LMS Capital delivered a polished first-half performance that saw a 12 per cent increase in net asset value and a near three-fold jump in pre-tax profits.
The value of the total investment portfolio fell from £253m at the end of 2010 to £224m, but this was after net realisations of £40.6m, principally from funds and quoted investments, as the group ran these down in order to build up a war chest to concentrate solely on direct investments. Consequently, quoted investments at the half year were down from £63.2m to £32.4m, of which the main interest is a £24m stake in Weatherford International.
Sensibly, management has adopted a cautious approach to new investments in the current climate. Of the 50 deal opportunities considered, around 80 per cent met the group’s core investment criteria, broadly in line with a year earlier, but only nine are at a further state of consideration and there were no direct new investments made. Follow-on funding for existing investments eased from £2.25m to £1.85m.
LMS expects to make some direct investments later this year, and has the funds to do so. Having paid off its remaining bank debt, it holds £30.5m in cash with uncalled commitments of £27.5m.
| LMS CAPITAL (LMS) | ||||
| ORD PRICE: | 62p | MARKET VALUE: | £169m | |
| TOUCH: | 62-63p | 12-MONTH HIGH: | 65p | LOW: 39p |
| DIVIDEND YIELD: | nil | PE RATIO: | 9 | |
| DISCOUNT TO NAV: | 33% | NET CASH: | £30.5m | |
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2010 | 83.0 | 1.4 | -0.1 | nil |
| 2011 | 93.0 | 5.5 | 1.7 | nil |
| % change | +12 | +297 | – | – |
| Ex-div: na Payment: na |
||||
Shares in LMS Capital have risen nearly 40 per cent this year, yet still trade on a hefty discount to net asset value. And with the focus now on direct investments, LMS will have a greater control on how its money is employed. Good value.
Last IC view: Good value, 57p 28 Mar 2011