Half-year Report
28/11/2017 07:00
RNS Number : 6521X
Adams PLC
28 November 2017
Adams plc
("Adams" or the "Company")
Interim Results for the Six Months ended 30 September 2017
Adams (AIM: ADA) generated a gross investment return of 24,000 in the half year ended 30 September 2017 which resulted in loss after tax of 98,000 after deduction of overheads and other costs. This compares to an investment return of 127,000 in the half year to 30 September 2016 and with a corresponding profit after tax of 24,000.
In June 2017, the Company raised cash of 1,116,000 (after expenses) pursuant to a share subscription open offer.
During the six months ended 30 September 2017, the Company spent 1,036,000 on a new equity investment in Petrofac Limited which is listed on the Main Market of the London Stock Exchange. In addition, the Company generated cash proceeds of 84,000 from the partial realisation of an existing investment.
Adams held 6 investments at 30 September 2017 comprising 5 quoted and 1 unquoted holding for which the total investment carrying value at 30 September 2017 was 2,066,000 (31 March 2017: 1,101,000 represented by 4 quoted and 1 unquoted holding).
The Company had cash balances of 89,000 at 30 September 2017, compared to cash balances of 41,000 at the previous 31 March 2017 year end.
Net assets attributable to holders of Adams at 30 September 2017 were 2,132,000 (equivalent to 0.0258 per share) versus 1,114,000 at 31 March 2017 (equivalent to 0.0270 per share). The 1,018,000 increase in net assets in the 6 months to 30 September 2017 is attributable to proceeds from the issue of shares of 1,116,000, partially offset by the loss after tax of 98,000 in the period.
Underwritten open offer and majority shareholder controlled undertaking
In order to provide the Company with additional resources with which to fund its investment strategy, the Company raised 1,116,000 (after expenses) in June 2017 pursuant to an underwritten open offer of 41,276,616 ordinary shares at 2.5p per share. Under the open offer, existing shareholders had an opportunity to subscribe for new shares at the 2.5p issue price by taking up their respective open offer entitlements which were calculated on a pro rata basis to their holding in the existing shares.
The open offer was fully underwritten by the Company's largest shareholder, Richard Griffiths who had an existing holding of 29.9 per cent in the existing shares. Following the open offer, the number of ordinary Adams shares in issue is 82,553,232 and consequent to the subscription and underwriting shares issued to Richard Griffiths, his holding increased to 63.8 per cent.
As a result, Adams is now a controlled undertaking of Richard Griffiths who will, if he so wishes, be able to further increase his interests in Adams shares without making a mandatory offer to the remaining shareholders. Subsequent to the open offer, Richard Griffiths has purchased further Adams shares in the AIM market such that his current holding in the Company is now 73.0 per cent.
The Company, Cairn Financial Advisers LLP (who are the Company's Nominated Advisor) and Richard Griffiths entered into a relationship agreement dated 2 June 2017, which governs the relationship between the Company and Richard Griffiths following the open offer, to ensure that the Company shall be managed independently for the benefit of shareholders as a whole.
Business model and change of investing policy
On 8 September 2017, shareholders approved a proposal by the Company's directors to revise the investing policy to one which provides the Board with a broader, more flexible approach to creating shareholder value. The existing policy at that time was focused on targeting undervalued or pre-commercialisation projects and assets in the biotechnology sector, whilst also considering opportunities in the wider technology and other sectors.
Under the revised investing policy, the Board will seek to acquire interests in special situation investment opportunities that have an element of distress, dislocation, dysfunction or other special situation attributes and that they perceive to be undervalued. The principal focus will be in the small to middle-market capitalisation sectors in the UK or Europe, but the directors will also consider possible special situation opportunities anywhere in the world if they believe there is an opportunity to generate added value for shareholders.
Events subsequent to 30 September 2017
On 5 October 2017, Adams sold its entire remaining holding of shares in GVC Holdings plc on the Main Market of the London Stock Exchange for a total cash consideration of 584,400.
On 16 November 2017, Adams received cash of 74,620 for its entire holding of shares in Imagination Technologies Group Plc consequent to the acquisition of that company by Canyon Bridge Capital Partners LLC under a recommended cash offer at a price of 182 pence per share.
The Adams directors intend to reinvest the proceeds of the above disposals in accordance with the Company's investing policy and on 24 November the Company used a part of the proceeds to purchase shares in Eland Oil & Gas plc on the AIM Market of the London Stock Exchange for a total cash consideration of 288,163.
Investments
The Company currently holds 4 listed investments comprising Petrofac Limited, Eland Oil & Gas plc, Oxford Pharmascience Group Plc and Communisis Plc. In addition, the Company holds shares and loan notes in unquoted Sherwood Holdings Limited, which owns Source Bioscience Plc as its principal asset.
