Final Results for the Year Ended 31 December 2025

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT MAY CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE UK'S MARKET ABUSE REGULATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, SUCH INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

LEI: 2138004UJ1TW8UCELX08

19 March 2026

LMS CAPITAL PLC

Final Results for the Year Ended 31 December 2025

The Board of LMS Capital plc ("LMS" or the "Company") is pleased to announce the Company's audited annual results for the year ended 31 December 2025.

Financial Summary

2025 key points

· Net Asset Value ("NAV") - £29.0 million

The NAV at 31 December 2025 was £29.0 million, 35.9 pence per share (31 December 2024: £36.2 million, 44.8 pence per share).

· Return of Capital to Shareholders - £1.6 million, 2.0 pence per share

The Company made its first return of capital to shareholders in July 2025 of 2.0 pence per share.

· Portfolio Movements - £0.3 million reduction

The portfolio net decrease comprises:

· Valuation changes:

o  Unrealised foreign exchange losses £1.1 million;

o  Net realised gains and unrealised underlying losses in portfolio £2.5 million.

· Additional investment in Dacian and Castle View £4.7 million; and

· Realisations £1.4 million.

· Net Running Costs - £1.4 million

Net running costs, including those incurred by subsidiaries, were £1.4 million (2024: £1.7 million) and there were an additional £0.9 million (2024: £0.8 million) of investment related costs.

· Portfolio Realisations - £1.4 million

Realisations include Weber £0.7 million, Brockton £0.6 million and others £0.1 million.

· Year End Cash Balance - £6.8 million

Cash balances at the year end, including amounts held by subsidiaries, were £6.8 million, representing 23.3% of the NAV (2024: £13.5 million and representing 37.4% of the NAV). Cash held by the Company was £6.6 million (2024: £11.6 million).

A copy of the Company's Annual Report and Accounts for the year ended 31 December 2025 will shortly be submitted to the National Storage Mechanism and will be available for inspection. The Annual Report and Accounts will also be available on the Company's website.

For further information please contact:

LMS Capital plc

Nick Friedlos, Managing Director

0207 935 3555

Chairman and Managing Director's Report

We are pleased to report our results for the year ended 31 December 2025.

In February 2025, the Board announced that, mindful of the challenges facing the Company in terms of its size, limited secondary market liquidity and the discount to NAV at which the ordinary shares had been trading, it had determined to carry out a strategic review of the Company's future direction and was intending to consult with shareholders. Following that consultation, the Board reached the conclusion that shareholder value would be best served by a managed realisation of the Company's assets and returns of capital to shareholders over time (the "Managed Realisation").

A general meeting was convened in May 2025 at which shareholders voted in support of proposals, set out in a circular to shareholders, for a change to the Company's investment policy to permit the Managed Realisation and any related matters required.

The focus of the Board and the team therefore since May 2025 has been on the optimum route to realisation of the Company's assets in a reasonable period of time. To date, a total of 4p per share (£3.2 million), comprising 2 pence per share in July 2025 and a further 2 pence per share in January 2026, has been returned to shareholders. This was financed principally through realisations of the Weber Fund, the most readily liquid investment, and a final distribution from Brockton Fund 1 in Q3 2025.

Net Asset Value ("NAV") overview

The NAV of the Company at 31 December 2025 was £29.0 million, 35.9 pence per share (31 December 2024: £36.2 million, 44.8 pence per share).

For the year as a whole, the Company's estimated NAV, after adjusting for the July 2025 distribution, has decreased by £5.6 million, most of which occurred in the first half and was reported at 30 June 2025. The principal underlying portfolio changes on a full year basis were:

· A decrease of £1.1 million from unrealised foreign exchange losses on US dollar denominated investments;

· Underlying portfolio net decrease £2.5 million comprising:

o  Decrease in Dacian £2.0 million, the bulk of which was recognised prior to the additional investment made in July 2025 and reflecting the impact of the additional funding on the prior investment valuation;

o  Decrease in Castle View £0.5 million, reflecting additional working capital required pending the sale of the stock of apartments;

o  Decrease in Elateral £0.6 million; and

o  £0.6 million realised gain, reported in Q3 and being clawback by the Brockton Fund, now dissolved, of historic carried interest payments to its managers.

