REG - Conygar Investmnt Co - PRELIMINARY RESULTS
21/11/2023 07:00
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RNS Number : 0493U Conygar Investment Company PLC(The) 21 November 2023
21 November 2023
The information contained within this announcement is deemed by the Company to
constitute inside information 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.
THE CONYGAR INVESTMENT COMPANY PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2023
SUMMARY
· Net asset value ("NAV") decreased in the year by £29.5 million to
£95.1 million (159.4p per share; 2022: 208.9p per share) primarily as a
result of a net £21.5 million write down in the carrying value of the Group's
investment properties in addition to a £5.2 million write down in the
carrying value of the Group's development site in Holyhead, Anglesey.
· Total cash deposits of £2.7 million (4.5p per share) at the year end
and £9.0 million as at 17 November 2023.
· Cash deposits boosted after the year end by the placing in October
2023 of 5 million zero dividend preference shares of £1 each (the "ZDP
shares") and completion in November 2023 of a £12 million loan facility from
A.S.K. Partners Limited.
· Construction progressing well and on budget for the 693 bed student
accommodation development at The Island Quarter, Nottingham planned for
completion in May 2024.
· £47.5 million facility agreement entered into with Barclays Bank PLC
("Barclays") in December 2022, for a maximum term of 3 years, to enable the
completion and subsequent letting of the student accommodation development at
The Island Quarter, with £18.0 million drawn by 30 September 2023.
· Detailed planning consent granted in May 2023 for a 249,000 square
foot bioscience building at The Island Quarter.
· Revised masterplan agreed with Nottingham City Council which, subject
to investor and occupier appetite, increases the size of The Island Quarter
development up to a maximum of 3.5 million square feet.
· Disposal of the development site at Haverfordwest, Pembrokeshire, for
gross proceeds of £9.65 million to realise a profit of £0.1 million.
· Anglesey Freeport confirmed as one of the two newly established
freeports in Wales with our 203 acre brownfield site at Rhosgoch, Anglesey
assigned as a special area within that freeport.
· Conditional contract exchanged, at a cost of £450,000, for the
purchase of a 14.7 acre plot at Bristol Fruitmarket site in the St Phillip's
Marsh area of Bristol.
Group net asset summary
2023 2022
Per share Per share
£'m p £'m p
Properties 113.2 189.8 110.1 184.7
Cash 2.7 4.5 17.4 29.1
Borrowings (17.2) (28.8) - -
Provisions - - (3.1) (5.2)
Other net (liabilities) / assets (3.6) (6.1) 0.2 0.3
Net assets 95.1 159.4 124.6 208.9
Robert Ware, Chief executive commented:
"We are acutely aware of the impact that continuing economic and political
uncertainty is having on the real estate sector and intend to maintain a
disciplined approach to both our cash commitments and financial leverage to
ensure our balance sheet remains robust.
Our results for the year are reflective of the currently subdued market.
However, fundamentals for the private built student accommodation, build to
rent and life science sectors, remain strong, with supply shortages likely to
support improved future pricing. The value from our development projects will
be created over the medium-term. Given the progress made, in particular at The
Island Quarter, since its acquisition, we remain optimistic about the Group's
future prospects."
Enquiries:
The Conygar Investment Company PLC
Robert Ware: 0207 258 8670
David Baldwin: 0207 258 8670
Liberum Capital Limited (nominated adviser and broker)
Richard Lindley: 0203 100 2222
Jamie Richards: 0203 100 2222
Temple Bar Advisory (public relations)
Alex Child-Villiers: 07795 425580
Will Barker: 07827 960151
Chairman's and chief executive's statement
Overview and results summary
The past year has been one of continual macroeconomic and geo-political
uncertainty. The impact of this on the valuation of UK real estate, in
particular from the sharp uplift in interest rates and increasing investor
caution as higher inflation became embedded, has been significant. Property
valuations in the UK fell across all sectors, as yields increased to reflect
the higher interest rate environment.
The value of our investment property portfolio, after allowing for capital
expenditure in the year, has declined by £21.5 million (16.3%). In addition,
the value of our development site at Holyhead, Anglesey has been written down
by £5.2 million. More recently the outlook for the UK economy has improved,
with interest rates now at or near their peak and inflationary indicators
suggesting further reductions.
The reduced valuations at 30 September 2023 relate primarily to the
undeveloped and unconsented plots at both The Island Quarter, Nottingham and
Holyhead. These have been partly offset by a valuation surplus from the
ongoing student accommodation development to reflect the considerable progress
made on site during the year for that asset. While these land price falls are
unwelcome, such valuations tend to be volatile and highly sensitive to small
changes in the underlying assumptions of key parameters, such as rental
levels, net initial yields, construction costs, finance costs and void
periods. As the economic situation improves and inflation eases, we expect to
see a rebound in land values given the unprecedented recent rental growth in
particular across the private built student accommodation ("PBSA") and build
to rent ("BTR") sectors.
The Group has incurred net operational and administrative losses, excluding
depreciation, of £4.2 million in the year as we seek to continue the
transition of our initially consented development plots at The Island Quarter
to income-producing assets. This cost increase, required to support both the
implementation of our development programme and operations team comes at a
point in the cycle when rental income receipts for the Group have
reduced.
However, with the restaurant and events venue at 1 The Island Quarter ("1
TIQ") now established and fully operational and the ongoing student
accommodation development in Nottingham planned for completion in May 2024, we
anticipate a material uplift in revenues in the medium-term.
The combined valuation and operational losses have been partly offset by the
reversal of a £1.7 million deferred tax provision resulting in a total loss
for the year of £29.5 million.
Cash deposits and debt financing
Our ambition at the start of the year was to raise significant additional
funds to progress, at a pace, the construction of the consented student
accommodation development at The Island Quarter and submit further planning
applications to better enable investor participation in our development
projects.
To that end, the Group entered into a new facilities agreement with Barclays
Bank PLC in December 2022 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.
The cash deposits of the Group were £2.7 million at 30 September 2023.
However, the liquidity of the Group has materially increased since the balance
sheet date by way of the placing in October 2023 of 5 million ZDP shares of
£1 each in addition to the signing in November 2023 of a £12 million debt
facility with A.S.K. Partners Limited ("ASK"), of which £5 million has been
drawn at the date of signing these financial statements. In addition to the 5
million of placed ZDP shares, the Company subscribed for a further 10 million
ZDP shares which it will look to place, subject to investor sentiment, during
the 5-year term of the ZDP to further boost its cash deposits as required.
