The Conygar Investment
Company PLC
Report And Accounts
30 September 2017
The Conygar Investment Company PLC
YEAR ENDED 30 SEPTEMBER 2017
SUMMARY
(cid:0) Net asset value per share 203.0p at 30 September 2017 increased by 3.1% from 196.9p at
30 September 2016.
(cid:0) Disposed of the majority of our investment properties for £129.8 million.
(cid:0) The disposal crystallised capital gains of £48.2 million realised between 2009 and March 2017
on assets acquired for £113.4 million. Net income before tax of £47.0 million was also received
over the same period from these assets.
(cid:0) Acquired a 37 acre development site in Nottingham city centre for £13.5 million.
(cid:0) Total cash available for acquisitions and development funding of £37 million and no debt.
(cid:0) Bought back 10.3 million shares (13.4% of ordinary share capital) at an average price of 165
pence per share.
Summary Group Net Assets as at 30 September 2017
Per Share
£’m p
Properties and Projects 70.9 106.0
Investment in Regional REIT Limited 27.6 41.3
Cash and other net assets 37.3 55.7
––––––––––– –––––––––––
Net Assets 135.8 203.0
––––––––––– –––––––––––
––––––––––– –––––––––––
1
The Conygar Investment Company PLC
Registered in England No. 04907617
CONTENTS
Page
Directors and Advisers 3
Chairman’s & Chief Executive’s Statement 4
Strategic Report 6
Corporate Governance Report 15
Directors’ Remuneration Report 17
Directors’ Report 20
Independent Auditors’ Report 23
Consolidated Statement of Comprehensive Income 27
Consolidated Statement of Changes in Equity 28
Company Statement of Changes in Equity 29
Consolidated Balance Sheet 30
Company Balance Sheet 31
Consolidated Cash Flow Statement 32
Company Cash Flow Statement 33
Notes to the Accounts 34
Glossary of Terms 58
Notice of Annual General Meeting 59
Form of Proxy 64
2
The Conygar Investment Company PLC
DIRECTORS AND ADVISERS
The Board of Directors
N J Hamway (Non-Executive Chairman)
R T E Ware (Chief Executive)
R H McCaskill (Finance Director)
P M C Rabl (Director)
M D Wigley (Non-Executive Director)
Company Secretary
R H McCaskill
Registered Office
Fourth Floor
110 Wigmore Street
London W1U 3RW
Auditors Solicitors
Rees Pollock Gowling WLG (UK) LLP
35 New Bridge Street 4 More London Riverside
London EC4V 6BW London SE1 2AU
Nominated Adviser & Stockbroker Registrars
Liberum Capital Limited Share Registrars Limited
Ropemaker Place, Level 12 The Courtyard
25 Ropemaker Street 17 West Street
London EC2Y 9LY Farnham
Surrey GU9 7DR
Registered Number
04907617
Website
www.conygar.com
3
The Conygar Investment Company PLC
CHAIRMAN’S & CHIEF EXECUTIVE’S STATEMENT
Results
We present the Group’s results for the year ended 30 September 2017.
Net asset value per share increased by 3.1% to 203.0p (2016: 196.9p). The key components driving that
growth were the profit on disposal of the investment property portfolio of £1.5 million, net rental and
dividend income of £4.3 million and the impact of the share buy back programme. During the year, the
Group bought back 10.34 million shares, or 13.4% of the share capital in issue as at 30 September 2016,
at an average price of 165 pence per share. These purchases enhanced net asset value per share by
4.9 pence.
The profit before taxation for the year was £1.2 million (2016: loss of £4.7 million). The Group had cash
balances of £37.2 million (2016: £63.7 million) at the year end and no bank debt (2016: £56.4 million).
Conygar ZDP PLC was sold to Regional REIT Limited as part of the disposal of the investment property
portfolio and so the zero dividend preference share liability, which amounted to £34.4 million at
30 September 2016, is no longer owed by the Group.
The balance sheet is strong and now consists of our investment properties under construction and
development projects totalling £70.9 million, our investment in Regional REIT Limited which was worth
£27.6 million at the year end and our cash deposits of £37.2 million.
This places us in a good position to deliver the inherent value of our development pipeline and also to take
advantage of opportunities should they arise.
Progress
In March 2017, the Group disposed of the investment property portfolio to Regional REIT Limited, which
attributed a value of £129.8 million to the portfolio. The bank facilities were transferred with the properties
together with Conygar ZDP PLC and the net consideration amounted to £28 million, which was satisfied
by the issue of 26.3 million Regional REIT shares at a price of 106.3p.
This transaction crystallised the substantial capital gains which had been made across the portfolio since
the acquisition of the assets during the period following the global financial crisis of 2008. The assets were
acquired for a total cost of £113.4 million and the total capital gains realised over the period from 2009
to March 2017 were £48.2 million, subject to the disposal of the Regional REIT shares. In addition, net
income of £47.0 million was generated over the same period, excluding tax.
The development pipeline has progressed well during the year. A detailed review of the development
pipeline can be found within the Strategic Report, which follows this Statement, but we should mention a
few of the projects here which are either new or have progressed significantly during the year.
In December 2016, the Group acquired 37 acres in Nottingham city centre for £13.5 million. We expect
to submit a planning application in the New Year. The site provides a unique opportunity to create a new
vibrant district in the centre of a major UK city and we are working closely with Nottingham City Council
to deliver this exciting project. We expect the application to consist of a mixed-use scheme of over two
million square feet which will include apartments, student housing, offices, leisure uses and associated
community retail offering along with open public spaces.
Construction of our site at Cross Hands, south west Wales, began in December 2016 and the works for
the initial 65,000 square foot phase of the retail park completed on time and on budget in October 2017.
We have now let 80% of this 106,000 square foot retail development and the tenants include B&M Retail
Ltd, Iceland Foods Ltd, Pets at Home Ltd, Costa Coffee Ltd, Dominos PLC and David Jenkins Ltd. We
are in discussions with other retailers to take the remaining space at the park and we aim to have let the
site fully during the course of next year.
4
The Conygar Investment Company PLC
CHAIRMAN’S & CHIEF EXECUTIVE’S STATEMENT (continued)
We have also completed the construction of the M&S Food Hall investment at our site in Ashby-de-la-
Zouch and subsequently sold the unit in November 2017 for £4.35 million. Although we intended to hold
this asset to provide us with long-term income, the unsolicited offer we received was compelling and
enabled us to take advantage of the strong market we are seeing for good quality regional assets. After the
year end, on 1 December 2017, we also agreed a lease with B&M Retail Ltd to construct a 20,000 square
foot store with an additional 7,500 square foot garden centre on the remaining two acres of this site. The
lease and construction of the store are conditional on planning approval and the planning application for
this development will be submitted in the New Year.
Lastly, in July 2017, we exchanged a lease agreement with Premier Inn Hotels Limited to construct an 80-
bed hotel, with a restaurant and bar, at our gateway site at Parc Cybi, on the outskirts of Holyhead,
Anglesey. Ynys Mon County Council (the Isle of Anglesey County Council) granted detailed planning
permission at the end of October 2017. Construction will commence early in the New Year and is expected
to take approximately ten months.
Dividend
The Board recommends that no dividend is declared in respect of the year ended 30 September 2017 but
it will continue to review the dividend payments annually. More information on the Group’s dividend
policy can be found within the Strategic Report on page 12.
Share Buy Back
During the year, the Group acquired 10,340,000 ordinary shares representing 13.4% of its ordinary share
capital, at an average a price of 165.4p per share. This cost £17.1m and, as a result of the buy backs, net
asset value per share has been enhanced by 4.9 pence per share. Following the year end, the Group has
acquired a further 1,070,000 ordinary shares representing 1.4% of its ordinary share capital at an average
price of 158.8p per share. This cost £1.7 million and has enhanced net asset value per share by 1.1 pence
per share. The Group will seek to renew the buy back authority at the forthcoming AGM because we
consider it to be a useful capital management tool.
Outlook
The disposal of the investment property portfolio enables us to concentrate on our goal of maximising the
value of the development pipeline. This area of the business will be the main driver of shareholder growth
in the medium term.
Our strong balance sheet, with cash reserves and no debt, places us in a good position to take advantage
of opportunities as they arise and we will make further acquisitions if it makes sense to do so.
In the meantime, we will work hard to deliver the projects and investments we currently hold.
N J Hamway
Chairman
11 December 2017
R T E Ware
Chief Executive
5
The Conygar Investment Company PLC
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 business model and strategy.
Strategy and Business Model
Conygar is an AIM quoted property investment and development group dealing primarily 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 three major strands being, property investment, property development and
investment in companies which trade or invest in property or hold substantial property assets. The property
portfolio and the investment in Regional REIT Limited generate cash flows sufficient to maintain the
Group’s administrative costs while at the same time we are creating a pipeline of investment properties
and development projects that are well positioned to deliver good returns in the medium term. We continue
to focus upon positive cash flow and 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 Company at the year end
The make-up of the Company has changed during the year with the sale of the investment property
portfolio. The portfolio of investment properties under construction and the development pipeline are
progressing and construction is about to start at several more locations this year. The construction of these
assets will provide income as will the shareholding in Regional REIT Limited. The balance sheet remains
strong with cash of £37.2 million and there is no debt in the Group. The Group has adequate resources
to maintain and develop its business and the balance sheet remains both liquid and robust.
Events since the balance sheet date
There have been no significant events since the balance sheet date apart from the granting of detailed
planning permission for an 80-bedroom hotel at Parc Cybi, Holyhead, by Ynys Mon County Council and
the sale of the M&S Food Hall in Ashby-de-la-Zouch for £4.35m.
Summary of Group Net Assets
The Group net assets as at 30 September 2017 may be summarised as follows:
Per Share
£’m p
Properties and Projects 70.9 106.0
Investment in Regional REIT Limited 27.6 41.3
Cash and other net assets 37.3 55.7
––––––––––– –––––––––––
Net Assets 135.8 203.0
––––––––––– –––––––––––
––––––––––– –––––––––––
6
The Conygar Investment Company PLC
STRATEGIC REPORT (continued)
Investment properties and Investment in Regional REIT Limited
The Group completed the disposal of various Group undertakings on 24 March 2017 which, with the
exception of the investment properties under construction, comprised the Group’s entire investment
property portfolio. The net consideration was satisfied by the issue of 26,326,644 ordinary shares in
Regional REIT Limited at a price of 106.3 pence per share. The shares were valued at 105 pence per share
at 30 September 2017 and this gave rise to a paper loss of £355,000 for the year. We will continue to
monitor the performance of Regional REIT and its share price but at present, we are pleased with the
progress of the company. We have received dividend income to date of £948,000 which is equivalent to a
yield of more than 7% per annum. Annualised, this income covers the majority of our overheads.
Investment Properties Under Construction and Development Projects
Good progress has been made on most of our development projects and investment properties under
construction since we last reported.
Nottingham
In December 2016, the Group acquired 37 acres in Nottingham city centre for £13.5 million. The mainly
cleared site was formerly Boots, the Chemists’ headquarters and laboratories and has been vacant for
twenty years. A masterplan is currently being prepared and will include offices, residential, student
accommodation and leisure facilities comprising some two million square feet. We believe this is a very
exciting opportunity to help shape a major UK city and will look to submit an outline application in
early 2018.
Fishguard Harbour
At Fishguard Harbour, we received Reserved Matters planning permission for the marine-based
infrastructure and development platform in February 2017. We are currently in the process of preparing
our Harbour Revision Order application and intend to submit this to the Marine Management
Organisation shortly. Once the Order has been formalised and we acquire some outstanding land, we will
be in a position to start the development of the marine platform and marina. Simultaneously, we continue
to prepare the detailed Reserved Matters application in respect of the 253 homes.
Haverfordwest
With disappointment and frustration, we withdrew our two planning applications for 100,000 square feet
of retail units, a hotel, a 5-screen cinema and 602 car parking spaces in June 2017. We are working on fresh
planning applications which we intend to submit in the coming year.
We have been working with a national housebuilder on a masterplan for the entire residential scheme and,
jointly with them, we intend to submit a Reserved Matters application next year for the first phase of
the development.
Cross Hands
We completed the construction of the initial 65,000 square foot phase of the retail park at Cross Hands,
South West Wales in October 2017. The construction was delivered on time and on budget. We have let
80% of the 106,000 square foot development to a number of national retailers including B&M Retail Ltd,
Iceland Foods Limited, Pets at Home Ltd, Costa Coffee Ltd, Dominos PLC and David Jenkins Ltd. We
are in discussions with potential tenants on the remaining units and aim to have the scheme fully let
during 2018.
7
The Conygar Investment Company PLC
STRATEGIC REPORT (continued)
Holyhead Waterfront
At Holyhead Waterfront, the Town and Village Green application, submitted by the Waterfront Action
Group to prevent the development from progressing, was rejected by the appointed Inspector and,
subsequently, acting on his recommendation, Ynys Mon County Council resolved to formally refuse the
application in March 2017. The Judicial Review period ended in June 2017 and the decision is now
completely free from challenge. We will now progress the detailed design and Reserved Matters application
for the development over the coming year.
Ashby-de-la-Zouch
At Ashby-de-la-Zouch, we completed the construction of an 11,000 square foot Marks and Spencer Food
Hall, that was pre-let for a fixed term of 15 years. Having received an unsolicited offer of £4.35m, we
disposed of the property in November 2017 for a net initial yield to the purchaser of 4.75%. On the further
2 acres of the site, we have exchanged an agreement for lease with B&M Retail Ltd for fifteen years. Subject
to securing planning permission, we intend to construct a 20,000 square foot store with a 7,500 square
foot garden centre and 79 car parking spaces. The planning application will be submitted in the New Year
with the aim of starting construction on site in early spring.
Parc Cybi Business Park, Holyhead and Rhosgoch
At Parc Cybi, Anglesey, we have exchanged an agreement for lease with Premier Inn Hotels Ltd to
construct an 80-bedroom hotel with a restaurant and bar. We submitted a detailed application and received
planning permission from Ynys Mon County Council in November 2017. The pre-let to Premier Inn is on
a 25 year lease, with a first break clause at year 20. We are currently out to tender on the building contract
and will look to start on site in the New Year.
The option agreement we signed with Horizon Nuclear Power (HNP) in December 2016, enabling them
to instruct us to build a logistics centre on our 6.9 acre site at Parc Cybi is still in place. Similarly, the
second option agreement that covers the 203 acre site at Rhosgoch for use during the construction of
Wylfa B stands until December 2022. Rhosgoch is one of several sites that HNP are considering as a
location for housing the temporary construction workers. The Development Consent Order for the entire
Wylfa scheme and associated infrastructure is due to be submitted by Horizon Nuclear in the New Year.
In September 2017, we disposed of our 50% interest in the Roadking Holyhead Limited truck stop to our
joint venture partners for £3.13 million. The cash generated will be used to fund the other projects at
this location.
Llandudno Junction
In May 2016, Conwy County Borough Council approved our outline planning application for
90,000 square feet of retail floor space. We continue to work in partnership with Conwy County Council
as its preferred development partner to bring forward this 90,000 square foot retail park. We are in
discussions with a number of national retailers and we will provide further updates in the New Year.
King’s Lynn, Norfolk
This is a six acre residential development site with planning permission for 94 dwellings near to King’s
Lynn, Norfolk. We are continuing to market this site and are in discussions with a number of
interested parties.
