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Alexander David Investments PL (ADI)

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Friday 01 June, 2012

Alexander David Investments PL

Alexander David Investments PLC : Final Results

Alexander David Investments PLC : Final Results

ALEXANDER DAVID INVESTMENTS PLC

 (the "Company")

FINAL RESULTS

The Company announces its final results for the year ended 31 December 2011.

CHAIRMAN'S STATEMENT

This is the first year of trading for Alexander David Investments Plc ("ADI") as an investing company which focuses on special opportunities with a particular focus on the basic resources and oil and gas sectors. It is not however a full year since the demerger of the ReGen Therapeutics business ("Demerger") ("ReGen") which took place on 18 February 2011.  We have tried to make it clear which items refer to ADI and, which to the former ReGen business and the costs associated with the Demerger, so that investors may get an accurate picture of the costs of running the ongoing business of ADI.    

  • Portfolio loss of £82,000 - as I set out in our statement of 6 March 2012 we started the ADI business at a difficult time for a company with our stated objectives.  One of the key indicators for the measurement of our performance is the FTSE AIM All Share Super Sector Oil and Gas Index, which fell by 36% from the date of the Demerger to 30 December 2011.   

Even so the Board was disappointed at the loss on the gross portfolio as it had been innovative in its attempt to mitigate the problems in the underlying market.  The loss was principally, but not entirely, due to the fall in value of one key investment, which met all our original criteria.  Unfortunately, the management's presentation was better than its performance, but with a change of management in the investee company we expect a better performance during the coming year.  

  • Administrative expenses of £207,000 - the Board is committed to keeping expenses to a minimum and as you will see in Note 9 the Directors salaries attributable to the continuing business of ADI totalled £46,606, representing 23% of total costs.  Every effort will be made to reduce costs further in the coming year.   

  • Griffin Two Limited - on 30 April 2012 ADI acquired a portfolio of investments from Griffin Two Limited for a consideration of £71,268 which was satisfied by the issue of 41,922,448 New Ordinary Shares of 0.01p each.  The portfolio of investments comprised investments in AIM quoted companies in the basic resources and oil and gas sectors, including two companies in which ADI already held investments.  This enabled the directors to enlarge the fund in a  simple and cost effective way without the need to raise new cash. 

As we have said before the Company has two strands to its investment strategy:

  • the Company holds a portfolio of listed investments on AIM. The Company does not disclose the details of the portfolio except when required to pursuant to the AIM Rules. 

  • in certain circumstances the Company may take  positions in pre-IPO situations.  The only investment in this area to date has been that in Evergreen Oil plc ("Evergreen") details of which were disclosed in announcements to shareholders in June and July 2011.  Evergreen is a PLUS quoted company whose activity is the production of forecourt quality bio diesel and is in the renewable energy sector.  In addition, as part of the Demerger, the Company agreed to provide ReGen Therapeutics Limited ("RTL") with a convertible loan note.  As of 31 December 2011, the Company had issued a total of £150,000 (this has since increased to £240,000) convertible loan notes to RTL. 

The Company also holds 2,880,000 ordinary shares in RTL, representing approximately 3.2 % of its issued share capital.  RTL's shares are traded through JP Jenkins and, as at 31 December 2011, ADI's holding was valued at £14,400 (currently also: £14,400).

As at 31 December 2011 the Company had cash resources of £33,000 (currently approximately £26,000).

There has been some improvement in the market since the beginning of the year and the directors are hopeful of a better year during 2012.  They continue to explore the options for ADI and hope to report further positive news in the near future.  They are also hopeful that one of their long term investments may move to a more liquid market enabling the Company to take some profits in these investments.

Percy W Lomax
Chairman

Further information:

Alexander David Investments PLC
Percy Lomax
+44 1245 462817
Cairn Financial Advisers LLP
Nominated Adviser
Liam Murray / Avi Robinson
+44 20 7148 7900
Alexander David Securities Limited
Broker
David Scott / Bill Sharp
+44 20 7448 9820

Profit and loss account for the year ended 31 December 2011

   

20112010
£'000£'000
(Audited)(Audited)

Continuing operations

Turnover - gross Portfolio return

(82)-

Administrative expenses

(696)(3,031)
    ________________

Operating loss

(778)(3,031)
Continuing operations(289)-
Discontinued operations(489)(3,031)
________________
Loss on ordinary activities before taxation(778)(3,031)
Taxation Note 7--
________________

Loss for the financial year

(778)(3,031)
__________________
Basic and diluted loss per share         Note 8   (0.22)p(4.88p)
Basic and diluted loss per share on continuing operations        (0.08)p-
Basic and diluted loss per share on discontinued operations        (0.14)p(4.88p)
There are no gains or losses for the period other than those recognized in the
Profit and loss account above.