Bristol and other property assets
On 6 April 2023, the Group, by way of Conygar Bristol Limited, in which it
holds an 80% interest, entered into a conditional contract with Wholesale
Fruit Centre (Bristol) Limited to acquire the 14.7 acre site at St Philips
Marsh where the Bristol Fruit Market is currently located, paying an initial
deposit of £450,000.
Completion of the acquisition is conditional on the satisfaction or, where
relevant, waiver of the grant of planning permission for a number of
development options by 6 June 2025, subject to extension provisions. In
addition, all tenants are required to have surrendered their existing leases
by 6 April 2024 and the market licence in respect of the site terminated. The
contract is capable of termination if the vacant possession condition has not
been satisfied or waived by 6 April 2024 or if the vacant possession and
planning permission conditions have not both been satisfied by 6 April
2028.
We intend to utilise part of the net proceeds from the ZDP share placing and
ASK loan to further progress both the Bristol and Nottingham planning
applications and hope to make announcements in that regard over the next
financial year.
However, in order to progress thereafter our pipeline of development projects,
in particular at The Island Quarter, we will need to raise substantial amounts
either as debt, through asset sales, or from joint ventures and we are in
discussions on a number of fronts in that regard.
Further details of the progress made during the year at The Island Quarter and
our other projects are set out in the strategic report.
Dividend
The Board recommends that no dividend is declared in respect of the year ended
30 September 2023. More information on the Group's dividend policy can be
found within the strategic report.
Share buy-back authority
The Board will seek to renew the buy-back authority of 14.99% of the issued
share capital of the Company at the forthcoming AGM as we consider the
buy-back authority to be a useful capital management tool and will continue to
use it, as our cash flows allow, when we believe the stock market value
differs too widely from our view of the intrinsic value of the Company.
Outlook
We are acutely aware of the impact that continuing economic and political
uncertainty is having on the real estate sector and intend to maintain a
disciplined approach to both our cash commitments and financial leverage to
ensure our balance sheet remains robust.
Our results for the year are reflective of the currently subdued market.
However, fundamentals for the PBSA, BTR and life science sectors, remain
strong, with supply shortages likely to support improved future pricing. The
value from our development projects will be created over the medium-term.
Given the progress made, in particular at The Island Quarter, since its
acquisition, we remain optimistic about the Group's future prospects.
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 strategy and business model.
Strategy and business model
The Conygar Investment Company PLC ("Conygar") is an AIM quoted property
investment and development group dealing 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 two major strands, being property investment and
property development where we 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 Group at the year end
The Group net assets as at 30 September 2023 may be summarised as follows:
2023 2022
Per share Per share
£'m p £'m p
Properties 113.2 189.8 110.1 184.7
Cash 2.7 4.5 17.4 29.1
Borrowings (17.2) (28.8) - -
Provisions - - (3.1) (5.2)
Other net (liabilities) / assets (3.6) (6.1) 0.2 0.3
Net assets 95.1 159.4 124.6 208.9
The Group's balance sheet remains both liquid and robust with property assets
and cash deposits totalling £115.9 million as at 30 September 2023 and only
£17.2 million of net bank borrowings secured against the student
accommodation development at The Island Quarter.
The £47.5 million Barclays debt facility will enable the Group to complete
the student accommodation development without the need for any further equity
input. Furthermore, as set out in the chairman's and chief executive's
statement, the net proceeds after the year end from the placing of 5 million
ZDP shares in addition to the £12 million loan facility from ASK will
facilitate the submission of further detailed planning applications at both
The Island Quarter and Bristol sites.
Key performance indicators
The key measures considered when monitoring progress towards the Board's
objective of providing attractive shareholder returns include the headway made
during the year on its development and investment property portfolio, the
movements in net asset value per share, levels of uncommitted cash and its
monitoring of and performance against its ESG targets.
The chairman's and chief executive's statement provides a summary on the
financial performance and progress made during the year on the Group's
property assets, further details of which are set out in this strategic
report. Matters considered by the audit committee and remuneration committee
are set out in the corporate governance section of the annual report. The
Board's approach and responsibilities in connection with environmental, social
and governance matters are set out in the ESG section of the annual report.
The other key performance measures are considered below.
1 TIQ and investment properties under construction
The Group's restaurant and events venue and investment properties under
construction at The Island Quarter, Nottingham were valued by Knight Frank
LLP, in their capacity as external valuers, as set out below:
2023 Per share 2022 Per share
£'m p £'m P
Phase 1 - 1 TIQ 14.0 23.5 14.1 23.7
Phase 2 - student accommodation 65.6 110.0 13.6 22.8
Undeveloped plots 29.5 49.5 64.0 107.3
Virgin Active Gym (freehold interest) 1.2 2.0 1.3 2.2
Total 110.3 185.0 93.0 156.0
As set out in the chairman's and chief executive's statement, the impact of a
sharp uplift in interest rates and increasing investor caution has resulted in
a reduction in property values across all sectors, with yields increased to
reflect the higher interest rate environment.
1 TIQ, which has now been operational for just over a year, has been very well
received by the local community. For a brand-new venue, it has achieved solid
revenues in the year to 30 September 2023 of £4.3 million. However, the
delayed completion of the development, due to various material and contracting
issues, resulted in the events operation being unable to take advantage of the
late summer and Christmas trade in 2022. This delay, when compounded by the
phased opening, intentional overstaffing as operations were fully tested and
margins being squeezed as a result of continuing inflationary pressures
limited the gross profit in the year to £0.3 million and a pre-tax loss of
£1.2 million.
Construction of the student accommodation development is now fully funded. The
development is progressing on-time and on-budget, with completion planned for
May 2024 to enable its letting to the September 2024 Nottingham university
intake. The marketing programme for the accommodation has also commenced with
net rental income, after operational and administrative costs, expected to be
in excess of £5.5 million per annum.
In May 2023, detailed consent was granted for our 249,000 square foot
bioscience application to include both laboratory and office space as well as
conference facilities. The consented plot is located to the north of the site
directly adjacent to an existing bioscience hub. We are progressing
discussions with a potential local tenant seeking significant expansion space
as well as an investor to forward fund the development. However, should they
not proceed, the demand for bioscience space is such that we feel confident
that we would be able to find alternative tenants and investors.
