
Intercompany receivables
The Company measured intercompany receivables and other receivables at fair value less any expected credit losses. Expected credit losses are measured through a loss allowance at an amount equal to:
· the 12-month expected credit losses (expected credit losses from possible default events within 12 months after the reporting date); or
· full lifetime expected credit losses (expected credit losses from all possible default events over the life of the financial instrument).
A loss allowance for full lifetime expected credit losses is required for intercompany receivables and other receivables if the credit risk has increased significantly since initial recognition.
Impairment losses on financial assets carried at amortised cost are reversed in subsequent periods if the expected credit losses decrease.
Cash and cash equivalents
Cash comprises cash in hand and at banks, and short-term deposits. Cash equivalents are short-term, highly-liquid investments that are readily convertible to known amounts of cash, and that are subject to an insignificant risk of changes in value.
Dividend payable
Dividend distribution to the shareholders is recognised as a liability in Financial Statements when approved at an annual general meeting by the shareholders. Interim dividend approved during the year is recorded upon payment.
Income
Gains and losses on investments
Realised and unrealised gains and losses on investments are recognised in the Income Statement in the period in which they arise.
Interest income
Interest income is recognised as it accrues using the effective interest method.
Dividend income
Dividend income is recognised on the date the Company's right to receive payment is established.
Expenditure
Income tax expense
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the Income Statement except to the extent that it relates to items recognised in other comprehensive income or directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet liability approach, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised.
2. Net loss on investments
Gains and losses on investments were as follows:
| | Year ended 31 December | |||||
| | 2024 | 2023 | ||||
| Investment portfolio of the Company | Realised | Unrealised | Total | Realised | Unrealised | Total |
| Asset type | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Unquoted | - | - | - | 86 | - | 86 |
| | - | - | - | 86 | - | 86 |
| (Charge)/credit for incentive plans |
|
| (12) | | | 3 |
| |
|
| (12) | | | 89 |
| |
|
|
| | | |
| Investment portfolio of subsidiaries |
|
|
| | | |
| Asset type |
|
|
| | | |
| Quoted | 6 | (62) | (56) | (10) | - | (10) |
| Unquoted | - | (1,690) | (1,690) | 1,412 | 366 | 1,778 |
| Funds | 457 | (3,210) | (2,753) | (9) | (4,509) | (4,518) |
| | 463 | (4,962) | (4,499) | 1,393 | (4,143) | (2,750) |
| Total | 463 | (4,962) | (4,511) | 1,479 | (4,143) | (2,661) |
| (Charge)/credit for incentive plans | 7 | | | (103) | ||
| | (4,504) | | | (2,764) | ||
| Operating and similar (loss)/income of subsidiaries* | (8,520) | | | (44,500) | ||
| | (13,024) | | | (47,264) | ||
* Includes operating and legal costs and taxation charges of subsidiaries.
During the year the Company and its subsidiaries carried out a further exercise to settle the debtor and creditor balances that had accumulated over a period of years between companies within the Group. This will achieve a simplification of accounting within the Group. Settlement of the balances was achieved through offsetting debtor and creditor amounts where appropriate and through the declaration of dividends by various subsidiary companies to holding companies within the Group. As part of this exercise a dividend of £8,000,000 (2023: £45,000,000) was declared by LMS Capital Group Limited to LMS Capital plc. The assets of LMS Capital plc increased by the amount of the dividend but as a result of this a reduction in the fair value of the investments in subsidiaries has been recognised. This exercise had no overall net effect on the net assets of the Company.
The Company operates carried interest arrangements in line with normal practice in the private equity industry. The charge for incentive plans for the Company is £12,000 (2023: credit of £3,000) and other incentives relating to historic arrangements. The charge for subsidiaries is included in the net gains/(losses) on investments in the Income Statement.
3. Interest income
| | Year ended 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Bank interest | 612 | | 608 |
| Interest receivable on intercompany loans | 804 | | - |
| | 1,416 | | 608 |
4. Interest payable
| | Year ended 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Interest payable on intercompany loans | 331 | | - |
| | 331 | | - |
5. Operating expenses
Operating expenses comprise administrative expenses and include the following:
| | Year ended 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Directors' remuneration (note 6) | 811 | | 832 |
| Staff expenses (note 7) | 342 | | 467 |
| Depreciation on right-of-use assets | 28 | | 28 |
| Other administrative expenses | 566 | | 761 |
| Foreign currency exchange differences | (6) | | 17 |
| Auditor's remuneration | 101 | | 91 |
| | 1,842 | | 2,196 |
Audit fees for the subsidiaries of £54,000 (2023: £73,000) were directly charged to subsidiaries.
