Last checked at 
27 Aug 2009 07:00
27 August 2009
LMS Capital plc Half Year Results for the six months to 30 June 2009
The Board of LMS Capital plc, ("LMS Capital" or "the Company"), is pleased to announce the Company's half year results for the six months to 30 June 2009.
Highlights
* Net Asset Value per share was 83p (31 December 2008: 89p) a decrease of 7% * Net Asset Value was 226.0 million (31 December 2008: 241.5 million) * The return on the investment portfolio was a loss of 10.7 million after recording unrealised currency losses of 16.5 million * The loss for the period was 15.5 million (six months ended 30 June 2008: profit of 22.8 million; year ended 31 December 2008: loss of 40.8 million) * Investment of 6.2 million in July for a 53.3% interest in Updata Infrastructure UK Limited ("Updata") in support of a management buyout * Successful migration of the Company's shares to trading on the Main Market of the London Stock Exchange
Robert Rayne, Chief Executive Officer of LMS Capital, said:
"The Company is focused on building the sales and profitability of the existing portfolio of investments while looking at attractively priced acquisitions. The general lack of liquidity is slowing down the growth of companies but also throwing up interesting investment opportunities. Our recent acquisition of a controlling interest in Updata is illustrative of this. Although the business climate in the first half of the year has been difficult, and we expect this to continue for some time, we are well positioned to use our strong balance sheet to acquire new investments and bolster our existing companies with add on acquisitions."
For further information please contact:
LMS Capital plc 020 7935 3555
Robert Rayne, Chief Executive Officer
Martin Pexton, Managing Director
Tony Sweet, Chief Financial Officer
J.P. Morgan Cazenove Limited 020 7588 2828
Michael Wentworth-Stanley
Brunswick Group LLP 020 7404 5959
Simon SporborgRobin TozerOliver HughesAbout LMS Capital
LMS Capital plc is an international investment company whose shares are listed on the London Stock Exchange. The investment portfolio comprises investments in both the US and UK, with a spread of early stage and second round technology investments, development capital and mature company buy-outs.
www.lmscapital.com
Interim management report 2009
LMS Capital maintains its objective of producing high rates of return though a risk diversified portfolio. This diversification is achieved through geographical spread, primarily the US and UK, and through investment in assets of varying maturities. The major focus is in small to medium sized companies in our preferred sectors of energy services, applied technology, media & consumer, medical & healthcare and real estate. 90% of investment is focused in development, growth and post IPO companies.
The Company is differentiated from other groups by the use of its own balance sheet. As it is not a manager of third party funds it is not constrained by the typical three to four year investment period with a similar liquidation period. Our holding periods are determined by the period necessary to optimise shareholders' returns.
As well as continuing to evaluate new investment opportunities, during the first six months of 2009 we have ensured that our directly managed unquoted investments have focussed on realistic revenue targets, with adjustments to their cost base where appropriate. In the current environment value improvement in the existing portfolio is a priority for the Company.
Results
The half year financial information includes the consolidation of portfolio companies which are also subsidiaries ("portfolio subsidiaries"). Note 2 to the financial information shows the results and net assets of the investment management business separate from the results and net assets of the portfolio subsidiaries.
In the six months to 30 June 2009 net asset value declined to 226.0 million or 83p per share from 241.5 million or 89p per share at 31 December 2008.
Investment management
The return on the investment portfolio for the six months ended 30 June 2009 was a loss of 10.7 million as follows:
6 months ended 30 June Year to 31 December 2009 2008 2008 GBP'000 GBP'000 GBP'000 Realised gains/ (losses) Quoted securities 799 759 574 Unquoted securities - 14,271 14,620 Funds (52) 503 2,114 747 15,533 17,308 Unrealised gains/ (losses) Quoted securities 10,485 13,893 (31,122) Unquoted securities (11,504) (7,824) (27,506) Funds (10,437) 4,213 4,572 (11,456) 10,282 (54,056) Total (10,709) 25,815 (36,748)
The above figures include 16.5 million of unrealised foreign currency losses, principally in respect of the US dollar (six months ended 30 June 2008: loss of 0.1 million; year ended 31 December 2008: gain of 45.5 million). It is the Board's current policy not to hedge the Company's underlying non-sterling investments.
