REG - Conygar Investmnt Co - Interim Results
16/05/2024 07:00
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RNS Number : 6196O Conygar Investment Company PLC(The) 16 May 2024
16 May 2024
The Conygar Investment Company PLC
Interim results for the six months ended 31 March 2024
Summary
· Net asset value ("NAV") decreased in the period by £3.8 million to
£91.2 million equating to 153.0p per share (30 September 2023: 159.4p per
share). This is derived primarily from net operational, debt financing and
administrative costs compounded by writing down £1.4m of costs in connection
with the proposed residential development at the Fruitmarket site in the St
Philip's Marsh area of Bristol.
· Cash deposits were boosted in the period from the placing in October
2023 of 5 million zero dividend preference shares of £1 each (the "ZDP
shares") and the drawing down of the first tranche of a £12 million loan
facility from A.S.K Partners Limited ("ASK"). As at 31 March 2024, the Group
had total cash deposits of £6.1 million, equating to 10.3p per share (30
September 2023: £2.7 million (4.5p per share)).
· Construction of the 693-bed student accommodation development at The
Island Quarter, Nottingham ("TIQ") is expected to complete, as planned and on
budget, before the end of June 2024 with lettings progressing well for the
September 2024 student intake.
· Detailed planning application submitted in February 2024 for the
second phase of student accommodation at TIQ comprising a 383-bed scheme to
adjoin, and complement, the first phase development.
· Revenues and margins steadily increasing at The Island Quarter's ("1
TIQ") restaurant and events venue as the reputation for this unique local
offering becomes more established.
Group net assets summary
31 Mar 31 Mar 30 Sept
2023
2024 2023
£'m
£'m £'m
Properties 131.6 115.6 113.2
Cash 6.1 13.3 2.7
Borrowings (45.4) - (17.2)
Provisions - (2.5) -
Other net liabilities (1.1) (4.1) (3.6)
Net assets 91.2 122.3 95.1
NAV per share 153.0p 205.1p 159.4p
Robert Ware, Chief Executive commented:
"Investment activity will take time to return to the levels seen before the
market downturn. However, as inflation and interest rates recede, such that
costs become more stabilised, the viability of funding opportunities should
improve. Given the significant progress made at The Island Quarter, Nottingham
and with investors prioritising high quality and sustainable investments we
are optimistic that opportunities will evolve over the coming months and years
which should enable us to maximise the returns from this and our other
development sites."
Enquiries:
The Conygar Investment Company PLC
Robert Ware: 020 7258 8670
David Baldwin: 020 7258 8670
Liberum Capital Limited (nominated adviser and broker)
Richard Lindley: 020 3100 2000
Jamie Richards: 020 3100 2000
Temple Bar Advisory (public relations)
Alex Child-Villiers: 07795 425580
Sam Livingstone: 07769 655437
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as amended by The Market Abuse (Amendment) (EU Exit)
Regulations 2019. Upon the publication of this announcement via the Regulatory
Information Service, this inside information is now considered to be in the
public domain.
This announcement is being made on behalf of the Company by David Baldwin,
Finance Director.
Chairman's and Chief Executive's statement
Progression
Against a challenging and uncertain market backdrop we have continued to make
steady progress, in particular at our mixed-use development site at TIQ, such
that we should be well positioned to benefit from both the improving economic
outlook and resultant uplift in investment activity.
During the period, we have made significant progress towards completing
construction of the first phase student accommodation development at TIQ with
practical completion expected before the end of June. Given the inflationary
pressures, economic uncertainty and supply chain shortages experienced during
the development we are delighted to be completing this phase on time and on
budget.
Lettings for the 693-bed development are also progressing well, with
approximately 40% of all enquiries converting into reservations. As such, we
are targeting full occupancy and a net operating income, for the 2024-2025
academic year of circa £5m. Furthermore, in February 2024, we submitted a
detailed planning application for the adjoining second phase of student
accommodation to complement the current development. This phase comprises a
383-bed scheme for which we are hopeful of a positive determination from the
planning committee in the coming months.
Valuation
The fair value of TIQ has been considered by the Board by reference to any
changes in the assumptions set out in the reported 30 September 2023 valuation
provided by Knight Frank LLP, progression of the project and the
recoverability of costs incurred since that date. During the period, no
planning permissions were granted or buildings completed, however there have
been significant cash outlays, in particular to progress construction of the
first phase student accommodation development.
Whilst we recognise the negative valuation impact from the recent abolition of
multiple dwellings relief, the fundamentals within both the purpose-built
student accommodation ("PBSA") and residential build to rent ("BTR") sectors,
which comprise approximately 65% by plot size of TIQ, remain very positive.
Student numbers in the UK are at record highs, compounded by an increasing
demand from the international market and there remains a material imbalance
between supply and demand across both sectors such that rental growth
prospects remain strong. With inflationary pressures easing and interest rate
reductions anticipated in the second half of 2024 it bodes well for property
yield improvements across the real estate sector, over the coming years.
As a result, the overall fair value for TIQ is assumed to have been maintained
throughout the period subject to an uplift to reflect the value enhancement
from costs incurred since 30 September 2023, primarily in connection with the
ongoing student accommodation development and submission of the second phase
student accommodation application, resulting in a £18.4 million increase in
the carrying value at 31 March 2024 to £114.7 million.
Elsewhere at TIQ
At 1 TIQ, against a backdrop of squeezed household budgets and rising costs,
compounded by a recent increase in the minimum wage, we realised a loss in the
period of £0.3 million. However, as a result of increasing capacity, in
particular for our outdoor events space, and the provision of a stretch tent
cover, to enable its all-weathers use, total revenues for the venue have
increased by 30% compared with the same six-month period in the prior year.
