29 May 2018
ENERGISER
INVESTMENTS PLC
FINAL RESULTS FOR
THE YEAR ENDED 31 DECEMBER 2017
CHAIRMAN’S STATEMENT
Introduction
I am delighted to report on the Group’s performance for the year
ended 31 December 2017.
During the year we sold the investment properties at
Wellingborough for a consideration of £2,800,000, the majority of
the priority return from the Kingswood 12 unit development loan was
also received in the year for a total of £773,000.
Results
The gross rental income from the Wellingborough investment
portfolio of 20 residential properties prior to the sale was
£138,000 (2016: £160,000). The net rental income, after relevant
operating costs, was £104,000 (2016: £118,000). Administrative
costs were £235,000 (2016: £110,000) due to increasing investment
activity in the year. Finance costs fell to £54,000 (2016:
£208,000) due to lower interest payments following the repayment of
the funding for the development at Kingswood, Surrey. The profit
before taxation was £604,000 (2016: loss £211,000) mainly due to
the £773,000 priority return received from the mezzanine funding
project with earnings per share of 0.46p (2016: loss 0.40p).
Net assets have increased slightly to £1,774,000 (2016:
£1,748,000) following disposals and repayment of debt. This results
in a net asset value per share at the year end of 1.43p (2016:
1.41p). Net asset value per share is calculated by dividing the net
assets of the Group by the number of ordinary shares in existence
at the balance sheet date.
Operations
The 20 properties in Wellingborough were sold during the year as
outlined was being considered in last year’s announcement.
Our investment in the development funding of 12 residential
properties in Kingswood, Surrey was repaid in the prior year.
As at the year end the remaining monies owed via the priority were
repaid albeit at slightly less than the full amount.
The Group has continued to fully provide against its investment
in EiRx Therapeutics plc, which was placed in creditors’ voluntary
liquidation in 2015. The key investment activity came after the
year end, in February and April 2018.
This involved investment in a £491,100 short term loan secured on
property in Croydon paying 7.5% p.a., and an investment of
£1,704,997 for a 24.7% shareholding in KCR Residential REIT Plc, an
AIM quoted Real Estate Investment Trust focused on owning rented
blocks of one and two bed reanted apartments in the residential
property sector. This activity is not reflected in the 2017
year end accounts. It will be reported in full in the Interim
statement for the period to 30 June
2018.
Outlook
The Group’s strategy is to invest in quoted and unquoted
companies to achieve capital growth. Our focus is
predominantly on investment opportunities within the real estate
sector. In 2018 we will continue to actively manage our investments
and uncover and transact in further accretive investment
opportunities.
Stephen
Wicks
Group strategic report
for the year ended 31 December
2017
The Directors present their Strategic Report on the Group for
the year ended 31 December 2017.
Review of the business
The Company is registered as a Public Limited Company (plc). The
Company’s shares of 0.1p each are listed on AIM, part of the London
Stock Exchange.
The Group invests in quoted and unquoted companies to achieve
capital growth. The Group also held investment properties during
the year whereby the properties are held with rental income arising
from short-term lets. It also provides mezzanine finance to
housebuilders.
Results and performance
The results of the Group for the year, show a profit on ordinary
activities before and after taxation of £604,000 and £572,000
respectively (2016: loss £211,000). The shareholders’ funds for the
Group total £1,774,000 (2016: £1,748,000).
The performance of the rental investment during 2017 was less
than 2016 due to the sale of the properties part way through the
year. During the year the Group received £773,000 out of the
£785,000 priority return relating to the Kingswood development of
12 residential units in Surrey, being slightly less than the full
amount originally expected due to less profit being made by the
development.
Strategy
Energiser’s strategy as an Investing Company is to invest,
directly or indirectly, in quoted and unquoted companies and in the
property sector to achieve capital growth in the medium term.
Key performance indicators
(‘KPIs’)
The Group’s KPIs are the return on project investment and the
net assets position of the Group including net assets per share.
