REG - Conygar Investmnt Co - Preliminary Results
RNS Number : 6137UConygar Investment Company PLC(The)26 November 2019
26 November 2019
THE CONYGAR INVESTMENT COMPANY PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2019
SUMMARY
· Net asset value per share 178.2p at 30 September 2019.
· Resolution passed to grant planning permission for our mixed-use scheme in Nottingham City Centre.
· Construction of the Lidl store at Cross Hands, Carmarthenshire completed.
· Completion of the construction and sale in October 2019 of B&M store in Ashby-de-la-Zouch, Leicestershire.
· Disposal of the Premier Inn at Parc Cybi, Anglesey completed in March 2019.
· Sale of Selly Oak, Birmingham agreed subject to planning permission.
· Write down of land value at Haverfordwest, Pembrokeshire by £18.6 million, reflecting the weak housing market.
· Bought back 3.24 million shares (5.4% of ordinary share capital) at an average price of 172.3 pence per share.
· Total cash available of £39.9 million and no borrowings.
Summary Group Net Assets as at 30 September 2019
Per Share
£'m
p
Properties
61.4
108.7
Cash
39.9
70.6
Other Net Liabilities
(0.6)
(1.1)
Net Assets
100.7
178.2
Robert Ware, Chief Executive, commented:
"The disposals of the assets at Parc Cybi, Anglesey, and Ashby-de-la-Zouch, Leicestershire, and the conditional sale of our property at Selly Oak, Birmingham, emphasise the Group's desire to realise value when opportunities arise. Funds raised from these disposals will be recycled into our other projects.
In spite of the current political uncertainty, the Group is well placed to deliver the existing developments and to take advantage of any market volatility we could see in the coming months, with cash of £39.9 million and no borrowings."
Enquiries:
The Conygar Investment Company PLC
Robert Ware: 020 7258 8670
Ross McCaskill: 020 7258 8670
Liberum Capital Limited (Nominated Adviser and Broker)
Richard Bootle: 020 3100 2222
Ed Phillips: 020 3100 2222
Laura Hamilton: 020 3100 2222
Temple Bar Advisory (Public Relations)
Alex Child-Villiers: 07795 425580
Will Barker: 020 7002 1080
Chairman's & Chief Executive's Statement
Results Summary
We present the Group's results for the year ended 30 September 2019.
Net asset value per share was 178.2p (2018: 201.3p) and the loss before tax for the year was £13.9 million (2018: £3.8 million).
The main reason for the loss before tax was the write down of £18.6 million at Haverfordwest, Anglesey, which was announced in the interim results for the six months ended 31 March 2019. As reported in May 2019, we are continuing with our plans to build the first phase of houses at this site but the demand from major housebuilders and potential homeowners for this land has been much lower than expected. These market conditions, along with the increasing costs of construction, have resulted in us re-evaluating the project and have given rise to the write-down.
Despite this negative, the Group has made good progress on the rest of the portfolio and we shall briefly outline the highlights here.
At our retail park in Cross Hands, Carmarthenshire, we completed the construction of the 23,000 square foot Lidl food store in September 2019 and accordingly, the 25 year lease with Lidl UK GmbH commenced. In October 2019, we also exchanged an agreement for lease with Union Burger Limited to construct a 2,750 square foot Burger King restaurant and drive through. Construction will commence in January. Lettings at the retail park have been strong with 90,000 square feet now tenanted and only 10,000 square feet available to let. As the park is almost fully let, a third party valuation has been undertaken and this has resulted in a surplus of £4.8 million in the year. This surplus is a significant positive when one considers the current travails of the retail sector and underlines how there is still opportunity to create value in this sector, provided the fundamentals are sound.
In October 2019, we completed the construction of the 20,000 square foot store and the 7,500 square foot garden centre at Ashby-de-la-Zouch, Leicestershire, both of which are let to B&M Retail Limited. This asset was forward sold and the Group received net proceeds of £4.2 million after the year end.
We also completed the sale of our 80 bedroom hotel, that had been let to Premier Inn Hotels Limited at Parc Cybi, Anglesey, in March 2019 and the Group received net proceeds of £6.9 million, representing a net initial yield of 4.7%.
In April 2019, we exchanged a conditional contract with a specialist provider of student accommodation to sell our industrial property in Selly Oak, Birmingham. This contract is conditional on the purchaser obtaining planning permission for its redevelopment and is also conditional on us managing the handover of the existing property with vacant possession. We expect the purchaser to submit a detailed planning application in the coming months.
As announced in April 2019, a resolution to grant planning permission was passed for our 37 acre mixed use scheme in Nottingham City Centre. We have worked closely with Nottingham City Council since our acquisition of the site in December 2016 to design a scheme which will regenerate this area of the City Centre that has been largely unused for over twenty-five years. This phased mixed use scheme will consist of offices, student housing, private residential and build to rent flats, a hotel and an associated food and beverage offering and potentially, an entertainment and leisure venue, which could have various uses. We are encouraged by the discussions we have had with potential occupants for all aspects of the scheme following the resolution to grant the planning permission and we are working with the Council to agree our section 106 obligations as quickly as possible. This will enable us to proceed with the first phase of this exciting development.