This expansion, supplemented by significant improvements in food, beverage and
wage margins since the start of the year, and the onset of the summer months
should enable enhanced returns in the next six months with gross revenues
projected for the full year in excess of £6 million.
Other property assets
Following the recent announcement by the UK government of its intention, in
support of their nuclear ambitions, to acquire the Wylfa site on Anglesey, we
are becoming increasingly confident as to the potential and range of
opportunities offered by our Welsh sites which are ideally located to support
any such future development. At the 203 acre brownfield site at Rhosgoch,
classified as a special area in the Anglesey freeport, we continue to receive
considerable interest from the renewables sector. However, while we await
future announcements from the UK government as to their intentions for the
Wylfa site we do not anticipate making any firm commitments in that regard.
At Holyhead Waterfront, also in Anglesey, we continue to await the
determination of the detailed application submitted in 2021. As set out in the
September 2023 annual report, we have currently fully written down the value
of this project.
Results summary
The Group has incurred a loss in the six months to 31 March 2024 of £3.8
million. This is substantially derived from net operational, financing and
administrative losses of £2.4 million (£2.1 million excluding depreciation)
as we continue the transition of our consented development plots at TIQ to
income-producing assets. We have also written down the carrying value of the
proposed residential project in Bristol by £1.4 million to reflect the market
conditions currently impacting the viability and better progression of this
project.
However, with the restaurant and events venue at 1 TIQ now well established
and expanding its operations, in addition to the first phase student
accommodation development in Nottingham becoming rent-producing from September
2024, we anticipate a material uplift in revenues in the coming year to offset
against these operational costs.
Cash deposits and debt financing
The cash deposits of the Group have increased in the period from £2.7 million
at 30 September 2023 to £6.1 million at 31 March 2024 primarily as a result
of placing 5 million ZDP shares and drawing down the first tranche of the £12
million loan facility from ASK.
The ZDP shares, which were issued in October 2023 at a price of £1 per ZDP
share, have a life of five years and a final capital entitlement of 153.86
pence per ZDP share, equivalent to a gross redemption yield of 9% per annum on
the issue price. The Company also subscribed for a further 10 million ZDP
shares which it will look to place, subject to investor sentiment, during
their 5-year term to further boost the Group's cash reserves as required.
The loan facility from ASK is for an initial term of 2 years with interest
paid at the Bank of England base rate plus a margin of 5.9%. The net proceeds
from drawing the first £5 million tranche of this facility, in addition to
the net proceeds from placing the ZDP shares have been and will continue to be
utilised in the progression of TIQ whilst we advance discussions with
potential investors to enable the funding for future phases of this
substantial mixed-use development.
Outlook
Investment activity will take time to return to the levels seen before the
market downturn. However, as inflation and interest rates recede, such that
costs become more stabilised, the viability of funding opportunities should
improve. Given the significant progress made at The Island Quarter, Nottingham
and with investors prioritising high quality and sustainable investments we
are optimistic that opportunities will evolve over the coming months and years
which should enable us to maximise the returns from this and our other
development sites.
N J
Hamway
R T E Ware
Chairman
Chief Executive
Financial review
Net asset value
During the six months ended 31 March 2024, the Group's NAV decreased by £3.8
million to £91.2 million (31 March 2023: £122.3 million; 30 September 2023:
£95.1 million). The primary movements in the period were management and
administrative costs of £2.3 million, a £1.4 million write down in the
carrying value of the proposed residential development in Bristol, expensed
finance costs of £0.4 million and other net direct property costs. These were
partly offset by a gross profit, before administrative costs, at 1 TIQ of
£0.5 million and interest received from cash deposits.
Cash flow and financing
At 31 March 2024, the Group had cash deposits of £6.1 million and net
borrowings, including the accrued capital entitlement of the ZDP shares, of
£45.4 million (31 March 2023: cash of £13.3 million and no debt; 30
September 2023: cash of £2.7 million and net borrowings of £17.2 million).
The primary cash inflows in the period were £18.9 million, drawn down under
the Barclays debt facility, net proceeds of £4.3 million from the issue of
ZDP shares and net proceeds of £4.4m from drawing down the first tranche of
the ASK loan. These were partly offset by £19.8 million incurred on the
Group's development and investment properties, including £17.6 million of
construction costs and professional fees in connection with the first phase of
student accommodation at TIQ, plus fees in connection with the detailed
planning application, submitted in February 2024, for a second phase of
student accommodation. Further costs were incurred to complete the fitting out
of the restaurant and events venue at 1 TIQ, to progress the potential
development project in Bristol and fund the net operational and administrative
costs of the Group, resulting in a net cash inflow for the period of £3.4
million.
The £47.5 million Barclays debt facility, which expires in December 2025,
will enable the Group to complete construction of the student accommodation
development at TIQ and enable the subsequent letting and stabilisation of this
asset. The net proceeds from the ZDP shares and ASK debt are being utilised to
cover our net operational costs and further progress TIQ as we seek the longer
term development funding required to progress this substantial project.
