2012 Annual Report and Notice of 2013 AGM

RNS Number : 2705C

LMS Capital PLC

15 April 2013

 



15 April 2013

LMS Capital plc

2012 Annual Report and

Notice of 2013 Annual General Meeting

LMS Capital plc ("LMS Capital" or "the Company") has today published its 2012 Annual Report and Notice of its 2013 Annual General Meeting. These documents are available in the Investor Relations section on the Company's website, www.lmscapital.com. This follows the release on 18 March 2013 of the Company's Preliminary Results Announcement for the year ended 31 December 2012 ("the Preliminary Results").

In compliance with Rule 9.6.1 of the Listing Rules, the Company has submitted to the UK Listing Authority, via the National Storage Mechanism, copies of the LMS Capital 2012 Annual Report, the Notice of its 2013 Annual General Meeting and a sample of a Form of Proxy for use at that meeting. The LMS Capital 2012 Annual Report will be filed with the Registrar of Companies in due course and copies can be obtained from the Company Secretary, LMS Capital plc, 100 George Street, London W1U 8NU. The Annual General Meeting will be held at 3 pm on Monday 20 May 2013.

The Disclosure and Transparency Rules (DTR 6.3.5(2)) require certain information to be disclosed upon publication of an Annual Report. Accordingly, the following disclosures are made in the Appendices below. References to page numbers and notes to the accounts made in these Appendices refer to page numbers and notes to the accounts in the LMS Capital 2012 Annual Report.

Appendix A - Audit Report

The Preliminary Results include a condensed set of financial statements. Audited financial statements for 2012 are contained in the LMS Capital 2012 Annual Report. The Independent Auditor's Report on the financial statements is set out in full on pages 33 and 34. The audit report is unqualified and does not contain any statements under section 498(2) or (3) of the Companies Act 2006.

Appendix B - Directors' Responsibility Statement

The following statement, made by the directors of the Company, is extracted from page 32 of the Company's Annual Report. This statement relates solely to the LMS Capital 2012 Annual Report and is not connected to the extracted information set out in this announcement or to the Preliminary Results.

We confirm that to the best of our knowledge:

·     The financial statements, prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

·     The directors' report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

Appendix C - Principal Risks and Uncertainties

The following is extracted in a full and unedited form from pages 19 and 20 of the Company's Annual Report:

This section provides a summary of the principal risks and uncertainties that could have a material adverse effect on the Group's strategy, performance and financial condition. The Group has an ongoing process for identifying, evaluating and managing risk with the aim of mitigating the impact of the risks and uncertainties to which the business is exposed. This process provides reasonable, rather than absolute, assurance in managing risk and cannot eliminate it.

The Group's risk profile derives from a combination of two elements - the Group's own strategy, including the actions taken within that strategic framework, and the effects of changes in the external economic environment in which it operates, including the impact on the companies in its investment portfolio. The Board has taken into account the impact of the change in strategy agreed at the general meeting on 30 November 2011 in assessing the risks which could have a material effect on the achievement of the Group's revised objectives. This change has principally impacted communication with stakeholders and counterparties and staff retention and incentivisaton (see further details below). The Board is satisfied that the Group's risk management process is appropriate in the context of the revised strategy.

The Audit Committee oversees the Group's risk management process and is provided with a report on risk management at each of its meetings. The management of specific risks is the responsibility of the executive directors and members of the Group's senior management team.

The principal risks and uncertainties summarised below are not set out in order of probability of occurrence or materiality; the Group may also be adversely affected by other risks and uncertainties besides those described here.

Economic and financial risk

The Group is subject to economic factors (such as the market demands of the sectors in which its investments operate) which may negatively impact the performance and growth rates of the Company's investments, which may result in the Company's Net Asset Value and net income declining. We seek to mitigate the potential impact of this by monitoring the trading performance and cash flows of our portfolio companies on a regular basis which allows us to act quickly should there be a need to do so.

A lack of liquidity in the capital markets could mean that the Company may not be able to realise its investments in line with planned timings and values. This could impact the timing and amount of capital returned to shareholders under the Company's asset realisation strategy. Difficulties could arise in agreeing the Company's plans to realise investments with investee companies' management and investing partners leading to realisations being lower and/or later than planned.

