Preliminary Results

RNS Number : 5918I
Conygar Investment Company PLC(The)
27 November 2018
 

27 November 2018

 

THE CONYGAR INVESTMENT COMPANY PLC

 

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2018

 

SUMMARY

 

 

·    Net asset value per share 201.3p.

 

·    Outline planning submitted to Nottingham City Council for a mixed use scheme consisting of over 2 million square feet.

 

·    Exchanged a lease agreement with Lidl UK to construct a 23,000 square foot store at Cross Hands, south west Wales.

 

·    Disposed of M&S Food Hall at Ashby-de-la-Zouch for £4.4 million. 

 

·    Agreed a lease with B&M Retail and a forward sale at Ashby-de-la-Zouch.

 

·    Planning permission granted and construction started for an 80 bed Premier Inn at Parc Cybi, Anglesey.  Forward sold for £6.9 million.

 

·    Purchase of industrial property in Selly Oak, Birmingham for £3.5 million in April 2018.

 

·    Sold all 26.3 million Regional REIT shares for £25.5 million.

·    Total cash available of £49.3 million with no debt or borrowings.

 

·    Bought back 7.13 million shares (10.7% of ordinary share capital) at an average price of 165.9 pence per share.

 

 

Summary Group Net Assets as at 30 September 2018

 

 

 

Per Share

 

£'m

p

Properties and Projects

70.2

117.3

Cash and other net assets

50.1

84.0

Net Assets

120.3

201.3

 

 

Robert Ware, Chief Executive, commented:

 

"Significant progress and change has occurred over the year. With the sale of our holding in Regional REIT and the sale or forward sale of certain assets, our balance sheet is now stronger than a year ago, consisting only of our properties and cash reserves, with no debt. We have submitted outline planning for the Nottingham City Centre site, taken full control of the Holyhead Waterfront development, are delivering our properties under construction and are also well positioned to capitalise on other opportunities when they arise."

 

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

Steve Pearce:                 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

 

We present the Group's results for the year ended 30 September 2018.

 

Net asset value per share was 201.3p (2017: 203.0p). 

 

Significant progress and change has occurred over the year. Following the sale of the investment property portfolio in 2017, the Group has sold all of its holding in Regional REIT Ltd.  We have taken full control of the development project at Holyhead Waterfront, which was previously a 50%/50% joint venture with Stena Line.  We have sold one asset and conditionally agreed to forward sell two assets taking advantage of the favourable market conditions we have seen for assets with long-term income, let to strong tenants. 

 

As referred to in our interim results for the six months ended 31 March 2018, we have written down the values of two of our development projects, at Fishguard Waterfront and Llandudno Junction, and this has been the main cause of the loss before taxation for the year of £3.8 million (2017: profit of £1.2 million).

 

Despite this loss, the balance sheet remains strong and now consists of our investment properties under construction and development projects totalling £70.2 million and our cash deposits of £49.3 million.

 

This places us in a good position to deliver our development pipeline and also to capitalise on opportunities when they arise.

 

Progress

 

The Group disposed of its entire holding of 26.3 million shares in Regional REIT Limited, realising a total of £25.5 million.  The total gain from the investment property portfolios sold to Regional REIT is £45.7 million over seven years, on an original investment cost of £113.4 million.

 

The development pipeline has progressed well during the year. In June, the Group submitted an outline planning application for a mixed used scheme of over two million square feet at its 37 acre site in Nottingham City Centre.  We have continued to work closely with Nottingham City Council to deliver this exciting project, which will include offices, apartments, student housing, leisure uses and associated community retail offering, along with open public spaces. We expect a decision from the Council with regard to the planning application shortly and we are keen to begin the infrastructure works as soon as possible.

 

As mentioned above, the Group has decided to sell or forward sell a number of assets which it originally intended to hold to provide long-term income.  The unsolicited offers received were compelling and highlight that, despite the current uncertainty in the UK economy, there is still a strong appetite for good quality regional assets. In November 2017, we sold our M&S Food Hall investment in Ashby-de-la-Zouch for £4.35 million, realising a profit of £446,000. At the same site, we exchanged a lease agreement with B&M Retail Ltd to construct a 20,000 square foot store with an additional 7,500 square foot garden centre and parking. Subsequently, an offer was received to forward purchase this asset and once constructed, which we expect will be by next autumn, the disposal will result in the Group receiving £4.3 million for the land and completed development.

 

On Parc Cybi, Anglesey, detailed planning permission was granted by Ynys Mon County Council (the Isle of Anglesey County Council) for an eighty bedroom hotel, which once built, is subject to a 25 year lease with Premier Inn Hotels Limited. Similarly to Ashby-de-la-Zouch, an offer was received for this asset which will result in the Group receiving net proceeds of £6.9 million for the completed development. These net proceeds equate to a net initial yield of 4.7% and again this disposal highlights the attraction of assets benefitting from long-term income let to high quality occupiers. 

 

In September, we were pleased to announce that we had exchanged a lease agreement with Lidl UK Gmbh to construct a 23,000 square foot store on our retail park at Cross Hands, in south west Wales. Once Lidl is operating, approximately 75,000 square feet of the park will be income generating, leaving just 15,000 square feet of constructed space available to let and 0.75 acres available for future construction. We continue to aim to have this site fully operational by next autumn.

