22 November 2022

THE CONYGAR INVESTMENT COMPANY PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2022

SUMMARY

·    Net asset value ("NAV") increased by £10.5 million to £124.6 million (208.9p per share; 2021: 217.4p per share), comprising a £10.5 million uplift from the placing of 7,138,998 of the Company's own shares net of a £53,000 loss in the year.

·    NAV per share decreased by 8.5p per share as a result of issuing the placing shares.

·    Total cash deposits of £17.4 million (29.1p per share).

·    No debt and no borrowings.

·    A further £23.6 million was invested in The Island Quarter, Nottingham during the year, to progress the various phases of this mixed-use development. This has resulted in a valuation of £93 million, as at 30 September 2022, equating to approximately £2.5 million per acre.  

·    Development completed, and trading commenced in September 2022, for the first phase of The Island Quarter comprising the restaurant and events venue at 1 The Island Quarter.

·    Construction commenced on the 693 bed The Island Quarter student accommodation development planned for completion in the summer of 2024.

·    Resolution passed by Nottingham City Council in May 2022 to grant planning consent for a further phase of The Island Quarter development comprising 247 build to rent apartments, 223 hotel rooms and 400 co-working desks, as well as a food and beverage provision.

·    Disposal of the retail park at Cross Hands, Carmarthenshire for £18.28 million to realise a £0.53m surplus over the 30 September 2021 valuation and a £0.38m profit for the year after sales costs.  

·    Disposal of two development sites at Selly Oak, Birmingham and Parc Cybi, Holyhead completed in the year, realising a combined net profit of £3.64 million.

·    A further planning application was submitted in October 2021 for the proposed waterfront development in Holyhead, Anglesey, supplementing the outline consent previously granted in 2014, which includes a 250-berth marina, 259 townhouses and apartments and associated retail and public realm.

Group net assets summary

   30 September 2022              30 September 2021

Robert Ware, Chief Executive commented:

"The repercussions from the ongoing macroeconomic and geo-political uncertainty will inevitably have a significant impact on the Group's ability to raise finance for, and realise value from, its real estate portfolio in the near term.

Furthermore, sustained inflation, as a result of the combined effects from commodity and supply chain shortages, liberal government spending and tight labour markets, compounded by the Russian invasion of Ukraine, has inevitably resulted in an acceleration of the Bank of England's monetary policy tightening and subsequent expansion of commercial property yields.

Whilst we cannot isolate ourselves from the consequences of this market uncertainty, we will continue to cautiously move our development programme forward with a particular focus on the targeted and efficient use of the Group's existing and anticipated cash deposits. This will include the further advancement of the detailed designs and planning submissions for The Island Quarter, in order that the Group is well positioned to take advantage of these opportunities as and when our cash flows and market sentiment allows."

Enquiries:

The Conygar Investment Company PLC

Liberum Capital Limited (nominated adviser and broker)

Temple Bar Advisory (public relations)

Chairman's and Chief Executive's Statement

Overview

We started the year with a degree of optimism, post pandemic, but what has followed both globally and domestically has inevitably tested even the most robust and resilient of economies and companies. Against this very challenging backdrop, we have progressed realising the value from our property portfolio by way of sales and further investment, as well as advancing and sourcing additional funding to start to open up the significant opportunities offered by our mixed-use development site at The Island Quarter in Nottingham.

Results summary

During the year, the Group completed the sales of its industrial units at Selly Oak, Birmingham, a retail park at Cross Hands, Carmarthenshire and 2.4 acres of development land in Parc Cybi, Holyhead. The total net profits from these sales of £4 million, in addition to property revaluation surpluses of £0.3 million have been offset by property operating and administrative costs, including £1.2 million of start-up costs for the initial phase of The Island Quarter in Nottingham, to result in a net loss for the year of £53,000.

The Group's NAV increased in the year by £10.5 million as a result of placing 7.1 million of the Company's own shares. However, the placing of these shares at a discounted price of 150p in addition to the small loss for the year has resulted in a reduction of the Group's net asset value per share of 8.5p (3.9%) to 208.9p per share as at 30 September 2022.

The property sales and share placing generated total net cash proceeds of £36.1 million in the year which have been, and continue to be, substantially utilised to progress the ongoing and anticipated future phases of The Island Quarter which was valued at £93m, by Knight Frank LLP, as at 30 September 2022.

The Island Quarter, Nottingham

In mid-September 2022, we were delighted to have the first of many planned developments opened to the public at 1 The Island Quarter on the north-west corner of the site, to the south of Nottingham's historic lace market. This venue, which occupies just over 1 acre, currently comprises an outdoor performance area, an indoor event space for private hire, two dining experiences, and, in due course, a roof top terrace planned for opening next year which will provide stunning views over the city.

