Final Results

RNS Number : 4291J

Conygar Investment Company PLC(The)

03 December 2008

 



3 December 2008

The Conygar Investment Company PLC

Preliminary Results for the year ended 30 September 2008

The Conygar Investment Company PLC, the property trading and development company, announces its results for the year ended 30 September 2008.

Highlights

• Net asset value per share increased 1.2% to 164p at 30 September 2008 from 162p the previous year
  
  
• Cash of £38 million with no debt whatsoever representing 92p of our net asset value
  
  
• £19 million of uncharged property assets which can be used to secure additional funding
  
  
• Three waterfront development projects with the potential to develop in excess of 1,000 marina berths with mixed use supporting development

Enquiries:

The Conygar Investment Company PLC

Robert Ware:	020 7408 2322
Peter Batchelor:	020 7408 2322

Oriel Securities Limited (Nominated Adviser)

Michael Shaw:

020 7710 7600

About Conygar

• Conygar is a trading and development group dealing primarily in UK commercial property
  
  
• The group aims to invest in property assets when we can add significant value using our property management, development and transaction structuring skills
  
  
• A major focus for the group is the proposed Pembroke Dock marina scheme. Other exciting port and marina opportunities are also being actively pursued including a joint venture with Stena Line Ports to develop Holyhead Waterfront
  
  
• Conygar was formed in 2003 by Chief Executive, Robert Ware together with Finance Director, Peter Batchelor and Property Director, Steven Vaughan
  
  
• Further information can be found at www.conygar.com

Chairman's & Chief Executive's Statement

Results

Given the immense turmoil in financial and property markets it will come as no surprise that it has been a difficult year for the Group. The loss before taxation for the year ended 30 September 2008 was £103,000 compared with a profit of £8,173,000 in the previous year. Apart from a reduction in property disposals, the results were adversely impacted by a £2,477,000 write-down of property inventory to net realisable value, albeit this is an unrealised loss. Despite this disappointing result, the underlying operations remain robust with our net asset value per share increasing 1.2% to 164p as at 30 September 2008 from 162p the previous year.  

As at 30 September 2008, the Group had cash of £38 million with no debt whatsoever which represents 92p of our net asset value and which underpins our financial strength. This is particularly important given the chaos of the last few months and the drying up of credit.  

The property market continues to languish and in our view there is worse to come as banks unwind their positions in property lending. Indications are that a number of buying opportunities will arise for companies such as Conygar who have cash. However, we are in no rush to re-enter the market until the extent of the downturn becomes clearer.

In the meantime, the Group is continuing to press ahead with its various development projects so that we shall be extremely well positioned when markets begin to recover.

Fishguard Waterfront Development

We are pleased to announce that we have acquired the rights to develop a marina at Fishguard Waterfront in West Wales. We are now progressing plans with agreement from the Crown Estate for a 450 berth marina for which Pembrokeshire Council have already resolved to grant planning consent. These proposals may include a mixed use supporting development and a potential joint venture with Stena Line to provide them with improved port facilities and the re-development of their surplus non-operational land. This is another exciting regeneration project which continues our strategy of expansion into waterfront projects. Negotiations and work on the detailed plans is progressing and should be finalised within the next twelve months. 

Pembroke Dock Waterfront Development

In February 2008, we obtained approval for our planning application in respect of the Pembroke Dock Waterfront development. This is the result of many years of hard work by the team and, whilst an ambitious project, it has benefited from constructive support from the client group comprising Pembrokeshire County Council, the Welsh Assembly Government, the Crown Estate and The Milford Haven Port Authority. Following this approval, the Group acquired the minority interests in Martello Quays Limited, the developer of Pembroke Dock Waterfront, so that we now own 100% of the development. Although we shall not be commencing development in the current market we are continuing to deal with the various legal agreements and detailed planning matters in addition to costing the various construction and engineering solutions. The waterfront development is expected to create a 260 berth marina, 146 houses, 304 apartments with associated leisure and retail facilities and we remain committed to the project. 

