ENGI.L Regulatory News (ENGI)

29 May 2014 Energiser Investments plc ("Energiser" or the "Company") Final Results for the Year Ended 31 December 2013 CHAIRMAN'S STATEMENT INTRODUCTION I am pleased to write my first report to shareholders following my appointmentas Chairman on 4 December 2013. There has been very little activity in the Company in recent years. Variouscorporate transactions were under negotiation which did not proceed, howeverthey did take up a considerable amount of management time and resource.Similarly, an investment in a potentially revolutionary new high powered motorwas written off as it became apparent that there were significant flaws in theconcept. A decision has now been made to focus on the property sector and, inparticular, the provision of mezzanine funding to small, experiencedhousebuilders. Since the very difficult period in the economy and the bankingcrisis, banks have remained very cautious in their lending policy to smallerhousebuilders and require the developer's own contribution to be injected intothe project prior to the banks' own capital being drawn down. There istherefore a "gap" in the market for providers of such finance to housebuildersthat are having difficulty securing funding for high quality residentialdevelopment opportunities in the South East of England where housing demand isstrongest. I am pleased to report that Energiser, via its subsidiary CedarGreen Homes Limited, has secured its first opportunity in this field. The Group has committed to inject up to £2.6m into a development of 12 unitsunder construction on a spectacular site at Kingswood Park, Surrey. Thedevelopment of 9 houses and 3 apartments is expected to generate a grossdevelopment value of over £8.5m. We have procured funding for this commitment from a number of investors whowill be paid a coupon of 10% on the funds invested. In the current climate oflow returns on bank deposits, this interest rate is an attractive return forthese investors. Their investment is secured by way of a second charge over theproperty behind the senior debt provider. Energiser is entitled to 50% of the net profit of the development including a"priority return" of £785,000, subject to the development making sufficientprofit, before the developer receives its share of profit. Construction is nowwell under way with the first sales expected by the end of the currentfinancial year. The Directors are evaluating other such proposals and believe that this newstrategy will provide a substantial revenue stream to the Company and willre-build shareholders' funds. RESULTS Our residential development in Wellingborough generated gross rental income of£147,000 (2012: £149,000) and, after associated operating costs, resulted innet rental income of £113,000 (2012: £117,000). £100,000 of the impairmentprovision made in previous years against the value of the Wellingboroughproperties has been reversed during the year due to the market value of theportfolio increasing. In addition, the Group wrote off £17,000 (2012: £116,000)invested in the production of the high powered motor. Administrative expensesreduced to £73,000 (2012: £84,000) and after finance costs of £102,000 (2012: £100,000) the profit before and after taxation was £36,000 (2012: loss of £171,000) resulting in earnings per share of 0.08p (2012: loss of 0.39p). The Group's net assets have increased to £205,000 (2012: £169,000) representingnet asset value per share of 0.47p (2012: 0.39p). Net asset value per share iscalculated by dividing the net assets of the Group by the number of ordinaryshares in existence at the balance sheet date. The Directors do not recommend the payment of a dividend. The Group's largest shareholder, Stephen Wicks, has agreed to provide furtherfinancial support to the Group for the foreseeable future, if required. As atthe year end there were no loans due to Mr Wicks. OPERATIONS Our investment portfolio of 20 freehold houses in Wellingborough,Northamptonshire remains fully let and in the current financial year the Grouphas experienced an increase of approximately 5% in gross rents being achieved. The properties are continuing to be let on short term tenancies and during theyear they were reclassified as investment property within non-current assets inthe Statement of Financial Position. The Group continues to hold an investment in EiRx Therapeutics plc which hasbeen previously fully provided against. OUTLOOK As set out above, the provision of development funding for experienced,undercapitalised housebuilders on prime sites, should enable the Group tocreate a substantial profit stream over the coming period and I thereforebelieve that the prospects for the Group are beginning to look positive. Bill Weston GROUP STRATEGIC REPORT Results and performance The results of the group for the year show a profit on ordinary activitiesbefore and after taxation of £36,000 (2012: loss of £171,000). Theshareholders' funds for the Group total £205,000 (2012: £169,000). TheDirectors do not recommend the payment of a dividend for the year ended 31December 2013. The performance of the Group during 2013 was similar to that of 2012, withalmost 100% occupancy on the rental properties. During the year the Groupadvanced £1.4m to a housebuilder under a mezzanine finance agreement. The Groupwill be providing up to £2.6m towards the development of 12 units in Surrey andit is entitled to receive 50% of the net profit of the development including apriority return of £785,000, subject to the development making sufficientprofit. The funding has been procured from investors at a cost of 10% perannum. Key performance indicators (`KPIs') The Group's KPIs are the return on project investment and the net assetsposition of the Group including net assets per share. These indicators aremonitored by the Board and the details of performance against these are givenbelow. 