 

In May, the Group agreed with its partner, Stena Line Ports Limited, to take 100% control of its joint venture development project at Holyhead Waterfront.  The transaction enables us to progress with the scheme as planned and we are working towards obtaining detailed planning permission in the coming months.  As part of the transaction, Stena was granted 999 year leases of the platform at Soldier's Quay, which is not required for the waterfront development, and a warehouse, which is situated at Soldier's Point and is used by Stena.  We retain a right to call for a sublease if this warehouse is required for the waterfront development in the future.  As part of the transaction, Stena repaid £2.5 million to Conygar, which is Stena's 50% share of a loan the Group made to the joint venture company.  As consideration for the sale of its shares in the joint venture company, Stena received £1 and will receive 20% of the profit after tax of the development once it has completed.

 

Lastly, in April, we acquired an industrial property in Selly Oak, Birmingham for £3.5 million which generates income of £215,000 per annum. The property is located in a predominantly residential area and it benefits from good medium term redevelopment prospects.

 

Dividend

 

The Board recommends that no dividend is declared in respect of the year ended 30 September 2018. More information on the Group's dividend policy can be found within the Strategic Report.

 

Share Buy Back

 

During the year, the Group acquired 7,130,000 ordinary shares representing 10.7% of its ordinary share capital, at an average price of 165.9p per share at a cost of £11.8m. As a result of the buy backs, net asset value per share has been enhanced by 4.4 pence per share. Following the year end, the Group has acquired a further 2,550,000 ordinary shares representing 3.8% of its ordinary share capital at an average price of 171.5p per share. This cost £4.4 million and has enhanced net asset value per share by 1.6 pence per share. The Group will seek to renew the buy back authority at the forthcoming AGM as we consider it to be a useful capital management tool.

 

Outlook

 

Our balance sheet is now stronger than a year ago, consisting only of our properties and cash reserves, with no debt. Accordingly, we are well positioned to deliver the development projects and also, to make further acquisitions should the right opportunities arise.    

 

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 portfolio of investment properties under construction and the development pipeline are progressing and construction is expected to start at several more locations this year. The balance sheet remains strong with cash of £49.3 million and there is no debt in the Group. The Group has adequate resources to maintain and develop its business and the balance sheet remains both liquid and robust.

 

Events since the balance sheet date

 

There have been no significant events since the balance sheet date.

 

Summary of Group Net Assets

 

The Group net assets as at 30 September 2018 may be summarised as follows:

 

 

 

 

Per Share

 

£'m

 

p

Properties and Projects

70.2

 

117.3

Cash and other net assets

50.1

 

84.0

Net Assets

120.3

 

201.3

 

 

Investment properties and Investment in Regional REIT Limited

 

The Group completed the disposal of various Group undertakings on 24 March 2017 which, with the exception of the investment properties under construction, comprised the Group's entire investment property portfolio. The net consideration was satisfied by the issue of 26,326,644 ordinary shares in Regional REIT Limited at a price of 106.3 pence per share. The shares were sold in the year at an average price of 97 pence per share generating £25.5 million.  

 

Investment Properties Under Construction and Development Projects

 

Good progress has been made on most of our development projects and investment properties under construction since we last reported.

 

Nottingham

 

In December 2016, the Group acquired 37 acres in Nottingham city centre for £13.5 million. The mainly cleared site was formerly Boots, the Chemists' headquarters and laboratories and has been vacant for twenty years. An outline planning application was submitted in June 2018 and includes offices, residential, student accommodation and leisure facilities comprising some two million square feet. We believe this is a very exciting opportunity to help shape a major UK city and we look forward to commencing the infrastructure works as soon as possible. 

 

Cross Hands

 

We completed the construction of the initial 67,000 square foot phase of the retail park at Cross Hands, south west Wales in October 2017. The construction was delivered on time and on budget. In September, we exchanged a lease agreement with Lidl UK Gmbh to construct a 23,000 square foot store and associated car parking and subject to the successful determination of a Section 73 application, which has been submitted, we intend to start on site in early 2019, with practical completion planned for the autumn.  Once operating, approximately 75,000 square feet of the park will be income generating with other tenants including B&M Retail Ltd, Iceland Foods Limited, Pets at Home Ltd, Peacocks Stores Limited, Costa Coffee Ltd, Dominos PLC and David Jenkins Ltd. There will then be 15,000 square feet of constructed space available to let and 0.75 acres available for construction.

 

Holyhead Waterfront

 

At Holyhead Waterfront, we agreed with Stena Line Ports Limited to take 100% control of the joint venture development project. This transaction enables us to progress with the scheme as planned and we will now progress the detailed design and Reserved Matters application for the development over the coming year.

 

Parc Cybi Business Park and Rhosgoch

 

At Parc Cybi, Anglesey, we exchanged an agreement for lease with Premier Inn Hotels Ltd to construct an 80-bedroom hotel with a restaurant and bar. We received planning permission from Ynys Mon County Council in November 2017. The pre-let to Premier Inn is on a 25 year lease, with a first break clause at year 20. We started construction in March and expect to complete in early 2019.  The asset has been forward sold and the net sale proceeds from the sale of land and the development agreement will be £6.9 million, representing a yield of 4.7%.

 

The option agreement we signed with Horizon Nuclear Power (HNP) in December 2016, enabling them to instruct us to build a logistics centre on our 6.9 acre site at Parc Cybi is still in place. Similarly, the second option agreement that covers the 203 acre site at Rhosgoch for use during the construction of Wylfa B stands until December 2022. Rhosgoch is one of several sites that HNP are considering as a location for housing the temporary construction workers. The Development Consent Order for the entire Wylfa scheme and associated infrastructure was submitted by Horizon Nuclear in June and is currently being examined by the planning inspectorate in a process which is expected to last six months.

