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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Addworth | LSE:ADW | London | Ordinary Share | GB00B05KLT09 | ORD 0.5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0.375 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:5689C Addworth PLC 08 May 2006 Addworth PLC 8 May 2006 Addworth plc ('Addworth' or the 'Company') PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005 (Unaudited) AT A GLANCE * Admitted to trading on AIM and commenced business on 3rd February 2005 * At the end of the first period, Addworth's investments were stated at #933,039 and had seen their value increase to #1,697,070 * Unrealised portfolio gain of #764,031 * Portfolio value up 81.88% * Addworth created and floated three new issues in the first and subsequent period Executive Chairman, Mark Watson-Mitchell commented: "I am delighted to report an excellent set of results in our first year of operation. The Addworth strategy is working well with the Company holding a portfolio of strategic investments in growth companies. We have a solid pipeline of opportunities under review for possible investment, and are well positioned to build upon this success in the coming year. The current year has started strongly and based on these factors, the outlook for the remainder of the year is very encouraging." COMPANY STRATEGY The Addworth strategy is to establish newly quoted companies which focus on making acquisitions in specific business sectors. Addworth aims to play a key role in the formation and funding of these new companies by providing early stage investment capital at the 'founder', 'pre-IPO' and subsequent phases of a newly quoted company's development. To enhance the abilities of companies to increase capital value and corporate profitability, Addworth provides management and financial assistance. As the companies develop, Addworth will derive management fees and, in due course, part or all of the invested equity may become subject to disposal with the aim of establishing added capital value for Addworth and therefore its shareholders. Three key elements to the Addworth strategy * invest in and promote companies on to the AIM and Ofex markets * invest in undervalued smaller quoted companies * acquire 'non-core' trading operations from quoted companies Since Addworth's admission to AIM on 3rd February 2005, the Directors have conducted detailed analysis of a number of potential transactions and acquisition targets. It is the Directors' opinion that opportunities also exist to acquire non-core subsidiary interests from various quoted companies, or from companies in the private sector where, in each case, the target company may benefit from Addworth introducing experienced and proven management and investment capital. The Directors will be involved in the development of these businesses by organic or acquired growth with a view to achieving an exit by trade sale or flotation. The Company also seeks to take advantage of opportunities to acquire, or invest mainly in, established companies whose shares are traded on a recognised exchange in the United Kingdom or the Republic of Ireland, where the current market capitalisation does not reflect the underlying value and where the Company believes it can be pro-active in facilitating change and unlocking a higher value. CHAIRMAN'S STATEMENT AND INVESTMENT REVIEW We have learned so much and in such a short time frame. It has been an exciting year and, furthermore, as our team has built up its own experience, we now realise that we do have a massive potential in our particular niche. We have also been aided by an excellent band of professional advisers. The Company is continually searching out and identifying smaller company situations for funding and helping to bring them rapidly to a market quotation. We have also been seeking undervalued stocks in which we can take both a meaningful stake and help to improve those company profiles, thereby adding to investor awareness. We have entered into negotiations with some non-quoted companies,but to no avail. The quest to acquire interesting 'non-core operations' of other quoted companies continues - with prospects under consideration. At the end of our first period our investments were stated in the balance sheet at #933,039 but had a portfolio value of #1,697,070. That represented an unrealised gain of #764,031, a near 82% increase - not yet recognised in the accounts under our accounting policies. We attempted to stay fully invested throughout the trading period, however we still ended the year with cash and debtors of #130,640. During the period to 31 December 2005, we made adjustments to our short-term portfolio resulting in sales of #257,731 but these disposals created a gross loss of #45,065. Additional sales of #17,837 were also generated from consulting fees. Overheads of #288,938 and interest income of #14,731 resulted in a pretax loss of #319,272 for the period. In February 2006 our cash balance was boosted by the subscription of #180,000 by Starvest Plc, the AIM quoted investment company, which now holds 12.31% of the Addworth equity. Our flotations Early last summer we took e-retail, an internet development consultancy, to AIM. In the process we created a company with strong cash reserves that was ready to do a deal in its sector. The eventual target acquisition was spotted early in its own creation