30 May 2017 07:00
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 housingmarket in the regions inwhich 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 MaldeCompany Secretary26 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 +44 (0) 1494 762450
Nishith Malde +44 (0) 1494 762450
Cairn Financial Advisers LLP
Jo Turner/Sandy Jamieson +44 (0) 20 7213 0880