Final Results

23 May 2016

ENERGISER INVESTMENTS PLC

(“Energiser” or the “Company”)

FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015

CHAIRMAN’S STATEMENT

Introduction

I am delighted to report on the Group’s performance for the year ended 31 December 2015.

As part of our strategy to focus on the property sector, I would like to welcome Dominic White to the Board as a Non-executive Director. Dominic has an extensive background in the real estate sector with previous experience at Cordea Savills as head of Portfolio Management where he grew the Italian business from a start-up to more than €3bn, prior to which he was with Henderson Global Investors.

Results

The gross rental income from the Wellingborough portfolio of 20 residential properties was £154,000 (2014: £148,000), an increase of 4% over the previous year.  The net rental income, after relevant operating costs, was £121,000 (2014: £112,000). Administrative expenses remained the same at £50,000 (2014: £50,000).   Finance costs have risen to £358,000 (2014: £322,000) due to the interest accrued on additional funding for the development at Highfield Chase in Kingswood Park, Surrey. The loss before and after taxation was £167,000 (2014: £147,000) with a loss per share of 0.38p (2014: 0.34p).

Net assets have reduced to £419,000 (2014: £598,000) primarily due to the effect of construction and sales delays on the fair value of our investment in the project at Highfield Chase. This results in a net asset value per share of 0.96p (2014: 1.37p). 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.

The Directors do not recommend the payment of a dividend.

Operations

All 20 properties in Wellingborough, Northamptonshire are currently let and will continue to be let on short-term tenancies.

Our investment in the development of 12 residential properties in Kingswood Park, Surrey by a housebuilder is behind programme. Construction has now been completed and nine of the properties have been sold and legally completed. A further two properties have been reserved and we are expecting all the units to be sold and legally completed in the near future. The senior debt provided by Coutts & Co has been repaid in full. Our investment in the project was by way of mezzanine funding to the housebuilder. The Group is expecting to receive its priority return of £785,000, against which it will incur the agreed coupon of 10% per annum to investors that provided the funding to Energiser.

The Group has continued to fully provide against its investment in EiRx Therapeutics plc, which was placed in creditors’ voluntary liquidation.

Outlook

The Group’s strategy is to focus on and engage in opportunities within the real estate sector, and with the new appointment to the Board it expects to build shareholders’ funds over the next few years.

Stephen Wicks

Group strategic report for the year ended 31 December 2015

The Directors present their Strategic Report on the Group for the year ended 31 December 2015.

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 holds investment properties 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 loss on ordinary activities before and after taxation of £167,000 (2014: £147,000). The shareholders’ funds for the Group total £419,000 (2014: £598,000).

The performance of the rental investment during 2015 was similar to that of 2014, with almost 100% occupancy on the rental properties. The Group has provided £3.3m (2014: £2.7m) towards the development of 12 units in Surrey and it is entitled to receive 50% of the net profit of the development, including a priority return of £785,000, subject to the development making sufficient profit. The majority of the funding has been procured from investors at a cost of 10% per annum.

Business environment

The property market in the United Kingdom has continued to recover over the past year, albeit at a slower rate than previously. This continued recovery has contributed to the increase in the value of the Wellingborough property portfolio.

Strategy

Due to the continued recovery of the housing market and the anticipated success of the 12 unit development in Surrey, the Group will continue to seek out opportunities on real estate projects where healthy returns can be generated for shareholders.

The Group continues to let the Wellingborough properties on short-term tenancies.

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.

	2015	2014
Return on project investment	£121,000	£112,000
Net assets	£419,000	£598,000
Net assets per ordinary share	0.96p	1.37p

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
Rental market	A decrease in demand for rental properties	Detrimental effect on the Group’s ability to cover administration and debt servicing costs	The Group seeks to ensure that tenants are satisfied with their property to encourage tenancy renewals and employs a reputable manager to deal with any issues and to let the properties
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

Financial risk management objectives and policies

The Company’s policy in respect of financial instruments and risk profile is set out in the Directors’ Report and in Note 18 of the Group accounts.

Future developments

In the coming year we expect to realise the profit share related to the mezzanine funding provided to a housebuilder for the 12 unit development in Kingswood Park, Surrey. The Group also intends to participate in other real estate projects and is actively looking for opportunities.

