TIDMENGI
RNS Number : 8310O
Energiser Investments PLC
03 June 2020
3 June 2020
Energiser Investments plc
("Energiser", the "Company" or the "Group")
FINAL RESULTS FOR YEARED 31 DECEMBER 2019
Chairman's Statement
I am pleased to report to the members of Energiser Investments
plc ("Energiser" or "the Group") for the year ended 31 December
2019.
Energiser Investments plc is an investment company whose
strategy is to invest in quoted and unquoted companies to achieve
capital growth. The Group continues to look for opportunities and
as reported in the interim results the Group is currently invested
in an AIM listed company, KCR Residential REIT plc ("KCR").
Results
The Group generated revenues of GBP2,000 during the period
(2018: Nil) from continuing operations. It reduced its
administrative expenses from GBP92,000 to GBP76,000 and made a loss
before tax of GBP72,000 (2018: loss GBP498,000) after reversing
accrued remuneration due to a former director of GBP117,000. The
loss included a write down of the investment in KCR by GBP134,000
to GBP1,181,000. The loss per share was 0.06p (2018: loss per share
0.40p).
The Group's net assets decreased to GBP1.20m (2018: GBP1.28m)
translating into net asset value per share of 0.97p per share
(2018:1.03p).
Investments
In March 2018, Energiser acquired 2,435,710 new KCR ordinary
shares at 70p a share for a total of GBP1,704,997. As at 31
December 2019, the share price of KCR had dropped to 48.5p per
share resulting in the Company's investment to be written down to
GBP1,181,000.
KCR is an AIM quoted Real Estate Investment Trust ("REIT")
operating in the private rented residential investment market. KCR
acquires whole blocks of studio, one and two-bedroom apartments
that are rented to private tenants and currently focuses on the UK
residential sector.
On 27 March 2020, KCR released their Interim Results for the six
months ended 31 December 2019. As at 31 December 2019, KCR's
investment properties were valued at GBP23.4m and its net assets
were GBP13.2m. KCR's net asset value per share was 47.84p per share
which reflected the conversion of 1,730,765 Restricted Preference
Shares to Ordinary Shares and the issue of 10,047,089 new ordinary
shares on 6 August 2019.
The directors of KCR commented as follows:
"The Coronavirus has had a global negative impact on demand,
supply chains, stock markets and consumer and business confidence.
Whilst the full impact is yet to be seen it is expected that travel
restrictions and reduced leisure travel in the near term will have
a negative impact on demand for short let accommodation in the
United Kingdom. This has potential to negatively impact the
occupancy profile and rentals that can be achieved by KCR's
portfolio if stock that is currently used predominantly for short
let leisure travel is repositioned for longer term lease.
On 12 February 2020, the group completed a GBP7.9m refinancing
of its Coleherne Road, Ladbroke Grove and Lomond Court assets. The
refinancing has a term of 25 years, a five year fixed interest rate
and is secured on the assets concerned. The interest rates relating
to these properties reduces from 3.75% per annum to 3.5% per annum.
This transaction delivered GBP2.9m of free capital to KCR post
repayment of the existing bank facility providing KCR with a strong
liquidity position.
Due to the rapid development of COVID-19, the degree of
uncertainty involved and the unprecedented nature of the challenges
posed by the coronavirus situation, the directors are of the
opinion that it is too soon to quantify what financial impact that
the COVID-19 pandemic will cause but are monitoring the situation
closely."
Outlook
The Group will continue to manage its investment in KCR and will
pursue other investment opportunities to achieve capital growth.
Despite the uncertainty, the directors are satisfied that the Group
is in a sound position to face the challenges ahead.
Group Strategic Report
The Directors present their Strategic Report on the Group for
the year ended 31 December 2019.
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 continues to hold its investment in KCR Residential
REIT plc. 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 GBP72,000 (2018:
GBP498,000). The shareholders' funds were GBP1,204,000 (2018:
GBP1,276,000).
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.
2019 2018
------------------------------ ------------ ------------
Net assets GBP1,204,000 GBP1,276,000
Net assets per ordinary share 0.97p 1.03p
------------------------------ ------------ ------------
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 while
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 A fall in the -- Inability The Group seeks to ensure
market housing market to realise maximum that investment is made
in the regions value in a timely either directly or indirectly
in which the fashion -- Adverse into the residential
Group operates effect on the property sector with
timing of sales a view to preserving
capital
--------- ------------------- ------------------- ------------------------------
Interest Significant Increased borrowing The Group mitigates
rates upward changes costs and a any adverse exposure
in interest detrimental to interest rate changes
rates effect on profit by controlling its gearing
COVID-19 The effect of The impact of The Group will liaise
the uncertainties COVID-19 on with the management
caused by COVID-19 the carrying of its investee company
and how long value of the to assess its underlying
the crisis will Group's investment net asset and liquidity
continue for position
--------- ------------------- ------------------- ------------------------------
Financial risk management objectives and policies
The Group's policy in respect of financial instruments and risk
profile is set out in the Directors' Report on pages 5 to 7 and in
Note 15 to the accounts.
