Final Results

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  Â£â€™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	[phone]
Dominic White
Nishith Malde
Cairn Financial Advisers LLP	[phone]
Jo Turner
Sandy Jamieson