REG - Adams PLC - Final Results
14/07/2023 07:15
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RNS Number : 9954F Adams PLC 14 July 2023
14 July 2023
Adams Plc
("Adams" or the "Company")
ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023
Adams Plc presents its annual report and audited financial results for the
year ended 31 March 2023
Highlights:
- Net assets at 31 March 2023 of £5.11 million (2022: £7.48
million).
- Net assets per share 3.50 pence at 31 March 2023 based on 145.9
million shares in issue (2022: 5.13 pence).
- Loss after tax of £2.37 million (2022: loss £1.73 million).
- Investments at 31 March 2023 valued at £5.10 million (2022:
£6.62 million).
- Spend on new investments of £1.22 million (2022: £3.09
million).
- Proceeds from investment realisations £0.56 million (2022:
£nil).
- Cash at 31 March 2023 of £0.05 million (2022: £0.87million).
- No part of the £3.00 million shareholder loan facility drawn
down to date.
Michael Bretherton, Chairman, said:
"The global economy is still being impacted by the adverse effects of Russia's
invasion of Ukraine and rising inflation, coupled with governments heavily
indebted by the financial support measures provided during the period of Covid
restrictions. As a result, financial conditions and monetary policy are likely
to continue to tighten and with growth expected to remain weak by historical
standards.
"Your Board will, therefore, continue to maintain a rigorous and highly
selective investment approach, coupled with strict cost control with a view to
delivering additional value for shareholders going forward. We remain
confident in the underlying fundamentals, technologies and long-term potential
for growth at the companies within our investment portfolio."
The Company's 2023 Annual Report will shortly be posted to shareholders
together with a Notice of Annual General Meeting, copies of which will be made
available on the Company's website at www.adamsplc.co.uk
(http://www.adamsplc.co.uk) under the Investor Relations / Company &
Shareholder Documents section. The Annual General Meeting is to be held at
11.30 a.m. on Friday 18 August 2023 at the Company's registered office at 55
Athol Street, Douglas, Isle of Man, IM1 1LA.
This announcement contains inside information as defined in Article 7 of the
Market Abuse Regulation No. 596/2014 ("MAR") as retained as part of UK law by
virtue of the European Union (Withdrawal) Act 2018 as amended.
Enquiries:
Adams Plc Michael Bretherton
Tel: +44 1534 719 761
Nomad Cairn Financial Advisers LLP. Sandy Jamieson, James
Caithie Tel: +44 207 213 0880
Broker Peterhouse Capital Limited. Heena Karani, Martin
Lampshire Tel: +44 (tel:0207%20469%200930) 207 469 0930
Chairman's Statement
Results
Adams incurred a net loss of £2.37 million for the year to 31 March 2023
(FY2023) compared to a loss of £1.73 million in the previous year ended 31
March 2022 (FY2022).
This FY2023 loss comprises a net investment loss of £2.19 million, together
with overhead costs of £0.18 million. The previous FY2022 loss comprised a
net investment loss of £1.57 million, together with administrative costs of
£0.16 million.
During FY2023, the Company spent £1.22 million on three equity investments,
two of which were new investments comprising Tremor International Ltd and
WANdisco Plc and the other being a follow-on investment in Seeing Machines
Limited. Disposal proceeds during the period amounted to £0.56 million on a
partial realisation of the Niox Group Plc investment holding. In addition, the
Company's small £0.10 million investment in 4D Pharma Plc had to be written
off when it went into administration on 24 June 2022.
The carrying value of the Company's equity investments at 31 March 2023 was
£5.10 million represented by nine quoted investment holdings and three
private investments (31 March 2022: £6.62 million represented by nine quoted
investment holdings and two private investments). In addition, Adams holds a
derivative investment asset in the form of warrants in C4X Holdings Plc which
have an exercise price that is significantly above the market price of the
underlying shares and the warrants are therefore considered to have a nil fair
value.
The investment in WANdisco was made in December 2022 following that company's
reporting of very significant new orders received during the previous 2
months. Subsequently on 9 March 2023, WANdisco announced it had requested a
suspension of its shares from trading on AIM while a legal investigation is
carried out on irregularities discovered on purchase orders and related
revenue bookings, which gave rise to a material misstatement of its financial
position. The WANdisco shares remained suspended at 31 March 2023 and are not
due to recommence trading on AIM until around 25 July 2023 when a recently
announced share offer equity fundraise to raise gross proceeds of US$ 30
million at a price of 50 pence per share is due to complete. The offer shares
will represent approximately 70.7% of WANdisco's existing issued share
capital. This investment holding is, therefore, being carried by Adams at a 50
pence per share value at the 31 March 2023 year end, being the best indication
of fair value at that date.
The Company held cash balances of £0.05 million as at 31 March 2023, compared
to cash balances of £0.87 million at the previous 31 March 2022 year end.