6. Directors' Remuneration
| | Year ended 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Directors' remuneration | 595 | | 657 |
| Directors' social security contributions | 96 | | 86 |
| Share-based payments | 87 | | 59 |
| Directors' other benefits | 33 | | 30 |
| | 811 | | 832 |
| |
| | |
| The highest paid Director was Nicholas Friedlos (2023 - Nicholas Friedlos) | 381 | | 442 |
The Directors are considered to be the only key management personnel.
7. Staff Expenses
| | Year ended 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Wages and salaries | 242 | | 366 |
| Employers' social security contributions | 47 | | 50 |
| Share-based payments | 28 | | 20 |
| Pension costs | 16 | | 23 |
| Employees' other benefits | 9 | | 8 |
| | 342 | | 467 |
Pensions costs are amounts payable to employees' defined contribution pension plans and are recognised on an accruals basis as they are incurred.
The average number of staff was as follows:
| | 2024 | | 2023 |
| Directors | 5 | | 5 |
| Staff | 2 | | 3 |
| Total | 7 | | 8 |
8. Taxation
| | Year ended 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Current tax expense |
| | |
| Current year | - | | - |
| Total tax expense | - | | - |
| |
| | |
| Reconciliation of tax expense | Year ended 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Loss before tax | (5,354) | | (3,732) |
| Corporation tax using the Company's domestic tax rate - 25.0% (2023: 23.5%) | (1,339) | | (877) |
| Expenses not deductible / non-taxable income | 1,125 | | 534 |
| Capital allowances | - | | 53 |
| Company relief | - | | (91) |
| Deferred tax asset not recognised | 22 | | 56 |
| Group relief surrendered | 192 | | 325 |
| Total tax expense | - | | - |
At year end, there are cumulative potential deferred tax assets of £2.713 million (2023: £2.516 million) in relation to the Company's cumulative tax losses of £10.852 million (2023: £10.064 million). It is uncertain when the Company will generate sufficient taxable profits in the future to utilise these amounts and therefore no deferred tax asset has been recognised in the current or prior year.
9. Loss per ordinary share
The calculation of the basic and diluted loss per share, in accordance with IAS 33, is based on the following data:
| |
| Year ended 31 December | ||
| |
| 2024 | | 2023 |
| |
| £'000 | | £'000 |
| Loss | |
| | |
| Loss for the purpose of net loss per share attributable to equity holders of the parent | (5,354) | | (3,732) | |
|
| |
| | |
|
| | Number | | Number |
| Number of shares | |
| | |
| Weighted average number of ordinary shares for the purposes of basic loss per share | | 80,727,450 | | 80,727,450 |
|
| |
| | |
| Loss per share | | Pence | | Pence |
| Basic | | (6.6) | | (4.6) |
| Diluted | | (6.6) | | (4.6) |
The Company share awards will be dilutive when the Company makes a profit.
10. Dividends
Dividends declared during the years ending 31 December 2024 and 31 December 2023 were as follows:
| | Dividend date | Payment date | Dividend £'000 | Pence per share |
| Final dividend payment for 2022 | 26 May 2023 | 23 June 2023 | 505 | 0.625 |
| Interim dividend payment for 2023 | 11 August 2024 | 12 September 2024 | 242 | 0.300 |
| Total as at 31 December 2023 |
|
| 747 | 0.925 |
| | | | | |
| Final dividend payment for 2023 | 31 May 2024 | 21 June 2024 | 505 | 0.625 |
| Interim dividend payment for 2024 | 16 August 2024 | 13 September 2024 | 242 | 0.300 |
| Total as at 31 December 2024 |
|
| 747 | 0.925 |
11. Investments
The Company's investments comprised the following:
| | 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Total investments | 7,842 | | 20,854 |
| These comprise: |
| | |
| Investment portfolio of subsidiaries | 23,483 | | 28,450 |
| Other net liabilities of subsidiaries | (15,641) | | (7,596) |
| | 7,842 | | 20,854 |
The carrying amounts of the subsidiaries' investment portfolios were as follows:
| | 31 December | ||
| Investment portfolio of subsidiaries | 2024 | | 2023 |
| Asset type | £'000 | | £'000 |
| Quoted | 59 | | 144 |
| Unquoted | 17,547 | | 18,837 |
| Funds | 5,877 | | 9,469 |
| Investment portfolio of subsidiaries | 23,483 | | 28,450 |
| Other net liabilities of subsidiaries | (15,641) | | (7,596) |
| | 7,842 | | 20,854 |
The movement in the subsidiaries' investment portfolio were as follows:
|
| Quoted securities | Unquoted securities | Funds | Other net assets/ (liabilities) of subsidiaries | Total |
|
| £'000 | £'000 | £'000 | £'000 | £'000 |