Holyhead Waterfront Development

Our joint venture with Stena Line Ports Limited will develop some half a mile of water frontage at Holyhead, Anglesey. This will be a regeneration project and is potentially larger than Pembroke Dock. 

The strategy is to develop a mixed use scheme incorporating residential, leisure, tourist and retail facilities together with a marina development with associated commercial and marine engineering elements. The joint venture has accumulated all of the land necessary for the development and work is progressing on our designs and planning application. It is anticipated that this will be submitted within this financial year. The complex scheme will utilise all of the experience we acquired at Pembroke Dock as it requires the support of various local government bodies, but we have been encouraged by the initial support and all of the elements for success are present. 

Trading Properties

In March 2008, we were particularly pleased to announce that the last Bedford Square property was sold at 43% over cost and more importantly some 13% over the September 2007 valuation. This is a significant achievement in the light of the downturn in the property market. The profit after finance to the Group from the Bedford Square portfolio is in excess of £9 million with an internal rate of return exceeding 61%, an excellent result for the Group.

In June 2008, we sold one of the remaining Buckingham Street properties for £2 million, being 11% ahead of the September 2007 valuation. We now have four properties remaining at Buckingham Street, London WC2 valued at £19.35 million. Three of the buildings are 86% let with an annual rent roll of £1.1 million and an estimated rental value of £1.4 million so there is no pressure to accept poor offers. The remaining Buckingham Street property is being refurbished after which it will be either sold or re-let depending upon market conditions. Our valuers are understandably cautious in this market but the assets are well let and we remain confident that these smaller West End London properties will be in demand.

Financing

At 30 September 2008, the Group had cash of £38 million or 92p per share. In addition we have £19 million of uncharged property assets which can be used to secure additional funding. This enables us to fully fund our existing commitments and provides us with a significant war chest to take advantage of the opportunities that will undoubtedly arise.

In March 2008, we issued 1,500,000 ordinary shares at 171.5p per share as part of the consideration to acquire the minority interests in Martello Quays Limited, the developer of Pembroke Dock Waterfront. We now own 100% of this potential £110 million development which now has planning permission at a total cost to the Group of £3.67 million.

As part of our joint venture with Stena Line Ports Limited to develop Holyhead Waterfront, we committed £7 million in funding of which £5.1 million has been spent to date leaving a commitment of £1.9 million. Of this commitment, £2.1 million is structured as an interest bearing loan secured on the joint venture property assets. The joint venture is therefore fully funded to the detailed planning stage and site accumulation is complete.

Triple Net Asset Value 

As a trading Group, properties are carried at the lower of cost and net realisable value. In order to show a clearer position of our value we calculate a triple net asset value ('NNNAV') using an external valuation of our properties less any tax arising from those revaluations. It should be noted that the net present value of our three development projects are not included in this NNNAV. Whilst in our view, they have considerable potential value it is not possible to appraise them with any certainty at this stage so they remain at cost. Knight Frank LLP have valued the trading properties at £19.35 million and the land held for development at £7.3 million. As we have accounted for the net realisable value adjustment arising from this valuation, it is our view that the NNNAV is not materially different from our net asset value of 164p per share.

Strategy and The Future

Our strategy for the next year remains clear and on course:

• To seek further opportunities in the port and marina sectors together with general property opportunities.
  

• Having successfully obtained planning permission at Pembroke Dock, we continue to progress with detailed legal and planning matters.
  

• To submit a planning application for the Holyhead Waterfront development.
  

• To submit a planning application for the Fishguard Waterfront development.
  

• To continue the realisation of the Buckingham Street trading assets when appropriate.
  

Clearly we shall continue to monitor the market and will adjust our strategy should conditions dictate.

Prospects

The Board remains confident about the future prospects of the Group, which is well equipped to weather the various financial and economic crises. The Group continues to make progress with its pipeline of future projects despite the general market turmoil and we will use our cash position to take advantage of any opportunities as they arise. That said, the Board is content to conserve cash until such time as matters become clearer. The various developments can be progressed without committing significant funds and we remain convinced these projects will ultimately be a success for the Group. As ever, we shall keep shareholders informed of progress and look forward to meeting with many of you at our forthcoming AGM. Further information on the Group can be found on our website www.conygar.com. 