Net income from property activities Six months ended Year ended
31 Mar 2024 31 Mar 2023 30 Sept
£'m
£'m
2023
£'m
Rental income 0.1 0.1 0.1
Restaurants and events income 2.2 1.6 4.3
Direct costs of rental income (0.4) (0.2) (0.5)
Direct costs of restaurants and events income (1.7) (1.7) (3.9)
0.2 (0.2) 0.0
Proceeds from property sale - 9.7 9.6
Cost of property sale - (9.5) (9.5)
Total net income arising from property activities 0.2 0.0 0.1
Administrative expenses
The administrative expenses for the period ended 31 March 2024 were £2.3
million (period ended 31 March 2023: £2.3 million; year ended 30 September
2023: £4.8 million). As we reported in September 2023, properly managing the
substantially increased development and operations teams, in particular at
TIQ, has required an increase in Group overheads.
Taxation
No current tax is payable for the six months ended 31 March 2024 (period ended
31 March 2023: £nil; year ended 30 September 2023: £nil) as the Group has
been loss-making over those periods and continues to have available losses to
offset against any resulting taxable profits.
The writing down at 30 September 2023 in the carrying value of the Group's
investment properties resulted in the full reversal of a £1.7 million net
deferred tax charge. The Directors have assessed the potential deferred tax
liability of the Group as at 31 March 2024 in respect of the chargeable gains
that would be payable if the investment properties were sold at their reported
values. Based on the unrealised chargeable gain of £nil as at 30 September
2023, and remaining as at 31 March 2024, no deferred tax liability has been
recognised (31 March 2023: £4.7 million).
As at 31 March 2024, the Group has further unused tax losses of £51.9 million
(31 March 2023: £24.4 million; 30 September 2023: £48.1 million) for which
no deferred tax asset has been recognised in the consolidated balance sheet.
1 TIQ and investment properties under construction
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'m
£'m
£'m
Phase 1 - 1 TIQ 13.9 14.2 14.0
Phase 2A - first phase student accommodation 82.6 26.8 65.6
Undeveloped plots 31.0 65.5 29.5
Virgin Active Gym (freehold interest) 1.2 1.2 1.2
Total 128.7 107.7 110.3
(1) The Group's investment properties under construction at TIQ were
valued by the Company's Directors at 31 March 2024 and 31 March 2023 and by
Knight Frank LLP, in their capacity as external valuers, as at 30 September
2023.
Development and trading properties
31 Mar 31 Mar 30 Sept
2023
2024 2023
£'m
£'m £'m
Rhosgoch 2.5 2.5 2.5
Parc Cybi 0.4 0.4 0.4
Holyhead Waterfront (2) - 5.0 -
Total 2.9 7.9 2.9
(1) Development and trading properties are stated at the lower of cost and
net realisable value.
(2) The value of the development site at Holyhead Waterfront was fully
written down at 30 September 2023.
Consolidated statement of comprehensive income
For the six months ended 31 March 2024
Six months ended Year ended
Note 31 Mar 2024 31 Mar 2023 30 Sept
£'000 £'000 2023
£'000
Rental income 3 112 97 141
Restaurant and events income 2,151 1,646 4,257
Proceeds on sale of development and trading properties - 9,650 9,650
Revenue 2,263 11,393 14,048
Direct costs of rental income (353) (190) (513)
Direct costs of restaurant and events income (1,691) (1,745) (3,928)
Costs on sale of development and trading properties - (9,476) (9,524)
Development / other project costs written off (1,444) (56) (5,164)
Direct costs (3,488) (11,467) (19,129)
Gross loss (1,225) (74) (5,081)
Fair value adjustment of property - - (30)
Fair value adjustment of investment properties - - (21,546)
under construction
Administrative expenses (2,346) (2,292) (4,775)
Operating loss (3,571) (2,366) (31,432)
Finance costs 5 (427) - -
Finance income 5 157 87 186
Loss before taxation (3,841) (2,279) (31,246)
Taxation 6 - - 1,714
Loss and total comprehensive (3,841) (2,279) (29,532)
charge for the period
Basic and diluted loss per share 8 (6.44p) (3.82p) (49.52p)
All amounts are attributable to equity shareholders of the Company.
All of the activities of the Group are classed as continuing.
Consolidated statement of changes in equity
For the six months ended 31 March 2024
Share Capital Retained Total
capital
redemption
earnings
equity £'000
£'000
reserve
£'000
£'000
Changes in equity for the
six months ended 31 March 2023
At 1 October 2022 2,982 3,928 117,694 124,604
Loss for the period - - (2,279) (2,279)
Total comprehensive charge for the period - - (2,279) (2,279)
At 31 March 2023 2,982 3,928 115,415 122,325
Changes in equity for the
year ended 30 September 2023
At 1 October 2022 2,982 3,928 117,694 124,604
Loss for the year - - (29,532) (29,532)
Total comprehensive charge for the year - - (29,532) (29,532)
At 30 September 2023 2,982 3,928 88,162 95,072
Changes in equity for the
six months ended 31 March 2024
At 1 October 2023 2,982 3,928 88,162 95,072
Loss for the period - - (3,841) (3,841)
Total comprehensive charge for the period - - (3,841) (3,841)
At 31 March 2024 2,982 3,928 84,321 91,231
All amounts are attributable to equity shareholders of the Company.