| Balance at 1 January 2023 | 160 | 16,771 | 14,033 | 37,243 | 68,207 |
| Accrued interest | - | 1,373 | - | - | 1,373 |
| Purchases | - | 6,130 | - | - | 6,130 |
| Proceeds from disposals | (6) | (7,301) | - | - | (7,307) |
| Distributions from partnerships | - | - | (55) | - | (55) |
| Contributions to partnerships | - | - | 9 | - | 9 |
| Fair value movements | (10) | 1,864 | (4,518) | - | (2,664) |
| Dividends paid | - | - | - | (45,000) | (45,000) |
| Other movements | - | - | - | 161 | 161 |
| Balance at 31 December 2023 | 144 | 18,837 | 9,469 | (7,596) | 20,854 |
|
| Quoted securities | Unquoted securities | Funds | Other net liabilities of subsidiaries | Total |
|
| £'000 | £'000 | £'000 | £'000 | £'000 |
| Balance at 1 January 2024 | 144 | 18,837 | 9,469 | (7,596) | 20,854 |
| Accrued interest | - | 1,041 | - | - | 1,041 |
| Proceeds from disposals | (29) | - | - | - | (29) |
| Distributions from partnerships | - | - | (894) | - | (894) |
| Contributions to partnerships | - | - | 55 | - | 55 |
| Fair value movements | (56) | (1,690) | (2,753) | - | (4,499) |
| Dividends paid | - | - | - | (8,000) | (8,000) |
| Other movements * | - | (641) | - | (45) | (686) |
| Balance at 31 December 2024 | 59 | 17,547 | 5,877 | (15,641) | 7,842 |
* Other movements relate to investment related provisions no longer required.
The following table analyses investments carried at fair value at the end of the year, by the level in the fair value hierarchy into which the fair value measurement is categorised. The different levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets;
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset that are not based on observable market data (unobservable inputs such as trading comparables and liquidity discounts).
Fair value measurements are based on observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's view of market assumptions in the absence of observable market information (see note 20 - Financial risk management).
The Company's investments are analysed as follows:
| | 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Level 1 | - | | - |
| Level 2 | - | | - |
| Level 3 | 7,842 | | 20,854 |
| | 7,842 | | 20,854 |
Level 3 includes:
| | 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Investment portfolio of subsidiaries | 23,483 | | 28,450 |
| Other net liabilities of subsidiaries | (15,641) | | (7,596) |
| | 7,842 | | 20,854 |
The investment portfolio of subsidiaries includes quoted investments of £59,000 (2023: £144,000). There were no transfers between levels during the year ending 31 December 2024.
12. Operating and other receivables
| | 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Other receivables and prepayments | 231 | | 135 |
| | 231 | | 135 |
13. Cash and cash equivalents
| | 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Bank balances | 125 | | 1,451 |
| Money market funds | 11,521 | | 7,576 |
| | 11,646 | | 9,027 |
14. Amounts receivable from subsidiaries
| | 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Amounts receivable from subsidiaries | 17,805 | | 15,014 |
| | 17,805 | | 15,014 |
Amounts receivable from subsidiaries are intercompany loans repayable on demand and incur interest at 5% per annum with effect from 1 January 2024. In accordance with IAS 1.66 amounts receivable from subsidiaries are classified as non-current as the expectation is that the balances will not be received within 12 months of the balance sheet date.
15. Operating and other payables
| | 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Trade payables | 37 | | 19 |
| Lease liabilities | 16 | | 31 |
| Other non-trade payables and accrued expenses | 409 | | 372 |
| | 462 | | 422 |
| Other long-term lease liabilities | - | | 16 |
| | 462 | | 438 |
16. Amounts payable to subsidiaries
| | 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Amounts payable to subsidiaries | 921 | | 2,493 |
| | 921 | | 2,493 |
Amounts payable to subsidiaries are intercompany loans repayable on demand and incur interest at the rate of 5% per annum with effect from 1 January 2024.
17. Capital and reserves
| | 2024 | 2023 | ||
| Ordinary shares | Number | £'000 | Number | £'000 |
| Balance at the beginning of the year | 80,727,450 | 8,073 | 80,727,450 | 8,073 |
| Balance at the end of the year | 80,727,450 | 8,073 | 80,727,450 | 8,073 |
The Company's ordinary shares have a nominal value of 10p per share and all shares in issue are fully paid up.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.