Nottingham City Council have also agreed, in principle, the parameters for a
sitewide masterplan that will guide and support the future planning
applications at The Island Quarter. This has resulted in a scheme which,
subject to the granting of detailed consent and local demand, will enable the
overall size of the development to increase up to approximately 3.5 million
square feet. Following on from this, we are progressing the detailed
application for a second phase of student accommodation comprising
approximately 400 beds which is expected to be submitted in the coming
months.
Development and trading properties
2023 Per share 2022 Per share
£'m p £'m p
Rhosgoch 2.50 4.2 2.50 4.2
Parc Cybi 0.38 0.6 0.38 0.6
Holyhead Waterfront - - 5.00 8.4
Haverfordwest - - 9.26 15.5
Total 2.88 4.8 17.14 28.7
We announced, in March 2023, the confirmation of the Anglesey Freeport as one
of the two newly established freeports in Wales. Included within this
location, as a special area, is our 203 acre brownfield site at Rhosgoch. Our
further site at Parc Cybi is also part of the freeport.
These freeports will form special zones with the benefit of simplified customs
procedures, relief on customs duties, tax benefits and development flexibility
designed to attract major domestic and international investment. The Welsh
freeports will also prioritise environmental sustainability and the climate
emergency.
In addition, the Company owns a further site in Anglesey at Holyhead
Waterfront where we continue to await the determination of our detailed
application for 259 townhouses and apartments, a 250 berth marina and
associated marine commercial and retail units. We have fully written down the
value of Holyhead Waterfront at 30 September 2023 as a result of the combined
impact from planning delays, increased finance costs and construction cost
price inflation particularly associated with the marine infrastructure works.
These factors have detrimentally affected the residual value of the proposed
development as has occurred during recent years across many sites in the UK.
In March 2023, we completed the sale of our site at Haverfordwest,
Pembrokeshire to The Welsh Minister and POBL Homes and Communities Limited for
gross proceeds of £9.65 million to realise a profit in the period of £0.1
million.
Financial review
Net asset value
The net asset value decreased in the year by £29.5 million to £95.1 million
at 30 September 2023 which equates to 159.4p per share (2022: 208.9p per
share). The primary movements were a net £21.5 million write down in the
carrying value of The Island Quarter's investment properties, a £5.2 million
write down in the carrying value of Holyhead Waterfront and increased
operational and administrative costs of £4.8 million, including depreciation
charges of £0.6 million. These were partly offset by the reversal of a £1.7
million provision for deferred tax and a £0.1 million profit from the sale of
Haverfordwest.
Cash flow and financing
At 30 September 2023, the Group had cash deposits of £2.7 million and had
drawn £18.0 million of the £47.5 million development loan facility from
Barclays (2022: cash of £17.4 million and no debt).
During the year, the Group generated £5.0 million of cash from its operating
activities, which includes the net proceeds from the sale of Haverfordwest
(2022: generated £3.9 million). The other primary cash inflows for the year
were net bank borrowings, after debt arrangement and debt servicing costs, of
£16.4 million and £0.2 million of interest on cash deposits.
The primary cash outflows in the period were £35.7 million incurred on the
Group's development and investment properties, including £31.7 million of
construction costs and professional fees to progress The Island Quarter's
student accommodation development, £1.0 million of fees in connection with
the consented bioscience planning application and £1.6 million of costs to
complete the energisation of the electricity substation and project manage the
ongoing operations at The Island Quarter. Further costs were incurred to
complete the fitting out of 1 TIQ resulting in a net cash outflow in the
period of £14.7 million.
Net income from property activities
This has been, and continues to be, a transitional period for the Group where,
having sold, over a number of years, the vast majority of our rent-producing
investment properties, to lock in, for the benefit of our shareholders, the
significant returns generated from those assets, we are now utilising those
funds to progress the planning applications for, and construction of, both our
owned and targeted development projects. As such, the rental income for the
Group during the current and previous years has reduced from that historically
achieved. However, with 1 TIQ now more established and fully operational, in
addition to the student accommodation development expected to become
rent-producing in the late summer of 2024, we would anticipate a material
uplift in rental and other income in the medium-term.
2023 2022
£'m £'m
Rental income 0.1 (0.4)
Restaurant and events income 4.3 0.1
Direct costs of rental income (0.5) (0.4)
Direct costs of restaurant and events income (3.9) (0.6)
- (1.3)
Proceeds from property sale 9.6 25.7
Cost of property sale (9.5) (21.7)
Total net income arising from property activities 0.1 2.7
Rental income for the year ended 30 September 2022 includes the reversal of a
£1.4 million accrued rent debtor following the sales of Cross Hands and Selly
Oak. This debtor arose from the even spreading of rental income, derived from
operating leases, over each tenant's respective minimum lease term after
allowing for rent-free periods.
Administrative expenses
The administrative expenses for the year were £4.8 million (2022: £2.9
million). As set out in the chairman's and chief executive's statement,
managing the substantially increased development and operations teams, in
particular at 1 TIQ, has required an increase in the Group's overheads.
Taxation
There is no current tax in the year as the Group is loss-making. However, the
results for the year include the reversal of a £1.7m deferred tax provision
following the net write down, at 30 September 2023, in the carrying value of
The Island Quarter.
Deferred tax is calculated at a rate of 25%, being the rate that has been
enacted or substantively enacted by the balance sheet date and which is
expected to apply when tax liabilities, resulting from unrealised chargeable
gains arising on revaluation of the Group's investment properties, are
projected to be settled.
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 to 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.
While the Group does not have a formally approved gearing ratio, the objective
above is actively managed through the direct linkage of borrowings to specific
property. The Group seeks to ensure that secured borrowing stays within agreed
covenants with external 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, reported
profitability and cash flows.
The Group finances its activities with a combination of bank loans, 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 enter into derivative transactions to manage the interest
rate risk arising from the Group's operations and its sources of finance. The
main risks associated with the Group's financial assets and liabilities are
set out below, together with the policies currently applied by the Board for
their management.
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 2023 (2022: £nil).
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 then much larger
investment property portfolio to enhance these properties by refurbishment,
re-letting and extending tenancies, fund the operations 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 the dividend policy each year. Our focus is,
and will primarily continue to be, growth in net asset value per share.