The movements in the investment portfolio in the six months ended 30 June 2009were as follows: GBP'000 1 January 2009 202,049 Additions in the six 16,002months Book value of (4,935)realisations Valuation adjustments 5,008 Foreign currency losses (16,464) 30 June 2009 201,660
Additions to the portfolio in the first six months of 2009 include fund calls of 9.2 million and follow on investments of 5.9 million, principally to meet the operating cash requirements of businesses in the unquoted portfolio. We also invested 0.4 million in Pims Group to enable it to acquire a complementary business in the water services business and 0.5 million to acquire directly a minority stake in Penguin Computing which is a San Francisco Equity Partners portfolio company. There were no additions to the quoted portfolio.
Realisations include 1.9 million in respect of fund distributions and 3.0 million for sales of quoted securities. We sold two of our smaller US holdings - Cantel Medical and Monogram Biosciences - and part of our holding (148,000 shares) in Venture Production. We have retained 352,000 shares in that company.
Unrealised gains/(losses) in the first half of the year were as follows:
Valuation Currency Total GBP'000 GBP'000 GBP'000 Quoted securities 14,504 (4,019) 10,485 Unquoted securities (8,612) (2,892) (11,504) Funds (884) (9,553) (10,437) 5,008 (16,464) (11,456)
The valuation losses on unquoted securities reflect the results of the directors' valuation as at 30 June 2009. They include a write down of 2.8 million in respect of CopperEye after a disappointing trading performance in the first half of the year and write downs of 1.8 million on Rave Reviews Cinemas and 1.7 million on 7 Global based on comparable market factors.
Details of our twenty largest investments by valuation at 30 June 2009 are set out on page 6.
Prostrakan Group plc (in which the Company holds 17.6 million shares, being 8.79% of its issued share capital) recently announced its 2009 half year results which were in line with expectations and its share price has increased significantly between the end of June and the date of this report.
On 13 July 2009 we announced that we had acquired a 53.3% interest in Updata Infrastructure UK Limited ("Updata") for 6.2 million in a management buyout. Updata designs, builds and manages cost-effective high-capacity broadband networks for public sector organisations in the UK. The company differentiates itself from its competitors through its culture of excellence in customer service.
Also in July we sold part of our interest in Inflexion 2006 Buyout Fund for approximately 1 million in cash; this transaction also reduced our outstanding commitment to this fund by 1.4 million.
On 24 July 2009 Viking Moorings, an investment within the Inflexion 2003 Buyout Fund, was sold in a secondary buyout producing proceeds to the Company of 2.5 million.
Portfolio subsidiaries
The portfolio subsidiaries included in the half year financial information made satisfactory progress during the first half of 2009. Of particular note was Wesupply Limited's success in being selected by Sainsbury's as the business-to-business (B2B) platform for connectivity to 4,000 of its suppliers. Offshore Tool and Energy Corporation (our specialist manufacturing business) showed good progress in the first half of the year as it expands its product offering to the water industry as well as serving its existing oil and gas markets.
The increase in consolidated operating expenses (which include cost of sales) in the first half of 2009 compared to the corresponding period in the prior year is principally a result of higher revenues and the inclusion of the results of Citizen Limited in the first half of 2009 following its becoming a subsidiary in the second half of 2008.
Admission to the Official List
On 30 June 2009 the Company's shares commenced trading on the London Stock Exchange's Main Market for listed securities. The Board believes that this migration to the Official List will have a number of benefits for shareholders, including offering investors greater liquidity.
Principal risks and uncertainties
The principal risks and uncertainties that affect the Group are described on page 71 of the Group's Annual Report for the year ended 31 December 2008. These are still considered the most relevant risks and uncertainties which the Group faces and they could have an impact on the Group's performance in the second half of the financial year.
We expect the difficult business environment to continue at least for the rest of 2009 with, in particular, a scarcity of traditional sources of finance and low levels of realisations by our fund interests. Movements in exchange rates and in the prices of our quoted portfolio could have a significant impact on our results in the second half.
Outlook
We are seeing a continuing inflow of new investment opportunities and our available liquid resources mean that we are well placed to take advantage of these. The Company has a broadly-based, risk-diversified portfolio of investments and your Board is confident that the Company's strategy will result in strong medium to long-term growth in shareholder value.
