Shares in real estate investor Conygar Investment Company PLC (LON:CIC) rose by nearly 4% to 108p early today on news that it had put in another strong performance during the year, with pre-tax profits up 8.8% to £14.9m and net asset value per share up 7.1% to 150p. The figures came as the group announced plans to buy back up to 2m shares in the market as and when they become available in order to bolster the net asset value per share for remaining shareholders.
While the year closed without a large acquisition of the likes of Advantage Property Income Trust, TAP, and Lamont, which were closed in previous years, Conygar did succeed in selling £58.8m and acquiring £44.8m of investment properties. Progress was also made on its development land bank, including two new projects at Parc Cybi, Holyhead and Haverfordwest, Pembrokeshire.
In an interview with Stockopedia in September, CEO Robert Ware insisted that acquisitions had to come at the right price and that numerous potential deals had simply not met the management team’s investment policy. As a result, the company’s strong cash flow and debt capacity mean that it still has a £110m war chest available for acquisitions.
Commenting today, Mr Ware said: “The outlook for Conygar remains positive and we are confident about the future prospects of the group. Our balance sheet is strong, our development land bank offers considerable upside for relatively low cost and we still have in excess of £110m available for further acquisitions. We are continually evaluating a pipeline of opportunities and whilst we have been close on several, we continue to walk away if the fundamentals are not right. We are frustrated not to have done another significant deal in 2010 but we continue to believe that our strong investment discipline in rejecting overpriced transactions will benefit the prospects for our company.”
In terms of the share buyback programme, Conygar said its primary consideration was to enhance net asset value per share for shareholders. The maximum price paid per share will be no more than 105% of the average middle market closing price of a Conygar share for the five business days preceding the date of acquisition. Given the level of liquidity in its shares, the company may buy back in any one day more…
The problem with the hyper-generous director bonus plan is that it may well be blighting the shareprice - this kind of arrangement is ok for a tiny market cap co, but this is a 120m cap company and will put off any serious investors sufficently that the market value of the company will always be discounted to soem extent because of it
additionally, although there is a large rental income, it is absolutely against the directors bonus interests to pay out more than a nominal divi, since anything worth having will reduce the the next period's gross nav - essentially the bonus scheme benfits from income to rolling up surplus rental income into capital to trigger bigger CASH bonuses.
