10th Dec 2007 07:00
Conygar Investment Company PLC(The)10 December 2007 10 December 2007 The Conygar Investment Company PLC Preliminary Results for the year ended 30 September 2007 The Conygar Investment Company PLC, the property trading and developmentcompany, announces its results for the year ended 30 September 2007. Highlights • Significant growth in net asset value and profit before tax • Pro forma NAV increased by 45% to 170p per share from 117p at 30 September 2006 • Two successful share placings raised £42.3 million net of expenses • Entered into a joint venture with Stena Line Ports in order to develop Holyhead Waterfront • Submitted planning application on the £100 million Pembroke Dock Waterfront marina development proposal • Group has £38.1 million of cash at the year end. All bank debt repaid • Properties valued at £36.9 million at year end • Property trading continued apace with the sale of £70.6 million of properties Enquiries: The Conygar Investment Company PLCRobert Ware: 020 7408 2322Peter Batchelor: 020 7408 2322 Oriel Securities Limited (Nominated Adviser)Malcolm Strang: 020 7710 7600Michael Shaw: 020 7710 7600 About Conygar • Conygar is a trading and development group dealingprimarily in UK commercial property • The group aims to invest in property assets when we can addsignificant value using our property management, development and transactionstructuring skills • A major focus for the group is the proposed Pembroke Dockmarina scheme. Other exciting port and marina opportunities are also beingactively pursued including a joint venture with Stena Line Ports to developHolyhead Waterfront • Conygar was formed in 2003 by Chief Executive, Robert Waretogether with Finance Director, Peter Batchelor and Property Director, StevenVaughan • Conygar raised £4.4 million upon admission to AIM in 2003and has subsequently raised £53.1 million through the issue of new ordinaryshares • Further information can be found at www.conygar.com Chairman's & Chief Executive's Statement Results We are pleased to be able to report another excellent year for the Group withsignificant progress made on all fronts. Net asset value per share increased 83%to 162p as at 30 September 2007 from 88p the previous year. Net asset value pershare on a pro forma basis is 170p compared to 117p at 30 September 2006. Profitbefore tax for the year ended 30 September 2007 increased to £8,173,000 from£1,037,000 the previous year. Having raised some £42.3 million through twosuccessful share placings, our market capitalisation is now over £70 million.With £38.1 million of cash and no indebtedness we are well placed to furtherexpand the business and take advantage of the opportunities which willundoubtedly arise in an increasingly difficult economic environment. Conygar Stena Line Limited In October 2007, we were pleased to announce the creation of a joint venture,Conygar Stena Line Limited, with Stena Line Ports Limited ("Stena") in order todevelop surplus land previously owned by Stena at Holyhead, Anglesey, Wales. Itis intended that the land, which has in excess of half a mile of water frontage,will be redeveloped as a mixed use scheme incorporating residential, leisure,tourist and retail facilities together with an expanded marina development withassociated commercial and marine engineering elements. We believe this will bean exciting regeneration scheme which will complement our multi-use PembrokeDock Waterfront development and further continue our strategy of expansion intowaterfront projects. We have committed £7 million to the joint venture company comprising £4.9million of additional and adjacent development land already acquired and £2.1million in cash which will fund the planning application and other associatedcosts. Stena will contribute its land in exchange for 50% of the joint venture.Work has already commenced on the project plans and planning applicationprocess. Trading Properties In October 2006, we announced the acquisition of eight properties in BuckinghamStreet, London WC2 for £33.91 million. The Royal Bank of Scotland plc provided a non-recourse structured facility of £29 million and the Group invested £3.46million of the equity which entitles us to 70% of any profit realised. Theproperties comprise approximately 54,000 square feet of freehold single andmulti-let office accommodation. To date, three properties have been sold for atotal consideration of £13.81 million. We are currently in the process ofre-letting a number of the remaining properties and undertaking somerefurbishment