Jonathan Agnew Robert A Rayne
Chairman Chief Executive Officer
27 August 2009
LMS Capital plc - Top 20 investments by valuation 30 June 2009
Investment Geography Type of Date of Cost Book Effective % of
Investment initial 000 Value equity net investment GBP000 interest assets 1 Weatherford US Quoted 2001 19,923 24,112
Condensed consolidated income statement
Notes Six months Six ended months ended 30 June 2009 30 June 2008 GBP'000 GBP'000 Continuing operations Revenue from sales of goods and 2 13,293 8,245services Gains and losses on investments 2 (4,665) 15,916 Interest income 135 631 Investment and other income 135 606 8,898 25,398 Operating expenses (22,198) (16,310) (Loss)/profit before finance (13,300) 9,088costs Finance costs (153) (54) (Loss)/profit before tax (13,453) 9,034 Taxation (127) (156) (Loss)/profit from continuing (13,580) 8,878operations Discontinued operations Profit from discontinued 3 - 50,755operations (net of taxation) (Loss)/profit for the period (13,580) 59,633 Attributable to: Equity holders of the parent (13,580) 59,744 Minority interests - (111) (13,580) 59,633 Basic (loss)/earnings per 4 (5.0)p 20.9pordinary share Diluted (loss)/earnings per 4 (5.0)p 20.6pordinary share Continuing operations Basic (loss)/earnings per 4 (5.0)p 3.1pordinary share Diluted (loss)/earnings per 4 (5.0)p 3.1pordinary share
The notes on pages 12 to 20 form part of these financial statements.
Condensed consolidated statement of
comprehensive income Six months Six months ended ended 30 June 30 June 2009 2008 GBP'000 GBP'000 (Loss)/profit for the period (13,580) 59,633 Exchange differences on translation of foreign (395) (392)operations
Total comprehensive (loss)/income for the period (13,975) 59,241
Attributable to: Equity holders of the parent (13,975) 59,352 Minority interests - (111) (13,975) 59,241
The notes on pages 12 to 20 form part of these financial statements.
Condensed consolidated statement of financial position
30 June 31 December 2009 2008 Notes GBP'000 GBP'000 Non-current assets Property, plant and equipment 2,994 3,216 Intangible assets 5 26,741 26,798 Investments 180,176 179,546 Other long term assets 24 15 Non-current assets 209,935 209,575 Current assets Inventories 392 319 Operating and other receivables 6,556 8,309 Cash and cash equivalents 27,822 42,615 Current assets 34,770 51,243 Total assets 244,705 260,818 Current liabilities Bank overdrafts (185) - Interest-bearing loans and borrowings (1,860) (1,656) Operating and other payables (8,691) (10,335) Deferred income (2,035) (3,426) Current tax liabilities (741) (410) Current liabilities (13,512) (15,827) Non-current liabilities Interest-bearing loans and borrowings (787) (1,170) Deferred income (2,871) (2,697) Deferred tax liabilities (36) (41) Other long-term liabilities (18) - Non-current liabilities (3,712) (3,908) Total liabilities (17,224) (19,735) Net assets 227,481 241,083 Equity Share capital 27,265 27,265 Capital redemption reserve 5,635 5,635 Merger reserve 84,083 84,083 Foreign exchange translation reserve 817 1,212 Retained earnings 109,534 122,741 Equity attributable to owners of the parent 227,334 240,936 Minority interest 147 147 Total Equity 227,481 241,083
The financial statements on pages 7 to 20 were approved by the Board on 27 August 2009 and were signed on its behalf by:
RA Rayne
Director
The notes on pages 12 to 20 form part of these financial statements.
Condensed consolidated statement of changes in equity
Six months ended 30 June 2009
Share Capital Merger Foreign e Retained Total Minority Total capital xchange earnings equity redemption reserve GBP'000 interest GBP'000 translation GBP'000 GBP'000 reserve GBP'000 GBP'000 reserve GBP'000 GBP'000 Balance at 1 27,265 5,635 84,083 1,212 122,741 240,936 147 241,083 January 2009 Loss for the - - - - (13,580) (13,580) - (13,580)period Other - - - (395) - (395) - (395) comprehensive income/(loss) Share based - - - - 373 373 - 373 payments Balance at 27,265 5,635 84,083 817 109,534 227,334 147 227,481 30 June 2009 Six months ended 30 June 2008 Share Capital Merger Foreign e Retained Total Minority Total capital xchange earnings equity redemption reserve GBP'000 interest GBP'000 translation GBP'000 GBP'000 reserve GBP'000 GBP'000 reserve GBP'000 GBP'000 Balance at 1 28,643 4,257 84,083 (867) 133,047 249,163 5,283 254,446 January 2008 Profit for - - - - 59,744 59,744 (111) 59,633 the period Other - - - (392) - (392) - (392) comprehensive income/(loss) Disposal of - - - 996 3,372 4,368 (4,368) -portfolio subsidiaries Share based - - - - 568 568 - 568 payments Repurchase of (550) 550 - - (4,021) (4,021) - (4,021) own shares Balance at 28,093 4,807 84,083 (263) 192,710 309,430 804 310,234 30 June 2008
The notes on pages 12 to 20 form part of these financial statements.