"Binks Yard" occupies the ground floor providing an all-day, dining, drinking and entertainment venue whilst "Cleaver and Wake" offers a modern dining experience, using the finest nationally-sourced produce, with both restaurants under the leadership of Laurence Henry, the 2018 MasterChef: The Professionals winner. The strength of this development lies in the variety of the offer, incorporating not only the restaurants, but also the outside bandstand and plaza, to provide live music and events for up to 500 guests, and the upper floor events space available for private hire for a further 120 guests. All of which, we believe, provide a number of compelling reasons to visit this new destination within the city as we continue with our regeneration of the rest of the site. Whilst we are acutely aware of the current challenges faced by the hospitality industry, the initial trading performance for Canal Turn, when compared with our own forecasts, has been encouraging.

In May 2022, the adjacent plot, which incorporates two hotels to be managed by Intercontinental Hotels Group, co-working space, 247 build to rent apartments, plus a food and beverage offering, was granted detailed planning permission.  

Construction has also commenced on the 693 bed student accommodation development, targeted for completion in the spring of 2024, with the buildings expected to be available to students for the academic year commencing in September 2024. The Group has progressed the early stages of this substantial development by utilising its existing cash deposits.

Whilst we anticipate a substantial amount of the Group's existing cash deposits will be utilised to progress the student accommodation development, we are very encouraged by the continuing positive sentiment from investors towards this asset class with demand currently outweighing the supply of stock. Furthermore, domestic student demand is at an all-time high which, coupled with the contracting supply of stock from private renters, provides an opportunity for purpose built student accommodation ("PBSA") owners to meet that excess demand.

We are currently finalising a detailed planning application, and are progressing discussions with a potential funding partner, for approximately 190,000 square feet of bioscience space on The Island Quarter and expect to submit the application in the coming weeks. The building will include both laboratory and office space, as well as conference facilities and car parking and be located adjacent to an existing bioscience hub.

We continue to progress the detailed designs for subsequent phases and are in advanced discussions with potential investors in connection with further commercial and residential developments and would hope to make announcements in that respect over the coming months.

Other projects

At Cross Hands, Carmarthenshire, we sold our retail park in February 2022 for net proceeds of £18.3 million, to benefit from the post-pandemic bounce in retail warehousing values, generating a profit in the year of £0.4 million. Further gains of £3.5 million were recognised, by way of revaluation surpluses, in prior periods which, in addition to £1.1 million of post development rental surpluses, has resulted in a total profit from the park of £5.0 million.

The granting, by Birmingham City Council, of their consent to a student home scheme at our site at Selly Oak, Birmingham enabled completion of the sale to a specialist provider of student accommodation for gross proceeds of £7.0 million. The sale realised a profit in the year of £3.4 million.

At Holyhead Waterfront, Anglesey, the detailed application and marine licence applications, submitted in October 2021, for a proposed development to include a 250-berth marina, 259 townhouses and apartments, marine commercial and additional A1/A3 retail units, were validated in January 2022. The determination of this application has been delayed by a lack of available planning officers, but is now progressing and we expect it to be considered by the planning committee early in 2023.

We continue to hold substantial plots of land at Rhosgoch and Parc Cybi on Anglesey. During the year we achieved a sale of 2.4 acres of the land at Parc Cybi for a net consideration of £0.3m, realising a profit over cost of £0.2 million. There has also been further interest from the renewables sector, in particular for the site at Rhosgoch. However, we will continue to retain these sites and wait to see whether the UK and Welsh Government's announcements earlier this year, for their suggested support of nuclear and / or other energy forms on Anglesey, actually translate to a full commitment.

At Haverfordwest in Pembrokeshire, where we have outline consent for 729 residential units and 90,000 square feet of implemented A1 retail, we completed construction of a 300-metre spine road and associated infrastructure in the year and are progressing discussions for the possible sale of the whole site or individual plots and hope to make further announcements in that regard later this year.

ESG Vision

The Board acknowledges the important role and impact that it, and the wider real estate sector, has in connection with Environmental, Social and Governance ("ESG") matters. As such, we have included for the first time in the Annual Report the Board's vision and approach to ESG.

Dividend

The Board recommends that no dividend is declared in respect of the year ended 30 September 2022. More information on the Group's dividend policy can be found within the Strategic Report.

Share buy back authority

The Board will seek to renew the buy back authority of 14.99% of the issued share capital of the Company at the forthcoming AGM as we consider the buy back authority to be a useful capital management tool and will continue to use it, as our cash flows allow, when we believe the stock market value differs too widely from our view of the intrinsic value of the Company.

Outlook

The repercussions from the ongoing macroeconomic and geo-political uncertainty will inevitably have a significant impact on the Group's ability to raise finance for, and realise value from, its real estate portfolio in the near term.

Furthermore, sustained inflation, as a result of the combined effects from commodity and supply chain shortages, liberal government spending and tight labour markets, compounded by the Russian invasion of Ukraine, has inevitably resulted in an acceleration of the Bank of England's monetary policy tightening and subsequent expansion of commercial property yields.

