TIDMCIC
RNS Number : 0493U
Conygar Investment Company PLC(The)
21 November 2023
21 November 2023
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014 as amended by the Market
Abuse (Amendment) (EU Exit) Regulations 2019. Upon the publication
of this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
THE CONYGAR INVESTMENT COMPANY PLC
PRELIMINARY RESULTS FOR THE YEARED 30 SEPTEMBER 2023
SUMMARY
-- Net asset value ("NAV") decreased in the year by GBP29.5
million to GBP95.1 million (159.4p per share; 2022: 208.9p per
share) primarily as a result of a net GBP21.5 million write down in
the carrying value of the Group's investment properties in addition
to a GBP5.2 million write down in the carrying value of the Group's
development site in Holyhead, Anglesey.
-- Total cash deposits of GBP2.7 million (4.5p per share) at the
year end and GBP9.0 million as at 17 November 2023.
-- Cash deposits boosted after the year end by the placing in
October 2023 of 5 million zero dividend preference shares of GBP1
each (the "ZDP shares") and completion in November 2023 of a GBP12
million loan facility from A.S.K. Partners Limited.
-- Construction progressing well and on budget for the 693 bed
student accommodation development at The Island Quarter, Nottingham
planned for completion in May 2024.
-- GBP47.5 million facility agreement entered into with Barclays
Bank PLC ("Barclays") in December 2022, for a maximum term of 3
years, to enable the completion and subsequent letting of the
student accommodation development at The Island Quarter, with
GBP18.0 million drawn by 30 September 2023.
-- Detailed planning consent granted in May 2023 for a 249,000
square foot bioscience building at The Island Quarter.
-- Revised masterplan agreed with Nottingham City Council which,
subject to investor and occupier appetite, increases the size of
The Island Quarter development up to a maximum of 3.5 million
square feet.
-- Disposal of the development site at Haverfordwest,
Pembrokeshire, for gross proceeds of GBP9.65 million to realise a
profit of GBP0.1 million.
-- Anglesey Freeport confirmed as one of the two newly
established freeports in Wales with our 203 acre brownfield site at
Rhosgoch, Anglesey assigned as a special area within that
freeport.
-- Conditional contract exchanged, at a cost of GBP450,000, for
the purchase of a 14.7 acre plot at Bristol Fruitmarket site in the
St Phillip's Marsh area of Bristol.
Group net asset summary
2023 2022
Per share Per share
GBP'm p GBP'm p
Properties 113.2 189.8 110.1 184.7
Cash 2.7 4.5 17.4 29.1
Borrowings (17.2) (28.8) - -
Provisions - - (3.1) (5.2)
Other net (liabilities) / assets (3.6) (6.1) 0.2 0.3
------- ---------- ------- ------------
Net assets 95.1 159.4 124.6 208.9
======= ========== ======= ============
Robert Ware, Chief executive commented:
"We are acutely aware of the impact that continuing economic and
political uncertainty is having on the real estate sector and
intend to maintain a disciplined approach to both our cash
commitments and financial leverage to ensure our balance sheet
remains robust.
Our results for the year are reflective of the currently subdued
market. However, fundamentals for the private built student
accommodation, build to rent and life science sectors, remain
strong, with supply shortages likely to support improved future
pricing. The value from our development projects will be created
over the medium-term. Given the progress made, in particular at The
Island Quarter, since its acquisition, we remain optimistic about
the Group's future prospects."
Enquiries:
The Conygar Investment Company PLC
Robert Ware: 0207 258 8670
David Baldwin: 0207 258 8670
Liberum Capital Limited (nominated adviser and broker)
Richard Lindley: 0203 100 2222
Jamie Richards: 0203 100 2222
Temple Bar Advisory (public relations)
Alex Child-Villiers: 07795 425580
Will Barker: 07827 960151
Chairman's and chief executive's statement
Overview and results summary
The past year has been one of continual macroeconomic and
geo-political uncertainty. The impact of this on the valuation of
UK real estate, in particular from the sharp uplift in interest
rates and increasing investor caution as higher inflation became
embedded, has been significant. Property v aluations in the UK fell
across all sectors, as yields increased to reflect the higher
interest rate environment.
The value of our investment property portfolio, after allowing
for capital expenditure in the year, has declined by GBP21.5
million (16.3%). In addition, the value of our development site at
Holyhead, Anglesey has been written down by GBP5.2 million. More
recently the outlook for the UK economy has improved, with interest
rates now at or near their peak and inflationary indicators
suggesting further reductions.
The reduced valuations at 30 September 2023 relate primarily to
the undeveloped and unconsented plots at both The Island Quarter,
Nottingham and Holyhead. These have been partly offset by a
valuation surplus from the ongoing student accommodation
development to reflect the considerable progress made on site
during the year for that asset. While these land price falls are
unwelcome, such valuations tend to be volatile and highly sensitive
to small changes in the underlying assumptions of key parameters,
such as rental levels, net initial yields, construction costs,
finance costs and void periods. As the economic situation improves
and inflation eases, we expect to see a rebound in land values
given the unprecedented recent rental growth in particular across
the private built student accommodation ("PBSA") and build to rent
("BTR") sectors.
The Group has incurred net operational and administrative
losses, excluding depreciation, of GBP4.2 million in the year as we
seek to continue the transition of our initially consented
development plots at The Island Quarter to income-producing assets.
This cost increase, required to support both the implementation of
our development programme and operations team comes at a point in
the cycle when rental income receipts for the Group have
reduced.
However, with the restaurant and events venue at 1 The Island
Quarter ("1 TIQ") now established and fully operational and the
ongoing student accommodation development in Nottingham planned for
completion in May 2024, we anticipate a material uplift in revenues
in the medium-term.
The combined valuation and operational losses have been partly
offset by the reversal of a GBP1.7 million deferred tax provision
resulting in a total loss for the year of GBP29.5 million.
Cash deposits and debt financing
Our ambition at the start of the year was to raise significant
additional funds to progress, at a pace, the construction of the
consented student accommodation development at The Island Quarter
and submit further planning applications to better enable investor
participation in our development projects.
To that end, the Group entered into a new facilities agreement
with Barclays Bank PLC in December 2022 comprising a development
facility and an investment facility (together the "facilities") up
to GBP47.5 million in aggregate. The facilities will enable
completion of the construction and subsequent letting of the 693
bed student accommodation development.
The cash deposits of the Group were GBP2.7 million at 30
September 2023.
However, the liquidity of the Group has materially increased
since the balance sheet date by way of the placing in October 2023
of 5 million ZDP shares of GBP1 each in addition to the signing in
November 2023 of a GBP12 million debt facility with A.S.K. Partners
Limited ("ASK"), of which GBP5 million has been drawn at the date
of signing these financial statements. In addition to the 5 million
of placed ZDP shares, the Company subscribed for a further 10
million ZDP shares which it will look to place, subject to investor
sentiment, during the 5-year term of the ZDP to further boost its
cash deposits as required.
Bristol and other property assets
On 6 April 2023, the Group, by way of Conygar Bristol Limited,
in which it holds an 80% interest, entered into a conditional
contract with Wholesale Fruit Centre (Bristol) Limited to acquire
the 14.7 acre site at St Philips Marsh where the Bristol Fruit
Market is currently located, paying an initial deposit of
GBP450,000.
Completion of the acquisition is conditional on the satisfaction
or, where relevant, waiver of the grant of planning permission for
a number of development options by 6 June 2025, subject to
extension provisions. In addition, all tenants are required to have
surrendered their existing leases by 6 April 2024 and the market
licence in respect of the site terminated. The contract is capable
of termination if the vacant possession condition has not been
satisfied or waived by 6 April 2024 or if the vacant possession and
planning permission conditions have not both been satisfied by 6
April 2028.
We intend to utilise part of the net proceeds from the ZDP share
placing and ASK loan to further progress both the Bristol and
Nottingham planning applications and hope to make announcements in
that regard over the next financial year.
However, in order to progress thereafter our pipeline of
development projects, in particular at The Island Quarter, we will
need to raise substantial amounts either as debt, through asset
sales, or from joint ventures and we are in discussions on a number
of fronts in that regard.