Condensed consolidated cash flow statement
Six months Six months ended ended 30 June 30 June 2009 2008 GBP'000 GBP'000 Cash flows from operating activities (Loss)/profit for the period (13,580) 59,633 Adjustments for: Depreciation and amortisation 591 587 Losses/(gains) on investments 4,665 (15,916) Gain on discontinued operations, net - (49,436)of income tax Loss on disposal of Fixed Assets 28 - Translation differences 370 (355) Share based payments 373 568 Finance costs 153 54 Interest income (135) (631) Income tax expense 127 156 (7,408) (5,340) Change in inventories (72) (9,990) Change in trade and other receivables 1,753 13,456 Change in trade and other payables (2,646) (7,268) (8,373) (9,142) Interest paid (153) (54) Net cash used in operating activities (8,526) (9,196) Cash flows from investing activities Interest received 135 631 Acquisition of property, plant and (544) (1,389)equipment Proceeds from disposals of property, 2 2plant and equipment Disposal of discontinued operations, - 80,543net of cash Acquisition of investments (10,958) (17,758) Acquisition of subsidiaries - (1,500) Proceeds from sale of investments 5,308 7,247 Net cash (used in)/from investing (6,057) 67,776activities Cash flows from financing activities Repurchase of own shares - (4,021) (Repayment)/drawdown of interest (179) 1,474bearing loans Net cash used in financing activities (179) (2,547) Net (decrease)/increase in cash and (14,762) 56,033cash equivalents Effect of exchange rate fluctuations (216) (23) Cash and cash equivalents at the 42,615 14,263beginning of the period Cash and cash equivalents at the end 27,637 70,273of the period Cash and cash equivalents above comprise Cash and cash equivalents 27,822 70,283 Bank overdrafts (185) (10) Cash and cash equivalents at the end 27,637 70,273of the period
The notes on pages 12 to 20 form part of these financial statements.
Notes to the financial information
1. Principal accounting policies
Reporting entity
LMS Capital plc ("the Company") is domiciled in the United Kingdom. These condensed consolidated financial statements are presented in pounds sterling because that is the currency of the principal economic environment of the Company's operations. The condensed consolidated financial statements of the Company for the six months ended 30 June 2009 comprise the Company and its subsidiaries (together "the Group").
These condensed consolidated financial statements do not constitute the statutory accounts of the Group within the meaning of section 434(3) and 435(3) of the Companies Act 2006 and have not been audited. The comparative figures for the financial year ended 31 December 2008 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified (ii) did not include a reference to any matters to which the auditors drew attention to by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985.
The Company was formed on 17 March 2006 and commenced operations on 9 June 2006 when it received the demerged investment division of London Merchant Securities. The consolidated financial statements are prepared as if the Group had always been in existence. The difference between the nominal value of the Company's shares issued and the amount of the net assets acquired at the date of demerger has been credited to merger reserve.
The Company is an investment company but because it holds majority stakes in certain investments it is required to prepare group accounts that consolidate the results of such investments. In order to present information that is consistent with other investment companies, the results of the Group's investment business on a stand alone basis are set out in Note 2.
Statement of compliance
These condensed consolidated financial statements have been prepared in accordance with IAS 34: Interim Financial Reporting as adopted by the EU. They do not include all of the information required for full annual financial statements and should be read in conjunction with the annual financial statements for the year ended 31 December 2008, which were prepared in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRS").
As required by the Disclosure and Transparency Rules of the Financial Services Authority, the condensed consolidated financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2008, except as set out below for the changes in presentation required by revised IAS 1: Presentation of Financial Statements (2007), which became effective as of 1 January 2009.
Taking account of the financial resources available to the Group the directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook. After making enquiries the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing the condensed consolidated financial statements for the six months ended 30 June 2009.