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 that could threaten the future performance,
solvency or liquidity of the Group. By definition, strategic risks 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 continually monitors and discusses the potential impact that changes
to the environment in which we operate can have 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, by ensuring we have
the right calibre of staff and external support in place, we look 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.
Market risks
Market risks primarily arise from the possibility that the Group is exposed to
fluctuations in the values of, or income from, its cash deposits and other
financial instruments along with 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.
The Group is not currently party to any derivative transactions to fix the
interest rate payable in connection with its loan from Barclays Bank PLC. This
is due to the short-term nature of this development loan in addition to the
high entry fees which have been payable in connection with such products over
the last financial year.
The Group remains compliant with all of its debt covenants.
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 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 the value for 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.
Financial assets and liabilities
The interest rate profile of the Group's cash deposits at the balance sheet
date was as follows:
30 Sep 23 £'000 30 Sep 22 £'000
Unsecured deposits 2,321 17,109
Performance bonds and other secured deposits 355 252
2,676 17,361
The Group's floating rate financial assets comprise cash and short-term
performance bond deposits held with banks whose credit ratings are acceptable
to the Board.
The interest rate profile of the Group's bank borrowings is set out in note
20.
Credit risk
Credit risk is the risk of financial loss to the Group if a counterparty fails
to meet its contractual obligations. The Group's principal financial assets
include its financial interest in property assets, cash deposits and trade and
other receivables. The carrying amount of financial assets recorded in the
financial statements represents the Group's maximum exposure to credit risk
without taking account of the value of any collateral obtained.
In the event of default by an occupational tenant, the Group will suffer a
rental shortfall and incur additional costs. The Directors continually monitor
tenant arrears in order to anticipate, and minimise the impact of, defaults by
occupational tenants and if necessary, where circumstances allow, will apply
rigorous credit control procedures to facilitate the recovery of trade
receivables.
Under IFRS 9, the Group is required to provide for any expected credit losses
arising from trade receivables. For all assured shorthold tenancies, credit
checks are performed prior to acceptance of the tenant. Regulated tenants are
incentivised through the benefit of their tenancy agreement to avoid default
on their rent and rent deposits are held where applicable.
The Directors have provided for rental and other arrears due from various
tenants which amounts to £273,000 at 30 September 2023 (2022: £200,000) and
which remain outstanding at the date of signing these financial statements.
The impaired receivables are based on a review of expected credit losses.
Impaired receivables and receivables not considered to be impaired are not
material to the financial statements and, therefore, no further analysis is
provided.
The credit risk on cash deposits is managed through the Company's policies of
monitoring counterparty exposure and the use of counterparties of good
financial standing. At 30 September 2023, the credit exposure from cash held
with banks was £2.7 million which represents 2.8% of the Group's net assets.
All cash deposits at the balance sheet date are placed with banks, whose
credit ratings are acceptable to the Board, on instant access accounts. Should
the credit quality or the financial position of the banks currently utilised
significantly deteriorate, cash deposits would be moved to alternative banks.
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. The Group had cash deposits at the balance sheet date of
£2.7 million. However, as set out in the chairman's and chief executive's
statement, the cash deposits of the Group have been increased since the
balance sheet date by the placing in October 2023 of 5 million ZDP shares of
£1 each and the signing in November 2023 of a £12 million debt facility with
ASK, of which £5 million has been drawn at the date of signing these
financial statements.
Section 172 statement
Directors' duty to promote the success of the Company under Section 172
Companies Act 2006
The strategic report is required to include a statement that describes how the
directors have had regard to the matters set out in section 172(1) (a) to (f)
of the Companies Act 2006 when performing their duty under section 172. Some
of the matters identified in Section 172(1) are already covered by similar
provisions in the QCA Code and have thus been previously reported by the
Company in the corporate governance statement, the corporate governance report
and the QCA statement of compliance on our website. In order to avoid
unnecessary duplication, the relevant parts of those documents are identified
below and are to be treated as expressly incorporated by reference into this
strategic report. Under section 172 (1) of the Companies Act 2006, each
individual director must act in the way he considers, in good faith, would be
the most likely to promote the success of the Company for the benefit of its
members as a whole, and in doing so have regard (amongst other matters) to six
matters detailed in the section. In discharging their duties, the directors
seek to promote the success of Conygar for the benefit of members as a whole
and have regard to all the matters set out in Section 172(1), where applicable
and relevant to the business, taking account of its size and structure and the
nature and scale of its activities in the commercial property market. The
following paragraphs address each of the six matters in Section 172(1) (a) to
(f).
(a) The likely consequences of any decision in the long term: The commercial
property market is cyclical by nature. Investing in commercial property is a
long-term business. The decisions taken must have regard to long-term
consequences in terms of success or failure and managing risks and
uncertainties. The directors cannot expect that every decision they take will
prove, with the benefit of hindsight, to be the best one - external factors
may affect the market and thus change conditions in the future, after a
decision has been taken. However, the Group's investment decisions are
undertaken by a Board with a wide range of experience, over many years, in
both the property and finance sectors.
(b) The interests of the Company's and Group's employees: The Company has five
full-time employees, including the chief executive, two property directors and
the finance director. These executive directors sit on the Board with the
non-executive directors. The Group also has a growing workforce to support its
operations at The Island Quarter, all of which are employed by a wholly-owned
group company. The commitment of the Board to its employees is set out in the
ESG section of the annual report.
(c) The need to foster the Company's business relationships with suppliers,
customers and others: The directors have regularly reported in the Company's
annual reports on the constructive relationships that Conygar seeks to build
with its tenants and the mutual benefits that this brings to both parties; and
this reporting has been extended over the past two years following Principle 3
of the QCA Code to include suppliers and others. This is therefore addressed
under Principle 3 in the QCA compliance statement. In recent years, it has
been vital to foster our business relationships with tenants given external
factors, such as political and economic
uncertainty.
(d) The impact of the Company's operations on the community and the
environment: This is also addressed under Principle 3 of the QCA Code in the
QCA compliance statement. Due to its size and structure and the nature and
scale of its activities, the Board considers that the impact of Conygar's
operations as a landlord on the community and the environment is low. With the
exception of 1 TIQ, Conygar's assets are used by its tenants for their own
operations rather than by Conygar itself. In the past year, the Company has
not been made aware of any tenant operations that have had a significant
impact on the community or the environment. In relation to 1 TIQ, as well as
ongoing and future planned developments, Conygar seeks to ensure that designs
and construction comply with all relevant environmental standards and with
local planning requirements and building regulations so as not to adversely
affect the community or the environment. Further details of this are set out
in the ESG section of the annual report.