Net assets reduced to £5.11 million (equivalent to 3.50p per share) at the 31
March 2023 balance sheet date, compared with £7.48 million (equivalent to
5.13p per share) at 31 March 2022. The £2.37 million decrease in net assets
reflects the loss reported for the year.
Business model and investing policy
Adams is an investing company with an investing policy under which the Board
is seeking to acquire interests in special situation investment opportunities
that have an element of distress, dislocation, dysfunction or other special
situation attributes and that the Board perceives to be undervalued. The
principal focus is 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.
Investment Portfolio
The principal listed investments held by the Company at 31 March 2023
comprised Niox Group Plc ("Niox" formerly known as Circassia Group Plc), C4X
Discovery Holdings Plc ("C4XD"), Seeing Machines Limited ("Seeing Machines")
and Access Intelligence Plc ("Access Intelligence") and Adams also holds
Oxehealth Limited ("Oxehealth") and Telit Cinteron Ltd ("Telit") as principal
unquoted investments.
Niox is an AIM listed global medical device company focused on point of care
asthma diagnosis and management. Following a major restructuring and the
transfer of the Tudorza and Duaklir products back to AstraZeneca in March
2021, Niox has now been transformed into a debt-free business with a strong
NIOX® asthma management products based continuing operations business. The
group is progressing its transition to a distributor-led business model with
new arrangements in the USA and China expected to drive scalable growth as it
continues to implement access to a large and underserved population of
patients suffering from asthma. For the year ended 31 December 2022, sales
increased 15% to £31.3 million and generated an EBITDA profit of £7.3
million. The profit after tax for the period amounted to £16.1 million
inclusive of an £8.1 million settlement consideration recognised on milestone
payments due from Beyond Air Inc., following FDA approval for its LungFit PH
device, together with a profit of £2.1 million on discontinued operations.
The company had net cash balances of £19.4 million at 31 December 2022. The
shareholding of Adams at 31 March 2023 was, and continues to be, 0.37 per cent
of the Niox shares in issue.
C4XD is a pioneering drug discovery company combining its enhanced DNA-based
target identification and candidate molecule design capabilities to
efficiently deliver world‑leading medicines which are developed by licensing
partners. C4XD has a number of existing partnership deals including a
milestone and royalties agreement with Indivior UK Limited for its oral
Orexin-1 receptor antagonist for the treatment of opioid addiction disorders
worth up to $284 million and a second milestones and royalties out-licensing
agreement with Sanofi for its IL-17A inhibitor programme worth up to €414
million plus potential for single‐digit royalties. In November 2022, C4XD
signed an exclusive licensing agreement with AstraZeneca for its NRF2
activator programme addressing the treatment of inflammatory and respiratory
diseases. The agreement is worth up to $402 million including pre-clinical
milestone payments of up to $16 million ahead of the first clinical trial,
with $2 million upfront. In addition, the company has continued to drive
other key programmes towards partnering with a near term focus on inflammatory
and oncology diseases. C4XD reported a loss after tax of £3.9 million in the
six months ending 31 January 2023 inclusive of R&D investment of £5.2
million and with revenues of £1.7 million. Cash balances at 31 January 2023
amounted to £9.6 million. The shareholding of Adams in C4XD at 31 March 2023
was, and continues to be, 1.98 per cent of the C4XD shares in issue.
Seeing Machines is an AIM listed industry leader in advanced computer vision
technologies. The company designs Artificial Intelligence / AI powered
operator monitoring systems using camera-based optics and embedded processing
to improve transport safety in automotive, commercial fleet, aviation, rail
and off-road markets. The technology incorporates warnings when human state
attention impairment is identified, in order to re-engage the operator or
driver. Seeing Machines continues to invest in R&D and grow as an
automotive leader in such technology having now won contracts with a total of
ten automotive Tier 1 global customers covering 15 automotive driver
monitoring safety ("DMS") programmes. In October 2022, the company entered
into an exclusive collaboration with Magna International, to pursue driver and
occupant monitoring system business targeting the vehicle's interior rear-view
mirror and under which Magna also provided additional investment through a
Convertible Note of up to US$47.5m which matures in October 2026 and has a
conversion rate per ordinary share of 11 pence. At 31 December 2022, there
were 710,049 vehicles on the road featuring Seeing Machines' DMS technology,
an increase of 188% over the 12 month period. In the half year to 31 December
2022, Seeing Machines reported underlying revenue growth of 54% per cent, to
give revenues of $24.4 million and a loss for the period of $5.4 million.
Seeing Machines' cash balances at 31 December 2022 amounted to $52.2 million
inclusive of $28.8 million received on partial draw down of the Magna
Convertible Loan Note. The shareholding of Adams in Seeing Machines as at 31
March 2023 was, and continues to be, 0.19 per cent of the Seeing Machines
shares in issue.