Share premium account
The Company's share premium account arose on the exercise of share options in prior years.
Capital redemption reserve
The capital redemption reserve comprises the nominal value of shares purchased by the Company out of its own profits and cancelled.
18. Share awards
Awards were made in accordance with the LTIP arrangements approved by shareholders at the Company's Annual General Meeting held on 17 May 2023.
Employee Share Incentive Plan
On 15 August 2023, the Remuneration Committee approved the issue of 686,064 nil-cost options.
The options vest to 15 August 2026 and have both a performance and a continuous service condition attached to them.
Performance condition
The Performance Condition for the Award shall be determined by reference to the Company's performance in deploying its available uninvested capital at 31 December 2022. The level of performance and hence the amount of the Award that vests will be determined at the discretion of the Remuneration Committee.
The targets for deployment of Investible Capital are:
(a) At least 50% of Investible Capital should have been Deployed by 31 December 2024;
(b) 100% of Investible capital should have been Deployed by 31 December 2025.
(c) The investments into which capital has been Deployed should be performing satisfactorily, taking account of the relatively early stage of such investments at the time the Performance Conditions are assessed.
For the purposes of this award Investible Capital has been set at £12.4 million.
IFRS 2: Share-based Payment addresses the accounting for the Share Plan. This sets out the definition of a share-based payment and in this case the Share Plan is classified as an equity settled transaction with cash alternatives, the Company has the discretion to settle the liability fully or partly in cash. Since there is no present obligation to settle the award in cash, the scheme will be accounted for as equity settled.
Both the performance condition and the service condition, which is to be employed for three years from the effective date of award, are considered to be non-market vesting condition per IFRS 2. On this basis the Share Plan will be recognised at fair value at the date of the award and will be amortised over the life of the plan on a straight-line basis.
The LMS Capital plc share price on the date of the award was 21p. This gives a fair value of the award at the date of issue of £144,073.
Management expect the performance condition to be met and the award to vest in full. In the event the performance condition is not met, the Remuneration Committee has the discretion to settle the awards in full.
As there is a service condition attached to the Share Plan, an estimate of whether there will be leavers is required over the vesting period. In this instance there is no expectation that any members of staff will leave within three years and as such 100% of the award will be used to recognise the expense over three years.
| | 2024 | 2023 | ||
|
| Number of awards | Weighted average fair value per award (pence) | Number of awards | Weighted average fair value per award (pence) |
| Outstanding at 1 January | 686,064 | 21.0 | - | - |
| Granted | - | - | 686,064 | 21.0 |
| Outstanding at 31 December | 686,064 | 21.0 | 686,064 | 21.0 |
| Exercisable at the year end | - | - | - | |
Value Creation Plan
At the Annual General Meeting on 17 May 2023, shareholders approved the proposed amendments to the VCP whereby the original units awarded in 2020 would be cancelled and a smaller number of new units would be issued. 384 new units were awarded on 14 June 2023, with a fair value at grant of £461 per unit. The awards vest quarterly over five years provided the employee is still in service of the Company. The final vesting date is 14 June 2028.
| | 2024 | 2023 | ||
|
| Number of awards | Weighted average fair value per award (£) | Number of awards | Weighted average fair value per award (£) |
| Outstanding at 1 January | 384 | 461.00 | 625 | 413.48 |
| Units cancelled | - | - | (625) | 413.48 |
| New units issued | - | - | 384 | 461.00 |
| Outstanding at 31 December | 384 | 461.00 | 384 | 461.00 |
| Exercisable at the year end | - | - | - | |
19. Leases
Lease commitments
The Company leases office space and information with regards to this lease is outlined below:
| Rental lease asset | 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Balance at 1 January | 42 | | 70 |
| Depreciation for the year | (28) | | (28) |
| Balance at 31 December | 14 | | 42 |
| Rental lease liability | 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Balance at 1 January | 46 | | 75 |
| Unwinding of the discount on lease liability | 3 | | 5 |
| Lease payments | (33) | | (33) |
| Balance at 31 December | 16 | | 47 |
20. Financial risk management
The following tables analyse the Company's financial assets and financial liabilities in accordance with the categories of financial instruments in IFRS 9. Assets and liabilities outside the scope of IFRS 9 are not included in the table below:
| | 31 December | |||||
| | 2024 | 2023 | ||||
|
| Fair value through profit or loss | Measured at amortised cost | Total | Fair value through profit or loss | Measured at amortised cost | Total |
| Financial assets | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Investments | 7,842 | - | 7,842 | 20,854 | - | 20,854 |
| Amounts receivable from subsidiaries | - | 17,805 | 17,805 | - | 15,014 | 15,014 |
| Operating and other receivables | - | 164 | 164 | - | 120 | 120 |
| Cash and cash equivalents | 11,521 | 125 | 11,646 | 7,576 | 1,451 | 9,027 |
| Total | 19,363 | 18,094 | 37,457 | 28,430 | 16,585 | 45,015 |
|
|
|
|
| | | |
| Financial liabilities |
|
|
| | | |
| Operating and other payables | - | 446 | 446 | - | 392 | 392 |
| Amounts payable to subsidiaries | - | 921 | 921 | - | 2,493 | 2,493 |
| Lease liabilities | - | 16 | 16 | - | 46 | 46 |
| Total | - | 1,383 | 1,383 | - | 2,931 | 2,931 |
Intercompany payables to subsidiaries are all repayable on demand thus there are no discounted contractual cash flows to present.