8
The Conygar Investment Company PLC
STRATEGIC REPORT (continued)
Summary of Investment Properties Under Construction
2017 2016
£’m £’m
Nottingham 14.01 –
Cross Hands 8.14 2.68
Ashby-de-la-Zouch 3.55 –
Haverfordwest (Retail) 3.52 3.40
Rhosgoch 3.46 3.40
Parc Cybi, Holyhead(1) 1.61 –
––––––––––– –––––––––––
Total investment to date 34.29 9.48
––––––––––– –––––––––––
––––––––––– –––––––––––
Summary of Development Projects
It remains our intention, once the individual projects are significantly advanced, to introduce third party
valuations as soon as it is practical to do so. We remain confident that there is significant upside in these
projects which will become evident over the medium term.
2017 2016
£’m £’m
Haverfordwest(2) 22.03 22.18
Holyhead Waterfront 10.86 10.31
Fishguard Waterfront 1.57 1.52
Fishguard Lorry Stop 0.54 0.54
King’s Lynn 0.87 0.87
Llandudno Junction 0.71 0.61
Holyhead Truckstop(3) – 3.18
Parc Cybi, Holyhead(1) – 1.61
––––––––––– –––––––––––
Total investment to date 36.58 40.82
––––––––––– –––––––––––
––––––––––– –––––––––––
(1) Parc Cybi Business Park, Holyhead has been reclassified in the year to an investment property under construction.
(2) The reduction in the Haverfordwest investment from 30 September 2016 arises due to the reimbursement of retention funds
from Pembrokeshire County Council following completion of the infrastructure works at Haverfordwest.
(3) On 29 September 2017, the Company disposed of its 50% interest in the Holyhead truckstop joint venture and assigned to the
purchaser the £3.2m loan previously advanced to the operating company, Roadking Holyhead Limited.
9
The Conygar Investment Company PLC
STRATEGIC REPORT (continued)
Financial review
Net Asset Value
The net asset value at the year end was £135.8 million (2016: £152.0 million). The primary movements
in the year were £3.4 million net rental income plus a £1.5 million profit on the sale of Group undertakings
to Regional REIT Limited and £0.9m of dividend income from the Regional REIT investment, offset by
£4.5 million of finance and administrative costs, a £0.4 million write down of our investment in Regional
REIT Limited, and £17.1 million spent on purchasing Conygar shares. Excluding the amounts incurred
purchasing Conygar shares, net asset value increased by 0.6% in the year.
2017 2016
£’m £’m
Net asset value 135.8 152.0
Share options – 4.1
––––––––––– –––––––––––
Diluted net asset value 135.8 156.1
––––––––––– –––––––––––
––––––––––– –––––––––––
Basic NAV per share 203.0p 196.9p
––––––––––– –––––––––––
––––––––––– –––––––––––
Diluted NAV per share 203.0p 196.9p
––––––––––– –––––––––––
––––––––––– –––––––––––
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. Our investment properties under
construction are carried at fair value and the 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.
Cash flow
The Group used £0.2 million cash in operating activities (2016: generated £2.5 million).
The primary cash outflows in the year were £13.5 million incurred on purchasing the Nottingham Island
site, £8.3 million to repay Barclays debt and £16.7 million to buy back shares. These were partly offset by
cash inflows of £20.8 million (net of costs) from the HSBC debt, resulting in a cash outflow during the
year of £26.5 million (2016: cash inflow of £6.3 million).
Net Income From Investment Property Activities
2017 2016
£’m £’m
Rental income 5.0 9.4
Direct property costs (1.6) (2.9)
––––––––––– –––––––––––
Rental surplus 3.4 6.5
Profit on sale of group undertakings* 1.5 –
Sale of investment properties – 7.0
Cost of investment properties sold – (7.3)
––––––––––– –––––––––––
Total net income arising from investment property activities 4.9 6.2
––––––––––– –––––––––––
––––––––––– –––––––––––
* Profit arising from the sale of the investment property portfolio to Regional REIT Limited.
10
The Conygar Investment Company PLC
STRATEGIC REPORT (continued)
Administrative Expenses
The administrative expenses for the year ended 30 September 2017 were £2.7 million compared with
£2.4 million the previous year. The major items were salary costs of £1.7 million (2016: £1.4 million) and
various costs arising as a result of the Group being listed on AIM.
Financing
At 30 September 2017, the Group had cash of £37.2 million (2016: £63.7 million). The decrease has
resulted mainly from the cash used in buying back shares, administrative costs and investing in the
investment properties under construction and development projects.
As at 30 September 2017, the Group no longer maintains any bank loan facilities.
Taxation
The tax charge for the year is £0.4 million on the pre-tax profit of £1.2 million and comprises £0.3 million
of current tax and £0.1 million of deferred tax. Current tax is payable, at a rate of 19.5% for UK registered
companies and 20% for those registered in Guernsey and Jersey, on net rental income after deduction of
finance costs and administrative expenses. A deferred tax liability of £0.2 million has been recognised in
respect of the surplus of the carrying value of the Regional REIT limited shares over their indexed base
cost and Group capital losses. This charge has been partly offset by a £0.1 million deferred tax credit
arising from movements in the carrying value of investment properties, held by UK registered subsidiaries,
over their indexed base costs up to their sale on 24 March 2017.
Capital management
Capital Risk Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain
an optimal capital structure to reduce the cost of capital.
While the Group does not have a formally approved gearing ratio, the objective above is actively managed
through the direct linkage of borrowings to specific property. The Group seeks to ensure that secured
borrowing stays within agreed covenants with external 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, on reported profitability and on the
cash flows of the Group.
The Group finances its activities with a combination of bank loans, 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 enter into derivative transactions to manage the interest rate risk arising
from the Group’s operations and its sources of finance. Derivative instruments may be used to change the
economic characteristics of financial instruments in accordance with the Group’s treasury policies.
The management of cash and similar instruments is monitored weekly with summary cash statements
produced on a fortnightly basis and discussed regularly in management and Board meetings. The overall
aim 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 with
a range of maturities up to a maximum of 180 days. 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.
11
The Conygar Investment Company PLC
STRATEGIC REPORT (continued)
Dividend policy
The Board recommends that no dividend is paid in respect of the year ended 30 September 2017.
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.
Over the past eight years we have used the surplus cash flow from the investment property portfolio to
enhance these properties by refurbishment, re-letting and extending tenancies, fund the operation of the
business, create a medium term pipeline of development opportunities, pay a modest dividend and buy
back shares where appropriate.
Given that the Group has made only a modest profit for the year ended 30 September 2017, the Board
recommends that no dividend should be declared for this period. The Board will continue to review our
dividend policy each year. Our focus is, and will continue to be, primarily growth in net asset value
per share.
Share buy backs
During the year, the Group acquired 10,340,000 ordinary shares at an average price of 165.4p which
represents 13.4% of its ordinary share capital. This cost £17.1 million and net asset value per share has
been enhanced by approximately 4.9 pence per share. The Group will seek to renew the buy back authority
at the forthcoming Annual General Meeting.
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.
By definition, strategies 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.
The Board devotes a considerable amount of time and resource to continually monitoring and discussing
the environment in which we operate and the potential impacts 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 financial performance and
strong balance sheet are 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 a
considerable amount of time and resource is applied towards ensuring we have the right calibre of staff
and external support to minimise such risks, as most operational risks arise from people-related issues. We
have also invested in improved IT systems to support the business and protect data. Our executive directors
are very closely involved in the day-to-day running of the business to ensure sound management judgement
is applied.
The Group has not suffered any material loss from operational risks during the year.
12
The Conygar Investment Company PLC
STRATEGIC REPORT (continued)
Market risks
Market risks primarily arise from the possibility that the Group is exposed to fluctuations in the values of,
or income from, its investment property portfolio and development land bank. 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 of directors 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:
Properties held for Development
The net realisable value of properties held for development requires an assessment of fair value of 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.
Investment in Joint Ventures
The net realisable value of properties held for development within the joint ventures requires an assessment
of fair value of the underlying assets using property appraisal techniques and other valuation methods.
Such estimates are inherently subjective and in particular, during the early stages of the development
process.
Investment Properties under Construction
The fair value of investment properties under construction rests in planned developments, and is difficult
to estimate pending confirmation of designs and planning permission, and hence has been estimated by
the Directors at cost as an approximation to fair value.
Financial Liabilities
The Group’s policy is to manage the cost of borrowing using variable rate debt. Whilst floating rate
borrowings are not exposed to changes in fair value, the Group is exposed to cash flow risk as costs increase
if market rates rise. The Group’s policy is to use derivative financial instruments to mitigate at least 50%
of this risk in order to achieve a sensible and appropriate level of interest rate protection whilst maintaining
flexibility to match the commercial trading strategy.
All of the undertakings that were party to the Group’s bank loans were sold on 24 March 2017. As at
30 September 2017, the Group no longer maintains any bank loan facilities or derivative financial
instruments.
13
The Conygar Investment Company PLC
STRATEGIC REPORT (continued)
Financial Assets
The interest rate profile of the Group’s cash at the balance sheet date was as follows:
30 Sep 17 30 Sep 16
£’000 £’000
Floating rate 37,170 63,662
––––––––––– –––––––––––
––––––––––– –––––––––––
Floating rate financial assets comprise cash and short term deposits at call and money market rates for up
to thirty days and institutional cash funds.
Credit Risk
The risk of financial loss due to a counterparty’s failure to honour its obligations arises principally in
connection with property leases, the investment of surplus cash and transactions where the Group sells
properties with an element of deferred consideration.
Tenant rent payments are monitored regularly and appropriate action is taken to recover monies owed or
if necessary, to terminate the lease. Deferred consideration terms are only agreed with counterparties
approved by the Board or where some additional security is available, and there were none as at
30 September 2017 (2016: none).
The Group policy has been to invest funds with a broad range of institutions having investment grade low
risk credit ratings and a strong or superior ability to repay short term debt obligations. The unprecedented
credit and banking market disruption of the global financial crisis had a significant impact upon the ability
to rely upon either credit ratings or the ability of financial institutions to honour their commitments and
the widespread nature of the financial crisis introduced considerable uncertainty into the process. As at
30 September 2017, the Group had a single balance of £59,000 (2016: £67,000) where the counter-party
had failed to honour a notice deposit and a full impairment provision has been recorded against the balance.
There are no other receivables which are past due but not impaired.
Liquidity Risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the
use of bank loans secured on the Group’s properties. The Group is exposed to liquidity risk should it
encounter difficulties in realising assets mainly through the sale of properties. However, the Group
maintains a prudent approach to financing and cash flow such that the adverse impact of this can
be mitigated.
Price Risk
The Group’s exposure to changing market prices on the value of financial instruments may have an impact
on the carrying value of financial instruments and would arise principally as a result of entering into swaps
or similar transactions to fix interest rates on the Group’s borrowings. The Group’s policies for managing
this risk are to control the levels of fixed rate debt. As the Group’s assets and liabilities are all denominated
in Pounds Sterling, there is currently no exposure to currency risk.
This report was approved by the Board on 11 December 2017 and signed on its behalf by:
R T E Ware
Chief Executive
11 December 2017
14
The Conygar Investment Company PLC
CORPORATE GOVERNANCE REPORT
The Workings of the Board and its Committees
The Board
The board currently comprises the chief executive, the finance director, a corporate director and two
independent non-executive directors, of whom one is chairman. These demonstrate a range of experience
and sufficient calibre to bring independent judgement on issues of strategy, performance, resources and
standards of conduct which are vital to the success of the Company. The board is responsible to
shareholders for the proper management of the Company. A statement of the directors’ responsibilities in
respect of the financial statements and a statement on going concern is given on pages 21 and 22.
The board has a formal schedule of matters specifically reserved to it. All directors have access to the advice
and services of the company secretary who is responsible to the board for ensuring that board procedures
are followed and that applicable rules and regulations are complied with. In addition, the company secretary
ensures that the directors receive appropriate training as necessary. The appointment and removal of the
company secretary is a matter for the board as a whole.
The board meets approximately ten times a year, reviewing trading performance, ensuring adequate
funding, setting and monitoring strategy, examining major acquisition possibilities and reporting to
shareholders. The non-executive directors have a particular responsibility to ensure that the strategies
proposed by the executive directors are fully considered. The chairman ensures that the directors may take
independent professional advice as required at the Company’s expense.
The following committees deal with specific aspects of the Group’s affairs.
Remuneration Committee
The Company’s remuneration committee is chaired by N J Hamway and its other member is M D Wigley.
It is responsible for making recommendations to the board, within agreed terms of reference, on the
Company’s framework of executive remuneration and its cost. The committee determines the contract
terms, remuneration and other benefits for each of the executive directors, including performance related
bonus schemes, pension rights and compensation payments. The board itself determines the remuneration
of the non-executive directors. The non-executive directors are not involved in any discussions or decisions
about their own remuneration.
Further details of the Company’s policies on remuneration, service contracts and compensation payments
are included in the Directors’ Remuneration Report on pages 17 to 19.
Audit Committee
The audit committee is chaired by N J Hamway and its other member is M D Wigley, and it meets not less
than twice annually. The committee also provides a forum for reporting by the Company’s external
auditors. Meetings are also attended, by invitation, by the chief executive and the finance director.
The audit committee is responsible for reviewing a wide range of matters including the half-year and annual
financial statements before their submission to the board and monitoring the controls which are in force
to ensure the integrity of the information reported to the shareholders. The audit committee advises the
board on the appointment of external auditors and on their remuneration both for audit and non-audit
work, and discusses the nature, scope and results of the audit with external auditors. The audit committee
keeps under review the cost effectiveness and the independence and objectivity of the external auditors.
15
The Conygar Investment Company PLC
CORPORATE GOVERNANCE REPORT (continued)
Relations with Shareholders
Communications with shareholders are given high priority. Pages 6 to 14 of these financial statements
include a detailed review of the business and future developments. There is regular dialogue with
shareholders. The company’s website is found at www.conygar.com.
The board uses the Annual General Meeting and results meetings to communicate with private and
institutional investors and welcomes their participation. Details of resolutions to be proposed at the Annual
General Meeting on 25 January 2018 can be found in the notice of the meeting on page 59.
Internal Control
The directors acknowledge that they are responsible for the Company’s systems of internal control and
for reviewing its effectiveness. The systems are designed to manage rather than eliminate the risk of failure
to achieve the Company’s strategic objectives, and can only provide reasonable, not absolute, assurance
against material misstatement or loss.
The Company’s key risk management processes and system of internal control procedures include
the following:
(cid:0) Management structure: Authority to operate is delegated to executive directors within limits set by
the board. The appointment of executives to the most senior positions within the Group requires
the approval of the board.
(cid:0) Identification and evaluation of business risks: The major financial, commercial, legal, regulatory
and operating risks within the Group are identified through annual reporting procedures.
(cid:0) Information and financial reporting systems: The Group’s planning and financial reporting
procedures include detailed operational budgets for the year ahead. The board reviews and
approves them.
(cid:0) Investment appraisal: A budgetary process and authorisation levels regulate capital expenditure. For
expenditure beyond specified levels, detailed written proposals have to be submitted to the board.
Commercial, legal and financial due diligence work is, where possible, carried out if a business is to
be acquired.
(cid:0) Audit Committee: The audit committee monitors the controls which are in place and any perceived
weakness in the control environment. The audit committee also considers and determines relevant
action in respect of any control issues raised by external auditors.
16
The Conygar Investment Company PLC
DIRECTORS’ REMUNERATION REPORT
Information Not Subject to Audit
Remuneration Committee
The Company’s remuneration committee is chaired by N J Hamway and its other member is M D Wigley.