Future developments
The Group will continue to focus on direct and indirect
investment in quoted and unquoted companies including those in the
property sector.
Group statement of comprehensive income
for the year ended 31 December 2019
2019 2018
Notes GBP'000 GBP'000
-------------------------------------- ------ -------- ----------
Continuing operations
Revenue arising in the course of
ordinary activities 2 -
Cost of sales - (1)
---------------------------------------------- -------- ----------
Gross profit / (loss) 2 (1)
Reversal of accrued remuneration
for former director 117 -
Administrative expenses (76) (92)
Operating profit/(loss) 43 (93)
Finance income - 6
Loss on investments (134) (411)
Recovery of bad debt written off
in previous periods 19 -
Loss before taxation (72) (498)
Taxation - -
-------------------------------------- ------ -------- ----------
Loss for the year attributable to
shareholders of the Group (72) (498)
---------------------------------------------- -------- ----------
Total comprehensive loss for the
year attributable to shareholders
of the Group (72) (498)
---------------------------------------------- -------- ----------
Loss per share
Basic and diluted loss per share
from total and continuing operations (0.06)p (0.40)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 2019
2019 2018
Notes GBP'000 GBP'000
----------------------------- --------- --------- ---------
ASSETS
--------- --------- ---------
Non-current assets
--------- --------- ---------
Investments 1,181 1,315
--------- ---------
1,181 1,315
--------------------------------------- --------- ---------
Current assets
--------- --------- ---------
Trade and other receivables 5 8
--------- ---------
Cash and cash equivalents 96 177
--------- ---------
101 185
--------------------------------------- --------- ---------
Total assets 1,282 1,500
--------- ---------
LIABILITIES
--------- --------- ---------
Current liabilities
--------- --------- ---------
Trade and other payables 78 190
--------- ---------
Tax and social security - 34
--------- ---------
78 224
--------------------------------------- --------- ---------
Total liabilities 78 224
--------- ---------
Net assets 1,204 1,276
---------------------------------------- --------- ---------
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 (9,477) (9,405)
--------- ---------
Total equity 1,204 1,276
---------------------------------------- --------- ---------
Group statement of changes in equity
for the year ended 31 December 2019
Share
Share premium Convertible Merger Retained Total
capital account loan reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- -------- ----------- -------- --------- --------
At 1 January 2018 2,392 7,189 88 1,012 (8,907) 1,774
Total comprehensive
loss - - - - (498) (498)
Balance at 31 December
2018 2,392 7,189 88 1,012 (9,405) 1,276
----------------------- -------- -------- ----------- -------- --------- --------
Total comprehensive
loss - - - - (72) (72)
Balance at 31 December
2019 2,392 7,189 88 1,012 (9,477) 1,204
----------------------- -------- -------- ----------- -------- --------- --------
Group statement of cash flows
for the year ended 31 December 2019
2019 2018
GBP'000 GBP'000
------------------------------------------------- -------- --------
Cash flows from operating activities
Loss before taxation (72) (498)
Adjustments for:
Loss on sale of investment properties - 23
Fair value adjustment for listed investments 134 390
Interest expense - -
Interest income - (6)
Decrease in trade and other receivables 3 3
(Decrease)/ increase in trade and other
payables (146) 5
Net cash used in operating activities (81) (83)
------------------------------------------------- -------- --------
Cash flows from investing activities
Interest received - 6
Purchase of investments - (1,705)
Net cash used in investing activities - (1,699)
------------------------------------------------- -------- --------
Net decrease in cash and cash equivalents (81) (1,782)
Cash and cash equivalents at beginning of
financial year 177 1,959
------------------------------------------------- -------- --------
Cash and cash equivalents at end of financial
year 96 177
------------------------------------------------- -------- --------
Notes to the financial statements
for the year ended 31 December 2019
1. Income and segmental analysis
The Group generates income by way of profits or losses on
investments. It also generated rental and other related income from
letting properties and has provided a loan to a housebuilder under
a mezzanine funding arrangement. The investment properties were
sold in 2017 and whilst some residual income has accrued, this
activity has now ceased. These operating segments are monitored by
the Executive Directors and strategic decisions are made on the
basis of segment operating results. The segmental analysis of
operations is as follows:
Segmental analysis by activity
2019 2018
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Segment result
Investment activities:
Reversal of accrued remuneration for former
director 117 -
Administrative expenses (76) (105)
-------------------------------------------- --------- ---------
(41) (105)
-------------------------------------------- --------- ---------
Rental activities:
Net rental income 2 (1)
Administrative expenses - 13
- 12
-------------------------------------------- --------- ---------
Operating loss (43) (93)
Finance income - 6
Finance costs - -
Other gains and losses (115) (411)
-------------------------------------------- --------- ---------
Loss before tax (72) (498)
-------------------------------------------- --------- ---------
2019 2019
GBP'000 GBP'000
-------------------------------- --------- ---------
Segment assets
- -
-------------------------------- --------- ---------
Investment activities:
Non-current assets - investment 1,181 1,315
-------------------------------- --------- ---------
Other 101 185
-------------------------------- --------- ---------
Rental activities:
Current assets - other - -
Total assets 1,282 1,500
-------------------------------- --------- ---------
2019 2019
GBP'000 GBP'000
------------------------------------ --------- ---------
Segment liabilities
Investment activities:
Current liabilities 78 224
------------------------------------ --------- ---------
78 224
------------------------------------ --------- ---------
Rental activities:
Current liabilities - -
- -
------------------------------------ --------- ---------
Total liabilities 78 224
------------------------------------ --------- ---------
Total assets less total liabilities 1,204 1,276
------------------------------------ --------- ---------
The activity of investments arose wholly in the United
Kingdom.
