Lms Capital Regulatory News (LMS)

22 October 2021

LMS CAPITAL PLC

Third Quarter 2021 Update

LMS Capital plc (the "Company") the listed Investment Company provides the following update covering the period from 30 June 2021 to date.

Financial Highlights

· Unaudited Net Asset Value ("NAV") at 30 September 2021 was £46.9 million (58.0p per share). This compares to £47.6 million (59.0p per share) at 30 June 2021;

· Interim dividend of £0.2 million paid in September; and

· Cash at 31 September 2021 was £20.5 million compared to £21.4 million at 30 June 2021

Unaudited Net Asset Value at 30 September 2021

The £0.7 million decrease in the NAV during the third quarter reflects payment of the interim dividend of £0.2 million and £0.5 million of other movements. The other movements comprise the following:

· Unrealised losses of £0.7 million on the investment portfolio;

· £0.4 million of portfolio and £0.3 million of non-portfolio foreign exchange gains from the strengthening of the U.S. Dollar against sterling; and

· £0.4 million of running costs and £0.1 million of investment related costs.

The 30 September 2021 NAV is summarised below:

The NAV at the end of September is based on the valuation of the Company's investments as at 30 June 2021, adjusted for transactions in the three months ended 30 September 2021, price movements on quoted securities, movements in foreign currency exchange rates, cash calls and distributions from funds, and the latest information available from third party fund managers.

Portfolio Unrealised Net Gains

The portfolio net unrealised losses of £0.7 million, excluding foreign exchange movements, are summarised below:

Quoted Investments

The Company's quoted investment valuations decreased by a net £0.1 million during the third quarter of 2021, reflecting underlying market price decreases.

Unquoted Investments

The Company's unquoted investments include assets managed by San Francisco Equity Partners (ICU Eyewear and YesTo), our direct holdings in Medhost and Elateral and a convertible debt instrument with IDE Group Holdings.

Total unquoted investment unrealised losses were £0.1 million. This primarily relates to YesTo where the remaining value of the investment was written off.

Elateral - The Company has increased its investment by £0.4 million as part of an agreement to buyout the former 50% co-investor and provide additional working capital. LMS' ownership has increased from approximately 50% to 62.5% of the economic interest in the company, the balance being held largely by our new operating partner and the Elateral Chairman both of whom have invested alongside LMS. Elateral operates in the digital marketing sector and has a cloud-based software platform which facilitates the creation and customisation of digital and print marketing materials.

Funds

The Company's fund investments include its holding in Brockton Capital Fund I, Opus Capital Partners, Weber Capital Partners ("Weber") and five other smaller fund interests.

Fund unrealised net losses were £0.5 million. The principal movements were:

· YesTo - Unrealised loss of £0.7 million. This investment, held through and managed by San Francisco Equity Partners, has been written down to zero pending the outcome of a review of the financing requirements of the business;

· Brockton Fund 1 - Unrealised gain £0.4 million, reflecting the third quarter movement in the discounted cash flow valuation; and

· Weber - unrealised loss of £0.2 million due to the performance in the U.S. microcap equities held in the fund. Year to date the fund has increased by 17.2%

The carrying value of the funds is based on the latest available information from the respective fund managers, generally the 30 June 2021 fund valuation reports except for Weber, which is based on 30 September 2021 valuations.

Portfolio Realisations

There were no portfolio realisations or fund distributions during the third quarter.

Liquidity and Outlook

The Company continues to maintain significant cash balances, £20.5 million at 30 September, and remains highly cautious about the way its liquid resources are deployed. The Company continues to review opportunities with its real estate teams and has a pipeline of opportunities for other investments.

Dacian

Dacian, the Romanian oil and gas production company in which LMS, together with other investors, has committed to invest, has not yet received the necessary approvals in Romania for its first acquisition of a business comprising 40 onshore oil and gas fields.

LMS' and other investors' commitments are conditional on the necessary approvals being obtained. LMS has committed $9.1 million, which comprises $9.1 million of senior loans bearing interest at 14% per annum and a 32% equity ownership in the company.

Notwithstanding some delay due to the impact of Covid-19 and government reorganisations in Romania, the process is taking substantially longer than envisaged at the time the commitment was made.

The Dacian management team believes, based on the evidence available to it, that the approval process is moving towards successful conclusion, although the timing of such conclusion is difficult to predict.

The Board maintains close contact with the Dacian team and continues to monitor the situation closely. If circumstances change the Board will reconsider its position, however at present it remains of the view that the merits of the transaction outweigh the delays, and therefore should await the conclusion of the approval process.

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

22 October 2021

For further information please contact:

LMS Capital PLC

Nick Friedlos, Managing Director

0207 935 3555

Shore Capital

Robert Finlay

0207 408 4050