Consolidated balance sheet
As at 31 March 2024
Note 31 Mar 2024 31 Mar 2023 30 Sept
£'000 £'000 2023
£'000
(as restated)
Non-current assets
Property, plant and equipment 9 14,999 15,364 15,116
Investment properties under construction 10 114,748 93,560 96,350
Deferred tax asset 6 - 2,986 -
129,747 111,910 111,466
Current assets
Development and trading properties 11 2,880 7,880 2,880
Inventories 12 77 69 110
Trade and other receivables 13 1,026 1,554 2,203
Tax asset 28 28 28
Cash and cash equivalents 6,122 13,257 2,676
10,133 22,788 7,897
Total assets 139,880 134,698 119,363
Current liabilities
Trade and other payables 14 3,210 6,860 7,091
Provision for liabilities and charges 15 - 813 -
3,210 7,673 7,091
Non-current liabilities
Deferred tax liability 6 - 4,700 -
Bank borrowings 16 40,785 - 17,200
ZDP shares 17 4,654 - -
45,439 4,700 17,200
Total liabilities 48,649 12,373 24,291
Net assets 91,231 122,325 95,072
Equity
Called up share capital 18 2,982 2,982 2,982
Capital redemption reserve 3,928 3,928 3,928
Retained earnings 84,321 115,415 88,162
Total equity 91,231 122,325 95,072
Net assets per share 20 153.0p 205.1p 159.4
As at 1 October 2022, the Group's then operational restaurant, beverage and
events venue at 1 TIQ was reclassified, at fair value, from an investment
property under construction to property, plant and equipment. However, for the
31 March 2023 interim report 1 TIQ was reported as an investment property and
so has been restated above to ensure consistency with the 30 September 2023
annual report disclosure.
Consolidated cash flow statement
For the six months ended 31 March 2024
Six months ended Year ended
31 Mar 2024 31 Mar 2023 30 Sept
£'000 £'000 2023
£'000
Cash flows from operating activities
Operating loss (3,571) (2,366) (31,432)
Deficit on revaluation of properties - - 21,576
Development and other project costs written off 1,444 56 5,164
Profit on sale of development and trading properties - (174) (126)
Depreciation of property, plant and equipment 306 - 595
Cash flows from operations before changes in working capital (1,821) (2,484) (4,223)
Decrease / (increase) in inventories 33 (37) (78)
(Increase) / decrease in trade and other receivables (523) 80 (1,125)
Additions to development and trading properties (78) (141) (294)
Net proceeds from sale of development and trading properties - 9,645 9,490
(Decrease) / increase in trade and other payables (631) 2,059 1,207
Net cash flows (used in) / generated from operations (3,020) 9,122 4,977
Cash flows from investing activities
Additions to investment properties (19,689) (12,283) (35,731)
Additions to property, plant and equipment (184) (226) (479)
Finance income 157 87 186
Cash flows used in investing activities (19,716) (12,422) (36,024)
Cash flows from financing activities
Bank loan drawn 23,888 - 18,033
Bank loan arrangement fees (566) (804) (924)
Gross proceeds from issue of ZDP shares 5,000 - -
ZDP arrangement fees (660) - (113)
Interest paid (1,480) - (634)
Cash flows generated from (used in) financing activities 26,182 (804) 16,362
Net increase / (decrease) in cash and cash equivalents 3,446 (4,104) (14,685)
Cash and cash equivalents at the start of the period 2,676 17,361 17,361
Cash and cash equivalents at the end of the period 6,122 13,257 2,676
Notes to the interim results
1. General information
The Conygar Investment Company PLC ("the Company") is incorporated in the
United Kingdom and domiciled in England and Wales, is registered at Companies
House under registration number 04907617, listed on the AIM market of the
London Stock Exchange and limited by shares.
The financial information set out in this report covers the six months to 31
March 2024, with comparative amounts shown for the six months to 31 March 2023
and the year to 30 September 2023, and includes the results and net assets of
the Company and its subsidiaries, together referred to as the Group.
Further information about the Group and Company can be found on its website
www.conygar.com.
2. Basis of preparation
The interim financial statements have been prepared in accordance with
International Accounting Standard ("IAS") 34 Interim Financial Reporting. The
accounting policies used in preparing the condensed financial information are
consistent with those of the annual financial statements for the year ended 30
September 2023 other than the mandatory adoption of new standards, revisions
and interpretations that are applicable to accounting periods commencing on or
after 1 October 2023, as detailed in the annual financial statements.
The condensed financial information for the six-month period ended 31 March
2024 and the six-month period ended 31 March 2023 has been reviewed but not
audited and does not constitute full financial statements within the meaning
of section 435 of the Companies Act 2006.
The financial information for the year ended 30 September 2023 does not
constitute the Group's statutory accounts for that period, but it is derived
from those accounts. Statutory accounts for the year ended 30 September 2023
have been delivered to the Registrar of Companies. Saffery LLP reported on
those accounts, their report was unqualified and did not contain statements
under section 498(2) or (3) of the Companies Act 2006.
The board of directors approved the above results on 15 May 2024.
Copies of the interim report may be obtained from the Company Secretary, The
Conygar Investment Company PLC, First Floor, Suite 3, 1 Duchess Street,
London, W1W 6AN.
3. Rental income
Six months ended Year ended
31 Mar 2024 31 Mar 2023 30 Sept
£'000 £'000 2023
£'000
Income from operating leases 112 94 138
Option fee income - 3 3
Total rental income 112 97 141
4. Segmental information
IFRS 8 "Operating Segments" requires the identification of the
Group's operating segments which are defined as being discrete components of
the Group's operations whose results are regularly reviewed by the Board. The
Group divides its business into the following segments:
· Investment properties held for capital appreciation, rental income or
both; and,
· Development properties, which include sites and developments under
construction held for sale in the ordinary course of business; and,
· Food, beverage and events operations.