· Full year running costs, including those of the subsidiaries, were £1.4 million. Cost saving measures during the year have reduced the annual run rate of costs to approximately £1.3 million by December 2025;

· Investment costs for the year of £0.9 million. This includes one-off amounts of £0.4 million during the first half of the year, relating to the issue of the circular to shareholders and implementation of the B Share scheme and the write off of historic management fees on Dacian. Other costs relate principally to the individuals who are focussed entirely on the oversight and development of the retirement living business; and

· Other net income of £0.3 million comprising bank interest of £0.4 million less unrealised foreign exchange losses of £0.1 million on non-portfolio assets.

The balance sheet at the year end can be summarised as follows:

Financial results for the year ended 31 December 2025

Liquidity - Cash less other net liabilities

Cash

Cash balances in the Company and its subsidiaries (excluding investee companies - see note 24) at 31 December 2025 were £6.8 million (31 December 2024: £13.5 million).

Net liabilities

Net liabilities in the Company and its subsidiaries of £1.0 million (31 December 2024: £0.8 million) consist primarily of accruals for income taxes and other sundry costs.

Retirement Living

Castle View

LMS, through its wholly owned subsidiary LMS Retirement Living Limited, acquired its investment in Castle View Retirement Village ("Castle View") in December 2023.

Castle View is a retirement development comprising 64 self-contained apartments close to Windsor town centre, together with communal facilities including 24-hour reception, lounges, bars, library and a restaurant facility.

Residents acquire their apartments, and the right to use the communal facilities, on 250-year leases and pay an annual service charge, which covers the day to day running of the scheme, plus a deferred fee on resale of an apartment. The deferred fee is designed to cover the costs of constructing the communal facilities, their ongoing maintenance and updating, and to provide a return on capital invested.

At the half year we reported that there were sale reservations on two apartments to the value of £1.3 million. During the autumn, both these reservations proceeded to completed sales, at the indicated prices.

The purchase of retirement apartments is typically financed by the sale of an existing larger property, and slowness in the housing market overall, has a knock-on effect on the ability of purchasers to complete on retirement apartments.

To accelerate full occupancy and to reduce the holding costs of unoccupied units and create additional income, the decision was taken to offer apartments for rental alongside sale. Rental demand has been good. Two rentals were concluded prior to the year end and a further two in 2026 to date.

Of the 15 units which were unsold when the village was acquired in December 2023, 5 currently remain unoccupied and are for sale or rental. Rental transactions are in progress on a further 1 apartment with a continuing flow of new enquiries.

The current debt facility on Castle View does not permit rentals. The Company has invested £1.0 million to pay down the current debt on the units rented prior to the year end and is in discussions to secure a new facility which will allow it to refinance in part this investment and will provide finance for further rental units.

The increase in valuation of Castle View from £6.6 million at the half year to £7.5 million reflects the additional investment by the Company in the rental units. The acquisition debt has been reduced from £4.8 million at the half year to £3.0 million at the year end, as a result of the two sales noted above and the paydown of debt on the rental units.

Retirement Living Outlook

The Board has previously stated that it continues to see opportunity in the sector. This remains the case, particularly in the acquisition of existing stock which offers long-term value potential but also provides attractive income. Accordingly, the Board may seek to attract outside investment into the Company's retirement living subsidiary which could add additional assets to create a retirement living platform and enhance realisation value.

Dacian

Additional working capital investment during 2025

In August 2025 the Company announced that, following a detailed review of the business in conjunction with a new leadership team at Dacian, it had agreed to invest up to $5.3 million of additional capital.

Other investors agreed to invest a further $0.24 million. Whilst acknowledging the risks inherent in the oil and gas industry and Dacian's past track record, the Board reached the view that the returns on the additional investment are attractive and will offer investors the prospect of a materially better overall financial outcome on realisation than seeking an immediate sale.