These indicators are monitored by the Board and the details of
performance against these are given below.
|
2017 |
2016 |
Return on project
investment |
£104,000 |
£118,000 |
Return on project
funding |
£773,000 |
— |
Net assets |
£1,774,000 |
£1,748,000 |
Net assets per
ordinary share |
1.43p |
1.41p |
Principal risks and uncertainties
The management of the business and the nature of the Group’s
strategy are subject to a number of risks. The Directors have set
out below the principal risks facing the business. Where possible,
processes are in place to monitor and mitigate such risks. The
Group operates a system of internal control and risk management in
order to provide assurance that the Board is managing risk whilst
achieving its business objectives. No system can fully eliminate
risk and, therefore, the understanding of operational risk is
central to the management process.
To enable shareholders to appreciate what the business considers
are the main operational risks, they are briefly outlined
below:
|
Risk |
Potential impact |
Strategy |
Housing
market |
A fall in the housing
market in the regions in which the Group operates |
Inability to realise maximum value in a timely fashion
Adverse effect on the timing of sales |
The Group seeks to
ensure that funding provided to housebuilders is for developments
in areas that are likely to be least affected by a decline in the
housing market |
Interest
rates |
Significant upward
changes in interest rates |
Increased borrowing
costs and a detrimental effect on profit |
The Group mitigates any
adverse exposure to interest rate changes by controlling its
gearing |
|
|
|
|
Future developments
The Group will continue to focus on direct investment in the
equity and debt capital of property assets. It will also look to
increase its exposure to property by investing in
property operating companies such
as serviced-residential, serviced-storage or
serviced-leisure that combine an interest
in a property portfolio with an overriding
operating business.
By order of the Board
Stephen Wicks
Non-executive Chairman
Group statement of comprehensive
income
for the year ended 31 December
2017
|
2017
£’000 |
2016
£’000 |
Continuing
operations |
|
|
Revenue arising in the
course of ordinary activities |
138 |
160 |
Cost of sales |
(34) |
(42) |
Gross
profit |
104 |
118 |
Administrative
expenses |
(235) |
(110) |
Operating
(loss)/profit |
(131) |
8 |
Finance costs |
(54) |
(208) |
Finance income |
— |
(11) |
Gain on sale of
investment properties |
16 |
— |
Gain on financial
instrument |
773 |
— |
Profit/(loss)
before taxation |
604 |
(211) |
Taxation |
(32) |
— |
Profit/(loss) for
the year attributable to shareholders of the Group |
572 |
(211) |
Other comprehensive
income/(loss) |
|
|
Items that may be
subsequently reclassified to profit or loss |
|
|
Change in value of
available-for-sale financial assets |
— |
(5) |
Related deferred
taxation |
— |
14 |
Other comprehensive
income for the year, net of tax |
— |
9 |
Total comprehensive
profit/(loss) for the year attributable to shareholders of the
Group |
572 |
(202) |
Profit per
share |
|
|
Basic and diluted
profit/(loss) per share from total and continuing operations |
0.46p |
(0.40)p |
Diluted profit/(loss) per share is taken as equal to the basic
profit/(loss) per share as the Company’s average share price during
the period is lower than the exercise price of the share options
and therefore the effect of including share options is
anti-dilutive.