Further details of the progress made during the year at The
Island Quarter and our other projects are set out in the strategic
report.
Dividend
The Board recommends that no dividend is declared in respect of
the year ended 30 September 2023. More information on the Group's
dividend policy can be found within the strategic report.
Share buy-back authority
The Board will seek to renew the buy-back authority of 14.99% of
the issued share capital of the Company at the forthcoming AGM as
we consider the buy-back authority to be a useful capital
management tool and will continue to use it, as our cash flows
allow, when we believe the stock market value differs too widely
from our view of the intrinsic value of the Company.
Outlook
We are acutely aware of the impact that continuing economic and
political uncertainty is having on the real estate sector and
intend to maintain a disciplined approach to both our cash
commitments and financial leverage to ensure our balance sheet
remains robust.
Our results for the year are reflective of the currently subdued
market. However, fundamentals for the PBSA, BTR and life science
sectors, remain strong, with supply shortages likely to support
improved future pricing. The value from our development projects
will be created over the medium-term. Given the progress made, in
particular at The Island Quarter, since its acquisition, we remain
optimistic about the Group's future prospects.
N J Hamway R T E Ware
Chairman Chief executive
Strategic report
The Group's strategic report provides a review of the business
for the financial year, discusses the Group's financial position at
the year end and explains the principal risks and uncertainties
facing the business and how we manage those risks. We also outline
the Group's strategy and business model.
Strategy and business model
The Conygar Investment Company PLC ("Conygar") is an AIM quoted
property investment and development group dealing in UK property.
Our aim is to invest in property assets and companies where we can
add significant value using our property management, development
and transaction structuring skills.
The business operates two major strands, being property
investment and property development where we are prepared to use
modest levels of gearing to enhance returns. Assets are recycled to
release capital as opportunities present themselves and we will
continue to buy-back shares where appropriate. The Group is content
to hold cash and adopt a patient strategy unless there is a
compelling reason to invest.
Position of the Group at the year end
The Group net assets as at 30 September 2023 may be summarised
as follows:
2023 2022
Per share Per share
GBP'm p GBP'm p
Properties 113.2 189.8 110.1 184.7
Cash 2.7 4.5 17.4 29.1
Borrowings (17.2) (28.8) - -
Provisions - - (3.1) (5.2)
Other net (liabilities) / assets (3.6) (6.1) 0.2 0.3
------- ---------- ------- ----------
Net assets 95.1 159.4 124.6 208.9
======= ========== ======= ==========
The Group's balance sheet remains both liquid and robust with
property assets and cash deposits totalling GBP115.9 million as at
30 September 2023 and only GBP17.2 million of net bank borrowings
secured against the student accommodation development at The Island
Quarter.
The GBP47.5 million Barclays debt facility will enable the Group
to complete the student accommodation development without the need
for any further equity input. Furthermore, as set out in the
chairman's and chief executive's statement, the net proceeds after
the year end from the placing of 5 million ZDP shares in addition
to the GBP12 million loan facility from ASK will facilitate the
submission of further detailed planning applications at both The
Island Quarter and Bristol sites.
Key performance indicators
The key measures considered when monitoring progress towards the
Board's objective of providing attractive shareholder returns
include the headway made during the year on its development and
investment property portfolio, the movements in net asset value per
share, levels of uncommitted cash and its monitoring of and
performance against its ESG targets.
The chairman's and chief executive's statement provides a
summary on the financial performance and progress made during the
year on the Group's property assets, further details of which are
set out in this strategic report. Matters considered by the audit
committee and remuneration committee are set out in the corporate
governance section of the annual report. The Board's approach and
responsibilities in connection with environmental, social and
governance matters are set out in the ESG section of the annual
report. The other key performance measures are considered
below.
1 TIQ and investment properties under construction
The Group's restaurant and events venue and investment
properties under construction at The Island Quarter, Nottingham
were valued by Knight Frank LLP, in their capacity as external
valuers, as set out below:
2023 Per share 2022 Per share
GBP'm p GBP'm P
Phase 1 - 1 TIQ 14.0 23.5 14.1 23.7
Phase 2 - student accommodation 65.6 110.0 13.6 22.8
Undeveloped plots 29.5 49.5 64.0 107.3
Virgin Active Gym (freehold
interest) 1.2 2.0 1.3 2.2
------ ---------- ------ ----------
Total 110.3 185.0 93.0 156.0
====== ========== ====== ==========
As set out in the chairman's and chief executive's statement, t
he impact of a sharp uplift in interest rates and increasing
investor caution has resulted in a reduction in property v alues
across all sectors, with yields increased to reflect the higher
interest rate environment.
1 TIQ, which has now been operational for just over a year, has
been very well received by the local community. For a brand-new
venue, it has achieved solid revenues in the year to 30 September
2023 of GBP4.3 million. However, the delayed completion of the
development, due to various material and contracting issues,
resulted in the events operation being unable to take advantage of
the late summer and Christmas trade in 2022. This delay, when
compounded by the phased opening, intentional overstaffing as
operations were fully tested and margins being squeezed as a result
of continuing inflationary pressures limited the gross profit in
the year to GBP0.3 million and a pre-tax loss of GBP1.2
million.
Construction of the student accommodation development is now
fully funded. The development is progressing on-time and on-budget,
with completion planned for May 2024 to enable its letting to the
September 2024 Nottingham university intake. The marketing
programme for the accommodation has also commenced with net rental
income, after operational and administrative costs, expected to be
in excess of GBP5.5 million per annum.
In May 2023, detailed consent was granted for our 249,000 square
foot bioscience application to include both laboratory and office
space as well as conference facilities. The consented plot is
located to the north of the site directly adjacent to an existing
bioscience hub. We are progressing discussions with a potential
local tenant seeking significant expansion space as well as an
investor to forward fund the development. However, should they not
proceed, the demand for bioscience space is such that we feel
confident that we would be able to find alternative tenants and
investors.
Nottingham City Council have also agreed, in principle, the
parameters for a sitewide masterplan that will guide and support
the future planning applications at The Island Quarter. This has
resulted in a scheme which, subject to the granting of detailed
consent and local demand, will enable the overall size of the
development to increase up to approximately 3.5 million square
feet. Following on from this, we are progressing the detailed
application for a second phase of student accommodation comprising
approximately 400 beds which is expected to be submitted in the
coming months.
Development and trading properties
2023 Per share 2022 Per share
GBP'm p GBP'm p
Rhosgoch 2.50 4.2 2.50 4.2
Parc Cybi 0.38 0.6 0.38 0.6
Holyhead Waterfront - - 5.00 8.4
Haverfordwest - - 9.26 15.5
Total 2.88 4.8 17.14 28.7
====== ========== ====== ==========
We announced, in March 2023, the confirmation of the Anglesey
Freeport as one of the two newly established freeports in Wales.
Included within this location, as a special area, is our 203 acre
brownfield site at Rhosgoch. Our further site at Parc Cybi is also
part of the freeport.
These freeports will form special zones with the benefit of
simplified customs procedures, relief on customs duties, tax
benefits and development flexibility designed to attract major
domestic and international investment. The Welsh freeports will
also prioritise environmental sustainability and the climate
emergency.
In addition, the Company owns a further site in Anglesey at
Holyhead Waterfront where we continue to await the determination of
our detailed application for 259 townhouses and apartments, a 250
berth marina and associated marine commercial and retail units. We
have fully written down the value of Holyhead Waterfront at 30
September 2023 as a result of the combined impact from planning
delays, increased finance costs and construction cost price
inflation particularly associated with the marine infrastructure
works. These factors have detrimentally affected the residual value
of the proposed development as has occurred during recent years
across many sites in the UK.
In March 2023, we completed the sale of our site at
Haverfordwest, Pembrokeshire to The Welsh Minister and POBL Homes
and Communities Limited for gross proceeds of GBP9.65 million to
realise a profit in the period of GBP0.1 million.