(e) The desirability of the Company maintaining a reputation for high
standards of business conduct: This is addressed under Principle 8 of the QCA
Code in the corporate governance statement and in the QCA compliance
statement. The Board considers that maintaining Conygar's reputation for high
standards of business conduct is not just desirable - it is a valuable asset
in the competitive commercial property market.
(f) The need to act fairly as between members of the Company: The Company has
only one class of shares, thus all shareholders have equal rights and,
regardless of the size of their holding, every shareholder is, and always has
been, treated equally and fairly. Relations with shareholders are further
addressed under Principles 2, 3 and 10 of the QCA Code in the corporate
governance report and the QCA compliance statement. We have been reviewing how
we communicate with shareholders and are encouraging shareholders to adopt
electronic communications and proxy voting in place of paper documents where
this suits them, as well as to raise questions in writing if they are unable
to attend AGMs.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 September 2023
Note Year ended Year ended
30 Sep 23 30 Sep 22
£'000 £'000
Rental income 12/13 141 (404)
Restaurant and events income 4,257 73
Proceeds on sale of development and trading properties 9,650 7,390
Revenue 14,048 7,059
Direct costs of rental income 513 395
Direct cost of restaurant and events income 3,928 572
Costs on sale of development and trading properties 9,524 3,749
Development costs written 15 5,164 289
off
Direct costs 19,129 5,005
Gross (loss) / profit (5,081) 2,054
Fair value adjustment of property 11 (30) -
Fair value adjustment of investment properties 13 (21,546) 320
under construction
Profit on sale of investment property - 380
Administrative expenses (4,775) (2,851)
Operating 3 (31,432) (97)
loss
Finance 6 - -
costs
Finance 6 186 73
income
Loss before taxation (31,246) (24)
Taxation 8 1,714 (29)
Loss and total comprehensive (29,532) (53)
charge for the year
Basic and diluted loss per share 10 (49.52p) (0.09)p
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 year ended 30 September 2023
Attributable to the equity holders of the Company
Share Capital
premium
Share
account redemption Retained Total
capital reserve earnings equity
£'000 £'000 £'000 £'000 £'000
Changes in equity for the year ended 30 September 2022
2,625 - 3,928 107,588 114,141
At 1 October 2021
Loss for the year - - - (53) (53)
Total comprehensive -
charge for the year
- - (53) (53)
Gross proceeds from 357 10,352 - - 10,709
placing of own shares
Fees paid on placing - (193) - - (193)
of own shares
Cancellation of share - (10,159) - 10,159 -
premium account
At 30 September 2022 2,982 - 3,928 117,694 124,604
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 - - - (29,532) (29,532)
charge for the year
At 30 September 2023 2,982 - 3,928 88,162 95,072
CONSOLIDATED BALANCE SHEET
at 30 September 2023
Note 30 Sep 2023 £'000 30 Sep 2022
£'000
Non-current assets
Property, plant and equipment 11 15,116 991
Investment properties 12 - -
Investment properties under construction 13 96,350 93,000
Right of use asset 7 - -
Deferred tax asset 8 - 2,986
111,466 96,977
Current assets
Development and trading 15 2,880 17,137
properties
Inventories 16 110 32
Trade and other 17 2,203 770
receivables
Tax asset 28 28
Cash and cash equivalents 2,676 17,361
7,897 35,328
Total assets 119,363 132,305
Current liabilities
Trade and other 18 7,091 1,605
payables
Lease liability for right of use asset 7 - -
7,091 1,605
Non-current liabilities
Deferred tax liability 8 - 4,700
Provision for liabilities and charge 19 - 1,396
Bank borrowings 20 17,200 -
17,200 6,096
Total liabilities 24,291 7,701
Net assets 95,072 124,604
Equity
Called up share 21 2,982 2,982
capital
Capital redemption reserve 3,928 3,928
Retained earnings 88,162 117,694
Total equity 95,072 124,604
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 September 2023
Year ended 30 Sep 23 £'000 Year ended
30 Sep 22
£'000
Cash flows from operating activities
Operating loss (31,432) (97)
Deficit / (surplus) on revaluation of properties 21,576 (320)
Development costs written off 5,164 289
Profit on sale of development and trading properties (126) (3,641)
Profit on sale of investment property - (380)
Depreciation of property, plant and equipment 595 -
Depreciation of right of use assets - 53
Cash flows from operations before changes in working capital (4,223) (4,096)
Increase in inventories (78) (32)
(Increase) / decrease in trade and other receivables (1,125) 1,892
Additions to development and trading properties (294) (1,115)
Net proceeds from sale of development and trading properties 9,490 7,337
Increase / (decrease) in trade and other payables 1,207 (94)
Net cash flows generated from operations 4,977 3,892
Cash flows from investing activities
Additions to investment properties (35,731) (28,085)
Net proceeds from sale of an investment property - 18,278
Additions to plant, machinery and office equipment (479) (970)
Finance income 186 73
Cash flows used in investing activities (36,024) (10,704)
Cash flows from financing activities
Bank loan drawn 18,033 -
Bank loan arrangement fees (924) -
Prepaid ZDP and debt arrangement fees (113) -
Interest paid (634) -
Net proceeds from placing of own shares - 10,516
Cash flows generated from financing activities 16,362 10,516
Net (decrease) / increase in cash and cash equivalents (14,685) 3,704
Cash and cash equivalents at 1 October 17,361 13,657
Cash and cash equivalents at 30 September 2,676 17,361
NOTES TO THE ACCOUNTS
for the year ended 30 September 2023
1. The financial information set out in this announcement is abridged and
does not constitute statutory accounts for the year ended 30 September 2023
but is derived from the financial statements. The auditors have reported on
the statutory accounts for the year ended 30 September 2023, 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
2022 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
section 498 (2) or (3) of the Companies Act 2006.
3. Operating LOSS
Operating loss is stated after charging: 30 Sep 23 30 Sep 22
£'000 £'000
Audit of the Company's consolidated and individual financial statements 50 47
Audit of subsidiaries, pursuant to legislation 60 56
Corporate finance advisory fees from the auditor * 60 -
Depreciation of property, plant and equipment 595 -
Depreciation of right of use asset - 53
* Cost in relation to the ZDP share issue included within trade and other
receivables at 30 September 2023.
