LMS Capital (LMS) has announced its final results for the year ended 31 December 2024, reporting a 12.4% decline in NAV and a decision by the board to pursue a managed wind-down of its portfolio (announced on 13 March 2025). This strategic pivot follows a challenging year marked by losses across several legacy fund positions and a reduction in net assets from £42.1m to £36.2m, equivalent to 44.8p per share (2023: 52.2p).
While £0.7m was paid in dividends during the year, the board has declared no final dividend and is instead preparing to convene a general meeting in April 2025, at which it will seek shareholder approval to amend the company’s investment policy to allow for a phased realisation of assets and return of capital.
Portfolio pressures prompted strategic review
The headline NAV reduction was driven primarily by £4.9m of portfolio losses, most notably:
- A £2.5m write-down of Brockton Capital Fund 1, which was reduced to nil following the appointment of receivers to its final remaining asset.
- A £2.1m drop in the valuation of Dacian, the Romanian energy business undergoing restructuring.
- A £0.9m decline in the value of Opus Capital, where two remaining investments are yet to be realised.
These were partially offset by £1.0m in accrued interest, modest gains elsewhere, and a £0.5m uplift to the Castle View retirement living investment.
Retirement Living and Dacian updates
The Castle View Retirement Village, acquired in December 2023, completed its first full year under LMS ownership, with three apartment sales completed and a further four under reservation. Debt tied to the acquisition has been reduced from £5.8m to £5.1m, and the property has been valued slightly higher on a discounted cash flow basis. The board continues to see long-term potential in the retirement living sector, citing favourable demographics and supply-demand imbalances. Co-investment options are being explored to scale this platform.
Dacian has undergone a major capital restructuring, converting senior loan notes into equity and bringing in Bridge Loan funding. LMS’s stake in Dacian is expected to rise to 50.8% once Romanian regulatory approvals are secured. A new non-executive director with oil sector experience, John Burkhart, has joined the Dacian board. Production stabilisation plans are now underway, with expectations of 900+ BOEPD by 2026 and monthly operating cash flows of over $0.3m, assuming $75 oil prices.
Cash position and cost base
Cash at the year-end was £13.5m, representing 37.4% of NAV, slightly down from £15.5m in 2023. The Company has no external debt, and fund commitments are limited to £2.5m. Net running costs were £1.7m, broadly stable, but cost-saving measures implemented during the year have reduced the 2025 run-rate to £1.6m. The board will be seeking to make further reductions as part of the managed realisation process.
Time to pull the plug
With the shares trading at a persistent discount and the Company’s small size hampering liquidity, the board now believes a managed wind-down is in shareholders’ best interests. A circular will be published in April 2025, with the board seeking shareholder support for this change in policy at a General Meeting. No final dividend has been proposed for 2024. Future distributions will be addressed in the upcoming circular.
[QD comment MR: Given its diminished scale, long-term performance record and highly concentrated nature of its portfolio, we do not think it makes sense for LMS Capital to continue as a listed investment company and were not surprised to see the board recommend a managed realisation earlier this month. The latest set of results underlines this point.]
