TIDMCIC
RNS Number : 0121T
Conygar Investment Company PLC(The)
30 November 2011
30 November 2011
THE CONYGAR INVESTMENT COMPANY PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2011
The Conygar Investment Company PLC, the property investment and
development company announces its results for the year ended 30
September 2011.
HIGHLIGHTS
-- 2011 was another successful year for Conygar.
-- NAV per share of 155.2p was up 3.1% (2010: 150.5p). EPRA NAV
per share increased by 2.5% to 153.9p (2010: 150.1p).
-- Final dividend proposed for the year of 1.1p per ordinary share.
-- Progress made on the development land bank with expenditure
in the year of GBP14.8 million. Purchased 93 acres of residential
development land at Haverfordwest, Pembrokeshire. Conditional
disposal of 9 acres to Sainsbury's to build a 60,000 square foot
food store.
-- Strong cash flow and debt capacity for future acquisitions,
with total cash and undrawn committed facilities exceeding GBP85
million.
-- Sold GBP13.5 million of investment properties.
-- Share buy back: the Group acquired 17.2% of its ordinary
share capital at a weighted average price of 116.1p per share.
Summary Group Net Assets As At 30 September 2011
Per Share
GBP'm p
Investment Properties 139.2 136.3
Development Projects 29.4 28.8
Cash 35.7 35.0
Other Net Liabilities (4.7) (4.7)
------- ----------
199.6
Bank Loans (33.7) (33.0)
Preference Shares (7.4) (7.2)
------- ----------
158.5 155.2
======= ==========
Robert Ware, Chief Executive, commented:
"The outlook for Conygar remains positive and the benefits of
our strategy are coming through. The balance sheet remains strong
and liquid, with GBP85 million available for further acquisitions.
We continue to rigorously search for undervalued assets and
development opportunities and realise assets where we believe we
can add no
further value. We are investing in our development projects,
which will produce good returns in the medium term, and our
investment property portfolio continues to hold up very well. Since
the financial crisis started in 2008, we have grown in net assets,
been consistently profitable and guarded our liquidity for the
opportunities which will surely come. Conygar is stronger now than
it was at the start of the financial crisis and we remain very
positive about the future for your business."
Enquiries:
The Conygar Investment Company PLC
Robert Ware: 020 7258 8670
Peter Batchelor: 020 7258 8670
Oriel Securities Limited (Nominated Adviser)
Michael Shaw: 020 7710 7600
Neil Langford: 020 7710 7600
Temple Bar Advisory (Public Relations)
Alex Child-Villiers: 07795 425580
Chairman's & Chief Executive's Statement
Results
The year ended 30 September 2011 has been another successful and
effective year for Conygar. In these difficult economic times, we
have continued to grow net asset value per share and have a strong
balance sheet. We are pleased to be able to report a net asset
value per share of 155.2p, which is an increase of 3.1% from last
year. The major components of that growth are the profit after tax
of GBP1.1 million and the impact of the share buy back. Net asset
value was GBP158.5 million compared with GBP176.6 million at 30
September 2010, however, the Group spent GBP24.6 million on share
buybacks during 2011 and paid a dividend of GBP1.2 million.
Excluding these, net assets increased by 4.3%. On an EPRA basis net
asset value per share increased by 2.5% to 153.9p.
The profit before taxation for the year was GBP1.8 million
(2010: GBP14.9 million). However, the previous year included a
GBP5.5 million profit from sale of properties and a revaluation
gain of GBP7.2 million. Net property income was GBP10.0 million
(2010: GBP12.4 million) before financing and overheads. The
uncertain timing of our acquisition, sales and development
expenditure mean that our profits cannot be expected to be a smooth
progression. We are not an earnings or income yield business: our
focus is on net asset value growth.
However, the Group has generated profits after tax of GBP29.4
million in the last three years, with a return on equity averaging
7.1% pa. This is despite a deliberate policy of holding cash for
investment opportunities which depresses returns. If adjusted for
cash, the net return rises to 16.4% pa which, given the economic
turmoil since October 2008, is a creditable performance.
The Group's investment properties as at 30 September 2011 were
independently valued at GBP139.2 million and have an annual
contracted rent roll of GBP12.1 million. On a like for like basis
with last year, the portfolio remained broadly flat, showing a
small overall gain of GBP401,000. In view of the secondary and
regional nature of the portfolio, we are pleased that value was
maintained, reflecting the active asset management work protecting
value.
The development land bank continues to be held at cost of
GBP29.4 million, after additions of a further GBP14.8 million
during 2011. We will revalue it once the various planning issues
are sufficiently advanced so that a sensible appraisal can be
produced. These projects represent a considerable amount of
potential upside and we continue to invest time, money and effort
into bringing them to fruition. We are particularly encouraged by
our conditional disposal of 9 acres at Haverfordwest to
Sainsbury's, for a food store, with whom we hope to develop other
opportunities. The waterfront projects move ahead, albeit in a
difficult market and we are pleased to have been able to access
certain infrastructure grant funds. All of these matters are
covered in more detail under Business Review.
Acquisitions and disposals
In November 2010, we purchased 86 acres of land at
Haverfordwest, Pembrokeshire, close to the town centre for GBP14
million, which has outline planning consent for 900 residential
units. In June 2011, we acquired a further 7 acres adjoining the
site for GBP0.3 million.
The Group disposed of four investment properties during the year
at Whetstone Business Park, Leicester; Southgate Retail Park,
Derby; Fishers Grove, Portsmouth and Caswell Road, Northampton for
total net proceeds of GBP13.5 million, generating a small surplus
of GBP167,000 over valuation. We will continue to dispose of assets
as opportunities arise and where no further value can be added by
the Group.
Dividend
The Board is pleased to recommend a final dividend of 1.1p per
ordinary share in respect of the year ended 30 September 2011 to be
paid on 10 January 2012 to shareholders on the register on 9
December 2011. This is an increase of 10% over last year which
reflects the continued progress of the business. The Board has
decided against the payment of interim dividends.
Share Buy Back
Having announced the share buy back programme last year, the
Group acquired 21,237,981 ordinary shares representing 17.2% of its
ordinary share capital, at a weighted average price of 116.1p per
share. This used cash of GBP24.65 million and, as a result of the
buy backs, net asset value has been enhanced by approximately 7.6
pence per share or 5.05%.
We continue to be disappointed by the discount of the share
price to the net asset value per share and will utilise the share
buy back authority where it makes sense to do so.
Financing
At 30 September 2011, the Group had cash of GBP35.7 million
available to pursue investment opportunities which, when combined
with funds available from the committed bank facility, increases to
GBP85 million. This excludes any further finance available in
respect of new acquisitions. Bank debt was GBP34.8 million compared
with GBP35.6 million last year. The Group continues to have net
cash and bank debt was at 25% loan to value overall.
During November 2011, the Group re-couponed its existing
interest rate swaps from 2.38% to 1.33%, having already reduced
them during the year from 5.2%. Aside from reducing the on-going
interest rate charge in the income statement, we retain the hedging
protection on 85% of our external bank debt and the weighted
average cost of all debt including margin has fallen to 4.44%.
Also during November 2011, the Group drew down GBP33 million
from its facility with Lloyds Banking Group for potential use on
acquisitions. This increases bank debt to GBP64.4 million or 46%
loan to value, ignoring cash. The Group takes the view that the
ability to deploy cash quickly remains a major competitive
advantage when competing for acquisition opportunities.
Summary of Group Net Assets
The Group net assets as at 30 September 2011 may be summarised
as follows:
Per Share
GBP'm p
Investment Properties 139.2 136.3
Development Projects 29.4 28.8
Cash 35.7 35.0
Other Net Liabilities (4.7) (4.7)
-------
199.6
Bank Loans (33.7) (33.0)
Preference Shares (7.4) (7.2)
------- ----------
158.5 155.2
======= ==========
Outlook
It is extremely difficult to determine the outlook in a world
that veers from one crisis to another. Our policy remains that of
sticking to what we know best and rigorously searching for
undervalued assets and development opportunities. We will continue
to realise assets where we believe we can add no further value.
