Conygar Investment : 27/11/2018 -  2018_Annual_Report.pdf

The Conygar Investment

Company PLC

Report And Accounts 30 September 2018

YEAR ENDED 30 SEPTEMBER 2018

SUMMARY

• ● Net asset value per share 201.3p.

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

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

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

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

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

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

• ● Sold all 26.3 million Regional REIT shares for £25.5 million.

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

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

Summary Group Net Assets as at 30 September 2018

Registered in England No. 04907617

CONTENTS

DIRECTORS AND ADVISERS

The Board of Directors

N J Hamway (Non-Executive Chairman)

R T E Ware (Chief Executive)

R H McCaskill (Finance Director)

F N G Jones (Property Director)

C J D Ware (Property Director)

M D Wigley (Non-Executive Director)

Company Secretary

R H McCaskill

Registered Office

Fourth Floor 110 Wigmore Street London W1U 3RW

Registered Number 04907617

Websitewww.conygar.com

CHAIRMAN'S & CHIEF EXECUTIVE'S STATEMENT

Results

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

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

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

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

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

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

Progress

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

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

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

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

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