Notes to the financial information
1. Principal accounting policies (continued)
These condensed consolidated financial statements were approved by the Board of Directors on 27 August 2009.
Operating segments
The Group adopted IFRS 8: Operating Segments ("IFRS 8") early with effect from the financial year ended 31 December 2007. IFRS 8 defines requirements for the disclosure of financial information of an entity's operating segments and is effective for reporting periods beginning on or after 1 January 2009.
Basis of consolidation
The condensed consolidated financial statements comprise the financial statements of the Company and its subsidiary undertakings up to 30 June 2009. The Company's subsidiary undertakings fall into two categories:
* Investment companies through which the Group conducts its investment activities; and * Certain portfolio companies which form part of the Group's investment activities but which, by virtue of the size of the Group's shareholding or other control rights, fall within the definition of subsidiaries under IFRS ("portfolio subsidiaries"). The portfolio subsidiaries are included within the consolidated financial information although they continue to be managed by the Group as investments held for capital appreciation. Note 10 includes details of the companies concerned.
Discontinued operations
A discontinued operation is a component of the Group's business that represents a separate line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative income statement is re-presented as if the operation had been discontinued from the start of the comparative period.
Presentation of financial statements
The Group applies revised IAS 1: Presentation of Financial Statements (2007), which became effective as of 1 January 2009. This change in accounting policy only impacts presentation aspects; there is no impact on net assets and earnings per share.
Use of estimates and judgements
The preparation of condensed consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these condensed consolidated financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2008.
Notes to the financial information
2. Operating segments
The information below has been prepared using the definition of an operating segment in IFRS 8: Operating Segments. The Group determines and presents information on operating segments based on the information that is provided internally to the directors to enable them to assess performance and allocate resources.
As an investment company, the Group's primary focus is on the performance of its investment management business. Financial information for this segment is prepared on the basis that all investments are accounted for at fair value.
The information set out below therefore presents summarised financial information for the investment management business on a stand alone basis as a single segment, together with the adjustments arising from the summarised results and financial position of the portfolio subsidiaries. Adjustments for Energy Cranes International Limited ("Energy Cranes") are shown separately in the prior periods because of the size of this business relative to the others.
The consolidation adjustments included below reflect the adjustments necessary to restate the portfolio subsidiaries from the basis included in the investment management segment (investments carried at fair value) to full consolidation in the Group's financial statements.
Segment profit or loss Six months ended 30 June 2009 Reconciliation Investment Portfolio Consolidation Group management total subsidiaries adjustments GBP'000 GBP'000 GBP'000 GBP'000 Revenues from - 13,293 - 13,293sales of goods and services to external customers Gains and losses (10,709) - 6,044 (4,665)on investments Interest income 133 2 - 135 Investment and 135 - - 135other income Finance costs - (3,345) 3,192 (153) Profit/(loss) for (15,474) (7,342) 9,236 (13,580)the period
Notes to the financial information
2. Operating segments (continued)
Six months ended 30 June 2008 Reconciliation Discontinued operations Investment Portfolio Energy Other Consolidation Group management total subsidiaries Cranes adjustments GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Revenues from - 8,245 - - - 8,245sales of goods and services to external customers Gains and losses 25,815 - - - (9,899) 15,916on investments Interest income 611 34 - - (14) 631 Investment and 606 - - - - 606other income Finance costs - (1,423) - - 1,369 (54) Continuing 22,814 (5,423) - - (8,513) 8,878operations Discontinued - - 57,556 (6,801) - 50,755operations Profit/(loss) for 22,814 (5,423) 57,556 (6,801) (8,513) 59,633the period Segmentnet assets 30 June 2009 Reconciliation Investment Portfolio Consolidation Group management subsidiaries total adjustments GBP'000 GBP'000 GBP'000 GBP'000 Property, plant and 220 2,774 - 2,994equipment Intangible assets - 3,140 23,601 26,741 Investments 201,660 - (21,484) 180,176 Other non-current assets - 24 - 24 Non-current assets 201,880 5,938 2,117 209,935 Cash and cash equivalents 26,030 1,792 - 27,822 Other current assets 801 6,147 - 6,948 Total assets 228,711 13,877 2,117 244,705 Total liabilities (2,531) (74,403) 59,710 (17,224) Net assets/(liabilities) 226,180 (60,526) 61,827 227,481
The net asset value of the investment management business at 30 June 2009 includes 226,033,000 attributable to the equity holders of the parent and 147,000 attributable to minority interests.
