Energiser Invts PLC Final Results
22 Maggio 2019 - 08:00AM
UK Regulatory
TIDMENGI
22 May 2019
ENERGISER INVESTMENTS PLC
('Energiser' or the 'Group)
FINAL RESULTS FOR THE YEARED 31 DECEMBER 2018
Chairman's statement
Introduction
I am pleased to present the accounts for Energiser for the year ended 31
December 2018.
Energiser is an Investing Company whose strategy is to invest in quoted and
unquoted companies to achieve capital growth. Much activity has taken place
over the last few years which endorses the focus in property particularly in
the residential sector.
In February 2018, Energiser invested GBP494,100 in a short-term loan secured on a
21,900 sq. ft office property in Croydon with planning permission to convert
into 71 residential units. The loan represented 30% of the estimated value of
the property and the interest was covered by rental income at a ratio of 4:1
(rent: interest). The gross interest paid on the loan was 7.5% p.a. The loan
was novated as part of our investment in KCR.
In March 2018, Energiser acquired 2,435,710 new KCR ordinary shares at GBP0.70 a
share for a total of GBP1,704,997. The investment, made by participation in a
subscription alongside other investors, was made at a 9% discount to net asset
value per share of KCR as reported by KCR on 19 March 2018. The subscription
was funded with cash of GBP1,210,897 and the novation of the rights to its
short-term loan investment of GBP494,100 described above. The Group's holding
represents 15.42% of KCR's ordinary share capital.
KCR is an AIM quoted Real Estate Investment Trust ("REIT") and its objective is
to acquire and manage a substantial rented residential property portfolio in
the UK that generates both income flow and capital appreciation for its
shareholders. It intends to prioritise the acquisition of special purpose
vehicles containing one or more residential properties as this structure has
inherent benefits for the REIT. KCR's focus is to invest in more affordable
rental properties for private tenants.
KCR's share price closed at GBP0.54p on 31 December 2018 and our investment has
therefore been written down by GBP390,000 to GBP1,315,000.
KCR's portfolio of properties was valued at GBP24.6m at 31 December 2018 and its
net asset value per share was 70.97p (30 June 2018: 88.17p). There is strong
demand and a shortage of supply of good quality affordably priced housing in
the UK. Residential dwellings at this level should deliver attractive rental
and capital value performance over the medium term. KCR targets low to
mid-price blocks of apartments for rent, aimed at new entrants and young
professionals. Energiser has found this to be a resilient segment of the
rental market and has experienced positive rental growth at every rented asset
in its portfolio.
Results
The Group had no revenues during the period (2017: GBP138,000) as it had sold its
revenue generating investments in the previous year. Administrative expenses
have reduced by 61% principally due to a significant reduction in salary
costs. The Group made a loss before tax of GBP498,000 (2017: profit GBP604,000)
which included a provision against the investment in KCR of GBP390,000.
The Group's net assets had decreased from GBP1.77m to GBP1.28m and now equate to
1.03p per share (2017: 1.43p).
Outlook
Our investment in KCR represents a substantial part of our asset base and we
will continue to watch its progress whilst searching for other investment
opportunities to achieve capital growth.
Stephen Wicks
Group Strategic Report
for the year ended 31 December 2018
The Directors present their Strategic Report on the Group for the year ended 31
December 2018.
Review of the business
Energiser is registered as a Public Limited Company (plc). Its shares of 0.1p
each are listed on AIM, part of the London Stock Exchange.
The Group subscribed for 2,435,710 of Ordinary shares in KCR Residential REIT
plc at 70p per share. The chairman's statement provides further details on
KCR's activities.
Results and performance
The results of the Group for the year show a loss on ordinary activities before
and after taxation of GBP498,000 (2017: profit of GBP604,000 and GBP572,000). The
shareholders' funds were GBP1,276,000 (2017: GBP1,774,000).
Investment properties were sold during the year ended 31 December 2017 and thus
there was no rental income during the year. The Group's cash was used
predominantly to acquire the investment in KCR.
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.
2018 2017
Return on project investment - GBP104,000
Net assets GBP GBP
1,276,000 1,774,000
Net assets per ordinary share 1.03p 1.43p
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 Inability to realise The Group seeks to ensure that
housing market in maximum value in a investment is made either
the regions in timely fashion directly or indirectly into the
which the Group Adverse effect on the residential property sector with
operates timing of sales a view to preserving capital.
Interest rates Significant upward Increased borrowing The Group mitigates any adverse
changes in costs and a detrimental exposure to interest rate changes
interest rates effect on profit by controlling its gearing
Future developments
The Group will continue to focus on direct and indirect investment in the
property sector. It will continue to invest in property operating companies in
the residential market.