 

Selly Oak

 

In April, we acquired units 5-9 Selly Oak Industrial Estate in Birmingham for £3.5 million including costs.  The units consist of 50,000 square feet and are fully let to University Hospitals Birmingham NHS Foundation Trust and Revolution Gymnastics Limited, generating income of £215,500 per annum.  The property is located in a predominantly residential area and has strong short to medium term redevelopment prospects.

 

Haverfordwest

 

At Haverfordwest, we successfully discharged the three pre-commencement conditions of the residential permission relating to master planning, phasing and ecology. We plan to submit a reserved matters application for the first phase of approximately one hundred units imminently. 

 

We continue to work on plans for the retail site where we withdrew our planning application in 2017.

 

Ashby-de-la-Zouch

 

At Ashby-de-la-Zouch, we completed the construction of an 11,000 square foot Marks and Spencer Food Hall, that was pre-let for a fixed term of 15 years. Having received an unsolicited offer of £4.35m, we disposed of the property in November 2017 for a net initial yield to the purchaser of 4.75%. On the further 2 acres of the site, we exchanged an agreement for lease, subject to planning, with B&M Retail for a term of 15 years. In October, a resolution to grant planning was awarded. The construction of the 20,000 square foot store and 7,500 square foot garden centre will start in the New Year. We have agreed to forward sell this asset and it is expected that the net sale proceeds from the sale of land and the development agreement will equate to £4.3 million.

 

King's Lynn, Norfolk

 

This is a six acre residential development site with planning permission for 94 dwellings near to King's Lynn, Norfolk.  We are in discussions to sell this site and will provide an update on the potential disposal when we next report.

 

Fishguard Harbour

 

At Fishguard Harbour, we announced in January that we can no longer progress our plans for this mixed-use marina development and we have therefore written off a total of £2.4 million.

 

Llandudno Junction

 

We have been working with Conwy County Council, as its preferred development partner, to bring forward 90,000 square feet of retail floor space at its Old Brickworks site.  Due to the profound difficulties in the retail sector and our belief that we will not be able to deliver the park as planned, it was decided that this investment should be written off. We are continuing to work with the Council and potential occupiers to devise alternative schemes for the site.

 

Summary of Investment Properties

 

 

2018

2017

 

£'m

£'m

Nottingham

15.00

14.01

Cross Hands

9.64

8.14

Haverfordwest (Retail)

3.59

3.52

Selly Oak 1

3.57

-

Rhosgoch

3.47

3.46

Parc Cybi, Holyhead

2.83

1.61

Ashby-de-la-Zouch 2

0.13

3.55

Total investment to date

38.23

34.29

 

1.   On 30 April 2018, the Company acquired units 5-9 Selly Oak Industrial Estate.

2.   The Marks and Spencer Food Hall development was completed in the year and, having received an unsolicited offer of £4.35m, was disposed of in November 2017.

 

 

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.  

 

 

2018

2017

 

£'m

£'m

Haverfordwest

22.14

22.03

Holyhead Waterfront 1

8.85

10.26

King's Lynn

0.87

0.87

Fishguard Lorry Stop 2

0.07

0.54

Fishguard Waterfront 2

-

2.17

Llandudno Junction

-

0.71

Total investment to date

31.93

36.58

 

1.   Includes £2.5m received from Stena Line Ports Limited.

2.   The Company is unable to progress its proposals for a mixed-use development.

 

Financial review

 

Net Asset Value

 

The net asset value at the year end was £120.3 million (2017: £135.8 million). The primary movements in the year were £1.8 million from investment property sales and net rental income plus £1.6 million of dividends from Regional REIT Limited offset by a £2.1 million loss on the sale of the Regional REIT shares, £3.2 million of development costs written off, £3.1 million of administrative costs and £11.8 million spent on purchasing our own shares. Following the cancellation of the share options in 2016, there are no diluting items to the basic NAV per share.

 

The NNNAV or "triple net asset value" is the net asset value taking into account asset revaluations, the mark to market costs of debt and hedging instruments and any associated tax effect. Our investment properties are carried on our balance sheet at independent valuation. Our investment properties under construction are carried at fair value and the development and trading assets are carried at the lower of cost and net realisable value. We have not sought to value these assets as, in our opinion, they are at too early a stage in their development to provide a meaningful figure, so cost is equated to fair value for these purposes.  On this basis, there is no material difference between our stated net asset value and NNNAV.

 

Cash flow

 

The Group used £1.0 million cash in operating activities (2017: used £0.2 million).

 

The primary cash outflows in the year were £3.5 million to purchase Selly Oak, £4.2 million incurred on investment properties under construction and £11.8 million to buy back shares. These were offset by £4.3 million from the sale of an investment property, £25.5 million from the sale of Regional REIT shares and £2.5 million received from Stena Line Ports following the release of their interest in the Stena Line joint venture, resulting in a cash inflow during the year of £12.1 million (2017: cash outflow of £26.5 million).

 

Net Income From Investment Property Activities

 

2018

2017

 

£'m

£'m

Rental income

1.5

5.0

Direct property costs

(0.2)

(1.6)

Rental surplus

1.3

3.4

Profit on sale of group undertakings*

-

1.5

Sale of investment property

4.3

-

Cost of investment property sold

(3.8)

-

Total net income arising from investment property activities


1.8


4.9

 

 

 

*Profit arising from the sale of the investment property portfolio to Regional REIT Limited.

 

Administrative Expenses

 

The administrative expenses for the year ended 30 September 2018 were £3.1 million compared with £2.7 million the previous year. The major items were salary costs of £1.9 million (2017: £1.7 million) and various costs arising as a result of the Group being listed on AIM.