Generally, the banks still have not de-geared their property
books and those that have, now require more capital to cover other
exposures, with the European crisis adding further uncertainties
and capital requirements. Many borrowers still have to re-finance
expiring loans, but recent experience shows that banks are
reluctant to face the challenge of non-performing loans and asset
value shortfalls. The full effects of the austerity measures have
yet to bite, and the coming years will be difficult. We have been
consistent in our message throughout: this situation requires
careful management, patience and, most of all, nerve.
For Conygar, the outlook remains positive and we are starting to
see the benefits of our strategy coming through. The balance sheet
remains strong and, most important of all, liquid. Our development
projects are starting to bear fruit and we continue to invest in
these projects which will produce good returns in the medium term.
Our investment property portfolio continues to hold up very well in
a difficult environment owing to the massive amount of work by our
team on asset management and we continue to evaluate opportunities
in a highly selective and disciplined way. We would like to
announce another deal but we will not overpay just to be able to do
that.
We believe that Conygar is stronger today than it was in 2008,
when the world went awry. We have shown growth in net assets, have
been consistently profitable and have guarded our liquidity for the
opportunities which will surely come, including where appropriate,
share buy backs.
We remain very positive about the future for your business.
N J Hamway R T E Ware
Chairman Chief Executive
Business Review
INVESTMENT PROPERTIES
Summary of portfolio
2011 2010
Valuation at 30 September GBP139,150,000 GBP151,145,000
Number of properties 41 45
Contracted rent (pa) GBP12,070,501 GBP13,350,440
Current ERV (pa) GBP13,665,893 GBP14,704,211
Net initial yield 7.86% 8.25%
Equivalent yield 8.92% 8.84%
Reversionary yield 9.35% 9.18%
ERV of vacant units (pa) GBP1,611,451 GBP2,063,236
Vacancy rate 11.19% 14.03%
Average unexpired lease lengths 5.21 years 5.92 years
Asset management
At 30 September 2011, the contracted rent for the investment
property portfolio was GBP12.1 million with an ERV of GBP13.7
million. The ERV of vacant space is GBP1.6 million of which
Advantage, Reading and Brunswick Point, Leeds account for 50% by
rental value. This has reduced from 71% in 2010 owing to the
successful letting of part of Advantage, Reading (see below). The
overall vacancy rate in the portfolio is 11.19% down from 14.03% in
2010 and whilst there remains much to do this is a pleasing trend.
We continue to seek out occupiers and can afford to be highly
competitive, however, the challenge remains a significant one,
particularly outside London.
In terms of lettings:
-- We agreed 12 new lettings contributing GBP616,141 pa of new
income at an aggregate premium of 1.03% to ERV.
-- We agreed 8 lease renewals retaining GBP681,691 pa of income
at an aggregate discount of 1.75% to ERV.
-- We agreed 3 rent reviews at GBP70,500 pa of income at an aggregate discount of 6.37% to ERV.
The highlights include:
Advantage, Reading
In March 2011, we let 8,448 square feet at Advantage, Reading to
Atex Group Limited on a twelve year lease, with a tenant only break
at year seven. The rent is GBP185,856 pa, subject to fixed uplifts
for which the tenant is receiving a two year rent free period. We
have agreed to finance the tenant fit-out of GBP350,000 which will
be repaid in eight quarterly instalments. The tenant has also taken
the right of first refusal over another floor. This is an important
letting as this is the largest void in the portfolio and Reading is
a competitive occupier market. Having attracted one occupier, we
are already seeing interest from other potential occupiers.
Unit 11/13 Brunel Centre, Bletchley
We have let a 2,975 square foot, previously vacant, unit to
Brighthouse on the basis of 10 years from March 2011, with a tenant
break after five years. The rent will be GBP17,500 pa rising to
GBP37,000 in year two and GBP40,000 thereafter. We have made a
capital contribution of GBP60,000 towards their fit-out costs. This
both reduces the void and enhances the value of this property.
Kingscourt Leisure Complex, Dundee
A 5,666 square foot unit has been let to Laser Quest for a
period of 10 years from April 2011 at GBP26,895 pa, with a mutual
break after five years. This unit has been vacant since the
property was constructed, so is a significant breakthrough and has
generated interest in two further vacant units which are currently
under negotiation.
Armytage Road, Brighouse
A new lease was completed to the existing tenant, Owens Corning,
on the basis of 10 years from September 2011, with a tenant only
break in 2016. The passing rent of GBP155,000 pa has been
maintained with a six month rent free period.
Sandwell Business Park, Oldbury
The tenant, Cadbury UK Limited, has now undertaken a GBP2
million refurbishment of this property and has re-occupied it as
one of the four core Cadbury distribution hubs in the UK. This
re-affirms the commitment of Cadbury to this 128,305 square foot
warehouse/distribution unit which is let to them until September
2020 at GBP725,000 pa.
We have also begun a number of refurbishment initiatives,
incurring some GBP1,079,000 of capital expenditure during 2011 and
this level of capital expenditure will likely continue in 2012. In
particular, we are upgrading Waterfront Business Park, Fleet; York
House, Felixstowe and Silver Court, Welwyn Garden City. However, we
have chosen to defer our proposed GBP2 million refurbishment of
Brunswick Point, Leeds. The extremely weak occupier market in Leeds
means little likelihood of realising adequate value for that level
of expenditure and the funds can be better employed elsewhere.
By their nature, most of our transactions remain relatively
small but the team is highly focussed on actively managing the
portfolio to protect the income and cash flow. As ever, we try to
ensure close contact with tenants and to chase debts promptly.
Clearly we cannot buck the market and, in particular, retail
tenants are under enormous pressure. We try to work with them to
manage the situation, often with success, but occasionally we must
bow to the inevitable. We typically collect 93-98% of rent within
ten days and arrears are less than 1% of the rent roll.
Disposals
The Group disposed of four investment properties during the year
at Whetstone Business Park, Leicester; Southgate Retail Park,
Derby; Fishers Grove, Portsmouth and Caswell Road, Northampton for
total net proceeds of GBP13.5 million, generating a small surplus
of GBP167,000 over valuation.
The largest asset disposed of was Whetstone Business Park,
Leicester which accounted for GBP6.97 million of the total net sale
proceeds, having been acquired as part of the Lamont portfolio in
2009 for GBP6.58 million. It was over rented with a tenant not in
occupation and wishing to exit the lease in 2014. Whilst the income
was good in the short term, we could only see downward pressure on
the valuation, so we opted to sell and achieved a good price in
this market.
The other significant asset was Southgate Retail Park, Derby
which was sold for GBP4.74 million or 3.5% ahead of valuation. This
property had a number of vacant retail units, with little
occupational demand in a competitive over-supplied market.
We will continue to dispose of assets as opportunities arise and
where no further value can be added by the Group.
Valuation
The investment property portfolio has been independently valued
by Jones Lang LaSalle (who acquired King Sturge LLP in 2011) at
GBP139.2 million as at 30 September 2011, comprising GBP97.4
million for the TAP portfolio and GBP41.8 million for the Lamont
portfolio. The total portfolio increased in value by GBP401,000, so
broadly flat compared with 2010.
There continues to be considerable downward pressure on values
of property outside London owing to a flat investor market, scarce
finance and tenants' businesses operating in a tough economic
climate. Active asset management is required to protect value and
our investment in capital expenditure is all financed out of
surplus cash flow from the portfolio.
Development Projects
Haverfordwest
In November 2010, we purchased 86 acres of land at
Haverfordwest, Pembrokeshire, close to the town centre for GBP14
million. This has planning consent for 900 residential units. We
subsequently acquired a further 7 acres adjoining our site for
GBP0.3 million taking our total site to 93 acres.