work prior to sale. With regard to Bedford Square, we can report that all but one of the propertieshave now been sold for a total of £66.97million representing a gross surplus of£11.71million over cost in eighteen months. All associated bank debt has beenrepaid. Pembroke Dock A major focus for the Group is the proposed Pembroke Dock Waterfront marinascheme. This is a £100 million development of the Pembroke Dock Waterfront inWest Wales. It is a partnership between Conygar, Welsh based developers andVinci Project Development Limited (part of the Vinci Group). Following acompetitive tender, the Conygar group was appointed as developer by a clientgroup comprising Pembrokeshire County Council, the Welsh Assembly Government,the Crown Estate and The Milford Haven Port Authority. Whilst we are pleased to report that most of the planning issues have beensuccessfully dealt with, it is somewhat frustrating that we are unable to reportthat our planning application has been approved. We are not aware of any majorissues outstanding and remain confident of a positive result notwithstanding thelengthy planning process. Financing In October 2006, we placed 1,000,000 ordinary shares at 140p per share raising£1.39 million after expenses and in January 2007, we placed 20,498,500 ordinaryshares at 200p per share raising £40.88 million after expenses. These placingsbroadened the shareholder base, provided funding for Pembroke Dock waterfrontand will enable us to pursue other opportunities. As at 30 September 2007, the Group had cash of £38.12 million and noindebtedness. The disposals during the year together with funds raised enabledus to repay £76.43 million of bank debt. The balance sheet is looking robust andprovides an excellent platform to move forward. International Financial Reporting Standards ("IFRS") This is the first year that the Group has prepared its financial statementsunder IFRS. Pro-forma Net Asset Value As a trading Group, properties are carried at the lower of cost and netrealisable value. In order to show a clearer position of our value we havecalculated a pro-forma net asset value using a Knight Frank LLP valuation of theportfolio. Knight Frank LLP have valued the remaining trading properties at£32.28 million and the land held for development at £4.70 million totalling£36.98 million. NAV Pence Per £'000 ShareNet asset value per accounts at 30 September 2007 64,968 161.8Group share of increase after tax in property valuation 3,500 8.7 ----------- ----------Pro-forma net asset value at 30 September 2007 68,468 170.5 ----------- ---------- Pembroke Dock Waterfront remains valued at cost but will be revalued at theperiod end following the outcome of the planning application. HolyheadWaterfront development will be valued every six months. Strategy and The Future Our strategy for the next year: 1. To finalise the planning permissions at Pembroke Dock and to commence development; 2. To commence the planning permission process at Holyhead; 3. To complete the realisation of the Bedford Square and Buckingham Street trading assets; 4. To carry on appraising our continuing pipeline of transactions including ports, marinas and general property opportunities; and 5. To raise additional finance as necessary. In terms of progress, the Bedford Square portfolio now consists of one propertywhilst three out of the eight Buckingham Street properties have been sold. Theplanning application for Pembroke Dock Waterfront continues to make progressalbeit at a frustrating pace. The joint venture with Stena for HolyheadWaterfront development is the culmination of many months work but is potentiallymuch larger than Pembroke Dock. Finally, we have raised a considerable amount ofnew finance which puts us on an extremely secure footing. Prospects The sub-prime credit crisis in the US seems to have been the catalyst forsignificant credit and property market concerns which are ongoing. As of todaythese markets are extremely volatile with numerous stories, reported andhearsay, depicting a significant crash. History shows that such prophesies canbe self-fulfilling and accordingly we believe that it will take several monthsto quantify the true extent of the crisis. However, we have an excellentpipeline of opportunities and are well positioned financially to take advantageof the situations that will undoubtedly arise from the current credit andproperty market difficulties. As ever, we shall keep shareholders informed ofprogress. N J Hamway R T E WareChairman Chief Executive CONSOLIDATED INCOME STATEMENT For