Balance sheet
As at 31 March 2024 As at 31 March 2023
Investment Development Food, Other Group Investment Development Food,
properties
properties
beverage
£'000
properties
properties
beverage
£'000
£'000
and events total
£'000
£'000
and events Other Group
£'000
£'000
£'000
total
£'000
£'000
Investment properties 114,748 - - - 114,748 107,728 - - - 107,728
Development and - 2,880 - - 2,880 - 7,880 - - 7,880
trading properties
Property, plant - - 14,999 - 14,999 - - 1,196 - 1,196
and equipment
114,748 2,880 14,999 - 132,627 107,728 7,880 1,196 - 116,804
Other assets 456 80 346 6,371 7,253 4,860 62 478 12,494 17,894
Total assets 115,204 2,960 15,345 6,371 139,880 112,588 7,942 1,674 12,494 134,698
Liabilities (42,680) (36) (924) (5,009) (48,649) (9,383) (2,144) (767) (79) (12,373)
Net assets 72,524 2,924 14,421 1,362 91,231 103,205 5,798 907 12,415 122,325
Income statement
Six months ended 31 March 2024 Six months ended 31 March 2023
Investment Development Food, Other Group Investment Development Food,
properties
properties
beverage
£'000
properties
properties
beverage
£'000
£'000
and events total
£'000
£'000
and events Other Group
£'000
£'000
£'000
total
£'000
£'000
Revenue 54 57 2,152 - 2,263 36 9,711 1,646 - 11,393
Direct costs (305) (98) (1,691) (1,394) (3,488) (49) (9,673) (1,745) - (11,467)
Gross (loss) / profit (251) (41) 461 (1,394) (1,225) (13) 38 (99) - (74)
Administrative expenses - - (780) (1,566) (2,346) - - (760) (1,532) (2,292)
Operating (loss) / profit (251) (41) (319) (2,960) (3,571) (13) 38 (859) (1,532) (2,366)
Finance costs - - - (427) (427) - - - - -
Finance income - - - 157 157 - - - 87 87
(Loss) / profit (251) (41) (319) (3,230) (3,841) (13) 38 (859) (1,445) (2,279)
before taxation
Taxation - - - - - - - - - -
(Loss) / profit (251) (41) (319) (3,230) (3,841) (13) 38 (859) (1,445) (2,279)
after taxation
5. Finance costs and finance income
Finance costs Six months ended Year ended
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
Bank loan interest 1,483 - 347
Bank loan commitment fees 116 167 421
Bank loan management and monitoring fees 18 3 23
Amortisation of bank loan arrangement fees 299 - 56
Total bank loan finance costs 1,916 170 847
Capitalisation of bank loan finance costs (note 10) (1,916) (170) (847)
Net bank loan finance costs - - -
Interest on ZDP shares 221 - -
Amortisation of ZDP shares issue costs 206 - -
Net finance costs 427 - -
Finance costs that are directly attributable to the planning fees,
construction costs and associated professional fees for TIQ are capitalised as
incurred into investment properties under construction.
Finance income Six months ended Year ended
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
Bank interest receivable 157 87 186
6. Taxation
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
Current tax - - -
Deferred tax credit - - (1,714)
Total tax credit - - (1,714)
Deferred tax asset
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
At the start of the period - 2,986 2,986
Credit for the period - - (2,986)
At the end of the period - 2,986 -
The Group will recognise a deferred tax asset for tax losses, held by group
undertakings, where the Directors believe it is probable that such an asset
will be recovered.
As at 31 March 2024, the Group has further unused losses of £51.9 million (31
March 2023: £24.4 million; 30 September 2023: £48.1 million) for which no
deferred tax asset has been recognised in the consolidated balance sheet.
Deferred tax liability - in respect of chargeable gains on investment
properties
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
At the start of the period - 4,700 4,700
Debit for the period - - (4,700)
At the end of the period - 4,700 -
The Directors have assessed the potential deferred tax liability of the Group
in respect of chargeable gains that would be payable if the investment
properties were sold at their reported values at each period end. Based on the
unrealised chargeable gain of £nil at 30 September 2023, and remaining at 31
March 2024 (31 March 2023: £18,798,000), a deferred tax liability of £nil
has been recognised (31 March 2023: £4,700,000).
Prior period deferred tax assets and liabilities were calculated at a
corporation tax rate of 25% being the rate that had been enacted or
substantively enacted by each balance sheet date and which was expected to
apply when the liability was settled and the asset realised.
7. Dividends
No dividends will be paid in respect of the six-month period ended 31 March
2024 and none were paid in the six-month period ended 31 March 2023 or the
year ended 30 September 2023.
8. Loss per share
Loss per share is calculated as the loss attributable to ordinary shareholders
of the Company for the period ended 31 March 2024 of £3,841,000 (period ended
31 March 2023: loss of £2,279,000; year ended 30 September 2023: loss of
£29,532,000) divided by the weighted average number of shares in issue
throughout each period of 59,638,588. There are no diluting amounts in either
the current or prior periods.
9. Property, plant and equipment
Property
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
(as restated)
At the start of the period 14,000 - -
Reclassification from investment - 14,100 14,100
properties under construction (note 10)
Additions 76 68 192
Depreciation (131) - (262)
Fair value adjustment - - (30)
At the end of the period 13,945 14,168 14,000
At 1 October 2022, the Group's then operational restaurant, beverage and
events venue at 1 TIQ was reclassified, at fair value from an investment
property under construction to property, plant and equipment.
Land and buildings are stated at revalued amounts less any depreciation or
impairment losses subsequently accumulated. Land is not depreciated.
Depreciation on revalued buildings is recognised using the straight-line basis
and results in the carrying amount, less the residual value, being expensed
through the income statement over their estimated useful lives of 50 years.