We have now exchanged contracts with Sainsbury's for the sale of
9 acres for a supermarket, subject to the obtaining of a suitable
planning consent. We intend to submit a planning application early
next year for a retail food store comprising 60,000 square feet of
sales floor space, a restaurant, a 500 space car park and filling
station. Our application will also include proposals for circa 800
residential plots on our remaining site. We have held a joint
public exhibition of the proposals with Sainsbury's and we can now
finalise our application.
The acquisition of this site in this challenging economic
climate was, we believe, opportune at a cost of less than GBP15,000
per plot. The addition of Sainsbury's will significantly change the
economics of the project and, if successful, will enable us to
bring forward the residential development, having more than covered
all our infrastructure and services costs through the net proceeds
from Sainsbury's. It is too early to ascertain the exact figures
until the planning application is submitted and consultation
underway.
Holyhead Waterfront
The planning application has been submitted for a mixed use
development. The application includes plans for 385 apartments and
townhouses, a 500 berth marina, 50,000 square feet of retail,
leisure, restaurants, hotel and office space, with a very flexible
design layout and in prime location overlooking the marina. We are
also making a provision for various local amenities and visitor
attractions. The site covers in excess of half a mile of water
frontage and is being developed jointly with Stena Line Ports
Limited. Conygar has spent GBP8.61 million to date and additional
funding and development partners will be introduced as the scheme
progresses.
The Council has now received all statutory and non-statutory
consultation responses and we have held various meetings with local
planning officers to establish what further work is required in
order that the Council can take the application forward to a
determination at committee. As anticipated, we have had a wide
range of responses some of which require further work. We are
confident that all issues can be adequately addressed by our design
team and we are seeking a determination during the first quarter of
2012.
Parc Cybi Business Park, Holyhead
We continue to market our development site at Parc Cybi, and
discussions are ongoing with several transport operators, as well
as the logistics industry supporting the nearby GBP15 billion
nuclear power project at Wylfa. We were pleased to have received
the go-ahead from the Welsh Government Business Minister for the
purchase of a further 9 acres in order to develop a transport hub
and lorry park for approximately 140 heavy goods vehicles.
We hope to submit a planning application in respect of this much
needed facility within the next three months. This has taken a
considerable amount of lobbying by our development team but we are
delighted that the project has now received the political support
it requires. In addition, the employment creation associated with
the scheme has enabled us to secure the offer of substantial
funding from the Wales European Funding Office.
Finally, the Welsh Government has recently announced that
Anglesey will be designated as an Enterprise Zone and whilst the
exact benefits are still being determined, it is highly likely that
enhanced capital allowances and business rate reliefs will form
part of any incentives, giving developments such as Parc Cybi a
major boost.
Fishguard Waterfront
In October 2011, we submitted, in conjunction with Stena Line
Ports Limited, a planning application for a mixed use marina
development at Fishguard in West Wales. The main elements of the
scheme include a 450 berth marina with workshops, stores and
ancillary facilities; 253 new residential apartments incorporating
extensive landscaped gardens and a 19 acre platform for the
potential expansion of the existing Stena Line port. The end value
of the development is expected to be in excess of GBP100
million.
We are particularly pleased to be working with our partners at
Holyhead, Stena Line, and to have received the support of
Pembrokeshire County Council and The Crown Estate, who own much of
the surrounding harbour area. The proposal will transform the area,
create much needed employment opportunities and further enhance and
ensure the future of the commercial port.
Clearly, the planning process for such a comprehensive proposal
will attract considerable scrutiny but we believe the economic
drivers for the plans are strong and the backing received thus far
is extremely encouraging. We expect to be able to report further
progress in May 2012, by which time we are hopeful of receiving
planning consent.
Fishguard Lorry Stop and Distribution Facility
We have recently completed the acquisition of this 11 acre site
in Fishguard for GBP330,000 which is sited near the Stena Line
owned port. In May 2011, we obtained outline planning consent for a
lorry stop and distribution park. The proposal includes a secure 24
hour truck stop together with approximately 190 spaces for tractor
and trailers, vehicle refuelling and wash facilities, plus an
amenity building. There will also be around 30,000 square feet of
industrial and warehousing units to support the lorry stop.
As this project will also offer significant employment and
infrastructure benefits to the community, we believe we will secure
an offer of grant funding from the South West Wales Property
Development Fund and discussions are currently taking place with
both hauliers and the port operator, Stena Line. It is our
intention to start development once we have secured sufficient
pre-lets.
Pembroke Dock Waterfront
Work on the various design and engineering solutions continues
at this GBP100 million development of the
Pembroke Dock Waterfront in West Wales. We were pleased to
report that the client group, comprising
Pembrokeshire County Council, the Welsh Government, the Crown
Estate and the Milford Haven Port Authority, recognising the
current state of the market, has consented to our adopting a phased
approach, which is a massive boost to the project, as it permits
the first phase of the project to begin sooner than would otherwise
have been the case. We are in discussions with several potential
tenants with a view to moving ahead with the first phase, which in
turn will kick-start the entire development.
King's Lynn, Norfolk
In August 2011, we acquired a 6 acre residential development
opportunity, which was under the control of the Irish NAMA vehicle,
with planning permission for 94 dwellings near to King's Lynn,
Norfolk for GBP799,000. In addition to the residential development,
the site offers some potential for mixed or commercial uses,
subject to planning. We are currently looking at options to improve
the scheme which offers good potential upside, subject to current
market conditions.
Aberystwyth
In November 2011, in conjunction with Sainsbury's, we have taken
an option to purchase a site at Aberystwyth Park Lodge,
Aberystwyth. We are looking to develop a food retail supermarket
together with a petrol filling station and car park. This is at a
very early stage but work has commenced on a planning application
which will be submitted as soon as possible. We hope to be able to
report further on this in due course.
Summary of Development Projects
The expenditure in the year on our development land bank
amounted to GBP14.8 million, reflecting the progress made on all
development projects. Our total investment to date is now GBP29.4
million at cost (analysed below) or 29p per share. We consider
that, as the projects continue to progress, they will deliver
potentially significant upside.
Our three waterfront developments are expected to develop in
excess of 1,200 waterside homes and 1,400 marina berths, together
with mixed use supporting development. Our other development sites,
such as Haverfordwest, add the potential for a further 890 homes
and the possible development of a new 60,000 square foot
Sainsbury's retail food store. The two development projects at Parc
Cybi, Holyhead and Fishguard Lorry Stop complement the waterfront
developments through the development of much needed lorry stop and
storage facilities. There are several other projects at an early
stage or in negotiation.
It is extremely difficult to provide shareholders with a
meaningful guide as to valuation of the various projects. The
mysteries of the planning process and the early stage of the
projects make accurate costing and predictions unreliable, in our
opinion. It is our intention to introduce third party valuations as
soon as it is meaningful to do so. Suffice to say, we are
comfortable that carrying the projects at cost is the prudent thing
to do. However, we believe that there is significant upside in
these projects which will become evident over the medium term.
2011 2010
GBP'm GBP'm
Haverfordwest 14.69 1.41
Holyhead Waterfront 8.61 8.47
Pembroke Dock Waterfront 4.41 4.40
King's Lynn 0.80 -
Fishguard Waterfront 0.58 0.35
Parc Cybi, Holyhead 0.18 -
Fishguard Lorry Stop 0.15 -
------ ------
Total investment
to date 29.42 14.63
====== ======
FINANCIAL REVIEW
Net Asset Value
The net asset value at the year end was GBP158.5 million (2010:
GBP176.6 million) representing a 10.2% decrease in the period. The
primary movement was the GBP24.6 million spent on purchasing own
shares.