Notes to the financial information
2. Operating segments (continued)
31 December 2008 Reconciliation Investment Portfolio Consolidation Group management subsidiaries total adjustments GBP'000 GBP'000 GBP'000 GBP'000 Property, plant and 288 2,928 - 3,216equipment Intangible assets - 3,196 23,602 26,798 Investments held at fair 202,049 1 (22,504) 179,546value through profit or loss Other non-current assets - 15 - 15 Non-current assets 202,337 6,140 1,098 209,575 Cash and cash equivalents 41,293 1,322 - 42,615 Other current assets 309 8,319 - 8,628 Total assets 243,939 15,781 1,098 260,818 Total liabilities (2,283) (70,604) 53,152 (19,735) Net assets/(liabilities) 241,656 (54,823) 54,250 241,083
The net asset value of the investment management business at 31 December 2008 includes 241,509,000 attributable to the equity holders of the parent and 147,000 attributable to minority interests.
The carrying amount and gain and losses of the investments of the investment management business can be further analysed as follows:
30 June 2009 31 December 2008 UK US Total UK US Total Asset type GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Funds 30,926 67,824 98,750 29,911 72,390 102,301 Quoted 20,597 33,814 54,411 19,409 27,097 46,506 Unquoted 32,569 15,930 48,499 33,686 19,556 53,242 84,092 117,568 201,660 83,006 119,043 202,049 Six months ended 30 June 2009 Six months ended 30 June 2008 Realised Unrealised Total Realised Unrealised Total gains/ gains/ gains gains/ (losses) (losses) (losses) Asset type GBP'000 GBP'000 GBP'000 GBP'000 GBP'000GBP'000 Funds (52) (10,437) (10,489) 503 4,213 4,716 Quoted 799 10,485 11,284 759 13,893 14,652 Unquoted - (11,504) (11,504) 14,271 (7,824) 6,447 747 (11,456) (10,709) 15,533 10,282 25,815
Notes to the financial information
2. Operating segments (continued)
Revenues
The Group's revenues to external customers comprise:
Six months Six months ended ended 30 June 30 June 2009 2008 GBP'000 GBP'000 Continuing operations Software and related services 8,411 5,715 Specialist manufacturing 4,882 2,530 13,293 8,245 3. Discontinued operations
There were no disposals constituting discontinued operations in the six months ended 30 June 2009. In March 2008 the Group sold its entire interest in Energy Cranes International Limited and in June 2008 the Group sold its entire interest in AssetHouse Technology limited. Full details of these transactions were included in note 9 to the Group's annual financial statements for the year ended 31 December 2008.
4. (Loss)/earnings per ordinary share
Basic
The calculation of basic (loss)/earnings per ordinary share is based on the loss of 13,580,000 (six months ended 30 June 2008: profit of 59,744,000), being the (loss)/profit for the period attributable to the parent, divided by the weighted average number of ordinary shares in issue during the period 272,640,952 (six months ended 30 June 2008: 285,888,244).
The calculation of basic (loss)/earnings per ordinary share for continuing operations is based on the loss of 13,580,000 (six months ended 30 June 2008: profit of 8,989,000) being the (loss)/profit for the period attributable to the parent, divided by the weighted average number of ordinary shares in issue during the period of 272,640,952 (six months ended 30 June 2008: 285,888,244).
Diluted
There was no dilution effect in the six months ended 30 June 2009.
The calculation of diluted earnings per ordinary share for the six months ended 30 June 2008 is based on the profit of 59,744,000, divided by the weighted average number of ordinary shares in issue during the period of 290,184,682 after taking account of the potential dilutive effect of share options issued under the Company's share option plans.
The calculation of diluted earnings per ordinary share for continuing operations for the six months ended 30 June 2008 is based on the profit of 8,989,000 divided by the weighted average number of ordinary shares in issue during the period of 290,184,682 after taking account of the potential dilutive effect of share options issued under the Company's share option plans.