4. PARTICULARS OF EMPLOYEES
The aggregate payroll costs were: Year ended 30 Sep 23 £'000 Year ended 30 Sep 22 £'000
Wages and salaries 3,815 1,674
Social security costs 347 203
Other pension costs 36 8
4,198 1,885
The weighted average monthly number of persons, including executive directors,
employed by the Group during the year was 111 (2022: 22). The increase in the
year is a result of the employees that have been recruited to operate and
manage the restaurant and events venue at 1 TIQ.
5. DIRECTORS' EMOLUMENTS
Year ended Year ended
30 Sep 23 30 Sep 22
£'000 £'000
Basic salary and total emoluments 1,110 1,035
Emoluments of the highest paid director 400 400
The Board, being the key management personnel, comprises the only
persons having authority and responsibility for planning, directing and
controlling the activities of the Group.
6. FINANCE COSTS AND FINANCE INCOME
Year ended Year ended
Finance costs 30 Sep 23 30 Sep 22
£'000 £'000
Bank loan interest 347 -
Bank loan commitment fees 421 -
Bank loan management and monitoring fees 23 -
Amortisation of loan arrangement fees 56 -
Total finance costs 847 -
Capitalisation of finance costs (note 13) (847) -
Net finance costs - -
Finance costs that are directly attributable to the construction of the
student accommodation at The Island Quarter, comprising the bank loan
interest, commitment fees, management fees, monitoring fees and amortised loan
arrangement fees, are capitalised as incurred into investment properties under
construction.
Year ended Year ended
Finance income 30 Sep 23 30 Sep 22
£'000 £'000
Bank interest receivable 186 73
7. LEASES
Group as lessor:
The Group receives income from investment properties and existing
tenants located at several development sites. At 30 September 2023, the
minimum lease payments receivable under non-cancellable operating leases were
as follows:
30 Sep 23 30 Sep 22
£'000 £'000
Less than one year 144 134
Between one and five years 615 607
Over five years 1,169 1,320
1,928 2,061
The amounts above represent total rental income up to the next
tenant only break date for each lease.
Group as lessee:
IFRS 16 requires lessees to record all leases on the balance
sheet as liabilities, along with an asset reflecting the right of use of the
asset over the lease term, so long as they are not for a low value or less
than 12 months whereby the lease could be recognised as an expense on a
straight-line basis over the lease term.
The Group was party to a three-year lease for office premises
which terminated on 28 April 2022. On 11 March 2022, the Group entered into a
subsequent one-year lease, for the same premises, which terminated on 28 April
2023. On 28 February 2023, a further lease was entered into for a 3-year term
expiring on 28 April 2026 which incorporates a break option on 28 April each
year throughout the term. All of the leases are for an amount of £99,100 per
annum.
The original 3-year lease was recorded on the balance sheet.
However, the subsequent one-year lease along with the further 3-year lease,
with its annual break optionality, are considered to be of such a short term
that the rent has been recognised as an expense in the statement of
comprehensive income on a straight-line basis.
Year ended Year ended
30 Sep 23
30 Sep 22
Right of use asset £'000 £'000
At the start of the year - 53
Depreciation - (53)
At the end of the year - -
Lease liability £'000 £'000
At the start of the year - 34
Lease payments - (34)
At the end of the year - -
8. TAX
Year ended Year ended
30 Sep 23 30 Sep 22
£'000 £'000
Current tax charge - -
Deferred tax (credit) / charge (1,714) 29
Total tax (credit) / charge (1,714) 29
The tax assessed on the loss for the year differs from the standard rate of
tax in the UK of 19% (2022: 19%). The differences are explained below:
Year ended Year ended
30 Sep 23 30 Sep 22
£'000 £'000
Loss before tax (31,246) (24)
Loss before tax multiplied by the standard rate of UK tax (5,937) (5)
Effects of:
Investment property revaluation not taxable 4,099 (61)
Capital loss not taxable - (72)
Utilisation of tax losses brought forward (23) (96)
Movement in tax losses carried forward 2,085 224
Expenses not deductible for tax purposes 27 15
Capital allowances utilised (251) (5)
Deferred tax (credit) / charge (1,714) 29
Total tax (credit) / charge for the year (1,714) 29
Deferred tax asset
Year ended Year ended
30 Sep 23 30 Sep 22
£'000 £'000
Deferred tax asset at the start of the year 2,986 2,935
Deferred tax (charge) / credit for the year (2,986) 51
Deferred tax asset at the end of the year - 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 this asset will
be recovered.
As at 30 September 2023, the Group has further unused losses of £48.1 million
(2022: £22.1 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 Year ended Year ended
30 Sep 23 30 Sep 22
£'000 £'000
Deferred tax liability at the start of the year 4,700 4,620
Deferred tax (credit) / charge for the year (4,700) 80
Deferred tax liability at the end of the year - 4,700
The directors have assessed the potential deferred tax liability of the Group
as at 30 September 2023 in respect of chargeable gains that would be payable
if the investment properties were sold at their financial year end valuations.
Based on the unrealised chargeable gains of £nil (2022: £18,798,000) a
deferred tax liability of £nil (2022: £4,700,000) has been recognised.
Prior year 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 that balance sheet date and which was projected to
apply when the liability is settled and the asset realised.
9. DIVIDENDS
No dividend will be paid in respect of the year ended 30
September 2023 (2022: nil).
10. LOSS PER SHARE
Loss per share is calculated as the loss attributable to
ordinary shareholders of the Company for the year of £29,532,000 (2022: loss
of £53,000) divided by the weighted average number of shares in issue
throughout the year of 59,638,588 (2022: 58,015,099). There are no diluting
amounts in either the current or prior years.
11. PROPERTY, PLANT AND EQUIPMENT
Property
30 Sep 23 30 Sep 22
£'000 £'000
At the start of the year - -
Reclassification from investment properties 14,100 -
under construction (note 13)
Additions 192 -
Depreciation (262) -
Fair value adjustment (30)
At the end of the year 14,000 -
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 fair value
on reclassification was derived from the 30 September 2022 valuation, as
provided by Knight Frank LLP.
Land and buildings, are stated at the 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 in
profit or loss over the estimated useful lives of 50 years.