On an EPRA basis, the net asset value is:
2011 2010 2009
GBP'm GBP'm GBP'm
Net asset value 158.5 176.6 160.9
Preference share liability 7.4 13.3 12.6
------- ------- -------
Diluted net asset value 165.9 189.9 173.5
Fair value of hedging
instruments 1.4 5.0 4.4
------- ------- -------
EPRA net asset value 167.3 194.9 177.9
======= ======= =======
EPRA NAV per share 153.9p 150.1p 138.2p
======= ======= =======
Basic NAV per share 155.2p 150.5p 138.5p
======= ======= =======
Diluted NAV per share 152.7p 146.3p 134.8p
======= ======= =======
The EPRA net asset value is calculated on a fully diluted basis
and excludes the impact of hedging instruments as these are held
for long term benefit and not expected to crystallise at the
balance sheet date.
The NNNAV or "triple net asset value" is the net asset value
taking into account asset revaluations, the mark to market costs of
debt and hedging instruments and any associated tax effect. Our
investment properties are carried on our balance sheet at
independent valuation and there is no associated tax liability. Our
development and trading assets are carried at the lower of cost and
net realisable value. We have not sought to value these assets as,
in our opinion, they are at too early a stage in their development
to provide a meaningful figure, so cost is equated to fair value
for these purposes. On this basis, there is no material difference
between our stated net asset value and NNNAV.
Revaluation
The Group's investment properties were independently valued by
Jones Lang LaSalle as at 30 September 2011. In their opinion, the
open market value of the investment property portfolio was GBP139.2
million. The total portfolio increased in value by GBP401,000 over
the year.
Cashflow
The Group used GBP11.9 million cash in operating activities
(2010: GBP15.5 million generated), of which GBP14.7 million was
incurred as expenditure on development and trading properties.
The Group generated a further GBP13.5 million cash from the sale
of investment properties and spent GBP24.6 million on the purchase
of own shares resulting in an overall cash outflow of GBP31.6
million during the year.
Net Income From Property Activities
2011 2010
GBP'm GBP'm
Rental income 13.0 15.4
Direct property costs (3.0) (3.0)
------- -------
Rental surplus 10.0 12.4
------- -------
Sale of trading properties - 3.1
Direct costs of trading properties
sold - (3.2)
------- -------
Trading (deficit) - (0.1)
------- -------
Sale of investment properties 13.5 58.8
Cost of investment properties
sold (13.3) (53.3)
------- -------
Gain on sale of investment properties 0.2 5.5
------- -------
Total net income arising from
property activities 10.2 17.8
======= =======
Administrative Expenses
The administrative expenses for the year ended 30 September 2011
were GBP5.2 million, an increase of 73% from the previous year. The
primary reasons for this are the profit share payment of GBP2.6
million to the executive directors and a reduction of GBP0.9
million in fees incurred in respect of abortive transactions. The
majority of other costs arise as a result of the Group being quoted
on AIM with no significant changes in 2011.
Taxation
The tax charge for the year of GBP0.7 million on the pre-tax
profit of GBP1.8 million represents an effective tax charge of 39%
(2010: 4.0%). Tax is payable at the full UK corporation tax rate of
27% on net rent income after deduction of finance costs and
administrative expenses. The current year tax charge is higher
owing to the preference share interest being non-deductible. There
is no tax payable in respect of investment property capital gains
or any reduction uplift, which is the main reason for the low
effective tax rate in the prior year.
Financing
At 30 September 2011, the Group had cash of GBP35.7 million
increasing to GBP62.6 million in November 2011 following a drawdown
of GBP33 million from the Lloyds Banking Group facility. Following
this drawdown, the Group has unutilised facilities of GBP22
million.
The bank debt at 30 September 2011 was GBP33.7 million
increasing to GBP64.4 million in November 2011. This remains the
only debt within the Group and is non-recourse to the parent
company. The loan to value is 46% so there is capacity to raise
further funding should it be required. This excludes any further
finance that might be released from re-financing any cash funded
acquisitions.
The interest rate risk on the facility continues to be managed
by way of interest rate swaps. During November 2011, the Group
re-couponed its existing interest rate swaps from 2.38% to 1.33%,
having already reduced it during the year from 5.2%. This
significantly reduces the ongoing interest rate charge in the
income statement whilst retaining the hedging protection. The fair
value of these derivative financial instruments is provided for in
full on the balance sheet.
The finance costs for the year amounted to GBP3.9 million (2010:
GBP7.6 million), primarily consisting of GBP2.8 million bank loan
interest (2010: GBP4.3 million). Loan repayment costs fell from
GBP2.2 million to GBP48,000. Finance income amounted to GBP0.2
million (2010: GBP0.3 million) reflecting the low returns on short
term cash deposits.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2011
Note Year Ended Year Ended
30 Sep 11 30 Sep 10
GBP'000 GBP'000
Sales of properties - 3,100
Rental income 13,010 15,415
Revenue 13,010 18,515
----------- -----------
Direct costs of:
Sales of properties - 5,052
Rental income 2,965 2,955
Write-down of property inventory - (1,830)
Direct Costs 2,965 6,177
----------- -----------
Gross Profit 10,045 12,338
Gain in respect of acquisition 24 - 608
Income from trading investments 81 -
Share of results of joint ventures 13 (11) (10)
Gain on sale of trading investments 49 -
Gain on sale of investment properties 12 167 5,529
Movement on revaluation of investment properties
12 401 7,205
Other gains and losses 6 (17) (475)
Administrative expenses (5,207) (3,011)
----------- -----------
Operating Profit 3 5,508 22,184
Finance costs 7 (3,925) (7,586)
Finance income 7 178 280
----------- -----------
Profit Before Taxation 1,761 14,878
Taxation 8 (683) (637)
----------- -----------
Profit And Total Comprehensive Income For The
Year 1,078 14,241
----------- -----------
Attributable to:
- equity shareholders 1,078 14,219
- minority shareholders - 22
----------- -----------
1,078 14,241
=========== ===========
Basic earnings per share 10 0.98p 12.13p
Diluted earnings per share 10 0.98p 11.57p
All of the activities of the Group are classed as
continuing.