Notes to the financial information
5 Intangible assets Software Goodwill Total Licence GBP'000 GBP'000 GBP'000 Cost Balance at 1 January 2008 - 75,922 75,922 Acquisitions through - 1,159 1,159 business combinations Disposals of businesses - (39,586) (39,586) Balance at 30 June 2008 - 37,495 37,495 Balance at 1 January 2009 2,088 40,656 42,744 and 30 June 2009 Accumulated impairment lossesand amortisation Balance at 1 January 2008 - 4,665 4,665 and 30 June 2008 Balance at 1 January 2009 57 15,889 15,946 Amortisation 57 - 57 Impairment loss - - - Balance at 30 June 2009 114 15,889 16,003 Carrying amounts At 1 January 2008 - 71,257 71,257 At 30 June 2008 - 32,830 32,830 At 1 January 2009 2,031 24,767 26,798 At 30 June 2009 1,974 24,767 26,741
For the purpose of impairment testing, goodwill is allocated to each portfolio subsidiary which represents the lowest level within the Group at which the goodwill is monitored for internal management purposes. The recoverable amount of each unit has been determined on the basis of its fair value less costs to sell or value in use, whichever is the greater.
6. Capital commitments 30 June 31 2009 December 2008 GBP'000 GBP'000 Outstanding commitments to funds 64,473 71,104
The outstanding commitments to funds comprise unpaid calls in respect of funds where a member of the Group is a limited partner.
7. Related party transactions
Transactions with related parties during the period were consistent in nature and scope with those disclosed in Note 29 to the Group's annual financial statements for the year ended 31 December 2008.
Notes to the financial information
8. Contingent liabilities
The Company has guaranteed the indebtedness of certain of the Group's investments; the amount outstanding under these arrangements at 30 June 2009 was 2.1 million (31 December 2008: 2.3 million).
9. Subsequent events
On 10 July 2009 the Group acquired a 53.3% interest in Updata Infrastructure UK Limited for consideration of 6.2 million which was settled in cash.
10. Subsidiaries
The subsidiaries comprising the Group's investment management business (as set out in Note 2) are as follows:
Name Country of Holding Activity incorporation % LMS Capital Group Limited England and Wales 100 Investment holding Lion Cub Investments Limited England and Wales 100 Dormant
Lion Cub Property Investments England and Wales 100 Investment holding Limited
LMS Capital Holdings Limited England and Wales 100 Investment holding
LMS Capital (ECI) Limited England and Wales 100 Investment holding Lion Investments Limited England and Wales 100 Investment holding LMS Capital (Bermuda) Limited Bermuda 100 Investment holding LMS Capital (GW) Limited Bermuda 100 Investment holding LMS Capital (General Partner) Bermuda 100 Investment holding Limited Tiger Investments Limited England and Wales 100 Investment holding LMS Tiger Investments (II) England and Wales 100 Investment holding Limited International Oilfield Bermuda 100 Investment holding Services Limited
Westpool Investment Trust plc England and Wales 100 Investment holding
LMS Tiger Investments Limited England and Wales 100 Investment holding
Lion Property Investments England and Wales 100 Investment holding Limited
Lioness Property Investments England and Wales 100 Investment holding Limited
In addition to the above, the Group's carried interest arrangements are operated through three limited partnerships (LMS Capital 2007 LP, LMS Capital 2008 LP and LMS Capital 2009 LP) which are registered in Bermuda.
Notes to the financial information
10. Subsidiaries (continued)
The following companies form part of the Group's investment activities but, byvirtue of the size of the Group's shareholding or other control rights, fallwithin the definition of subsidiaries under IFRS. These portfolio subsidiariesare included within the consolidated financial information although theycontinue to be managed by the Group as investments held for capitalappreciation.Name Country of Holding Activity incorporation % Offshore Tool and United States 100 Specialist engineering designEnergy Corporation of America and fabrication Citizen Limited England and 84 Services to the advertising, Wales publishing and graphic arts industries Entuity limited England and 68 Network management software Wales Wesupply Limited England and 99 Supply chain management Wales software CopperEye Limited England and 76 Specialised search solutions Wales for business transaction data Kizoom Limited England and 94 Intelligent transport Wales information networks (formerly Cityspace Limited)
Statement of directors' responsibilities
We confirm that to the best of our knowledge:
* the condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU; and * the interim management report includes a fair review of the information required by: * DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed consolidated financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and * DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group during that period; and any changes in the related party transactions described in the last annual report that could do so.
RA Rayne AC Sweet
Chief Executive Officer Chief Financial Officer
27 August 2009
Independent review report to LMS Capital plc
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.
Anthony Cecil
for and on behalf of KPMG Audit PlcChartered Accountants8 Salisbury SquareLondon EC4Y 8BB27 August 2009
vendor