Key elements of the plan to be executed by the new team were

· Investment in inventory of replacement components and implementation of a maintenance plan to reduce the frequency of equipment failures and consequent interruptions to production;

· Carrying out a programme of well workovers and interventions, financially evaluated and risk adjusted in accordance with industry best practice, to enhance production over the next 12 months;

· Taking opportunities to monetise some unutilised land and equipment held by Dacian;

· Evaluating and presenting to external capital, an identified set of additional development projects within Dacian's fields; and

· Continuing to work with partners in the development of other opportunities including in clean energy initiatives.

Execution of the plan is still in process but progress to date has been satisfactory. The new team structure has worked well since being put in place in mid-2025.

Mobilisation of resources and inventory for the maintenance plan and for the workover programme were initially slower than anticipated, but are now well underway. Early indications are that the capital cost of projects is at or slightly below budgeted cost. An early major workover, accounting for approximately 10% of the overall production gain, began flowing in January 2026 and is delivering the planned level of production. More detailed discussions with potential partners on opportunities in clean energy have commenced.

Whilst there is still much to be delivered the Board remains confident in the team and the plan.

Dacian capital structure

As previously reported, the investment in 2020 by the Original Investor Group, structured as senior loan notes with a coupon of 14% per annum on a compounding basis (the "Senior Loan Notes") and an equity subscription at nominal value, was restructured by a debt to equity swap in July 2024. Further bridge finance has also been provided in 2024 and 2025. In summary the Dacian financing has been provided as follows:

· Initial Investment in 2020, structured as senior loan notes with a coupon of 14% per annum on a compounding basis (the "Senior Loan Notes"), and an equity subscription at nominal value;

· Debt to equity swap in July 2024, which converted the initial investment to equity and diluted the Founder team; and

· Bridge finance during 2024 and 2025. The tranches all have a maturity date of June 2026 and entitle the lenders to additional equity shares.

The debt to equity swap, whilst agreed between all shareholders, has been awaiting regulatory approval in Romania, which approval we have always been advised should be forthcoming. We are pleased to report that the regulatory approval was finally received on 5 February 2026.

As a result of its participation in the initial investment and participation in the bridge finance since May 2025, LMS in aggregate will have invested $14.7 million and owns 60% of the equity in Dacian and holds $5.6 million of loan instruments. The other members of the Original Investor Group own 37% and hold $3.5 million of loan instruments.

Looking forward

As previously announced in connection with the Managed Realisation, the Board is not proposing an annual dividend. Any future distributions will be considered in the context of the Managed Realisation and communicated to shareholders as appropriate.

We would like to express our appreciation for the support from our team and from the network of people with whom we work on a regular basis. We would also like to express our appreciation for the continued support of our shareholders.

James Wilson Nicholas Friedlos

Chairman Managing Director

Portfolio Management Review

The movement in NAV during the year was as follows:

Cash realisations and new and follow-on investments from the portfolio were as follows:

Realisations in 2025 include distributions received from GW 2001 Fund and Brockton Capital Fund 1.

Below is a summary of the investment portfolio of the Company and its subsidiaries, which reflects all investments held by the Group:

Basis of valuation:

Quoted investments

Quoted investments for which an active market exists are valued at the closing bid price at the reporting date.

Unquoted direct investments

Unquoted direct investments for which there is no active market are valued using the most appropriate valuation technique with regard to the stage and nature of the investment.

Valuation methods that may be used include:

· investments in an established business are valued using revenue multiples depending on the stage of development of the business and the extent to which it is generating sustainable revenue or earnings;

· investments in an established business which is generating sustainable revenue or earnings but for which other valuation methods are not appropriate are valued by calculating the discounted value of future cash flows;

Funds

Investments in managed funds are valued at fair value. The general partners of the funds will provide periodic valuations on a fair value basis, the latest available of which the Company will adopt provided it is satisfied that the valuation methods used by the funds are not materially different from the Company's valuation methods. Adjustments will be made to the fund valuation where the Company believes the evidence available supports an alternative valuation.