The committee makes recommendations to the board, within agreed terms of reference, on an overall
remuneration package for executive directors and any other senior executives.
Remuneration Policy and Review
The Company’s policy on directors’ remuneration remains that the overall remuneration package should
be sufficiently competitive to attract, retain and motivate high quality executives capable of achieving the
Group’s objectives and thereby enhancing shareholder value. The package consists of a basic salary with
the potential for significant performance related bonuses aligned to growth in shareholder value, as
represented by net assets per share. All Group employees are employed by the Company.
The details of individual components of the executive remuneration package and service contracts are
summarised below.
Basic salary and benefits: The salary and benefits are reviewed annually at the complete discretion of the
remuneration committee. At present, the directors receive no benefits.
Profit sharing plan: The Remuneration Committee has decided to introduce a new profit sharing plan,
recognising the significant changes in the Group’s activity following the sale of the bulk of the investment
properties. The Remuneration Committee expects to put this plan in place during the first half of 2018.
Share options: The share options were awarded by the remuneration committee and have now lapsed. No
share options were awarded during the year and it is not intended that any further options be granted by
the Company.
Pensions: The Company does not make contributions to directors’ pension plans other than through salary
sacrifice arrangements.
Service contracts: The Company’s policy is for all executive directors to have contracts of employment with
provision for termination on no more than 12 months’ notice.
Non-executive directors
None of the non-executive directors have service contracts. Letters of Appointment provide for a period
of three years which may be extended by mutual agreement for a further three years. The letters of
appointment were extended on 25 October 2016. The remuneration of the non-executive directors takes
the form solely of fees, which are set by the board, having taken advice on appropriate levels. The non-
executive directors are not involved in any discussions or decision about their own remuneration.
17
The Conygar Investment Company PLC
DIRECTORS’ REMUNERATION REPORT (continued)
Service contracts
The service contracts and letters of appointment of the directors include the following terms:
Date of Contract Unexpired Term Notice Period
(Months) (Months)
Executive Directors
R T E Ware 25 October 2007 N/A 12
P M C Rabl 29 October 2009 N/A 12
R H McCaskill 1 October 2015 N/A 12
Non-Executive Directors
N J Hamway 25 October 2007 23 6
M D Wigley 25 October 2007 23 6
Mr R T E Ware and Mr N J Hamway retire by rotation and, being eligible, offer themselves for re-election.
Audited Information
Directors’ emoluments
Basic Basic
Salary Bonus Fees Total Salary Fees Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Executive Directors
2017
2016
R T E Ware 352 – – 352 352 – 352
P M C Rabl 202 – – 202 202 – 202
R H McCaskill 279 75 – 354 175 – 175
Non-Executive Directors
N J Hamway – – 63 63 – 63 63
M D Wigley – – 42 42 – 42 42
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
833 75 105 1,013 729 105 834
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
No non-cash benefits were paid to Directors.
18
The Conygar Investment Company PLC
DIRECTORS’ REMUNERATION REPORT (continued)
Interests in Options
The Company had a share option scheme by which executive directors and other senior executives were
able to subscribe for ordinary shares in the Company and acquire shares in the Company. The interests of
the directors were as follows:
Cancelled
At Awarded Exercised unexercised At
1 October during during during 30 September
Exercise 2016 the year the year the year 2017
Price No. No. No. No. No.
R T E Ware £2.00 2,025,000 – – 2,025,000 –
The options were exercisable between 19 February 2009 and 19 February 2017 and have lapsed.
The interests of the directors to subscribe for or acquire ordinary shares have not changed since the
year-end.
This report was approved by the Board on 11 December 2017 and signed on its behalf by:
R H McCaskill
Company Secretary
19
The Conygar Investment Company PLC
DIRECTORS’ REPORT
Directors’ Report
The directors present their report and the accounts of the Group and the Company for the year ended 30
September 2017.
Principal Activities and Review of the Business
The principal activity of the Group and the Company during the year was property trading, property
investment, acquiring property assets with development and investment potential, and investing in
companies with significant property assets. The Company’s principal subsidiaries are listed in note 16 to
the accounts.
A review of the Company’s activities and likely future developments during this year is dealt with in the
Chairman’s and Chief Executive’s Statement and the Strategic Report.
Significant Events Since the Balance Sheet Date
There have been no significant events since the balance sheet date apart from the granting, by Ynys Mon
County Council in November 2017, of detailed planning permission for an 80-bedroom hotel at Parc
Cybi, Holyhead and the disposal of the M&S store at Ashby-de-la-Zouch for £4.35 million.
Results and Dividends
The Group’s trading results for the year and the Group’s and Company’s financial position at the end of
the year are shown in the attached financial statements.
The directors do not recommend a dividend in respect of the year ended 30 September 2017 (2016: nil).
The Directors and Their Interests in the Shares of the Company
The directors who served the Company during the year together with their beneficial and family interests
in the shares of the Company were as follows:
Ordinary Shares of £0.05 each
At At
30 September 2017 30 September 2016
N J Hamway 1,089,700 1,089,700
R T E Ware 4,500,000 4,500,000
P M C Rabl 1,425,480 1,525,480
M D Wigley 330,000 330,000
R H McCaskill 2,000 2,000
––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––
Details of the directors’ options to subscribe for shares in the Company are disclosed in the Directors’
Remuneration Report.
Directors’ Indemnities
The Company has made qualifying third party indemnity provisions for the benefit of its directors which
remain in force at the date of this report.
20
The Conygar Investment Company PLC
DIRECTORS’ REPORT (continued)
Major Interests in Shares
At 11 December 2017, the directors had been notified of the following interests in excess of 3% of the
Company’s issued share capital:
Name No of Shares %
Miton Group Limited 8,916,884 13.55
Majedie Asset Management Limited 6,216,727 9.44
R T E Ware 4,500,000 6.84
B Sandhu 4,015,000 6.10
Cove Investment Partners LLP 3,146,369 4.78
Creditor Payment Policy and Practice
It is the Company’s policy that payments to suppliers are made in accordance with those terms and
conditions agreed between the Company and its suppliers, provided that all trading terms and conditions
have been complied with.
At 30 September 2017, the Company had an average of 7 days (2016: 7 days) purchases outstanding in
trade creditors. The Group had an average of 7 days (2016: 14 days) outstanding in trade creditors.
Charitable Donations and Political Contributions
The Group made no political donations during the year. The Group made charitable donations of £43,472
(2016: £41,093) during the year.
Financial Instruments
Details of the Group’s financial instruments are given in note 28.
Going Concern
After making enquiries, the directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future. For this reason, they continue to
adopt the going concern basis in preparing the financial statements.
Directors’ Responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in accordance
with applicable law and regulations. The directors are required to prepare financial statements for the
Group in accordance with the International Financial Reporting Standards as adopted by the European
Union (‘IFRS’) and have elected to prepare financial statements for the Company in accordance with
IFRS. Company law requires the directors to prepare such financial statements in accordance with IFRS,
the Companies Act 2006 and Article 4 of the IAS Regulation. Under company law, the directors must not
approve the financial statements unless they are satisfied that they give a true and fair view of the state of
the affairs of the Company and the Group and of the profit or loss of the Group for that period.
International Accounting Standard 1 requires that the financial statements present fairly for each financial
year the Company’s financial position, financial performance and cash flows. This requires the faithful
representation of the effect of transactions, other events and conditions in accordance with the definitions
and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting
Standards Board’s ‘Framework for the preparation and presentation of financial statements’. In virtually
all circumstances, a fair presentation will be achieved by compliance with all the applicable International
Financial Reporting Standards. Directors are also required to:
(cid:0) properly select and apply accounting policies;
21
The Conygar Investment Company PLC
DIRECTORS’ REPORT (continued)
(cid:0) make judgements and accounting estimates that are reasonable and prudent;
(cid:0) present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information; and
(cid:0) provide additional disclosures when compliance with the specific requirements in IFRS is insufficient
to enable users to understand the impact of particular transactions, other events and conditions on
the entity’s financial position and performance.
The directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position
of the Company and the Group and to enable them to ensure that the financial statements comply with
the Companies Act 2006. The directors are also responsible for safeguarding the assets of the Company
and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The directors have chosen, in accordance with S414c (11) of the Companies Act 2006, to include Principal
Risks and Uncertainties within the Strategic Report.
Electronic Publication
The directors are also responsible for the maintenance and integrity of the investor information contained
on the website. Legislation in the UK concerning the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Provision of Information to Auditors
Each of the persons who is a director at the date of approval of this annual report confirms that:
(cid:0) so far as the director is aware, there is no relevant audit information of which the Company’s auditors
are unaware;
(cid:0) the director has taken all the steps that he ought to have taken as a director in order to make himself
aware of any relevant audit information and to establish that the Company’s auditors are aware of
that information.
Auditors
Rees Pollock have expressed their willingness to continue in office and a resolution to re-appoint them as
auditors for the ensuing year will be proposed at the forthcoming annual general meeting.
Annual General Meeting
The Annual General Meeting of the company will be held on Thursday 25 January 2018 at 4.30pm at the
offices of Gowling WLG (UK) LLP, 4 More London Riverside, London, SE1 2AU.
The notice of meeting and the resolutions to be proposed at that meeting are attached on page 59.
In addition to ordinary business, there are resolutions to give a director’s authority to disapply pre-
exemption rights and allot equity securities together with resolutions to give share buy back authorities.
By Order of the Board
R H McCaskill
Company Secretary
11 December 2017
22
The Conygar Investment Company PLC
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
THE CONYGAR INVESTMENT COMPANY PLC
Opinion
We have audited the financial statements of The Conygar Investment Company PLC for the year ended
30 September 2017 which comprise the consolidated statement of comprehensive income, the consolidated
and company statement of changes in equity, the consolidated and company balance sheets, the
consolidated and company cash flow statements, and the related notes, including a summary of significant
accounting policies. The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European
Union and, as regards the parent company financial statements, as applied in accordance with the
Companies Act 2006.
In our opinion:
(cid:0) the financial statements give a true and fair view of the state of the group’s and of the parent
company’s affairs as at 30 September 2017 and of the group’s profit for the year then ended;
(cid:0) the group financial statements have been properly prepared in accordance with IFRSs as adopted
by the European Union;
(cid:0) the parent company financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union and as applied in accordance with the provisions of the Companies
Act 2006; and
(cid:0) the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
group and parent company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard as applied to SME listed entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require
us to report to you where:
(cid:0) the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
(cid:0) the directors have not disclosed in the financial statements any identified material uncertainties that
may cast significant doubt about the group’s or the parent company’s ability to continue to adopt
the going concern basis of accounting for a period of at least twelve months from the date when the
financial statements are authorised for issue.
23
The Conygar Investment Company PLC
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
THE CONYGAR INVESTMENT COMPANY PLC (continued)
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the financial statements as
a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matters Description of risk How the scope of our audit addressed
Impairment of
development and trading
properties
The group has significant
development and trading
properties. The group’s assessment
of the carrying value requires
significant judgement.
the risk
We have reviewed management’s
calculations for the development
projects. Management’s assumptions
as to costs and expected revenue
have, on a sample basis, been agreed
to supporting documentation where
possible. Computational accuracy
has also been checked and reviewed.
We have performed sensitivity
analysis to determine the headroom
for overall profitability.
Based on our procedures we
Valuation of investment
properties under
construction
The group has significant
investment properties under
construction. The group’s
assessment of the valuation
requires significant judgement.
concluded no impairment to the
carrying value of development and
trading properties is necessary.
Most of the investment properties
under construction are at a very early
stage and management have
estimated cost be an approximation
of the fair value.
For investment properties under
construction which are nearly
completed the fair value is also being
approximated at cost.
We have reviewed management’s
current plan for these investment
properties and the current status of
the planning permission process.
Based on our procedures we
concluded that the valuation of
investment properties under
construction is appropriate. We
consider that the approach taken by
management not to uplift those
investment properties under
construction which are nearly
completed is a fair reflection of their
value taking into account the risks
associated with partly completed
sites.
This is not a complete list of all risks identified by our audit.
24
The Conygar Investment Company PLC
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
THE CONYGAR INVESTMENT COMPANY PLC (continued)
Our application of materiality
In planning and performing our audit we applied the concept of materiality. An item is considered material
if it could reasonably be expected to change the economic decisions of a user of the financial statements.
We used the concept of materiality to both focus our testing and evaluate the impact of
misstatements identified.
Based on our professional judgement, we determined overall materiality for the group’s financial statements
as a whole to be £700,000 (2016: £1,400,000). In determining this, we considered a range of benchmarks
with specific focus on the total assets as at the balance sheet date. This materiality level represents 0.5%
(2016: 0.6%) of total assets.
Based on our professional judgement, we determined the materiality for the parent’s financial statements
as a whole to be £700,000 (2016: £1,400,000). In determining this, we considered a range of benchmarks
with specific focus on the total assets as at the balance sheet date. This materiality level represents 0.5%
(2016: 0.9%) of total assets.
We report to the Audit Committee all identified unadjusted errors in excess of £70,000. Errors below that
threshold would also be reported if, in our opinion as auditor, disclosure was required on
qualitative grounds.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the group and its environment, including controls,
and assessing the risks of material misstatement.
We carried out a full scope audit of all the components of the group, except for the components disposed
of during the year. These components were subject to specific audit procedures where the extent of our
audit work was based on our assessment of the risks of material misstatement. All audit work to respond
to the risks of material misstatement was performed directly by the audit engagement team.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditors’ report thereon. Our
opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
(cid:0) the information given in the Strategic report and the Directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
(cid:0) the Strategic report and the Directors’ report have been prepared in accordance with applicable
legal requirements.
25
The Conygar Investment Company PLC
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
THE CONYGAR INVESTMENT COMPANY PLC (continued)
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the
course of the audit, we have not identified material misstatements in the Strategic report or the Directors’
report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
(cid:0) adequate accounting records have not been kept, or returns adequate for our audit have not been
received from branches not visited by us; or
(cid:0) the parent company financial statements are not in agreement with the accounting records and
returns; or
(cid:0) certain disclosures of directors’ remuneration specified by law are not made; or
(cid:0) we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Directors’ Responsibilities Statement set out on pages 21 to 22, the directors
are responsible for the preparation of the financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the group
or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s
members those matters which we are required to state to them in an auditors’ report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the company and the company’s members, as a body, for this report, or the opinions we have formed.
Jonathan Munday (Senior Statutory Auditor)
For and on behalf of Rees Pollock
Statutory Auditor
11 December 2017
26
The Conygar Investment Company PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 September 2017
Year Year
Ended Ended
30 Sep 17 30 Sep 16
Note £’000 £’000
Rental income 4,641 9,222
Other property income 367 213
–––––––––– ––––––––––
Revenue 5,008 9,435
–––––––––– ––––––––––
Direct costs of:
Rental income 1,608 2,909
Development costs written off 77 1,581
–––––––––– ––––––––––
Direct Costs 1,685 4,490
–––––––––– ––––––––––
Gross Profit 3,323 4,945
Profit on sale of group undertakings 1,496 –
Movement on revaluation
of investment in Regional REIT 12 (355) –
Share of results of joint ventures 15 29 (3)
Profit on sale/assignment of interest in joint venture 3 –
Loss on sale of investment properties 13 – (308)
Revaluation of investment properties 13 – 992
Loss on impairment of goodwill – (3,173)
Dividends received from Regional REIT 948 –
Other gains and losses 6 92 (880)
Administrative expenses (2,710) (2,440)
–––––––––– ––––––––––
Operating Profit/(Loss) 3 2,826 (867)
Finance costs 7 (1,785) (4,135)
Finance income 7 174 259
–––––––––– ––––––––––
Profit/(Loss) Before Taxation 1,215 (4,743)
Taxation 8 (360) (706)
–––––––––– ––––––––––
Profit/(Loss) And Total Comprehensive
Income/(Charge) for the Year 855 (5,449)
–––––––––– ––––––––––
–––––––––– ––––––––––
All amounts are attributable to equity shareholders
Basic earnings/(loss) per share 10 1.21p (6.90)p
Diluted earnings/(loss) per share 10 1.21p (6.90)p
All of the activities of the Group are classed as continuing.