Whilst we cannot isolate ourselves from the consequences of this market uncertainty, we will continue to cautiously move our development programme forward with a particular focus on the targeted and efficient use of the Group's existing and anticipated cash deposits. This will include the further advancement of the detailed designs and planning submissions for The Island Quarter, in order that the Group is well positioned to take advantage of these opportunities as and when our cash flows and market sentiment allows.               

N J Hamway                                                                         R T E Ware

Chairman                                                                               Chief Executive

Strategic report

The Group's strategic report provides a review of the business for the financial year, discusses the Group's financial position at the year end and explains the principal risks and uncertainties facing the business and how we manage those risks. We also outline the Group's strategy and business model.

Strategy and business model

The Conygar Investment Company PLC ("Conygar") is an AIM quoted property investment and development group dealing in UK property. Our aim is to invest in property assets and companies where we can add significant value using our property management, development and transaction structuring skills.

The business operates two major strands, being property investment and property development where we are prepared to use modest levels of gearing to enhance returns. Assets are recycled to release capital as opportunities present themselves and we will continue to buy back shares where appropriate. The Group is content to hold cash and adopt a patient strategy unless there is a compelling reason to invest.

Position of the Group at the year end

The Group net assets as at 30 September 2022 may be summarised as follows:

The Group's balance sheet remains both liquid and robust with cash deposits at 30 September 2022 of £17.4 million and no borrowings. We have utilised part of the Group's cash deposits, including cash generated from the share placing and property sales in the year, to complete the construction and connection of The Island Quarter electricity sub-station, to substantially complete the construction of the restaurant and events venue at 1 The Island Quarter and commence construction of the 693 bed The Island Quarter student accommodation development. However, the continuation of future phases requires us to seek either debt funding, joint venture partners or to sell assets to take best advantage of the opportunities presented by this significant development and discussions are ongoing in this regard.

The Group is party to a letter of intent which provides total funding commitments of £31.2m to the contractor of the student accommodation development to enable the continued progression of its construction whilst debt financing arrangements are put into place. The Group's commitments in this regard are expected to be ultimately financed partly out of its own cash deposits and partly from debt, for which we expect to provide a further update in the coming weeks.

Key performance indicators

The key measures considered when monitoring progress towards the Board's objective of providing attractive shareholder returns include the headway made during the year on its development and investment property portfolio, the movements in net asset value per share, levels of uncommitted cash and its monitoring of and performance against its ESG targets.

The Chairman's and Chief Executive's Statement provides a detailed update on the progress made during the year on the Group's property assets. Matters considered by the Audit Committee and Remuneration Committee are set out in the Corporate Governance section of the Annual Report. The Board's approach and responsibilities in connection with environmental, social and governance matters are set out in the ESG section of the Annual report. The other key performance measures are considered below.

Summary of investment properties

1    The Group's investment in Nottingham was valued by Knight Frank LLP, in their capacity as external valuers, as at 30 September 2022 and 30 September 2021.

2    The Group's investment in Cross Hands, which was sold in February 2022, was independently valued by Knight Frank LLP in the prior year.

Summary of development projects

We remain confident that there is significant upside in these projects, but this will only become evident over the medium term.  

1    The Group's industrial units at Selly Oak and 2.4 acres of development land at Parc Cybi were sold in the year.

Financial review

Net asset value

The net asset value increased in the year by £10.5 million to £124.6 million at 30 September 2022. The primary movements were net proceeds of £10.5 million from the placing of 7,138,998 ordinary shares, a £3.6 million profit from the sale of development properties at Selly Oak and Park Cybi, a £0.4 million profit from the sale of Cross Hands retail park and a revaluation surplus of £0.3m for The Island Quarter. These gains have been offset by £1.2 million of recruitment, training and start-up costs for 1 The Island Quarter, £2.2 million of other administrative costs, £0.3 million of development costs written off and £0.8 million of net property operating costs.

Conversely, the net asset value per share has decreased in the period by 8.5p per share to 208.9p as at 30 September 2022 primarily as a result of the placing of shares at a discount to NAV, to provide additional capital to further progress The Island Quarter project in Nottingham.

Cash flow and financing

At 30 September 2022, the Group had cash deposits of £17.4 million and no debt (2021: cash of £13.7 million and no debt).

During the year, the Group generated £3.9 million of cash in its operating activities (2021: used £1.8 million).

The other primary cash inflows for the year were net proceeds of £18.3 million from the sale of Cross Hands retail park and £10.5m from the placing of the Company's own shares.

These cash inflows were offset by capital costs of £30.2 million. Capital expenditure includes the construction costs and associated professional fees for the infrastructure works, 1 The Island Quarter and student accommodation developments at The Island Quarter, completion of a spine road on the residential site at Haverfordwest and statutory fees to advance the proposed development at Holyhead Waterfront.

Net income from property activities

1    Rental and other income for the year ended 30 September 2022 includes the reversal of a £1.4 million accrued rent debtor following the sales of Cross Hands and Selly Oak. This debtor arose from the even spreading of rental income, derived from operating leases, over each tenant's respective minimum lease term after allowing for rent free periods.