Performance of the investment portfolio

The return on investments for the year ended 31 December was as follows:

Approximately 62% of the portfolio at 31 December 2025 was denominated in US Dollars (31 December 2024: 63%) and the above table includes the impact of currency movements. In the year ended 31 December 2025, the strengthening of sterling against the US Dollar resulted in an unrealised foreign currency loss of £1.1 million (2024: unrealised gain of £0.2 million). As is common practice in private equity investment, it is the Board's current policy not to hedge the Company's underlying non-sterling investments.

Quoted investments

The changes in valuation on the quoted portfolio arose as follows:

Unquoted investments

The changes in valuation on the unquoted portfolio arose as follows:

Valuations are sensitive to changes in the following inputs:

· the operating performance of the individual businesses within the portfolio;

· changes in the revenue multiples and transaction prices of comparable businesses, which are used in the underlying calculations;

· changes in the estimated future cash flows of the individual businesses which are derived based on judgemental inputs (see note 20 for further details); and

· the discount rates applied to valuations.

Fund interests

The changes in valuation on the Company's fund portfolio arose as follows:

Costs

Running costs, including those of the subsidiaries, for the year were £1.4 million (2024: £1.7 million) and investment related costs being support costs for real estate and co-investment activities, were £0.9 million (2024: £0.8 million) which included one-off amounts of £0.4 million during the first half of the year, relating to the issue of the circular to shareholders and implementation of the B Share scheme and the write off of historic management fees on Dacian.

Taxation

The tax provision for the year is £nil (2024: £0.1 million). 

Financial Resources and Commitments

At 31 December 2025 cash holdings, including cash in subsidiaries, were £6.8 million (31 December 2024: £13.5 million) and neither the Company nor any of its subsidiaries had any external debt in either 2025 or 2024.

At 31 December 2025, subsidiary companies had commitments of £0.4 million (31 December 2024: £2.5 million) to meet outstanding capital calls from fund interests.

LMS CAPITAL plc

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with UK adopted international accounting standards and applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Financial Statements in accordance with UK adopted international accounting standards. Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these Financial Statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and accounting estimates that are reasonable and prudent;

· state whether they have been prepared in accordance with UK adopted international accounting standards, subject to any material departures disclosed and explained in the Financial Statements;

· prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and

· prepare a Directors' Report, a Strategic Report and Directors' Remuneration Report which comply with the requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. 

They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors have ensured that the Annual Report and Accounts, taken as a whole, are fair, balanced, and understandable and provide the information necessary for shareholders to assess the position and performance, business model and strategy.

Website publication

The Directors are responsible for ensuring the Annual Report and the Financial Statements are made available on a website. Financial Statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the Financial Statements contained therein.

Directors' responsibilities pursuant to DTR4

The Directors confirm to the best of their knowledge:

· The Financial Statements have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company.

· The Annual Report includes a fair review of the development and performance of the business and the financial position of the Company, together with a description of the principal risks and uncertainties that they face.

For and on behalf of the Board.

James Wilson

Chairman

Company Income Statement

For the year ended 31 December 2025

All activities of the Company are classed as continuing.

Company Statement of Other Comprehensive Income

For the year ended 31 December 2025

Company Statement of Financial Position

As at 31 December 2025

Company Statement of Changes in Equity

For the year ended 31 December 2025

Company Cash Flow Statement

For the year ended 31 December 2025

Notes to the Financial Statements

1. Material accounting policies

Reporting entity

LMS Capital plc ("the Company") is a public limited company limited by shares incorporated in the United Kingdom and registered in England and Wales with company number 5746555. The address of the registered office is 3 Bromley Place, London W1T 6DB.

The Company was formed on 17 March 2006 and commenced operations on 9 June 2006 when it received the demerged investment division of London Merchant Securities plc.

Basis of preparation

These Financial Statements for the year ended 31 December 2025 have been prepared in accordance with UK adopted International Accounting Standards. The Financial Statements are presented in sterling which is also the Company's functional currency.