Within cash and cash equivalents are investments in money market funds to the value of £11,521,000 (2023: £7,576,000) which are deemed to meet the classification as cash equivalent and are classed as level 2 within the fair value hierarchy.
The Company has exposure to the following risks from its use of financial instruments:
· credit risk;
· liquidity risk; and
· market risk.
This note presents information about the Company's exposure to each of the above risks, its policies for measuring and managing risk, and its management of capital.
Credit risk
Credit risk is the risk of the financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company's receivables and its cash.
| | 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Amounts receivable from subsidiaries | 17,805 | | 15,014 |
| Operating and other receivables | 164 | | 120 |
| Cash and cash equivalents | 11,646 | | 9,027 |
| | 29,615 | | 24,161 |
The Company limits its credit risk exposure by only depositing funds with highly rated institutions. Cash holdings at 31 December 2024 and 2023 were held in institutions currently rated A or better by Standard and Poor. Given these ratings, the Company does not expect any counterparty to fail to meet its obligations and therefore, no allowance for impairment is made for bank deposits.
The loss allowance as at 31 December 2024 and 31 December 2023 was determined as follows for trade receivables:
| | Current | More than 30 days past due | More than 60 days past due | More than 120 days past due | Total |
| 31 December 2024 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Other receivables | 164 | - | - | - | 164 |
| Total | 164 | - | - | - | 164 |
| | Current | More than 30 days past due | More than 60 days past due | More than 120 days past due | Total |
| 31 December 2023 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Other receivables | 120 | - | - | - | 120 |
| Total | 120 | - | - | - | 120 |
The Company recognised credit losses of the full value of receivable for trade receivables not recovered after four months. As at 31 December 2024, the Company does not have an outstanding trade receivable (2023: £nil).
For the year ending 31 December 2024, the Company did not witness significant increase in the credit risk since the initial recognition of the outstanding receivable from subsidiaries and other receivables, therefore, no expected losses were recognised during the year (2023: £nil).
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's financing requirements are met through a combination of liquidity from the sale of investments and the use of cash resources.
The following table shows an analysis of the undiscounted financial liabilities by remaining expected maturities as at 31 December 2024 and 31 December 2023:
Financial liabilities:
| 31 December 2024 | Up to 3 months | 3-12 months | 1-5 years | Over 5 years | Total |
|
| £'000 | £'000 | £'000 | £'000 | £'000 |
| Operating and other payables | 446 | - | - | - | 446 |
| Amount payable to subsidiaries | 921 | - | - | - | 921 |
| Lease liabilities | 8 | 8 | - | - | 16 |
| Total | 1,375 | 8 | - | - | 1,383 |
| 31 December 2023 | Up to 3 months | 3-12 months | 1-5 years | Over 5 years | Total |
|
| £'000 | £'000 | £'000 | £'000 | £'000 |
| Operating and other payables | 391 | - | - | - | 391 |
| Amount payable to subsidiaries | 2,493 | - | - | - | 2,493 |
| Lease liabilities | 8 | 23 | 16 | - | 47 |
| Total | 2,892 | 23 | 16 | - | 2,931 |
In addition, some of the Company's subsidiaries have uncalled capital commitments to funds of £2,458,000 (2023: £2,661,000) for which the timing of payment is uncertain (see note 21).
Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and equity prices will affect the Company's income or the value of its holdings of financial instruments. The Company aims to manage this risk within acceptable parameters while optimising the return.