The notes on pages 34 to 57 form part of these accounts.
27
The Conygar Investment Company PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2017
Attributable to the equity holders of the Company
Capital Non-
Share Share Redemption Treasury Retained Controlling Total
Capital Premium Reserve Shares Earnings Total Interests Equity
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Group
Changes in equity
for the year ended
30 September 2016
At 1 October 2015 4,985 125,371 1,568 (23,321) 59,173 167,776 20 167,796
Loss for the year – – – – (5,449) (5,449) – (5,449)
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Total comprehensive
charge for the year – – – – (5,449) (5,449) – (5,449)
Cancellation of share
premium account – (125,371) – – 125,371 – – –
Dividend paid – – – – (1,415) (1,415) – (1,415)
Purchase of own shares – – – (8,873) – (8,873) – (8,873)
Purchase of non-
controlling interest – – – – – – (20) (20)
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
At 30 September 2016 4,985 – 1,568 (32,194) 177,680 152,039 – 152,039
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Changes in equity
for the year ended
30 September 2017
At 1 October 2016 4,985 – 1,568 (32,194) 177,680 152,039 – 152,039
Profit for the year – – – – 855 855 – 855
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Total comprehensive
income for the year – – – – 855 855 – 855
Purchase of own shares – – – (17,104) – (17,104) – (17,104)
Cancellation of treasury
shares (1,629) – 1,629 48,909 (48,909) – – –
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
At 30 September 2017 3,356 – 3,197 (389) 129,626 135,790 – 135,790
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
The notes on pages 34 to 57 form part of these accounts.
28
The Conygar Investment Company PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2017
Capital
Share Share Redemption Treasury Retained Total
Capital Premium Reserve shares Earnings Equity
£’000 £’000 £’000 £’000 £’000 £’000
Company
Changes in equity for the year
ended 30 September 2016
At 1 October 2015 4,985 125,371 1,568 (23,321) 24,115 132,718
Loss for the year – – – – (8,121) (8,121)
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
Total comprehensive
charge for the year – – – – (8,121) (8,121)
Cancellation of share
premium account – (125,371) – – 125,371 –
Dividend paid – – – – (1,415) (1,415)
Purchase of own shares – – – (8,873) – (8,873)
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
At 30 September 2016 4,985 – 1,568 (32,194) 139,950 114,309
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
Changes in equity for the year
ended 30 September 2017
At 1 October 2016 4,985 – 1,568 (32,194) 139,950 114,309
Profit for the year – – – – 25,318 25,318
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
Total comprehensive
income for the year – – – – 25,318 25,318
Purchase of own shares – – – (17,104) – (17,104)
Cancellation of treasury shares (1,629) – 1,629 48,909 (48,909) –
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
At 30 September 2017 3,356 – 3,197 (389) 116,359 122,523
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
The notes on pages 34 to 57 form part of these accounts.
29
The Conygar Investment Company PLC
CONSOLIDATED BALANCE SHEET
at 30 September 2017
Company Number: 04907617
30 Sep 2017 30 Sep 2016
Note £’000 £’000
Non-Current Assets
Property, plant and equipment 11 24 21
Investment in Regional REIT 12 27,643 –
Investment properties 13 – 130,680
Investment properties under construction 14 34,293 9,476
Investment in joint ventures 15 7,267 10,110
–––––––––– ––––––––––
69,227 150,287
–––––––––– ––––––––––
Current Assets
Development and trading properties 17 29,311 30,739
Trade and other receivables 18 1,166 3,675
Derivatives 28 – 44
Cash and cash equivalents 37,170 63,662
–––––––––– ––––––––––
67,647 98,120
–––––––––– ––––––––––
Total Assets 136,874 248,407
Current Liabilities
Trade and other payables 19 879 4,263
Bank loans 20 – 8,335
Tax liabilities – 243
–––––––––– ––––––––––
879 12,841
–––––––––– ––––––––––
Non-Current Liabilities
Bank loans 20 – 47,210
Zero dividend preference shares 21 – 34,415
Deferred tax 24 205 1,902
–––––––––– ––––––––––
205 83,527
–––––––––– ––––––––––
Total Liabilities 1,084 96,368
–––––––––– ––––––––––
Net Assets 135,790 152,039
–––––––––– ––––––––––
–––––––––– ––––––––––
Equity
Called up share capital 22 3,356 4,985
Capital redemption reserve 3,197 1,568
Treasury shares 23 (389) (32,194)
Retained earnings 129,626 177,680
–––––––––– ––––––––––
Total Equity Attributable to Equity Holders 135,790 152,039
–––––––––– ––––––––––
–––––––––– ––––––––––
The accounts on pages 27 to 57 were approved by the Board and authorised for issue on 11 December
2017 and are signed on its behalf by:
R T E WARE
R H MCCASKILL }
The notes on pages 34 to 57 form part of these accounts.
30
The Conygar Investment Company PLC
COMPANY BALANCE SHEET
at 30 September 2017
Company number: 04907617
30 Sep 2017 30 Sep 2016
Note £’000 £’000
Non-Current Assets
Investment in Regional REIT 12 27,643 –
Investment in subsidiary undertakings 16 16 68
Investment properties under construction 14 5,064 3,397
Property, plant and equipment 11 24 21
–––––––––– ––––––––––
32,747 3,486
–––––––––– ––––––––––
Current Assets
Development and trading properties 17 7,282 8,558
Trade and other receivables 18 57,143 99,784
Cash and cash equivalents 36,208 37,902
–––––––––– ––––––––––
100,633 146,244
–––––––––– ––––––––––
Total Assets 133,380 149,730
Current Liabilities
Trade and other payables 19 10,652 35,421
Non-Current Liabilities
Deferred tax 24 205 –
–––––––––– ––––––––––
Total Liabilities 10,857 35,421
–––––––––– ––––––––––
Net Assets 122,523 114,309
–––––––––– ––––––––––
–––––––––– ––––––––––
Equity
Called up share capital 22 3,356 4,985
Capital redemption reserve 3,197 1,568
Treasury shares 23 (389) (32,194)
Retained earnings 116,359 139,950
–––––––––– ––––––––––
Total Equity 122,523 114,309
–––––––––– ––––––––––
–––––––––– ––––––––––
The accounts on pages 27 to 57 were approved by the Board and authorised for issue on 11 December
2017 and are signed on its behalf by:
R T E WARE
R H MCCASKILL }
The notes on pages 34 to 57 form part of these accounts.
31
The Conygar Investment Company PLC
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 September 2017
Year Year
Ended Ended
30 Sep 17 30 Sep 16
£’000 £’000
Cash Flows From Operating Activities
Operating profit/(loss) 2,826 (867)
Depreciation and amortisation of reverse lease premium 66 125
Profit on sale of group undertakings (1,496) –
Loss on revaluation of listed investment 355 –
Share of results of joint ventures (29) 3
Profit on sale of interest in joint venture (3) –
Development costs written off 77 1,581
Other gains and losses 25 17
Loss on sale of investment properties – 308
Surplus on revaluation of investment properties – (992)
Loss on impairment of goodwill – 3,173
–––––––––– ––––––––––
Cash Flows From Operations Before Changes In Working Capital 1,821 3,348
Change in trade and other receivables (659) 1,294
Change in land, development and trading properties (127) 267
Change in trade and other payables (436) (320)
–––––––––– ––––––––––
Cash Flows From Operations 599 4,589
Finance costs (693) (1,450)
Finance income 74 167
Tax paid (181) (815)
–––––––––– ––––––––––
Cash Flows (Used In)/Generated From Operating Activities (201) 2,491
–––––––––– ––––––––––
Cash Flows From Investing Activities
Acquisition of and additions to investment properties (22,149) (9,759)
Proceeds from sale of investment properties – 6,842
Cash transferred on sale of group undertakings (1,881) –
Costs paid on sale of group undertakings (792) –
Investment in joint ventures (282) (215)
Proceeds from sale/assignment of interest in joint venture 3,125 –
Loans repaid by joint venture – 175
Purchase of plant and equipment (12) (14)
–––––––––– ––––––––––
Cash Flows Used In Investing Activities (21,991) (2,971)
–––––––––– ––––––––––
Cash Flows From Financing Activities
Bank loans drawn down 21,298 48,100
Bank loans repaid (8,335) (29,816)
Costs paid on new bank loan (548) (971)
Purchase of interest rate cap – (269)
Dividend paid – (1,415)
Purchase of own shares (16,715) (8,873)
–––––––––– ––––––––––
Cash Flows (Used In)/Generated From Financing Activities (4,300) 6,756
–––––––––– ––––––––––
Net (decrease)/increase in cash and cash equivalents (26,492) 6,276
Cash and cash equivalents at 1 October 63,662 57,386
–––––––––– ––––––––––
Cash and Cash Equivalents at 30 September 37,170 63,662
–––––––––– ––––––––––
–––––––––– ––––––––––
The notes on pages 34 to 57 form part of these accounts.
32
The Conygar Investment Company PLC
COMPANY CASH FLOW STATEMENT
for the year ended 30 September 2017
Year Year
Ended Ended
30 Sep 17 30 Sep 16
£’000 £’000
Cash Flows From Operating Activities
Operating loss (1,273) (8,065)
Surplus on revaluation of listed investment (131) –
Write down value of investment in subsidiary undertakings 1 3,201
Provision against loan to group undertaking 102 1,643
Depreciation and amortisation 9 21
–––––––––– ––––––––––
Cash Flows From Operations Before
Changes in Working Capital (1,292) (3,200)
Change in trade and other receivables (385) 293
Change in land, developments and trading properties (194) (1,382)
Change in trade and other payables 193 817
–––––––––– ––––––––––
Cash Flows From Operations (1,678) (3,472)
Finance income 68 124
–––––––––– ––––––––––
Cash Flows Used In Operating Activities (1,610) (3,348)
–––––––––– ––––––––––
Cash Flows From Investing Activities
Acquisition of and additions to investment properties (197) (3,397)
Proceeds from sale/assignment of interest in joint venture 3,125 –
Costs paid on sale of group undertakings (792) –
Purchase of plant and equipment (12) (14)
–––––––––– ––––––––––
Cash Flows Used In Investing Activities 2,124 (3,411)
–––––––––– ––––––––––
Cash Flows From Financing Activities
Loans from subsidiary undertakings 14,762 30,872
Loans to joint venture (255) (153)
Dividend paid – (1,415)
Purchase of own shares (16,715) (8,873)
–––––––––– ––––––––––
Cash Flows (Used In)/Generated From Financing Activities (2,208) 20,431
–––––––––– ––––––––––
Net (decrease)/increase in cash and cash equivalents (1,694) 13,672
Cash and cash equivalents at 1 October 37,902 24,230
–––––––––– ––––––––––
Cash and Cash Equivalents at 30 September 36,208 37,902
–––––––––– ––––––––––
–––––––––– ––––––––––
The notes on pages 34 to 57 form part of these accounts.
33
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS
for the year ended 30 September 2017
1. Accounting Policies and General Information
1a General Information
The Conygar Investment Company PLC (“the Company”) is a company incorporated and
domiciled in England and Wales, is AIM listed and registered at Companies House under registration
number 4907617.
The Company’s subsidiaries are shown in note 16. The Company and its subsidiaries are collectively
referred to below as “the Group”.
The Company’s principal activity is property trading, property investment, acquiring property assets
with development and investment potential, and investing in companies with significant property assets.
1b Basis of Preparation
The Company has prepared the accounts on the basis of all applicable IFRS, including all International
Accounting Standards (IAS), Standing Interpretations Committee (SIC) interpretations issued by the
International Financial Reporting Interpretations Committee (IFRIC) interpretations issued by the
International Accounting Standards Board (IASB) with effective dates for accounting periods
beginning on or after 1 October 2016, together with those parts of the Companies Act 2006 applicable
to companies reporting under IFRS.
The consolidated financial information has been prepared on the historical cost basis except for
investment properties, derivatives and listed investments which are accounted for at fair value.
1c Summary of Significant Accounting Policies
The principal accounting policies of the Group are set out below. These policies have been consistently
applied to all of the periods presented, unless otherwise stated.
Interpretations and Amendments to Published Standards Effective in the Accounts
For the purposes of the preparation of the accounts, the Group has applied all standards and
interpretations that will be effective for the accounting periods commencing on or after 1 October 2016.
The following standards and interpretations have been adopted:
– Annual improvements 2014 (effective for accounting periods beginning on or after
1 January 2016);
– Amendments to IAS 16 ‘Property plant and equipment’ and IAS 38, ‘Intangible assets’, on
depreciation and amortisation (effective annual periods beginning on or after 1 January 2016);
– Amendment to IAS 1, ‘Presentation of financial statements’ on the disclosure initiative (effective
annual periods beginning on or after 1 January 2016).
Management has assessed the impact of the standards and interpretations on the Group and concluded
they are not applicable to the Group’s circumstances and do not require amendment of the Group’s
accounting policies.
Standards, Interpretations and Amendments to Published Standards that are not yet
Effective
Certain new standards, amendments and interpretations to existing standards have been published
that are mandatory for the Group’s accounting periods beginning on or after 1 October 2017 or later
periods but which the Group has not adopted early are as follows:
– Amendment to IAS 7, ‘Statement of cash flows’ on disclosure initiative (effective for accounting
periods beginning on or after 1 January 2017);
34
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
1. Accounting Policies and General Information (continued)
– Amendments to IAS 12, ‘Income taxes’ on Recognition of deferred tax assets for unrealised losses
(effective for accounting periods beginning on or after 1 January 2017);
–
–
–
IFRS 9 ‘Financial Instruments’ (effective for accounting periods beginning on or after
1 January 2018);
IFRS 15 ‘Revenue from contracts with customers’ (effective for accounting periods beginning on
or after 1 January 2018);
IFRS 16 ‘Leases’ (effective for accounting periods beginning on or after 1 January 2019 with earlier
application permitted if IFRS 15, ‘Revenue from Contracts with Customers’, is also applied.);
– Amendments to IAS 40, ‘Investment property’ relating to transfers of investment property (effective
for accounting periods beginning on or after 1 January 2018);
– Annual improvements 2014-2016 (effective for accounting periods beginning on or after
1 January 2017).
Management continues to monitor the IASB’s on-going work on improvements to financial reporting
but does not currently believe that the amendments and interpretations listed above will have a material
effect on the Group’s reported income or net assets.
Basis of Consolidation The Group accounts consolidate those of the Company and all of its
subsidiary undertakings drawn up to 30 September each year. Subsidiary undertakings are those
entities over which the Group has the ability to govern the financial and operating policies through
the exercise of voting rights. The results of subsidiaries acquired or sold are consolidated for the
periods from or to the date on which control passed. Acquisitions are accounted for under the
acquisition method.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess
of the cost of the business combination over the Group’s interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the
net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost
of the business combination, the excess is recognised immediately in profit or loss.