 

Financing

 

At 30 September 2018, the Group had cash of £49.3 million (2017: £37.2 million). The increase has resulted mainly from sale of both the Regional REIT shares and investment property, partly offset by the cash used in buying back shares, administrative costs, the purchase of Selly Oak and investing in the investment properties under construction and development projects.

 

As at 30 September 2018, the Group does not maintain any bank loan facilities.

 

Taxation

 

The tax credit for the year is £0.1 million on the pre-tax loss of £3.8 million and comprises £0.1 million of current tax offset by a £0.2 million deferred tax credit. 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. The deferred tax liability of £0.2 million, recognised at 30 September 2017, has been reversed in the year following the sale of all the Regional REIT shares.  

 

Capital management

 

Capital Risk Management

 

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain 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, on reported profitability and on the cash flows of the Group.

 

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. Derivative instruments may be used to change the economic characteristics of financial instruments in accordance with the Group's treasury policies.

 

The management of cash and similar instruments is monitored weekly with summary cash statements produced on a fortnightly basis and discussed regularly in management and Board meetings. The overall aim 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 with a range of maturities up to a maximum of 180 days. 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 2018.

 

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.

 

Over the past nine 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 7,130,000 ordinary shares at an average price of 165.9p which represents 10.7% of its ordinary share capital. This cost £11.8 million and net asset value per share has been enhanced by approximately 4.4 pence per share. The Group will seek to renew the buy back authority at the forthcoming Annual General Meeting.

 

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 financial performance and strong balance sheet are 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. We have also invested in improved IT systems to support the business and protect data. 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 property portfolio and development land bank. 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 of directors 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:

 

Property held for Investment

 

The fair value of property held for investment is based upon open market value and is calculated using a third party valuation provided by an external valuer.

 

Properties held for Development

 

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

 

The Group's policy is to manage the cost of borrowing using variable rate debt. Whilst floating rate borrowings are not exposed to changes in fair value, the Group is exposed to cash flow risk as costs increase if market rates rise. The Group's policy is to use derivative financial instruments to mitigate at least 50% of this risk in order to

achieve a sensible and appropriate level of interest rate protection whilst maintaining flexibility to match the commercial trading strategy. 

 

As at 30 September 2018, the Group does 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 18

30 Sep 17

 

£'000

£'000

Floating rate

49,262

37,170

 

 

 

Floating rate financial assets comprise cash and short term deposits at call and money market rates for up to thirty days and institutional cash funds.

 

Credit Risk

 

The risk of financial loss due to a counterparty's failure to honour its obligations arises principally in connection with property leases, the investment of surplus cash and transactions where the Group sells properties with an element of deferred consideration.

 

Tenant rent payments are monitored regularly and appropriate action is taken to recover monies owed or if necessary, to terminate the lease. Deferred consideration terms are only agreed with counterparties approved by the Board or where some additional security is available, and there were none as at 30 September 2018 (2017: none). 

 

The Group policy has been to invest funds with a broad range of institutions having investment grade low risk credit ratings and a strong or superior ability to repay short term debt obligations. The unprecedented credit and banking market disruption of the global financial crisis had a significant impact upon the ability to rely upon either credit ratings or the ability of financial institutions to honour their commitments and the widespread nature of the financial crisis introduced considerable uncertainty into the process. As at 30 September 2018, the Group had a single balance of £57,000 (2017: £59,000) 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

 

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans secured on the Group's properties. The Group is exposed to liquidity risk should it encounter difficulties in realising assets mainly through the sale of properties. However, the Group maintains a prudent approach to financing and cash flow such that the adverse impact of this can be mitigated.

 

Price Risk

 

The Group's exposure to changing market prices on the value of financial instruments may have an impact on the carrying value of financial instruments and would arise principally as a result of entering into swaps or similar transactions to fix interest rates on the Group's borrowings. The Group's policies for managing this risk are to control the levels of fixed rate debt. As the Group's assets and liabilities are all denominated in Pounds Sterling, there is currently no exposure to currency risk.

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 September 2018

 

                                                                                    Note

Year Ended

30 Sep 18

£'000

Year Ended

30 Sep 17

£'000

 

 

 

Rental income

1,342

4,641

Other property income

196

367

Revenue

1,538

5,008

 

 

 

Direct costs of:

 

 

Rental income

161

1,608

Development costs written off                                          17

3,232

77

Direct Costs

3,393

1,685

 

 

 

Gross (Loss)/Profit

(1,855)

3,323

 

 

 

 

 

 

Profit on sale of group undertakings

-

1,496

Profit on sale of investment property                                 13

446

-

Surplus on revaluation of investment property                  13

34

-

Profit realised in purchase of Stena Line's                         

interest in Conygar Holyhead Limited                               23

 

1,083

 

-

Loss on sale of Regional REIT shares                               12

(2,132)

-

Dividends received from Regional REIT

1,636

948

Loss on revaluation

 

 

of investment in Regional REIT

-

(355)

Share of results of joint ventures                                       15

-

29

Other gains and losses                                                         6

3

95

Administrative expenses

(3,075)

(2,710)

 

 

 

Operating (Loss)/Profit                                                    3

(3,860)

2,826

Finance costs                                                                      7

-

(1,785)

Finance income                                                                  7

91

174

 

 

 

(Loss)/Profit Before Taxation

(3,769)

1,215

Taxation                                                                              8

95

(360)

 

 

 

(Loss)/Profit And Total Comprehensive

(Charge)/Income for the Year


(3,674)


855

 

 

 

 

 

 

(Loss)/earnings per share                                                   10

(5.72)p

1.21p

 

 

 

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 2018

 

Attributable to the equity holders of the Company

 

 

 