The fair value of 1 TIQ as at 31 March 2024 has been provided by reference to
the 30 September 2023 valuation, as provided by Knight Frank LLP, adjusted to
reflect the construction costs incurred and depreciation charged in the
current period, resulting in a carrying value as at 31 March 2024 of
£13,945,000.
As at 30 September 2023, 1 TIQ was valued by Knight Frank LLP in their
capacity as external valuer. The valuation was prepared on a fixed fee basis,
independent of the property value and undertaken in accordance with RICS
Valuation - Global Standards on the basis of fair value, supported by
reference to market evidence of transaction prices for similar properties. It
assumed a willing buyer and a willing seller in an arm's length transaction
and reflected usual deductions in respect of purchaser's costs and SDLT as
applicable at the valuation date. The independent valuer made various
assumptions including future rental income, anticipated void costs and the
appropriate discount rate or yield.
Plant and equipment
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
At the start of the period 1,116 991 991
Additions 113 355 458
Depreciation (175) (150) (333)
At the end of the period 1,054 1,196 1,116
During the current period and prior year, the Group acquired plant, machinery
and office equipment required to operate the restaurant, beverage and events
venue at 1 TIQ.
Depreciation is recognised so as to write off the cost of these assets, over
their estimated useful economic lives, using the straight-line method at 25%
per annum.
10. Investment properties under construction
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
At the start of the period 96,350 93,000 93,000
Additions 16,482 15,073 39,545
Capitalisation of finance costs (note 5) 1,916 170 847
Fair value adjustments - - (21,546)
Reclassification to property, plant and equipment (note 9) - (14,100) (14,100)
Movement in introductory fee provision - (583) (1,396)
At the end of the period 114,748 93,560 96,350
Investment properties under construction comprise freehold land and buildings
at TIQ which are held for current or future development as investment
properties and reported in the balance sheet at fair value.
Valuations of the Group's investment properties under construction are
inherently subjective as they are based on assumptions which may not prove to
be accurate and which, as a result, are subject to material uncertainty. This
is particularly true for TIQ given its scale, lack of comparable evidence and
the early-stage position of this substantial development. As such, relatively
small changes to the underlying assumptions of key parameters, such as rental
levels, net initial yields, construction costs, finance costs and void periods
can have a significant impact both positively and negatively on the resulting
valuation as evidenced in the prior year.
As set out in the Chairman's and Chief Executive's statement, the reported
fair value of TIQ as at 31 March 2024 has been provided by the Board by
reference to any changes in the assumptions set out in the reported 30
September 2023 valuation provided by Knight Frank LLP, progression of the
project and the recoverability of costs incurred since that date. During the
period, no planning permissions were granted or buildings completed and whilst
we recognise the impact that price inflation and monetary policy tightening
has had on property construction costs and commercial property yields, we have
seen these offset by a corresponding uplift in market rents, particularly
within the residential build to rent and student accommodation sectors. As the
assumptions, when appraised as a whole, are not considered by the Board to be
materially different to those envisaged as at 30 September 2023 the fair value
has only been adjusted to reflect the cash outlays in the current period to
progress, in particular, the construction of the first phase student
accommodation development and the detailed planning application for the second
phase of student accommodation. As such the fair value at 31 March 2024 has
been increased to £114,748,000 to reflect those development costs incurred in
the six-months since 30 September 2023.
In preparing their valuation at 30 September 2023, Knight Frank utilised
market and site-specific data, their own extensive knowledge of the real
estate sector, professional judgement and other market observations as well as
information provided by the Company's Executive Directors. The resulting
models and assumptions therein were also reviewed for overall reasonableness
by the Board. Inevitably in a complex model like this, and as noted above,
variations in assumptions can lead to widely differing values.
The Knight Frank LLP valuation at 30 September 2023 was prepared on a fixed
fee basis, independent of the property value and undertaken in accordance with
RICS Valuation - Global Standards on the basis of fair value, supported by
reference to market evidence of transaction prices for similar properties. It
assumed a willing buyer and a willing seller in an arm's length transaction
and reflected usual deductions in respect of purchaser's costs and SDLT as
applicable at the valuation date. The independent valuer made various
assumptions including future rental income, anticipated void costs and the
appropriate discount rate or yield.
The fair value of Nottingham has been determined using an income
capitalisation technique whereby contracted rent and market rental values are
capitalised with a market capitalisation rate. This technique is consistent
with the principles in IFRS 13 and uses significant unobservable inputs, such
that the fair value has been classified in all periods as Level 3 in the fair
value hierarchy as defined in IFRS 13. For Nottingham, the key unobservable
inputs are the net initial yields, construction costs, rental income rates,
construction financing costs and expiry void periods. Principal sensitivities
of measurement to variations in the significant unobservable outputs are that
decreases in net initial yields, construction costs, financing costs and void
periods will increase the fair value whereas reductions to rental income rates
would decrease the fair value.
As at 1 October 2022, the Group's then operational restaurant, beverage and
events venue at 1 TIQ was reclassified, at fair value, from an investment
property under construction to property, plant and equipment.
The historical cost of the Group's investment properties under construction as
at 31 March 2024 was £107,596,000 (31 March 2023: £67,603,000; 30 September
2023: £89,198,000).
11. Development and trading properties
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
At the start of the period 2,880 17,137 17,137
Additions 50 135 276
Disposals (1) - (9,336) (9,369)
Development costs written off (2) (50) (56) (5,164)
At the end of the period 2,880 7,880 2,880
1. The Group's development site at Haverfordwest, Pembrokeshire was
sold in the prior year for gross proceeds of £9.65 million realising a profit
in that year of £0.13 million.