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from
the Group’s equity therein. Non-controlling interests consist of the amount of these interests at the
date of the original business combination and the minority’s share of changes in equity since the date
of the combination.
All intra group balances, transactions, income and expenses and profit and losses on transactions
between the Company and its subsidiaries and between subsidiaries are eliminated.
Revenue Recognition Property revenue consists of gross rental income on an accruals basis, together
with sales of trading, development and investment properties. Rental income receivable in the period
from lease commencement to the earlier of lease expiry and any tenant’s option to break is spread
evenly over that period. Any incentive for lessees to enter into a lease agreement and any costs
associated with entering into the lease are spread over the same period.
A property is regarded as sold when the significant risks and returns have been transferred to the buyer.
For conditional exchanges, sales are recognised when the conditions are satisfied.
Revenue in respect of investment and other income represents investment income, fees and
commissions earned on an accruals basis and profits or losses recognised on investments held for the
short term. Dividends are recognised when the shareholders’ right to receive payment has been
established. Interest income is accrued on a time basis, by reference to the principal outstanding and
the effective interest rate.
35
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
1. Accounting Policies and General Information (continued)
Operating Profit Operating profit is stated after charging income from trading investments and after
the share of results of joint ventures but before finance costs and finance income.
Expenses All expenses are accounted for on an accruals basis. They are charged through the Statement
of Comprehensive Income with the exception of share issue expenses, which are charged to the share
premium account.
Profit sharing plan The Group has a profit sharing plan which is an annual plan in which executive
directors and senior executives will be entitled to an allocation of a profit sharing pool based upon the
increase in the net asset value per share of the Company. The Remuneration Committee is currently
reviewing this plan.
Share Based Payments The Group provided equity-settled share-based payments in the form of
share options.
IFRS 2 “Share-based payment” is applied to all share-based payment arrangements granted after 7
November 2002 that had not vested prior to 1 October 2005. Equity-settled share-based payments
are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of
grant. The fair value determined at the date of grant is expensed on a straight line basis over the vesting
period, based on the Group’s estimate of shares which will eventually vest and adjusted for the effect
of non market-based vesting conditions. The Group uses an appropriate valuation model utilising a
Monte Carlo simulation in order to arrive at a fair value at the date share options are granted.
Property, Plant and Equipment Property, plant and equipment is stated at cost less accumulated
depreciation.
Depreciation Depreciation is charged so as to write off the cost of assets, over their estimated useful
lives, using the straight line method, on the following basis:
Plant and equipment
Furniture and fittings
– 25% per annum
– 20% per annum
Amortisation The lease of the Company’s premises is amortised over the length of the lease.
Taxation The taxation charge represents the sum of tax currently payable and deferred tax. The charge
for current taxation is based on the results for the year as adjusted for items which are non-assessable
or disallowed. It is calculated using rates that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amounts of assets and liabilities in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of
the assets to be recovered.
Deferred tax is calculated at the tax rates that have been enacted or substantively enacted by the balance
sheet date and are expected to apply in the period when the liability is settled or the asset is realised.
It is recognised in the Statement of Comprehensive Income except when it relates to items credited or
charged directly to equity, in which case the deferred tax is also dealt with in equity.
36
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
1. Accounting Policies and General Information (continued)
Fixed Asset Investments Fixed asset
investments are recognised at cost and are
subsequently remeasured at fair value. The resulting gain or loss is recognised in the Statement of
Comprehensive Income.
Investment Properties In accordance with IAS 40 (Revised) both long leasehold and freehold
properties which are held to earn rentals and/or for capital appreciation have been accounted for as
investment properties.
Investment properties are initially recognised at cost, being the fair value of the consideration given,
including acquisition costs associated with the investment property. Subsequent costs, including reverse
lease premiums, are capitalised to the extent that such costs have an ongoing benefit to the property.
After initial recognition, investment properties are measured at fair value, with unrealised gains and
losses recognised in the Statement of Comprehensive Income. Fair value is based on the market value,
at the balance sheet date, of the properties as provided by Jones Lang LaSalle, a firm of independent
chartered surveyors, in accordance with the Practice Statements contained in the RICS Appraisal and
Valuation Standards published by the Royal Institution of Chartered Surveyors.
Investments In Joint Ventures A joint venture is an entity in which the Group has an interest. The
joint venture operates in the same way as other entities, except that a contractual arrangement between
the venturers establishes joint control over the economic activity of that entity.
The Group’s interests in jointly controlled entities are incorporated in the financial information using
the equity method of accounting. Investments in joint ventures are carried in the balance sheet at cost
as adjusted by post acquisition changes in the Group’s share of the net assets of the associate, less any
impairment in the value of the individual investments. The Group’s share of the net profit or loss of
the joint venture is shown as a single line item in the Consolidated Statement of Comprehensive
Income.
Where the Group transacts with a joint venture any profit or loss arising is eliminated to the extent of
the Group’s interest in the relevant joint venture.
Investment In Subsidiaries Investments in subsidiaries are held in the Company balance sheet at
cost and reviewed annually for impairment.
Development and Trading Properties Development and trading properties held for sale are
inventory and are included in the Balance Sheet at the lower of cost and net realisable value. Cost
comprises the original purchase price of the property together with directly attributable costs. Where
multiple properties are acquired as part of a single transaction the purchase price and directly
attributable costs are allocated to the individual units based on independent valuations. Net realisable
value represents the estimated selling price less all estimated costs of completion.
Cash and Cash Equivalents Cash and cash equivalents are carried in the Balance Sheet at cost. For
the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand, deposits
with banks and other short term liquid investments with original maturities of three months or less.
Trade Receivables Trade receivables are measured on initial recognition at fair value, and are
subsequently measured at amortised cost using the effective interest rate method. Appropriate
allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective
evidence that the asset is impaired. The allowance recognised is measured as the difference between
the asset’s carrying amount and the present value of the estimated future cash flows discounted at the
effective interest rate computed at initial recognition.
37
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
1. Accounting Policies and General Information (continued)
Zero Dividend Preference Shares Zero dividend preference shares are recognised as liabilities in
the Statement of Financial Position in accordance with IAS 32 Financial Instruments: Presentation.
After initial recognition, these liabilities are measured at amortised cost, which represents the initial
proceeds of the issuance plus the accrued entitlement to the date of these financial statements.
Borrowing and Borrowing Costs Interest bearing bank loans and overdrafts are initially recorded
at fair value, net of direct finance and other costs yet to be amortised and are subsequently measured
at amortised cost using the effective interest rate method. Finance and other costs incurred in respect
of the obtaining and maintenance of borrowings are accounted for on an accruals basis using the
effective interest rate method and written off to the Statement of Comprehensive Income over the
length of the associated borrowings. Borrowing costs that are directly attributable to the acquisition,
construction or production of assets, which necessarily take a substantial period of time to get ready
for their intended use or sale, are capitalised as part of the cost of that asset.
Trade Payables Trade payables are recognised initially at fair value, and are subsequently measured
at amortised cost using the effective interest rate method.
Trading Investments Trading investments are measured at fair value. Gains and losses on the
re-measurement of trading investments are recognised directly in the Statement of Comprehensive
Income. Fair values of these investments are based on quoted market prices where available.
Derivative Financial Instruments Derivative financial assets and financial liabilities are recognised
on the Balance Sheet when the Group becomes a party to the contractual provisions of the instrument.
Derivatives are initially recorded at fair value and are subsequently remeasured to fair value based on
mid-market prices, estimated future cash flows and forward rates as appropriate.
Financial liabilities and equity Financial liabilities and equity instruments are classified according
to the substance of the contractual arrangements entered into. An equity instrument is any contract
that evidence a residual interest in the assets of the Group after deducting all of its liabilities.
Equity instruments Equity instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs. Dividend distributions to the Company’s shareholders are recognised as a
liability in the Group’s financial statements in the period in which the dividend is approved by the
Company’s shareholders.
Treasury shares Shares which have been repurchased are classified as Treasury Shares and shown
as a separate item within equity. They are recognised at the trade date for the amount of consideration
paid, together with directly attributable costs. This is presented as a deduction from total equity.
Preference shares Preference shares are regarded as compound instruments, consisting of a liability
component and an equity component. At the date of issue, the fair value of the liability component is
estimated using the prevailing market interest rate for similar non-convertible debt. The difference
between the proceeds of issue of the convertible loan notes and the fair value assigned to the liability
component, representing the embedded option to convert the liability into equity of the Group, is
included in equity.
Issue costs are apportioned between the liability and equity components of the convertible loan notes
based on their relative carrying amounts at the date of issue. The portion relating to the equity
component is charged directly against equity.
The interest expense on the liability component is calculated by applying the prevailing market interest
rate for similar non-convertible debt to the liability component of the instrument. The difference
between this amount and the interest paid is added to the carrying amount of the convertible loan note.
38
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
1. Accounting Policies and General Information (continued)
Leasing The Group has entered into commercial property leases as lessor of its investment property
portfolio. As the terms of these leases do not transfer substantially all the risks and rewards of ownership
to the lessee they are classified as operating leases. Rentals receivable under operating leases are credited
to income on a straight line basis over the term of the relevant lease. Benefits granted as an incentive
to enter into an operating lease are also spread on a straight line basis over the lease term.
The Group leases its office premises. As the terms of the lease do not transfer substantially all the risks
and rewards of ownership to the Company, the lease is classified as an operating lease. Rentals payable
under operating leases are charged to income on a straight line basis over the term of the relevant lease.
Use of Estimates and Judgements 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 of directors
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:
Properties Held for Investment
The fair value of properties held for investment is based upon open market value and is calculated
using a third party valuation provided by an external independent valuer. The valuations are based
upon assumptions including future rental income, anticipated void cost, the appropriate discount rate
or yield. The independent valuers also take into consideration market evidence for comparable
properties in respect of both transaction prices and rental agreements.
Properties Held for Development
The net realisable value of properties held for development requires an assessment of fair value of 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.
Investment in Joint Ventures
The net realisable value of properties held for development within the joint ventures requires an
assessment of fair value of the underlying assets using property appraisal techniques and other valuation
methods. Such estimates are inherently subjective and in particular during the early stages of the
development process.
Share Based Payments
The estimation of share based payment costs, which require the use of an appropriate valuation model,
including estimations for inputs into the valuation model covering vesting period, expected life, the
number of awards that will ultimately vest and judgements relating to the probability of meeting
non-market performance conditions and the continuing participation of employees.
39
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
2. Segmental Information
The Group has adopted IFRS 8 Operating Segments with effect from 1 October 2009. IFRS 8 requires
the identification of the Group’s operating segments which are defined as being discrete components
of the Group’s operations whose results are regularly reviewed by the Board of directors. The Group
divides its business into the following segments:
(cid:0) Investment in the shares of Regional REIT;
(cid:0) Investment properties, including investment properties under construction, which are owned or
leased by the Group for long-term income and for capital appreciation; and,
(cid:0) Development properties, which include sites, developments in the course of construction and sites
available for sale.
The only items of revenue or profit/loss relating to the investment in Regional REIT Limited are the
dividends received from that investment and the fair value movement from acquisition until the balance
sheet date. The only item of revenue or profit/loss relating to the development properties is the write
off of development costs and therefore only the segmented balance sheet is reported.
Balance Sheet
30 Sep 2017 30 Sep 2016
Investment Development Group Investment Development Group
Investment Properties Properties Other Total Properties Properties Other Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Investment in
Regional REIT 27,643 – – – 27,643 – – – –
Investment properties – 34,293 – – 34,293 140,156 – – 140,156
Investment in
joint ventures – – 7,267 – 7,267 – 10,110 – 10,110
Development &
trading properties – – 29,311 – 29,311 – 30,739 – 30,739
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
27,643 34,293 36,578 – 98,514 140,156 40,849 – 181,005
Other assets – 883 21 37,456 38,360 27,947 – 39,455 67,402
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Total assets 27,643 35,176 36,599 37,456 136,874 168,103 40,849 39,455 248,407
Liabilities – (125) (4) (955) (1,084) (60,077) – (36,291) (96,368)
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Net assets 27,643 35,051 36,595 36,501 135,790 108,026 40,849 3,164 152,039
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
40
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
3. Operating Profit
Operating profit is stated after charging:
Year ended Year ended
30 Sep 17 30 Sep 16
£’000 £’000
Audit services – fees payable to the parent company auditor
for the audit of the Company and the consolidated
financial statements 20 25
–––––––––– ––––––––––
Other services – fees payable to the Company auditor for the
audit of the Company’s subsidiaries pursuant to legislation 25 60
–––––––––– ––––––––––
Other services – fees payable to the Company auditor for
tax services 20 20
–––––––––– ––––––––––
Depreciation of owned assets 9 3
–––––––––– ––––––––––
Lease amortisation – 18
–––––––––– ––––––––––
Operating lease rentals – land and buildings 223 184
–––––––––– ––––––––––
Movement on provision for doubtful debts 40 107
–––––––––– ––––––––––
4. Particulars of Employees
The aggregate payroll costs were:
Year ended Year ended
30 Sep 17 30 Sep 16
£’000 £’000
Wages and salaries 1,516 1,264
Social security costs 196 165
–––––––––– ––––––––––
1,712 1,429
–––––––––– ––––––––––
–––––––––– ––––––––––
The average monthly number of persons, including executive directors, employed by the Company
during the year was seven (2016: seven).
5. Directors’ Emoluments
Year ended Year ended
30 Sep 17 30 Sep 16
£’000 £’000
Emoluments 1,013 834
–––––––––– ––––––––––
–––––––––– ––––––––––
Emoluments of highest paid director 354 352
–––––––––– ––––––––––
–––––––––– ––––––––––
The board of directors comprise the only persons having authority and responsibility for planning,
directing and controlling the activities of the Group.
41
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
6. Other Gains and Losses
Year ended Year ended
30 Sep 17 30 Sep 16
£’000 £’000
Movement in fair value of interest rate swaps 59 (262)
Transaction costs – (650)
Other 33 32
–––––––––– ––––––––––
92 (880)
–––––––––– ––––––––––
–––––––––– ––––––––––
7. Finance Income/Costs
Year ended Year ended
30 Sep 17 30 Sep 16
£’000 £’000
Finance Income
Bank interest and interest receivable 174 259
–––––––––– ––––––––––
–––––––––– ––––––––––
Finance Costs
Bank loans (757) (1,584)
Amortisation of arrangement fees (127) (741)
ZDP interest payable (901) (1,810)
–––––––––– ––––––––––
(1,785) (4,135)
–––––––––– ––––––––––
–––––––––– ––––––––––
8. Taxation on Ordinary Activities
(a) Analysis of tax charge in the year
Year ended Year ended
30 Sep 17 30 Sep 16
£’000 £’000
UK Corporation tax based on the results for the year 313 577
Over provision in prior years (11) (1,773)
–––––––––– ––––––––––
Current tax 302 (1,196)
Deferred tax 58 1,902
–––––––––– ––––––––––
360 706
–––––––––– ––––––––––
–––––––––– ––––––––––
42
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
(b) Factors affecting tax charge
The tax assessed on the profit/(loss) for the year differs from the standard rate of corporation tax in
the UK of 19.5% (2016: 20.0%).