CONSOLIDATED Statement of Changes in Equity
For the year ended 30 September 2011
Attributable to the equity holders of the
Company
Share Share Merger Equity Treasury Retained Total Non-Controlling Total
Capital Premium Reserve Reserve Shares Earnings Interests Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Group
At 1 October
2009 5,809 123,094 7,640 1,254 - 23,126 160,923 1,122 162,045
Changes in
equity
for the year
ended
30 September
2010
Profit for the
year - - - - - 14,219 14,219 22 14,241
-------- ---------- -------- -------- --------- --------- --------- ---------------- ---------
Total
comprehensive
income for the
year - - - - - 14,219 14,219 22 14,241
Credit to equity
for equity
settled
share based
payment - - - - - 434 434 - 434
Issue of share
capital 56 896 - - - - 952 - 952
Issue of
preference
shares - - - 2 - - 2 - 2
Preference share
conversion 5 99 - (9) - - 95 - 95
Purchase of
non-controlling
interests - - - - - - - (1,124) (1,124)
At 30 September
2010 5,870 124,089 7,640 1,247 - 37,779 176,625 20 176,645
-------- ---------- -------- -------- --------- --------- --------- ---------------- ---------
Changes in
equity
for year ended
30 September
2011
At 1 October
2010 5,870 124,089 7,640 1,247 - 37,779 176,625 20 176,645
Profit for the
year - - - - - 1,078 1,078 - 1,078
-------- ---------- -------- -------- --------- --------- --------- ---------------- ---------
Total
comprehensive
income for the
year - - - - - 1,078 1,078 - 1,078
Dividend paid - - - - - (1,175) (1,175) - (1,175)
Preference share 6,586
conversion 299 6,884 - (597) - - 6,586 - -
Purchase of own
shares - - - - (24,649) - (24,649) - (24,649)
-
---------
At 30 September
2011 6,169 130,973 7,640 650 (24,649) 37,682 158,465 20 158,485
======== ========== ======== ======== ========= ========= ========= ================ =========
CONSOLIDATED BALANCE SHEET
At 30 September 2011
Note 30 Sep 2011 30 Sep 2010
GBP'000 GBP'000
Non-Current Assets
Property, plant and equipment 11 208 219
Investment properties 12 139,150 151,145
Investment in joint ventures 13 5,466 5,344
Goodwill 15 3,173 3,173
147,997 159,881
------------ ------------
Current Assets
Trading Investments 16 1,802 -
Development and trading properties 17 20,779 6,111
Trade and other receivables 18 2,614 2,230
Cash and cash equivalents 35,674 67,322
------------ ------------
60,869 75,663
------------ ------------
Total Assets 208,866 235,544
Current Liabilities
Trade and other payables 19 7,441 5,766
Preference shares 21 7,376 -
Tax liabilities 532 677
15,349 6,443
------------ ------------
Non-Current Liabilities
Bank loans 20 33,664 34,090
Preference shares 21 - 13,324
Derivatives 28 1,368 5,042
35,032 52,456
------------ ------------
Total Liabilities 50,381 58,899
------------ ------------
Net Assets 158,485 176,645
============ ============
Equity
Called up share capital 22 6,169 5,870
Share premium account 130,973 124,089
Merger reserve 7,640 7,640
Equity reserve 650 1,247
Treasury shares 23 (24,649) -
Retained earnings 37,682 37,779
------------ ------------
Equity Attributable to Equity Holders 158,465 176,625
Non-controlling interests 20 20
Total Equity 158,485 176,645
============ ============
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 2011
Year Ended Year Ended
30 Sep 11 30 Sep 10
GBP'000 GBP'000
Cash Flows From Operating Activities
Operating profit 5,508 22,184
Depreciation and amortisation 165 35
Share of results of joint ventures (11) (10)
Other gains and losses 39 (136)
Gain on sale of investment properties (167) (5,529)
Movement on revaluation of investment properties (401) (7,205)
Dividend income (81) -
Gain in respect of acquisition - (608)
Share based payment charge - 434
Cash Flows From Operations Before Changes In
Working Capital 5,052 9,165
Change in trade and other receivables (384) 16,845
Change in land, development and trading properties (14,668) 977
Change in trade and other payables 1,675 (6,326)
------------------ -----------
Cash (Used In) / Generated From Operations (8,325) 20,661
Finance costs (2,878) (6,457)
Finance income 178 280
Tax (paid) / received (828) 1,054
------------------ -----------
Cash Flows (Used In) / Generated From Operating
Activities (11,853) 15,538
------------------ -----------
Cash Flows From Investing Activities
Acquisition of investment properties (1,080) (44,763)
Acquisition of trading investments (2,277) -
Disposal of trading investments 455 -
Sale proceeds of investment properties 13,531 57,937
Investment in joint ventures (111) (243)
Acquisition of non-controlling interests - (76)
Purchase of plant and equipment (36) (99)
Leasehold improvements (8) (148)
Dividend income 81 -
------------------ -----------
Cash Flows Generated From Investing Activities 10,555 12,608
------------------ -----------
Cash Flows From Financing Activities
Bank loans repaid (834) (64,023)
Dividend paid (1,175) -
Issue of shares - 372
Purchase of own shares (24,649) -
Re-couponing of interest rate swaps (3,692) -
------------------ -----------
Cash Flows Used In Financing Activities (30,350) (63,651)
------------------ -----------
Net decrease in cash and cash equivalents (31,648) (35,505)
Cash and cash equivalents at 1 October 67,322 102,827
Cash and Cash Equivalents at 30 September 35,674 67,322
------------------ -----------
NOTES TO THE ACCOUNTS
For the year ended 30 September 2011
1. The financial information set out in this announcement is
abridged and does not constitute statutory accounts for the year
ended 30 September 2011 but is derived from those financial
statements. The financial information is not audited. The auditors
have reported on the statutory accounts for the year ended 30
September 2011, 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 2010 was derived from information extracted from the
annual report and accounts for that period, which was prepared
under IFRS and which has been filed with the UK Registrar of
Companies. The auditors have reported on those accounts, their
report was unqualified and did not contain statements under
sections 498 (2) or (3) of the Companies Act 2006.
3. Operating PROFIT
Operating profit is stated after charging:
Year ended Year ended
30 Sep 11 30 Sep 10
GBP'000 GBP'000
Audit services - fees payable to the parent
company auditors for the audit of the company
and the consolidated financial statements 24 23
----------- -----------
Other services - fees payable to the company
auditor for the audit of the company's subsidiaries
pursuant to legislation. 43 35
----------- -----------
Other services - fees payable to the company
auditor for tax services 15 11
----------- -----------
Depreciation of owned assets 28 31
----------- -----------
Lease amortisation 27 16
----------- -----------
Operating lease rentals - land and buildings 219 148
----------- -----------
Share based payments charge - 434
----------- -----------
Cost of inventories recognised as an expense - 5,052
----------- -----------
Write downs of inventories recognised as an
expense - (1,830)
----------- -----------
Movement on provision for doubtful debts 66 (183)
----------- -----------
4. PARTICULARS OF EMPLOYEES
The aggregate payroll costs of the above were:
Year ended Year ended
30 Sep 11 30 Sep 10
GBP'000 GBP'000
Wages and salaries 3,802 1,054
Social security costs 507 125
Pension costs - 20
---------- ----------
4,309 1,199
========== ==========
The average monthly number of persons, including executive
directors, employed by the Company during the year was seven (2010
- seven).
5. DIRECTORS' EMOLUMENTS
Year ended Year ended
30 Sep 11 30 Sep 10
GBP'000 GBP'000
Emoluments (excluding pension contributions) 3,550 899
========== ==========
Pension contributions - 20
========== ==========
Emoluments of highest paid director 1,492 280
========== ==========
Pension contributions of highest paid director - 20
========== ==========
Emoluments includes a GBP2.65 million payment under the Conygar
profit sharing plan (2010 - GBPnil). No (2010: one) director
received a contribution to a defined contribution pension scheme in
the year as part of a salary sacrifice arrangement.
The board of directors comprise the only persons having
authority and responsibility for planning, directing and
controlling the activities of the Group. In addition to the
emoluments disclosed above, the Group incurred share based payment
charges of GBPnil (2010: GBP434,000). The aggregate compensation of
key management personnel as defined by IAS 24 "Related Party
Disclosures" was therefore GBP3,550,000 (2010: GBP1,333,000).
6. OTHER GAINS AND LOSSES
Year ended Year ended
30 Sep 11 30 Sep 10
GBP'000 GBP'000
Movement in fair value of interest rate swaps (18) (611)
Movement in fair value of trading investments (70) -
Other provision 71 136
(17) (475)
================= ===========
7. FINANCE INCOME / COSTS
Year ended Year ended
Finance Income 30 Sep 11 30 Sep 10
GBP'000 GBP'000
Bank interest 178 280
========== ==========
Finance Costs
Bank loans (2,816) (4,266)
Loan repayment costs (48) (2,191)
Amortisation of arrangement fees (423) (339)
Notional interest on preference shares (638) (790)
---------- ----------
(3,925) (7,586)
========== ==========
8. TAXATION ON ORDINARY ACTIVITIES
(a) Analysis of charge in the year
Year ended Year ended
30 Sep 11 30 Sep 10
GBP'000 GBP'000
UK Corporation tax based on the results for
the period 519 589
Over provision in prior periods 164 (44)
----------- -----------
Current tax 683 545
Deferred tax - 92
683 637
=========== ===========
(b) Factors affecting tax charge
The tax assessed on the profit for the year
differs from the standard rate of corporation
tax in the UK of 27% (2010 - 28%)
Year ended Year ended
30 Sep 11 30 Sep 10
GBP'000 GBP'000
Profit before taxation 1,761 14,878
=========== ===========
Profit multiplied by rate of tax 476 4,166
Effects of:
Expenses not deductible for tax purposes 220 123
UK dividend income (24) -
Gain on acquisition not taxable - (170)
Under / (over) provision in prior periods 164 (44)
Share based payment not deductible for tax
purposes - 121
Schedule 23 deduction in respect of share
options - (86)
Deferred tax no longer required - 92
Gains not subject to UK taxation (45) (1,548)
Revaluation gains not taxable (108) (2,017)
----------- -----------
Tax charge for the year 683 637
=========== ===========
9. DIVIDENDS
The directors have recommended a final dividend of 1.1 pence per
ordinary share in respect of the year ended 30 September 2011 (2010
- 1 pence). This final dividend will amount to GBP1,124,000 (2010:
GBP1,175,000), if approved at the AGM. In accordance with IFRS, it
has not been included as a liability in the financial
statements.