Financial review
Net asset value
The net asset value decreased in the year by GBP29.5 million to
GBP95.1 million at 30 September 2023 which equates to 159.4p per
share (2022: 208.9p per share). The primary movements were a net
GBP21.5 million write down in the carrying value of The Island
Quarter's investment properties, a GBP5.2 million write down in the
carrying value of Holyhead Waterfront and increased operational and
administrative costs of GBP4.8 million, including depreciation
charges of GBP0.6 million. These were partly offset by the reversal
of a GBP1.7 million provision for deferred tax and a GBP0.1 million
profit from the sale of Haverfordwest.
Cash flow and financing
At 30 September 2023, the Group had cash deposits of GBP2.7
million and had drawn GBP18.0 million of the GBP47.5 million
development loan facility from Barclays (2022: cash of GBP17.4
million and no debt).
During the year, the Group generated GBP5.0 million of cash from
its operating activities, which includes the net proceeds from the
sale of Haverfordwest (2022: generated GBP3.9 million). The other
primary cash inflows for the year were net bank borrowings, after
debt arrangement and debt servicing costs, of GBP16.4 million and
GBP0.2 million of interest on cash deposits.
The primary cash outflows in the period were GBP35.7 million
incurred on the Group's development and investment properties,
including GBP31.7 million of construction costs and professional
fees to progress The Island Quarter's student accommodation
development, GBP1.0 million of fees in connection with the
consented bioscience planning application and GBP1.6 million of
costs to complete the energisation of the electricity substation
and project manage the ongoing operations at The Island Quarter.
Further costs were incurred to complete the fitting out of 1 TIQ
resulting in a net cash outflow in the period of GBP14.7
million.
Net income from property activities
This has been, and continues to be, a transitional period for
the Group where, having sold, over a number of years, the vast
majority of our rent-producing investment properties, to lock in,
for the benefit of our shareholders, the significant returns
generated from those assets, we are now utilising those funds to
progress the planning applications for, and construction of, both
our owned and targeted development projects. As such, the rental
income for the Group during the current and previous years has
reduced from that historically achieved. However, with 1 TIQ now
more established and fully operational, in addition to the student
accommodation development expected to become rent-producing in the
late summer of 2024, we would anticipate a material uplift in
rental and other income in the medium-term.
2023 2022
GBP'm GBP'm
Rental income 0.1 (0.4)
Restaurant and events income 4.3 0.1
Direct costs of rental income (0.5) (0.4)
Direct costs of restaurant and events
income (3.9) (0.6)
--------- ---------
- (1.3)
Proceeds from property sale 9.6 25.7
Cost of property sale (9.5) (21.7)
---------
Total net income arising from property
activities 0.1 2.7
========= =========
Rental income for the year ended 30 September 2022 includes the
reversal of a GBP1.4 million accrued rent debtor following the
sales of Cross Hands and Selly Oak. This debtor arose from the even
spreading of rental income, derived from operating leases, over
each tenant's respective minimum lease term after allowing for
rent-free periods.
Administrative expenses
The administrative expenses for the year were GBP4.8 million
(2022: GBP2.9 million). As set out in the chairman's and chief
executive's statement, managing the substantially increased
development and operations teams, in particular at 1 TIQ, has
required an increase in the Group's overheads.
Taxation
There is no current tax in the year as the Group is loss-making.
However, the results for the year include the reversal of a GBP1.7m
deferred tax provision following the net write down, at 30
September 2023, in the carrying value of The Island Quarter.
Deferred tax is calculated at a rate of 25%, being the rate that
has been enacted or substantively enacted by the balance sheet date
and which is expected to apply when tax liabilities, resulting from
unrealised chargeable gains arising on revaluation of the Group's
investment properties, are projected to be settled.
Capital management
Capital risk management
The Board's primary objective when managing capital is to
preserve the Group's ability to continue as a going concern, in
order to safeguard its equity and provide returns for shareholders
and benefits for other stakeholders, whilst maintaining an optimal
capital structure to reduce the cost of capital.
While the Group does not have a formally approved gearing ratio,
the objective above is actively managed through the direct linkage
of borrowings to specific property. The Group seeks to ensure that
secured borrowing stays within agreed covenants with external
lenders.
Treasury policies
The objective of the Group's treasury policies is to manage the
Group's financial risk, secure cost-effective funding for the
Group's operations and to minimise the adverse effects of
fluctuations in the financial markets on the value of the Group's
financial assets and liabilities, reported profitability and cash
flows.
The Group finances its activities with a combination of bank
loans, cash and short-term deposits. Other financial assets and
liabilities, such as trade receivables and trade payables, arise
directly from the Group's operations. The Group may also enter into
derivative transactions to manage the interest rate risk arising
from the Group's operations and its sources of finance. The main
risks associated with the Group's financial assets and liabilities
are set out below, together with the policies currently applied by
the Board for their management.
The management of cash is monitored weekly with summary cash
statements produced on a monthly basis and discussed regularly in
management and board meetings. The approach is to provide
sufficient liquidity to meet the requirements of the business in
terms of funding developments and potential acquisitions. Surplus
funds are invested with a broad range of institutions. At any point
in time, at least half of the Group's cash is held on instant
access or short-term deposit of less than 30 days.
Dividend policy
The Board recommends that no dividend is paid in respect of the
year ended 30 September 2023 (2022: GBPnil).
Our dividend policy is consistent with the overall strategy of
the business: namely to invest in property assets and companies
where we can add significant value using our property management,
development and transaction structuring skills.
In previous years we have used the surplus cash flow from the
then much larger investment property portfolio to enhance these
properties by refurbishment, re-letting and extending tenancies,
fund the operations of the business, create a medium-term pipeline
of development opportunities, pay a modest dividend and buy-back
shares where appropriate.
The Board will continue to review the dividend policy each year.
Our focus is, and will primarily continue to be, growth in net
asset value per share.
Principal risks and uncertainties
Managing risk is an integral element of the Group's management
activities and a considerable amount of time is spent assessing and
managing risks to the business. Responsibility for risk management
rests with the Board, with external advisers used where
necessary.
Strategic risks
Strategic risks are risks arising from an inappropriate strategy
or through flawed execution of a strategy that could threaten the
future performance, solvency or liquidity of the Group. By
definition, strategic risks tend to be longer term than most other
risks and, as has been amply demonstrated in the last few years,
the economic and wider environment can alter quickly and
significantly. Strategic risks identified include global or
national events, regulatory and legal changes, market or sector
changes and key staff retention.
The Board continually monitors and discusses the potential
impact that changes to the environment in which we operate can have
upon the Group. We are confident we have sufficiently high-calibre
directors and managers to manage strategic risks.
We are content that the Group has the right approach toward
strategy and our strong balance sheet is good evidence of that.
Operational risks
Operational risks are essentially those risks that might arise
from inadequate internal systems, processes, resources or incorrect
decision making. Clearly, it is not possible to eliminate
operational risk. However, by ensuring we have the right calibre of
staff and external support in place, we look to minimise such
risks, as most operational risks arise from people-related issues.
Our executive directors are very closely involved in the day-to-day
running of the business to ensure sound management judgement is
applied.
Market risks
Market risks primarily arise from the possibility that the Group
is exposed to fluctuations in the values of, or income from, its
cash deposits and other financial instruments along with its
investment properties and development projects. This is a key risk
to the principal activities of the Group and the exposures are
continuously monitored through timely financial and management
reporting and analysis of available market intelligence.
Where necessary, management takes appropriate action to mitigate
any adverse impact arising from identified risks and market risks
continue to be monitored closely.
The Group is not currently party to any derivative transactions
to fix the interest rate payable in connection with its loan from
Barclays Bank PLC. This is due to the short-term nature of this
development loan in addition to the high entry fees which have been
payable in connection with such products over the last financial
year.
The Group remains compliant with all of its debt covenants.
Estimation and judgement risks
To be able to prepare accounts according to generally accepted
accounting principles, management must make estimates and
assumptions that affect the asset and liability items and revenue
and expense amounts recorded in the accounts. These estimates are
based on historical experience and various other assumptions that
management and the Board believe are reasonable under the
circumstances. The results of these considerations form the basis
for making judgements about the carrying value of assets and
liabilities that are not readily available from other sources.
The key sources of estimation uncertainty that have a
significant risk of causing material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are the following:
Investment properties
The fair values of investment properties are based upon open
market value and calculated using a third-party valuation provided
by an external valuer.
