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Conygar Investment Company Plc (The) NEX:CIC.GB NEX Ordinary Share GB0033698720
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Conygar Investment Company PLC(The) Preliminary Results

26/11/2019 7:01am

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RNS Number : 6137U

Conygar Investment Company PLC(The)

26 November 2019

26 November 2019

THE CONYGAR INVESTMENT COMPANY PLC

PRELIMINARY RESULTS FOR THE YEARED 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 GBP18.6 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 GBP39.9 million and no borrowings. 

Summary Group Net Assets as at 30 September 2019

 
                                  Per Share 
                          GBP'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 GBP39.9 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 GBP13.9 million (2018: GBP3.8 million).

The main reason for the loss before tax was the write down of GBP18.6 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 GBP4.8 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 GBP4.2 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 GBP6.9 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 GBP5.6 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 GBP39.9 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 
                          GBP'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 GBP18.6 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 GBP39.9 million and no borrowings.

Investment Properties and Development Projects

Nottingham, Nottinghamshire

The Group acquired 37 acres in Nottingham City Centre in December 2016 for GBP13.5 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 GBP6.9 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 GBP3.5 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 GBP215,000 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 GBP4.3 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 
                           GBP'm   GBP'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 
                         GBP'm   GBP'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 GBP18.6m 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 GBP100.7 million (2018: GBP120.3 million). The primary movements in the year were GBP6.0 million from the revaluation of investment properties plus net rental income of GBP1.5 million, offset by GBP19.1 million of development costs written off, GBP2.6 million of administrative costs and GBP5.6 million spent purchasing our own shares.

Cash flow and Financing

At 30 September 2019, the Group had cash of GBP39.9 million and no bank debt (2018: cash of GBP49.3 million and no bank debt).

During the year, the Group used GBP2.0 million cash in operating activities (2018: used GBP1.0 million).

The primary cash outflows in the year were GBP5.6 million to buy back shares and GBP8.5 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 GBP5.5 million from the sale of the Premier Inn, resulting in a net cash outflow in the year of GBP9.4 million (2018: cash inflow of GBP12.1 million).

Net Income from Property Activities

 
                                                         2019    2018 
                                                        GBP'm   GBP'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 GBP2.6 million compared with GBP3.1 million the previous year. The major items were salary costs of GBP1.6 million (2018: GBP1.9 million) and various costs arising as a result of the Group being listed on AIM.

Taxation

The tax charge for the year is GBP0.1 million on the pre-tax loss of GBP13.9 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 GBP5.6 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 
                  GBP'000    GBP'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 GBP54,000 (2018: GBP57,000) 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   Year Ended 
                                                                                             30 Sep 19    30 Sep 18 
                                                                                               GBP'000      GBP'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

 
                                              Capital 
                                  Share    Redemption     Treasury     Retained       Total 
                                Capital       Reserve       Shares     Earnings      Equity 
                                GBP'000       GBP'000      GBP'000      GBP'000     GBP'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     30 Sep 
                                                        GBP'000       2018 
                                                                   GBP'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   Year Ended 
                                                          30 Sep 19    30 Sep 18 
                                                            GBP'000      GBP'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 
                                                      GBP'000      GBP'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 
                           GBP'000     GBP'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   Year ended 
                                             30 Sep 19    30 Sep 18 
                                               GBP'000      GBP'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   Year ended 
                               30 Sep 19    30 Sep 18 
                                 GBP'000      GBP'000 
 Interest on cash deposits           252           91 
                             ===========  =========== 
 
   7.      TAX 
 
                                                  Year ended   Year ended 
                                                   30 Sep 19    30 Sep 18 
                                                     GBP'000      GBP'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   Year ended 
                                                   30 Sep 19    30 Sep 18 
                                                     GBP'000      GBP'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.       DIVIDS 

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 GBP13,972,000 (2018: loss of GBP3,674,000) 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     30 Sep 
                                                      19         18 
                                                 GBP'000    GBP'000 
 At the start of the year                          3,570          - 
 Additions                                         4,767      3,536 
 Revaluation movement                              5,996         34 
 Reclassification from investment properties      10,666          - 
  under construction 
 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 GBP14,283,000 (2018: GBP3,536,000).

The Group's revenue for the year includes GBP1,315,000 derived from properties leased out under operating leases (2018: GBP992,000).

   11.     INVESTMENT PROPERTIES UNDER CONSTRUCTION 

Freehold land and buildings

 
                                                30 Sep     30 Sep 
                                                    19         18 
                                               GBP'000    GBP'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     30 Sep 
                                                      19         18 
                                                 GBP'000    GBP'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     30 Sep 
                                                      19         18 
                                                 GBP'000    GBP'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      22,649          - 
  under construction 
 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 GBP18.6m 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    30 Sep 
                                        19        18 
                                   GBP'000   GBP'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    30 Sep 
                                           19        18 
                                      GBP'000   GBP'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 
                                          GBP'000      GBP,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 
                                                 GBP          GBP 
140,000,000 (2018: 140,000,000) Ordinary 
 shares of GBP0.05 each                    7,000,000    7,000,000 
                                           =========  =========== 
 
 
 
  Allotted and called up: 
                                                       No            GBP'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 GBP5,582,000 (2018: GBP11,823,000). 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 
                                             GBP'000    GBP'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 
                                           GBP'000    GBP'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    30 Sep 
                                    19        18 
                               GBP'000   GBP'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 GBP965,000 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: GBP3,100,000).

During the year the Company charged a management fee to Conygar Cross Hands Limited of GBP1,000,000 (2018: GBPnil) 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 
                                GBP'000    GBP'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 
                                              GBP'000    GBP'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 GBP4.2 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 GBP4.0 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.

END

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