REG - Adams PLC - Half-year Report

AdamsAnnouncement

28/11/2019 07:07

RNS Number : 9106U
Adams PLC
28 November 2019
 


Adams plc
("Adams" or the "Company")
 
Interim Results for the Six Months ended 30 September 2019
 
 
Adams Plc ("Adams" or the "Company") experienced a challenging six months to 30 September 2019 in terms of the performance of its investment portfolio and as a result the Company incurred a loss after tax of £46,000 during that period versus a profit after tax of £517,000 earned in the six months ended 30 September 2018. The reduction in profitability is principally due to lower investment returns of only £23,000 compared to £598,000 in the previous September 2018 half year.
During the six months ended 30 September 2019, the Company spent £559,000 on 3 new equity investments and generated cash proceeds of £579,000 from the realisation of its investment in Midatech Pharma Plc. Adams held 6 investments at 30 September 2019, of which 5 were listed and 1 was un-listed, and for which the total investment carrying value was £2.02 million (31 March 2019: carrying value £2.08 million, represented by 3 listed and 1 un-listed investment holdings).
The Company held cash balances of £309,000 at 30 September 2019, compared to cash balances of £315,000 at the previous 31 March 2019 year end, and it had not drawn down any part of its £3 million unsecured loan facility at that date. Net assets attributable to shareholders of Adams at 30 September 2019 were £2.32 million (equivalent to 2.81 pence per share) versus £2.37 million (equivalent to 2.87 pence per share) at 31 March 2019.
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 listed investments held by the Company at 30 September 2019 comprised Petrofac Limited ("Petrofac"), Eland Oil & Gas Plc ("Eland"), Diurnal Group PLC ("Diurnal"), Griffin Mining Limited ("Griffin") and Circassia Pharmaceuticals plc ("Circassia"). In addition, the Company holds shares and loan notes in unquoted Sherwood Holdings Limited which has Source Bioscience Limited ("Source Bioscience") as its principal subsidiary company asset.
Petrofac is listed on the Main Market of the London Stock Exchange and is a multinational service provider to the oil and gas production and processing industry. The company, which has 31 offices and approximately 13,500 staff worldwide, designs, builds, operates and maintains oil and gas facilities with a focus on delivering first class project execution, cost control and effective risk management. For the six months ended 30 June 2019, Petrofac reported a profit of US$135 million after tax on revenue of US$2.82 billion. Net cash stood at US$69 million at 30 June 2019.


Eland is an AIM listed independent oil and gas company focused on production and development in principally the Niger Delta in West Africa where, through its joint venture company Elcrest Exploration and Production Nigeria Ltd, it has acquired a number of oil field licenses. Eland's increasing production led to record revenues of US$106.0 million in the six months to 30 June 2019 and a resultant US$32.7 million post-tax profit for that period.
Diurnal is an AIM listed specialty pharmaceutical company dedicated to developing high-quality hormone therapeutics to aid lifelong treatment for rare and chronic endocrine conditions, initially by developing and marketing products for the rare orphan diseases congenital adrenal hyperplasia and adrenal insufficiency including its Alkindi® and Chronocort® products. Initial revenues grew to £1 million for the year ended June 2019, which coupled with continued significant investment in research and development and marketing, resulted in a loss after tax of £12.3 million for that year.
Griffin 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. For the six months ended 30 June 2019, Griffin reported a much reduced profit of US$4.1 million after tax on revenue of US$38.6 billion, reflecting falling zinc metal prices and significantly higher smelter treatment charges.
Circassia is an AIM listed specialty pharmaceutical company focused on respiratory disease and which markets innovative asthma management products including the chronic obstructive pulmonary disease products Tudorza® and Duaklir® as well as the ventilator-compatible novel nitric oxide NIOX® product. Revenues amounted to £27.9 million for the six months ended 30 June 2019, which coupled with continued significant investment in development and marketing, resulted in an operating loss of £19.3 million for that period.
Source Bioscience is a private company that 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.
Post period end investment transactions. Subsequent to 30 September 2019, Adams realised its investment in Eland in full, generating investment disposal proceeds amounting to £328,000. Together with other post 30 September 2019 cash flows, Adams currently has cash balances of approximately £640,000, in addition to an unused loan facility of £3.0 million, available for further investment as and when the Directors identify appropriate attractive opportunities to exploit.
Outlook
There is continued reason for investment caution in the near term, given that the global economy is slowing down as reflected by falling GDP output in the US and China, coupled with near recession conditions in Germany, Italy and the UK. The key threats to a sustained global recovery include the continuing trade war between the US and China, ongoing Brexit uncertainties and worldwide debt to GDP ratios which are now at their highest levels since the Second World War.
We will, therefore, continue to maintain a rigorous and highly selective investment approach with a view to exploiting opportunities as they emerge and we are confident that this approach will enable us to build considerable value for shareholders going forward.
 