Year ended Year ended
30 Sep 17 30 Sep 16
£’000 £’000
Profit/(loss) before taxation 1,215 (4,743)
–––––––––– ––––––––––
–––––––––– ––––––––––
Profit/(loss) multiplied by rate of tax 237 (949)
Effects of:
Tax impact of unrealised revaluation movements 69 (198)
Utilisation of tax losses (98) (129)
Movement in tax losses carried forward 304 607
Non-taxable items (189) 1,314
Joint venture losses not taxable – 10
Capital allowances (76) (78)
Impact of differing tax rates for offshore entities 66 –
Over provision in prior years (11) (1,773)
–––––––––– ––––––––––
Current tax charge/(credit) for the year 302 (1,196)
–––––––––– ––––––––––
–––––––––– ––––––––––
9. Dividends
No dividend was paid in respect of the year ended 30 September 2017 (2016: nil).
10. Earnings Per Share
The calculation of earnings per ordinary share is based on the profit after tax of £855,000 (2016: loss
of £5,449,000) and on the number of shares in issue being the weighted average number of shares in
issue during the period of 70,684,860 (2016: 78,920,377). There are no diluting amounts in either
the current or prior years.
43
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
11. Property, Plant and Equipment
Group & Company Premises Office Furniture
Lease Equipment & Fittings Total
£’000 £’000 £’000 £’000
Cost
At 1 October 2015 157 75 95 327
Additions – 14 – 14
–––––––––– –––––––––– –––––––––– ––––––––––
At 30 September 2016 and
1 October 2016 157 89 95 341
Additions – 12 – 12
–––––––––– –––––––––– –––––––––– ––––––––––
At 30 September 2017 157 101 95 353
–––––––––– –––––––––– –––––––––– ––––––––––
Depreciation/Amortisation
At 1 October 2015 139 65 95 299
Provided during the year 18 3 – 21
–––––––––– –––––––––– –––––––––– ––––––––––
At 30 September 2016 and
1 October 2016 157 68 95 320
Provided during the year – 9 – 9
–––––––––– –––––––––– –––––––––– ––––––––––
At 30 September 2017 157 77 95 329
–––––––––– –––––––––– –––––––––– ––––––––––
Net book value at
30 September 2017 – 24 – 24
–––––––––– –––––––––– –––––––––– ––––––––––
–––––––––– –––––––––– –––––––––– ––––––––––
Net book value at
30 September 2016 – 21 – 21
–––––––––– –––––––––– –––––––––– ––––––––––
–––––––––– –––––––––– –––––––––– ––––––––––
12. Investment in Regional REIT
As set out in the Chairman’s and Chief Executive’s Statement, the Group completed the disposal of
various Group undertakings on 24 March 2017. The net consideration was satisfied by the receipt of
26,326,644 ordinary shares in Regional REIT, at a price of 106.347 pence per share, which represented
8.76% of the issued share capital of Regional REIT at the balance sheet date.
Regional REIT is a United Kingdom based real estate investment trust whose shares were admitted
to the premium segment of the Official List and to trading on the main market of the London Stock
Exchange on 6 November 2015. Regional REIT is managed by London & Scottish Investments
Limited, as asset manager, and Toscafund Asset Management LLP, as investment manager.
The consideration was subject to adjustment by reference to completion accounts, which were agreed
in July 2017, with a balancing cash settlement of £3,407 paid by the Group to Regional REIT.
The movement in the market value of the shares during the period was as follows:
£’000
Consideration shares at issue price 27,998
Movement in market value (355)
––––––––––
Valuation at 30 September 2017 27,643
––––––––––
––––––––––
Under the terms of the sale agreement, the Company has agreed a lock-in arrangement in respect of
the consideration shares. Specifically, the Company is not permitted to dispose (directly or indirectly)
of the legal or beneficial ownership of one-third of the consideration shares until 24 March 2018 and
a further one-third of the consideration shares until 24 September 2018.
44
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
13. Investment Properties
With the exception of the investment properties under construction, set out in note 14, the Group’s
investment property portfolio was disposed of on 24 March 2017 as part of the corporate sale to Regional
REIT. The movement in fair value of the investment properties up to the date of disposal was as follows:
Group
Long Reverse Lease
Freehold Leasehold Premiums Total
£’000 £’000 £’000 £’000
Valuation at 1 October 2015 112,552 20,146 492 133,190
Additions 1,446 2,226 – 3,672
Disposals (7,150) – – (7,150)
Lease incentive granted 80 – – 80
Reverse lease premium amortisation – – (104) (104)
Movement on revaluation (538) 1,530 – 992
–––––––––– –––––––––– –––––––––– ––––––––––
Valuation at 30 September 2016 106,390 23,902 388 130,680
Additions 11 64 – 75
Reclassification to investment
Properties under construction (1,170) – – (1,170)
Reverse lease premium amortisation – – (57) (57)
Disposal of group undertakings (105,231) (23,966) (331) (129,528)
–––––––––– –––––––––– –––––––––– ––––––––––
At 30 September 2017 – – – –
–––––––––– –––––––––– –––––––––– ––––––––––
–––––––––– –––––––––– –––––––––– ––––––––––
The historical cost of properties held at 30 September 2016 was £161,164,000.
The properties were valued by Jones Lang LaSalle, independent valuers not connected with the Group,
at 30 September 2016 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 valuations were arrived at by reference to
market evidence of transaction prices and completed lettings for similar properties. The properties
were valued individually and not as part of a portfolio and no allowance was made for expenses of
realisation or for any tax which might have arisen. They assumed a willing buyer and a willing seller in
an arm’s length transaction. The valuations reflect 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 cost and the appropriate discount rate or yield.
As at 30 September 2017, the Group has pledged £nil (2016: £89,955,000) of investment property
to secure Lloyds Bank, Jersey debt facilities and £nil (2016: £33,260,000) to secure Barclays Bank
PLC debt facilities. Further details of these facilities are provided in note 28.
The property rental income earned from investment properties, leased out under operating leases,
amounted to £5,008,000 (2016: £9,435,000). Apart from the corporate sale, there were no other
investment property disposals in the current year. Details of the loss from the sale of investment
properties in the prior year are set out below:
30 Sep 16
£’000
Gross sale proceeds 6,955
Sale fees (113)
––––––––––
Net sale proceeds 6,842
Book value of properties sold (7,150)
––––––––––
Loss on sale of investment properties (308)
––––––––––
––––––––––
45
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
14. Investment Properties Under Construction
Investment properties under construction are freehold land and buildings representing investment
properties under development or construction and they amount to £34,293,000 (2016: £9,476,000)
as at 30 September 2017. These properties comprise landholdings for current or future development
as investment properties. This methodology has been adopted because the value of these properties is
dependent on a detailed knowledge of the planning status, the competitive position of the assets and
a range of complex development appraisals. The fair value of these properties rests in the planned
developments, and is difficult to estimate pending confirmation of designs and planning permission,
and hence has been estimated by the directors at cost as an approximation to fair value. Additions in
the year include the acquisition of the Nottingham Island site for £13.5m including costs.
Investment Properties under Construction
Group Company
30 Sep 17 30 Sep 16 30 Sep 17 30 Sep 16
£’000 £’000 £’000 £’000
At 1 October 9,476 3,156 3,397 –
Additions 22,038 6,320 – 3,397
Reclassification from investment properties 1,170 – – –
Reclassification from development projects 1,609 – 1,609 –
–––––––––– –––––––––– –––––––––– ––––––––––
At 30 September 34,293 9,476 5,064 3,397
–––––––––– –––––––––– –––––––––– ––––––––––
–––––––––– –––––––––– –––––––––– ––––––––––
15. Investment in Joint Ventures
30 Sep 17 30 Sep 16
£’000 £’000
At 1 October 10,110 6,660
Share of results of joint ventures 29 (3)
Investment in joint venture 253 218
Proceeds on sale/assignment of interest in joint venture (3,125) –
Reclassify loan to joint venture – 3,235
–––––––––– ––––––––––
At 30 September 7,267 10,110
–––––––––– ––––––––––
–––––––––– ––––––––––
On 29 September 2017, the Group disposed of its 50% interest in the share capital of Roadking
Holyhead Limited and assigned its loan to Roadking Holyhead Limited for a gross consideration of
£3,125,500. Details of the profit from the sale are set out below:
30 Sep 17
£’000
Gross proceeds from sale/assignment 3,125
Sale fees (10)
––––––––––
Net sale proceeds 3,115
Book value of interest sold (3,112)
––––––––––
Profit on sale/assignment of interest in joint venture 3
––––––––––
––––––––––
As at the balance sheet date, the Group retained a 50% interest in Conygar Stena Line Limited, a
property development company and CM Sheffield Limited a dormant company.
46
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
15. Investment in Joint Ventures (continued)
Loans to Joint Ventures
In accordance with IAS 39, loans to joint venture companies have not been disclosed separately on
the balance sheet as the investments in those entities are net liabilities when the loans are excluded.
30 Sep 17 30 Sep 16
£’000 £’000
Conygar Stena Line Limited 8,098 7,733
C M Sheffield Limited 2 2
Roadking Holyhead Limited – 3,235
–––––––––– ––––––––––
8,100 10,970
–––––––––– ––––––––––
–––––––––– ––––––––––
The following amounts represent the Group’s 50% share of the assets and liabilities, and results of the
joint ventures which are included in the consolidated balance sheet and consolidated statement of
comprehensive income.
As at As at
30 Sep 17 30 Sep 16
£’000 £’000
Assets
Current assets 7,282 10,203
Liabilities
Current liabilities (15) (93)
–––––––––– ––––––––––
Net Assets 7,267 10,110
–––––––––– ––––––––––
–––––––––– ––––––––––
Year ended Year ended
30 Sep 17 30 Sep 16
£’000 £’000
Operating profit/(loss) 29 (3)
Finance income – –
–––––––––– ––––––––––
Profit/(loss) before tax 29 (3)
Tax – –
–––––––––– ––––––––––
Profit/(loss) after tax 29 (3)
–––––––––– ––––––––––
–––––––––– ––––––––––
There are no contingent liabilities relating to the Group’s interest in joint ventures, and no contingent
liabilities of the ventures themselves.
16. Investment in Subsidiary Undertakings
30 Sep 17 30 Sep 16
Company £’000 £’000
At 1 October 2016 68 3,269
Write down investments in the year (1) (3,201)
Disposals in the year (51) –
–––––––––– ––––––––––
At 30 September 2017 16 68
–––––––––– ––––––––––
–––––––––– ––––––––––
47
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
16. Investment in Subsidiary Undertakings (continued)
During the year, the directors commenced a programme to strike off the Group’s dormant companies
that are no longer required. The subsidiaries set out below, which as at the balance sheet date, are
wholly owned and controlled by the Group, have been classified between those to be retained and
those planned for striking off in the next financial year.
Country of % of
Company name Principal activity registration equity held
Conygar Holdings Ltd Holding Company England 100%
Conygar Wales PLC Holding Company England 100%*
Conygar Developments Ltd Property trading and development England 100%*
Conygar Haverfordwest Ltd Property trading and development England 100%*
Conygar Nottingham Ltd Property trading and development England 100%*
Conygar Ynys Mon Ltd Property trading and development England 100%*
Martello Quays Ltd Property trading and development England 100%
The Nottingham Island Site
Management Company Ltd Dormant England 100%*
Lamont Property Holdings Ltd Property investment Jersey 100%*
Conygar Ashby Ltd Property investment Jersey 100%*
Conygar Cross Hands Ltd Property investment Jersey 100%*
Subsidiaries in the process of being struck off
Coleridge (Fleet GP) Ltd Dormant England 100%*
Conygar Bedford Square Ltd Dormant England 100%*
Conygar Properties Ltd Dormant England 100%*
Conygar Sunley Ltd Dormant England 100%*
Loch (Warrington GP) Ltd Dormant England 100%*
The Advantage Property
Income Trust Ltd Dormant Guernsey 100%*
TOPP Holdings Ltd Dormant Guernsey 100%*
TAPP Maidenhead Ltd Dormant Guernsey 100%*
Conygar Haverfordwest
Retail Ltd Dormant Jersey 100%*
Lamont Property Acquisition
(Jersey) V Ltd Dormant Jersey 100%*
Lamont Property Acquisition
(Jersey) VII Ltd Dormant Jersey 100%*
* Indirectly owned
17. Property Inventories
Group Company
30 Sep 17 30 Sep 16 30 Sep 17 30 Sep 16
£’000 £’000 £’000 £’000
Properties held for resale or development 29,311 30,739 7,282 8,558
–––––––––– –––––––––– –––––––––– ––––––––––
–––––––––– –––––––––– –––––––––– ––––––––––
48
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
18. Trade and Other Receivables
Group Company
30 Sep 17 30 Sep 16 30 Sep 17 30 Sep 16
£’000 £’000 £’000 £’000
Trade receivables 26 834 20 –
Provision for doubtful debts – (48) – –
–––––––––– –––––––––– –––––––––– ––––––––––
26 786 20 –
Amounts owed by group undertakings – – 56,402 99,428
Other receivables 535 845 116 151
Prepayments and accrued income 605 2,044 605 205
–––––––––– –––––––––– –––––––––– ––––––––––
1,166 3,675 57,143 99,784
–––––––––– –––––––––– –––––––––– ––––––––––
–––––––––– –––––––––– –––––––––– ––––––––––
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
Group Company
30 Sep 17 30 Sep 16 30 Sep 17 30 Sep 16
£’000 £’000 £’000 £’000
Amounts owed to group undertakings – – 9,956 34,515
Social security and payroll taxes 66 – 66 115
Trade payables 545 976 430 73
Accruals and deferred income 268 3,287 200 718
–––––––––– –––––––––– –––––––––– ––––––––––
879 4,263 10,652 35,421
–––––––––– –––––––––– –––––––––– ––––––––––
–––––––––– –––––––––– –––––––––– ––––––––––
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
Group Company
30 Sep 17 30 Sep 16 30 Sep 17 30 Sep 16
£’000 £’000 £’000 £’000
Bank loans – 56,435 – –
Debt issue costs – (890) – –
–––––––––– –––––––––– –––––––––– ––––––––––
– 55,545 – –
–––––––––– –––––––––– –––––––––– ––––––––––
–––––––––– –––––––––– –––––––––– ––––––––––
All of the undertakings that were party to the Group’s bank loans were sold on 24 March 2017
therefore, as at the balance sheet date, the Group no longer maintains any bank loan facilities. Further
details of the Group’s financial liabilities are given in note 28.
49
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
21. Zero Dividend Preference Shares
Part of the consideration for the sale of its investment property portfolio was the transfer to Regional
REIT Limited of the Group’s interest in and obligations under the 30,000,000 zero dividend preference
shares (“ZDP Shares”).
The ZDP shares have an entitlement to receive a fixed cash amount on 9 January 2019, being the maturity
date, but do not receive any dividends or income distributions. Additional capital accrues to the ZDP
shares on a daily basis at a rate equivalent to 5.5% per annum. During the period ended 24 March 2017,
the Group accrued for £901,000 of additional capital (2016: £1,810,000).