Development properties
The net realisable value of properties held for development
requires an assessment of the value for the underlying assets using
property appraisal techniques and other valuation methods. Such
estimates are inherently subjective and actual values can only be
determined in a sales transaction.
Financial assets and liabilities
The interest rate profile of the Group's cash deposits at the
balance sheet date was as follows:
30 Sep 23 30 Sep 22
GBP'000 GBP'000
Unsecured deposits 2,321 17,109
Performance bonds and other secured
deposits 355 252
---------- ----------
2,676 17,361
========== ==========
The Group's floating rate financial assets comprise cash and
short-term performance bond deposits held with banks whose credit
ratings are acceptable to the Board.
The interest rate profile of the Group's bank borrowings is set
out in note 20.
Credit risk
Credit risk is the risk of financial loss to the Group if a
counterparty fails to meet its contractual obligations. The Group's
principal financial assets include its financial interest in
property assets, cash deposits and trade and other receivables. The
carrying amount of financial assets recorded in the financial
statements represents the Group's maximum exposure to credit risk
without taking account of the value of any collateral obtained.
In the event of default by an occupational tenant, the Group
will suffer a rental shortfall and incur additional costs. The
Directors continually monitor tenant arrears in order to
anticipate, and minimise the impact of, defaults by occupational
tenants and if necessary, where circumstances allow, will apply
rigorous credit control procedures to facilitate the recovery of
trade receivables.
Under IFRS 9, the Group is required to provide for any expected
credit losses arising from trade receivables. For all assured
shorthold tenancies, credit checks are performed prior to
acceptance of the tenant. Regulated tenants are incentivised
through the benefit of their tenancy agreement to avoid default on
their rent and rent deposits are held where applicable.
The Directors have provided for rental and other arrears due
from various tenants which amounts to GBP273,000 at 30 September
2023 (2022: GBP200,000) and which remain outstanding at the date of
signing these financial statements. The impaired receivables are
based on a review of expected credit losses. Impaired receivables
and receivables not considered to be impaired are not material to
the financial statements and, therefore, no further analysis is
provided.
The credit risk on cash deposits is managed through the
Company's policies of monitoring counterparty exposure and the use
of counterparties of good financial standing. At 30 September 2023,
the credit exposure from cash held with banks was GBP2.7 million
which represents 2.8% of the Group's net assets. All cash deposits
at the balance sheet date are placed with banks, whose credit
ratings are acceptable to the Board, on instant access accounts.
Should the credit quality or the financial position of the banks
currently utilised significantly deteriorate, cash deposits would
be moved to alternative banks.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group seeks to
manage its liquidity risk by ensuring that sufficient cash is
available to meet its foreseeable needs. The Group had cash
deposits at the balance sheet date of GBP2.7 million. However, as
set out in the chairman's and chief executive's statement, the cash
deposits of the Group have been increased since the balance sheet
date by the placing in October 2023 of 5 million ZDP shares of GBP1
each and the signing in November 2023 of a GBP12 million debt
facility with ASK, of which GBP5 million has been drawn at the date
of signing these financial statements.
Section 172 statement
Directors' duty to promote the success of the Company under
Section 172 Companies Act 2006
The strategic report is required to include a statement that
describes how the directors have had regard to the matters set out
in section 172(1) (a) to (f) of the Companies Act 2006 when
performing their duty under section 172. Some of the matters
identified in Section 172(1) are already covered by similar
provisions in the QCA Code and have thus been previously reported
by the Company in the corporate governance statement, the corporate
governance report and the QCA statement of compliance on our
website. In order to avoid unnecessary duplication, the relevant
parts of those documents are identified below and are to be treated
as expressly incorporated by reference into this strategic report.
Under section 172 (1) of the Companies Act 2006, each individual
director must act in the way he considers, in good faith, would be
the most likely to promote the success of the Company for the
benefit of its members as a whole, and in doing so have regard
(amongst other matters) to six matters detailed in the section. In
discharging their duties, the directors seek to promote the success
of Conygar for the benefit of members as a whole and have regard to
all the matters set out in Section 172(1), where applicable and
relevant to the business, taking account of its size and structure
and the nature and scale of its activities in the commercial
property market. The following paragraphs address each of the six
matters in Section 172(1) (a) to (f).
(a) The likely consequences of any decision in the long term:
The commercial property market is cyclical by nature. Investing in
commercial property is a long-term business. The decisions taken
must have regard to long-term consequences in terms of success or
failure and managing risks and uncertainties. The directors cannot
expect that every decision they take will prove, with the benefit
of hindsight, to be the best one - external factors may affect the
market and thus change conditions in the future, after a decision
has been taken. However, the Group's investment decisions are
undertaken by a Board with a wide range of experience, over many
years, in both the property and finance sectors.
(b) The interests of the Company's and Group's employees: The
Company has five full-time employees, including the chief
executive, two property directors and the finance director. These
executive directors sit on the Board with the non-executive
directors. The Group also has a growing workforce to support its
operations at The Island Quarter, all of which are employed by a
wholly-owned group company. The commitment of the Board to its
employees is set out in the ESG section of the annual report.
(c) The need to foster the Company's business relationships with
suppliers, customers and others: The directors have regularly
reported in the Company's annual reports on the constructive
relationships that Conygar seeks to build with its tenants and the
mutual benefits that this brings to both parties; and this
reporting has been extended over the past two years following
Principle 3 of the QCA Code to include suppliers and others. This
is therefore addressed under Principle 3 in the QCA compliance
statement. In recent years, it has been vital to foster our
business relationships with tenants given external factors, such as
political and economic uncertainty.
(d) The impact of the Company's operations on the community and
the environment: This is also addressed under Principle 3 of the
QCA Code in the QCA compliance statement. Due to its size and
structure and the nature and scale of its activities, the Board
considers that the impact of Conygar's operations as a landlord on
the community and the environment is low. With the exception of 1
TIQ, Conygar's assets are used by its tenants for their own
operations rather than by Conygar itself. In the past year, the
Company has not been made aware of any tenant operations that have
had a significant impact on the community or the environment. In
relation to 1 TIQ, as well as ongoing and future planned
developments, Conygar seeks to ensure that designs and construction
comply with all relevant environmental standards and with local
planning requirements and building regulations so as not to
adversely affect the community or the environment. Further details
of this are set out in the ESG section of the annual report.
(e) The desirability of the Company maintaining a reputation for
high standards of business conduct: This is addressed under
Principle 8 of the QCA Code in the corporate governance statement
and in the QCA compliance statement. The Board considers that
maintaining Conygar's reputation for high standards of business
conduct is not just desirable - it is a valuable asset in the
competitive commercial property market.
(f) The need to act fairly as between members of the Company:
The Company has only one class of shares, thus all shareholders
have equal rights and, regardless of the size of their holding,
every shareholder is, and always has been, treated equally and
fairly. Relations with shareholders are further addressed under
Principles 2, 3 and 10 of the QCA Code in the corporate governance
report and the QCA compliance statement. We have been reviewing how
we communicate with shareholders and are encouraging shareholders
to adopt electronic communications and proxy voting in place of
paper documents where this suits them, as well as to raise
questions in writing if they are unable to attend AGMs.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 September 2023
Note Year ended Year ended
30 Sep 23 30 Sep 22
GBP'000 GBP'000
Rental income 12/13 141 (404)
Restaurant and events income 4,257 73
Proceeds on sale of development and
trading properties 9,650 7,390
Revenue 14,048 7,059
------------- -------------
Direct costs of rental income 513 395
Direct cost of restaurant and events
income 3,928 572
Costs on sale of development and trading
properties 9,524 3,749
Development costs written off 15 5,164 289
Direct costs 19,129 5,005
------------- -------------
Gross (loss) / profit (5,081) 2,054
Fair value adjustment of property 11 (30) -
Fair value adjustment of investment
properties
under construction 13 (21,546) 320
Profit on sale of investment property - 380
Administrative expenses (4,775) (2,851)
------------- -------------
Operating loss 3 (31,432) (97)
Finance costs 6 - -
Finance income 6 186 73
Loss before taxation (31,246) (24)
Taxation 8 1,714 (29)
------------- -------------
Loss and total comprehensive
charge for the year (29,532) (53)
------------- -------------
Basic and diluted loss per share 10 (49.52p) (0.09)p
All amounts are attributable to equity
shareholders of the Company.