Share

Capital

Capital

Redemption

 Reserve

 

Treasury

Shares

 

Retained

Earnings

 

Total

Equity

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Changes in equity for the year ended 30 September 2017

 

 

 

 

 

At 1 October 2016

4,985

1,568

(32,194)

177,680

152,039

 

Profit for the year

 

-

 

-

 

-

 

855

 

855

 

 

 

 

 

 

Total comprehensive 

income for the year

 

-

 

-

 

-

 

855

 

855

Purchase of own shares

-

-

(17,104)

-

(17,104)

Cancellation of treasury shares

(1,629)

1,629

48,909

(48,909)

-

 

 

 

 

 

 

At 30 September 2017

3,356

3,197

(389)

129,626

135,790

 

 

 

 

 

 

 

 

 

 

 

 

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

               

 

 

CONSOLIDATED BALANCE SHEET       

at 30 September 2018

                                                                                                           

                                                                                   

 

Note

 

30 Sep 2018 £'000

30 Sep 2017

£'000

Non-Current Assets

 

 

 

 

Property, plant and equipment                                    

11

 

-

24

Investment in Regional REIT

12

 

-

27,643

Investment properties

13

 

3,570

-

Investment properties under construction

14

 

34,663

34,293

Investment in joint ventures                                        

15

 

-

7,267

 

 

 

38,233

69,227

Current Assets

 

 

 

 

Development and trading properties                           

17

 

31,931

29,311

Trade and other receivables                                        

18

 

1,425

1,166

Cash and cash equivalents

 

 

49,262

37,170

 

 

 

82,618

67,647

Total Assets

 

 

120,851

136,874

 

 

 

 

 

Current Liabilities

 

 

 

 

Trade and other payables                                            

19

 

457

879

Tax liabilities

 

 

110

-

 

 

 

567

879

 

 

 

 

 

Non-Current Liabilities

 

 

 

 

Deferred tax

22

 

-

205

 

 

 

 

 

Total Liabilities

 

 

567

1,084

 

 

 

 

 

Net Assets

 

 

120,284

135,790

 

 

 

 

 

Equity

 

 

 

 

Called up share capital                                                

20

 

2,988

3,356

Capital redemption reserve

 

 

3,565

3,197

Treasury shares                                                          

21

 

-

(389)

Retained earnings

 

 

113,731

129,626

 

 

 

 

 

Total Equity

 

 

120,284

135,790

 

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 30 September 2018

 

 

Year Ended 30 Sep 18 £'000

Year Ended

30 Sep 17

£'000

Cash Flows From Operating Activities

 

 

Operating (loss)/profit

(3,860)

2,826

Development costs written off

3,232

77

Profit on sale of group undertakings

-

(1,496)

Profit on sale of investment property

(446)

-

Surplus on revaluation of investment property

(34)

-

Loss on sale of Regional REIT shares

2,132

-

Loss on revaluation of Regional REIT shares

-

355

Profit realised on purchase of Stena Line's

interest in Conygar Holyhead Limited

 

(1,083)

 

-

Share of results of joint ventures

-

(29)

Depreciation and amortisation of reverse lease premium

24

66

Other gains and losses

-

22

Cash Flows From Operations Before Changes In Working Capital

(35)

1,821

Change in trade and other receivables

(249)

(659)

Change in land, developments and trading properties

(211)

(127)

Change in trade and other payables

(541)

(436)

Cash Flows From Operations

(1,036)

599

Finance costs

-

(693)

Finance income

91

74

Tax paid

(10)

(181)

Cash Flows Used In Operating Activities

(955)

(201)

 

 

 

Cash Flows From Investing Activities

 

 

Acquisition of and additions to investment properties

(7,687)

(22,149)

Proceeds from sale of investment property

4,331

-

Proceeds from the sale of shares in Regional REIT

25,511

-

Repayment by Stena Line of its 50% share of a loan made to the

Group by Conygar Holyhead Limited

 

2,500

 

-

Cash transferred on sale of group undertakings

-

(1,881)

Costs paid on sale of group undertakings

-

(792)

Cash received from/(investment in) joint ventures

224

(282)

Proceeds from sale/assignment of interest in joint venture

-

3,125

Purchase of plant and equipment

-

(12)

Cash Flows Generated From/(Used In) Investing Activities

24,879

(21,991)

 

 

 

Cash Flows From Financing Activities

 

 

Bank loans drawn down

-

21,298

Bank loans repaid

-

(8,335)

Costs paid on new bank loan

-

(548)

Purchase of own shares

(11,832)

(16,715)

Cash Flows Used In Financing Activities

(11,832)

(4,300)

 

 

 

Net increase/(decrease) in cash and cash equivalents

12,092

(26,492)

Cash and cash equivalents at 1 October

37,170

63,662

Cash and Cash Equivalents at 30 September

49,262

37,170

 

 

NOTES TO THE ACCOUNTS

For the year ended 30 September 2018

 

1.    The financial information set out in this announcement is abridged and does not constitute statutory accounts for the year ended 30 September 2018 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 2018, 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 2017 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 PROFIT

 

Operating profit is stated after charging:

 

Year ended

Year ended

 

30 Sep 18

30 Sep 17

 

£'000

£'000

Audit services - fees payable to the parent company auditor for the audit of the Company and the consolidated financial statements

33

33

 

 

 

Other services - fees payable to the Company auditor for the audit of the Company's subsidiaries pursuant to legislation.