The Group will continue to rent out the Wellingborough properties on short-term tenancies.

By order of the Board

Nishith Malde
Company Secretary
 

Group statement of comprehensive income

for the year ended 31 December 2015

		2015 £’000	2014 £’000
Continuing operations
Revenue arising in the course of ordinary activities		154	148
Cost of sales		(34)	(8)
Gross profit		120	140
Administrative expenses		(50)	(50)
Revaluation of investment properties		102	76
Operating profit		172	166
Finance costs		(358)	(322)
Finance income		19	9
Loss before taxation		(167)	(147)
Taxation		—	—
Loss for the year attributable to shareholders of the Group		(167)	(147)
Other comprehensive (loss)/income
Items that may be subsequently reclassified to profit or loss
Change in value of available-for-sale financial assets		(16)	684
Related deferred taxation		4	(144)
Other comprehensive (loss)/income for the year, net of tax		(12)	540
Total comprehensive (loss)/income for the year attributable to shareholders of the Group		(179)	393
Loss per share
Basic and diluted loss per share from total and continuing operations		(0.38)p	(0.34)p

Diluted loss per share is taken as equal to the basic 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 2015

		2015 £’000	2014 £’000
ASSETS
Non-current assets
Investment property		2,844	2,742
Financial assets held at fair value through profit or loss		—	1
		2,844	2,743
Current assets
Trade and other receivables		38	9
Available-for-sale financial assets		3,977	3,343
Cash and cash equivalents		218	13
		4,233	3,365
Total assets		7,077	6,108
LIABILITIES
Current liabilities
Trade and other payables		866	564
Short-term borrowings		4,318	4,794
Deferred tax		140	144
		5,324	5,502
Non-current liabilities
Long-term borrowings		1,334	—
Financial liabilities held at fair value through profit or loss		—	8
		1,334	8
Total liabilities		6,658	5,510
Net assets		419	598
EQUITY
Share capital		2,312	2,312
Share premium account		5,747	5,747
Convertible loan		88	88
Merger reserve		1,012	1,012
Revaluation reserve		528	540
Retained earnings		(9,268)	(9,101)
Total equity		419	598

Group statement of changes in equity

for the year ended 31 December 2015

	Share capital £’000	Share premium account  Â£â€™000	Convertible loan £’000	Merger reserve £’000	Revaluation reserve £’000	Retained earnings £’000	Total equity £’000
At 1 January 2014	2,312	5,747	88	1,012	—	(8,954)	205
Total comprehensive loss	—	—	—	—	540	(147)	393
Balance at 31 December 2014	2,312	5,747	88	1,012	540	(9,101)	598
Total comprehensive loss	—	—	—	—	(12)	(167)	(179)
Balance at 31 December 2015	2,312	5,747	88	1,012	528	(9,268)	419

Group statement of cash flows

for the year ended 31 December 2015

	2015 £’000	2014 £’000
Cash flows from operating activities
Loss before and after taxation	(167)	(147)
Adjustments for:
Fair value adjustment on financial liabilities recognised in profit or loss	(8)	(9)
Fair value adjustment on investment property	(102)	(76)
Interest expense	358	322
Interest income	(11)	—
(Increase)/decrease in trade and other receivables	(13)	6
Increase/(decrease) in trade payables	35	(60)
Net cash generated from operating activities	92	36
Cash flows from investing activities
Mezzanine finance facility issued	(650)	(1,259)
Net cash used in investing activities	(650)	(1,259)
Cash flows from financing activities
Proceeds from borrowings	2,064	1,323
Repayment of borrowings	(1,206)	(40)
Interest paid	(95)	(57)
Net cash generated from financing activities	763	1,226
Net increase in cash and cash equivalents	205	3
Cash and cash equivalents at beginning of financial year	13	10
Cash and cash equivalents at end of financial year	218	13

Note:

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2015 or 2014 but is derived from those accounts. Statutory accounts for 2014 have been delivered to the registrar of companies, and those for 2015 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 2014 or 2015.

The AGM will be held at Decimal Place, Chiltern Avenue, Amersham, Buckinghamshire, HP6 5FG at 11.00 am on 30 June 2016.

The Company’s Annual Report and Accounts 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

Nishith Malde                                       [phone]

Cairn Financial Advisers LLP

Jo Turner/Sandy Jamieson                                [phone]