Access Intelligence is an AIM listed London based technology innovator
delivering Artificial Intelligence / AI Software-as-a-Service solutions for
the global marketing and communications industries. The company combines AI
technologies with human expertise to analyse data and provide strategic
insights as a single, real-time view of what is important. It is supported by
partnerships with the world's largest data providers and social media
platforms including Twitter, Reddit and Twitch. For the year ended 30 November
2022, Access Intelligence reported revenues of £65.7 million and delivered a
positive EBITDA of £2.3 million before exceptional costs associated with the
integration of Isentia Group which had been acquired in September 2021. The
loss for the year amounted to £4.2 million after exceptional costs and
inclusive of additional investment in sales and marketing to drive global
expansion. Cash balances at 30 November 2022 amounted to £4.9 million. During
the period, the group delivered continued growth in the EMEA and North America
region and won a substantial number of blue-chip clients across every region,
including significant win backs in the APAC region. The shareholding of Adams
in Access Intelligence as at 31 March 2023 was, and continues to be, 0.52 per
cent of the Access Intelligence voting shares in issue.
Oxehealth is a private company and an industry leader in vision-based patient
monitoring and management systems. The company uses proprietary signal
processing and computer vision to process normal digital video camera data to
measure the vital signs and activity of patients in a number of different
markets, primarily in Mental Health, Acute Hospital settings, Primary Care
settings, Care Home, and Custodial facilities in both the UK and also in
Sweden and more recently the USA. This is achieved through the deployment of
its Oxevision platform which enables clinicians to take non-contact
cardiorespiratory measurements of a patient's pulse and breathing rate, and
which generate alerts to potentially risky activity and reports on a patient's
vital signs and behaviour. This can all be done without the clinician entering
the patient's room, including by use of mobile handsets on the ward. Adams has
participated in the Oxehealth new share issue funding rounds undertaken in the
previous few years but did not participate in the last one undertaken in the
March quarter of 2023 and as a result has seen some dilution of its
shareholding in this investment. At 31 March 2023, the investment holding by
Adams in Oxehealth represents 2.22 per cent of Oxehealth's issued share
capital at that date.
Telit is a private company and a global leader in Internet of Things (IoT)
enablement. Telit has over twenty years of experience designing, building, and
executing complex digital business. The company has an extensive portfolio of
wireless connectivity modules, software platforms and global IoT connectivity
services, empowering hundreds of millions of connected 'things' to date, and
trusted by thousands of direct and indirect customers, globally. On 1 January
2023, the company completed a transaction with the global defence, aerospace
and security group, Thales, under which it acquired the cellular IoT products
business of Thales and thereby expanded Telit's presence in the growing
industrial IoT segments and end markets, including payment systems, energy,
e-health, and security. It will also enhance the company's capabilities in the
rapidly growing cybersecure IoT solutions market. At 31 March 2023, the
investment holding by Adams in Telit represents 0.35 per cent of Telit's
issued share capital at that date.
In addition to the above investments, at 31 March 2023 Adams held five other
quoted holdings, together with one other private company holding. The five
quoted holdings comprise Griffin Mining Limited, which is an AIM listed mining
and investment company that has been the leader in foreign investment in
mining in China having been engaged in developing the Caijiaying zinc and gold
project since 1997; Tremor International Ltd, which is an AIM listed
advertising-technology company focused on digital advertising including video,
mobile, native, display technology, and connected TV; WANdisco Plc, which is
a data activation company that enables organisations to move large datasets to
the cloud at massive scale in order to activate all their data for AI, machine
learning and analytics on modern cloud data platforms; Euromax Resources Ltd,
which is a Canadian development company listed on the Toronto Stock Exchange
and focused on building and operating the Ilovica-Shtuka copper and gold
project in Macedonia; and Afentra Plc, which is an AIM listed upstream oil and
gas company focused on acquiring mature production and development assets in
Africa. The private company holding comprises Source Bioscience International
Ltd, which is an international provider of state-of-the art laboratory
services, clinical diagnostics and analytical testing services.
Outlook
The global economy is still being impacted by the adverse effects of Russia's
invasion of Ukraine and rising inflation, coupled with governments heavily
indebted by the financial support measures provided during the period of Covid
restrictions. As a result, financial conditions and monetary policy are likely
to continue to tighten and with growth expected to remain weak by historical
standards.
Your Board will, therefore, continue to maintain a rigorous and highly
selective investment approach, coupled with strict cost control with a view to
delivering additional value for shareholders going forward. We remain
confident in the underlying fundamentals, technologies and long-term potential
for growth at the companies within our investment portfolio.
Michael Bretherton
Chairman
14 July 2023
Investing Policy
The current Investing Policy is:
The Board will seek to acquire a direct and/or indirect 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.