Currency risk
The Company is exposed to currency risk on those of its investments which are denominated in a currency other than the Company's functional currency which is pounds sterling. The only other significant currency within the investment portfolio is the US dollar. Approximately 63% of the investment portfolio of the subsidiaries is denominated in US dollars.
The Company does not hedge the currency exposure related to its investments. The Company regards its exposure to exchange rate changes on the underlying investment as part of its overall investment return and does not seek to mitigate that risk through the use of financial derivatives.
The Company is exposed to translation currency risk on sales and purchases which are denominated in a currency other than the Company's functional currency. The currency in which these transactions are denominated is principally US dollars.
The Company's exposure to foreign currency risk was as follows:
| | 31 December | |||||
| | 2024 | 2023 | ||||
|
| GBP | USD | Other | GBP | USD | Other |
| Financial assets | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Investments | 1,037 | 6,805 |
| 2,847 | 17,394 | 613 |
| Amounts receivable from subsidiaries | 17,803 | 2 | - | 15,014 | - | - |
| Right-of-use assets | 14 | - | - | 42 | - | - |
| Operating and other receivables | 231 | - | - | 135 | - | - |
| Cash | 11,280 | 366 | - | 8,680 | 347 | - |
| Operating and other payables | (462) | - | - | (438) | - | - |
| Amount payable to subsidiaries | (921) | - | - | (2,493) | - | - |
| Net exposure | 28,982 | 7,173 | - | 23,787 | 17,741 | 613 |
The aggregate net foreign exchange profit recognised in profit or loss were:
| | 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Net foreign exchange profit/(loss) on investments | 232 | | (1,141) |
| Net foreign exchange profit/(loss) on non-investments | 90 | | (42) |
| Total net foreign exchange profit/(loss) recognised in profit before income tax for the year | 322 | | (1,183) |
At 31 December 2024, the rate of exchange was USD $1.25 = £1.00 (2023: $1.27 = £1.00).
A 10% strengthening of the US dollar against the pound sterling would have increased equity and increased profit by £0.8 million at 31 December 2024 (2023: increased equity and increased profit by £2.0 million). This assumes that all other variables, in particular interest rates, remain constant. A weakening of the US dollar by 10% against the pound sterling would have decreased equity and decreased the profit for the year by £0.7 million (2023: decreased equity and decreased the profit for the year by £1.6 million). This level of change is considered to be reasonable based on observations of current conditions.
Interest rate risk
At the reporting date, the Company's cash is exposed to interest rate risk and the sensitivity below is based on these amounts.
An increase of 100 basis points in interest rates at the reporting date would have increased equity by £116,000 (2023: increase of £118,000) and increased the profit for the year by £116,000 (2023: increased the profit £118,000). A decrease of 100 basis points would have decreased equity and increased the loss for the year by the same amounts. This level of change is considered to be reasonable based on observations of current conditions.
Fair values
All items not held at fair value in the Statement of Financial Position have fair values that approximate their carrying values.
Other market price risk
Equity price risk arises from equity securities held as part of the Company's portfolio of investments. The Company's management of risk in its investment portfolio focuses on diversification in terms of geography and sector, as well as type and stage of investment.
The Company's investments comprise unquoted investments in its subsidiaries. The subsidiaries' investment portfolios comprise investments in quoted and unquoted equity and debt instruments. Quoted investments are quoted on the main stock exchanges in London and New York. A proportion of the unquoted investments are held through funds managed by external managers.
As is common practice in the venture and development capital industry, the investments in unquoted companies are structured using a variety of instruments including ordinary shares, preference shares and other shares carrying special rights, options and warrants and debt instruments with and without conversion rights. The investments are held for resale with a view to the realisation of capital gains. Generally, the investments do not pay significant income.
The significant unobservable inputs used at 31 December 2024 in measuring investments categorised as level 3 in note 11 are considered below:
1. Unquoted securities (carrying value £17.5 million) are valued using the most appropriate valuation technique such as a revenue-based approach, an earnings-based approach, or a discounted cash flow approach. These investments are sensitive to both the overall market and industry specific fluctuations that can impact multiples and comparable company valuations. In most cases the valuation method uses inputs based on comparable quoted companies for which the key unobservable inputs are:
· revenue multiples in the range 1.5-2.5 times, also dependent on attributes at individual investment level; and
· Discounts applied of up to 40%, to reflect the illiquidity risk of the unquoted companies. The discount used requires the exercise of judgement taking into account factors specific to individual investments such as size and rate of growth compared to other companies in the sector.