Michael Bretherton
Chairman
27 November 2019
 
Enquiries:
 




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




 
 
STATEMENT OF COMPREHENSIVE INCOME

 
FOR THE SIX MONTH PERIOD TO 30 SEPTEMBER 2019
 




 


 


 
6 months ended
30 Sep 2019


Year ended 31 Mar 2019


6 months ended
 30 Sep 2018




 


Note


(Unaudited)


(Audited)


(Unaudited)




 


 


£'000


£'000


£'000




(Loss)/gain on investments


5


(31)


317


541




Dividend income


 


54


87


57




Investment return


 


23


404


598




 


 


 


 


 




Expenses and other income


 


 


 


 




Administrative expenses


 


(73)


(172)


(86)




Other income


 


-


14


-




Operating (loss)/profit


 


(50)


246


512




 


 


 


 


 




Interest income


 


4


11


5




 


 


 


 


 




(Loss)/profit before income tax


(46)


257


517




 


 


 


 


 




Income tax expense


 


-


-


-




 


 


 


 


 




(Loss)/profit and total comprehensive


 


 


 


 




(Loss)/income for the period


 


(46)


257


517




 


 


 


 


 




Basic and diluted (loss)/earnings per share


10


(0.06)p


0.31p


0.63p




 
There are no other items of comprehensive (loss)/income. 
 
   
STATEMENT OF FINANCIAL POSITION

 
AS AT 30 SEPTEMBER 2019
 




 


 


 


As at
30 Sep 2019


As at
31 Mar 2019


As at
30 Sep 2018




 


 


 


(Unaudited)


(Audited)


(Unaudited)




 


Note


 


£'000


£'000


£'000




Assets


 


 


 


 


 




Non-current assets


 


 


 


 


 




Investments


6


 


2,024


2,075


2,622




 


 


 


 


 


 




Current assets


 


 


 


 


 




Trade and other receivables


7


 


3


2


6




Cash and cash equivalents


 


 


309


315


30




Current assets


 


 


312


317


36




 


 


 


 


 


 




Total assets


 


 


2,336


2,392


2,658




 


 


 


 


 


 




Liabilities


 


 


 


 


 




Current liabilities


 


 


 


 


 




Trade and other payables


8


 


(16)


(26)


(32)




Total liabilities


 


 


(16)


(26)


(32)




 


 


 


 


 


 




Net current assets


 


 


296


291


4




 


 


 


 


 


 




Net assets


 


 


2,320


2,366


2,626




 


 


 


 


 


 




Equity


 


 


 


 


 




Called up share capital


9


 


826


826


826




Accumulated gains


 


 


1,494


1,540


1,800




Total shareholder equity


 


 


2,320


2,366


2,626




 


 


 


 


 


 




 
 
  
STATEMENT OF CHANGES IN EQUITY

 
FOR THE SIX MONTH PERIOD TO 30 SEPTEMBER 2019
 
 




 


Share
Capital


Share
Premium


Foreign currency
translation reserve


Accumulated gains/(losses)


Total




 


£'000


£'000


£'000


£'000


£'000




 


 


 


 


 


 




At 31 March 2018 (audited)


1,001


1,401


(244)


(49)


2,109




 


 


 


 


 


 




Total comprehensive gain for period


-


-


-


517


517




Redenomination of share capital


(175)