The Directors intend to identify investment opportunities offering the
potential to deliver a favourable return to Shareholders over the medium to
long term, primarily in the form of a capital gain. A particular consideration
will be to identify businesses which, in the opinion of the Directors, are
under-valued due to any of a number of special situations that adversely
impact the business's short-term prospects and/or underlying value but which
business interests the Directors believe have a solid fundamental core or
sound development potential to present opportunities for value creation.
The Company's interest in a potential investment may range from a minority
position to 100 per cent. ownership and the interest may be either quoted or
unquoted. Investments may be made in shares, or by the acquisition of assets
(including intellectual property) of a relevant business, or by entering into
partnerships, joint ventures, equity derivatives, contracts for differences or
other equity or debt related securities that the Board deem appropriate.
There will be no limit on the number of projects into which the Company may
invest, and the Company's financial resources may be invested in a number of
propositions or in just one investment, which may be deemed to be a reverse
takeover pursuant to Rule 14 of the AIM Rules.
While the Directors intend to take into account the level of existing funds
available for investment when assessing the amount of any investment, it is
not proposed that there be any maximum investment limit.
The Company may be both an active and a passive investor depending on the
nature of the individual investments. Although the Company intends to be a
medium to long term investor, there will be no minimum or maximum limit on the
length of time that any investment may be held and short-term investments may
be made.
The Company will not have a separate investment manager.
The Company may require additional funding as investments are made and new
opportunities arise. The Directors may offer new Ordinary Shares by way of
consideration, as well as cash, thereby helping to preserve the Company's cash
resources. The Company may, in appropriate circumstances, issue debt
securities or otherwise borrow money to complete an investment.
Given the nature of the Company's Investing Policy, the Company does not
intend to make regular periodic disclosures or calculations of net asset value
other than at the time of publication of its half year and annual results.
The Board's principal focus will be on achieving capital growth for
Shareholders.
Statement of Comprehensive Income for the year ended 31 March 2023
Year ended
31 March 2023 Year ended
31 March 2022
£'000 £'000
Investment loss return (2,188) (1,571)
Expenses and other income
Administrative expenses (182) (160)
Operating loss (2,370) (1,731)
Interest income - -
Loss on ordinary activities before taxation (2,370) (1,731)
Tax on loss on ordinary activities - -
Loss for the year (2,370) (1,731)
Basic and diluted loss per share (1.62)p (1.21)p
Statement of Financial Position at 31 March 2023
31 March 2023
31 March
2022
£'000 £'000
Assets
Non-current assets
Investments 5,095 6,622
Current assets
Trade and other receivables 11 12
Cash and cash equivalents 47 871
Current assets 58 883
Total assets 5,153 7,505
Liabilities
Current liabilities
Trade and other payables (43) (25)
Total liabilities (43) (25)
Net current assets 15 858
Net assets 5,110 7,480
Equity
Share capital 1,459 1,459
Share premium 3,425 3,425
Retained earnings reserve 226 2,596
Total shareholder equity 5,110 7,480
Statement of Changes in Equity as at 31 March 2023
Share Capital Share premium Retained earnings reserve Total
£'000 £'000 £'000 £'000
At 31 March 2021 826 - 4,327 5,153
Changes in equity
Issue of shares 633 3,482 - 4,115
Share issue costs - (57) - (57)
Changes in equity
Total comprehensive loss - - (1,731) (1,731)
At 31 March 2022 1,459 3,425 2,596 7,480
Changes in equity
Total comprehensive loss - - (2,370) (2,370)
At 31 March 2023 1,459 3,425 226 5,110
Statement of Cash Flows for the year ended 31 March 2023
Year ended Year ended
31 March 2023 31 March 2022
*Restated
£'000 £'000
Loss for the year (2,370) (1,731)
Unrealised loss on revaluation of portfolio investments 2,203 1,571
Realised gain on disposal of portfolio investments (15) -
Decrease in trade and other receivables 1 10
Increase in trade and other payables 18 2
Net cash outflow from operating activities (163) (148)
Cash flows from investing activities
Purchase of portfolio investments (1,216) (3,088)
Proceeds from sales of investments 555 -
Net cash used in investing activities (661) (3,088)
Cash flows from financing activities
Issue of new ordinary shares - 4,058
Net cash generated from financing activities - 4,058
Net (decrease) / increase in cash and cash equivalents (824) 822
Cash and cash equivalents at beginning of year 871 49
Cash and cash equivalents at end of year 47 871
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect",
''will'' or the negative of those, variations or comparable expressions,
including references to assumptions. These forward-looking statements are not
based on historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the amount,
nature and sources of funding thereof), competitive advantages, business
prospects and opportunities. Such forward looking statements reflect the
Directors' current beliefs and assumptions and are based on information
currently available to the Directors.
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