The movement on the zero dividend preference share liability during the year was as follows:
Year ended Year ended
30 Sep 17 30 Sep 16
£’000 £’000
Balance at start of year 34,415 32,471
Amortisation of share issue costs 64 134
Accrued capital 901 1,810
Transfer of obligation on sale of group undertakings (35,380) –
–––––––––– ––––––––––
Balance at end of year – 34,415
–––––––––– ––––––––––
–––––––––– ––––––––––
22. Share Capital
Authorised share capital:
30 Sep 17 30 Sep 16
£ £
140,000,000 (2016: 140,000,000) Ordinary shares of £0.05 each 7,000,000 7,000,000
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
Allotted and called up:
Amounts recorded as equity:
Ordinary shares of £0.05 each
No £’000
As at 30 September 2016 99,714,123 4,985
Cancellation of treasury shares (32,587,688) (1,629)
–––––––––––––– ––––––––––––––
As at 30 September 2017 67,126,435 3,356
–––––––––––––– ––––––––––––––
–––––––––––––– ––––––––––––––
23. Treasury Shares
In December 2010, the Group began a share buyback programme and during the year ended 30
September 2017 purchased 10,340,000 (2016: 5,299,819) shares on the open market at a cost of
£17,103,676 (2016: £8,872,556). As seen in note 22 above, on 19 September 2017, 32,587,688
ordinary shares of 5 pence each were transferred out of treasury and cancelled. The remaining 235,000
shares bought back were held in treasury at 30 September 2017.
50
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
24. Deferred Tax Liability
The deferred tax liabilities comprise amounts arising from unrealised revaluation movements as follows:
Group Company
30 Sep 17 30 Sep 16 30 Sep 17 30 Sep 16
£’000 £’000 £’000 £’000
At the start of the year 1,902 – – –
Charge to the statement of
comprehensive income 58 1,902 205 –
Transfer of obligation on sale of
group undertakings (1,755) – – –
–––––––––– –––––––––– –––––––––– ––––––––––
At the end of the year 205 1,902 205 –
–––––––––– –––––––––– –––––––––– ––––––––––
–––––––––– –––––––––– –––––––––– ––––––––––
Deferred tax liabilities have been measured at a rate of 19% (2016: 20%), being the rate substantively
enacted at the balance sheet date. They are calculated on the basis of the chargeable gain that would
crystallise on the sale of the Group’s investment properties and other fixed asset investments at each
balance sheet date. The calculation takes account of any available indexation.
25. Lease Commitments
Group and Company as lessee:
At 30 September 2017, the Group and Company had outstanding commitments for future minimum
lease payments under non-cancellable operating leases, which fall due as follows:
30 Sep 17 30 Sep 16
£’000 £’000
Within one year 180 180
In the second to fifth years inclusive 131 311
–––––––––– ––––––––––
311 491
–––––––––– ––––––––––
–––––––––– ––––––––––
Group and Company as lessor:
Prior to the sale on 24 March 2017, the Group held retail, office, industrial and leisure buildings as
investment properties which were let to third parties. These were non-cancellable leases and the income
profile based upon the unexpired lease length was as follows:
30 Sep 17 30 Sep 16
£’000 £’000
Less than one year – 10,553
Between one and five years – 21,723
Over five years – 10,926
–––––––––– ––––––––––
– 43,202
–––––––––– ––––––––––
–––––––––– ––––––––––
51
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
25. Lease Commitments (continued)
The Group and Company receive income under non-cancellable leases from existing property located
at several of the Group’s development sites. The income profile based upon the unexpired lease length
was as follows:
30 Sep 17 30 Sep 16
£’000 £’000
Less than one year 186 129
Between one and five years 508 404
Over five years 296 338
–––––––––– ––––––––––
990 871
–––––––––– ––––––––––
–––––––––– ––––––––––
26. Related Party Transactions
The Company has made advances to and received advances from the following subsidiaries in order
to provide both long term and additional working capital funding. All amounts are repayable upon
demand, non-interest bearing and will be repaid from the trading activities of each group undertaking.
No provisions have been made against the outstanding amounts.
30 Sep 17 30 Sep 16
£’000 £’000
Subsidiaries
Conygar Holdings Limited (9,906) 63,217
Conygar Haverfordwest Limited 22,104 22,167
Conygar Nottingham Limited 14,058 –
Conygar Cross Hands Limited 8,415 110
Conygar Ashby Limited 3,725 –
Conygar Wales PLC (50) (50)
Conygar Strand Limited (sold in the year) – 2,939
Conygar Advantage Limited (struck off in the year) – 25
Conygar ZDP PLC (sold in the year) – (34,465)
–––––––––– ––––––––––
38,346 53,943
–––––––––– ––––––––––
–––––––––– ––––––––––
30 Sep 17 30 Sep 16
£’000 £’000
Joint Ventures
Conygar Stena Line Limited 8,098 7,733
C M Sheffield Limited 2 2
Roadking Holyhead Limited (loan assigned in the year) – 3,235
–––––––––– ––––––––––
8,100 10,970
–––––––––– ––––––––––
–––––––––– ––––––––––
52
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
26. Related Party Transactions (continued)
The loans to Conygar Stena Line Limited may be analysed as:
30 Sep 17 30 Sep 16
£’000 £’000
Secured interest bearing loan 5,078 4,713
Unsecured non-interest bearing shareholder loan 3,020 3,020
–––––––––– ––––––––––
8,098 7,733
–––––––––– ––––––––––
–––––––––– ––––––––––
During the year, the Company received a management fee from Conygar Stena Line Limited of
£50,000 (2016: £50,000) in respect of management services and intercompany interest of £199,000
(2016: £184,000) due on the secured interest bearing loan.
During the year, the Company received intercompany interest of £nil (2016: £355,000) from Conygar
Holdings Limited.
27. Profit of Parent Company
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the Company
is not presented as part of these financial statements. The parent company’s profit for the year amounts
to £25,318,000 (2016: loss of £8,121,000).
28. Financial Instruments
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, on reported profitability
and on the cash flows of the Group.
The Group finances its activities with a combination of bank loans, 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 enter into derivative transactions to manage the interest rate
risk arising from the Group’s operations and its sources of finance. The main risks associated with the
Group’s financial assets and liabilities are set out below, together with the policies currently applied by
the Board for their management. Derivative instruments may be used to change the economic
characteristics of financial instruments in accordance with the Group’s treasury policies. As at the
balance sheet date, no group undertakings were party to any derivative transactions following the
transfer on 24 March 2017 of both interest rate caps to Regional REIT. As at 30 September 2016,
interest rate caps amounted to an economic hedge of between £36.1 million and £37.0 million of the
total loans drawn of £56.4 million for cash flows to 27 April 2021, but no hedge accounting was used.
The management of cash and similar instruments is monitored weekly with summary cash statements
produced on a fortnightly 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
with a range of maturities up to a maximum of 180 days. 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.
53
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
28. Financial Instruments (continued)
Market Risk
The Group is exposed to market risk which up until 24 March 2017 primarily related to interest rates.
These exposures are actively monitored.
As the Group’s assets and liabilities are all denominated in Pounds Sterling there is currently no
exposure to currency risk.
Interest Rate Risk
Financial Liabilities
The Group’s policy is to manage the cost of borrowing using variable rate debt. Whilst floating rate
borrowings are not exposed to changes in fair value, the Group is exposed to cash flow risk as costs
increase if market rates rise. The Group’s policy is to use derivative financial instruments to mitigate
at least 50% of this risk in order to achieve a sensible and appropriate level of interest rate protection
whilst maintaining flexibility to match the commercial trading strategy.
All of the undertakings that were party to the Group’s bank loans were sold on 24 March 2017
therefore, as at the balance sheet date, the Group no longer maintains any bank loan facilities. As at
30 September 2016 after taking into account interest rate caps, 66% of the Group’s bank borrowings
were at a fixed rate of interest.
The interest rate profile of the Group bank borrowings at 30 September 2016 was as follows:
Interest
Rate Maturity 30 Sep 16
£’000
Lloyds Bank, Jersey BOE base + 1.9% 2-5 years 48,100
Barclays LIBOR + 3.5% Less than 1 year 8,335
–––––––––
56,435
–––––––––
–––––––––
In addition to the bank debt, as at 30 September 2016, the Group had a financial liability of £34.4
million relating to 30,000,000 zero dividend preference shares (“ZDP Shares”). As set out in note 21,
the Group’s interest in and obligations under the ZDP shares were transferred to Regional REIT
Limited on 24 March 2017.
Financial Assets
The interest rate profile of the Group’s cash and derivatives at the balance sheet date was as follows:
30 Sep 17 30 Sep 16
£’000 £’000
Floating rate 37,170 63,662
–––––––––– ––––––––––
–––––––––– ––––––––––
The interest rate profile of the Company’s cash and derivatives at the balance sheet date was as follows:
30 Sep 17 30 Sep 16
£’000 £’000
Floating rate 36,208 37,902
–––––––––– ––––––––––
–––––––––– ––––––––––
Floating rate financial assets comprise cash and short term deposits at call and money market rates for
up to thirty days and institutional cash funds.
54
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
28. Financial Instruments (continued)
Credit Risk
The risk of financial loss due to a counterparty’s failure to honour its obligations arises principally in
connection with property leases, the investment of surplus cash and transactions where the Group sells
properties with an element of deferred consideration.
Tenant rent payments are monitored regularly and appropriate action is taken to recover monies owed
or if necessary to terminate the lease. Deferred consideration terms are only agreed with counterparties
approved by the Board or where some additional security is available, and there were none as at 30
September 2017 (2016: £nil).
The Group policy has been to invest funds and enter into derivative transactions with a broad range
of institutions having investment grade low risk credit ratings and a strong or superior ability to repay
short term debt obligations. As at 30 September 2017, the Group had a single balance of £59,000
(2016: £67,000) where the counter-party had failed to honour a notice deposit and a full impairment
provision has been recorded against the balance.
There are no other receivables which are past due but not impaired.
Liquidity Risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through
the use of bank loans secured on the Group’s properties. The Group is exposed to liquidity risk should
it encounter difficulties in realising assets mainly through the sale of investment properties. However,
the Group maintains a prudent approach to financing and cash flow such that the adverse impact of
this can be mitigated.
Loans
All of the undertakings that were party to the Group’s bank loans were sold on 24 March 2017
therefore, as at the balance sheet date, the Group no longer maintains any bank loan facilities.
As at 30 September 2016 and up to the date of disposal of the Group undertakings, TAPP Property
Limited, TOPP Property Limited, TOPP Bletchley Limited, Lamont Property Acquisition (Jersey) I
Limited, Lamont Property Acquisition (Jersey) II Limited and Lamont Property Acquisition (Jersey)
IV Limited (“the borrowers”) jointly maintained a facility with Lloyds Bank, Jersey of £48,100,000
under which £48,100,000 had been drawn down. This facility was repayable on or before 27 April
2021 and was secured by fixed and floating charges over the assets of the borrowers. The facility was
subject to a maximum loan to value covenant of 65%, a historical interest cover ratio covenant of 200%
and a historical debt service cover ratio of 110%.
On 26 October 2016, Conygar Dundee Limited, Conygar Hanover Street Limited, Conygar Stafford
Limited and Conygar St Helens Limited repaid the outstanding balances of their facilities with Barclays
Bank PLC of £8,335,000 (30 September 2016: £8,335,000).
From 2 December 2016 and up to the date of disposal of the Group undertakings, Conygar Dundee
Limited, Conygar Hanover Street Limited, Conygar Strand Limited and Conygar St Helens Limited
jointly maintained a facility with HSBC Bank PLC of £21,397,500 under which £21,397,500 had
been drawn down. This facility was repayable on or before 2 December 2021 and was secured by fixed
and floating charges over the assets of Conygar Dundee Limited, Conygar Hanover Street Limited,
Conygar Strand Limited and Conygar St Helens Limited. The facility was subject to a maximum loan
to value covenant of 65%, a historical and projected interest cover ratio covenant of 200% and a
historical and projected debt service cover ratio of 120%.
55
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
28. Financial Instruments (continued)
Price Risk
The Group’s exposure to changing market prices on the value of financial instruments may have an
impact on the carrying value of financial instruments and would arise principally as a result of entering
into swaps or similar transactions to fix interest rates on the Group’s borrowings. The Group’s
policies for managing this risk are to control the levels of fixed rate debt as set out under interest rate
risk above.
Capital Risk Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a
going concern in order to provide returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital.
While the Group does not have a formally approved gearing ratio, the objective above is actively
managed through the direct linkage of borrowings to specific property. The Group seeks to ensure that
secured borrowing does not exceed 70% of the current market value of such property.
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 2017 30 Sep 2016 30 Sep 2017 30 Sep 2016
£’000 £’000 £’000 £’000
Financial Assets
Cash 37,170 63,662 37,170 63,662
Loans to joint ventures 8,100 10,970 8,100 10,970
Interest rate derivatives – 44 – 44
Financial Liabilities
Floating rate borrowings – 56,435 – 56,435
Fixed rate borrowings – 34,719 – 34,719
The fair values of all the Company’s financial assets and liabilities are set out below:
Book Value Book Value Fair Value Fair Value
30 Sep 2017 30 Sep 2016 30 Sep 2017 30 Sep 2016
£’000 £’000 £’000 £’000
Financial Assets
Cash 36,208 37,902 36,208 37,902
Loans to joint ventures 8,100 10,970 8,100 10,970
56
The Conygar Investment Company PLC
NOTES TO THE ACCOUNTS (continued)
28. Financial Instruments (continued)
Derivative Financial Instruments
All of the undertakings that were party to the Group’s derivative financial instruments were sold on
24 March 2017 therefore, as at the balance sheet date, the Group no longer maintains any derivative
financial instruments. The market value of the derivative financial instruments as at 30 September
2016 are set out below:
Market
value at
Protected 30 Sep 2016
Rate % Expiry £’000
£37 million cap 2.00 Feb-18 44
£36.1 million cap 2.50 Apr-21 –
––––––––––
44
––––––––––
––––––––––
The valuation of the swaps was provided by JC Rathbone Associates Limited, was a tier 2 valuation
and represented the change in fair value since execution. The fair value was 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.
57
The Conygar Investment Company PLC
GLOSSARY OF TERMS
AIM
EPS
Equivalent Yield
Net Initial Yield
NAV
Reversionary Yield
Conygar
Loan to Value
PBT
UK
ERV
NNNAV or Triple Asset Value
Passing Rent
Tenant Break
Lease Re-gear
The AIM market of the London Stock Exchange PLC
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
The constant capitalisation rate which, if applied to all cash flows
from an investment property, equates to the market rent
Annual net rents expressed as a percentage of the investment
property valuation
Net asset value
The anticipated yield which the Net Initial Yield will rise to once
the rent reaches the ERV
The Conygar Investment Company PLC
The amount of borrowing divided by the value of investment
property expressed as a percentage
Profit before taxation
United Kingdom
Estimated Rental Value being the open market rent as estimated
by the Company’s valuers
A measure of net asset value taking into account asset
revaluations, the fair value of debt and any associated tax effects
The annual gross rental income excluding the effects of lease
incentives
An option in a lease for a tenant to terminate that lease early
A mutual re-negotiation of a lease between landlord and tenant
prior to a lease expiry date
Average Unexpired Lease Length The average unexpired lease term expressed in years weighted by
rental income
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
58
The Conygar Investment Company PLC
(Company Number 4907617)
(the “Company”)
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at the
offices of Gowling WLG (UK) LLP, 4 More London Riverside, London SE1 2AU on 25 January 2018
at 4.30pm to consider and, if thought fit, pass the following resolutions:
Resolutions 1 to 7 are proposed as ordinary resolutions and resolutions 8 to 9 are proposed as
special resolutions.
ORDINARY BUSINESS
Ordinary Resolutions
1 To receive and adopt the Company’s annual accounts for the financial year ended 30 September
2017 together with the directors’ report and the auditors’ report on those accounts.
2 To approve the directors’ remuneration report for the financial year ended 30th September 2017.
3 To re-appoint Rees Pollock as auditors of the Company to hold office from the conclusion of this
meeting to the conclusion of the next meeting at which accounts are laid before the Company.
