Final Results

RNS Number : 2082N

Energiser Investments PLC

08 June 2010

 

Energiser Investments plc

Final results for the year ended 31 December 2009

Chairman's Statement

BACKGROUND

The Board of Energiser Investments Plc ("Energiser" or "the Company") announces its results for the year ended 31 December 2009.

In my report to shareholders which accompanied the Company's results for the six months ended 30 June 2009, I commented on the severe impact that the collapse of Lehman Brothers had on the world's equity markets. I was at the time of the view that the worst was probably behind us but cautioned that there would be some bumps along the road as policy makers looked to start planning a way back to financial equilibrium.

The markets in recent weeks have been dominated by the results of the UK general election, where there has been no clear result, and events surrounding European sovereign debt. Equity markets in recent days have suffered some of their heaviest falls since 2008 with concerns that the problems in Greece will spill over into other European countries such as Spain, Portugal and Italy. The declining appetite for risk in the credit markets has driven the yields in US and German government debt to near record lows and many investors are concerned that without effective action by European governments the contagion stemming from the tragedy of Greece's economic position may not be contained. 

The problem is now a political one and the markets have little faith in the ability of politicians to act in a co-ordinated way. On the one hand the package of €720 billion of emergency funding put forward by the European Union ("EU") and the International Monetary Fund to stabilise the Euro zone, equivalent to five times the annual EU budget, was well received. On the other, the markets have been spooked by the foolhardy attempt by Angela Merkel, the German Chancellor, to try to ban the short selling of the euro in Germany. At a time when the markets need unity, single, seemingly unco-ordinated actions such as this are to say the very least, surprising.

In the UK it is still early days for the Conservative - Liberal Democrat coalition government. Whilst the occupier market remains challenging as unemployment continues to grow, the UK commercial property market has lost most of its pariah status. The residential housing market at the end of 2009 showed some recovery and I am pleased to note that this has continued during the first quarter of 2010. That said, the market remains weak and the continued lack of available credit for first time and other house buyers remains a concern.

Markets, be they equity, debt or property are driven by sentiment and there are considerable uncertainties at present. It would appear that the economic way forward will continue to be challenging.

RESULTS

After a number of years of losses, I am pleased to be able to report a profit before taxation of £531,000 (2008: loss before taxation: £1,250,000) which represents something of a turnaround from the loss of £147,000 I reported for the 6 months ended 30 June, 2009. The primary reason for these improved results is the profits of £896,000 (2008: loss of £936,000) made from realising the majority of our investments, further details of which are set out below. The basic earnings per ordinary share from continuing operations amounts to 1.87p (2008: loss per ordinary share of 10.24p). As at 31 December 2009 the Company had net assets of £255,000 (2008: net liabilities of £399,000).

I am also pleased to report that since the year end we have settled the Company's loan note to Billam AG on favourable terms. Under the terms of this instrument Energiser would have been liable to repay this loan on 31 August 2013 for £397,146. This liability has now been settled by a one off payment of £100,000 in cash and as a consequence the Company's net assets have been improved by nearly £300,000. 

Notwithstanding the profits realised this year, the Directors do not intend to recommend a dividend.

DEVELOPMENT FUNDING LIMITED

As shareholders will be aware our development in Wellingborough, Northamptonshire comprises 29 new freehold houses in a courtyard style. The development is now substantially complete and to date, 9 houses have been sold, 19 have been rented out to tenants at commercial rents and the final unit will be build complete in June 2010. We intend to continue to let these properties whilst the property market remains subdued.

The total cost of the development in aggregate is now £2,450,000 and this has been funded by loans from a commercial bank and another provided by Mr Stephen Wicks, Energiser's largest shareholder who owns just over 61% of the Company's issued share capital. In December, 2009 in consideration of Mr Wicks agreeing to certain changes to his loan, including increasing the annual rate of interest that Energiser pays for his loan to 4% above the Bank of England base rate, he agreed to convert a further £100,000 of this debt into ordinary shares in the Company, with the ordinary shares being valued at the then closing mid market price. At 31 December 2009 the amount outstanding to Mr Wicks was £454,000 (2008: loan of £920,000) and since the year end a further £335,000 has been repaid. The loan is secured by a debenture over the assets and whilst there is no formal agreement in place, the Directors have agreed with Mr Wicks that his outstanding loan will not be repayable for a minimum of twelve months, unless the Company is in a position to do so. Energiser continues to rely on the financial support of Mr Wicks, which is expected to continue for the foreseeable future and his loan to the Company constitutes a related parties transaction under the AIM rules for companies. The Directors consider that, having consulted the Company's nominated advisor, that the terms of the facility are fair and reasonable insofar as the shareholders are concerned. 