All of the activities of the Group are classed as
continuing.
CONSOLIDATED Statement of Changes in Equity
for the year ended 30 September 2023
Attributable to the equity holders of the Company
Share Capital
Share premium redemption Retained Total
capital account reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Changes in equity
for the year ended
30 September 2022
At 1 October 2021 2,625 - 3,928 107,588 114,141
Loss for the year - - - (53) (53)
Total comprehensive
charge for the year - - - (53) (53)
Gross proceeds from
placing of own shares 357 10,352 - - 10,709
Fees paid on placing
of own shares - (193) - - (193)
Cancellation of share
premium account - (10,159) - 10,159 -
At 30 September 2022 2,982 - 3,928 117,694 124,604
============ ============== ============== ============= ============
Changes in equity
for the year ended
30 September 2023
At 1 October 2022 2,982 - 3,928 117,694 124,604
Loss for the year - - - (29,532) (29,532)
------------ -------------- -------------- ------------- ------------
Total comprehensive
charge for the year - - - (29,532) (29,532)
At 30 September 2023 2,982 - 3,928 88,162 95,072
============ ============== ============== ============= ============
CONSOLIDATED BALANCE SHEET
at 30 September 2023
Note 30 Sep 30 Sep 2022
2023 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 11 15,116 991
Investment properties 12 - -
Investment properties under construction 13 96,350 93,000
Right of use asset 7 - -
Deferred tax asset 8 - 2,986
111,466 96,977
-------------- ------------
Current assets
Development and trading properties 15 2,880 17,137
Inventories 16 110 32
Trade and other receivables 17 2,203 770
Tax asset 28 28
Cash and cash equivalents 2,676 17,361
-------------- ------------
7,897 35,328
-------------- ------------
Total assets 119,363 132,305
Current liabilities
Trade and other payables 18 7,091 1,605
Lease liability for right of use 7 - -
asset
7,091 1,605
Non-current liabilities
Deferred tax liability 8 - 4,700
Provision for liabilities and charge 19 - 1,396
Bank borrowings 20 17,200 -
17,200 6,096
Total liabilities 24,291 7,701
-------------- ------------
Net assets 95,072 124,604
============== ============
Equity
Called up share capital 21 2,982 2,982
Capital redemption reserve 3,928 3,928
Retained earnings 88,162 117,694
-------------- ------------
Total equity 95,072 124,604
============== ============
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 September 2023
Year ended Year ended
30 Sep 23 30 Sep
GBP'000 22
GBP'000
Cash flows from operating activities
Operating loss (31,432) (97)
Deficit / (surplus) on revaluation of properties 21,576 (320)
Development costs written off 5,164 289
Profit on sale of development and trading properties (126) (3,641)
Profit on sale of investment property - (380)
Depreciation of property, plant and equipment 595 -
Depreciation of right of use assets - 53
----------- -----------
Cash flows from operations before changes in
working capital (4,223) (4,096)
Increase in inventories (78) (32)
(Increase) / decrease in trade and other receivables (1,125) 1,892
Additions to development and trading properties (294) (1,115)
Net proceeds from sale of development and trading
properties 9,490 7,337
Increase / (decrease) in trade and other payables 1,207 (94)
----------- -----------
Net cash flows generated from operations 4,977 3,892
Cash flows from investing activities
Additions to investment properties (35,731) (28,085)
Net proceeds from sale of an investment property - 18,278
Additions to plant, machinery and office equipment (479) (970)
Finance income 186 73
----------- -----------
Cash flows used in investing activities (36,024) (10,704)
----------- -----------
Cash flows from financing activities
Bank loan drawn 18,033 -
Bank loan arrangement fees (924) -
Prepaid ZDP and debt arrangement fees (113) -
Interest paid (634) -
Net proceeds from placing of own shares - 10,516
Cash flows generated from financing activities 16,362 10,516
----------- -----------
Net (decrease) / increase in cash and cash equivalents (14,685) 3,704
Cash and cash equivalents at 1 October 17,361 13,657
----------- -----------
Cash and cash equivalents at 30 September 2,676 17,361
=========== ===========
NOTES TO THE ACCOUNTS
for the year ended 30 September 2023
1. The financial information set out in this announcement is
abridged and does not constitute statutory accounts for the year
ended 30 September 2023 but is derived from the financial
statements. The auditors have reported on the statutory accounts
for the year ended 30 September 2023, their report was unqualified
and did not contain statements under sections 498(2) or (3) of the
Companies Act 2006, and these will be delivered to the registrar of
companies following the Company's annual general meeting. The
financial information has been prepared using the recognition and
measurement principle of IFRS.
2. The comparative financial information for the year ended 30
September 2022 was derived from information extracted from the
annual report and accounts for that period, which was prepared
under IFRS and which has been filed with the UK registrar of
companies. The auditors have reported on those accounts, their
report was unqualified and did not contain statements under section
498 (2) or (3) of the Companies Act 2006.
3. Operating LOSS
Operating loss is stated after charging: 30 Sep 23 30 Sep 22
GBP'000 GBP'000
Audit of the Company's consolidated and individual
financial statements 50 47
Audit of subsidiaries, pursuant to legislation 60 56
Corporate finance advisory fees from the auditor
* 60 -
Depreciation of property, plant and equipment 595 -
Depreciation of right of use asset - 53
* Cost in relation to the ZDP share issue included within trade
and other receivables at 30 September 2023.
4. PARTICULARS OF EMPLOYEES
The aggregate payroll costs were: Year ended Year ended
30 Sep 23 30 Sep 22
GBP'000 GBP'000
Wages and salaries 3,815 1,674
Social security costs 347 203
Other pension costs 36 8
----------- -----------
4,198 1,885
=========== ===========
The weighted average monthly number of persons, including
executive directors, employed by the Group during the year was 111
(2022: 22). The increase in the year is a result of the employees
that have been recruited to operate and manage the restaurant and
events venue at 1 TIQ.
5. DIRECTORS' EMOLUMENTS
Year ended Year ended
30 Sep 30 Sep 22
23 GBP'000
GBP'000
Basic salary and total emoluments 1,110 1,035
=========== ===========
Emoluments of the highest paid director 400 400
=========== ===========
The Board, being the key management personnel, comprises the
only persons having authority and responsibility for planning,
directing and controlling the activities of the Group.
6. FINANCE COSTS AND FINANCE INCOME
Year ended Year ended
Finance costs 30 Sep 23 30 Sep 22
GBP'000 GBP'000
Bank loan interest 347 -
Bank loan commitment fees 421 -
Bank loan management and monitoring fees 23 -
Amortisation of loan arrangement fees 56 -
----------- -----------
Total finance costs 847 -
Capitalisation of finance costs (note 13) (847) -
----------- -----------
Net finance costs - -
=========== ===========
Finance costs that are directly attributable to the construction
of the student accommodation at The Island Quarter, comprising the
bank loan interest, commitment fees, management fees, monitoring
fees and amortised loan arrangement fees, are capitalised as
incurred into investment properties under construction.
Year ended Year ended
Finance income 30 Sep 23 30 Sep 22
GBP'000 GBP'000
Bank interest receivable 186 73
7. LEASES
Group as lessor:
The Group receives income from investment properties and
existing tenants located at several development sites. At 30
September 2023, the minimum lease payments receivable under
non-cancellable operating leases were as follows:
30 Sep 30 Sep 22
23
GBP'000 GBP'000
Less than one year 144 134
Between one and five years 615 607
Over five years 1,169 1,320
-------- ----------
1,928 2,061
======== ==========
The amounts above represent total rental income up to the next
tenant only break date for each lease.
Group as lessee:
IFRS 16 requires lessees to record all leases on the balance
sheet as liabilities, along with an asset reflecting the right of
use of the asset over the lease term, so long as they are not for a
low value or less than 12 months whereby the lease could be
recognised as an expense on a straight-line basis over the lease
term.