Dividend
The Board recommends that no dividend is declared in respect of the year ended 30 September 2019. More information on the Group's dividend policy can be found within the Strategic Report.
Share Buy Back
During the year, the Group acquired 3,239,000 ordinary shares representing 5.4% of its ordinary share capital, at an average price of 172.3p per share at a cost of £5.6 million. As a result of the buy backs, net asset value per share has been enhanced by 1.7 pence per share. The Group will seek to renew the buy back authority of 14.99% of the issued share capital of the Company at the forthcoming AGM. We consider it to be a vital capital management tool and believe it is prudent to have maximum flexibility given the level of uncertainty we see in the wider economy.
Board Changes
Michael Wigley, who joined the Board in October 2003 when the Company floated on the Stock Exchange, will retire at the end of September 2020. Michael's contribution throughout his tenure has been exemplary and we will miss his wise counsel. We anticipate announcing an alternative director at the Annual General Meeting.
Outlook
The disposals of the assets at Parc Cybi, Anglesey, and Ashby-de-la-Zouch, Leicestershire and the conditional sale of our property at Selly Oak, Birmingham, emphasise the Group's desire to realise value when opportunities arise. Funds raised from these disposals will be recycled into our other projects.
In spite of the current political uncertainty, the Group is well placed to deliver the existing developments and to take advantage of any market volatility we could see in the coming months, with cash of £39.9 million and no borrowings.
N J Hamway R T E Ware
Chairman Chief Executive
Strategic Report
The Group's Strategic Report provides a review of the business for the financial year; discusses the Group's financial position at the year end and explains the principal risks and uncertainties facing the business and how we manage those risks. We also outline the Group's business model and strategy.
Strategy and Business Model
Conygar is an AIM quoted property investment and development group dealing primarily in UK property. Our aim is to invest in property assets and companies where we can add significant value using our property management, development and transaction structuring skills.
The business operates three major strands being, property investment, property development and investment in companies which trade or invest in property or hold substantial property assets. We continue to focus upon positive cash flow and are prepared to use modest levels of gearing to enhance returns. Assets are recycled to release capital as opportunities present themselves and we will continue to buy back shares where appropriate. The Group is content to hold cash and adopt a patient strategy unless there is a compelling reason to invest.
Position of the Company at the year end
The Group net assets as at 30 September 2019 may be summarised as follows:
Per Share
£'m
p
Properties
61.4
108.7
Cash
39.9
70.6
Other Net Liabilities
(0.6)
(1.1)
Net Assets
100.7
178.2
With the exception of the £18.6 million write down at Haverfordwest, good progress has been made on our investment properties and development projects since we last reported, the details of which are set out below. The Group has adequate resources to maintain and develop its business and the balance sheet remains both liquid and robust with cash deposits at 30 September 2019 of £39.9 million and no borrowings.
Investment Properties and Development Projects
Nottingham, Nottinghamshire
The Group acquired 37 acres in Nottingham City Centre in December 2016 for £13.5 million. The site was formerly the headquarters and laboratories of Boots, the chemists, and has been mostly vacant for over twenty-five years. An outline planning application was submitted in June 2018 and the resolution to grant planning permission for the mixed use scheme was passed by Nottingham City Council in April 2019. The permission for the development of over two million square feet including offices, apartments and student housing, will be formally granted upon the signing of a Section 106 agreement between the Group and Nottingham City Council. It is hoped that this agreement will be signed in the coming weeks, which will enable us to start the infrastructure works and the first phase of the development.
Cross Hands, Carmarthenshire
At this retail park, 90,000 square feet of a total 100,000 square feet are now let. This includes the completion of the 23,000 square foot Lidl store, a 5,000 square foot unit that has been let to Shoe Zone PLC and a lease agreement, exchanged in September 2019, with Union Burger Limited to construct a 2,750 square foot Burger King restaurant and drive through, subject to planning permission being granted. The planning application was submitted in October 2019 and we expect to receive a decision by the end of 2019 which will enable construction to begin in January 2020. Discussions to let the remaining 10,000 square feet are ongoing.
Holyhead Waterfront, Anglesey
After agreeing with Stena Line Ports Limited to take 100% control of the Joint Venture development project last year, we have continued work on the detailed design and Reserved Matters application. We expect to submit the Reserved Matters and Marine Consent applications in early 2020.
Parc Cybi Business Park and Rhosgoch, Anglesey
In March 2019 we completed the sale of our 80 bedroom hotel at Parc Cybi, on the outskirts of Holyhead, which is let to Premier Inn Hotels Ltd for a term of 25 years. The Group received net proceeds of £6.9 million which represents a net initial yield of 4.7%. We are now looking at development proposals for the adjoining 1.4 acre residual plot.