 Note of Historical Cost Profits and Losses for the year ended 31 December 2011

   

20112010
£'000£'000
(Audited)(Audited)
Reported loss for the year before taxation(778)(3,031)
Fair value adjustment in respect of investments held at fair value  
through the profit and loss
76-
________________
Historical cost loss on ordinary activities before and after taxation(702)(3,031)
__________________

Balance Sheet as at 31 December 2011

2011201120102010
£'000£'000£'000£'000
(Audited)(Audited)(Audited)(Audited)
Fixed Assets
Non current assets
Investments in subsidiaries-1,020
Other investmentsNote 4163-
________________
1631,020
Current assets
Trade and other debtors7-
Other investmentsNote 5422-
Cash and cash equivalents33-
________________

Total current assets

462-
________________

Total assets

6251,020
________________
Creditors: amounts falling due within one year
Trade and other creditors100416
________________
100416
________________

Non current assets/(liabilities)

362(416)
________________

Total net assets

525604
________________
Equity
Share capitalNote 96,6436.611
Share premiumNote 1014,28615,303
Share based payment reserveNote 1086-
Profit and Loss accountNote 10(20,490)(21,310)
________________

Total equity

525604
________________

Cashflow statement for year ended 31 December 2011

2011201120102010
£'000£'000£'000£'000
(Audited)(Audited)(Audited)(Audited)

Operating activities

Loss after tax for the financial year(778)(3,031)
Adjustments for
Payment in shares(14)-
Convertible loan interest                        (13)        -(13)-
Fair value adjustment                        76        -76-
Share option charge86-
Finance costs from discontinued operations-3
Amortisation and depreciation from discontinued activities-2,583
________________
Operating cash flows before movements in working capital and provisions(643)(445)
Increase in debtors(7)-
Movement in working capital from discontinued operations(203)(405)
________________
Net cash flows from operating activities(853)(850)
________________
Investing activities
Net purchase of investments
(744)
-
Sale of investments260-
Convertible loans(150)-
Cash flows from investing activities from discontinued operations-258
________________

Net cash flows used in investing activities

(634)258
________________
Financing activities
Net proceeds from issue of shares1,520559
Cash flows from financing activities from discontinued operations-3
________________

Net cash flows from financing activities

1,520562
________________
Net increase / (decrease) in cash and cash equivalents33(30)

Opening cash and cash equivalents

-30
________________
Closing cash and cash equivalents        33-
________________

Notes forming part of the financial statements for the year ended 31 December 2011

1   General information

Alexander David Investments PLC ("ADI" or "the Company") is an investing company quoted on AIM (LSE: ADI). ADI's investment targets are small cap and special opportunities with a current bias towards basic resources and oil and gas companies, predominately on AIM. Such investments will focus on new and secondary equity issues but may also include some pre-IPO investments.

ADI was incorporated in England and Wales on 11 February 1998 (registration no. 3508592), with its registered office at 90 Fetter Lane, London EC4A 1EQ.  Its principal country of operations is the United Kingdom.

Until 18 February 2011 ADI was called ReGen Therapeutics PLC and carried on the business of the development of nutraceutical healthcare products and ethical pharmaceuticals.  

On 18 February 2011 the Company demerged its existing business, now carried on by a new company (ReGen Therapeutics Limited), and transferred the shares of that new company to its shareholders and the Company became an investment company.

The financial statements are presented in pounds sterling, the functional currency of the company.

2        Basis of preparation

        Following the sale of business assets and demerger the ReGen business described in note 5, the Company is a single reporting entity and no longer the holding company of a group.  The financial statements are therefore those of a single reporting entity and the comparative figures in these financial statements are those of the Company only in respect of the year ended 31 December 2010.

        The financial statements have been prepared in accordance with the Companies Act 2006 and UK Generally Accepted Accounting Practice with adoption of fair value and therefore FRS 25, FRS 26 and FRS 29 have been fully adopted.

Going concern

The financial statements have been prepared on a going concern basis. On 18 February 2011 the Company demerged its existing business into a new company (ReGen Therapeutics Limited) and transferred the shares of that new company to shareholders.  On 18 February 2011 the Company issued 300,000,000 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £1,500,000, the proceeds of the share issue to be applied in settlement of historical liabilities of the ReGen business and to promote working capital for the Company.