N J Hamway	R T E Ware
Chairman	Chief Executive

CONSOLIDATED INCOME STATEMENT

For the year ended 30 September 2008

	Year Ended 30 Sep 08 £'000	Year Ended 30 Sep 07 £'000
Sales of properties	8,150	70,603
Rental income	1,225	3,492
Revenue	9,375	74,095
Direct costs of:
Sales of properties	4,963	60,747
Rental income	522	517
Write-down of property inventory	2,477	-
Direct Costs	7,962	61,264
Gross Profit	1,413	12,831
Income from trading investments	-	233
Share of results of joint ventures	3	12
Other gains and losses	(137)	137
Administrative expenses	(3,615)	(3,149)
Operating (Loss) / Profit	(2,336)	10,064
Finance costs	-	(3,613)
Finance income	2,233	1,722
(Loss) / Profit Before Taxation	(103)	8,173
Taxation	(262)	(2,557)
(Loss) / Profit For The Period	(365)	5,616
Attributable to:
-    equity shareholders	(365)	5,616
-    minority shareholders	-	-
Basic (loss) / earnings per share	(0.89)p	16.94p
Diluted (loss) / earnings per share	(0.89)p	14.36p

All of the activities of the Group are classed as continuing.

CONSOLIDATED Statement of Changes in Equity 

For the year ended 30 September 2008

Attributable to the equity holders of the Company

	Share Capital	Share Premium	Retained Earnings	Total	Minority Interests	Total  Equity
	£'000	£'000	£'000	£'000	£'000	£'000
Group
At 1 October 2006	932	14,294	1,138	16,364	5	16,369
Profit for the period	-	-	5,616	5,616	-	5,616
Share based payment	-	-	710	710	-	710
Issue of share capital	1,075	41,322	-	42,397	-	42,397
Share issue costs	-	(124)	-	(124)	-	(124)
At 30 September 2007	2,007	55,492	7,464	64,963	5	64,968
At 1 October 2007	2,007	55,492	7,464	64,963	5	64,968
Loss for the period	-	-	(365)	(365)	-	(365)
Share based payment	-	-	1,069	1,069	-	1,069
Issue of share capital	75	2,498	-	2,573	-	2,573
Share issue costs	-	-	(35)	(35)	-	(35)
At 30 September 2008	2,082	57,990	8,133	68,205	5	68,210

CONSOLIDATED BALANCE SHEET

At 30 September 2008

	30 Sep 2008 £'000	30 Sep 2007 £'000
Non-Current Assets
Property, plant and equipment	8	11
Investment in joint ventures	5,047	91
Goodwill	3,173	-
Deferred tax assets	304	243
	8,532	345
Current Assets
Development and trading properties	22,895	30,848
Trade and other receivables	726	2,850
Tax receivable	134	-
Derivative financial instruments	-	137
Cash and cash equivalents	38,290	38,123
	62,045	71,958
Total Assets	70,577	72,303
Current Liabilities
Trade payables and other payables	2,367	5,535
Tax liabilities	-	1,800
	2,367	7,335
Total Liabilities	2,367	7,335
Net Assets	68,210	64,968
Equity
Called up share capital	2,082	2,007
Share premium account	57,990	55,492
Retained earnings	8,133	7,464
Equity Attributable to Equity Holders	68,205	64,963
Minority interests	5	5
Total Equity	68,210	64,968