16

15

 

 

 

Other services - fees payable to the Company auditor for tax services

18

18

Depreciation of owned assets

24

9

Operating lease rentals - land and buildings

231

223

Movement on provision for doubtful debts

-

40

 

        4. PARTICULARS OF EMPLOYEES

 

        The aggregate payroll costs were:

 

Year ended

Year ended

 

30 Sep 18

30 Sep 17

 

£'000

£'000

Wages and salaries

1,664

1,516

Social security costs

215

196

 

1,879

1,712

 

The average monthly number of persons, including executive directors, employed by the Company during the year was seven (2017: seven).

 

5.     DIRECTORS' EMOLUMENTS

 

 

Year ended

Year ended

 

30 Sep 18

30 Sep 17

 

£'000

£'000

Basic salary

1,042

1,013

Payment in lieu of notice

202

-

Total emolument

1,244

1,013

 

 

 

Emoluments of highest paid director

370

354

 

       The board of directors comprises the only persons having authority and responsibility for planning, directing and controlling the activities of the Group. 

 

6.    OTHER GAINS AND LOSSES

           

Year ended 30 Sep 18

£'000

Year ended 30 Sep 17

£'000

 Movement in fair value of interest rate swaps

-

59

 Other

3

36

 

3

95

 

7.     FINANCE INCOME/COSTS

 

 

Year ended

Year ended

Finance Income

30 Sep 18

30 Sep 17

 

£'000

£'000

Bank interest and interest receivable

91

174

 

 

 

Finance Costs

 

 

Bank loans

-

(757)

Amortisation of arrangement fees

-

(127)

ZDP interest payable

-

(901)

 

-

(1,785)

 

8.      TAXATION ON ORDINARY ACTIVITIES

 

(a)          Analysis of tax (credit)/charge in the year

 

Year ended

30 Sep 18

£'000

Year ended

30 Sep 17

£'000

UK Corporation tax based on the results for the year

110

313

Over provision in prior years

-

(11)

Current tax charge

110

302

Deferred tax (credit)/charge

(205)

58

 

(95)

360

 

 

 

(b)         Factors affecting tax charge

 

 

 

The tax assessed on the (loss)/profit for the year differs from the standard rate of corporation tax in the UK of 19.0% (2017: 19.5%).

 

 

Year ended

30 Sep 18

£'000

Year ended

30 Sep 17

£'000

(Loss)/profit before taxation

(3,769)

1,215

 

 

 

(Loss)/profit multiplied by rate of tax

(716)

237

Effects of:

 

 

Gains not subject to UK taxation

(89)

-

Revaluation gains not taxable

(7)

-

Tax impact of unrealised revaluation movements

 

69

Utilisation of tax losses

(4)

(98)

Movement in tax losses carried forward

1,128

304

Non-taxable items

(195)

(189)

Capital allowances

(2)

(76)

Impact of differing tax rates for offshore entities

(5)

66

Over provision in prior years

-

(11)

Current tax charge for the year

110

302

 

9.       DIVIDENDS
 

          No dividend will be paid in respect of the year ended 30 September 2018 (2017: nil). 

 

10.     EARNINGS PER SHARE

 

          The calculation of earnings per ordinary share is based on the loss after tax of £3,674,000 (2017: profit of £855,000) and on the number of shares in issue being the weighted average number of shares in issue during the period of 64,184,339 (2017: 70,684,860). There are no diluting amounts in either the current or prior years.

 

11.     PROPERTY, PLANT AND EQUIPMENT

 

 

Office

Equipment

£'000

Furniture

& Fittings

£'000

 

Total

£'000

Cost

 

 

 

At 1 October 2016

89

95

184

Additions

12

-

12

 

 

 

 

At 30 September 2017 and 1 October 2017

101

95

196

Additions

-

-

-

 

 

 

 

At 30 September 2018

101

95

196

 

 

 

 

Depreciation/Amortisation

 

 

 

At 1 October 2016

68

95

163

Provided during the year

9

-

9

 

 

 

 

At 30 September 2017 and 1 October 2017

77

95

172

Provided during the year

24

-

24

 

 

 

 

At 30 September 2018

101

95

196

 

 

 

 

 

 

 

 

Net book value at 30 September 2018

-

-

-

 

 

 

 

Net book value at 30 September 2017

24

-

24

 

12.     INVESTMENT IN REGIONAL REIT

 

Regional REIT is a United Kingdom based real estate investment trust whose shares were admitted to the premium segment of the Official List and to trading on the main market of the London Stock Exchange on 6 November 2015. Regional REIT is managed by London & Scottish Investments Limited, as asset manager, and Toscafund Asset Management LLP, as investment manager.

 

The Company sold all of its 26,326,644 shares in Regional REIT during the year realising a loss on sale as set out below:

 

 

 


30 Sep 18
£'000

Gross sale proceeds

25,545

Sale fees

(34)

Net sale proceeds

25,511

Book value of shares sold

(27,643)

Loss on sale of Regional REIT shares

(2,132)

 

13.     INVESTMENT PROPERTIES

 

Group

 

 

Freehold

£'000

 

Long

Leasehold

£'000

Reverse Lease Premiums

£'000

 

 

Total

£'000

Valuation at 1 October 2016

106,390

23,902

388

130,680

Additions

11

64

-

75

Reclassification to investment

 

 

 

 

properties under construction

(1,170)

-

-

(1,170)

Reverse lease premium amortisation

-

-

(57)

(57)

Disposal of group undertakings

(105,231)

(23,966)

(331)

(129,528)

At 30 September 2017

-

-

-

-

Additions

3,536

-

-

3,536

Movement on revaluation

34

-

-

34

Valuation at 30 September 2018

3,570

-

-

3,570

 

The historical cost of property held at 30 September 2018 is £3,536,000.