LMS Capital plc adopted an amendment to IFRS 10 with effect from 11 January 2016, which exempts investment entities from presenting consolidated financial statements. As a result, the Company is not required to produce consolidated accounts and only presents the results of the Company.

The Financial Statements have been prepared on the historical cost basis except for investments and share options which are measured at fair value, with changes in fair value recognised in the Income Statement.

The Company's business activities and financial position are set out in the Strategic Report on pages 10 to 15 and in the Portfolio Management Review on pages 16 to 21. In addition, note 20 to the financial information includes a summary of the Company's financial risk management processes, details of its financial instruments and its exposure to credit risk and liquidity risk. Taking account of the financial resources available to it, the Directors believe that the Company is well placed to manage its business risks successfully. After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources for the foreseeable future.

Going concern

The Directors acknowledge that, at a General Meeting held on 14 May 2025, shareholders approved a change to the Company's investment policy requiring a Managed Realisation of the assets held within the Group and a return of capital over time to the shareholders.

Following the approval by the shareholders, it is expected that the Managed Realisation of the Company will take place over time which is expected to be a period greater than 12 months from the date of this report.

Based on the above, the Directors intend to cease trade of the Company at the conclusion of the Managed Realisation process. Therefore, the Directors do not consider it to be appropriate to adopt the going concern basis of accounting in preparing the financial statements. On this basis, the Directors have prepared the financial statements on a basis other than going concern.

The Viability Statement of the Company is included in the Strategic Report on page 15.

As required by IAS 1, the Directors have prepared the financial statements on a basis that the Company is no longer a going concern. No material adjustments arose as a result of ceasing to apply the going concern basis.

New and revised accounting standards and amendments effective for the current period

New and revised accounting standards and amendments that are effective for annual periods beginning 1 January 2025 which have been adopted for the first time by the Company:

• Lack of Exchangeability (Amendment to IAS 21 - The Effects of Changes in Foreign Exchange Rates) (effective 1 January 2025)

The adoption of the amendment listed above did not have any material impact on the Company's results.

There are no other standards, amendments to standards or interpretations that are effective for annual periods beginning on 1 January 2025 that have had a material effect on the Company's Financial Statements.

New accounting standards, amendments and interpretations not yet effective, and which have not been early adopted

Other standards and amendments that are effective for subsequent reporting periods beginning on or after 1 January 2026 and have not been early adopted by the Company include:

• Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 - Financial Instruments and IFRS 7) (effective 1 January 2026)

• Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 and IFRS 7) (effective 1 January 2026)

• IFRS 18 - Presentation and Disclosure in Financial Statements (effective 1 January 2027)

• IFRS 19 - Subsidiaries without Public Accountability: Disclosures. (effective 1 January 2027) (Not yet endorsed by the UK Endorsement Board)

These standards and amendments are not expected to have a significant impact on the Financial Statements in the period of initial application and therefore detailed disclosures have not been provided. The Board is still assessing the potential impact of IFRS 18 - Presentation and Disclosure in Financial Statements.

IFRS 2 - Share-based Payment

IFRS 2 - Share-based Payment requires an entity to recognise equity-settled share-based payments measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed over the vesting period, together with a corresponding increase in other capital reserves, based upon the Company's estimate of the shares that will eventually vest, which involves making assumptions about any performance and service conditions over the vesting period. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. The vesting period is determined by the period of time the relevant participant must remain in the Company's employment before the rights to the shares transfer unconditionally to them. The total expense is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied. At the end of each period, the Company revises its estimates on the number of awards it expects to vest based on the service conditions.

Any awards granted are to be settled by the issuance of equity are deemed to be equity settled share-based payments, accounted for in accordance with IFRS 2 - Share-based Payment.

Where the terms of an equity-settled transaction are modified, as a minimum, an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification.

Where an equity-settled transaction is cancelled, it is treated as if it had vested on the date of the cancellation, and any expense not yet recognised for the transaction is recognised immediately. However, if a new transaction is substituted for the cancelled transaction and designated as a replacement transaction on the date that it is granted, the cancelled and new transactions are treated as if they were a modification of the original transaction, as described in the previous paragraph.