The directors believe that this will be sufficient for the Company's purposes for a minimum of 12 months from the date of the approval of the financial statements. If the Company requires additional working capital it will seek to raise funds on the open market and if necessary will liquidate its current assets to meet its obligations as they fall due.

Financial instruments

Financial assets and financial liabilities are recognised on the balance sheet when the Company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value.

Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Other investments - Investments at fair value through profit or loss

The Company designates its investment portfolio as financial assets at fair value through profit or loss. The fair value of each investment is assessed at each reporting date as follows:

Quoted investments

The fair value of financial assets which are traded on active liquid markets are determined with reference to quoted market prices. Purchases and sales of quoted investments are recognised on the trade date where a contract of sale exists whose terms require delivery within a time frame determined by the relevant market.

Unquoted investments

The fair value of financial assets which are not traded on an active market is determined by reference to the 'International Private Equity and Venture Capital Valuation Guidelines' ("IPEVCV Guidelines"). In determining the fair value of an investment, the Company applies a methodology prescribed by the IPEVCV Guidelines that is appropriate in light of the nature, facts and circumstances of the investment and its materiality in the context of the total investment portfolio using reasonable data, market inputs, assumptions and estimates. Any changes in the above data, market inputs, assumptions and estimates will affect the fair value of an investment which may lead to a recognition of impairment losses in the profit and loss account if an indication of impairment exists.

Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Company commits to purchase or sell the investment.

A fair value through profit or loss asset is derecognised when the Company loses control over the contractual rights that comprise that asset. This occurs when rights are realised, expire or are surrendered and the rights to receive cash flows from the investments have expired or the Company has transferred substantially all risks and rewards of ownership. Realised gains and losses on fair value through profit or loss assets sold are calculated as the difference between the sales proceeds and cost. Fair value through profit or loss assets that are derecognised and corresponding receivables from the buyer for the payment are recognised as of the date the Company has transacted an unconditional disposal of the assets.

Financial instruments

Financial assets and financial liabilities are recognised on the Company's balance sheet at fair value when the Group becomes a party to the contractual provisions of the instrument.

Trade debtors

  Trade debtors represent amounts due from customers in the normal course of business. These are recognised at fair value and subsequently at amortised cost unless the effect of discounting is immaterial. Appropriate allowance is made for impairment.

Cash and cash equivalents

  Cash and cash equivalents include cash at hand and deposits held at call with banks with original maturities of three months or less.

Trade creditors

Trade creditors are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

Deferred taxation

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date except that the recognition of deferred tax assets is limited to the extent that the Company anticipates to make sufficient taxable profits in the future to absorb the reversal of the underlying timing differences.

Share based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the profit and loss account over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity investments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

Where terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the profit and loss account over the remaining vesting period.

Where equity instruments are granted to persons other than employees, the profit and loss account is charged with the fair value of goods and services received.

Cash and cash equivalents

For the purposes of the statement of cash flows, cash and cash equivalents are defined as cash available on demand and short-term deposits.

Provisions

Provisions are recognised for liabilities of uncertain timing or amounts that have arisen as a result of past transactions.

3        Sale of business assets and demerger

On 30 December 2010 the Company disposed of the business assets (excluding liabilities) of the ReGen business to ReGen NewCo Limited (now renamed ReGen Therapeutics Limited -'RTL'), a wholly owned subsidiary of the Company for consideration of £604,038 satisfied by the issue to it of 78,446,547 ordinary shares in RTL credited as fully paid at £0.0077 per share.

On 18 February the Company demerged the ReGen business, now carried on by a new company RTL and transferred the shares of that new company to its shareholders. As part of this process the Company was required to undergo a reduction in capital and to adopt an investing policy. To effect the demerger a bonus issue was made out of the Company's share premium account of "B" ordinary shares on the basis of one "B" ordinary share for every one existing ReGen (or ADI) ordinary share held by a shareholder on the register of members at 15 February 2011. The aggregate nominal value of all the "B" ordinary shares issued was £2,520,000. The Company then cancelled all of the "B" ordinary shares issued pursuant to the bonus issue by reducing the Company's share capital in accordance with the Companies Act 2006. This involved the cancellation of part of the Company's share capital account and became effective on 17 February 2011 whereupon all investments held by ReGen were then transferred to RTL.