the year ended 30 September 2007 Year Ended Year Ended 30 Sep 07 30 Sep 06 £'000 £'000 Sales of properties 70,603 9,225Rental income 3,492 831 --------- ---------Revenue 74,095 10,056 --------- --------- Direct costs of:Sales of properties 60,747 7,664Rental income 517 28 --------- ---------Direct Costs 61,264 7,692 --------- --------- Gross Profit 12,831 2,364Income from trading investments 233 -Share of results of joint ventures 12 13Other gains and losses 137 -Administrative expenses (3,149) (465) --------- ---------Operating Profit 10,064 1,912Finance costs (3,613) (1,232)Finance income 1,722 357 --------- --------- Profit Before Taxation 8,173 1,037Taxation (2,557) (353) --------- --------- Profit For The Period 5,616 684 ========= =========Attributable to:- equity shareholders 5,616 684- minority shareholders - - ========= =========Basic earnings per share 16.94p 4.72pDiluted earnings per share 14.36p 4.50p All of the activities of the Group are classed as continuing. Statement of Changes in Equity For the year ended 30 September 2007 Attributable to the equity holders of the Company Share Capital Share Premium Retained Total Minority Total Earnings Interests Equity £'000 £'000 £'000 £'000 £'000 £'000Group At 1October 486 4,427 319 5,232 - 5,2322005Profitfor the - - 684 684 - 684periodSharebased - - 135 135 - 135paymentIssue ofshare 446 9,909 - 10,355 - 10,355capitalShareissue - (42) - (42) - (42)costsOther - - - - 5 5movement -------- --------- -------- ------- --------- ---------At 30September 932 14,294 1,138 16,364 5 16,3692006 ======== ========= ======== ======= ========= ========= At 1October 932 14,294 1,138 16,364 5 16,3692006Profitfor the - - 5,616 5,616 - 5,616periodSharebased - - 710 710 - 710paymentIssue ofshare 1,075 41,322 - 42,397 - 42,397capitalShareissue - (124) - (124) - (124)costs -------- --------- -------- -------- --------- ---------At 30September 2,007 55,492 7,464 64,963 5 64,9682007 ======== ========= ======== ======== ========= ========= CONSOLIDATED BALANCE SHEET At 30 September 2007 30 Sep 2007 30 Sep 2006 £'000 £'000Non-Current AssetsProperty, plant and equipment 11 7Investment in joint ventures 91 445Deferred tax assets 243 - --------- --------- 345 452 Current AssetsDevelopment and trading properties 30,848 49,988Trade and other receivables 2,850 3,536Derivative financial instruments 137 -Cash and cash equivalents 38,123 13,001 --------- --------- 71,958 66,525 --------- ---------Total Assets 72,303 66,977 Current LiabilitiesTrade payables and other payables 5,535 2,827Tax liabilities 1,800 353 --------- --------- 7,335 3,180 Non-Current LiabilitiesBorrowings - 47,428 --------- --------- - 47,428 --------- ---------Total Liabilities 7,335 50,608 --------- --------- Net Assets 64,968 16,369 ========= ========= EquityCalled up share capital 2,007 932Share premium account 55,492 14,294Retained earnings 7,464 1,138 --------- --------- Equity Attributable to Equity Holders 64,963 16,364Minority interests 5 5 --------- ---------Total Equity 64,968 16,369 ========= ========= Net Assets Per Share 162p 88p CONSOLIDATED CASH FLOW STATEMENT For the year ended 30 September 2007 Year ended 30 Year ended 30 Sep 07 Sep 06 £'000 £'000Cash Flows From Operating ActivitiesOperating profit 9,927 1,912Depreciation 5 2Share of results of jointventures (12) (13)Share based payment charge 710 135 ---------- ---------Cash Flows From OperationsBefore Changes In WorkingCapital 10,630 2,036Change in trade and otherreceivables 549 (3,640)Change in land, developments andtrading properties 19,140 (49,988)Change in trade and otherpayables 3,398 2,002 ---------- ---------Cash Used In / Generated FromOperations 33,717 (49,590)Finance costs (2,897) (452)Finance income 1,709 357Dividends from joint ventures 200 200Tax paid (1,352) - ---------- ---------Cash Flows From OperatingActivities 31,377 (49,485) ---------- ---------Cash Flows From Investing ActivitiesPurchase of plant and equipment (9) (5) ---------- ---------Cash Flows From InvestingActivities (9) (5) ---------- --------- Cash Flows From Financing ActivitiesIssue of shares 42,397 10,355Issue costs of shares (124) (42)Borrowings drawn down 29,000 52,750Issue costs of borrowings (205) (471)Borrowings repaid (76,428) (4,940)Exit fees paid (886) - ---------- ---------Cash Flows From FinancingActivities (6,246) 57,652 ---------- --------- Net increase in cash and cashequivalents 25,122 8,162Cash and cash equivalents at 1October 13,001 4,839 ---------- ---------Cash and Cash Equivalents at 30September 38,123 13,001 ---------- --------- TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS") This is the first year that the Group has presented its accounts under IFRS.There were no adjustments required to the transition balance sheet at 1 October2005. The major adjustments from UK GAAP are as follows: Notes Year ended 30 Year ended Sept 2007 30 Sept 2006 £'000 £'000Equity under UK GAAP 64,591 16,364 --------- ---------IFRS Adjustments:Fair value of interest ratecaps b) 137 -Lease incentives and lettingcosts c) 22 - --------- --------- IFRS Adjustments 159 - --------- --------- Equity under IFRS 64,750 16,364 ========= ========= Notes Year ended 30 Sept 2007 Year ended £'000 30 Sept 2006 £'000Profit after tax under UK GAAP 5,954 819 --------- --------- IFRS Adjustments:Share based payments a) (497) (135)Fair value of interest ratecaps b) 137 -Lease incentives and lettingcosts c) 22 - --------- --------- IFRS Adjustments (338) (135) --------- --------- Profit after tax under IFRS 5,616 684 ========= ========= The principal reasons for the adjustments shown in the reconciliations betweenUK GAAP and the IFRS are: a) Under IFRS share based payments to directors and employees such as under theGroup's share option scheme are required to be measured at fair value andrecognised as an expense in the income statement with an equivalent increase inequity. b) Under IFRS the fair value of interest rate derivative instruments is included in the balance sheet and, when the instrument is not considered to bean effective hedge, changes in fair value are included in the income statement. c) Under UK GAAP, the Group wrote off letting costs when incurred and rent freeperiods are generally allocated over the period to the first rent review. UnderIFRS rent free periods are letting costs are allocated over the period untilthe first break option or, if it is reasonable certain that the break option will not be exercised, over the full lease term Notes: 1. This financial information set out in this announcement is abridged and doesnot constitute statutory accounts for the year ended 30 September 2007 but isderived from those draft financial statements. The financial information is notaudited. The statutory accounts for the year ended 30 September 2007 will befinalised on the basis of the financial information presented by the directorsin this preliminary announcement and will be delivered to the Registrar ofCompanies following the Company's annual general meeting. The financialinformation has been prepared using the recognition and measurement principlesof IFRS. 2. The comparative financial information for the year ended 30 September 2006was derived from information extracted from the annual report and accounts forthat period, which was prepared under UK GAAP and which has been filed with theUK Registrar of Companies. The auditors have reported on those UK GAAP 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 basisof a profit after tax of £5,616,000 (2006 - £684,000) and on the number ofshares in issue being the weighted average number of shares in issue during theperiod of 33,152,521 (2006 - 14,491,437). The weighted average number of shareson a fully diluted basis was 39,108,698 (2006 - 15,203,895) which assumes theexercise of options over 5,956,177 (2006 - 712,458) shares at the start of theperiod. No adjustment has been made in respect of the exercise of options whichwere anti-dilutive throughout the period. 4. The directors are not proposing that a dividend payment be made. 5. The Report and Accounts for the year ended 30 September 2007 will be postedto shareholders shortly and copies may be obtained free of charge for at leastone month following their posting by writing to The Secretary, The ConygarInvestment Company PLC, Fourth Floor, Bond House, 19-20 Woodstock Street, LondonW1C 2AN. They are also available on the website www.conygar.com. 6. The Company's Annual General Meeting will be held at 11.00 am on Wednesday,30 January 2008 at the offices of the Wragge & Co LLP, 3 Waterhouse Square, 142Holborn, London EC1N 2SW. The directors of Conygar accept responsibility for the information contained inthis announcement. The best of the knowledge and belief of the directors ofConygar (who have taken all reasonable care to ensure that such is the case) theinformation contained in this announcement is in accordance with the facts anddoes not omit anything likely to affect the import of such information. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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