Also at Parc Cybi, the option agreement we signed with Horizon Nuclear Power in December 2016, enabling them to construct a 6.9 acre logistics centre, is still in place. At our 203 acre site in Rhosgoch, Horizon Nuclear Power terminated its option agreement to use this land and we are now considering other uses for the site. It is likely that the potential future use will be in the renewables sector.
Selly Oak, Birmingham
We acquired two units on Selly Oak Industrial Estate for £3.5 million including costs in April 2018. The units consist of 50,000 square feet and are fully let to University Hospitals Birmingham NHS Foundation Trust and Revolution Gymnastics Limited, generating income of £215,000 per annum.
In April 2019, we exchanged a conditional contract, on a subject to planning permission basis, to sell this property to a specialist provider of student accommodation. The purchaser is expecting to submit a detailed planning application in the coming months.
Haverfordwest, Pembrokeshire
At Haverfordwest, our Reserved Matters application for the first phase of 115 houses was approved in September 2019 and we will start construction at the beginning of 2020. This follows the write down of the value of the investment, details of which were announced in the interim results for the six month period ended 31 March 2019.
Ashby-de-la-Zouch, Leicestershire
At Ashby-de-la-Zouch, we completed the construction, and received net proceeds of £4.3 million, for the 20,000 square foot store and 7,500 square foot garden centre let to B&M Retail Limited.
King's Lynn, Norfolk
This is a six acre residential development site near to King's Lynn which we are in discussions to sell.
Summary of Investment Properties
2019
2018
£'m
£'m
Cross Hands
18.30
9.64
Ashby-de-la-Zouch
3.13
0.13
Nottingham (1)
-
15.00
Haverfordwest (Retail) (1)
-
3.59
Selly Oak (1)
-
3.57
Rhosgoch (1)
-
3.47
Parc Cybi, Holyhead (1)
-
2.83
Total investment to date
21.43
38.23
(1) As set out in the tables above and below, the Group's investments in Nottingham, Haverfordwest (Retail), Selly Oak, Rhosgoch and Parc Cybi have been reclassified as development properties during the year.
Summary of Development Projects
It remains our intention, once the individual projects are significantly advanced, to introduce third party valuations as soon as it is practical to do so. We remain confident that there is significant upside in these projects which will become evident over the medium term.
2019
2018
£'m
£'m
Nottingham
15.52
-
Holyhead Waterfront
9.23
8.85
Haverfordwest (1)
7.33
22.14
Selly Oak
3.57
-
Rhosgoch
3.00
-
King's Lynn
0.78
0.87
Parc Cybi
0.50
-
Fishguard Lorry Stop
0.07
0.07
Total investment to date
40.00
31.93
(1) The Group has written down the carrying value of Haverfordwest by £18.6m as a result of the weakening of the housing market, the rising costs of construction and the fact that our retail development at this site is not currently able to commence.
Financial review
Net Asset Value
The net asset value at 30 September 2019 was £100.7 million (2018: £120.3 million). The primary movements in the year were £6.0 million from the revaluation of investment properties plus net rental income of £1.5 million, offset by £19.1 million of development costs written off, £2.6 million of administrative costs and £5.6 million spent purchasing our own shares.
Cash flow and Financing
At 30 September 2019, the Group had cash of £39.9 million and no bank debt (2018: cash of £49.3 million and no bank debt).
During the year, the Group used £2.0 million cash in operating activities (2018: used £1.0 million).
The primary cash outflows in the year were £5.6 million to buy back shares and £8.5 million on investment and development properties, including development costs for the B&M store in Ashby-de-la-Zouch, the Premier Inn at Parc Cybi and the Lidl store at Cross Hands. These were partly offset by cash inflows of £5.5 million from the sale of the Premier Inn, resulting in a net cash outflow in the year of £9.4 million (2018: cash inflow of £12.1 million).
Net Income from Property Activities
2019
2018
£'m
£'m
Rental and other income
1.8
1.5
Direct property costs
(0.2)
(0.2)
1.6
1.3
Sale of investment property
5.5
4.3
Cost of investment property sold
(5.5)
(3.8)
Total net income arising from property activities
1.6
1.8
Administrative Expenses
The administrative expenses for the year ended 30 September 2019 were £2.6 million compared with £3.1 million the previous year. The major items were salary costs of £1.6 million (2018: £1.9 million) and various costs arising as a result of the Group being listed on AIM.
Taxation
The tax charge for the year is £0.1 million on the pre-tax loss of £13.9 million. Current tax is payable, at a rate of 19% for UK registered companies and 20% for those registered in Jersey, on net rental income after deduction of finance costs and administrative expenses.
Capital management
Capital Risk Management
The Board's primary objective when managing capital is to preserve the Group's ability to continue as a going concern, in order safeguard its equity and provide returns for shareholders and benefits for other stakeholders whilst maintaining an optimal capital structure to reduce the cost of capital.