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
30 Sep 23 30 Sep 22
£'000 £'000
At the start of the year 991 -
Additions 458 991
Depreciation (333) -
At the end of the year 1,116 991
During the current 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. As the venue at 1 TIQ was only partly
operational from 14 September 2022 no depreciation was recognised in the
period to 30 September 2022.
12. INVESTMENT PROPERTIES
Freehold investment
properties
30 Sep 23 30 Sep 22
£'000 £'000
At the start of the year - 17,750
Additions - 148
Disposals - (17,898)
At the end of the year - -
The Group's retail park in Cross Hands, Carmarthenshire was sold in the prior
year for net proceeds of £18.3 million. As at 30 September 2021, Cross Hands
was valued by Knight Frank LLP in their capacity as external valuer.
For the year ended 30 September 2022, Group revenue included £433,000 derived
from investment properties leased out under operating leases. Group revenue
for the prior year also includes the reversal of a £1,194,000 rent spreading
debtor following the sale of Cross Hands.
13. INVESTMENT PROPERTIES UNDER CONSTRUCTION
Freehold land and buildings
30 Sep 23 30 Sep 22
£'000 £'000
At the start of the year 93,000 70,500
Reclassification to property, (14,100) -
plant and equipment (note 11)
Additions 39,545 23,591
Capitalisation of finance costs (note 6) 847 -
Fair value adjustments (21,546) 320
Movement in introductory fee provision (1,396) (1,411)
At the end of the year 96,350 93,000
Investment properties under construction comprise freehold land and buildings
at The Island Quarter, Nottingham 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 The Island Quarter 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 has been evidenced in
the current year.
In preparing their valuation, Knight Frank have 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 have also been reviewed for overall reasonableness by the
Conygar Board. Inevitably in a complex model like this, and as noted above,
variations in assumptions can lead to widely differing values.
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 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 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. Net initial yields have
been estimated for the individual units at between 4.5% and 7.0%. and debt
financing rates, including arrangement fees, estimated to average 8.0% over
the construction period. 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 fair value
on reclassification was derived from the 30 September 2022 valuation, as
provided by Knight Frank LLP.
The historical cost of the Group's investment properties under construction as
at 30 September 2023 was £89,198,000 (2022: £62,566,000). The Group's
revenue for the year includes £33,000 derived from properties leased out
under operating leases (2022: £271,000).
14. INVESTMENT IN SUBSIDIARY UNDERTAKINGS
Listed below are the subsidiary undertakings of the Group
at 30 September 2023.
Country of % of
Company name Principal activity Registration equity held
Conygar Holdings Ltd** Holding company England 100%
Conygar ZDP PLC** Issuer of ZDP shares England 100%
Conygar Bristol Ltd** Property trading and development England 80%****
Conygar Haverfordwest Ltd** Property trading and development England 100%*
Conygar Holyhead Ltd** Property trading and development England 100%*
Conygar Nottingham Ltd** Property investment England 100%*
Nohu Limited** Property investment England 100%*
Parc Cybi Management Management company England 100%
Company Limited**
Conygar Developments Ltd** Dormant England 100%*
Conygar Wales PLC** Dormant England 100%*
The Island Quarter Student Property investment England 100%*
Property Company Ltd**
The Island Quarter Student Property operations England 100%*
Operating Company Ltd**
The Island Quarter Canal Turn Restaurant and events operations England 100%*
Operating Company Ltd**
The Island Quarter Dormant England 100%*
Management Company Ltd**
The Island Quarter Careers Ltd** Recruitment and human resources England 100%*
The Island Quarter Propco 2 Ltd** Dormant England 100%*
The Island Quarter Propco 3 Ltd** Dormant England 100%*
The Island Quarter Propco 4 Ltd** Dormant England 100%*
Lamont Property Holdings Ltd*** Holding company 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.
*** Subsidiaries incorporated in Jersey with a registered office at 3(rd)
Floor, 44 Esplanade, St Helier, Jersey JE4 9WG.
**** 20% of the issued share capital in Conygar Bristol Limited is owned by
Urban & City Limited.
15. DEVELOPMENT AND TRADING PROPERTIES
30 Sep 23 30 Sep 22
£'000 £'000
At the start of the year 17,137 20,192
Additions 276 924
Disposals (1) (9,369) (3,690)
Development costs written off (2) (5,164) (289)
At the end of the year 2,880 17,137
1. The Group's development site at Haverfordwest, Pembrokeshire was sold
in March 2023 for gross proceeds of £9.65 million realising a profit in the
year of £0.13 million.
2. As set out in the strategic report, the value of Holyhead Waterfront
has been fully written down at 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.
16. INVENTORIES
30 Sep 23 30 Sep 22
£'000 £'000
Food and drink 110 32
Inventories recognised as an expense in the year total £1,411,000 (2022:
£82,000).
17. TRADE AND OTHER RECEIVABLES
30 Sep 23 30 Sep 22
£'000 £'000
Trade receivables 139 70
Other receivables 1,432 423
Prepayments and accrued income 632 277
2,203 770
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.
Other receivables, as at 30 September 2023, includes £1.2 million paid to
date in connection with the proposed acquisition of the 14.7 acre site in
Bristol comprising a conditionally refundable £0.5 million exchange deposit,
an introductory fee of £0.4 million plus legal and advisory fees in
connection with the contract and initial planning related works.
Prepayments, as at 30 September 2023, include £0.3 million of provisional
arrangement fees in connection with the placing of the ZDP shares which
completed in October 2023.
18. TRADE AND OTHER PAYABLES
30 Sep 23 30 Sep 22
£'000 £'000
Social security and payroll taxes 156 56
Trade payables 5,996 938
Accruals and deferred income 939 611
7,091 1,605
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, as at 30 September 2023, primarily comprise costs payable to
the contractor and other professionals in connection with the student
accommodation development at The Island Quarter. These costs were incurred by
30 September 2023 but not paid until October 2023 with the student
accommodation development costs funded by way of a further drawdown from the
Barclays loan facility.
19. PROVISION FOR LIABILITIES AND CHARGES
30 Sep 23 30 Sep 22
£'000 £,000
At the start of the year 1,396 5,614
Paid in the year - (2,807)
Movement in provision in the year (1,396) (1,411)
At the end of the year - 1,396
As at 30 September 2021, the Group was party to a services agreement and
introduction fee agreement in connection with its investment property at
Nottingham. The fee payable was to be calculated on the earlier of the date of
sale of the property or 22 December 2021 with settlement to follow, subject to
agreement between each party, 31 business days after the fee calculation has
been finalised. In January 2022, the introductory fee, calculated at £2.807
million, was paid and the longstop date for the services agreement calculation
extended until 22 December 2023.The provisions at 30 September 2023 and 30
September 2022 have been calculated by reference to the value of the property
at each balance sheet date after allowing for a priority return and applicable
costs. The reduction in the Group's investment property values in the year has
resulted in a full reversal of the other services provision at 30 September
2023.