At 31 December, 2009 we had one remaining significant investment in our portfolio, which I comment on below:

AIM LISTED INVESTMENTS

Physiomics plc ("Physiomics") is a computational systems biology services company which applies simulations of cell behaviour to drug development companies aimed at reducing the high attrition rates of clinical trials. The commercial rationale for Physiomics' services is that at present it is estimated that the cost of bringing a new drug to market is $800 million and that 80 to 90 per cent of all clinical drug candidates fail. There is increasing evidence that the major pharmaceutical companies are using more sophisticated technology to shorten the discovery process thereby reducing the overall cost associated with it.

In March 2010 Physiomics released its interim results for the 6 months ended 31 December 2009 which showed a loss before taxation of £123,000 (2008: profit of £1,000) on revenue of £117,000 (2008: £211,000). The Board of Physiomics commented that a number of the large pharmaceutical companies were reducing their head counts by several thousand staff and that this had had a negative impact on their research and development budgets and hence Physiomics' revenue.

In the last two months of 2009 the Physiomics share price, which had an average price of approximately 0.25p per ordinary share for the first ten months of the year, started to rise extremely quickly for reasons that were not evident to me. The shares reached a high of 1.23p per ordinary share in November. We used the share price strength to sell the vast majority of our holding in Physiomics and it is these sales that are primarily responsible for the £896,000 profit on investments that we made this year. During this period Physiomics also raised approximately £1,200,000 by issuing new shares that were sold onto other market participants.

In December 2009 we elected to convert a £50,000 loan note into ordinary shares in Physiomics at a price equivalent to 0.1p per ordinary share. The 50 million shares we received from this conversion have been sold since the year end at a healthy profit.

As a result of these disposals and the sale of the small holding we had in Inland plc, we now no longer have any significant investments in our portfolio.

OUTLOOK

The disposal of our investment portfolio and the settlement of the Billam AG loan note have left the balance sheet in a much improved position. Our principal investment is now in our property development in Wellingborough and unless conditions in the domestic UK housing market improve substantially, it is unlikely that the future results will match those for this financial year. 

Simon Bennett

Chairman

7 June 2010

Report of the Directors

Results and dividends

The net profit of the Group for the year after taxation amounted to £531,000 (2008: loss of £1,250,000).  The Directors do not recommend the payment of a dividend for the year ended 31 December 2009.

The net assets of the Group at 31 December 2009 totalled £255,000 (2008: net liabilities £399,000). The net assets per ordinary share as at 31 December 2009 were 0.8p (2008: net liabilities per share 1.4p).

A more detailed review of the activity and progress of the business including the portfolio of investments and the principal risks and uncertainties faced by the business (being the current economic climate and specifically the downturn in the housing market), is contained in the Chairman's statement on pages 1 to 4.

The Group's principal activity is that of investing in quoted and unquoted companies to achieve capital growth.  Accordingly, the main key performance indicators used by the business are:

Ø the underlying share price of the investments

̵     Physiomics (2009: 0.57p, 2008: 0.15p);

Ø the returns on project finance (at the year end the only project, comprising the Wellingborough development, was substantially let out under operating leases ); and

Ø the net assets position of the Group including net assets per share (2009: net assets per share of 0.8p; 2008: net liabilities per share of 1.4p).

Going concern

The financial statements have been prepared on the going concern basis, the directors having considered the cash forecasts for the next 12 months from the date of the approval of these financial statements.  In doing so they have given due regard to the risks and uncertainties affecting the business, the liquidity of investments and the liquidity risk, funding provided by Mr S D Wicks and the repayment of other loans. On this basis the Directors have a reasonable expectation that the funds available to the Group are sufficient to meet the requirements indicated by those forecasts.

ON BEHALF OF THE BOARD

Nishith Malde
Company Secretary
7 June 2010

Group Income Statement

For the year ended 31 December 2009

		2009	2008
		£'000	£'000

Continuing operations

Change in fair value of investments		896	(936)
Other income		84	55
Administrative expenses		(295)	(514)
		----------------------	----------------------
Operating profit/(loss)		685	(1,395)
Finance costs		(154)	(166)
Finance income		-	311
		----------------------	----------------------
Profit/(loss) before taxation		531	(1,250)
Taxation		-	-
		----------------------	----------------------
Profit/(loss) for the year attributable to shareholders of the parent company		531	(1,250)
		===================	===================

Earnings/(loss) per share: 

Basic and diluted earnings/(loss) per share from total and continuing operations		1.87p	(10.24)p
		===================	===================