Petrofac is a multinational service provider to the oil and gas production and processing industry. The company designs, builds, operates and maintains oil and gas facilities with a focus on delivering first class project execution, cost control and effective risk management. Petrofac has a 36-year track record and has grown significantly to become a constituent of the FTSE 250 Index. The company has 31 offices and approximately 13,500 staff worldwide, comprising more than 80 nationalities.
Eland is an independent oil and gas company with the principal business objective of identifying, acquiring and developing interests in oil and gas assets in West Africa, focused initially on Nigeria including the prolific Niger Delta.
Oxford Pharmascience is a drug development group that re-develops approved drugs to make them better, safer and easier to take. The group is currently planning to demerge its existing commercial and development assets, together with cash of around 1.3 million, into a private vehicle, and provide a continued investment in a cash shell seeking to deploy its remaining cash assets of approximately 19.3 million through the reverse acquisition of a new operating business.
Communisis is a leading provider of outsourced digital asset management and personalised customer communication services.
Source Bioscience is an international provider of state of the art laboratory services and products and has an expertise in clinical diagnostics, genomics, proteomics, drug discovery & development research and analytical testing services.
Outlook
Although the global economic cycle remains supportive of risk assets, the potential for volatility in capital markets remains. In particular, the alarming increase in China's debt and its likely slowing of economic growth and concerns about the direction of US foreign policy and trade reforms, are expected to have implications for the whole global economy. In addition, continued economic uncertainty post the Brexit vote, may impact currently reasonable Eurozone growth prospects.
The Board will, therefore, continue to maintain a highly selective investment approach in these uncertain markets.
Michael Bretherton
Chairman
28 November 2017
Enquires
| Adams plc | |
| Mike Bretherton | Tel: +44 1534 719 761 |
| Nomad - Cairn Financial Advisers LLP | |
| Sandy Jamieson, James Caithie | Tel: +44 207 213 0880 |
| Broker - Peterhouse Corporate Finance Limited | |
| Lucy Williams, Duncan Vasey | Tel: +44 207 469 0930 |
| 6 months ended 30 Sep 2017 | Year ended 31 Mar 2017 | 6 months ended 30 Sep 2016 | ||
| Note | (Unaudited) | (Audited) | (Unaudited) | |
| '000 | '000 | '000 | ||
| Gain on investments | 5 | 8 | 180 | 121 |
| Dividend income | 16 | 17 | 6 | |
| Gross investment return | 24 | 197 | 127 | |
| Expenses | ||||
| Net foreign exchange loss | (36) | (15) | (15) | |
| Administrative expenses | (92) | (174) | (88) | |
| Operating (loss)/profit | (104) | 8 | 24 | |
| Interest income | 6 | 6 | - | |
| (Loss)/profit on ordinary activities before taxation | (98) | 14 | 24 | |
| Tax on (loss)/profit on ordinary activities | - | - | - | |
| (Loss)/profitfor the period | (98) | 14 | 24 | |
| Total comprehensive (loss)/income for the period | (98) | 14 | 24 | |
| (Loss)/earnings per ordinary share | ||||
| Basic and diluted | 10 | (0.16)c | 0.03c | 0.06c |
| As at 30 Sep 2017 | As at 31 Mar 2017 | As at 30 Sep 2016 | |||
| (Unaudited) | (Audited) | (Unaudited) | |||
| Note | '000 | '000 | '000 | ||
| Assets | |||||
| Non-current assets | |||||
| Investments | 6 | 2,066 | 1,101 | 1,037 | |
| Current assets | |||||
| Trade and other receivables | 7 | 1 | 2 | 8 | |
| Cash and cash equivalents | 89 | 41 | 96 | ||
| 90 | 43 | 104 | |||
| Total assets | 2,156 | 1,144 | 1,141 | ||
| Liabilities | |||||
| Current liabilities | |||||
| Trade and other payables | 8 | (24) | (30) | (17) | |
| Total liabilities | (24) | (30) | (17) | ||
| Net current assets | 66 | 13 | 87 | ||
| Net assets | 2,132 | 1,114 | 1,124 | ||
| Equity | |||||
| Called up share capital | 9 | 826 | 413 | 413 | |