175


-


-


-




Elimination of foreign currency reserve


-


(244)


244


-


-




Reclassification of share premium


-


(1,332)


-


1,332


-




 


 


 


 


 


 




At 30 September 2018 (unaudited)


826


-


-


1,800


2,626




 


 


 


 


 


 




Total comprehensive loss for period


-


-


-


(260)


(260)




 


 


 


 


 


 




At 31 March 2019 (audited)


826


-


-


1,540


2,366




 


 


 


 


 


 




Total comprehensive loss for period


-


-


-


(46)


(46)




 


 


 


 


 


 




At 30 September 2019 (unaudited)


826


-


-


1,494


2,320




 
 
 
 
STATEMENT OF CASH FLOWS

 
FOR THE SIX MONTH PERIOD TO 30 SEPTEMBER 2019




 
 


 
6 months
ended
 30 Sep 2019


Year
ended
31 Mar 2019


6 months ended
30 Sep 2018




 


(Unaudited)


(Audited)


(Unaudited)




 


£'000


£'000


£'000




 


 


 


 




(Loss)/profit for the period


(46)


257


517




Unrealised loss/(gain) on revaluation of investments


277


(174)


(541)




Realised gain on disposal of investments


(246)


(143)


-




(Increase)/decrease in trade and other receivables


(1)


5


(4)




(Decrease)/increase in trade and other payables


(10)


-


11




 


 


 


 




Net cash outflows from operating activities


(26)


(55)


(17)




 


 


 


 




Cash flows from investing activities


 


 


 




Proceeds from sales of investments


579


529


-




Purchase of investments


(559)


(211)


(5)




 


 


 


 




Net cash generated/(used) in investing activities


20


318


(5)




 


 


 


 




Net (decrease)/increase in cash and cash equivalents


(6)


263


(22)




 


 


 


 




Cash and cash equivalents at beginning of period


315


52


52




 


 


 


 




Cash and cash equivalents at end of period


309


315


30




 


 


 


 




 
 
 
NOTES TO THE FINANCIAL STATEMENTS

 
FOR THE SIX MONTH PERIOD TO 30 SEPTEMBER 2019
The accounting policies and explanatory notes set out below from an integral part of the financial statements.
 
1     General information         
Adams Plc ("the Company") is a company incorporated in the Isle of Man and is listed on the AIM market of the London Stock Exchange.
2     Basis of preparation
The interim financial statements of Adams Plc are unaudited condensed financial statements for the six months ended 30 September 2019. These include unaudited comparatives for the six months ended 30 September 2018 together with audited comparatives for the year ended 31 March 2019.
These interim condensed financial statements have been prepared on the basis of the accounting policies expected to apply for the financial year to 31 March 2020 which are based on the recognition and measurement principles of International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). The financial statements have been prepared under the historical cost convention. The Company's presentation and functional currency is GBP Pounds Sterling.
The interim financial statements do not include all of the information required for full annual financial statements and do not comply with all the disclosures in IAS 34 'Interim Financial Reporting', and should be read in conjunction with the Company's annual financial statements to 31 March 2019. Accordingly, whilst the interim statements have been prepared in accordance with IFRS, they cannot be construed as being in full compliance with IFRS.
The preparation of financial statements in conformity with IFRS as adopted by the EU requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. 
3     Going concern     
Information on the business environment, financial position and the factors underpinning the Company's future prospects and portfolio are included in the Chairman's Statement. The Directors confirm that they are satisfied that the Company has adequate financial resources to continue in business for the foreseeable future based on the current liquid resources available. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
4     Significant accounting policies
The accounting policies adopted are consistent with those followed in the preparation of the annual financial statements of Adams Plc for the year ended 31 March 2019 which received an unqualified audit opinion. A copy of these financial statements is available on the Company website at www.adamsplc.co.uk.
5     Segment reporting
Operating segments for Adams Plc are reported based on the financial information provided to the Board, which is used to make strategic decisions. The Directors are of the opinion that under IFRS 8 'Operating segments' the Company has only one reportable segment, being Investment Return. The Board assesses the performance of the operating segment based on financial information which is measured and presented in a manner consistent with that in the financial statements.
 