£'000
Cancellation of bonus issue2,505
Less
Investments(907)

1,598

4        Fixed assets - other investments

As part of the demerger arrangements referred to in note 5 the Company agreed to lend up to £240,000 to its former subsidiary undertaking, RTL, in the form of a convertible loan with 10 per cent coupon.  The loan is not due for repayment until after February 2014 at which point it becomes repayable upon demand.  RTL is an unlisted company engaged in the manufacture and sale of Colostrinin TM.  NAC Lott serves as a director of RTL as a personal appointment and not as a nominee of the Company.  

At the balance sheet date RTL had drawn down £150,000 against the facility. Based on the most recent price at which shares in RTL have been traded, should the Company exercise its conversion rights in relation to loan balance outstanding, the resultant equity issue would result in the Company owning approximately 27 per cent of the issued share capital of RTL.  

The outstanding amount of the loan plus unaccrued interest thereon is included in investments at fair value through profit and loss because the conversion rights attaching to the loan are not considered to be a long term participating interest in the equity of RTL for the purpose of securing a contribution to the Company's activities by the exercise of control or influence arising from or related to that interest. The Company does not exercise significant influence through active involvement or the exercise of influence in the direction of RTL, its policy decisions or decisions on strategic issues, whether relevant to the Company and its investment and conversion rights or not.  When the convertible loan was issued to RTL conversion was not expected.  

5        Other investments

        The fair value of listed equity securities are based upon their current bid prices in active markets. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis, as such these are valued in accordance with tier 2 of the fair value hierarchy. The fair value of the convertible loan note (see below) is based upon cost less impairment (level 3 of the fair value hierarchy).

31 Dec 2011
£'000
Balance as at 1 January 2011-
Additions758
Disposals(260)
Fair value through profit and loss(76)
Balance as at 31 December 2011422

6        Segment information

        There is considered to be one class of business: the selective investment in UK listed and non-listed entities and as a result there is considered to be only one reportable class of business.  All turnover is derived from activities in the UK.

7        Taxation

No charge to taxation arises in the period ended 31 December 2011 (2010: nil).

No related deferred tax asset has been recognised on the losses due to the unpredictability of future profit streams. Losses may be carried forward indefinitely and may be recoverable if relevant taxable profit arises in future periods.

2011
£'000
(Audited)
2010
£'000
(Audited)
Loss before tax7783,031
________________
Loss at the standard rate of corporation tax in the UK of 25% (2009 - 28%)195849
Effects of:
Tax losses for which no deferred tax asset recognised(195)(849)
________________
Total tax credit for the year16,67728,350
________________

8        Earnings per share

The basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue for the period. As the Company has reported a loss for the period the shares are not diluted for the purpose of earnings per share

Year
 ended
Year
ended
31/12/2011  30/12/2010  
£'000£'000
Loss attributable to equity holders of the Company
  • continuing 

289-
  • discontinued 

4893,031
  • total 

7783,031
Weighted average number of ordinary shares in issue358,237,98262,167,553
Basic loss per share -  continuing operations(0.08)p-
                -  discontinued operations (0.14)p(4.88)p

9        Share Capital

  31 Dec   31 Dec
        2011        2010
        £'000        £'000

Called up share capital issued and fully paid
401,030,716 ordinary shares of 0.01p each
(2010 - 78,446,548 ordinary shares of 0.01p each)   40   8
13,068,521 deferred B shares of 9.99p each   1,305   1,305
108,121,391 deferred A shares of 4.9p each   5,298   5,298
  __________   __________

  6,643   6,611
        __________        __________

Deferred shares do not carry voting rights and have no right to receive dividends. Deferred shareholders are entitled to receive the amount paid up or credited as paid up on their respective holdings of deferred shares only after there has been paid on each ordinary share the nominal amount paid up on such share plus a further £1 per ordinary share.  The holders of the deferred shares shall not be entitled to participate further in any distribution of the assets or the capital of the Company.

Note  Number of
Shares
Share CapitalShare  Premium
£'000£'000
Called-up and fully paid ordinary shares of 0.01p
at 1 January 2011
78,446,5488      15,303
Ordinary shares issued on 18 January 201111,000,000154
Ordinary shares issued on 18 February 2011300,000,000301,470
Ordinary shares issued on 1 March 201111,360,462156
Ordinary shares issued on 18 April 201164,665--
Ordinary shares issued on 26 April 2011500--
Ordinary shares issued on 24 May 201110,000--
Ordinary shares issued on 24 June 20112,649--
Ordinary shares issued on 14 July 201145,364--
Ordinary shares issued on 2 August 201170,220--
Ordinary shares issued on 25 August 20111,648--
Ordinary shares issued on 5 September 201128,093--
Ordinary shares issued on 29 September 2011567--
Called-up and fully paid ordinary shares of 0.01p each
at 31 December 2011
401,030,7164016,883
Transaction Costs--(92)
Bonus Issue2-2,505(2,505)
Cancellation2-(2,505)-
401,030,7164014,286

On 18 January 2011, the Company issued 11,000,000 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £55,000.