and, following it breaking even last December, the EBTM company was 'reversed' into e-retail in February this year. Our investment of #95,000 by the end of the year was valued at #326,500, and at the beginning of this month that stake is worth #450,000. The EBTM operation is impressive and trading in the period to end April 2006, its year end, was above expectations. Also in the summer of 2005 we created, funded and floated on Ofex, a quite unique investment company called Yellowcake. The intention was to research and then invest in quoted uranium stocks across the globe. By late September the Yellowcake portfolio started to take shape and by the year end was gently ahead of cost, despite some big disappointments in Australian stocks. In the last few months Yellowcake has benefited from a surge in the price of uranium which is beginning to be reflected in the stock prices of its portfolio constituents, especially in Canada and Australia. Elsewhere a large investment made in the third stage funding of a private uranium business, with interests in Africa, showed an increase in value. That company floated on the AIM market a couple of weeks ago - pushing its value up over 60% from cost. At the beginning of this month, Yellowcake was up an average of 60% in portfolio value. We are delighted with this investment to date. It cost #90,000 and is currently worth around #300,000. That value could increase significantly if Yellowcake achieves the second part of its strategy, which is to invest directly in uranium prospects. Towards the end of 2005 we invested an initial #75,000 in The Core Business (TCB), a company that creates, develops, launches and distributes personal care products and colour cosmetics. With the company's AIM flotation in early March this year, our investment had increased to #182,580 and the value has since advanced to #440,000. This company has the potential to negotiate a string of joint venture and licence agreements with a number of well-known brands. It is still very early days in TCB's existence but its corporate development since it has floated is impressive and the prospects are considerable. New flotations Elsewhere on our float list we are currently working on the AIM listing of a very profitable specialist niche business, operating in the construction engineering sector. The company concerned has a high quality client base together with impressive order intakes and is well positioned to continue its record of profitable growth. We look forward to making an investment in that company's equity within the next month or so and hope to bring it to the market this summer. Another potential AIM float is in discussion. This particular company is a niche player in the supply of highly qualified health and safety executives to the global oil and gas sector. It has a long record of growth and is profitable but, with a round of funding, its potential could be opened up considerably. On the Ofex front we see real room for a major uplift in investor interest. Unfortunately the market itself is doing next to no direct promotion of its facilities to either companies or investors. However that could change. Taking such a view, we have decided to establish a new company called Early Equity and it will focus purely upon the Ofex market. It is our intention to trade down the majority of our Ofex investments into the portfolio of this new company, in which we will hold between 35% -40% of the equity, leaving in our Addworth portfolio only those investments that we understand will shortly seek an AIM quotation. Early Equity will mirror on Ofex the operations of Addworth on the AIM market. We will expect to see that company funding a number of companies at a very early stage, as well as creating new specialist acquisition vehicles. It will be the intention that each of those investee companies will be floated upon Ofex, with Early Equity helping to introduce investors and guide their corporate strategy. Currently under consideration are projects to fund companies in the following sectors: internet fraud prevention; surveillance equipment; television and film production; estate agency; house-building; coal resources; gaming; oil and gas operations; and even game fishing. None of the likely issues will be large, but they will enable investors to participate, at an early stage, in the equity of some very interesting companies, any of which could prove to be future winners in their field. Our 'Undervalued' Portfolio Another part of the Addworth core strategy is to seek out and invest in undervalued smaller quoted companies, whether they are fully listed or quoted on AIM. Early into Addworth's existence we invested #99,208 in the shares of Myhome International, the Ofex quoted cleaning franchise business. This company proved to be in the initial stages of its expansion, with the number of its franchisees increasing swiftly. By the end of 2005 our investment had improved in value to just over #307,000. In the last couple of months we have 'top sliced' our holding - returning the bulk of our original cash investment and leaving us in with around 1.2m shares, currently trading around the 35p level. The hotel company, AJ Leisure, was another Ofex investment that we made early in 2005. The #102,000 cost remained at break even for the better part of 2005, before rising to #127,000 in value by the end of 2005. The countryside inns operator has