2    Direct property costs include £1.2 million for the upfront consultancy, set up, recruitment, operational and administrative costs in connection with the restaurant and events venue at 1 The Island Quarter to ensure its successful opening in September 2022.

Administrative expenses

The administrative expenses for the year ended 30 September 2022, excluding 1 The Island Quarter, were £2.2 million (2021: £2.1 million). The major items were salary costs of £1.4 million (2021: £1.4 million), head office running costs and various costs arising as a result of the Group being listed on AIM.

Taxation

Current tax is payable at a rate of 19% on net rental income and profits from the sale of development properties after deduction of finance costs and administrative expenses.

Deferred tax is calculated at a rate of 25%, being the rate that has been enacted or substantively enacted by the balance sheet date and which is expected to apply when the tax liability, resulting from unrealised chargeable gains arising on revaluation of the Group's investment properties, is projected to be settled.

Capital management

Capital risk management

The Board's primary objective when managing capital is to preserve the Group's ability to continue as a going concern, in order to safeguard its equity and provide returns for shareholders and benefits for other stakeholders, whilst maintaining an optimal capital structure to reduce the cost of capital.

As at the balance sheet date, the Group does not have any borrowings, but is expected to utilise borrowings in the future to fund development projects. When doing so the Group will seek to ensure that it can stay within agreed covenants with its lenders.

Treasury policies

The objective of the Group's treasury policies is to manage the Group's financial risk, secure cost effective funding for the Group's operations and to minimise the adverse effects of fluctuations in the financial markets on the value of the Group's financial assets and liabilities, reported profitability and cash flows.

The Group finances its activities with a combination of cash and short term deposits. Other financial assets and liabilities, such as trade receivables and trade payables, arise directly from the Group's operations. The Group may also finance its activities with bank loans and enter into derivative transactions to manage the interest rate risk arising from its operations and sources of finance. Throughout the year, and as at the balance sheet date, no group undertakings were party to any bank loans or derivative instruments.

The management of cash is monitored weekly with summary cash statements produced on a monthly basis and discussed regularly in management and board meetings. The approach is to provide sufficient liquidity to meet the requirements of the business in terms of funding developments and potential acquisitions. Surplus funds are invested with a broad range of institutions. At any point in time, at least half of the Group's cash is held on instant access or short term deposit of less than 30 days.

Dividend policy

The Board recommends that no dividend is paid in respect of the year ended 30 September 2022 (2021: £nil).

Our dividend policy is consistent with the overall strategy of the business: namely to invest in property assets and companies where we can add significant value using our property management, development and transaction structuring skills.

In previous years we have used the surplus cash flow from the then much larger investment property portfolio to enhance these properties by refurbishment, re-letting and extending tenancies, fund the operations of the business, create a medium term pipeline of development opportunities, pay a modest dividend and buy back shares where appropriate.

The Board will continue to review the dividend policy each year. Our focus is, and will primarily continue to be, growth in net asset value per share.

Share placing

At the Company's Annual General Meeting held on 20 December 2021, resolutions were passed to enable the Company to complete the placing of 7,138,998 Ordinary shares of 5p each at a placing price of 150p per share. The premium received from each placing share over their 5p nominal value, net of fees paid in connection with the placing, resulted in a £10.16 million credit to the Company's share premium account.

At a General Meeting of the Company on 28 March 2022 a further resolution was passed to enable the cancellation of the share premium account, subject to approval of the Court, such that the amount cancelled can be credited to a distributable reserve. On 22 April 2022, an application was submitted to the Court to request the cancellation which was duly confirmed by the Court on 10 May 2022 and completed on 12 May 2022.

Principal risks and uncertainties

Managing risk is an integral element of the Group's management activities and a considerable amount of time is spent assessing and managing risks to the business. Responsibility for risk management rests with the Board, with external advisers used where necessary.

Strategic risks

Strategic risks are risks arising from an inappropriate strategy or through flawed execution of a strategy that could threaten the future performance, solvency or liquidity of the Group. By definition, strategic risks tend to be longer term than most other risks and, as has been amply demonstrated in the last few years, the economic and wider environment can alter quickly and significantly. Strategic risks identified include global or national events, regulatory and legal changes, market or sector changes and key staff retention. As set out in the Chairman's and Chief Executive's Statement, the ongoing macroeconomic and geo-political uncertainty, in addition to sustained inflation, will inevitably have a significant impact on the Group's ability to raise finance for, and realise value from, its real estate portfolio in the near term.

The Board continually monitors and discusses the potential impact that changes to the environment in which we operate can have upon the Group. We are confident we have sufficiently high calibre Directors and managers to manage strategic risks.

We are content that the Group has the right approach toward strategy and our strong balance sheet is good evidence of that.

Operational risks

Operational risks are essentially those risks that might arise from inadequate internal systems, processes, resources or incorrect decision making. Clearly, it is not possible to eliminate operational risk. However, by ensuring we have the right calibre of staff and external support in place we look to minimise such risks, as most operational risks arise from people-related issues. Our Executive Directors are very closely involved in the day-to-day running of the business to ensure sound management judgement is applied.

