Conygar Investment Company (LON: CIC) has today provided preliminary results for the year ended 30th September 2019.
Summary
· Net asset value per share 178.2p at 30 September 2019.
· Resolution passed to grant planning permission for our mixed-use scheme in Nottingham City Centre.
· Construction of the Lidl store at Cross Hands, Carmarthenshire completed.
· Completion of the construction and sale in October 2019 of B&M store in Ashby-de-la-Zouch, Leicestershire.
· Disposal of the Premier Inn at Parc Cybi, Anglesey completed in March 2019.
· Sale of Selly Oak, Birmingham agreed subject to planning permission.
· Write down of land value at Haverfordwest, Pembrokeshire by £18.6 million, reflecting the weak housing market.
· Bought back 3.24 million shares (5.4% of ordinary share capital) at an average price of 172.3 pence per share.
· Total cash available of £39.9 million and no borrowings.
Summary Group Net Assets as at 30 September 2019.
| Per Share | ||
| £’m | p | |
| Properties | 61.4 | 108.7 |
| Cash | 39.9 | 70.6 |
| Other Net Liabilities | (0.6) | (1.1) |
| Net Assets | 100.7 | 178.2 |
Robert Ware, Conygar Investment Company Chief Executive, commented:
“The disposals of the assets at Parc Cybi, Anglesey, and Ashby-de-la-Zouch, Leicestershire, and the conditional sale of our property at Selly Oak, Birmingham, emphasise the Group’s desire to realise value when opportunities arise. Funds raised from these disposals will be recycled into our other projects.
In spite of the current political uncertainty, the Group is well placed to deliver the existing developments and to take advantage of any market volatility we could see in the coming months, with cash of £39.9 million and no borrowings.”
Chairman’s & Chief Executive’s Statement
Results Summary
We present the Group’s results for the year ended 30 September 2019.
Net asset value per share was 178.2p (2018: 201.3p) and the loss before tax for the year was £13.9 million (2018: £3.8 million).
The main reason for the loss before tax was the write down of £18.6 million at Haverfordwest, Anglesey, which was announced in the interim results for the six months ended 31 March 2019. As reported in May 2019, we are continuing with our plans to build the first phase of houses at this site but the demand from major housebuilders and potential homeowners for this land has been much lower than expected. These market conditions, along with the increasing costs of construction, have resulted in us re-evaluating the project and have given rise to the write-down.
Despite this negative, the Group has made good progress on the rest of the portfolio and we shall briefly outline the highlights here.
At our retail park in Cross Hands, Carmarthenshire, we completed the construction of the 23,000 square foot Lidl food store in September 2019 and accordingly, the 25 year lease with Lidl UK GmbH commenced. In October 2019, we also exchanged an agreement for lease with Union Burger Limited to construct a 2,750 square foot Burger King restaurant and drive through. Construction will commence in January. Lettings at the retail park have been strong with 90,000 square feet now tenanted and only 10,000 square feet available to let. As the park is almost fully let, a third party valuation has been undertaken and this has resulted in a surplus of £4.8 million in the year. This surplus is a significant positive when one considers the current travails of the retail sector and underlines how there is still opportunity to create value in this sector, provided the fundamentals are sound.
In October 2019, we completed the construction of the 20,000 square foot store and the 7,500 square foot garden centre at Ashby-de-la-Zouch, Leicestershire, both of which are let to B&M Retail Limited. This asset was forward sold and the Group received net proceeds of £4.2 million after the year end.
We also completed the sale of our 80 bedroom hotel, that had been let to Premier Inn Hotels Limited at Parc Cybi, Anglesey, in March 2019 and the Group received net proceeds of £6.9 million, representing a net initial yield of 4.7%.
In April 2019, we exchanged a conditional contract with a specialist provider of student accommodation to sell our industrial property in Selly Oak, Birmingham. This contract is conditional on the purchaser obtaining planning permission for its redevelopment and is also conditional on us managing the handover of the existing property with vacant possession. We expect the purchaser to submit a detailed planning application in the coming months.
As announced in April 2019, a resolution to grant planning permission was passed for our 37 acre mixed use scheme in Nottingham City Centre. We have worked closely with Nottingham City Council since our acquisition of the site in December 2016 to design a scheme which will regenerate this area of the City Centre that has been largely unused for over twenty-five years. This phased mixed use scheme will consist of offices, student housing, private residential and build to rent flats, a hotel and an associated food and beverage offering and potentially, an entertainment and leisure venue, which could have various uses. We are encouraged by the discussions we have had with potential occupants for all aspects of the scheme following the resolution to grant the planning permission and we are working with the Council to agree our section 106 obligations as quickly as possible. This will enable us to proceed with the first phase of this exciting development.
Dividend
The Board recommends that no dividend is declared in respect of the year ended 30 September 2019. More information on the Group’s dividend policy can be found within the Strategic Report.
Share Buy Back
During the year, the Group acquired 3,239,000 ordinary shares representing 5.4% of its ordinary share capital, at an average price of 172.3p per share at a cost of £5.6 million. As a result of the buy backs, net asset value per share has been enhanced by 1.7 pence per share. The Group will seek to renew the buy back authority of 14.99% of the issued share capital of the Company at the forthcoming AGM. We consider it to be a vital capital management tool and believe it is prudent to have maximum flexibility given the level of uncertainty we see in the wider economy.
Board Changes
Michael Wigley, who joined the Board in October 2003 when the Company floated on the Stock Exchange, will retire at the end of September 2020. Michael’s contribution throughout his tenure has been exemplary and we will miss his wise counsel. We anticipate announcing an alternative director at the Annual General Meeting.
Outlook
The disposals of the assets at Parc Cybi, Anglesey, and Ashby-de-la-Zouch, Leicestershire and the conditional sale of our property at Selly Oak, Birmingham, emphasise the Group’s desire to realise value when opportunities arise. Funds raised from these disposals will be recycled into our other projects.
In spite of the current political uncertainty, the Group is well placed to deliver the existing developments and to take advantage of any market volatility we could see in the coming months, with cash of £39.9 million and no borrowings.
N J Hamway – Chairman
R T E Ware – Chief Executive