The Group was party to a three-year lease for office premises
which terminated on 28 April 2022. On 11 March 2022, the Group
entered into a subsequent one-year lease, for the same premises,
which terminated on 28 April 2023. On 28 February 2023, a further
lease was entered into for a 3-year term expiring on 28 April 2026
which incorporates a break option on 28 April each year throughout
the term. All of the leases are for an amount of GBP99,100 per
annum.
The original 3-year lease was recorded on the balance sheet.
However, the subsequent one-year lease along with the further
3-year lease, with its annual break optionality, are considered to
be of such a short term that the rent has been recognised as an
expense in the statement of comprehensive income on a straight-line
basis.
Year ended Year ended
30 Sep 30 Sep 22
23
Right of use asset GBP'000 GBP'000
At the start of the year - 53
Depreciation - (53)
------------ -----------
At the end of the year - -
============ ===========
Lease liability GBP'000 GBP'000
At the start of the year - 34
Lease payments - (34)
At the end of the year - -
============ ===========
8. TAX
Year ended Year ended
30 Sep 30 Sep
23 22
GBP'000 GBP'000
Current tax charge - -
Deferred tax (credit) / charge (1,714) 29
----------- -----------
Total tax (credit) / charge (1,714) 29
=========== ===========
The tax assessed on the loss for the year differs from the standard
rate of tax in the UK of 19% (2022: 19%). The differences are
explained below:
Year ended Year ended
30 Sep 30 Sep
23 22
GBP'000 GBP'000
Loss before tax (31,246) (24)
=========== ================
Loss before tax multiplied by the standard
rate of UK tax (5,937) (5)
Effects of:
Investment property revaluation not taxable 4,099 (61)
Capital loss not taxable - (72)
Utilisation of tax losses brought forward (23) (96)
Movement in tax losses carried forward 2,085 224
Expenses not deductible for tax purposes 27 15
Capital allowances utilised (251) (5)
Deferred tax (credit) / charge (1,714) 29
----------- ----------------
Total tax (credit) / charge for the year (1,714) 29
=========== ================
Deferred tax asset
Year ended Year ended
30 Sep 30 Sep
23 22
GBP'000 GBP'000
Deferred tax asset at the start of the year 2,986 2,935
Deferred tax (charge) / credit for the year (2,986) 51
----------- -----------
Deferred tax asset at the end of the year - 2,986
=========== ===========
The Group will recognise a deferred tax asset for tax losses,
held by group undertakings, where the directors believe it is
probable that this asset will be recovered.
As at 30 September 2023, the Group has further unused losses of
GBP48.1 million (2022: GBP22.1 million) for which no deferred
tax asset has been recognised in the consolidated balance sheet.
Deferred tax liability - in respect of
chargeable gains on investment properties Year ended Year ended
30 Sep 30 Sep
23 22
GBP'000 GBP'000
Deferred tax liability at the start of the
year 4,700 4,620
Deferred tax (credit) / charge for the year (4,700) 80
----------- -----------
Deferred tax liability at the end of the year - 4,700
=========== ===========
The directors have assessed the potential deferred tax liability
of the Group as at 30 September 2023 in respect of chargeable
gains that would be payable if the investment properties were
sold at their financial year end valuations. Based on the unrealised
chargeable gains of GBPnil (2022: GBP18,798,000) a deferred tax
liability of GBPnil (2022: GBP4,700,000) has been recognised.
Prior year deferred tax assets and liabilities were calculated
at a corporation tax rate of 25% being the rate that had been
enacted or substantively enacted by that balance sheet date and
which was projected to apply when the liability is settled and
the asset realised.
9. DIVIDS
No dividend will be paid in respect of the year ended 30
September 2023 (2022: nil).
10. LOSS PER SHARE
Loss per share is calculated as the loss attributable to
ordinary shareholders of the Company for the year of GBP29,532,000
(2022: loss of GBP53,000) divided by the weighted average number of
shares in issue throughout the year of 59,638,588 (2022:
58,015,099). There are no diluting amounts in either the current or
prior years.
11. PROPERTY, PLANT AND EQUIPMENT
Property
30 Sep 30 Sep
23 22
GBP'000 GBP'000
At the start of the year - -
Reclassification from investment properties
under construction (note 13) 14,100 -
Additions 192 -
Depreciation (262) -
Fair value adjustment (30)
--------- ---------
At the end of the year 14,000 -
========= =========
As at 1 October 2022, the Group's then operational restaurant,
beverage and events venue at 1 TIQ was reclassified, at fair value,
from an investment property under construction to property, plant
and equipment. The fair value on reclassification was derived from
the 30 September 2022 valuation, as provided by Knight Frank
LLP.
Land and buildings, are stated at the revalued amounts less any
depreciation or impairment losses subsequently accumulated. Land is
not depreciated. Depreciation on revalued buildings is recognised
using the straight-line basis and results in the carrying amount,
less the residual value, being expensed in profit or loss over the
estimated useful lives of 50 years.
As at 30 September 2023, 1 TIQ was valued by Knight Frank LLP in
their capacity as external valuer. The valuation was prepared on a
fixed fee basis, independent of the property value and undertaken
in accordance with RICS Valuation - Global Standards on the basis
of fair value, supported by reference to market evidence of
transaction prices for similar properties. It assumed a willing
buyer and a willing seller in an arm's length transaction and
reflected usual deductions in respect of purchaser's costs and SDLT
as applicable at the valuation date. The independent valuer made
various assumptions including future rental income, anticipated
void costs and the appropriate discount rate or yield.
Plant and equipment
30 Sep 30 Sep
23 22
GBP'000 GBP'000
At the start of the year 991 -
Additions 458 991
Depreciation (333) -
--------- ---------
At the end of the year 1,116 991
========= =========
During the current and prior year, the Group acquired plant,
machinery and office equipment required to operate the restaurant,
beverage and events venue at 1 TIQ.
Depreciation is recognised so as to write off the cost of these
assets, over their estimated useful economic lives, using the
straight-line method at 25% per annum. As the venue at 1 TIQ was
only partly operational from 14 September 2022 no depreciation was
recognised in the period to 30 September 2022.
12. INVESTMENT PROPERTIES
Freehold investment properties
30 Sep 30 Sep
23 22
GBP'000 GBP'000
At the start of the year - 17,750
Additions - 148
Disposals - (17,898)
At the end of the year - -
========== =========
The Group's retail park in Cross Hands, Carmarthenshire was sold
in the prior year for net proceeds of GBP18.3 million. As at 30
September 2021, Cross Hands was valued by Knight Frank LLP in their
capacity as external valuer.
For the year ended 30 September 2022, Group revenue included
GBP433,000 derived from investment properties leased out under
operating leases. Group revenue for the prior year also includes
the reversal of a GBP1,194,000 rent spreading debtor following the
sale of Cross Hands.
13. INVESTMENT PROPERTIES UNDER CONSTRUCTION
Freehold land and buildings
30 Sep 30 Sep
23 22
GBP'000 GBP'000
At the start of the year 93,000 70,500
Reclassification to property,
plant and equipment (note 11) (14,100) -
Additions 39,545 23,591
Capitalisation of finance costs (note 6) 847 -
Fair value adjustments (21,546) 320
Movement in introductory fee provision (1,396) (1,411)
At the end of the year 96,350 93,000
========== =========
Investment properties under construction comprise freehold land
and buildings at The Island Quarter, Nottingham which are held for
current or future development as investment properties and reported
in the balance sheet at fair value.
Valuations of the Group's investment properties under
construction are inherently subjective as they are based on
assumptions which may not prove to be accurate and which, as a
result, are subject to material uncertainty. This is particularly
true for The Island Quarter given its scale, lack of comparable
evidence and the early-stage position of this substantial
development. As such, relatively small changes to the underlying
assumptions of key parameters, such as rental levels, net initial
yields, construction costs, finance costs and void periods can have
a significant impact both positively and negatively on the
resulting valuation, as has been evidenced in the current year.
