Final Results

RNS Number : 4775G

Energiser Investments PLC

30 May 2017

 

ENERGISER INVESTMENTS PLC

FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2016

CHAIRMAN'S STATEMENT

Introduction

I am delighted to report on the Group's performance for the year ended 31 December 2016.

As part of our strategy to focus on the property sector, in October 2016 Dominic White moved from his role as Non-Executive Director to Chief Executive. Dominic has an extensive background in the real estate sector and capital markets. 

During the year we maintained greater than 95% occupancy at the Wellingborough investment portfolio, saw the majority of the development loan repaid at the Kingswood, Surrey development, made great progress on the sourcing, analysis and negotiation of a number of potential transactions and raised new equity.

Results

The gross rental income from the Wellingborough investment portfolio of 20 residential properties increased to £160,000 (2015: £154,000), an uplift of 3.9% over the previous year. The net rental income, after relevant operating costs, was £118,000 (2015: £120,000). Administrative costs were £110,000 (2015: £50,000) due to the appointment of Dominic White and the resulting increase in activity. Finance costs fell to £208,000 (2015: £358,000) due to lower interest payments following the repayment of the funding for the development at Kingswood, Surrey. The loss before and after taxation was £211,000 (2015: £167,000) with a loss per share of 0.40p (2015: 0.38p).

Net assets have increased significantly to £1,748,000 (2015: £419,000) primarily due to the new equity issue in December 2016 which raised £1,255,000 gross of issue expenses. This results in a net asset value per share of 1.41p (2015: 0.96p). 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 are currently let and will continue to be let on short-term tenancies. The Directors have decided that following successful asset management activity, rents and values have increased such that it is timely to consider a disposal.  The assets will be marketed for sale in 2017.

Our investment in the development funding of 12 residential properties in Kingswood, Surrey has now been repaid.  At the year end 11 of the 12 units had been sold. The last unit was sold in April 2017 and all payments have now been received. 

We successfully raised £1,255,000 in December 2016, ahead of our target.

The Group has continued to fully provide against its investment in EiRx Therapeutics plc, which was placed in creditors' voluntary liquidation in 2015.

Outlook

The Group's strategy is to focus on and engage in investment opportunities within the real estate sector, in particular in real estate operating companies.  Our focus is on three areas - serviced-residential, self-storage and short term property lending.  The over-riding theme is technology led real estate operations to deliver efficiency, scalability and transparency.   We are negotiating specific opportunities in the serviced apartment and self-storage sectors and are reviewing a number of secured lending investments through our property lending subsidiary. 

We look forward to sharing full details of the next Energiser investment with shareholders in 2017.

Stephen Wicks

26 May 2017

Group strategic report

for the year ended 31 December 2016

The Directors present their Strategic Report on the Group for the year ended 31 December 2016.

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 £211,000 (2015: £167,000). The shareholders' funds for the Group total £1,748,000 (2015: £419,000).

The performance of the rental investment during 2016 was similar to that of 2015, with greater than 95% occupancy on the rental properties. The Group had provided £nil funding for the development of 12 residential units in Surrey and 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. Since the year end, the sale of the final unit has legally completed and the Group's share of profit and cash has been received.

Business environment

The property market around Wellingborough has not seen any price inflation and therefore no uplift was recognised in the value of the investment properties.

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.

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.

	2016	2015
Return on project investment	£118,000	£120,000
Net assets	£1,748,000	£419,000
Net assets per ordinary share	1.41p	0.96p

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

Future developments

We have now realised the profit share related to the mezzanine funding provided to a housebuilder for the 12 unit development in Kingswood Park, Surrey. 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.

The Group intends to dispose of the Wellingborough properties in the near future.

By order of the Board

Nishith Malde
Company Secretary
26 May 2017

Group statement of comprehensive income

for the year ended 31 December 2016

		2016 £'000	2015 £'000
Continuing operations
Revenue arising in the course of ordinary activities		160	154
Cost of sales		(42)	(34)
Gross profit		118	120
Administrative expenses		(110)	(50)
Revaluation of investment properties		-	102
Operating profit		8	172
Finance costs		(208)	(358)
Finance income		(11)	19
Loss before taxation		(211)	(167)
Taxation		-	-
Loss for the year attributable to shareholders of the Group		(211)	(167)
Other comprehensive income/(loss)
Items that may be subsequently reclassified to profit or loss
Change in value of available-for-sale financial assets		(5)	(16)
Related deferred taxation		14	4
Other comprehensive income/(loss) for the year, net of tax		9	(12)
Total comprehensive loss for the year attributable to shareholders of the Group		(202)	(179)
Loss per share
Basic and diluted loss per share from total and continuing operations		(0.40)p	(0.38)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 2016

		2016 £'000	2015 £'000
ASSETS
Non-current assets
Investment property		2,844	2,844
		2,844	2,844
Current assets
Trade and other receivables		72	38
Available-for-sale financial assets		553	3,977
Cash and cash equivalents		1,120	218
		1,745	4,233
Total assets		4,589	7,077
LIABILITIES
Current liabilities
Trade and other payables		733	866
Short-term borrowings		694	4,318
Deferred tax		126	140
		1,553	5,324
Non-current liabilities
Long-term borrowings		1,288	1,334
		1,288	1,334
Total liabilities		2,841	6,658
Net assets		1,748	419
EQUITY
Share capital		2,392	2,312
Share premium account		7,198	5,747
Convertible loan		88	88
Merger reserve		1,012	1,012
Revaluation reserve		537	528
Retained earnings		(9,479)	(9,268)
Total equity		1,748	419

Group statement of changes in equity

for the year ended 31 December 2016

	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 2015	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
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

Group statement of cash flows

for the year ended 31 December 2016

	2016 £'000	2015 £'000
Cash flows from operating activities
Loss before and after taxation	(211)	(167)
Adjustments for:
Fair value adjustment on financial liabilities recognised in profit or loss	-	(8)
Fair value adjustment on investment property	-	(102)
Interest expense	208	358
Interest income	11	(11)
Increase in trade and other receivables	(33)	(13)
(Decrease)/increase in trade payables	(127)	35
Net cash (used in)/generated by operating activities	(152)	92
Cash flows from investing activities
Mezzanine finance facility repaid	3,408	-
Mezzanine finance facility issued	-	(650)
Net cash generated by/(used in) investing activities	3,408	(650)
Cash flows from financing activities
Proceeds from borrowings	-	2,064
Net proceeds on the issue of ordinary shares	1,530	-
Repayment of borrowings	(3,670)	(1,206)
Interest paid	(214)	(95)
Net cash (used in)/generated by financing activities	(2,354)	763
Net increase in cash and cash equivalents	902	205
Cash and cash equivalents at beginning of financial year	218	13
Cash and cash equivalents at end of financial year	1,120	218

Note:

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2016 or 2015 but is derived from those accounts. Statutory accounts for 2015 have been delivered to the registrar of companies, and those for 2016 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 2016 or 2015.

The AGM will be held at Decimal Place, Chiltern Avenue, Amersham, Buckinghamshire, HP6 5FG at 11.00 am on 30 June 2017.

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 www.energiserinvestments.co.uk.

For further information contact:

Energiser Investments plc

Dominic White                           [phone]

Nishith Malde                             [phone]

Cairn Financial Advisers LLP

Jo Turner/Sandy Jamieson     [phone]

 

END

 

 

FR OKCDBKBKBQPB