The Group does not currently have any borrowings, but may utilise borrowing in the future to fund development projects. When doing so the Group will seek to ensure that it can stay within agreed covenants with its lenders.
Treasury Policies
The objective of the Group's treasury policies is to manage the Group's financial risk, secure cost effective funding for the Group's operations and to minimise the adverse effects of fluctuations in the financial markets on the value of the Group's financial assets and liabilities, on reported profitability and on the cash flows of the Group.
The Group finances its activities with a combination of cash and short term deposits. Other financial assets and liabilities, such as trade receivables and trade payables, arise directly from the Group's operations. The Group may also finance its activities with bank loans and enter into derivative transactions to manage the interest rate risk arising from the Group's operations and its sources of finance. Throughout the year, and as at the balance sheet date, no group undertakings were party to any bank loans or derivative instruments.
The management of cash is monitored weekly with summary cash statements produced on a monthly basis and discussed regularly in management and board meetings. The approach is to provide sufficient liquidity to meet the requirements of the business in terms of funding developments and potential acquisitions. Surplus funds are invested with a broad range of institutions. At any point in time, at least half of the Group's cash is held on instant access or short term deposit of less than 30 days.
Dividend policy
The Board recommends that no dividend is paid in respect of the year ended 30 September 2019.
Our dividend policy is consistent with the overall strategy of the business: namely to invest in property assets and companies where we can add significant value using our property management, development and transaction structuring skills.
In previous years we have used the surplus cash flow from the investment property portfolio to enhance these properties by refurbishment, re-letting and extending tenancies, fund the operation of the business, create a medium term pipeline of development opportunities, pay a modest dividend and buy back shares where appropriate.
The Board will continue to review our dividend policy each year. Our focus is, and will continue to be, primarily growth in net asset value per share.
Share buy backs
During the year, the Group acquired 3,239,000 ordinary shares at an average price of 172.3p, which represented 5.4% of its ordinary share capital. This cost £5.6 million and net asset value per share has been enhanced by approximately 1.7 pence per share. The Group will seek to renew the buy back authority of 14.99% of the issued share capital of the Company at the forthcoming Annual General Meeting. We consider it to be a vital capital management tool and believe it is prudent to have maximum flexibility given the level of uncertainty we see in the wider economy.
Principal risks and uncertainties
Managing risk is an integral element of the Group's management activities and a considerable amount of time is spent assessing and managing risks to the business. Responsibility for risk management rests with the Board, with external advisers used where necessary.
Strategic risks
Strategic risks are risks arising from an inappropriate strategy or through flawed execution of a strategy. By definition, strategies tend to be longer term than most other risks and, as has been amply demonstrated in the last few years, the economic and wider environment can alter quickly and significantly. Strategic risks identified include global or national events, regulatory and legal changes, market or sector changes and key staff retention.
The Board devotes a considerable amount of time and resource to continually monitoring and discussing the environment in which we operate and the potential impacts upon the Group. We are confident we have sufficiently high calibre directors and managers to manage strategic risks.
We are content that the Group has the right approach toward strategy and our strong balance sheet is good evidence of that.
Operational risks
Operational risks are essentially those risks that might arise from inadequate internal systems, processes, resources or incorrect decision making. Clearly, it is not possible to eliminate operational risk, however a considerable amount of time and resource is applied towards ensuring we have the right calibre of staff and external support to minimise such risks, as most operational risks arise from people-related issues. Our executive directors are very closely involved in the day-to-day running of the business to ensure sound management judgement is applied.
The Group has not suffered any material loss from operational risks during the year.
Market risks
Market risks primarily arise from the possibility that the Group is exposed to fluctuations in the values of, or income from, its investment properties and development projects. This is a key risk to the principal activities of the Group and the exposures are continuously monitored through timely financial and management reporting and analysis of available market intelligence.
Where necessary, management takes appropriate action to mitigate any adverse impact arising from identified risks and market risks continue to be monitored closely.
Estimation and judgement risks
To be able to prepare accounts according to generally accepted accounting principles, management must make estimates and assumptions that affect the asset and liability items and revenue and expense amounts recorded in the accounts. These estimates are based on historical experience and various other assumptions that management and the Board believe are reasonable under the circumstances. The results of these considerations form the basis for making judgements about the carrying value of assets and liabilities that are not readily available from other sources.
The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are the following:
Investment Properties
The fair values of investment properties are based upon open market value and calculated, where applicable, using a third party valuation provided by an external valuer.
Development Properties
The net realisable value of properties held for development requires an assessment of fair value of the underlying assets using property appraisal techniques and other valuation methods. Such estimates are inherently subjective and actual values can only be determined in a sales transaction.
Investment Properties under Construction
The fair value of investment properties under construction rests in planned developments, and is difficult to estimate before the completion of their construction, and hence has been estimated by the Directors at cost as an approximation to fair value.