 

The property was valued by Lambert Smith Hampton, independent valuers not connected with the Group, at 30 September 2018 at market value in accordance with the Practice Statements contained in the RICS Appraisal and Valuation Standards published by the Royal Institution of Chartered Surveyors which conform to international valuation standards. The valuation was arrived at by reference to market evidence of transaction prices and completed lettings for similar properties. No allowance has been made for expenses of realisation or for any tax which might arise. It assumes a willing buyer and a willing seller in an arm's length transaction.  The valuation 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 cost, the appropriate discount rate or yield.

 

The property rental income earned from investment properties (including investment properties under construction), leased out under operating leases, amounted to £1,538,000 (2017: £5,008,000). Details of the profit on sale of the investment property in the year are set out below:

 

 

 


30 Sep 18
£'000

Gross sale proceeds

4,331

Sale fees

(49)

Net sale proceeds

4,282

Book value of property sold

(3,836)

Profit on sale of investment property

446

 

14.     INVESTMENT PROPERTIES UNDER CONSTRUCTION

         

          Investment properties under construction are freehold land and buildings representing investment properties under development or construction and they amount to £34,663,000 (2017: £34,293,000) as at 30 September 2018. These properties comprise landholdings for current or future development as investment properties. This methodology has been adopted because the value of these properties is dependent on a detailed knowledge of the planning status, the competitive position of the assets and a range of complex development appraisals. The fair value of these properties rests in the planned developments, and is difficult to estimate pending confirmation of designs and planning permission, and hence has been estimated by the directors at cost as an approximation to fair value.

 

          The movement in the carrying value of investment properties under construction during the year was as follows:

                                                                                                             

 

30 Sep 18

£'000

30 Sep 17

£'000

At 1 October

34,293

9,476

Additions

4,206

22,038

Disposals

(3,836)

-

Reclassification from investment properties

-

1,170

Reclassification from development projects

-

1,609

At 30 September

34,663

34,293

 

15.     INVESTMENT IN JOINT VENTURES

 

 

30 Sep 18

£'000

30 Sep 17

£'000

At 1 October

7,267

10,110

Share of results of joint venture

-

29

Investment in joint venture

76

253

Contribution to planning costs by joint venture partner

(300)

-

Repayment by Stena Line of its 50% share of a loan

the Group made to Conygar Holyhead Limited

 

(2,500)

 

-

Proceeds on sale/assignment of interest in joint venture

-

(3,125)

Reclassification to property inventories following purchase

 

 

of interest in joint venture

(4,543)

-

At 30 September

-

7,267

 

As set out in the Chairman's and Chief Executive's statement, the Group acquired the 50% interest in Conygar Holyhead Limited (formerly Conygar Stena Line Limited) previously owed by its joint venture partner Stena Line Ports Limited on 23 May 2018.

 

As at 30 September 2018, the only joint venture company in which the Group retained a 50% interest was CM Sheffield Limited which was dormant at the balance sheet date and dissolved on 2 October 2018.

 

The following amounts represent the Group's share of the assets and liabilities as at 30 September 2017 and the results of the joint ventures for the year ended 30 September 2017, which are included in the comparative consolidated balance sheet and consolidated statement of comprehensive income.

 

 

As at

30 Sep 17

£'000

Assets

 

Current assets

7,282

 

 

Liabilities

 

Current liabilities

(15)

 

 

Net Assets

7,267

 

 

Year ended

30 Sep 17

£'000

Operating profit and profit before tax

29

Tax

-

 

 

Profit after tax

29

 

 

As at 30 September 2017, the Group had provided loans to Conygar Holyhead Limited and C M Sheffield Limited of £8,098,000 and £2,000 respectively.

 

16.   INVESTMENT IN SUBSIDIARY UNDERTAKINGS

 

        The subsidiaries set out below are wholly owned and controlled by the Group as at the balance sheet date.

 

 

 

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

(formerly Conygar Stena Line 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%

The Nottingham Island Site
Management Company Ltd

Dormant

England

100%*

Conygar Properties 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%*

 

 

 

 

 

Subsidiaries struck off after the balance sheet date

 

 

 

 

Conygar Bedford Square Ltd**

Dormant

England

100%*

Conygar Sunley Ltd**

Dormant

England

100%*

           

 

       *     Indirectly owned.

 

       **   Conygar Bedford Square Ltd and Conygar Sunley Ltd were dissolved on 2 October

              2018.

 

       *** Conygar Properties Ltd was dissolved on 13 November 2018.

 

17.   DEVELOPMENT AND TRADING PROPERTIES

 

 

 

30 Sep 18

30 Sep 17

 

£'000

£'000

Properties held for resale or development

31,931

29,311

 

 

 

         Development and trading properties include sites, developments in the course of construction and sites available for sale. The movements in the carrying value of development and trading properties during the year were as follows:

 

                                                                                               

 

30 Sep 18

£'000

30 Sep 17

£'000

At 1 October

29,311

30,739

Additions

4,913

258

Development costs written off

(3,232)

(77)

Reclassification from joint venture following purchase of partners interest


4,543


-

Fair value of properties and land leased to Stena Line (note 23)

 

(3,604)

 

-

Reclassification to investment properties under construction

 

-

 

(1,609)

At 30 September

31,931

29,311

   

        As set out in the Chairman's and Chief Executive's Statement, the Group is unable to progress its proposals for a mixed-use development at Fishguard, west Wales. Accordingly, the Group has written off a total of £2.4 million.

 

         The Group has also written off its £0.8 million investment in the Llandudno Junction project.