10. EARNINGS PER SHARE
The calculation of earnings per ordinary share is based on the
profit after tax attributable to equity shareholders of
GBP1,078,000 (2010 - GBP14,219,000) and on the number of shares in
issue being the weighted average number of shares in issue during
the period of 109,602,651 (2010 - 117,203,241). The diluted
earnings per share calculation is based on profit for the year of
GBP1,717,000 (2010 - GBP15,009,000) and on 119,171,352 (2010 -
129,720,010) ordinary shares and is non-dilutive. The diluted
ordinary shares are calculated as follows:
2011 2010
No. No.
Basic weighted average number of shares 109,602,651 117,203,241
Diluting potential ordinary shares:
Employee share options 22,446 27,057
Preference shares 9,546,255 12,489,712
------------ ------------
Total diluted 119,171,352 129,720,010
============ ============
11. PROPERTY, PLANT AND EQUIPMENT
Premises Office Furniture Total
Lease Equipment & Fittings
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 October 2009 - 21 - 21
Additions 148 23 76 247
---------- ------------ ------------- ----------
At 30 September 2010 and 1
October 2010 148 44 76 268
Additions 8 17 19 44
---------- ------------ ------------- ----------
At 30 September 2011 156 61 95 312
---------- ------------ ------------- ----------
Depreciation / Amortisation
At 1 October 2009 - 14 - 14
Provided during the year 4 15 16 35
---------- ------------ ------------- ----------
At 30 September 2010 and 1
October 2010 4 29 16 49
Provided during the year 27 10 18 55
---------- ------------ ------------- ----------
At 30 September 2011 31 39 34 104
---------- ------------ ------------- ----------
Net book value at 30 September
2011 125 22 61 208
========== ============ ============= ==========
Net book value at 30 September
2010 144 15 60 219
========== ============ ============= ==========
12. INVESTMENT PROPERTIES
Freehold Long Reverse Total
Leasehold Lease Premiums
GBP'000
GBP'000 GBP'000 GBP'000
Valuation at 1 October 2009 141,357 7,805 2,427 151,589
Fair value with subsidiaries 12,593 32,170 - 44,763
Additions 75 (8) - 67
Disposals (49,447) (1,050) (1,760) (52,257)
Reverse lease premium amortisation - - (222) (222)
Movement on revaluation 4,119 3,086 - 7,205
--------- ----------- ---------------- ---------
Valuation at 30 September 2010 108,697 42,003 445 151,145
Additions 961 (2) 120 1,079
Disposals (13,365) - - (13,365)
Reverse lease premium amortisation - - (110) (110)
Movement on revaluation 593 (192) - 401
--------- ----------- ---------------- ---------
Valuation at 30 September 2011 96,886 41,809 455 139,150
========= =========== ================ =========
The historical cost of properties held at 30 September 2011 is
GBP211,359,000 (2010: GBP233,328,000).
The properties were valued by Jones Lang LaSalle, independent
valuers not connected with the Group, at 30 September 2011 at
market value in accordance with the Practice Statements contained
in the RICS Appraisal and Valuation Standards published by the
Royal Institution of Chartered Surveyors which conform to
international valuation standards.
The Group has pledged GBP105,085,000 (2010 - GBP112,310,000) of
investment property to secure Lloyds Banking Group debt facilities
and GBP34,065,000 (2010 - GBP35,235,000) to secure Capita debt
facilities. Further details of these facilities are provided in
note 28.
The property rental income earned from investment property,
which is leased out under operating leases amounted to
GBP13,010,000 (2010 - GBP15,099,000).
Gain on sale of investment properties 30 Sep 11 30 Sep 10
GBP'000 GBP'000
Gross proceeds on sales of investment properties 13,645 58,755
Costs of sales (113) (818)
---------- ----------
Net proceeds on sales of investment properties 13,532 57,937
Book value (13,365) (52,408)
---------- ----------
Gain on sale 167 5,529
========== ==========
13. INVESTMENTS
Joint Ventures
30 Sep 11 30 Sep 10
GBP'000 GBP'000
At 1 October 2010 5,344 5,087
Share of loss retained by joint ventures (11) (10)
Investment in joint venture 133 267
At 30 September 2011 5,466 5,344
========== ==========
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 Year ended
30 Sep 11 30 Sep 10
GBP'000 GBP'000
Assets
Current assets 5,485 5,348
----------- -----------
5,485 5,348
Liabilities
Current liabilities (19) (4)
----------- -----------
(19) (4)
Net Assets 5,466 5,344
=========== ===========
Operating loss (11) (10)
Finance income - -
----------- -----------
Loss before tax (11) (10)
Tax - -
----------- -----------
Loss after tax (11) (10)
=========== ===========
There are no contingent liabilities relating to the Group's
interest in joint ventures, and no contingent liabilities of the
ventures themselves.
14. FIXED ASSET INVESTMENTS
Subsidiaries
The principal companies in which the Company's interest is more
than 10% are as follows:
Company name Principal activity Country of registration % of Equity held
Conygar Holdings
Ltd Holding Company England 100%
Property trading
Martello Quays Limited and development England 100%
Conygar Wales PLC Holding Company England 60%*
Conygar Bedford Square Property trading England 100%*
Ltd and development
Conygar Properties Property trading England 100%*
Ltd and development
Conygar Developments Property trading England 100%*
Ltd and development
Conygar Strand Ltd Property trading England 100%*
and development
Conygar Hanover Street Property trading England 100%*
Ltd and development
The Advantage Property Property investment Guernsey 100%*
Income Trust Ltd
TAPP Property Ltd Property investment Guernsey 100%*
TOPP Holdings Ltd Property investment Guernsey 100%*
TAPP Maidenhead Ltd Property investment Guernsey 100%*
TOPP Bletchley Ltd Property investment Guernsey 100%*
TOPP Property Ltd Property investment Guernsey 100%*
Conygar Stena Line Property trading England 50%*
Ltd and development
CM Sheffield Ltd Property trading England 50%*
and development
Conygar Haverfordwest Property trading England 60%*
Ltd and development
Conygar Advantage
Limited Holding company Guernsey 100%
Lamont Property Acquisition Property investment Jersey 100%*
(Jersey) I Ltd
Lamont Property Acquisition Property investment Jersey 100%*
(Jersey) II Ltd
Lamont Property Acquisition Property investment Jersey 100%*
(Jersey ) III Ltd
Lamont Property Acquisition Property investment Jersey 100%*
(Jersey) IV Ltd
Lamont Property Acquisition Property investment Jersey 100%*
(Jersey) V Ltd
Lamont Property Acquisition Property investment Jersey 100%*
(Jersey) VII Ltd
* Indirectly owned
15. GOODWILL
30 Sep 11 30 Sep 10
GBP'000 GBP'000
At 1 October 2010 and 30 September 2011 3,173 3,173
========== ==========
The goodwill arose upon the acquisition of the non-controlling
interests in Martello Quays Limited and represents the excess of
the consideration over the fair value of the identifiable net
assets acquired. The goodwill has been wholly allocated to the
development project within Martello Quays Limited, which is
considered to represent a single income generating unit. The
development project is still at an early stage, but management have
prepared forecasts indicating that the net present value of the
project exceeds its carrying value when discounted at the Group's
weighted average cost of capital.