Financial Liabilities
Throughout the year, and as at the balance sheet date, the Group did not maintain any bank loan facilities or derivative financial instruments.
Financial Assets
The interest rate profile of the Group's cash at the balance sheet date was as follows:
30 Sep 19
30 Sep 18
£'000
£'000
Floating rate
39,911
49,262
Floating rate financial assets comprise cash and short term deposits at call.
Credit Risk
Credit risk is the risk of financial loss to the Group if a counterparty fails to meet its contractual obligations. The principal counterparties are the Group's tenants (in respect of trade receivables arising under operating leases) and banks (as holders of the Group's cash deposits).
The credit risk of trade receivables is considered low because tenant rent payments are monitored regularly and, if necessary, appropriate action is taken to recover monies owed.
The credit risk on cash deposits is limited because the counterparties are banks with credit ratings which are acceptable to the Board. As at 30 September 2019, the Group had a single balance of £54,000 (2018: £57,000) where the counter-party had failed to honour a notice deposit and a full impairment provision has been recorded against the balance.
There are no other receivables which are past due but not impaired.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group seeks to manage its liquidity risk by ensuring that sufficient cash is available to meet its foreseeable needs.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 September 2019
Note
Year Ended
30 Sep 19
£'000
Year Ended
30 Sep 18
£'000
Rental income
1,661
1,342
Other property income
116
196
Revenue
1,777
1,538
Direct costs of:
Rental income
179
161
Development costs written off 14
19,084
3,232
Direct Costs
19,263
3,393
Gross Loss
(17,486)
(1,855)
Surplus on revaluation of investment properties 10
5,996
34
Profit on sale of investment property
-
446
Profit on purchase of interest in joint venture
-
1,083
Loss on sale of Regional REIT shares
-
(2,132)
Dividends received from Regional REIT
-
1,636
Other gains
1
3
Administrative expenses
(2,616)
(3,075)
Operating Loss 3
(14,105)
(3,860)
Finance income 6
252
91
Loss Before Taxation
(13,853)
(3,769)
Taxation 7
(119)
95
Loss and Total Comprehensive
Charge for the Year
(13,972)
(3,674)
Loss per share 9
(24.57)p
(5.72)p
All amounts are attributable to equity shareholders
All of the activities of the Group are classed as continuing.
CONSOLIDATED Statement of Changes in Equity
for the year ended 30 September 2019
Attributable to the equity holders of the Company
Share
Capital
Capital
Redemption
Reserve
Treasury
Shares
Retained
Earnings
Total
Equity
£'000
£'000
£'000
£'000
£'000
Changes in equity for the year ended 30 September 2018
At 1 October 2017
3,356
3,197
(389)
129,626
135,790
Loss for the year
-
-
-
(3,674)
(3,674)
Total comprehensive
charge for the year
-
-
-
(3,674)
(3,674)
Purchase of own shares
-
-
(11,832)
-
(11,832)
Cancellation of treasury shares
(368)
368
12,221
(12,221)
-
At 30 September 2018
2,988
3,565
-
113,731
120,284
Changes in equity for the year ended 30 September 2019
At 1 October 2018
2,988
3,565
-
113,731
120,284
Loss for the year
-
-
-
(13,972)
(13,972)
Total comprehensive
charge for the year
-
-
-
(13,972)
(13,972)Purchase of own shares
-
-
(5,582)
-
(5,582)
Cancellation of treasury shares
(162)
162
5,582
(5,582)
-
At 30 September 2019
2,826
3,727
-
94,177
100,730
CONSOLIDATED BALANCE SHEET
at 30 September 2019
Note
30 Sep 2019 £'000
30 Sep 2018
£'000
Non-Current Assets
Investment properties
10
21,429
3,570
Investment properties under construction
11
-
34,663
21,429
38,233
Current Assets
Development and trading properties
14
39,999
31,931
Trade and other receivables
15
1,470
1,425
Cash and cash equivalents
39,911
49,262
81,380
82,618
Total Assets
102,809
120,851
Current Liabilities
Trade and other payables
16
788
457
Tax liabilities
141
110
929
567
Non-Current Liabilities
Provision for liabilities and charges
17
1,150
-
Total Liabilities
2,079
567
Net Assets
100,730
120,284
Equity
Called up share capital
18
2,826
2,988
Capital redemption reserve
3,727
3,565
Retained earnings
94,177
113,731
Total Equity
100,730
120,284
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 September 2019
Year Ended 30 Sep 19 £'000
Year Ended
30 Sep 18
£'000
Cash Flows From Operating Activities
Operating loss
(14,105)
(3,860)
Development costs written off
19,084
3,232
Surplus on revaluation of investment properties
(5,996)
(34)
Profit on purchase of interest in joint venture
-
(1,083)
Profit on sale of investment property
-
(446)
Loss on sale of Regional REIT shares