4 To authorise the directors of the Company (the “Directors”) to agree the remuneration of
the auditors.
5 To re-appoint the following Director who retires by rotation:
Robert Thomas Ernest Ware
6 To re-appoint the following Director who retires by rotation:
Nigel Jonathon Hamway
SPECIAL BUSINESS
7 (a)
That the Directors be and are generally and unconditionally authorised for the purposes of
section 551 of the Companies Act 2006 (the “Act”) to exercise all the powers of the
Company to allot shares in the Company and grant rights to subscribe for, or convert any
security into shares in the Company provided that this authority shall be limited to the
allotment of up to an aggregate nominal amount of £400,000.00 (comprising 8,000,000
Ordinary Shares) and provided that this authority (unless renewed, varied or revoked by the
Company in a general meeting) is for a period expiring on the earlier of (i) the conclusion
of the next Annual General Meeting of the Company or (ii) the expiry of 15 months from
the passing of this resolution; and
(b)
the Company may, before such expiry of this authority, make an offer or agreement which
would or might require the shares to be allotted or rights to subscribe for, or convert any
security into shares to be granted after such expiry and the Directors may allot shares or
grant rights to subscribe for, or convert any security into shares in pursuance of such offer
or agreement notwithstanding that the authority conferred by this resolution has expired.
This authority is in substitution for all subsisting authorities to allot any shares in the Company
and to grant rights to subscribe for or convert any security into shares in the Company to the
extent unused.
Special Resolutions
8 That subject to the passing of resolution 7 above, the Directors be and are hereby generally and
unconditionally empowered pursuant to sections 570 (1) and 573 of the Act to allot equity
securities (within the meaning of section 560(1) of the Act) wholly for cash pursuant to the
authority conferred by resolution 7 and / or by way of a sale of treasury shares as if section 561(1)
of the Act did not apply to any such allotment, provided that this power shall be limited to the
allotment of equity securities:
59
The Conygar Investment Company PLC
NOTICE OF ANNUAL GENERAL MEETING (continued)
(a)
in connection with an offer of such securities by way of rights to holders of Ordinary Shares
in proportion (as nearly as may be practicable) to their respective holdings of such shares,
but subject to such exclusions or other arrangements as the directors may deem necessary
or expedient in relation to treasury shares, fractional entitlements or any legal or practical
problems under the laws of any territory, or the requirements of any regulatory body or
stock exchange;
(b)
otherwise than pursuant to sub-paragraph (a) above up to an aggregate nominal amount of
£400,000.00 (comprising 8,000,000 Ordinary Shares);
and this power (unless renewed, varied or revoked by the Company in a general meeting) shall
expire on the earlier of (i) the conclusion of the next Annual General Meeting of the Company after
the passing of this resolution and (ii) the date falling 15 months after the date of the passing of this
resolution, save that the Company may, before such expiry make an offer or agreement which
would or might require equity securities to be allotted, or treasury shares to be sold after such
expiry and the Directors may allot equity securities, or sell treasury shares, in pursuance of any
such offer or agreement notwithstanding that the power conferred by this resolution has expired.
The authority granted by this resolution shall replace all existing authorities previously granted to
the Directors to allot equity securities for cash or by way of a sale of treasury shares as if section
561 (1) of the Act did not apply.
9 That the Company be and is generally and unconditionally authorised for the purposes of section
701(1) of the Act to make one or more market purchases (within the meaning of section 693(4) of
the Act) on the London Stock Exchange of ordinary shares of £0.05 each (each an “Ordinary
Share”) the Company provided that:
(a)
the maximum aggregate number of Ordinary Shares authorised to be purchased is
9,873,215 (representing approximately 15% of the Company’s issued ordinary share
capital);
(b)
the minimum price (excluding expenses) which may be paid for such shares is £0.05 per
share;
(c)
(d)
(e)
the maximum price (excluding expenses) which may be paid for an Ordinary Share shall not
be more than an amount equal to 105% of the average of the middle market quotations for
an Ordinary Share as derived from The London Stock Exchange Daily Official List for the
five business days immediately preceding the date on which the Ordinary Share is
purchased;
unless previously renewed, varied or revoked, the authority conferred shall expire at the
conclusion of the Company’s next Annual General Meeting or 12 months from the date of
passing this resolution, if earlier; and
the Company may make a contract or contracts to purchase Ordinary Shares under the
authority conferred prior to the expiry of such authority which will or may be executed
wholly or partly after the expiry of such authority and may make a purchase of Ordinary
Shares in pursuance of any such contract or contracts.
Registered Office
Fourth Floor
110 Wigmore Street
London
W1U 3RW
By Order of the Board
R H McCaskill
Company Secretary
11 December 2017
60
The Conygar Investment Company PLC
NOTICE OF ANNUAL GENERAL MEETING (continued)
Notes
Entitlement to attend and vote
1. In accordance with Regulation 41 of the Uncertificated Securities Regulations 2001, only those members registered in the
Company’s register of members at:
• 4.30pm on 23 January 2018; or
• if this meeting is adjourned, at 4.30pm on the day two days prior to the adjourned meeting (excluding non-working days),
shall be entitled to attend and vote at the Meeting. Changes to the register of members after the relevant deadline shall be
disregarded in determining the rights of any person to attend and vote at the Meeting.
2. Only the holders of Ordinary Shares registered in the Company shall be entitled to attend and vote at the Meeting.
Appointment of proxies
3. As a member of the Company, you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and
vote at the Meeting and you should have received a proxy form with this Notice of Meeting. You can only appoint a proxy
using the procedures set out in these notes and the notes to the proxy form.
4. A proxy does not need to be a member of the Company but must attend the Meeting to represent you. Details of how to
appoint the Chairman of the Meeting or another person as your proxy using the proxy form are set out in the notes to the
proxy form. If you wish your proxy to speak on your behalf at the Meeting you will need to appoint your own choice of
proxy (not the Chairman) and give your instructions directly to them.
5. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You
may not appoint more than one proxy to exercise rights attached to any one share.
6. If you do not give your proxy an indication of how to vote on any resolution, your proxy will vote or abstain from voting at
his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which
is put before the Meeting. A vote withheld is not a vote in law, which means that the vote will not be counted in the
calculation of votes for or against the resolution.
Appointment of proxy using hard copy proxy form
7. The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote. To
appoint a proxy using the proxy form, the form must be
• completed and signed;
• sent or delivered to the Company at Share Registrars Ltd, The Courtyard, 17 West Street, Farnham, Surrey,
GU9 7DR or;
• scanned and emailed to proxies@shareregistrars.uk.com or;
• received by the Company no later than 4.30pm on 23 January 2018.
In the case of a member which is a company, the proxy form must be executed under its common seal or signed on its
behalf by an officer of the company or an attorney for the company.
Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power
or authority) must be included with the proxy form.
8. If a member appoints a proxy or proxies and then decides to attend the Meeting in person and vote using his poll card, then
the vote in person will override the proxy vote(s). If the vote in person is in respect of the member’s holding, then all proxy
votes will be disregarded. If, however, the member votes at the meeting in respect of less than the member’s entire holding,
then if the member indicates on his polling card that all proxies are to be disregarded, that shall be the case, but if the
member does not specifically revoke proxies, then the vote in person will be treated in the same way as if it were the last
received proxy and earlier proxies will only be disregarded to the extent that to count them would result in the number of
votes being cast exceeding the member’s entire holding. If you do not have a proxy form and/or believe that you should have
one or if you require additional forms, please contact Share Registrars Ltd.
Appointment of proxy by joint members
9. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment
submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint
holders appear in the Company’s register of members in respect of the joint holding (the first-named being the most senior).
Changing proxy instructions
10. To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the
cut-off time for receipt of proxy appointments (see above) also apply in relation to amended instructions; any amended
proxy appointment received after the relevant cut-off time will be disregarded. Where you have appointed a proxy using the
hard-copy proxy form and would like to change the instructions using another hard-copy proxy form, please contact Share
Registrars Ltd. If you submit more than one valid proxy appointment, the appointment received last before the latest time
for the receipt of proxies will take precedence.
61
The Conygar Investment Company PLC
NOTICE OF ANNUAL GENERAL MEETING (continued)
Termination of proxy appointments
11. In order to revoke a proxy instruction you will need to inform the Company using the following method:
• by sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to Share
Registrars Limited (Proxies), The Courtyard, 17 West Street, Farnham, Surrey, GU9 7DR. In the case of a
member which is a company, the revocation notice must be executed under its common seal or signed on its behalf by
an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the
revocation notice is signed (or a duly certified copy of such power or authority) must be included with the
revocation notice.
The revocation notice must be received by Share Registrars Ltd no later than 4.30pm on 23 January 2018.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the
paragraph directly below, your proxy appointment will remain valid.
Appointment of a proxy does not preclude you from attending the Meeting and voting in person. If you have appointed a
proxy and attend the Meeting in person, your proxy appointment will automatically be terminated.
Communication
12. Except as provided above, members who have general queries about the Meeting should email the Company Secretary on
rossmccaskill@conygar.com (no other methods of communication will be accepted).
You may not use any electronic address provided either:
• in this notice of general meeting; or
• any related documents (including the proxy form),
to communicate with the Company for any purposes other than those expressly stated.
Appointment of proxies through CREST
13. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may
do so for the Annual General Meeting and any adjournment(s) thereof by using the procedures described in the CREST
Manual (available from https://www.euroclear.com/site/public/EUI).
CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a
voting service provider(s) should refer to their CREST sponsor or voting service provider(s), who will be able to take the
appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST
message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with CRESTCO Limited’s
specifications and must contain the information required for such instructions, as described in the CREST Manual.
The message, regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to
a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent 7RA36 by
the latest time(s) for receipt of proxy appointments specified above. For this purpose, the time of receipt will be taken to
be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the
issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time,
any change of instructions to proxies appointed through CREST should be communicated to the appointee through
other means.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that CRESTCo
Limited does not make available special procedures in CREST for any particular messages. Normal system timings and
limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST
member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has
appointed a voting service provider(s), to procure that his or her CREST sponsor or voting service provider(s) take(s)) such
action as shall be necessary to ensure that a message is transmitted by means of CREST by any particular time. In this
connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in
particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001 (as amended).
If a corporation is a member of the Company, it may by resolution of its directors or other governing body authorise one
or more persons to act as its representative or representatives at the Meeting and any such representative or representatives
shall be entitled to exercise on behalf of the corporation all the powers that the corporation could exercise if it were an
individual member of the Company. Corporate representatives should bring with them either an original or certified copy
of the appropriate board resolution or an original letter confirming the appointment, provided it is on the corporation’s
letterhead and is signed by an authorised signatory and accompanied by evidence of the signatory’s authority.
62
The Conygar Investment Company PLC
NOTICE OF ANNUAL GENERAL MEETING (continued)
Issued shares and total voting rights
14. As at 11 December 2017 (being the last business day prior to the publication of this Notice) the Company’s issued share
capital consists of 65,821,435 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as
at 11 December 2017 are 65,821,435.
Documents on display
15. Copies of the Executive Directors’ service contracts with the Company and any of its subsidiary undertakings and letters
of appointment of the Non-Executive Directors are available for inspection at the registered office of the Company during
the usual business hours on any weekday (Saturday, Sunday or public holidays excluded) from the date of this notice until
the conclusion of the Annual General Meeting.
63
The Conygar Investment Company PLC
(Company Number 4907617)
(the “Company”)
Annual General Meeting
FORM OF PROXY
I/We ..........................................................................................................................................................................................
of ..............................................................................................................................................................................................
.................................................................................................................................................................................................
being (a) member(s) of the Company, hereby appoint .................................................................................................................
of ..............................................................................................................................................................................................
or failing him the Chairman of the Meeting (see note 3) as my/our proxy to vote for me/us on my behalf as directed below at the
Annual General Meeting of the Company to be held at the offices of Gowling WLG (UK) LLP, 4 More London Riverside SE1
2AU on 25 January 2018 at 4.30pm and at any adjournment thereof. I/we request such proxy to vote on the following resolutions
as indicated below. If no indication is given, my/our proxy will vote or abstain from voting at his or her discretion and I/we authorise
my/our proxy to vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting:
Resolution
Number Resolution For Against Vote Withheld
Ordinary Resolutions
1 To receive and adopt the Company’s annual accounts for the
financial year ended 30 September 2017 together with the
directors’ report and the auditors’ report on those accounts.
2 To approve the directors’ remuneration report for the financial
year ended 30 September 2017.
3 To re-appoint Rees Pollock as auditors of the Company.
4 To authorise the directors to agree the remuneration of the
auditors.
5 To re-appoint the following director who retires by rotation:
Robert Thomas Ernest Ware.
6 To re-appoint the following director who retires by rotation:
Nigel Jonathon Hamway.
7 To give directors’ authority to allot shares in the Company or grant
rights to subscribe for, or convert any security into shares in the
Company up to an aggregate nominal amount of £400,000.00.
Special Resolutions
8 To give a directors’ authority to disapply pre-emption rights and
allot equity securities.
9 To give a share buyback authority of up to a maximum aggregate
number of ordinary shares of 9,873,215.
Names of joint holders (if any) ...................................................................................................................................................
Date ..........................................................................................................................................................................................
Signed .......................................................................................................................................................................................
Notes:
1 As a member of the Company you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote at a general meeting of the
Company. You can only appoint a proxy using the procedures set out in these notes.
2 Please indicate with an “X” in the appropriate boxes how you wish the proxy to vote. The proxy will exercise his discretion as to how he votes or whether he
abstains from voting:
(a) on any resolution referred to above if no instruction is given in respect of that resolution; and
(b) on any business or resolution considered at the meeting other than the resolutions referred to above.
A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution.
3 If you wish to appoint someone other than the Chairman of the Meeting as your proxy please insert their name. If you insert no name then you will have
appointed the Chairman of the Meeting as your proxy. A proxy need not be a member of the Company but must attend the meeting to represent you. Where
you appoint as your proxy someone other than the Chairman of the Meeting, you are responsible for ensuring that they attend the meeting and are aware
of your voting intentions.
4 You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one
proxy to exercise rights attached to any one share.
5 In the case of a corporation, this form of proxy must be executed under its common seal or under the hand of an officer or attorney duly authorised in writing.
6 In the case of joint holders, the votes of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of the
other joint holders and for this purpose, seniority shall be determined by the order in which the names stand in the Register.
(cid:0)
7 To be effective, this Form of Proxy, duly executed together with the power of attorney or other authority (if any) under which it is signed (or a notarially
certified or office copy thereof) must be lodged at the Company’s Registrars, Share Registrars Ltd, The Courtyard, 17 West Street, Farnham, Surrey, GU9
7DR, by 4.30pm on 23 January 2018.
8 Any alterations to this form of proxy should be initialled. If you submit more than one valid proxy appointment, the appointment received last before the
latest time for the receipt of proxies will take precedence. For details on how to change your proxy instructions or revoke your proxy appointment please see
the notes to the notice of meeting.
9 Completion of this form will not prevent you from subsequently attending and voting at the Meeting in person, in which case any votes cast by proxy will
be excluded.
10 This Form of Proxy has been sent to you by post. It may be returned in hard copy form by post or by hand to the Company’s Registrars, Share Registrars
Ltd, The Courtyard, 17 West Street, Farnham, Surrey, GU9 7DR. In each case, the proxy appointment must be received not less than 4.30pm on 23 January
2018 together with any authority (or a notarially certified copy of such authority) under which it is signed.
Perivan Financial Print 247934