Many of our investments produce little or no recurring income and the timing of realisations of unquoted investments (which itself may be a function of underlying economic conditions) cannot be ascertained with certainty. We rely on our detailed budgeting and forecasting procedures to ensure that the cash requirements of the Group are met. The Board regularly reviews the Company's working capital requirements and believes it has sufficient liquid resources to meet its expected cash obligations for the foreseeable future.

The Group is subject to the impact of changes in market prices for its quoted investments, as well as to movements in interest rates and exchange rates. A significant proportion of our investment portfolio is denominated in a currency other than pounds sterling, principally US dollars. Changes in the value of the US dollar affect the valuation of the Company's US investments, and therefore impact the valuation of the portfolio as a whole. The Group regards its exposure to exchange rate changes on the underlying investment as part of its overall investment return and monitors its overall exposure to foreign currencies at a portfolio level. It is the Board's current policy not to hedge the Company's underlying non-sterling investments.

The Group has made investments and by virtue of these investments may be obliged to make further capital contributions. Whilst the maximum amount of the future commitment is known, the timing of such capital calls cannot be predicted with certainty. The monitoring of this exposure is included in the Group's budgeting and forecasting procedures referred to above.

Investment risk

The Group's investment risk arises as a result of individual investment decisions and the performance of its investments. Our investment management process requires regular monitoring of the performance and prospects of each investment; this is usually achieved by board representation or equivalent at each investment. The experience of the executive management team is a key factor in mitigating our risk of loss on individual investments. The progress of each investment is reported regularly to the Board including an update on expected realisation timing and value.

Operational risk

The Group has a number of internal processes and systems to ensure that it complies with all legal and regulatory obligations, as well as internal controls designed to ensure the integrity of its financial information and reporting. The Audit Committee, on behalf of the Board, regularly reviews these systems, which include reports on the Company's risk management procedures. The Company has instituted procedures to ensure that directors' outside interests do not give rise to conflicts with its operations and strategy.

The ability to access and attract people with the appropriate skills is of fundamental importance to the Group's strategy, since failure to do so could adversely affect investment returns. Headcount changes and/or reductions as a result of cost saving measures require careful management to minimise their impact on the Group's investment management processes.

Appendix D - Related Party Transactions

The following is extracted in a full and unedited form from note 29 on page 75 of the Company's Annual Report:

With effect from January 2011 the Company entered into a lease agreement with Derwent London plc in respect of the premises comprising its head office and registered office. Under the terms of the lease the Company pays an annual rent of £288,752 to Derwent London plc plus certain service charges. Mr Robert Rayne is Chairman of Derwent London plc.

Under an arrangement with SQP Limited the Company pays fees of £60,000 per annum for the provision of services by Mr Robert Rayne.

Compensation arrangements for key management are set out in the Remuneration report on pages 21 to 27.

In connection with the tender offer in November 2012, the Company received an irrevocable undertaking from Withers Trust Corporation Limited (the "Undertaking"). The purpose of the Undertaking was a contingency measure to ensure that members of the extended Rayne family and associated trusts (the "Concert Party") would in aggregate tender sufficient shares so that the Concert Party's percentage interest in the ordinary shares of the Company would not increase as a consequence of the tender offer and consequently avoid any requirement under the City Code on Takeovers and Mergers for the Concert Party to make an offer for all the issued shares of the Company which they did not own. This arrangement described above was classified as a smaller related party transaction under the Listing Rules of the UK Listing Authority (the "Listing Rules").For the purposes of this classification the deemed value of the consideration for the Undertaking was £1.67 million.

The results of the Tender Offer did not, however, ultimately require any extra shares to be tendered by Withers under the terms of the Undertaking. No fee was payable by the Company in connection with the Undertaking.

For further information, please contact:

LMS Capital plc                                                                                                                                 020 7935 3555

Nick Friedlos, Director

Tony Sweet, Chief Financial Officer

About LMS Capital plc

LMS Capital is an investment company which, following a general meeting on 30 November 2011, is undertaking a realisation strategy with the aim of achieving a balance between an efficient return of cash to shareholders and optimising the value of the Company's investments. Its investment portfolio consists of small to medium sized companies in the consumer, energy and business services sectors.

 

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