Net Assets Per Share

164p

162p

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 September 2008

	Year Ended 30 Sep 08 £'000	Year Ended 30 Sep 07 £'000
Cash Flows From Operating Activities
Operating (loss) / profit	(2,336)	10,064
Depreciation	5	5
Share of results of joint ventures	(3)	(12)
Other gains and losses	137	(137)
Share based payment charge	1,069	710
Cash Flows From Operations Before Changes In Working Capital	(1,128)	10,630
Change in trade and other receivables	2,150	549
Change in land, developments and trading properties	7,953	19,140
Change in trade and other payables	(3,168)	3,398
Cash Generated From Operations	5,807	33,717
Finance costs	-	(2,897)
Finance income	2,207	1,709
Dividends from joint ventures	90	200
Tax paid	(2,257)	(1,352)
Cash Flows From Operating Activities	5,847	31,377
Cash Flows Used In Investing Activities
Investment in joint venture	(5,043)	-
Acquisition of minority interest	(600)	-
Purchase of plant and equipment	(2)	(9)
Cash Flows Used In Investing Activities	(5,645)	(9)
Cash Flows Used In Financing Activities
Issue of shares	-	42,397
Issue cost of shares	(35)	(124)
Borrowings drawn down	-	29,000
Issue costs of borrowings	-	(205)
Borrowings repaid	-	(76,428)
Exit fees paid	-	(886)
Cash Flows Used In Financing Activities	(35)	(6,246)
Net increase in cash and cash equivalents	167	25,122
Cash and cash equivalents at 1 October	38,123	13,001
Cash and Cash Equivalents at 30 September	38,290	38,123

Notes:

1.    The financial information set out in this announcement is abridged and does not constitute statutory accounts for the year ended 30 September 2008 but is derived from those draft financial statements. The financial information is not audited. The statutory accounts for the year ended 30 September 2008 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and 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 principles of IFRS.

2.    The comparative financial information for the year ended 30 September 2007 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 237 (2) or (3) of the Companies Act 1985.

3.    Basic and fully diluted earnings per share have been calculated on the basis of a loss after tax of £365,000 (2007 profit - £5,616,000) and on the number of shares in issue being the weighted average number of shares in issue during the period of 40,899,961 (2007 - 33,152,521). The weighted average number of shares on a fully diluted basis was 40,899,961 (2007 - 39,108,698) which assumes the exercise of options over nil (2007 - 5,956,177) shares at the start of the period. No adjustment has been made in respect of the exercise of options which were anti-dilutive throughout the period.

4.    The directors are not proposing that a dividend payment be made.

5.    Investment in Joint Ventures

	30 Sep 08 £'000	30 Sep 07 £'000
At 1 October 2007	91	445
Share of profit retained by joint ventures	3	12
Investment in joint venture	5,043	-
Other movements	-	(166)
Dividends received	(90)	(200)
At 30 September 2008	5,047	91

The group has a 50% interest in a joint venture, Conygar Stena Line Limited, which is a property development company. It also has a 50% interest in a joint venture, CM Sheffield Limited, which is a property trading company.

The following amounts represent the group's 50% share of the assets and liabilities, and results of the joint ventures. They are included in the balance sheet and income statement:

	Year ended 30 Sep 08 £'000	Year ended 30 Sep 07 £'000
Assets
Current assets	5,061	117
	5,061	117
Liabilities
Current liabilities	(14)	(26)
	(14)	(26)
Net Assets	5,047	91
Operating loss	(1)	(1)
Finance income	5	15
Profit before tax	4	14
Tax	(1)	(2)
Profit after tax	3	12

6.    Goodwill

	30 Sep 08	30 Sep 07
	£'000	£'000
At 1 October 2007	-	-
Addition	3,173	-
At 30 September 2008	3,173	-

The goodwill arose upon the acquisition of the minority interests in Martello Quays Limited and represents the excess of the consideration over the fair value of the identifiable net assets acquired.

7.    Property Inventories

	30 Sep 08	30 Sep 07
	£'000	£'000
Properties held for resale or development	25,372	30,848
Write-down of property inventory	(2,477)	-
	22,895	30,848

8.    The Report and Accounts for the year ended 30 September 2008 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, Bond House, 19-20 Woodstock Street, London W1C 2AN. They are also available on the website www.conygar.com.

9.    The Company's Annual General Meeting will be held at 10.00 am on Friday, 6 February 2009 at the offices of Wragge & Co LLP, 3 Waterhouse Square, 142 Holborn, London EC1N 2SW

The directors of Conygar accept responsibility for the information contained in this announcement. The best of the knowledge and believe of the directors of Conygar (who have taken all reasonable care to ensure that such in 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.

 

END

 

 

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