16. TRADING INVESTMENTS
GBP'000
At 1 October 2010 -
Additions 2,277
Disposals (405)
Loss on fair value revaluation (70)
--------
At 30 September 2011 1,802
========
17. PROPERTY INVENTORIES
30 Sep 30 Sep
11 10
GBP'000 GBP'000
Properties held for resale or
development 20,779 6,111
======== ========
18. TRADE AND OTHER RECEIVABLES
30 Sep 30 Sep
11 10
GBP'000 GBP'000
Trade receivables 878 2,286
Provision for doubtful debts (138) (245)
-------- --------
740 2,041
Amounts owed by group undertakings - -
Other receivables 74 132
Prepayments and accrued income 1,800 57
-------- --------
2,614 2,230
======== ========
The directors consider that the carrying amount of trade and
other receivables approximates to their fair value due to the short
term nature of these financial assets.
19. TRADE AND OTHER PAYABLES
30 Sep 30 Sep
11 10
GBP'000 GBP'000
Amounts owed to group undertakings - -
Social security and payroll taxes 413 45
Trade payables 687 1,300
Other payables - 69
Accruals and deferred income 6,341 4,352
-------- --------
7,441 5,766
======== ========
The directors consider that the carrying amounts of the trade
and other payables approximate to their fair value due to the short
period of repayment.
20. BANK LOANS
30 Sep 30 Sep
11 10
GBP'000 GBP'000
Bank loans 34,752 35,586
Debt issue costs (1,088) (1,496)
-------- --------
33,664 34,090
======== ========
Details of the financial liabilities are given in note 28.
21. PREFERENCE SHARES
30 Sep 30 Sep
11 10
GBP'000 GBP'000
Preference shares 7,376 13,324
======== ========
As part of the offer for The Advantage Property Income Trust
Limited, the Company issued 62,902,335 convertible preference
shares of GBP0.01 each of which 32,457,595 (2010: 62,313,045) were
outstanding at the year end. The preference shares are convertible
at any point into ordinary shares at the option of the preference
shareholder. The conversion rate is one ordinary share for five
preference shares. Any preference shares not converted are
redeemable for GBP0.25 each on 31 December 2011.
Although equity share capital at law, the preference shares are
classified as hybrid instruments under IFRS consisting of a
discounted debt element of GBP0.20 per share and an equity element
of GBP0.02 per share which
has been credited to an equity reserve. A notional interest
element is charged to the income statement over the period to
redemption.
The movement on the preference shares during the year was as
follows:
30 Sep 2011 30 Sep 2010
GBP'000 GBP'000
At 30 September 2010 13,324 12,612
Fair value of preference shares at date of issue - 18
Equity components - (2)
------------ ------------
Liability component at date of issue 13,324 12,628
Conversions to ordinary shares in the period
at carrying value (6,586) (95)
Notional interest charge 638 791
------------ ------------
At 30 September 2011 7,376 13,324
============ ============
22. SHARE CAPITAL
Authorised share capital:
30 Sep 11 30 Sep 10
GBP GBP
140,000,000 (2010- 140,000,000) Ordinary shares
of GBP0.05 each 7,000,000 7,000,000
150,000,000 (2010- 150,000,000) Preference shares
of GBP0.01 each 1,500,000 1,500,000
========= =========
Allotted and called up:
Amounts recorded as equity: 30 Sep 11 30 Sep 10
No GBP'000 No GBP'000
Ordinary shares of GBP0.05 each 123,362,223 6,169 117,391,133 5,870
============ ======== ============ ========
Amounts recorded as liability:
30 Sep 11 30 Sep 10
No GBP'000 No GBP'000
Preference shares of GBP0.01 each
(Note 21) 32,457,595 325 62,313,045 623
=========== ======== =========== ========
The Preference shares were issued in connection with the offer
for The Advantage Property Income Trust
Limited. They are convertible at any stage into Ordinary shares.
The conversion rate is one Ordinary
share for five Preference shares. Any Preference shares not
converted are redeemable for GBP0.25 each on 31 December 2011.
During the year, the Company issued 5,971,090 (2010: 90,240)
ordinary shares of GBP0.05 each in respect of conversions of
29,855,450 (2010: 451,200) preference shares. The carrying value of
the liability which was treated as consideration for these issues
was GBP6,885,000 (2010: GBP93,000) and GBP597,000 (2010: GBP9,000)
was transferred from equity reserve to reflect the equity elements
of the preference shares.
The resulting movement on the group's share capital during the
year was as follows:
Allotted and Called Up
Price
GBP No. GBP'000
At 30 September 2009 116,172,721 5,809
Share issue - 7 October
2009 1.140 350,880 18
Share issue - 20 October
2009 1.155 45,696 2
Share issue - 17 November
2009 1.100 18,049 1
Share issue - 26 November
2009 1.100 1,380 -
Share issue - 10 December
2009 0.595 (average) 625,000 31
Share issue - 14 December
2009 1.100 1,532 -
Share issue - 7 January
2010 1.200 106,416 6
Share issue - 7 January
2010 1.100 21,000 1
Share issue - 2 February
2010 1.100 1,316 -
Share issue - 10 February
2010 1.100 43,297 2
Share issue - 18 August
2010 1.100 3,846 -
------------ ---------
At 30 September 2010 117,391,133 5,870
Share issue - 28 October
2010 1.100 93,300 5
Share issue - 9 February
2011 1.100 3,000,000 150
Share issue - 15 April
2011 1.100 18,802 1
Share issue - 31 May
2011 1.100 4,400 -
Share issue - 6 June
2011 1.100 2,843,148 142
Share issue - 15 August
2011 1.100 11,440 1
------------ ---------
123,362,223 6,169
============ =========
23. TREASURY SHARES
In December 2010, the Group began a share buyback programme and
during the year ended 30 September 2011 purchased 21,237,981 shares
on the open market at a cost of GBP24,649,000. All of these shares
were held in treasury as at 30 September 2011.
24. ACQUISITIONS
On 24 November 2009, the Group acquired six Jersey-based
companies (the "Lamont portfolio") which hold seven freehold and
long leasehold buildings for a total cash consideration of
GBP44,763,000 million. Although effected through the acquisition of
separate legal entities, the Lamont portfolio does not in substance
constitute a business combination as defined by IFRS 3 and has
accordingly been treated as an asset purchase. The portfolio
consisted of:
-- Brennan House, Farnborough Aerospace Centre, Hampshire
-- Three units at Aker Village, Kirkhill, Aberdeen
-- Cambridge Road, Whetstone Business Park, Leicester (sold
during the year ended 30 September 2011)
-- Kelvin II, Kelvin Close, Birchwood Park, Warrington
-- Crystal Drive, Sandwell Business park, Oldbury, West Midlands
The annual rent roll was, at the time of acquisition,
approximately GBP4.41 million representing a net initial yield of
9.8%. The buildings comprise 562,000 sq ft of lettable space and
occupy some 47 acres.
The Group also acquired the remaining 2.15% of the issued share
capital of The Advantage Property Income Trust Limited ("TAP") and
thereby owned 100% of the issued share capital of the company by 8
January 2010.
The transaction was accounted for by the purchase method of
accounting:
30 Sep 2011 30 Sep 2010
GBP'000 GBP'000
Share of net assets acquired - 1,281
Non-controlling interests - -
Gain in respect of acquisition - (608)
------------- ------------
Total consideration - 673
============= ============
Satisfied by:
Ordinary shares at fair value - 580
Preference shares at fair value - 17
Cash - 76
Directly attributable costs - -
-------------
- 673
=============================================== ============
25. SHARE BASED PAYMENTS
No options were granted in either the current or prior year.
The Group and Company recognised total expenses of GBPnil (2010
- GBP434,000) in relation to equity settled share-based payment
transactions.