By order of the Board
Stephen Wicks
Non-executive Chairman
Group statement of comprehensive income
for the year ended 31 December 2018
2018 2017
GBP'000 GBP'000
Continuing operations
Revenue arising in the course of ordinary activities - 138
Cost of sales (1) (34)
Gross (loss)/profit (1) 104
Administrative expenses (92) (235)
Operating loss (93) (131)
Finance costs - (54)
Finance income 6 -
(Loss)/Gain on investments (411) 16
Gain on financial instrument - 773
(Loss)/profit before taxation (498) 604
Taxation - (32)
(Loss)/profit for the year attributable to shareholders of (498) 572
the Group
Total comprehensive (loss)/profit for the year attributable (498) 572
to shareholders of the Group
(Loss)/profit per share
Basic and diluted (loss)/profit per share from total and (0.40)p 0.46p
continuing operations
Diluted (loss)/profit per share is taken as equal to the basic (loss)/profit
per share as Energiser'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 2018
2018 2017
GBP'000 GBP'000
ASSETS
Non-current assets
Investments 1,315 -
1,315 -
Current assets
Trade and other receivables 8 33
Cash and cash equivalents 177 1,959
185 1,992
Total assets 185 1,992
LIABILITIES
Current liabilities
Trade and other payables 190 185
Tax and social security 34 33
224 218
Total liabilities 224 218
Net assets 1,276 1,774
EQUITY
Share capital 2,392 2,392
Share premium account 7,189 7,189
Convertible loan 88 88
Merger reserve 1,012 1,012
Retained earnings (9,405) (8,907)
Total equity 1,276 1,774
Group statement of changes in equity
for the year ended 31 December 2018
Share Share Convertible Merger Revaluation Retained Total
capital premium loan reserve reserve earnings equity
GBP'000 account GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
At 1 January 2017 2,392 7,198 88 1,012 537 (9,479) 1,748
Total comprehensive loss - - - - (537) 572 35
Issue of equity - (9) - - - - (9)
Balance at 31 December 2,392 7,189 88 1,012 - (8,907) 1,774
2017
Total comprehensive loss - - - - - (498) (498)
Balance at 31 December 2,392 7,189 88 1,012 - (9,405) 1,276
2018
Group statement of cash flows
for the year ended 31 December 2018
2018 2017
GBP'000 GBP'000
Cash flows from operating activities
(Loss)/Profit before taxation (498) 604
Adjustments for:
Loss on sale of investment properties 23 (16)
Fair value adjustment for listed investments 390 -
Interest expense - 54
Interest income (6) -
Decrease in trade and other receivables 3 51
Increase/(Decrease) in trade and other payables 5 (641)
Net cash generated (used in)/by operating activities (83) 52
Cash flows from investing activities
Interest received 6 -
Purchase of Investments (1,705) -
Mezzanine finance facility repaid - 16
Sale of investment properties - 2,816
Net cash generated (used in)/by investing activities (1,699) 2,832
Cash flows from financing activities
Net proceeds on the issue of ordinary shares - (9)
Repayment of borrowings - (1,982)
Interest paid - (54)
Net cash used in financing activities - (2,045)
Net (decrease)/increase in cash and cash equivalents (1,782) 839
Cash and cash equivalents at beginning of financial year 1,959 1,120
Cash and cash equivalents at end of financial year 177 1,959
Note:
The financial information set out above does not constitute the Group's
statutory accounts for the years ended 31 December 2018 or 2017 but is derived
from those accounts. Statutory accounts for 2017 have been delivered to the
registrar of companies, and those for 2018 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 2018 or 2017.
The Group's statutory accounts have been prepared under the historical cost
convention, except as modified by the fair value of investment property and
financial assets and liabilities (including derivatives). They have also been
prepared in accordance with the Companies Act 2006 applicable to companies
reporting under IFRS and in accordance with the accounting policies set out in
the Group's statutory accounts and International Financial Reporting Standards
(IFRS) as adopted by the European Union and that were effective at 31 December
2018.
Those financial statements have been prepared on the going concern basis, the
Directors having considered the cash forecasts for the next twelve months from
the date of the approval of those financial statements. In doing so they have
given due regard to the risks and uncertainties affecting the business, the
liquidity of investments and the liquidity risk. The Group and Company make
investments for the long term. Accordingly, the Group and Company rarely trade
investments in the short term. The Group currently has investments in KCR
Residential REIT plc. As this is a traded investment it is deemed liquid. On
this basis, the Directors have a reasonable expectation that the funds
available to the Group are sufficient to meet the requirements indicated by
those forecasts.
During the year, new accounting standards were adopted including IAS7 (amended)
- Statement of Cash Flows and IFRS 9 Financial Instruments. The latter applies
to classification and measurement of financial assets and financial
liabilities, impairment provisioning and hedge accounting. The Group does not
presently hold any complex financial instruments. Given that inter Group
balances are eliminated on consolidation and does not affect Group results, no
material impairment allowance adjustments are expected. It is considered that
the introduction of IFRS 9 is not expected to have a material impact on the
results or cash flows of either the Group or the Company.
The AGM will be held at Burnham Yard, London End, Beaconsfield, HP9 2JH at
11.00 am on 20 June 2019.
Energiser'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 Energiser's website at www.energiserinvestments.co.uk.
For further information contact:
Energiser Investments plc
John Depasquale +44 (0) 1494 762450
Nishith Malde +44 (0) 1494 762450
Cairn Financial Advisers LLP
Jo Turner +44 (0) 20 7213 0880
Sandy Jamieson
END
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