Market risks

Market risks primarily arise from the possibility that the Group is exposed to fluctuations in the values of, or income from, its cash deposits, investment properties and development projects. This is a key risk to the principal activities of the Group and the exposures are continuously monitored through timely financial and management reporting and analysis of available market intelligence.

Where necessary, management takes appropriate action to mitigate any adverse impact arising from identified risks and market risks continue to be monitored closely.

Estimation and judgement risks

To be able to prepare accounts according to generally accepted accounting principles, management must make estimates and assumptions that affect the asset and liability items and revenue and expense amounts recorded in the accounts. These estimates are based on historical experience and various other assumptions that management and the Board believe are reasonable under the circumstances. The results of these considerations form the basis for making judgements about the carrying value of assets and liabilities that are not readily available from other sources.

The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are the following:

Investment properties

The fair values of investment properties are based upon open market value and calculated, where applicable, using a third party valuation provided by an external valuer.

Development properties

The net realisable value of properties held for development requires an assessment of the value for the underlying assets using property appraisal techniques and other valuation methods. Such estimates are inherently subjective and actual values can only be determined in a sales transaction.

Financial assets

The interest rate profile of the Group's cash at the balance sheet date was as follows:

Fixed and floating rate financial assets comprise cash and short term performance bond deposits held with banks whose credit ratings are acceptable to the Board.

Credit risk

Credit risk is the risk of financial loss to the Group if a counterparty fails to meet its contractual obligations. The Group's principal financial assets include its financial interest in property assets, cash deposits and trade and other receivables. The carrying amount of financial assets recorded in the financial statements represents the Group's maximum exposure to credit risk without taking account of the value of any collateral obtained.

In the event of default by an occupational tenant, the Group will suffer a rental shortfall and incur additional costs. The Directors continually monitor tenant arrears in order to anticipate, and minimise the impact of, defaults by occupational tenants and if necessary, where circumstances allow, will apply rigorous credit control procedures to facilitate the recovery of trade receivables.

Under IFRS 9, the Group is required to provide for any expected credit losses arising from trade receivables. For all assured shorthold tenancies, credit checks are performed prior to acceptance of the tenant. Regulated tenants are incentivised through the benefit of their tenancy agreement to avoid default on their rent and rent deposits are held where applicable. Taking these factors into account, the risk to the Group of individual tenant default and the credit risk of trade receivables are considered low, albeit that risk increased as a result of the impact of COVID-19, as is borne out by the level of trade receivables written off in the current and prior years.

The Directors have provided for rental and other arrears due from various tenants impacted by, amongst other factors, the economic downturn and COVID-19 pandemic which amount to £200,000 at 30 September 2022 and which remain outstanding at the date of signing the financial statements. The impaired receivables are based on a review of expected credit losses. Impaired receivables and receivables not considered to be impaired are not material to the financial statements and, therefore, no further analysis is provided.

The credit risk on cash deposits is managed through the Company's policies of monitoring counterparty exposure and the use of counterparties of good financial standing. At 30 September 2022, the credit exposure from cash held with banks was £17.4 million which represents 13.9% of the Group's net assets. All cash deposits at the balance sheet date are placed with banks, whose credit ratings are acceptable to the Board, on instant access accounts. Should the credit quality or the financial position of the banks currently utilised significantly deteriorate, cash deposits would be moved to alternative banks.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group seeks to manage its liquidity risk by ensuring that sufficient cash is available to meet its foreseeable needs. The Group has cash deposits at the balance sheet date of £17.4 million. However, we will need to raise substantial amounts either as debt, or through joint ventures or further asset sales, in order to significantly progress The Island Quarter development in Nottingham and expect to make announcements in that respect over the coming months.

Section 172 statement

Directors' duty to promote the success of the Company under Section 172 Companies Act 2006

The strategic report is required to include a statement that describes how the Directors have had regard to the matters set out in section 172(1) (a) to (f) of the Companies Act 2006 when performing their duty under section 172. Some of the matters identified in Section 172(1) are already covered by similar provisions in the QCA Code and have thus been previously reported by the Company in the corporate governance statement, the corporate governance report and the QCA statement of compliance on our website. In order to avoid unnecessary duplication, the relevant parts of those documents are identified below and are to be treated as expressly incorporated by reference into this strategic report. Under section 172 (1) of the Companies Act 2006, each individual Director must act in the way he considers, in good faith, would be the most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to six matters detailed in the section. In discharging their duties, the Directors seek to promote the success of Conygar for the benefit of members as a whole and have regard to all the matters set out in Section 172(1), where applicable and relevant to the business, taking account of its size and structure and the nature and scale of its activities in the commercial property market. The following paragraphs address each of the six matters in Section 172(1) (a) to (f).