2. Investments
2019 2018
GBP'000 GBP'000
----------------------------------------- -------- --------
Investments listed on a recognised stock
exchange 1,181 1,315
----------------------------------------- -------- --------
In accordance with IFRS 7, financial instruments are measured by
level of the following fair value measurement hierarchy:
-- Level 1: quoted prices in an active market for identical
assets or liabilities. The fair value of financial instruments
traded in active markets is based on quoted market prices at the
balance sheet date. A market is regarded as active if quoted prices
are readily and regularly available and those prices represent
actual and regularly occurring market transactions on an
arm's-length basis. The quoted market price used for financial
assets held by the Group is the closing price on the last day of
the financial year of the Group. These instruments are included in
level 1 and comprise FTSE and AIM-listed investments classified as
held at fair value through profit or loss.
-- Level 2: the fair value of financial instruments that are not
traded in an active market is determined by using valuation
techniques. These valuation techniques maximise the use of
observable market data where it is available and rely as little as
possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument
is included in level 2.
-- Level 3: the fair value of financial instruments that are not
traded in an active market (for example, investments in unquoted
companies) is determined by using valuation techniques such as
earnings multiples. If one or more of the significant inputs is not
based on observable market data, the instrument is included in
level 3.
There have been no transfers between these classifications in
the period (2018: none). The change in fair value for the current
and previous years is recognised through profit or loss.
All assets held at fair value through profit or loss were
designated as such upon initial recognition. Movements in
investments held at fair value through profit or loss are
summarised as follows:
Level 1
Equity
investments Total investments
GBP'000 GBP'000
---------------------- ------------ -----------------
Cost
At 1 January 2019 1,705 1,705
----------------------- ------------ -----------------
At 31 December 2019 1,705 1,705
----------------------- ------------ -----------------
Fair value losses
At 1 January 2019 (390) (390)
Fair value adjustment (134) (134)
At 31 December 2019 (524) (524)
----------------------- ------------ -----------------
Fair value
At 31 December 2019 1,181 1,181
----------------------- ------------ -----------------
At 31 December 2018 1,315 1,315
----------------------- ------------ -----------------
3. Fair Value through profit and loss assets
Investment
GBP'000
---------------------- ----------
Cost
At 1 January 2019 1,705
At 31 December 2019 1,705
---------------------- ----------
Fair value movements
At 1 January 2019 (390)
Fair value adjustment (134)
At 31 December 2019 (524)
---------------------- ----------
Fair value
At 31 December 2019 1,181
---------------------- ----------
At 31 December 2019 1,315
---------------------- ----------
Energiser Investments plc acquired shares in KCR Residential
REIT plc at a price of GBP0.70 per share. The investment was
classed as fair value through profit and loss in accordance with
IFRS 9. The investment was valued downwards at the year-end in
accordance with IFRS 13. The closing value at 31 December 2019 was
GBP1,181m.
Note:
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 31 December 2019 or
2018 but is derived from those accounts. Statutory accounts for
2018 have been delivered to the registrar of companies, and those
for 2019 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
2019 or 2018.
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 2019.
Those financial statements have been prepared on the going
concern basis, the Directors having considered the cash forecasts
for the next 18 months from the date of the approval of these
financial statements. In doing so they have given due regard to the
risks and uncertainties affecting the business as set out in the
Strategic Report and the Directors' Report, the liquidity of
investments and the liquidity risk. The uncertainties as a result
of COVID-19 will potentially adversely impact the occupancy profile
and rentals that can be achieved in KCR's portfolio if properties
that are currently used predominantly for short let leisure travel
are repositioned for longer term lease. This may have an impact on
KCR's net asset value and thus on its share price if the
uncertainty lasts for a long period of time. The Group's forecasts
indicate that it may need to realise a small amount of its
investment in KCR in the absence of any further equity injection
during the next 18 months which should not present any
difficulties. 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.
The AGM will be held at Burnham Yard, London End, Beaconsfield,
HP9 2JH at 10.00 am on 30 June 2020.
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 .
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014) ("MAR") prior to its release as part
of this announcement and is disclosed in accordance with the
Company's obligations under Article 17 of MAR.
For further information please
contact:
Energiser Investments Plc
John Depasquale +44 (0) 1494 762450
Nishith Malde +44 (0) 1494 762450
WH Ireland (NOMAD & Broker) www.whirelandcb.com
Mike Coe / Chris Savidge 0207 220 1666
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END
FR KKNBDKBKDFAK
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