In preparing their valuation, Knight Frank have utilised market
and site-specific data, their own extensive knowledge of the real
estate sector, professional judgement and other market observations
as well as information provided by the Company's executive
directors. The resulting models and assumptions therein have also
been reviewed for overall reasonableness by the Conygar Board.
Inevitably in a complex model like this, and as noted above,
variations in assumptions can lead to widely differing values.
The valuation was prepared on a fixed fee basis, independent of
the property value and undertaken in accordance with RICS Valuation
- Global Standards on the basis of fair value, supported by
reference to market evidence of transaction prices for similar
properties. It assumes a willing buyer and a willing seller in an
arm's length transaction and reflects usual deductions in respect
of purchaser's costs and SDLT as applicable at the valuation date.
The independent valuer makes various assumptions including future
rental income, anticipated void costs and the appropriate discount
rate or yield.
The fair value of Nottingham has been determined using an income
capitalisation technique whereby contracted rent and market rental
values are capitalised with a market capitalisation rate. This
technique is consistent with the principles in IFRS 13 and uses
significant unobservable inputs, such that the fair value has been
classified in all periods as Level 3 in the fair value hierarchy as
defined in IFRS 13. For Nottingham, the key unobservable inputs are
the net initial yields, construction costs, rental income rates,
construction financing costs and expiry void periods. Net initial
yields have been estimated for the individual units at between 4.5%
and 7.0%. and debt financing rates, including arrangement fees,
estimated to average 8.0% over the construction period. Principal
sensitivities of measurement to variations in the significant
unobservable outputs are that decreases in net initial yields,
construction costs, financing costs and void periods will increase
the fair value whereas reductions to rental income rates would
decrease the fair value.
As at 1 October 2022, the Group's then operational restaurant,
beverage and events venue at 1 TIQ was reclassified, at fair value,
from an investment property under construction to property, plant
and equipment. The fair value on reclassification was derived from
the 30 September 2022 valuation, as provided by Knight Frank
LLP.
The historical cost of the Group's investment properties under
construction as at 30 September 2023 was GBP89,198,000 (2022:
GBP62,566,000). The Group's revenue for the year includes GBP33,000
derived from properties leased out under operating leases (2022:
GBP271,000).
14. INVESTMENT IN SUBSIDIARY UNDERTAKINGS
Listed below are the subsidiary undertakings of the Group at 30
September 2023.
Country
of % of
equity
Company name Principal activity Registration held
Conygar Holdings Ltd** Holding company England 100%
Conygar ZDP PLC** Issuer of ZDP shares England 100%
Property trading and
Conygar Bristol Ltd** development England 80%****
Conygar Haverfordwest Property trading and
Ltd** development England 100%*
Property trading and
Conygar Holyhead Ltd** development England 100%*
Conygar Nottingham
Ltd** Property investment England 100%*
Nohu Limited** Property investment England 100%*
Parc Cybi Management
Company Limited** Management company England 100%
Conygar Developments
Ltd** Dormant England 100%*
Conygar Wales PLC** Dormant England 100%*
The Island Quarter
Student
Property Company Ltd** Property investment England 100%*
The Island Quarter
Student
Operating Company
Ltd** Property operations England 100%*
The Island Quarter
Canal
Turn
Operating Company Restaurant and events
Ltd** operations England 100%*
The Island Quarter
Management Company
Ltd** Dormant England 100%*
The Island Quarter
Careers Recruitment and human
Ltd** resources England 100%*
The Island Quarter
Propco
2 Ltd** Dormant England 100%*
The Island Quarter
Propco
3 Ltd** Dormant England 100%*
The Island Quarter
Propco
4 Ltd** Dormant England 100%*
Lamont Property
Holdings
Ltd*** Holding company Jersey 100%*
Conygar Ashby Ltd*** Property investment Jersey 100%*
Conygar Cross Hands
Ltd*** Property investment Jersey 100%*
* Indirectly owned.
** Subsidiaries with the same registered office as the Company.
*** Subsidiaries incorporated in Jersey with a registered office at 3(rd) Floor, 44 Esplanade,
St Helier, Jersey JE4 9WG.
**** 20% of the issued share capital in Conygar Bristol Limited is owned by Urban & City
Limited.
15. DEVELOPMENT AND TRADING PROPERTIES
30 Sep 30 Sep
23 22
GBP'000 GBP'000
At the start of the year 17,137 20,192
Additions 276 924
Disposals (1) (9,369) (3,690)
Development costs written off (2) (5,164) (289)
--------- ---------
At the end of the year 2,880 17,137
========= =========
1. The Group's development site at Haverfordwest, Pembrokeshire
was sold in March 2023 for gross proceeds of GBP9.65 million
realising a profit in the year of GBP0.13 million.
2. As set out in the strategic report, the value of Holyhead
Waterfront has been fully written down at 30 September 2023.
Development and trading properties are reported in the balance
sheet at the lower of cost and net realisable value. The net
realisable value of properties held for development requires an
assessment of the underlying assets using property appraisal
techniques and other valuation methods. Such estimates are
inherently subjective as they are made on assumptions which may not
prove to be accurate and which can only be determined in a sales
transaction.
16. INVENTORIES
30 Sep 30 Sep
23 22
GBP'000 GBP'000
Food and drink 110 32
======== ========
Inventories recognised as an expense in the year total
GBP1,411,000 (2022: GBP82,000).
17. TRADE AND OTHER RECEIVABLES
30 Sep 30 Sep
23 22
GBP'000 GBP'000
Trade receivables 139 70
Other receivables 1,432 423
Prepayments and accrued income 632 277
-------- ----------
2,203 770
======== ==========
Trade and other receivables are measured on initial recognition
at fair value, and are subsequently measured at amortised cost
using the effective interest rate method, less any impairment.
Impairment is calculated using an expected credit loss model.
Other receivables, as at 30 September 2023, includes GBP1.2
million paid to date in connection with the proposed acquisition of
the 14.7 acre site in Bristol comprising a conditionally refundable
GBP0.5 million exchange deposit, an introductory fee of GBP0.4
million plus legal and advisory fees in connection with the
contract and initial planning related works.
Prepayments, as at 30 September 2023, include GBP0.3 million of
provisional arrangement fees in connection with the placing of the
ZDP shares which completed in October 2023.
18. TRADE AND OTHER PAYABLES
30 Sep 30 Sep
23 22
GBP'000 GBP'000
Social security and payroll taxes 156 56
Trade payables 5,996 938
Accruals and deferred income 939 611
-------- --------
7,091 1,605
======== ========
Trade and other payables are recognised initially at fair value,
and are subsequently measured at amortised cost using the effective
interest rate method.
Trade payables, as at 30 September 2023, primarily comprise
costs payable to the contractor and other professionals in
connection with the student accommodation development at The Island
Quarter. These costs were incurred by 30 September 2023 but not
paid until October 2023 with the student accommodation development
costs funded by way of a further drawdown from the Barclays loan
facility.
19. PROVISION FOR LIABILITIES AND CHARGES
30 Sep 30 Sep 22
23
GBP'000 GBP,000
At the start of the year 1,396 5,614
Paid in the year - (2,807)
Movement in provision in the year (1,396) (1,411)
------------- --------------
At the end of the year - 1,396
============= ==============
As at 30 September 2021, the Group was party to a services
agreement and introduction fee agreement in connection with its
investment property at Nottingham. The fee payable was to be
calculated on the earlier of the date of sale of the property or 22
December 2021 with settlement to follow, subject to agreement
between each party, 31 business days after the fee calculation has
been finalised. In January 2022, the introductory fee, calculated
at GBP2.807 million, was paid and the longstop date for the
services agreement calculation extended until 22 December 2023.The
provisions at 30 September 2023 and 30 September 2022 have been
calculated by reference to the value of the property at each
balance sheet date after allowing for a priority return and
applicable costs. The reduction in the Group's investment property
values in the year has resulted in a full reversal of the other
services provision at 30 September 2023.