(a) The likely consequences of any decision in the long term: The commercial property market is cyclical by nature. Investing in commercial property is a long term business. The decisions taken must have regard to long term consequences in terms of success or failure and managing risks and uncertainties. The Directors cannot expect that every decision they take will prove, with the benefit of hindsight, to be the best one - external factors may affect the market and thus change conditions in the future, after a decision has been taken. However, the Group's investment decisions are undertaken by a Board with a wide range of experience, over many years, in both the property and finance sectors.

(b) The interests of the Company's and Group's employees: The Company has five full time employees, including the Chief Executive, two Property Directors and the Finance Director. These Executive Directors sit on the Board with the Non-Executive Directors. The Group also has a growing workforce to support its operations at The Island Quarter, all of which are employed by a wholly-owned group company. The commitment of the Board to its employees is set out in the ESG section of the Annual Report.

(c) The need to foster the Company's business relationships with suppliers, customers and others: The Directors have regularly reported in the Company's annual reports on the constructive relationships that Conygar seeks to build with its tenants and the mutual benefits that this brings to both parties; and this reporting has been extended over the past two years following Principle 3 of the QCA Code to include suppliers and others. This is therefore addressed under Principle 3 in the QCA compliance statement. In recent years, it has been vital to foster our business relationships with tenants given external factors, such as political and economic uncertainty.                                                      

(d) The impact of the Company's operations on the community and the environment: This is also addressed under Principle 3 of the QCA Code in the QCA compliance statement. Due to its size and structure and the nature and scale of its activities, the Board considers that the impact of Conygar's operations as a landlord on the community and the environment is low. With the exception of 1 The Island Quarter, Conygar's assets are used by its tenants for their own operations rather than by Conygar itself. In the past year, the Company has not been made aware of any tenant operations that have had a significant impact on the community or the environment. In relation to 1 The Island Quarter, as well as ongoing and future planned developments, Conygar seeks to ensure that designs and construction comply with all relevant environmental standards and with local planning requirements and building regulations so as not to adversely affect the community or the environment. Further details of which are set out in the ESG section of the Annual Report.                                                            

(e) The desirability of the Company maintaining a reputation for high standards of business conduct: This is addressed under Principle 8 of the QCA Code in the corporate governance statement and in the QCA compliance statement. The Board considers that maintaining Conygar's reputation for high standards of business conduct is not just desirable - it is a valuable asset in the competitive commercial property market.

(f) The need to act fairly as between members of the Company: The Company has only one class of shares, thus all shareholders have equal rights and, regardless of the size of their holding, every shareholder is, and always has been, treated equally and fairly. Relations with shareholders are further addressed under Principles 2, 3 and 10 of the QCA Code in the corporate governance report and the QCA compliance statement. We have been reviewing how we communicate with shareholders and are encouraging shareholders to adopt electronic communications and proxy voting in place of paper documents where this suits them, as well as to raise questions in writing if they are unable to attend AGMs.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 September 2022

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

CONSOLIDATED Statement of Changes in Equity

for the year ended 30 September 2022

                                                                    Attributable to the equity holders of the Company

CONSOLIDATED BALANCE SHEET       

at 30 September 2022

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 30 September 2022

NOTES TO THE ACCOUNTS

for the year ended 30 September 2022

1.   The financial information set out in this announcement is abridged and does not constitute statutory accounts for the year ended 30 September 2022 but is derived from the financial statements. The auditors have reported on the statutory accounts for the year ended 30 September 2022, 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 2021 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 section 498 (2) or (3) of the Companies Act 2006.

3.    Operating (LOSS) / PROFIT

4.     PARTICULARS OF EMPLOYEES

The weighted average monthly number of persons, including Executive Directors, employed by the Group during the year was twenty two (2021: seven). The increase in the year is a result of the additional employees that have been recruited to operate and manage the restaurant and events venue at 1 The Island Quarter.

5.     DIRECTORS' EMOLUMENTS

       The Board, being the key management personnel, comprises the only persons having authority and responsibility for planning, directing and controlling the activities of the Group.  

6.       FINANCE INCOME AND COST

7.     LEASES

        Group as lessor:

       The Group receives income from investment properties and existing tenants located at several development sites. At 30 September 2022, the minimum lease payments receivable under non-cancellable operating leases were as follows:   

        The amounts above represent total rental income up to the next tenant only break date for each lease.

        Group as lessee:

       The Group was party to a three-year lease which terminated on 28 April 2022. On 11 March 2022, the Group entered into a subsequent one-year lease, for the same premises, which terminates on 28 April 2023. The rental charge in connection with the new lease, for the period from 28 April 2022 to 30 September 2022, amounted to £40,617.  

        IFRS 16 requires lessees to record all leases on the balance sheet as liabilities, along with an asset reflecting the right of use of the asset over the lease term, so long as they are not for a low value or less than 12 months whereby the lease could be recognised as an expense on a straight line basis over the lease term.

        The lease liability for three-year term was calculated as the present value of the remaining lease payments, discounted at an incremental borrowing rate of 2.7%. The right of use asset was measured at the amount equal to the lease liability adjusted for rent prepaid on the date of implementation. Depreciation of the right of use asset was on a straight line basis over the lease term.