recently joined AIM and has now re-branded itself as the Maypole Group. We have subsequently added to our holding in this company in anticipation of an acquisition programme that should really boost its estate and its profits. By the end of 2005 we had built up a 7.4m share stake in Cheerful Scout, the AIM quoted media company that is now providing specific equipment and services for events for major professional firms. This company's balance sheet was reorganised earlier this year and it now looks as though Cheerful Scout is trading back into profits. This year we have added to our stake, which is now 10m shares. The cost of #83,149 compares with a current value of over #105,000, a level at which we consider the shares to be undervalued. In December 2005 we made a #50,000 investment in a new AIM quoted company called Venue Solutions. At the same time we also secured three sets of call options over further equity in this specialist provider of venue management technologies, all three at advantageous price levels. We have since sold, at a profit, our original investment and we are looking to action dealings in the option stock. In the main we have seen useful advances in the majority of our portfolio constituents. However, we do have two disappointments - the first is Intandem Films, in which we have invested #111,000 and which by the year end had fallen to #82,000 in value and is now worth only #64,000. This is very unsatisfactory, however, for the time being we have elected to maintain our stance in the stock, hopeful that its management will be able to heighten the company's profile sufficiently and thereby increase its value. The second investment is the #60,000 stake we have in Branded Entertainment, formerly Three Strikes, a developer of sport and lifestyle DVD projects. Its major involvement is with the creation of an animated feature film centred around the Manchester United Football Club. It has taken a very long time in obtaining funding. Hopefully that situation will be remedied in the near future, but in the meantime we are locked into a private investment that could eventually reward us for our patience. The Portfolio Balance The balance of our portfolio is made up of much smaller, less meaningful stakes. Such constituents included at the year end were Cap Energy, an Ofex oil and gas play, which we have since sold at a profit; Wogen, an AIM quoted metals and minerals trader, which we also sold at a profit, well before the recent profit warning; and Elephant Loans, an AIM finance company, which again we have sold at a profit since the year end. Other year end portfolio constituents, that are still in our list, include Franchise Investment Strategies, an Ofex franchise investor, showing around a 30% advance on cost; Creative Entertainment, an Ofex quoted concert business, was up 19% at the year end; NBCC, an Ofex shell which is looking to do a deal, which we will hold for the time being; Twenty, has been a really poor performer; initially it was quoted on Ofex but is now on AIM. Our entry price was high but we will hold for some recovery; Sexual Health Group which is a healthy yielder on Ofex; and finally Petsome and Ricmore, which are two other dismal performers in our portfolio - two AIM listed investment vehicles where the failure of the incumbent management to find and complete acceptable investments has culminated in the value of the investment in both stocks falling well below book cost. Finally, on a positive portfolio note, we have enjoyed some really good profits already this year after taking a 1m share stake in Concorde Oil & Gas, for just #24,000. Having already sold off a sufficient proportion of our stake to get our money back and then double that, we are still holding a sizeable number of shares, albeit undeclarable. This Ofex-quoted company is expected to shortly seek an AIM listing which could help to further increase its value from around the 11p level. Going Forward We ended the period with a portfolio value of #1,697,070. That was an unrealised gain of #764,031, which was a near 82% increase. We have a number of potential investments to make in companies that we will soon be looking to take on to either the AIM or Ofex markets. Taking an early stage investment view and rapidly gaining a quotation for those investee companies really does help to increase our shareholder value. The management of the Company is encouraged that if we keep on doing more of the same over the coming year we should see an increase in our overall balance sheet value. Furthermore we are enjoying the benefits of identifying undervalued market plays in what many would consider to be the unfashionable end of the market, that of the even smaller quoted companies. Hopefully this will continue in 2006, a year which holds a great deal of promise for Addworth as a whole. Mark Watson-Mitchell Executive Chairman UNAUDITED PROFIT AND LOSS ACCOUNT for the period from 29 October 2004 to 31 DECEMBER 2005 Notes Period ended 31 December 2005 # Turnover 1 275,568 Cost of sales (320,633) --------- Gross loss (45,065) Administrative expenses (288,938) --------- Operating loss (334,003) Interest receivable 14,731 --------- Loss on ordinary activities before taxation (319,272) Tax on loss on ordinary activities - --------- Retained loss for the financial period (319,272) ========= Loss per share Basic and diluted loss per share 2 (0.7 p) All of the