On 18 February 2011, the Company issued 300,000,000 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £1,500,000.

On 1 March 2011, the Company issued 11,360,462 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £56,802 in lieu of payment to creditors of the former ReGen Therapeutics Plc in accordance with the Company's undertakings to the High Court following the publication of the circular sent to shareholders.

On 18 April 2011, the Company issued 64,665 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £323 pursuant to the exercise of warrants.

On 26 April 2011, the Company issued 500 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £2.50 pursuant to the exercise of warrants

On 24 May 2011, the Company issued 10,000 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £50 pursuant to the exercise of warrants

On 24 June 2011, the Company issued 2,649 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £13.25 pursuant to the exercise of warrants

On 14 July 2011, the Company issued 45,364 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £226.82 pursuant to the exercise of warrants.
                                                                                                                 
On 2 August 2011, the Company issued 70,220 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £351.10 pursuant to the exercise of warrants.

On 25 August 2011, the Company issued 1,648 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £8.24 pursuant to the exercise of warrants.

On 5 September 2011, the Company issued 28,093 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £140.46 pursuant to the exercise of warrants.

On 29 September 2011, the Company issued 567 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £2.84 pursuant to the exercise of warrants.

'B' Ordinary Shares

A bonus issue was made out of the Company's share premium account of 'B' Ordinary Shares on the basis of one 'B' Ordinary Share for every one existing Ordinary Share held on the register of members at 15 February 2011. The aggregate nominal value of all the 'B' Ordinary Shares issued was £2,520,000

In order to effect the demerger of the ReGen business, the Company cancelled all of the 'B' Ordinary Shares issued pursuant to the bonus issue by reducing the Company's share capital in accordance with the Companies Act 2006. This involved the cancellation of part of the Company's share capital account and became effective on 17 February 2011.

10        Reconciliation of movement in shareholders funds

NoteShare CapitalShare PremiumShare based payment reserveProfit and loss accountTotal
£'000£'000£'000£'000
At 1 January 20106,60714,748-(18,279)3,076
Loss for the year---(3,031)(3,031)
Issue of shares net of costs4555--559
As at 31 December 20106,61115,303-(21,310)604
Loss for the year---(778)(778)
Issue of share options--86-86
Issue of shares net of costs321,488--1,520
Bonus Issue22,505(2,505)---
Reorganisation2(2,505)--1,598(907)
As at 31 December 20116,64314,286266(20,490)525

11   Events after the balance sheet date

On 27 January 2012, the Company issued 6,735 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £33.68 pursuant to the exercise of warrants.

On 9 February 2012, the Company issued 20,000 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £100 pursuant to the exercise of warrants.

On 14 February 2012, the Company issued 64,396 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £321.98 pursuant to the exercise of warrants.

On 25 March 2012, the Company issued 25,015 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £125.08 pursuant to the exercise of warrants.

On 25 April 2012, the Company issued 2,795 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £13.98 pursuant to the exercise of warrants.

On 30 April 2012, the Company issued 41,922,448 ordinary shares of 0.01p each at a premium of 0.33p per share for a consideration of £71,268 to acquire Griffin Two Limited.

On 30 April 2012 ADI acquired the portfolio of investments from Griffin Two Limited for consideration of £71,268.  The portfolio of investments comprised of investments in AIM quoted companies in the basic resources and oil and gas sectors, which was a simple and cost effective way of enlarging the overall fund.

On 9 May 2012, the Company issued 200 ordinary shares of 0.01p each at a premium of 0.49p per share for a consideration of £1 pursuant to the exercise of warrants.

12        Availability of Report and Accounts

Pursuant to AIM Rule 20, the Company advises that the audited annual report and financial statements for the year ended 31 December 2011 will be sent to all shareholders today and copies will be available on the web site www.ad-investments.com and from the Company's business address at 90 Fetter Lane, London, EC4A 1EQ.




This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: Alexander David Investments PLC via Thomson Reuters ONE

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