        The modified retrospective approach was adopted for transition purposes such that comparatives were not restated and the difference between the right of use asset and lease liability at the start of the prior year was recognised within the Group's opening retained earnings.

        The current one-year lease is considered to be of low value and as such will be recognised as an expense over the lease term on a straight line basis.

8.      TAX

9.       DIVIDENDS

          No dividend will be paid in respect of the year ended 30 September 2022 (2021: nil). 

10.     (LOSS) / PROFIT PER SHARE

          (Loss) / profit per share is calculated as the (loss) / profit attributable to ordinary shareholders of the Company for the year of £53,000 (2021: profit of £26,525,000) divided by the weighted average number of shares in issue throughout the year of 58,015,099 (2021: 53,064,275). There are no diluting amounts in either the current or prior years.

11.     PLANT, MACHINERY AND OFFICE EQUIPMENT

          During the year, the Group acquired plant, machinery and office equipment that will be required to operate the restaurant, beverage and events businesses at 1 The Island Quarter.

          Depreciation is recognised so as to write off the cost of these assets, over their estimated useful economic lives, using the straight line method at 25% per annum. As the venue at 1 The Island Quarter was only partly operational from 14 September 2022 no depreciation has been recognised in the period to 30 September 2022.

12.     INVESTMENT PROPERTIES

          Freehold investment properties

The Group's retail park in Cross Hands, Carmarthenshire was sold in the year for net proceeds of £18.3m realising a profit in the year of £0.4m.

As at 30 September 2021, Cross Hands was valued by Knight Frank LLP in their capacity as external valuers. The valuation was prepared on a fixed fee basis, independent of the property value and undertaken in accordance with RICS Valuation - Global Standards on the basis of fair value, supported by reference to market evidence of transaction prices for similar properties. It assumed a willing buyer and a willing seller in an arm's length transaction and reflected usual deductions in respect of purchaser's costs and SDLT as applicable at the valuation date. The independent valuer made various assumptions including future rental income, anticipated void costs and the appropriate discount rate or yield.

The fair value of Cross Hands was determined using an income capitalisation technique whereby contracted rent and market rental values were capitalised with a market capitalisation rate. This technique is consistent with the principles in IFRS 13 and uses significant unobservable inputs, such that the fair value was classified as Level 3 in the fair value hierarchy as defined in IFRS 13. For Cross Hands, the key unobservable inputs were the net initial yields and expiry void periods. Net initial yields were estimated for the individual units at between 5.0% and 9.5% and expiry void periods were projected at between 6 and 12 months. The principal sensitivity of measurement to variations in the significant unobservable outputs was that decreases in net initial yields and void periods would increase the fair value.

The historical cost of the Group's investment properties as at 30 September 2022 was £nil (2021: £14,242,000).

The Group's revenue for the year includes £433,000 derived from properties leased out under operating leases (2021: £1,152,000). The Group's revenue also includes the reversal of a £1,194,000 rent spreading debtor following the sale of Cross Hands.

13.     INVESTMENT PROPERTIES UNDER CONSTRUCTION

          Freehold land and buildings

Investment properties under construction comprise the freehold land and buildings at The Island Quarter in Nottingham which are held for current or future development as investment properties and reported in the balance sheet at fair value.

The valuations of the Group's investment properties are inherently subjective as they are based on the valuers' assumptions which may not prove to be accurate and which, as a result, are subject to material uncertainty. This is particularly true for The Island Quarter given its scale, lack of comparable evidence and the early stage position of this substantial development where relatively small changes to the underlying assumptions of key parameters, such as rental levels, net initial yields, construction costs, finance costs and void periods can have a significant impact both positively and negatively on the resulting valuation.

In preparing their valuation, Knight Frank have utilised market and site specific data, their own extensive knowledge of the real estate sector, professional judgement and other market observations as well as information provided by the Company's Executive Directors. The resulting models and assumptions therein have also been reviewed for overall reasonableness by the Conygar Board. Inevitably in a complex model like this, and as noted above, variations in assumptions can lead to widely differing values. The Board have considered the valuation in the context of their experience and believe the value of approximately £2.5 million per acre is justifiable.

The valuation was prepared on a fixed fee basis, independent of the property value and undertaken in accordance with RICS Valuation - Global Standards on the basis of fair value, supported by reference to market evidence of transaction prices for similar properties. It assumes a willing buyer and a willing seller in an arm's length transaction and reflects usual deductions in respect of purchaser's costs and SDLT as applicable at the valuation date. The independent valuer makes various assumptions including future rental income, anticipated void costs and the appropriate discount rate or yield.