-
2,132
Depreciation
-
24
Cash Flows From Operations Before Changes In Working Capital
(1,017)
(35)
Change in trade and other receivables
(45)
(249)
Change in land, developments and trading properties
(932)
(211)
Change in trade and other payables and provisions
93
(541)
Cash Flows Used In Operations
(1,901)
(1,036)
Tax paid
(88)
(10)
Cash Flows Used In Operating Activities
(1,989)
(1,046)
Cash Flows From Investing Activities
Acquisition of and additions to investment properties
(7,531)
(7,687)
Proceeds from sale of investment property
5,499
4,331
Finance income
252
91
Proceeds from the sale of Regional REIT shares
-
25,511
Repayment of loan by joint venture partner
-
2,500
Cash received from joint venture
-
224
Cash Flows (Used In)/Generated From Investing Activities
(1,780)
24,970
Cash Flows From Financing Activities
Purchase of own shares
(5,582)
(11,832)
Cash Flows Used In Financing Activities
(5,582)
(11,832)
Net (decrease)/increase in cash and cash equivalents
(9,351)
12,092
Cash and cash equivalents at 1 October
49,262
37,170
Cash and Cash Equivalents at 30 September
39,911
49,262
NOTES TO THE ACCOUNTS
For the year ended 30 September 2019
1. The financial information set out in this announcement is abridged and does not constitute statutory accounts for the year ended 30 September 2019 but is derived from those financial statements. The financial information is not audited. The auditors have reported on the statutory accounts for the year ended 30 September 2019, their report was unqualified and did not contain statements under sections 498(2) or (3) of the Companies Act 2006, and these will be delivered to the Registrar of Companies following the Company's annual general meeting. The financial information has been prepared using the recognition and measurement principle of IFRS.
2. The comparative financial information for the year ended 30 September 2018 was derived from information extracted from the annual report and accounts for that period, which was prepared under IFRS and which has been filed with the UK Registrar of Companies. The auditors have reported on those accounts, their report was unqualified and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.
3. Operating LOSS
Operating loss is stated after charging:
Year ended
Year ended
30 Sep 19
30 Sep 18
£'000
£'000
Audit of the Company's consolidated and individual financial statements
33
33
Audit of subsidiaries, pursuant to legislation
16
16
Fees payable to the Company's auditor for tax services
11
18
Depreciation of owned assets
-
24
Operating lease rentals - land and buildings
196
231
4. PARTICULARS OF EMPLOYEES
The aggregate payroll costs were:
Year ended
Year ended
30 Sep 19
30 Sep 18
£'000
£'000
Wages and salaries
1,435
1,664
Social security costs
189
215
1,624
1,879
The average monthly number of persons, including executive directors, employed by the Company during the year was seven (2018: seven).
5. DIRECTORS' EMOLUMENTS
Year ended
30 Sep 19
£'000
Year ended
30 Sep 18
£'000
Basic salary
1,145
1,042
Payment in lieu of notice
-
202
Total emolument
1,145
1,244
Emoluments of the highest paid director
400
370
The board of directors comprises the only persons having authority and responsibility for planning, directing and controlling the activities of the Group.
6. FINANCE INCOME
Year ended
30 Sep 19
£'000
Year ended
30 Sep 18
£'000
Interest on cash deposits
252
91
7. TAX
Year ended
30 Sep 19
£'000
Year ended
30 Sep 18
£'000
UK tax
119
110
Current tax charge
119
110
Deferred tax credit
-
(205)
119
(95)
The tax assessed on the loss for the year differs from the standard rate of tax in the UK of 19% (2018: 19%). The differences are explained below:
Year ended
30 Sep 19
£'000
Year ended
30 Sep 18
£'000
Loss before tax
(13,853)
(3,769)
Loss before tax multiplied by the standard rate of UK tax
(2,632)
(716)
Effects of:
Investment property revaluation not taxable
(1,198)
(96)
Utilisation of tax losses
-
(4)
Movement in tax losses carried forward
3,883
1,128
Amounts not deductible for tax
11
(195)
Capital allowances
(1)
(2)
Impact of differing tax rates for offshore entities
56
(5)
Current tax charge for the year
119
110
8. DIVIDENDS
No dividend will be paid in respect of the year ended 30 September 2019 (2018: nil).
9. EARNINGS PER SHARE
Earnings per share is calculated as the loss attributable to ordinary shareholders of the Company for the year of £13,972,000 (2018: loss of £3,674,000) divided by the weighted average number of shares in issue throughout the year of 56,860,879 (2018: 64,184,339). There are no diluting amounts in either the current or prior years.