2013 2012 Return on project investment £113,000 £117,000 Net assets £205,000 £169,000 Net assets per ordinary share 0.47p 0.39p Nishith MaldeCompany Secretary DIRECTORS' REPORT Going concern The financial statements have been prepared on the going concern basis, theDirectors having considered the cash forecasts for the next twelve months fromthe date of the approval of these financial statements. In doing so they havegiven due regard to the risks and uncertainties affecting the business as setout in the Directors' Report, the liquidity risk, financial support provided byMr S D Wicks, who has undertaken to meet the cash needs of the Group ifrequired, and the repayment of other loans. On this basis the Directors have areasonable expectation that the funds available to the Group are sufficient tomeet the requirements indicated by those forecasts. Nishith MaldeCompany Secretary STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2013 2013 2012 £'000 £'000 Continuing operations Revenue arising in the course of ordinary activities 147 149 Development costs (17) (116) Cost of sales 66 (32) Gross profit 196 1 Administrative expenses (73) (84) Operating profit/(loss) 123 (83) Finance costs (102) (100) Finance income 15 12 Profit/(loss) before taxation 36 (171) Taxation - - Profit/(loss) for the year attributable to shareholders 36 (171)of the Company and total comprehensive income Earnings/(loss) per share Basic and diluted earnings/(loss) per share from total 0.08p (0.39)pand continuing operations Diluted earnings/(loss) per share is taken as equal to basic earnings/(loss)per share as the Group's average share price during the period is lower thanthe exercise price of the share options and therefore the effect of includingshare options is anti-dilutive. GROUP STATEMENT OF FINANCIAL POSITION As at 31 December 2013 2013 2012 £'000 £'000 ASSETS Non-current assets Investment property 2,666 - Financial assets held at fair value through profit or 1 1loss 2,667 1 Current assets Inventories - 2,566 Trade and other receivables 1,415 14 Cash and cash equivalents 10 7 1,425 2,587 Total assets 4,092 2,588 LIABILITIES Current liabilities Trade and other payables 359 333 Short-term borrowings 2,311 815 2,670 1,148 Non-current liabilities Long-term borrowings 1,200 1,239 Financial liabilities held at fair value through profit 17 32or loss 1,217 1,271 Total liabilities 3,887 2,419 Net assets 205 169 EQUITY Share capital 2,312 2,312 Share premium account 5,747 5,747 Convertible loan 88 88 Merger reserve 1,012 1,012 Retained earnings (8,954) (8,990) Total equity 205 169 GROUP STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2013 Share Share premium Convertible Merger Retained Total capital account loan reserve earnings equity £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2012 2,312 5,747 88 1,012 (8,819) 340 Total comprehensive loss - - - - (171) (171) Balance at 31 December 2,312 5,747 88 1,012 (8,990) 1692012 Total comprehensive income - - - - 36 36 Balance at 31 December 2,312 5,747 88 1,012 (8,954) 2052013 GROUP STATEMENT OF CASH FLOWS For the year ended 31 December 2013 2013 2012 £'000 £'000 Cash flows from operating activities Profit/(loss) before and after taxation 36 (171) Adjustments for: Fair value gain on financial liabilities recognised in (15) (12) profit or loss Interest expense 102 100 Increase in trade and other receivables (1) - (Decrease) / increase in trade payables (23) 22 Reversal of impairment of inventories (100) - Increase in inventories - (16) Net cash used in operating activities (1) (77) Cash flows from investing activities Mezzanine finance facility issued (1,400) - Net cash used in investing activities (1,400) - Cash flows from financing activities Proceeds from borrowings 1,496 71 Re-payment of borrowings (39) (31) Interest paid (53) (67) Net cash generated by / (used in) financing 1,404 (27)activities Net increase / (decrease) in cash and cash 3 (104)equivalents Cash and cash equivalents at beginning of period 7 111 Cash and cash equivalents at end of period 10 7 Note: The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 31 December 2013 or 2012 but is derivedfrom those accounts. Statutory accounts for 2012 have been delivered to theregistrar of companies, and those for 2013 will be delivered in due course. Theauditors have reported on those accounts; their reports were (i) unqualified,(ii) did not include a reference to any matters to which the auditorsdrew attention by way of emphasis without qualifying their report and (iii) didnot contain a statement under section 498 (2) or (3) of the Companies Act 2006in respect of the accounts for 2012 or 2013. The AGM will be held at 2 Anglo Office Park, 67 White Lion Road, Amersham,Buckinghamshire, HP7 9FB at 11.00 am on 30 June 2014. The Company's Annual Report and Accounts will be posted to shareholders shortlyand will be available to view and download on the Company's website atwww.energiserinvestments.co.uk. For further information contact: Energiser Investments plcNishith Malde +44 (0) 1494 762450 Cairn Financial Advisers LLPJo Turner +44 (0) 20 7148 7900