Group Balance Sheet

As at 31 December 2009

		2009 £'000					2008 £'000
ASSETS
Non-current assets
Financial assets at fair value through profit and loss			228			266
			----------------------			----------------------
			228			266
Current assets
Inventories			2,393			2,126
Trade and other receivables			17			245
Cash and cash equivalents			270			43
			----------------------			----------------------
			2,680			2,414
			----------------------			----------------------
Total assets			2,908			2,680
			----------------------			----------------------
LIABILITIES
Current liabilities
Trade and other payables			313			405
Short-term borrowings			2,007			2,338
			----------------------			----------------------
			2,320			2,743
			----------------------			----------------------
Non-current liabilities
Other payables			-			20
Long-term borrowings			333			316
			----------------------			----------------------
			333			336
			----------------------			----------------------
Total liabilities			2,653			3,079
			----------------------			----------------------
Net assets/(liabilities)			255			(399)
			===================			===================
EQUITY
Share capital			2,300			2,296
Share premium account			5,641			5,538
Convertible loan			88			88
Merger reserve			1,012			1,012
Retained earnings			(8,786)			(9,333)
			----------------------			----------------------
Total equity			255			(399)
			===================			===================

Group Statement of Changes in Equity

For the year ended 31 December 2009

	Share capital	Share premium account	Convertible loan	Merger reserve	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2008	2,279	5,423	88	1,012	(8,099)	703
	----------------	-----------------	-----------------	----------------	------------------	------------------
Loss for the year	-	-	-	-	(1,250)	(1,250)
	----------------	-----------------	-----------------	----------------	------------------	------------------
Total comprehensive income	-	-	-	-	(1,250)	(1,250)
	------------------	------------------	------------------	----------------	------------------	------------------
Issue of equity	17	115	-	-	-	132
Share based compensation	-	-	-	-	16	16
	------------------	------------------	------------------	----------------	------------------	------------------
Balance at 31 December 2008	2,296	5,538	88	1,012	(9,333)	(399)
	------------------	------------------	------------------	----------------	------------------	------------------

Profit for the year	-	-	-	-	531	531
	-----------------	-----------------	-----------------	-----------------	------------------	------------------
Total comprehensive income	-	-	-	-	531	531
	-----------------	-----------------	-----------------	-----------------	------------------	------------------
Issue of equity	4	103	-	-	-	107
Share based compensation	-	-	-	-	16	16
	-----------------	-----------------	-----------------	-----------------	------------------	------------------
Balance at 31 December 2009	2,300	5,641	88	1,012	(8,786)	255
	=================	=================	=================	=================	=================	=================

Group Statement of Cash Flows

For the year ended 31 December 2009

		2009	2008
		£'000	£'000

Cash flows from operating activities

Profit/(loss) before and after taxation			531	(1,250)
Adjustments for:
Change in fair value of investments			(896)	936
Interest expense			154	166
Decrease/(increase) in loans, trade and other receivables			228	(310)
Decrease in trade payables			(149)	(69)
Interest received			-	(311)
Share option charge			16	16
Write down of inventories to net realisable value			60	381
Increase in inventories			(327)	-
			----------------------	----------------------
Net cash used in operating activities			(383)	(441)
			----------------------	----------------------

Cash flows from investing activities

Purchase of investments		(329)	(155)
Proceeds from sale of investments		1,263	604
Net overdrafts acquired with subsidiary		-	(1,254)
		-------------------	----------------------
Net cash generated from /(used in) investing activities		934	(805)
		--------------------	----------------------

Cash flows from financing activities

Proceeds from short-term borrowings			269	374
Re-payment of short-term borrowings			(581)	(335)
Interest paid			(30)	-
			-----------------	-----------------
Net cash (used in) / generated from financing activities			(342)	39
			_________	_________

Net increase/(decrease) in cash and cash equivalents		209	(1,207)
Cash and cash equivalents at beginning of period		(1,211)	(4)
		----------------------	----------------------
Cash and cash equivalents at end of period		(1,002)	(1,211)
		===================	===================

Note:

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2009 or 2008 but is derived from those accounts. Statutory accounts for 2008 have been delivered to the registrar of companies, and those for 2009 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 237 (2) or (3) of the Companies Act 1985 in respect of the accounts for 2008 nor a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 2009.

The AGM will be held at 2 Anglo Office Park, 67 White Lion Road, Amersham, Buckinghamshire, HP7 9FB at 2.00pm on 30June 2010.

The Company's Annual Report and Accounts are available to view and download on the Company's website at www.energiserinvestments.co.uk.

For further information contact:

Energiser Investments plc

Nishith Malde                                   [phone]

finnCap Limited

Marc Young                                        [phone]

The Company has been advised that, with effect from 30 April 2010, its Nominated Adviser and Broker has changed its name to finnCap Ltd.

 

END

 

 

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