| Share premium | 9 | 1,819 | 1,116 | 1,116 | |
| Retained earnings deficit | (513) | (415) | (405) | ||
| Total shareholder equity | 2,132 | 1,114 | 1,124 | ||
| Share Capital | Share Premium | Retained Earnings Deficit | Total | ||
| '000 | '000 | '000 | '000 | ||
| At 31 March 2016 | 413 | 1,116 | (429) | 1,100 | |
| Total comprehensive gain for period | - | - | 24 | 24 | |
| At 30 September 2016 | 413 | 1,116 | (405) | 1,124 | |
| Total comprehensive loss for period | - | - | (10) | (10) | |
| At 31 March 2017 | 413 | 1,116 | (415) | 1,114 | |
| Issue of shares | 413 | 703 | - | 1,116 | |
| Total comprehensive loss for period | - | - | (98) | (98) | |
| At 30 September 2017 | 826 | 1,819 | (513) | 2,132 |
| 6 months ended 30 Sep 2017 | Year ended 31 Mar 2017 | 6 months ended 30 Sep 2016 | |
| (Unaudited) | (Audited) | (Unaudited) | |
| '000 | '000 | '000 | |
| (Loss)/profit for the period | (98) | 14 | 24 |
| Unrealised gain on revaluation of investments | (10) | (166) | (107) |
| Realised loss/(gain) on disposal of investments | 2 | (14) | (14) |
| Decrease/(increase) in trade and other receivables | 1 | 1 | (5) |
| Decrease in trade and other payables | (6) | (2) | (15) |
| Net cash outflows from operating activities | (111) | (167) | (117) |
| Cash flows from investing activities | |||
| Proceeds from sales of investments | 84 | 175 | 65 |
| Purchase of investments | (1,041) | (225) | (110) |
| Net cash used in investing activities | (957) | (50) | (45) |
| Cash flows from financing activities | |||
| Issue of ordinary share capital | 413 | - | - |
| Issue of premium share capital, net of costs | 703 | - | - |
| Net cash generated from financing activities | 1,116 | - | - |
| Net increase/(decrease) in cash and cash equivalents | 48 | (217) | (162) |
| Cash and cash equivalents at beginning of period | 41 | 258 | 258 |
| Cash and cash equivalents at end of period | 89 | 41 | 96 |
| 6 months ended 30 Sep 2017 | Year ended 31 Mar 2017 | 6 months ended 30 Sep 2016 | |
| '000 | '000 | '000 | |
| Unrealised gain on investments | 10 | 166 | 107 |
| Realised (loss)/gain on investments | (2) | 14 | 14 |
| Total gain on investments | 8 | 180 | 121 |
| Quoted Equity Shares | Unquoted Equity Shares | Unquoted Loan Notes | Total | ||
| '000 | '000 | '000 | '000 | ||
| Fair value at 31 March 2016 | 871 | - | - | 871 | |
| Additions at cost | 7 | 6 | 97 | 110 | |
| Disposals | (51) | - | - | (51) | |
| Unrealised gain on the revaluation of investments | 107 | - | - | 107 | |
| Fair value at 30 September 2016 | 934 | 6 | 97 | 1,037 | |
| Additions at cost | 102 | - | 13 | 115 | |
| Disposals | (110) | - | - | (110) | |
| Unrealised gain on the revaluation of investments | 59 | - | - | 59 | |
| Fair value at 31 March 2017 | 985 | 6 | 110 | 1,101 | |
| Additions at cost | 1,036 | - | 5 | 1,041 | |
| Disposals | (86) | - | - | (86) | |
| Unrealised gain/(loss) on the revaluation of investments | 14 | - | (4) | 10 | |
| Fair value at 30 September 2017 | 1,949 | 6 | 111 | 2,066 | |
| As at 30 Sep 2017 | As at 31 Mar 2017 | As at 30 Sep 2016 | |||
| '000 | '000 | '000 | |||
| Prepayments and accrued income | 1 | 2 | 8 | ||
| 1 | 2 | 8 | |||
| As at 30 Sep 2017 | As at 31 Mar 2017 | As at 30 Sep 2016 | |
| '000 | '000 | '000 | |
| Trade payables | 10 | 14 | 12 |
| Accruals | 14 | 16 | 5 |
| 24 | 30 | 17 |
| Ordinary shares of 0.01 | Number of shares issued and fully paid up | Share capital '000 | Share premium '000 |
| At 1 April 2016 | 41,276,616 | 413 | 1,116 |
| Issue of shares | - | - | - |
| At 30 September 2016 | 41,276,616 | 413 | 1,116 |
| Issue of shares | - | - | - |
| At 31 March 2017 | 41,276,616 | 413 | 1,116 |
| Issue of shares | 41,276,616 | 413 | 703 |
| At 30 September 2017 | 82,553,232 | 826 | 1,819 |
| 6 months ended 30 Sep 2017 | Year ended 31 Mar 2017 | 6 months ended 30 Sep 2016 | |
| Profit/(loss) after tax attributable to equity holders of the Company ('000) | (98) | 14 | 24 |
| Weighted average number of ordinary shares | 62,478,812 | 41,276,616 | 41,276,616 |
| Basic and diluted earnings/(loss) per share | (0.16)c | 0.03c | 0.06c |