28 October 2021

LMS CAPITAL PLC

Third Quarter 2022 Update

LMS Capital plc (the "Company") the listed Investment Company, provides the following update covering the period from 30 June 2022 to date.

Financial Highlights

·    Unaudited Net Asset Value ("NAV") at 30 September 2022 was £48.8 million (60.5p per share). This compares to £47.0 million (58.2 p per share) at 30 June 2022, an increase in the quarter of 4.5% after adjusting for dividends paid;

·    Interim dividend of £0.2 million (0.3p per share) paid in September 2022; and

·    Cash at 30 September 2022 was £18.4 million (22.8p per share) compared to £18.9 million (23.5p per share) at 30 June 2022.

The portfolio overall has benefitted from unrealised foreign exchange gains in the quarter with a small net increase in underlying valuations.

As we enter a period of further economic uncertainty our significant cash balances put us in a strong position to evaluate and make the most of opportunities in our chosen sectors.

Unaudited Net Asset Value at 30 September 2022

After adjusting for dividends paid in the quarter of £0.2 million, the net increase in NAV during the quarter was £2.0 million, comprising the following:

·    Unrealised foreign exchange ("FX") gains of £2.1 million on the investment portfolio. The US dollar strengthened by approximately 8.3% against sterling during the quarter. Approximately 75% of the Company's investments are US dollar denominated;

·    Underlying gains and accrued income on the investment portfolio were £0.4 million;

·    Non portfolio foreign exchange gains of £0.2 million, running costs of £0.4 million, and investment related costs of £0.1 million.

The 30 September 2022 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 2022, adjusted for transactions in the three months ended 30 September 2022, 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 Net Gains

The portfolio net unrealised gains during the quarter to 30 September were £2.5 million, of which £2.1 million were unrealised foreign exchange gains and £0.4 million were net unrealised gains in underlying investment valuations. The movements, are summarised below:

Quoted Investments - £0.2 million (30 June 2022 - £0.2 million)

The Company's quoted investment valuation has not changed materially since the 30 June 2022. The principal investment is a small holding in IDE Group Limited.

Unquoted Investments - £17.5 million (30 June 2022 - £16.1 million)

The Company's unquoted investments showed unrealised FX gains of £1.4 million and an unrealised loss in the underlying investment valuations of £0.2 million.

The principal holdings are Dacian Petroleum, Medhost, Elateral and ICU, managed by San Francisco Equity Partners.

Dacian - The increase in valuation since the half year comprises unrealised FX gains of £0.9 million and accrued loan interest of £0.3 million. The acquired portfolio of onshore oil and gas wells has now been operated by the Dacian team for 10 months. As reported at the half year, a build up of backlog maintenance prior to Dacian's ownership has required remediation and has diverted the team from some of its planned workover activity during the year. The team is gradually managing the reactive maintenance needs and has conducted some workover projects achieving an increase in production since commencing operations in November 2021. The business is EBITDA positive and cash generative and has benefitted from strong energy prices during the year.

Medhost - The increase in valuation of £0.5 million arises from unrealised FX gains, the underlying investment valuation is unchanged from the half year. The company operates in a mature market and continues to be profitable and cash generative and performing in line with budget.

Elateral - The valuation is unchanged from half year. During the quarter Elateral received some additional working capital finance from investors, of which LMS' share was £0.2 million.

ICU (managed by San Francisco Equity Partners) - The reduction of £0.3 million during the quarter principally comprises a reduction in the underlying valuation reflecting concerns around progress with an exit process that has been underway for several months. Greater clarity around the outcome is anticipated by the year end.

Funds - £15.2 million (30 June 2022 - £14.0 million)

The Company's fund investments showed unrealised foreign exchange gains of £0.7 million and a gain in the underlying asset valuations of  £0.6 million.

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.

Brockton - The increase in valuation since the half year comprises the third quarter movement in the discounted cash flow valuation of this asset.

Opus - The increased valuation comprises unrealised FX gains of £0.5 million less a reduction of £0.1 million in the underlying valuation by the third party manager. The reduction in the underlying valuation reflects movement in the general market benchmark values used by the manager for valuation purposes.

Weber - The increased valuation since the half year comprises unrealised FX gains of £0.2 million and gains in the underlying market value of the portfolio of £0.3 million. Notwithstanding general market conditions this fund benefitted during the quarter from a significant increase in market value of one of its holdings.

The carrying value of the funds is based on the latest available information from the respective fund managers, generally the 30 June 2022 fund valuation reports except for Weber, which is based on a 30 September 2022 valuation.

Portfolio Realisations

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

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.

For further information please contact:

LMS Capital PLC - Nick Friedlos, Managing Director

0207 935 3555

Shore Capital - Robert Finlay

0207 408 4050