The principal sources of revenue for the Company in the period to 30 September 2019 were as follows:
 




 


6 months ended 30 Sep 2019


Year ended
31 Mar 2019


6 months ended 30 Sep 2018




 


£'000


£'000


£'000




Unrealised (loss)/gain on investments


(277)


174


541




Realised gains on investments


246


143


-




Total (loss)/gain on investments


(31)


317


541




 
 
6      Investments
An analysis of movements in the value of the Company's investments is as follows:
 




 


Quoted Equity Shares


Unquoted Equity Shares


Unquoted Loan Notes


Total




 


£'000


£'000


£'000


£'000




Fair value at 31 March 2018


1,968


5


103


2,076




Additions at cost


-


-


5


5




Unrealised revaluation gains


541


-


-


541




Fair value at 30 September 2018


2,509


5


108


2,622




Additions at cost


200


-


6


206




Disposals


(386)


-


-


(386)




Unrealised revaluation loss


(367)


-


-


(367)




Fair value at 31 March 2019


1,956


5


114


2,075




Additions at cost


555


-


4


559




Disposals


(333)


-


-


(333)




Unrealised revaluation loss


(277)


-


-


(277)




Fair value at 30 September 2019


1,901


5


118


2,024




           
7     Trade and other receivables




 


As at
30 Sep 2019


As at
31 Mar 2019


As at
 30 Sep 2018




 


£'000


£'000


£'000




Prepayments


3


2


6




 


3


2


6




 
The carrying amount of prepayment is approximate to their fair value.
8     Trade and other payables




 


As at
30 Sep 2019


As at
31 Mar 2019


As at
 30 Sep 2018




 


£'000


£'000


£'000




Trade payables


11


11


13




Accruals and other creditors


5


15


19




 


16


26


32




 
The carrying amount of trade and other payables approximates to their fair value.
 
9     Share capital and share premium




Ordinary shares


Number of shares issued and fully paid up


Share
capital
£'000


Share
premium
£'000




 


 


 


 




At 1 April 2018


82,553,232


1,001


1,401




 


 


 


 




Redenomination of share capital


-


(175)


175




Elimination of foreign currency reserve


-


-


(244)




Reclassification of share premium


-


-


(1,332)




 


 


 


 




At 30 September 2018


82,553,232


826


-




 


 


 


 




Issue of shares


-


-


-




 


 


 


 




At 31 March 2019


82,553,232


826


-




 


 


 


 




Issue of shares


-


-


-




 


 


 


 




At 30 September 2019


82,553,232


826


-




 
On 10 August 2018, a special resolution was passed authorising the par value of the Company's Ordinary Shares to be redenominated from €0.01 to £0.01. On that same date, resolutions were also passed that £244,000 of share premium be cancelled and applied to eliminate the Foreign Currency Translation Reserve and that the remaining balance on the Company's share premium account be reclassified as distributable reserves.
The authorised Ordinary share capital of the Company at 30 September 2019, 31 March 2019 and 30 September 2018 is 350,000,000 Ordinary Shares of £0.01.
 
10    (Loss)/earnings per share
The basic (loss)/earnings per share is calculated by dividing the (loss)/profit after tax attributable to equity shareholders by the weighted average number of Ordinary Shares in issue during the period:




 


 
6 months
ended
 30 Sep 2019


Year
ended
31 Mar 2019


6 months
ended
30 Sep 2018




 


 


 


 




(Loss)/profit after tax attributable to equity holders of the Company (£'000)


(46)


257


517




 


 


 


 




Weighted average number of Ordinary Shares


82,553,232


82,553,232


82,553,232




 


 


 


 




Basic and diluted (loss)/earnings per share


(0.06)p


0.31p


0.63p




 
There were no potentially dilutive shares in issue as at 30 September 2019, 31 March 2019 and 30    September 2018.
 
 
11    Events after reporting date
Following the 30 September 2019 half year end, the Company disposed of its entire remaining holding of 199,911 shares in Eland Oil & Gas Plc for a cash consideration of £328,000.
 




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