10. INVESTMENT PROPERTIES
Freehold investment properties
30 Sep 19
£'000
30 Sep 18
£'000
At the start of the year
3,570
-
Additions
4,767
3,536
Revaluation movement
5,996
34
Reclassification from investment properties under construction
10,666
-
Reclassification to trading properties
(3,570)
-
At the end of the year
21,429
3,570
The Group's investment properties are comprised of Cross Hands and Ashby-de-la-Zouch. Cross Hands was valued by Knight Frank LLP as at 30 September 2019 in their capacity as external valuers. The valuation was prepared on a fixed fee basis, independent of the property value and was undertaken in accordance with the RICS Valuation - Global Standards 2017 on the basis of fair value, supported by reference to market evidence of transaction prices for similar properties. It assumes a willing buyer and a willing seller in an arm's length transaction and reflects usual deductions in respect of purchaser's costs and SDLT as applicable at the valuation date. The independent valuer makes various assumptions including future rental income, anticipated void costs and the appropriate discount rate or yield.
The fair value of Cross Hands 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 both the current and prior years, as Level 3 in the fair value hierarchy as defined in IFRS 13. For Cross Hands, the key unobservable input is the net initial yield which has been estimated for the individual units at between 5.25% and 8.00%. The principal sensitivity of measurement to variations in the significant unobservable outputs is that decreases in net initial yield will increase the fair value.
Ashby-de-la-Zouch has been revalued to reflect the forward sale and confirmed by the completion of the sale after the balance sheet date.
The historical cost of the Group's investment properties as at 30 September 2019 was £14,283,000 (2018: £3,536,000).
The Group's revenue for the year includes £1,315,000 derived from properties leased out under operating leases (2018: £992,000).
11. INVESTMENT PROPERTIES UNDER CONSTRUCTION
Freehold land and buildings
30 Sep 19
£'000
30 Sep 18
£'000
At the start of the year
34,663
34,293
Additions
4,151
4,206
Disposals
(5,499)
(3,836)
Reclassification to investment properties
(10,666)
-
Reclassification to trading properties
(22,649)
-
At the end of the year
-
34,663
Investment properties under construction comprised freehold land and buildings under development or landholdings for current or future development as investment properties which are reported in the Balance Sheet at fair value, and the lower of cost or net realisable value is deemed by the directors to equate to fair value.
Property and land valuations are inherently subjective as they are made on assumptions which may not prove to be accurate. For these reasons, the investment properties under construction, as reported in the prior year were classified as Level 3 as defined in IFRS 13. There were no transfers between levels in the year.
12. INVESTMENT IN JOINT VENTURES
30 Sep 19
£'000
30 Sep 18
£'000
At the start of the year
-
7,267
Investment in joint venture
-
76
Contribution to planning costs by joint venture partner
-
(300)
Repayment of loan by joint venture partner
-
(2,500)
Reclassification to trading properties
-
(4,543)
At the end of the year
-
-
As reported in the 2018 financial statements, the Company acquired the 50% interest in Conygar Holyhead Limited previously owned by its joint venture partner Stena Line Ports Limited on 23 May 2018.
The Group held a 50% interest was CM Sheffield Limited until the dormant company was dissolved on 2 October 2018.
13. INVESTMENT IN SUBSIDIARY UNDERTAKINGS
The companies listed below are the subsidiary undertakings of the Group at 30 September 2019, all of which are wholly owned.
Country of
% of
Company name
Principal activity
registration
equity held
Conygar Holdings Ltd**
Holding Company
England
100%
Conygar Wales PLC**
Holding Company
England
100%*
Conygar Developments Ltd**
Property trading and development
England
100%*
Conygar Haverfordwest Ltd**
Property trading and development
England
100%*
Conygar Holyhead Ltd**
Property trading and development
England
100%*
Conygar Nottingham Ltd**
Property trading and development
England
100%*
Conygar Ynys Mon Ltd**
Property trading and development
England
100%*
Martello Quays Ltd**
Property trading and development
England
100%
Parc Cybi Management
Company Limited**
Management Company
England
100%*
The Nottingham Island Site
Management Company Ltd**Dormant
England
100%*
Lamont Property Holdings Ltd***
Property investment
Jersey
100%*
Conygar Ashby Ltd***
Property investment
Jersey
100%*
Conygar Cross Hands Ltd***
Property investment
Jersey
100%*
* Indirectly owned.
** Subsidiaries with the same registered office as the Company.
*** Incorporated in Jersey with a registered office at One Waverley Place, Union Street, St Helier, Jersey JE1 1AX
14. DEVELOPMENT AND TRADING PROPERTIES
30 Sep 19
£'000
30 Sep 18
£'000
At the start of the year
31,931
29,311
Additions
933
4,913
Reclassification from investment properties
3,570
-
Reclassification from investment properties under construction
22,649
-
Reclassification from joint ventures
-
4,543
Lease of properties at fair value
-
(3,604)
Development costs written off
(19,084)
(3,232)
At the end of the year
39,999
31,931
At 30 September 2019, the Group's development and trading properties comprise Nottingham, Haverfordwest, Holyhead Waterfront, Selly Oak, Kings Lynn, Parc Cybi Business Park and Rhosgoch.
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.
The Group has written down the carrying value of Haverfordwest by £18.6m as a result of the weakening of the housing market, the rising costs of construction, which are being significantly impacted by Brexit, and the fact that our retail development at this site is not currently able to commence.