2. Holyhead Waterfront is fully written down at 31 March 2024 and 30
September 2023.
Development and trading properties are reported in the balance sheet at the
lower of cost and net realisable value. The net realisable value of properties
held for development requires an assessment of the underlying assets using
property appraisal techniques and other valuation methods. Such estimates are
inherently subjective as they are made on assumptions which may not prove to
be accurate and which can only be determined in a sales transaction.
12. Inventories
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
Food and drink 77 69 110
Inventories recognised as an expense in the period ended 31 March 2024
totalled £638,000 (period ended 31 March 2023: £604,000; year ended 30
September 2023: £1,411,000).
13. Trade and other receivables
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
Trade receivables 104 108 139
Other receivables 540 263 1,432
Prepayments and accrued income 382 1,183 632
1,026 1,554 2,203
Trade and other receivables are measured on initial recognition at fair value,
and are subsequently measured at amortised cost using the effective interest
rate method, less any impairment. Impairment is calculated using an expected
credit loss model.
14. Trade and other payables
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
Social security and payroll taxes 131 156 156
Trade payables 1,890 3,806 5,996
Other payables 345 1,907 -
Accruals and deferred income 844 991 939
3,210 6,860 7,091
Trade and other payables are recognised initially at fair value, and are
subsequently measured at amortised cost using the effective interest rate
method.
Trade payables primarily comprise amounts due to the contractor and other
professionals in connection with the student accommodation development at TIQ
to be funded by way of a further drawdown from the Barclays development loan
facility.
15. Provision for liabilities and charges
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
At the start of the period - 1,396 1,396
Movement in provision in the period - (583) (1,396)
At the end of the period - 813 -
The Group is party to a services agreement in connection with its investment
property at TIQ. The date for calculation of any fee payable under this
agreement has been extended until 30 June 2025. The provisions at 31 March
2024, 31 March 2023 and 30 September 2023 were calculated by reference to the
value of TIQ at each balance sheet date after allowing for a priority return
and applicable costs. The reduction in value of the Group's residual land at
30 September 2023 resulted in a full reversal of this provision.
16. Borrowings - non current
Barclays
31 Mar 2024 30 Sept 2023
Drawn £'000 Undrawn £'000 Total £'000 Drawn £'000 Undrawn £'000 Total £'000
At the start of the period 18,033 29,467 47,500 - - -
Drawdown in the period 18,888 (18,888) - 18,033 29,467 47,500
At the end of the period 36,921 10,579 47,500 18,033 29,467 47,500
Less unamortised loan arrangement fees (582) - (582) (833) - (833)
36,339 10,579 46,918 17,200 29,467 46,667
ASK
31 Mar 2024 30 Sept 2023
Drawn £'000 Undrawn £'000 Total £'000 Drawn £'000 Undrawn £'000 Total £'000
At the start of the period - - - - - -
New facility in the period 5,000 7,000 12,000 - - -
At the end of the period 5,000 7,000 12,000 - - -
Less unamortised loan arrangement fees (554) - (554) - - -
4,446 7,000 11,446 - - -
Total borrowings
31 Mar 2024 30 Sept 2023
Drawn £'000 Undrawn £'000 Total £'000 Drawn £'000 Undrawn £'000 Total £'000
At the start of the period 18,033 29,467 47,500 - - -
Drawdown in the period 18,888 (18,888) - - - -
New facility in the period 5,000 7,000 12,000 18,033 29,467 47,500
At the end of the period 41,921 17,579 59,500 18,033 29,467 47,500
Less unamortised loan arrangement fees (1,136) - (1,136) (833) - (833)
40,785 17,579 58,364 17,200 29,467 46,667
On 23 December 2022, the Group entered into a facilities agreement with
Barclays Bank PLC comprising a development facility and an investment facility
(together the "facilities") up to £47.5 million in aggregate. The facilities
will enable completion of the construction and subsequent letting of the 693
bed student accommodation development at TIQ.
As at 31 March 2023, no amounts had been drawn under the facilities with the
first development facility drawdown occurring in May 2023. As such, no
comparative has been provided in the table above as at 31 March 2023.
The maximum term of the combined facilities is 3 years. This includes the
development facility for up to 27 months, which subject to the satisfaction of
certain conditions prior to the expiry of the development facility, switches
into the investment facility for the remainder of the 3-year term. Interest on
the development facility is payable on a Sonia-linked floating rate basis for
each interest period plus a margin of 3.25%, and interest is payable on the
investment facility at the same Sonia rate plus a margin of 1.90%.
Security for the facilities is provided by way of the student accommodation
plot. The Company has also provided cost overrun and interest shortfall
guarantees of up to £5 million in connection with the development facility. A
capital guarantee is also in place which could increase the Company's
guarantee by £2.5 million if certain covenants are not met in advance of
drawing the investment facility or the development facility is not repaid when
due.
On 16 November 2023, the Group entered into a £12 million loan facility with
ASK. The loan is for an initial term of two years with interest paid at the
Bank of England base rate plus a margin of 5.9 per cent. The funds will be
utilised primarily to further progress TIQ.
The Group remained compliant with all covenants throughout the period up to
the date of this report.