2. Investments in funds (carrying value £5.9 million) are valued using the reported NAV from the general partners of the fund interests with adjustments made for calls, distributions and foreign currency movements since the date of the report (if prior to 31 December 2024). The reported NAVs of the funds are fair value based. The Company also carries out its own review of individual funds and their portfolios to satisfy ourselves that the underlying valuation bases are consistent with our basis of valuation and knowledge of the investments and the sectors in which they operate. However, the degree of detail on valuations varies significantly by fund and, in general, details of unobservable inputs used are not available.
Two of the Company's subsidiaries' underlying investments are valued using discounted cash flow ("DCF") models. These models rely on detailed cash flow forecasts and on substantial subjective judgemental inputs and the derived valuations are sensitive to small changes in these inputs as follows:
Castle View - valuation £6.5 million
A key driver of value is the right to receive Deferred Management Fee ("DMF") income in the future when units are resold. The current valuation assumes that 8 units will be resold each year in the future. With all other inputs being equal, applying an average unit turnover range of 5 to 9 units would result in a valuation range of £3.4 million to £7.1 million.
A discount rate of 11.1% has been applied to the valuation which reflects the entry IRR in December 2023. To demonstrate sensitivity, with all other inputs being equal, a discount range of 9% to 12% would result in a valuation range of £7.6 million to £6.2 million.
Dacian Petroleum - valuation £9.3 million
The valuation of Dacian Petroleum is sensitive to the following inputs:
· Oil price;
· Production levels; and
· Discount rate.
An oil price of $75 per barrel has been used in the valuation, being Dacian's expectation of the average oil price during 2025. The effect of a decrease or increase in oil price of $5 per barrel, with all other inputs being equal, would result in a valuation of between £7.5 million and £11.2 million.
The effect of a decrease or increase in production of 5%, with all other inputs being equal, would result in a valuation of between £7.8 million and £10.9 million.
A discount rate of 15% has been applied to the valuation which reflects a slight increase on the coupon of 14% on the original Senior Loan Notes before the anticipated conversion. To demonstrate sensitivity, with all other inputs being equal, a discount range of 14% to 16% would result in a valuation range of £9.8 million to £8.8 million.
The valuation of the investments in subsidiaries makes use of multiple interdependent significant unobservable inputs and it is impractical to sensitise variations of any one input on the value of the investment portfolio as a whole. Estimates and underlying assumptions are reviewed on an ongoing basis however inputs are highly subjective. Changes in any one of the variables, earnings or revenue multiples or illiquidity discounts could potentially have a significant effect on the valuation.
The reported values of the level 3 investments would change, should there be a change in the underlying assumptions and unobservable inputs driving these values. The Company has performed a sensitivity analysis to assess the overall impact of a 10% movement in these reported values of investments, on the profit for the year. The effect on loss is shown in the table below:
| | 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Effect of 10% decrease in investment value | (784) | | (2,085) |
| Effect of 10% increase in investment value | 784 | | 2,085 |
Capital management
The Company's total capital at 31 December 2024 was £36.2 million (2023: £42.1 million) comprising equity share capital and reserves. The Company had no borrowings at 31 December 2024 (2023: £nil).
In order to meet the Company's capital management objectives, the Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes:
· Working capital requirements and follow-on investment capital for portfolio investments, including calls from funds;
· Capital available for new investments; and
· The annual dividend policy and other possible distributions to shareholders.
21. Capital commitments
| | 31 December | ||
| | 2024 | | 2023 |
| | £'000 | | £'000 |
| Outstanding commitments to funds | 2,458 | | 2,661 |
The outstanding commitments to funds comprise unpaid capital calls in respect of funds where a subsidiary of the Company is a limited partner. At the balance sheet date it is not expected that these outstanding commitments will be called.
As of 31 December 2024 the Company has no other contingencies or commitments to disclose (2023: £nil).
22. Related party transactions
During the year, the Company paid rent of £32,780 (2023: £32,780) to The Rayne Foundation for its office space. Robert Rayne was the Chairman of The Rayne Foundation.