20. BORROWINGS - non current
Year ended 30 September 2023
Drawn Undrawn Total
£'000 £'000 £'000
At the start of the year - - -
Drawdown of new facility 18,033 29,467 47,500
At the end of the year 18,033 29,467 47,500
Less unamortised loan arrangement fees (833) - (833)
17,200 29,467 46,667
On 23 December 2022, the Group entered into a new 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, targeted by the summer of 2024,
and subsequent letting of the 693-bed student accommodation development at The
Island Quarter site in Nottingham. Security is provided by way of the student
accommodation plot as well as the guarantees from the Company noted below.
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%.
The Company has 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.
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
30 Sep 23 30 Sep 22
£'000 £'000
Bank borrowings at the start of the year - -
Cash flows from financing activities:
Bank borrowings drawn 18,033 -
Loan arrangement fees paid (1) (889) -
Non-cash movements:
Amortisation of loan arrangement fees 56 -
Bank borrowings at the end of the year 17,200 -
1. In addition to the arrangement fees paid in connection with the
Barclays loan the Company has also paid a further £149,000 in the year in
connection with provisional arrangement fees for both the ASK loan and ZDP
share placing. The funds from these were not received until after the year
end.
21. SHARE CAPITAL
Authorised share capital: 30 Sep 23 30 Sep 22
£ £
140,000,000 (2022: 140,000,000) Ordinary shares of 5p each 7,000,000 7,000,000
Allotted and called up:
No £'000
As at 30 September 2022 and 30 September 2023 59,638,588 2,982
22. CAPITAL COMMITMENTS
As at 30 September 2023, the Group had contracted capital commitments, not
provided for in the financial statements, of £19,795,000 (2022: £32,060,000)
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. £19,627,000 relates to the remaining construction costs
anticipated to enable completion of the student accommodation development at
The Island Quarter which are to be funded entirely by way of further drawdowns
from the Barclays loan facility.
On 6 April 2023, the Group, by way of its 80% interest in the shares of
Conygar Bristol Limited, entered into a conditional contract with Wholesale
Fruit Centre (Bristol) Limited to acquire the 14.7 acre site at St Philips
Marsh where the Bristol Fruit Market is currently located, paying an initial
deposit of £450,000. Completion of the acquisition is conditional on the
satisfaction or, where relevant, waiver of the grant of planning permission
for a number of development options by 6 June 2025, subject to extension
provisions. In addition, all tenants are required to have surrendered their
existing leases by 6 April 2024 and the market licence in respect of the site
terminated. The contract is capable of termination if the vacant possession
condition has not been satisfied or waived by 6 April 2024 or if the vacant
possession and planning permission conditions have not both been satisfied by
6 April 2028.
23. RELATED PARTY TRANSACTIONS
On 27 September 2023, The Group entered into a subscription and
shareholders' agreement, with Urban & City Limited, which sets out the
commercial terms and profit-sharing arrangements in connection with the
possible, acquisition, redevelopment and sale of the land at St Philips Marsh.
Included within the agreement is the requirement to pay an introductory fee of
£400,000 to Lavignac Securities Limited for it having introduced this
opportunity. Mr G S Miller-Cheevers, who is a director of Conygar Bristol
Limited owns the entire issued share capital and is the sole director of both
Urban & City Limited and Lavignac Securities Limited. The full
introductory fee is accrued in these financial statements and was paid in
October 2023.
During the year Lavignac Securities Limited also charged £200,000 of fees to
the Group, in connection with services provided to progress The Island Quarter
and Bristol projects, of which £33,000 is included within trade payables as
at 30 September 2023 and was paid in October 2023.
24. 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.
Financial assets:
30 Sep 23 30 Sep 22
£'000 £'000
Cash and cash equivalents 2,676 17,361
Trade receivables and accrued income 167 92
Other receivables (excluding VAT) 1,282 199
4,125 17,652
Financial liabilities:
30 Sep 23 30 Sep 22
£'000 £'000
Floating rate bank borrowings (note 20) 17,200 -
Trade payables and other accrued expenses 7,053 1,566
24,253 1,566
Group trade payables, as at 30 September 2023, primarily comprise costs
payable to the contractor and other professionals in connection with the
student accommodation development at The Island Quarter. These costs were
incurred by 30 September 2023 but not paid until October 2023 with the student
accommodation development costs funded by way of a further drawdown from the
Barclays loan facility.
25. EVENTS AFTER THE BALANCE SHEET DATE
On 3 October 2023, the Group, by way of its wholly-owned subsidiary
undertaking Conygar ZDP PLC (the "ZDP Co"), placed 5 million zero dividend
preference shares (the "ZDP shares"), at a price of £1 per ZDP share, 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 the date of transfer of such
shares to a third party or 4 October 2028.
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.
Pursuant to a contribution agreement, dated 3 October 2023, between the ZDP Co
and the Company the funds raised from the placing, net of issue costs, have
been lent to the Company. The loan is non-interest bearing and repayable, at
the latest, five business days before the ZDP repayment date of 4 October
2028. In return, the Company has undertaken to meet all costs and liabilities
of the ZDP Co and enable the ZDP Co to meet all its obligations in respect of
the ZDP shares.
On 16 November 2023, the Company announced the completion of 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, of which £5m has been drawn at the date of signing these financial
statements, will be utilised primarily to further progress the owned and
proposed development projects at The Island Quarter and Bristol.
The report and accounts for the year ended 30 September 2023 will shortly be
available via the Company's website www.conygar.com (http://www.conygar.com)
or, as required, posted to shareholders and copies may be obtained free of
charge for at least one month following their posting by writing to the
company secretary, The Conygar Investment Company PLC, 1 Duchess Street,
London W1W 6AN.
The Company's annual general meeting will be held at 11:00am on Tuesday, 19
December 2023 at the offices of The Conygar Investment Company PLC, First
Floor, Suite 3, 1 Duchess Street, London W1W 6AN.
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.
.
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