20. BORROWINGS - non current
Year ended 30 September 2023
Drawn Undrawn Total
GBP'000 GBP'000 GBP'000
At the start of the year - - -
Drawdown of new facility 18,033 29,467 47,500
-------- -------- --------
At the end of the year 18,033 29,467 47,500
Less unamortised loan arrangement
fees (833) - (833)
-------- -------- --------
17,200 29,467 46,667
======== ======== ========
On 23 December 2022, the Group entered into a new facilities
agreement with Barclays Bank PLC comprising a development facility
and an investment facility (together the "facilities") up to
GBP47.5 million in aggregate. The facilities will enable completion
of the construction, targeted by the summer of 2024, and subsequent
letting of the 693-bed student accommodation development at The
Island Quarter site in Nottingham. Security is provided by way of
the student accommodation plot as well as the guarantees from the
Company noted below.
The maximum term of the combined facilities is 3 years. This
includes the development facility for up to 27 months, which
subject to the satisfaction of certain conditions prior to the
expiry of the development facility, switches into the investment
facility for the remainder of the 3-year term. Interest on the
development facility is payable on a Sonia-linked floating rate
basis for each interest period plus a margin of 3.25%, and interest
is payable on the investment facility at the same Sonia rate plus a
margin of 1.90%.
The Company has provided cost overrun and interest shortfall
guarantees of up to GBP5 million in connection with the development
facility. A capital guarantee is also in place which could increase
the Company's guarantee by GBP2.5 million if certain covenants are
not met in advance of drawing the investment facility or the
development facility is not repaid when due.
The Group remained compliant with all covenants throughout the
period up to the date of this report.
Reconciliation of liabilities to cash flows from financing
activities
30 Sep 30 Sep
23 22
GBP'000 GBP'000
Bank borrowings at the start of the year - -
Cash flows from financing activities:
Bank borrowings drawn 18,033 -
Loan arrangement fees paid (1) (889) -
Non-cash movements:
Amortisation of loan arrangement fees 56 -
Bank borrowings at the end of the year 17,200 -
======== ========
1. In addition to the arrangement fees paid in connection with
the Barclays loan the Company has also paid a further GBP149,000 in
the year in connection with provisional arrangement fees for both
the ASK loan and ZDP share placing. The funds from these were not
received until after the year end.
21. SHARE CAPITAL
Authorised share capital: 30 Sep 30 Sep 22
23
GBP GBP
140,000,000 (2022: 140,000,000) Ordinary shares
of 5p each 7,000,000 7,000,000
========= ===========
Allotted and called up:
No GBP'000
As at 30 September 2022 and 30 September 2023 59,638,588 2,982
================ =================
22. CAPITAL COMMITMENTS
As at 30 September 2023, the Group had contracted capital
commitments, not provided for in the financial statements, of
GBP19,795,000 (2022: GBP32,060,000) in connection with the
construction, development or enhancement of the Group's investment
and trading properties which are expected to be incurred in the
next financial year. GBP19,627,000 relates to the remaining
construction costs anticipated to enable completion of the student
accommodation development at The Island Quarter which are to be
funded entirely by way of further drawdowns from the Barclays loan
facility.
On 6 April 2023, the Group, by way of its 80% interest in the
shares of Conygar Bristol Limited, entered into a conditional
contract with Wholesale Fruit Centre (Bristol) Limited to acquire
the 14.7 acre site at St Philips Marsh where the Bristol Fruit
Market is currently located, paying an initial deposit of
GBP450,000. Completion of the acquisition is conditional on the
satisfaction or, where relevant, waiver of the grant of planning
permission for a number of development options by 6 June 2025,
subject to extension provisions. In addition, all tenants are
required to have surrendered their existing leases by 6 April 2024
and the market licence in respect of the site terminated. The
contract is capable of termination if the vacant possession
condition has not been satisfied or waived by 6 April 2024 or if
the vacant possession and planning permission conditions have not
both been satisfied by 6 April 2028.
23. RELATED PARTY TRANSACTIONS
On 27 September 2023, The Group entered into a subscription and
shareholders' agreement, with Urban & City Limited, which sets
out the commercial terms and profit-sharing arrangements in
connection with the possible, acquisition, redevelopment and sale
of the land at St Philips Marsh. Included within the agreement is
the requirement to pay an introductory fee of GBP400,000 to
Lavignac Securities Limited for it having introduced this
opportunity. Mr G S Miller-Cheevers, who is a director of Conygar
Bristol Limited owns the entire issued share capital and is the
sole director of both Urban & City Limited and Lavignac
Securities Limited. The full introductory fee is accrued in these
financial statements and was paid in October 2023.
During the year Lavignac Securities Limited also charged
GBP200,000 of fees to the Group, in connection with services
provided to progress The Island Quarter and Bristol projects, of
which GBP33,000 is included within trade payables as at 30
September 2023 and was paid in October 2023.
24. FINANCIAL INSTRUMENTS
The following tables set out the Group's financial assets and
liabilities, all of which are due within one year. The tables have
been drawn up based on the undiscounted cash flows of financial
liabilities, based on the earliest date on which the Group can be
required to pay.
Financial assets:
30 Sep 30 Sep
23 22
GBP'000 GBP'000
Cash and cash equivalents 2,676 17,361
Trade receivables and accrued income 167 92
Other receivables (excluding VAT) 1,282 199
--------- -----------
4,125 17,652
========= ===========
Financial liabilities:
30 Sep 30 Sep
23 22
GBP'000 GBP'000
Floating rate bank borrowings (note 20) 17,200 -
Trade payables and other accrued expenses 7,053 1,566
--------- -----------
24,253 1,566
========= ===========
Group trade payables, as at 30 September 2023, primarily
comprise costs payable to the contractor and other professionals in
connection with the student accommodation development at The Island
Quarter. These costs were incurred by 30 September 2023 but not
paid until October 2023 with the student accommodation development
costs funded by way of a further drawdown from the Barclays loan
facility.
25. EVENTS AFTER THE BALANCE SHEET DATE
On 3 October 2023, the Group, by way of its wholly-owned
subsidiary undertaking Conygar ZDP PLC (the "ZDP Co"), placed 5
million zero dividend preference shares (the "ZDP shares"), at a
price of GBP1 per ZDP share, with a further 10 million ZDP shares
subscribed for by the Company (each a "subscription share"). The
issue price for the subscription shares is required to be paid by
the Company on the earlier of the date of transfer of such shares
to a third party or 4 October 2028.
The ZDP shares have a life of five years and a final capital
entitlement of 153.86 pence per ZDP share payable on 4 October 2028
(the "ZDP repayment date"), equivalent to a gross redemption yield
of 9.0 per cent. per annum on the issue price.
Pursuant to a contribution agreement, dated 3 October 2023,
between the ZDP Co and the Company the funds raised from the
placing, net of issue costs, have been lent to the Company. The
loan is non-interest bearing and repayable, at the latest, five
business days before the ZDP repayment date of 4 October 2028. In
return, the Company has undertaken to meet all costs and
liabilities of the ZDP Co and enable the ZDP Co to meet all its
obligations in respect of the ZDP shares.
On 16 November 2023, the Company announced the completion of a
GBP12 million loan facility with ASK. The loan is for an initial
term of two years with interest paid at the Bank of England base
rate plus a margin of 5.9 per cent. The funds, of which GBP5m has
been drawn at the date of signing these financial statements, will
be utilised primarily to further progress the owned and proposed
development projects at The Island Quarter and Bristol.
The report and accounts for the year ended 30 September 2023
will shortly be available via the Company's website www.conygar.com
or, as required, posted to shareholders and copies may be obtained
free of charge for at least one month following their posting by
writing to the company secretary, The Conygar Investment Company
PLC, 1 Duchess Street, London W1W 6AN.
The Company's annual general meeting will be held at 11:00am on
Tuesday, 19 December 2023 at the offices of The Conygar Investment
Company PLC, First Floor, Suite 3, 1 Duchess Street, London W1W
6AN.
The directors of Conygar accept responsibility for the
information contained in this announcement. To the best of the
knowledge and belief of the directors of Conygar (who have taken
all reasonable care to ensure that such is the case) the
information contained in this announcement is in accordance with
the facts and does not omit anything likely to affect the import of
such information.
.
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END
FR EAPFEAFFDFFA
(END) Dow Jones Newswires
November 21, 2023 02:00 ET (07:00 GMT)
Conygar Investment (AQSE:CIC.GB)
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