During the year the following transactions occurred with Group companies:
| 31 December 2024 | Advanced to | Received from | Interest receivable / (payable) | Dividends/ fees received | Balance due from/ (due to) |
|
| £ | £ | £ | £ | £ |
| LMS Capital Group Limited | 14,000 | 8,000,000 | 2,122 | 8,000,000 | 48,052 |
| LMS Capital Holdings Limited | 8,061,499 | 5,970,862 | (314,791) | - | (412,852) |
| LMS Co-Invest Limited | 43,444 | - | 6,550 | 59,370 | 173,101 |
| Lion Investments Limited | 158,196 | 260,000 | 223,455 | 109,761 | 4,747,718 |
| Tiger Investments Limited | 1,128 | - | - | - | - |
| LMS Tiger Investments (II) Limited | - | - | - | - | 1,828 |
| Cavera Limited | - | 243,047 | - | - | - |
| LMS Retirement Living Limited | 1,857,604 | 12,017 | 352,119 | 126,828 | 8,074,860 |
| Lioness Property Investments Limited | - | - | 220,379 | - | 4,627,958 |
| Lion Property Investments Limited | 33 | 190,882 | (16,637) | - | (508,434) |
| Westpool Investment Trust plc | 37,077 | 36,367 | - | 129,285 | 129,321 |
| LMS Capital (Bermuda) Limited | 229,053 | 226,888 | - | 933 | 1,743 |
| 31 December 2023 | Advanced to | Received from | Dividends/ fees received | Balance due from/ (due to) |
|
| £ | £ | £ | £ |
| LMS Capital Group Limited | 45,012,930 | 45,000,000 | 45,000,000 | 31,930 |
| LMS Capital Holdings Limited | 45,175,126 | 30,325,581 | - | (2,188,698) |
| LMS Co-Invest Limited | 150,956 | 301,327 | 120,130 | 63,737 |
| Lion Investments Limited | 418,911 | 535,127 | - | 4,516,306 |
| Tiger Investments Limited | 6,436 | - | - | (1,128) |
| LMS Tiger Investments (II) Limited | 10,551,301 | 10,580,158 | - | 1,828 |
| Cavera Limited | 46,790 | 5,000 | - | 243,047 |
| LMS Retirement Living Limited | 5,750,326 | - | - | 5,750,326 |
| Lioness Property Investments Limited | 6,848,764 | - | - | 4,407,579 |
| Lion Property Investments Limited | 6,469 | - | - | (300,948) |
| Westpool Investment Trust plc | 11,900,544 | - | - | (674) |
| LMS Capital (Bermuda) Limited | 12,750,211 | 3,796,079 | - | (1,355) |
| International Oilfield Services Limited | 10,001,614 | 9,681,266 | - | - |
Details of Directors' remuneration are disclosed in note 6.
23. Subsequent events
On 13 March the Company announced that following engagement with key shareholders, the Board had reached the conclusion that shareholder value would be best served by a managed realisation of the Company's assets and returns of capital over time. Further details can be found in the Viability Statement and in the Basis of preparation accounting policy.
There are no other subsequent events that would materially affect the interpretation of these Financial Statements.
24. Subsidiaries
The Company's subsidiaries are as follows:
| Name | Country of incorporation | Holding % | Activity |
| LMS Capital (Bermuda) Limited | Bermuda | 100 | Investment holding |
| LMS Capital Group Limited | England and Wales | 100 | Investment holding |
| LMS Capital Holdings Limited | England and Wales | 100 | Investment holding |
| Lioness Property Investments Limited | England and Wales | 100 | Investment holding |
| Lion Property Investments Limited | England and Wales | 100 | Investment holding |
| Lion Investments Limited | England and Wales | 100 | Investment holding |
| Tiger Investments Limited | England and Wales | 100 | Investment holding |
| LMS Tiger Investments (II) Limited | England and Wales | 100 | Investment holding |
| Westpool Investment Trust plc | England and Wales | 100 | Investment holding |
| Cavera Limited | England and Wales | 100 | Dormant |
| LMS Co-Invest Limited | England and Wales | 100 | Trading |
| LMS Retirement Living Limited | England and Wales | 100 | Investment holding |
The registered office addresses of the Company's subsidiaries are as follows:
Subsidiaries incorporated in England and Wales: 3 Bromley Place, London, United Kingdom, W1T 6DB.
Subsidiaries incorporated in Bermuda: Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
International Oilfield Services Limited, a company registered in Bermuda, was dissolved on 2 December 2024. Lion Cub Property Investments Limited was dissolved on 7 January 2025.
25. Net asset value per share
The net asset value per ordinary share in issue is as follows:
| | 31 December | ||
| | 2024 | | 2023 |
| Net assets (£'000) | 36,155 | | 42,141 |
| Number of ordinary shares in issue | 80,727,450 | | 80,727,450 |
| Net asset value per share (pence) | 44.79 | | 52.20 |
NAV per share is considered to be an Alternative Performance Measure ("APM").
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