Coronavirus Update

LMS Capital Plc - Update on Investment Management Arrangements



LMS Capital plc

(The "Company")


Update on investment management arrangements

The Board of LMS Capital wishes to provide shareholders with an update on the review of the Company's investment management arrangements which was initiated in July.

The review concluded with a majority of the Board deciding that Gresham House Asset Management ("GHAM") should continue as the appointed investment manager of the Company on terms that include both a reduction in the annual management fee payable to GHAM due to no fees being payable on cash amounts over 5 per cent. of the prevailing net asset value and reconstituting the Company's Investment Committee with the Board having observer status. Certain changes to the existing performance fee arrangements have been agreed in principle with GHAM (subject to shareholder approval as required by the Listing Rules).

In conjunction with the new terms agreed with GHAM, the Board also intends to introduce a 5-year continuation vote alongside a progressive dividend policy, starting in 2020 with an initial yield target of 4 per cent. of NAV.

An alternative proposal which would have terminated the existing agreement with GHAM and replaced it with LMS becoming self-managed was submitted by Mr Robert Rayne.  As part of the review this proposal has been carefully considered by the independent members of the Board (Messrs. Knight, Birkett and Lerner, together the "Independent Directors") alongside other proposals received.  Following that review, the Independent Directors unanimously concluded that the reappointment of GHAM was in the best interests of the Company.  Mr Rayne continues to support a self-managed proposal and has stated to the Board that his view is also supported by a number of shareholders.

The Board has therefore decided to make the reappointment of GHAM subject to shareholder approval.

A circular convening a general meeting of the Company will be sent to all shareholders as soon as possible. The circular will contain full details of the GHAM proposal and Mr Rayne will separately provide details of the self-managed proposal to shareholders at the same time.

The approval of the reappointment of GHAM on the terms set out in the new investment management agreement will be decided by a majority vote of shareholders represented by proxy or by person at the meeting. The Independent Directors will be recommending to shareholders that they vote in favour of the resolution to reappoint GHAM.

In the event that shareholders do not approve the resolution reappointing GHAM, the Independent Directors have stated that they would intend to resign from the Board of the Company with immediate effect. In these circumstances, it is expected that Mr Rayne, together with the replacement directors, would seek to implement the self-managed proposal.