Company's operations are classed as continuing. There were no gains or losses in the period other than those included in the above profit and loss account. UNAUDITED BALANCE SHEET as at 31 DECEMBER 2005 2005 # Current assets Debtors 70,501 Current asset investments 933,039 Cash at bank 60,139 --------- 1,063,679 Creditors: amounts falling due within one year (112,067) --------- Net assets 951,612 ========= Capital and reserves Called up share capital 285,000 Share premium account 985,884 Profit and loss account (319,272) --------- Shareholders' funds 951,612 ========= UNAUDITED CASHFLOW STATEMENT for the period ended 31 DECEMBER 2005 Notes Period ended 31 December 2005 # Net cash outflow from operating activities 3 (1,229,097) Returns on investments Interest received 14,731 --------- Cash outflow before financing (1,214,366) Financing Issue of ordinary share capital 1,270,884 --------- Increase in cash in the period 56,518 ========= NOTES 1 Accounting policies The accounts have been prepared in accordance with applicable accounting standards. Basis of accounting The accounts have been prepared under the historical cost convention. Current asset investments Current asset investments are stated at the lower of cost and net realisable value. Net realisable value is determined from published price quotations for listed investments. For non listed investments net realisable value is determined via a review of the related Company's financial position and future prospects. Deferred taxation Deferred tax is provided for on a full provision basis on all timing differences, which have arisen but not reversed at the balance sheet date. Deferred tax assets are recognised to the extent that they are recoverable, that is, on the basis of all available evidence, it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Any assets and liabilities recognised have not been discounted. Turnover Turnover represents amounts receivable on disposal of current asset investments and management fees earned during the period in respect of providing management services to certain companies in which the Company has made a short term investment. Turnover excludes VAT. 2 Loss per share The basic loss per share is based upon a loss of #319,272 and the weighted average number of shares of 46,344,989 in issue during the period. 3 Reconciliation of operating loss to net cash outflow from # operating activities Operating loss (334,003) Increase in current asset investments (933,039) Increase in debtors (70,501) Increase in creditors 108,446 --------- Net cash outflow from operating activities (1,229,097) ========= 4 Reconciliation of net cash flow to movement in net funds # Increase in cash in the year 56,518 Net funds at 29 October 2004 - --------- Net funds at 31 December 2005 56,518 ========= 5 Analysis of net funds At 29 October Cash Flow At 31 December 2004 2005 # # # Cash at bank - 60,139 60,139 Bank overdraft - (3,621) (3,621) --------- -------- --------- - (56,518) (56,518) ========= ======== ========= 6 Investments At 31 December 2005 the aggregate market value of the investments was #1,697,070, resulting in an unrecognised gain of #764,031 as at 31 December 2005. If this gain were to be realised this would result in a potential tax liability of #229,209, based on a corporation tax rate of 30%. Market value is based on published price quotations where applicable. Where no such price is available, the market value of the investment is determined through a review of the related Company's financial position and future prospects. Name of Company Number of Lower of cost Market value shares held or net realisable value # Cap Energy plc 100,125 26,700 35,544 Cheerful Scout plc 7,400,000 54,506 96,200 EBTM plc (formerly 9,000,000 95,000 326,250 e-retail plc) Elephant Loans plc 500,000 15,000 22,500 Franchise Investment 625,000 25,000 32,813 Strategies plc Intandem Films plc 2,848,000 81,880 81,880 JGP Investments plc 1,250,000 25,000 29,750 Maypole Group plc 6,000,000 102,000 127,200 (formerly AJ Leisure plc) MyHome International 1,500,000 99,208 307,500 plc NBCC plc 250,000 24,375 24,375 Petsome plc 1,200,000 24,000 25,500 Ricmore plc 1,200,000 21,000 21,000 Sexual Health Group 25,000 25,000 25,000 plc 10% loan notes The Core Business plc 6,000,000 75,000 75,000 Branded Entertainment 12,500 60,000 60,000 Limited (formerlyThree Strikes Limited) Twenty plc 43,650 21,825 22,916 Venue Solutions plc 225,000 50,715 61,312 Wogen plc 11,000 16,830 16,830 Yellowcake plc 16,250,000 90,000 305,500 --------- ----------- 933,039 1,697,070 ========= =========== 7 The Directors do not recommend the payment of a dividend for the period. 8 The financial information set out in this document is unaudited and does not constitute statutory accounts. The Report and Accounts will be posted to shareholders and copies will be available to the public, free of charge, from the office of Nabarro Wells & Co. Ltd, Saddlers House, Gutter Lane, Cheapside, London, EC2V 6HS. Enquiries: Addworth plc Mark Watson-Mitchell, Executive Chairman +44 (0) 207 638 8750 www.addworth.co.uk Nabarro Wells & Co. Ltd Hugh Oram +44 (0) 207 710 7404 Aquila Financial Ltd Yvonne Fraser +44 (0) 207 202 2609 Peter Reilly +44 (0) 207 202 2601 www.aquila-financial.com This information is provided by RNS The company news service from the London Stock Exchange END FR UBANRNARVRAR
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