The fair value of Nottingham has been determined using an income capitalisation technique whereby contracted rent and market rental values are capitalised with a market capitalisation rate. This technique is consistent with the principles in IFRS 13 and uses significant unobservable inputs, such that the fair value has been classified in all periods as Level 3 in the fair value hierarchy as defined in IFRS 13. For Nottingham, the key unobservable inputs are the net initial yields, construction costs, rental income rates, construction financing costs and expiry void periods. Net initial yields have been estimated for the individual units at between 4.35% and 7.0%. The principal sensitivity of measurement to variations in the significant unobservable outputs is that decreases in net initial yields, construction costs, financing costs and void periods will increase the fair value whereas reductions to rental income rates would decrease the fair value.

The historical cost of the Group's investment properties under construction as at 30 September 2022 was £62,566,000 (2021: £36,168,000). The Group's revenue for the year includes £271,000 derived from properties leased out under operating leases (2021: £80,000).

14.   INVESTMENT IN SUBSIDIARY UNDERTAKINGS

        Listed below are the wholly-owned subsidiary undertakings of the Group at 30 September 2022.

15.   DEVELOPMENT AND TRADING PROPERTIES

* The costs incurred in connection with the planning and design for our scheme at Holyhead Waterfront
    have been written off in the year to retain the carrying value as at 30 September 2022 at £5.0 million.

Development and trading properties are reported in the balance sheet at the lower of cost and net realisable value. The net realisable value of properties held for development requires an assessment of the underlying assets using property appraisal techniques and other valuation methods. Such estimates are inherently subjective as they are made on assumptions which may not prove to be accurate and which can only be determined in a sales transaction.

16.     INVENTORIES

Inventories recognised as an expense in the year totalled £82,041 (2021: £nil).

17.   TRADE AND OTHER RECEIVABLES

Trade and other receivables are measured on initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method, less any impairment. Impairment is calculated using an expected credit loss model.

18.  TRADE AND OTHER PAYABLES

Trade and other payables are recognised initially at fair value, and are subsequently measured at amortised cost using the effective interest rate method. 

19.   PROVISION FOR LIABILITIES AND CHARGES

As at 30 September 2021, the Group was party to a services agreement and introduction fee agreement in connection with its investment property at Nottingham. The fee payable, under the terms of each agreement, in connection with introductory and other services, was to be calculated on the earlier of the date of sale of the property or 22 December 2021 with settlement to follow, subject to agreement between each party, 31 business days after the fee calculation has been finalised. In January 2022, the introductory fee, calculated at £2.807 million, was paid and the longstop date for the services agreement calculation extended until 22 December 2023.The provisions at 30 September 2022 and 30 September 2021 have been calculated by reference to the value of the property at each balance sheet date after allowing for a priority return and applicable costs.

20.   SHARE CAPITAL

At the Company's Annual General Meeting held on 20 December 2021, resolutions were passed to enable the Company to complete the placing of 7,138,998 Ordinary shares of 5p each at a placing price of 150p per share. The premium received from each placing share over their 5p nominal value, net of fees paid in connection with the placing, resulted in a £10.16 million credit to the Company's share premium account.

At a General Meeting of the Company on 28 March 2022 a further resolution was passed to enable the cancellation of the share premium account, subject to approval of the Court, such that the amount cancelled can be credited to a distributable reserve. On 22 April 2022, an application was submitted to the Court to request the cancellation which was duly confirmed by the Court on 10 May 2022 and completed on 12 May 2022.

In December 2010, the Group began a share buyback programme and during the year ended 30 September 2022 purchased nil (2021: 1,092,000) shares on the open market at a cost of £nil (2021: £1,217,000). On 16 September 2021, 1,092,000 ordinary shares of 5p each were transferred out of treasury and cancelled.

21.   CAPITAL COMMITMENTS

As at 30 September 2022, the Group had contracted capital commitments, not provided for in the financial statements, of £32,060,000 (2021: £12,800,000) relating to the construction, development or enhancement of the Group's investment and trading properties. £31,171,000 of which is projected to be incurred over the next financial year and relates to a letter of intent provided by a group undertaking to the contractor of the student accommodation development to enable the continued progression of this development whilst debt financing arrangements are put into place. The Group's commitments in this regard are expected to be ultimately financed partly out of the Group's own cash deposits and partly from debt, for which we expect to provide a further update in the coming weeks.

22.   FINANCIAL INSTRUMENTS

        The following tables set out the Group's financial assets and liabilities, all of which are due within one year. The tables have been drawn up based on the undiscounted cash flows of financial liabilities, based on the earliest date on which the Group can be required to pay.

23.   EVENTS AFTER THE BALANCE SHEET DATE

There are no significant events since the balance sheet date that require disclosure in the financial statements.

The report and accounts for the year ended 30 September 2022 will shortly be available via the Company's website www.conygar.com or, as required, posted to shareholders and copies may be obtained free of charge for at least one month following their posting by writing to the Company Secretary, The Conygar Investment Company PLC, 1 Duchess Street, London W1W 6AN.

 The Company's Annual General Meeting (the "AGM") will be held at 10:00am on Monday, 19 December 2022 at the offices of The Conygar Investment Company PLC, First Floor, Suite 3, 1 Duchess Street, London W1W 6AN.

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.