Accounting for subsidiaries

The Directors have concluded that the Company has all the elements of control as prescribed by IFRS 10 - Consolidated Financial Statements in relation to all its subsidiaries and that the Company continues to satisfy the three essential criteria to be regarded as an investment entity as defined in IFRS 10, IFRS 12 - Disclosure of lnterests in Other Entities and IAS 27 - Separate Financial Statements. The three essential criteria are such that the entity must:

• Obtain funds from one or more investors for the purpose of providing these investors with professional investment management services;

• Commit to its investors that its business purpose is to invest its funds solely for returns from capital appreciation, investment income or both; and

• Measure and evaluate the performance of substantially all of its investments on a fair value basis.

In satisfying the second essential criteria, the notion of an investment time frame is critical. An investment entity should not hold its investments indefinitely but should have an exit strategy for their realisation. Although the Company has invested in equity interests that have an indefinite life, it invests typically for a period of up to 10 years. In some cases, the period may be longer, depending on the circumstances of the investment, however, investments are not made with intention of indefinite hold. This is a common approach in the private equity industry.

Subsidiaries are therefore measured at fair value through profit or loss, in accordance with IFRS 13 - Fair Value Measurement and IFRS 9 - Financial Instruments.

The Company's subsidiaries, which are wholly owned and over which it exercises control, are listed in note 24.

Use of estimates and judgements

The preparation of the Financial Statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis; revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

The areas involving significant judgements are:

· valuation technique selected in estimating fair value of unquoted investments - note 11;

· valuation technique selected in estimating fair value of investments held in funds - note 11; and

· going concern - note 1.

The areas involving significant estimates are:

· estimated inputs used in calculating fair value of unquoted investments - note 11; and

· estimated inputs used in calculating fair value of investments held in funds - note 11.

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have financial impact on the entity and that are believed to be reasonable under the circumstances.

Segmental reporting

The Board has considered the requirements of IFRS 8 - Operating Segments and is of the view that the Company is engaged in a single segment business, which is one of investing activities, and that therefore the Company has only a single operating segment.

Investments in subsidiaries

The Company's investments in subsidiaries are stated at fair value which is considered to be the carrying value of the net assets of each subsidiary other than their investments. On disposal of such investments, the difference between net disposal proceeds and the corresponding carrying amount is recognised in the Income Statement.

Valuation of investments

The Company and its subsidiaries manage their investments with a view to profit from the receipt of dividends, interest income and increase in fair value of equity investments which can be realised on sale. Therefore, all quoted, unquoted and managed fund investments are designated at fair value through profit or loss which can be realised on sale and carried in the Statement of Financial Position at fair value.

Fair values have been determined in accordance with the International Private Equity and Venture Capital Valuation ("IPEV") Guidelines. These guidelines require the valuer to make judgments as to the most appropriate valuation method to be used and the results of the valuations.

Each investment is reviewed individually with regard to the stage, nature and circumstances of the investment and the most appropriate valuation method selected. The valuation results are then reviewed and any amendment to the carrying value of investments is made as considered appropriate.

Quoted investments

Quoted investments for which an active market exists are valued at the bid price at the reporting date.

Unquoted direct investments

Unquoted direct investments for which there is no active market are valued using the most appropriate valuation technique with regard to the stage and nature of the investment. Valuation methods that may be used include:

· investments in an established business are valued using revenue multiples depending on the stage of development of the business and the extent to which it is generating sustainable revenue or earnings;

· investments in an established business which is generating sustainable revenue or earnings but for which other valuation methods are not appropriate are valued by calculating the discounted cash flow of future revenue or earnings; and

· the Company has adopted the IPEV guidelines issued in December 2022.

Funds

Investments in managed funds are valued at fair value. The general partners of the funds will provide periodic valuations on a fair value basis, the latest available of which the Company will adopt provided it is satisfied that the valuation methods used by the funds are not materially different from the Company's valuation methods. Adjustments will be made to the fund valuation where the Company believes there is evidence available for an alternative valuation.