Further details on progress for each of the development and trading properties is set out in the Strategic Report.
15. TRADE AND OTHER RECEIVABLES
30 Sep 19
30 Sep 18
£'000
£'000
Trade receivables
74
84
Other receivables
494
377
Prepayments and accrued income
902
964
1,470
1,425
The directors consider that the carrying amount of trade and other receivables approximates to their fair value due to the short term nature of these financial assets.
16. TRADE AND OTHER PAYABLES
30 Sep 19
30 Sep 18
£'000
£'000
Social security and payroll taxes
65
61
Trade payables
164
82
Accruals and deferred income
559
314
788
457
The directors consider that the carrying amounts of the trade and other payables approximate to their fair value due to the short period of repayment.
17. PROVISION FOR LIABILITIES AND CHARGES
30 Sep 19
30 Sep 18
£'000
£,000
Amount payable from development profit
1,150
-
The Group is party to a profit share agreement for one of its properties which would become payable on the earliest of the disposal of the asset or the date upon which the open market value is agreed between the parties following completion of the development.
18. SHARE CAPITAL
Authorised share capital:
30 Sep 19
30 Sep 18
£
£
140,000,000 (2018: 140,000,000) Ordinary shares of £0.05 each
7,000,000
7,000,000
Allotted and called up:
No
£'000
As at 30 September 2017
67,126,435
3,356
Cancellation of treasury shares
(7,365,000)
(368)
As at 30 September 2018
59,761,435
2,988
Cancellation of treasury shares
(3,239,000)
(162)
As at 30 September 2019
56,522,435
2,826
In December 2010, the Group began a share buyback programme and during the year ended 30 September 2019 purchased 3,239,000 (2018: 7,130,000) shares on the open market at a cost of £5,582,000 (2018: £11,823,000). On 30 September 2019, 3,239,000 ordinary shares of 5 pence each were transferred out of treasury and cancelled (2018: 7,365,000 ordinary shares of 5 pence each).
19. DEFERRED TAX LIABILITY
The movements in the prior year deferred tax liability, which related entirely to unrealised gains on a Group investment property were as follows:
30 Sep 19
30 Sep 18
£'000
£'000
At the start of the year
-
205
Credit to the statement of comprehensive income
-
(205)
At the end of the year
-
-
Deferred tax liabilities have been measured at a rate of 19% (2018: 19%), being the rate substantively enacted at the balance sheet date.
20. COMMITMENTS
Group as lessee:
At 30 September 2019, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
30 Sep 19
30 Sep 18
£'000
£'000
Within one year
99
131
In the second to fifth years inclusive
57
-
156
131
The Group receives income under non-cancellable leases from investment properties and existing properties located at several development sites. At 30 September 2019, the income profile based upon the unexpired lease lengths was as follows:
30 Sep 19
30 Sep 18
£'000
£'000
Less than one year
1,237
909
Between one and five years
4,601
3,348
Over five years
6,016
3,721
11,854
7,978
As at 30 September 2019, the Group had commitments of £965,000 for the remaining construction costs and building retentions payable in connection with the developments at Cross Hands, Ashby-de-la-Zouch and Parc Cybi, Anglesey (2018: £3,100,000).
During the year the Company charged a management fee to Conygar Cross Hands Limited of £1,000,000 (2018: £nil) for management services in connection with the Cross Hands development.
21. FINANCIAL INSTRUMENTS
The following tables set out the Group's financial assets and liabilities all of which are due within one year. The tables have been drawn up based on the undiscounted cash flows of financial liabilities, based on the earliest date on which the Group can be required to pay.
30 Sep 19
30 Sep 18
£'000
£'000
Financial assets:
Cash and cash equivalents
39,911
49,262
Trade and other receivables
264
169
40,175
49,431
30 Sep 19
30 Sep 18
£'000
£'000
Financial liabilities:
Trade payables and other accrued expenses
486
232
22. EVENTS AFTER THE BALANCE SHEET DATE
In October 2019, the Group completed the sale of the B&M store at Ashby-de-la-Zouch. This asset was forward sold and the Group received net proceeds of £4.2 million.
In November 2019, the Company acquired 2,930,845 ordinary shares representing 5.19% of its ordinary share capital, at a price of 135.0p per share at a cost of £4.0 million.
The Report and Accounts for the year ended 30 September 2019 will be posted to shareholders shortly and copies may be obtained free of charge for at least one month following their posting by writing to The Secretary, The Conygar Investment Company PLC, 1 Duchess Street, London W1W 6AN. They are also available on the website www.conygar.com.
The Company's Annual General Meeting will be held at 10:30am on 8 January 2020 at the offices of Gowling WLG (UK) LLP, 4 More London Riverside, London, SE1 2AU.
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.
This announcement is released by The Conygar Investment Company PLC and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.
For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Company by Ross McCaskill, Finance Director.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDFR BABTTMBATTPL
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