Reconciliation of liabilities to cash flows from financing activities
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
Bank borrowings at the start of the period 17,200 - -
Cash flows from financing activities:
Bank borrowings drawn 23,888 - 18,033
Loan arrangement fees paid (601) - (889)
Non-cash movements:
Amortisation of loan arrangement fees 298 - 56
Bank borrowings at the end of the period 40,785 - 17,200
17. ZDP shares
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
At the start of the period - - -
Net proceeds from issue of 5 million ZDP shares 4,226 - -
Amortisation of issue costs 206 - -
Accrued capital 222 - -
At the end of the period 4,654 - -
On 3 October 2023, the Group placed 5 million ZDP shares, at a price of £1.00
per ZDP share (the "issue price"), with a further 10 million ZDP shares
subscribed for by the Company (each a "subscription share"). The issue price
for the subscription shares is required to be paid by the Company on the
earlier of five business days after the date of transfer of such shares to a
third party or 4 October 2028, following which such funds, net of issue costs,
are required to be lent to the Company in accordance with a contribution
agreement.
The ZDP shares have a life of five years and a final capital entitlement of
153.86 pence per ZDP share payable on 4 October 2028 (the "ZDP repayment
date"), equivalent to a gross redemption yield of 9.0 per cent. per annum on
the issue price.
The accrued capital entitlement of each ZDP share was 104.43p as at 31 March
2024.
The ZDP shares were admitted to the Official List of The International Stock
Exchange on 4 October 2023. The ISIN number of the ZDP Shares is GB00BMGBHD21
and the SEDOL code is BMH6RG9.
The fair value of the ZDP shares at 31 March 2024, based on the quoted bid
price at that date, was £5,105,000.
The ZDP shares do not carry the right to vote at general meetings of the
Company, although they carry the right to vote as a class on certain proposals
which would be likely to materially affect their position.
18. Share capital
Number of shares allotted and called up: Six months ended Year ended
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
At the start and end of each period 59,638,588 59,638,588 59,638,588
Nominal value of Ordinary shares of 5p each: Six months ended Year ended
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
At the start and end of each period 2,982 2,982 2,982
19. Capital commitments
As at 31 March 2024, the Group had contracted capital commitments, not
provided for in the financial statements, of £5.1 million (31 March 2023:
£42.1 million; 30 September 2023: £19.8 million) in connection with the
construction, development or enhancement of the Group's investment and trading
properties which are expected to be incurred in the next financial year. £4.9
million relates to the remaining construction costs to enable completion of
the student accommodation development at TIQ, which are to be funded entirely
by way of further drawdowns from the remaining Barclays development loan
facility.
20. Net assets per share
Net assets per share is calculated as the net assets of the Group divided by
the number of shares in issue at each period end. There are no diluting or
adjusting amounts for the reported periods.
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
Net assets 91,231 122,325 95,072
No No No
Shares in issue 59,638,588 59,638,588 59,638,588
Net assets per share 153.0p 205.1p 159.4p
21. Key management compensation
Key management personnel have the authority and responsibility for planning,
directing and controlling the activities of the Group and are considered to be
the Directors of the Company. Amounts paid in respect of key management
compensation were as follows:
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2024
2023
2023
£'000
£'000
£'000
Short-term employee benefits 518 592 1,110
Independent review report to The Conygar Investment Company PLC
Conclusion
We have reviewed the accompanying condensed set of financial statements of The
Conygar Investment Company PLC ("the Company") and its subsidiaries ('the
Group') as at 31 March 2024 which comprises the consolidated statement of
comprehensive income, the consolidated statement of changes in equity,
consolidated balance sheet, consolidated cash flow statement and the related
notes for the six-month period ended 31 March 2024. We have read the other
information contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 March 2024 is not prepared, in
all material respects, in accordance with International Accounting Standard
34, 'Interim Financial Reporting' as adopted in the UK and AIM Rules of the
London Stock Exchange.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (ISRE) 2410 (UK), 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity.' A review of interim
financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the basis for conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the Group or parent
company to cease to continue as a going concern.
Directors' responsibilities
Management is responsible for the preparation and presentation of the
condensed set of financial statements included in this half-yearly financial
report in accordance with International Accounting Standard 34, 'Interim
Financial Reporting' as adopted in the UK and AIM Rules of the London Stock
Exchange. As disclosed in Note 1, the annual financial statements of
the Group and parent company are prepared in accordance with IFRS as adopted
in the UK.
In preparing the interim financial information, the Directors are responsible
for assessing the Group and parent company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to
liquidate the Group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Our responsibility
In reviewing the interim financial information, we are responsible for
expressing to the Company a conclusion on the condensed set of financial
statements in the half-yearly financial report. Our conclusion, including our
conclusions relating to going concern, are based on procedures that are less
extensive than audit procedures, as described in the basis for conclusion
paragraph of this report.
Use of our report
This report is made solely to the parent company in accordance with the terms
of our engagement. Our review has been undertaken so that we might state to
the parent company those matters we are required to state to it in this report
and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the parent company for
our review work, for this report, or for the conclusions we have reached.
Saffery LLP
Chartered Accountants
London
15 May 2024
Notes:
(a) The maintenance and integrity of The Conygar
Investment Company PLC website is the responsibility of the Directors; the
work carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the interim report since it was initially
presented on the website.
(b) Legislation in the United Kingdom governing the
presentation and dissemination of financial information may differ from
legislation in other jurisdictions.
The Directors of Conygar accept responsibility for the information contained
in this announcement. To the best of the knowledge and belief of the Directors
of Conygar (who have taken all reasonable care to ensure that such is the
case) the information contained in this announcement is in accordance with the
facts and does not omit anything likely to affect the import of such
information.
For those individual shareholders that specifically requested to continue to
receive any document issued by the Company in paper format the arrangements
will continue as before whereby the Interim Report for the period ended 31
March 2024 will be posted to those shareholders shortly. For all other
shareholders, the Interim Report will be made available, as soon as
practically possible, via the Company's website.
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