26. DEFERRED TAX ASSET
Deferred tax assets are recognised in the accounts as
follows:
30 Sep 11 30 Sep 10
Provided Not Provided Provided Not Provided
GBP'000 GBP'000 GBP'000 GBP'000
Share based payments - 2 - 2
Losses - 1,464 - 1,464
---------- ------------- --------- -------------
- 1,466 - 1,466
================================= ============= ========= =============
The deferred tax asset in respect of the trading losses carried
forward has not been recognised on the basis that it is uncertain
when taxable profits will be available for offset.
Movements on the recognised assets are as follows:
Share Based Payments
GBP'000
At 1 October 2009 92
Debit to profit and loss account (92)
---------------------
At 30 September 2010 -
=====================
At 1 October 2010 -
Debit to profit and loss account -
At 30 September 2011 -
=====================
27. COMMITMENTS
Group as lessee:
At 30 September 2011, the Group had outstanding commitments for
future minimum lease payments under non-cancellable operating
leases, which fall due as follows:
30 Sep 11 30 Sep 10
GBP'000 GBP'000
Within one year 126 187
In the second to fifth years inclusive 503 503
--------- ---------
629 690
========= =========
Group as lessor:
In addition, the Group holds retail, office, industrial and
leisure buildings as investment properties which are let to third
parties. These are non-cancellable leases and the income profile
based upon the unexpired lease length was as follows:
30 Sep 30 Sep
11 10
GBP'000 GBP'000
Less than one year 11,397 13,950
Between one and five years 36,112 36,791
Over five years 21,560 27,269
-------- --------
69,069 78,010
======== ========
At 30 September 2011, the Group was committed to complete a
purchase of land at Clun Bach, Fishguard,
provided a number of conditions precedent relating to the
receipt of suitable planning consents are met. A deposit of
GBP36,500 was paid on 4 August 2010. The acquisition was completed
in November 2011.
28. FINANCIAL INSTRUMENTS
The interest rate profile of the Group bank borrowings at 30
September 2011was as follows:
Interest 30 Sep 2011 30 Sep 2010
Rate Maturity GBP'000 GBP'000
Lloyds Banking Group
(1) LIBOR +2% 2 - 5 years 20,150 20,150
Capita (2) 5.24% 2 - 5 years 14,602 15,435
34,752 35,585
============ ============
(1) Senior bank facility repayable 27 January 2015. Margin is on
sliding scale from 2% to 3.5% subject to loan to value
covenants.
(2) Interest rate fixed until 18 January 2013.
Loans
As at 30 September 2011, TAPP Property Limited maintained a
facility with the Lloyds Banking Group of up to GBP78,000,000
(2010: GBP78,000,000) under which GBP20,150,000 (2010 -
GBP20,150,000) had been drawn down. This facility is repayable on
or before 27 January 2015 and is secured by fixed and floating
charges over the assets of the TAPP Property Limited group and the
Lamont companies. The facility is subject to a maximum loan to
value covenant of 70% and an interest cover ratio covenant of
150%.
As at 30 September 2011, TOPP Property Limited maintained a
facility with Capita of GBP35,267,000 (2010: GBP35,267,000) of
which GBP14,601,000 (2010 - GBP15,435,000) had been drawn down.
This facility is repayable on or before 18 January 2013 and is
secured by fixed and floating charges over the assets of the TOPP
Property Limited group. The facility is subject to a maximum loan
to value covenant of 70% and an interest cover ratio covenant of
135%.
Fair Values of Financial Assets and Financial Liabilities
The fair values of all the Group's financial assets and
liabilities are set out below:
Book Value Book Value Fair Value Fair Value
30 Sep 2011 30 Sep 2010 30 Sep 30 Sep
2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
Financial Assets
Cash 35,674 67,322 35,674 67,322
Financial Liabilities
Floating rate borrowings 20,150 20,150 20,150 20,150
Fixed rate borrowings 14,601 15,435 14,235 15,250
Interest rate swaps 1,368 5,042 1,368 5,042
Preference share liability 7,376 13,324 7,376 13,324
Derivative Financial Instruments
Market Value Market Value
at 30 Sep at 30 Sep
Protected Rate Expiry 2011 2010
%
GBP'000 GBP'000
GBP21.8 million (2010: GBP21.8 2.38 (2010:
million) swap 5.135) Feb 2015 (865) (3,182)
GBP12.7 million (2010: GBP12.7 2.38 (2010:
million) swap 5.15) Feb 2015 (503) (1,860)
------------- -------------
(1,368) (5,042)
============= =============
The valuation of the swaps was provided by JC Rathbone
Associates Limited, is a tier 2 valuation and represents the change
in fair value since execution. The fair value is derived from the
present value of the future cash flows discounted at rates obtained
by means of the current yield curve appropriate for those
instruments.
The fair value of the Group's trade debtors and other
receivables and trade creditors and other payables is not
considered to vary from historic cost due to the short term nature
of these financial assets and liabilities. As such, they are
excluded from the disclosure.
29. Events Since the Balance Sheet Date
Since 30 September 2011, we completed the acquisition of
Fishguard Lorry Stop (otherwise referred to as land at Clun Bach,
Fishguard) for GBP330,000.
In November 2011, we have taken an option to purchase a site at
Aberystwyth Park Lodge, Aberystwyth, which, in conjunction with a
local developer and Sainsbury's, we hope to develop into a food
retail supermarket together with petrol filling station and car
park.
On 11 November 2011, we drew down GBP33 million of our Lloyds
Banking Group facility taking the outstanding loan amount on that
facility to GBP49.79 million.
The Report and Accounts for the year ended 30 September 2011
will be posted to shareholders shortly and copies may be obtained
for free of charge for at least one month following their posting
by writing to The Secretary, The Conygar Investment Company PLC,
Fourth Floor, 110 Wigmore Street, London, W1U 3RW. They are also
available on the website www.conygar.com.
The Company's Annual General Meeting will be held at 3.00pm on
Thursday, 5 January 2012 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. 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.
GLOSSARY OF TERMS
AIM The AIM market of the London Stock Exchange PLC
EPRA European Public Real Estate Association
EPRA EPS A measure of earnings per share designed by EPRA to
present underlying earnings from core operating activities
EPRA NAV A measure of net asset value designed by EPRA
presenting net asset value excluding the effects of fluctuations in
value in instruments that are held for long term benefit, net of
deferred tax
EPS Earnings per share, calculated as the earnings for the
period after tax attributable to members of the parent Company
divided by the weighted average number of shares in issue in the
period
Equivalent Yield The constant capitalisation rate which, if
applied to all cash flows from an investment property, equates to
the market rent
Net Initial Yield Annual net rents expressed as a percentage of
the investment property valuation
NAV Net asset value
Reversionary Yield The anticipated yield which the Net Initial
Yield will rise to once the rent reaches the ERV
Conygar The Conygar Investment Company PLC
TAP The Advantage Property Income Trust Limited
Loan to Value The amount of borrowing divided by the value of
investment property expressed as a percentage
PBT Profit before taxation
UK United Kingdom
ERV Estimated Rental Value being the open market rent as
estimated by the Company's valuers
NNNAV or Triple Asset Value A measure of net asset value taking
into account asset revaluations, the fair value of debt and any
associated tax effects
Passing Rent The annual gross rental income excluding the
effects of lease incentives
Tenant Break An option in a lease for a tenant to terminate that
lease early
Lease Re-gear A mutual re-negotiation of a lease between
landlord and tenant prior to a lease expiry date
Average Unexpired The average unexpired lease term expressed in
years weighted by rental income
Lease Length
Rent-Free Period A lease incentive offering the tenant a period
without paying rent
Vacancy Rate The estimated rental value of vacant properties
expressed as a percentage of the total estimated rental value of
the portfolio
This information is provided by RNS
The company news service from the London Stock Exchange
END
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