Group statement of financial
position
as at 31 December 2017
|
2017
£’000 |
2016
£’000 |
|
|
|
ASSETS |
|
|
Non-current
assets |
|
|
Investment
property |
— |
2,844 |
|
— |
2,844 |
Current
assets |
|
|
Trade and other
receivables |
33 |
72 |
Available-for-sale
financial assets |
— |
553 |
Cash and cash
equivalents |
1,959 |
1,120 |
|
1,992 |
1,745 |
Total
assets |
1,992 |
4,589 |
LIABILITIES |
|
|
Current
liabilities |
|
|
Trade and other
payables |
185 |
733 |
Short-term
borrowings |
— |
694 |
Tax and social
security |
33 |
126 |
|
218 |
1,553 |
Non-current
liabilities |
|
|
Long-term
borrowings |
— |
1,288 |
|
— |
1,288 |
Total
liabilities |
218 |
2,841 |
Net assets |
1,774 |
1,748 |
EQUITY |
|
|
Share capital |
2,392 |
2,392 |
Share premium
account |
7,189 |
7,198 |
Convertible loan |
88 |
88 |
Merger reserve |
1,012 |
1,012 |
Revaluation
reserve |
— |
537 |
Retained earnings |
(8,907) |
(9,479) |
Total
equity |
1,774 |
1,748 |
Group statement of changes in
equity
for the year ended 31 December
2017
|
Share
capital
£’000 |
Share
premium account
£’000 |
Convertible loan
£’000 |
Merger
reserve
£’000 |
Revaluation reserve
£’000 |
Retained earnings
£’000 |
Total
equity
£’000 |
At 1 January 2016 |
2,312 |
5,747 |
88 |
1,012 |
528 |
(9,268) |
419 |
Total comprehensive
loss |
— |
— |
— |
— |
9 |
(211) |
(202) |
Issue of equity |
80 |
1,451 |
— |
— |
— |
— |
1,531 |
Balance at 31
December 2016 |
2,392 |
7,198 |
88 |
1,012 |
537 |
(9,479) |
1,748 |
Total comprehensive
profit |
— |
— |
— |
— |
(537) |
572 |
35 |
Issue of equity |
— |
(9) |
— |
— |
— |
— |
(9) |
Balance at 31
December 2017 |
2,392 |
7,189 |
88 |
1,012 |
— |
(8,907) |
1,774 |
Group statement of cash flows
for the year ended 31 December
2017
|
2017
£’000 |
2016
£’000 |
Cash flows from
operating activities |
|
|
Profit/(Loss) before
taxation |
604 |
(211) |
Adjustments for: |
|
|
Profit on sale of investment
properties |
(16) |
— |
Interest expense |
54 |
208 |
Interest income |
— |
11 |
Decrease/(Increase) in trade and other
receivables |
51 |
(33) |
(Decrease)/Increase in trade and other
payables |
(641) |
(127) |
Net cash generated
by/(used in) operating activities |
52 |
(152) |
Cash flows from
investing activities |
|
|
Mezzanine finance
facility repaid |
16 |
3,408 |
Sale of investment
properties |
2,816 |
— |
Net cash generated
by investing activities |
2,832 |
3,408 |
Cash flows from
financing activities |
|
|
Net proceeds on the
issue of ordinary shares |
(9) |
1,530 |
Repayment of
borrowings |
(1,982) |
(3,670) |
Interest paid |
(54) |
(214) |
Net cash used in
financing activities |
(2,045) |
(2,354) |
Net increase in
cash and cash equivalents |
839 |
902 |
Cash and cash
equivalents at beginning of financial year |
1,120 |
218 |
Cash and cash
equivalents at end of financial year |
1,959 |
1,120 |
Note:
The financial information set out above does not constitute
the Company's statutory accounts for the years ended 31
December 2017 or 2016 but is derived from those
accounts. Statutory accounts for 2016 have been delivered to the
registrar of companies, and those for 2017 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 498 (2) or (3) of the Companies
Act 2006 in respect of the accounts for 2017 or 2016.
The AGM will be held at Decimal Place, Chiltern Avenue,
Amersham, Buckinghamshire, HP6 5FG at 11.00
am on 29 June 2018.
The Company’s Annual Report and Accounts along with the Notice
of Annual General Meeting will be posted to shareholders shortly
and will be available to view and download on the Company’s website
at http://www.energiserinvestments.co.uk/.
For further information contact:
Energiser Investments
plc |
+44 (0) 1494 762450 |
Dominic White |
|
Nishith Malde |
|
|
|
Cairn Financial Advisers
LLP |
+44 (0)20 7213 0880 |
Jo Turner |
|
Sandy Jamieson |
|