 

18.   TRADE AND OTHER RECEIVABLES

 

 

 

30 Sep 18

30 Sep 17

 

£'000

£'000

Trade receivables

84

26

Provision for doubtful debts

-

-

 

84

26

Amounts owed by group undertakings

-

-

Other receivables

377

535

Prepayments and accrued income

964

605

 

1,425

1,166

 

       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.

 

19.  TRADE AND OTHER PAYABLES

 

 

 

30 Sep 18

30 Sep 17

 

£'000

£'000

Social security and payroll taxes

61

66

Trade payables

82

545

Accruals and deferred income

314

268

 

457

879

 

        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.

 

20.   SHARE CAPITAL

 

        Authorised share capital:

 

30 Sep 18

30 Sep 17

 

£

£

140,000,000 (2017: 140,000,000) Ordinary shares of £0.05 each

7,000,000

7,000,000

 

 

Allotted and called up:

 

 

 

 

 

 

Amounts recorded as equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Ordinary shares of £0.05 each

 

 

 

 

 

 

 

               No

           £'000

 

 

As at 30 September 2017

67,126,435

3,356

 

 

Cancellation of treasury shares

(7,365,000)

(368)

 

 

As at 30 September 2018

59,761,435

2,988

 

                   

 

21.   TREASURY SHARES

 

In December 2010, the Group began a share buyback programme and during the year ended 30 September 2018 purchased 7,130,000 (2017: 10,340,000) shares on the open market at a cost of £11,832,023 (2017: £17,103,676). As seen in note 20 above, on 27 September 2018, 7,365,000 ordinary shares of 5 pence each were transferred out of treasury and cancelled.

 

22.   DEFERRED TAX LIABILITY

 

The Group's deferred tax liabilities comprise amounts arising from unrealised revaluation movements as follows: 

 

 

30 Sep 18

30 Sep 17

 

£'000

£'000

At the start of the year

205

1,902

(Credit)/charge to the statement of comprehensive income

(205)

58

Transfer of obligation on sale of group undertakings

-

(1,755)

At the end of the year

-

205

 

Deferred tax liabilities have been measured at a rate of 19% (2017: 19%), being the rate substantively enacted at the balance sheet date. They are calculated on the basis of the chargeable gain that would crystallise on the sale of the Group's investment properties and other fixed asset investments at each balance sheet date. The calculation takes account of any available indexation.

 

23.   ACQUISITION OF SUBSIDIARY

 

On 24 May 2018, the Group agreed with its partner, Stena Line Ports Limited ("Stena Line"), to take 100% control of its joint venture development project at Holyhead Waterfront.

 

The transaction enables the Group to progress with the scheme as planned and the Company will work towards obtaining detailed planning permission in the coming months. As part of the transaction, Conygar Holyhead Limited (formerly Conygar Stena Line Limited) has granted 999 year leases to Stena Line of the platform at Soldier's Quay, which is not required for the waterfront development, and a warehouse which is situated at Soldier's Point and is currently used by Stena Line. The Group has the right to call for a sublease if this warehouse is required for the waterfront development in the future.

 

As part of the transaction, Stena Line has repaid £2.5 million to the Group, which is Stena Line's 50% share of a loan the Group made to the joint venture company. As consideration for the sale of its shares in the joint venture company, Stena Line has received £1 and will receive 20% of the profit after tax of the development once it has completed.  

 

The transaction has been accounted for by the acquisition method of accounting

 

Net assets acquired

Book value

Fair value

 

£'000

£'000

Development and trading properties

8,857

8,857

Fair value of properties and land leased to Stena Line

(3,604)

(3,604)

Trade and other receivables

18

18

Trade and other payables

(2,001)

(2,001)

 

3,270

3,270

Total consideration including losses recognised up to 24 May 2018

 

(2,187)

Gain on acquisition recognised in the Statement of Comprehensive Income

 

1,083

 

As at 30 September 2018, the development at Holyhead Waterfront is not sufficiently advanced to enable a meaningful estimation of Stena's profit share to be reported.

 

24.   COMMITMENTS

 

        Group as lessee:

 

       At 30 September 2018, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

 

30 Sep 18

30 Sep 17

 

£'000

£'000

Within one year

131

180

In the second to fifth years inclusive

-

131

 

131

311

 

       The Group receives income under non-cancellable leases from existing property located at several of the Group's development sites. The income profile based upon the unexpired lease length was as follows:

 

 

30 Sep 18

30 Sep 17

 

£'000

£'000

Less than one year

909

186

Between one and five years

3,348

508

Over five years

3,721

296

 

7,978

990

      

Development of the Premier Inn hotel at Parc Cybi commenced in March 2018 and is expected to complete in early 2019.  As at 30 September 2018, the Company had committed construction costs of £3.1m.

 

25.   FINANCIAL INSTRUMENTS

     

       The fair values of all the Group's financial assets and liabilities are set out below:

 

Book Value

Book Value

Fair Value

Fair Value

 

30 Sep 2018

30 Sep 2017

30 Sep 2018

30 Sep 2017

 

£'000

£'000

£'000

£'000

  Financial Assets

 

 

 

 

  Cash

49,262

37,170

49,262

37,170

  Loans to joint ventures

-

8,100

-

8,100

 

 

 

 

 

        The fair value of the Group's trade debtors and other receivables and trade creditors and other payables is not considered to vary from historic cost due to the short term nature of these financial assets and liabilities. As such they are excluded from the disclosure.

 

 

The Report and Accounts for the year ended 30 September 2018 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, Fourth Floor, 110 Wigmore Street, London, W1U 3RW.  They are also available on the website www.conygar.com.

 

The Company's Annual General Meeting will be held at 10:30am on 21 December 2018 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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