Foreign currencies

Transactions in foreign currencies are recorded at the rate of exchange at the date of transaction. Monetary assets and monetary liabilities denominated in foreign currencies at the reporting date are reported at the rates of exchange prevailing at that date and exchange differences are included in the Income Statement.

Intercompany receivables

The Company measures intercompany receivables and other receivables at fair value less any expected credit losses. Expected credit losses are measured through a loss allowance at an amount equal to:

· the 12-month expected credit losses (expected credit losses from possible default events within 12 months after the reporting date); or

· full lifetime expected credit losses (expected credit losses from all possible default events over the life of the financial instrument).

A loss allowance for full lifetime expected credit losses is required for intercompany receivables and other receivables if the credit risk has increased significantly since initial recognition.

Impairment losses on financial assets carried at amortised cost are reversed in subsequent periods if the expected credit losses decrease.

Cash and cash equivalents

Cash comprises cash at banks, and short-term deposits. Cash equivalents are short-term, highly-liquid investments that are readily convertible to known amounts of cash, and that are subject to an insignificant risk of changes in value, and include money market funds.

Dividend payable

Dividend distributions to the shareholders are recognised as a liability in the Financial Statements when approved at an annual general meeting by the shareholders. Interim dividends approved during the year are recorded upon payment.

Income

Gains and losses on investments

Realised and unrealised gains and losses on investments are recognised in the Income Statement in the period in which they arise.

Interest income

Interest income is recognised as it accrues using the effective interest method.

Dividend income

Dividend income is recognised on the date the Company's right to receive payment is established.

Expenditure

Income tax expense

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the Income Statement except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the balance sheet liability approach, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised.

2. Net loss on investments

Gains and losses on investments were as follows:

* Includes operating and legal costs and taxation charges of subsidiaries.

During the year the Company and its subsidiaries carried out a further exercise to settle the debtor and creditor balances that had accumulated over a period of years between companies within the Group. This will achieve a simplification of accounting within the Group. Settlement of the balances was achieved through offsetting debtor and creditor amounts where appropriate and through the declaration of dividends by various subsidiary companies to holding companies within the Group. As part of this exercise dividends of £2,408,000 (2024: £8,000,000) were declared by LMS Capital Group Limited to LMS Capital plc and £89,738 (2004: £nil) by LMS Co-Invest Limited to LMS Capital plc. The assets of LMS Capital plc increased by the amount of these dividends but as a result of this a reduction in the fair value of the investments in subsidiaries has been recognised. This exercise had no overall effect on the net assets of the Company.

The Company operated carried interest arrangements in line with normal practice in the private equity industry. The charge for incentive plans for the Company is £nil (2024: charge of £12,000) and other incentives relating to historic arrangements. The charge for subsidiaries is included in the net gains/(losses) on investments in the Income Statement. All carried interest arrangements have now ceased.

3. Interest income

4. Interest payable

5. Operating expenses

Operating expenses comprise administrative expenses and include the following:

Audit fees of £24,000 (2024: £54,000) were directly charged to subsidiaries.

6. Directors' Remuneration

The Directors are considered to be the only key management personnel.

7. Staff Expenses

Pensions costs are amounts payable to employees' defined contribution pension plans and are recognised on an accruals basis as they are incurred.

The average number of staff was as follows:

8. Taxation

At year end, there are cumulative potential deferred tax assets of £2.411 million (2024: £2.713 million) in relation to the Company's cumulative tax losses of £9.643 million (2024: £10.852 million). It is uncertain when the Company will generate sufficient taxable profits in the future to utilise these amounts and therefore no deferred tax asset has been recognised in the current or prior year.

9. Loss per ordinary share

The calculation of the basic and diluted loss per share, in accordance with IAS 33, is based on the following data:

The Company share awards may be dilutive when the Company makes a profit.

10. Dividends

Dividends declared during the years ending 31 December 2025 and 31 December 2024 were as follows:

11. Investments

The Company's investments comprised the following:

The carrying amounts of the subsidiaries' investment portfolios were as follows: