Conygar Inv Regulatory News (CIC)

24 November 2020

THE CONYGAR INVESTMENT COMPANY PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2020

SUMMARY

· Net asset value per share 165.8p.

· Total cash deposits of £32.1 million (60.0p per share).

· No debt and no borrowings.

· Construction completed of both the Lidl store and Burger King restaurant and drive through at Cross Hands, Carmarthenshire.

· Outline planning consent granted, with the signing of the section 106 agreement, for our 40 acre mixed-use scheme at the Island Quarter in Nottingham city centre.

· Resolution to grant detailed planning permission passed for the first phase of the Island Quarter development, incorporating a 20,000 square foot waterfront pavilion.

· Write down of land at Holyhead, Anglesey by £5.0 million, following the withdrawal of the proposed nuclear development at Wylfa.

· £1.7 million reduction in the value of Cross Hands, Carmarthenshire as a result of COVID-19.

· Bought back 2.93 million shares (5.2% of ordinary share capital) at an average price of 135.3p per share.

Group net assets summary as at 30 September 2020

Robert Ware, Chief Executive, commented:

"The outlook is highly uncertain. We expect the impact of COVID-19 to significantly affect the progression of and carrying values for our investment and development properties over the coming year. While there remains considerable uncertainty as to how the pandemic will play out, compounded by the impact of a fast approaching Brexit, and pressures on market rents from business closures and rising unemployment, it is extremely difficult confidently to predict the future."

Enquiries:

The Conygar Investment Company PLC

Liberum Capital Limited (nominated adviser and broker)

Temple Bar Advisory (public relations)

Chairman's & chief executive's statement

Results summary

We present the Group's results for the year ended 30 September 2020.

The impact of COVID-19 and social distancing restrictions have been far reaching and have brought about unprecedented challenges to both the UK and global economies. Whilst progress on a number of our projects has been impacted, we have continued to move forward with our ongoing and planned development programme.

Our approach to COVID-19 has been to support our staff, tenants and the communities in which we operate, wherever it is possible and reasonable to do so. Such steps have included offering revised rental payment terms to those tenants impacted by the pandemic, supporting the community of Nottingham by setting up a COVID-19 testing centre on part of our site, and ensuring the wellbeing of our staff by enabling them to work remotely.

Net asset value per share was 165.8p (2019: 178.2p) and the loss before tax for the year was £8.2 million (2019: loss of £13.9 million). The main reasons for the loss were the re-evaluation of our projects in Anglesey at Holyhead Waterfront and our industrial land at Rhosgoch, in addition to a reduction in the valuation of our retail park at Cross Hands, Carmarthenshire.

The impact of Hitachi announcing their withdrawal from the proposed nuclear development at Wylfa, a lack of alternative investors, the impact of COVID-19 on Wales and the response of the Wales Assembly Government plus the undoubted pending recession has meant that we have reassessed the carrying values of Holyhead Waterfront and Rhosgoch, leading to write downs of £5.0 million and £0.5 million respectively. We believe that Wylfa will not happen without significant UK government support, both financial and political, for a credible nuclear operator. In addition, the valuation of our retail park at Cross Hands, Carmarthenshire has fallen in the year from £18.3 million to £16.5 million.

The retail market has been under severe pressure during the year not only as a result of COVID-19 but also from structural shifts in shopping behaviour, political and economic uncertainty, and business rates. Whilst a number of the Cross Hands tenants were able to continue to trade throughout the initial lockdown period and all non-essential shops were allowed to re-open in June, footfall continues to be low. However, in contrast to retail high streets, out of town retail parks have shown signs of resilience throughout the pandemic, particularly in the non-fashion sectors.

At Cross Hands we have collected 81% of the rents due for the current quarter which increases to 86% for the Group as a whole. Of the remainder, 5% have moved to monthly payments, which are expected to be received in full by the end of the year, and 9% have been provided for in these financial statements where, as a result of COVID-19, Peacocks Stores Limited have not paid their rent since March 2020.

Despite the economic and political volatility during the year, the Group has made good progress on the rest of the portfolio and we shall briefly outline the highlights here.

At the Island Quarter, Nottingham, the outline planning permission was granted in the year with the signing of the section 106 agreement. This was followed in September 2020 with the passing of a resolution to grant permission for the first phase of the 40 acre mixed use development to include a 20,000 square foot waterfront pavilion featuring restaurants, events space and a rooftop terrace. The plans also feature provision for a bandstand and an area of new public realm. Given the current COVID-19 situation there is material uncertainty as to the value which would be created by undertaking this phase of the development. However, it will help to enable the development of the remainder of the site. We have also made good progress with the design of subsequent phases of the development and hope to submit further applications over the coming year.

At Haverfordwest in Pembrokeshire, discussions are ongoing for our plan to build the first phase of 115 houses for which reserved matters consent was granted in September 2019. We have also completed the section 38 and section 104 agreements that will enable us to start on site in due course with the construction of the spine road planned to commence in December 2020.

In April 2019, we exchanged a conditional contract to sell our industrial property in Selly Oak, Birmingham, on a subject to planning permission basis, to a specialist provider of student accommodation who subsequently submitted an application in January 2020. Additional information and an amended planning application have been submitted and we expect a determination of the application in the next few months.

During the year we completed the 23,000 square foot Lidl food store at Cross Hands, Carmarthenshire which opened for trading in January 2020. We also completed construction of a 2,750 square foot Burger King restaurant and drive through in October 2020, let 1,300 square feet to Card Factory and are under offer for a further 3,400 square feet to a gym operator. This is a very pleasing result given the current volatility in the retail sector and reflects the quality of the park where 90,000 square feet out of a total of 100,000 square feet are now let or under offer, producing a rent roll of £1.15 million.

At the Holyhead Waterfront scheme in Anglesey, we continue to work on the detailed design and reserved matters application in tandem with the marine consenting process. We expect to submit both applications in addition to a harbour revision order in early 2021.

Dividend

The Board recommends that no dividend is declared in respect of the year ended 30 September 2020. More information on the Group's dividend policy can be found within the strategic report.

Share buy back

During the year, the Group acquired 2,930,845 ordinary shares, representing 5.2% of its ordinary share capital, at a cost of £3.96 million which equates to an average price of 135.3p per share. As a result of the buy backs, net asset value per share has been enhanced by 2.3p per share. The Group will seek to renew the buy back authority of 14.99% of the issued share capital of the Company at the forthcoming AGM. We consider the buy back authority to be a useful capital management tool and will continue to use it when we believe the stock market value differs too widely from our view of the intrinsic value of the Company.

Board changes

Michael Wigley and Ross McCaskill both stepped down from the Board during the year and we thank them for their considerable contributions to the success of the Group. We were also delighted to announce the appointment of Bim Sandhu as Non-Executive Director in March 2020.

Outlook

The outlook is highly uncertain. We expect the impact of COVID-19 to significantly affect the progression of and carrying values for our investment and development properties over the coming year. While there remains considerable uncertainty as to how the pandemic will play out, compounded by the impact of a fast approaching Brexit, and pressures on market rents from business closures and rising unemployment, it is extremely difficult confidently to predict the future.

However, since the summer there have been some encouraging signs of activity and the nature of the property market is such that, irrespective of the number of lockdowns the country is subject to, it will not remain quiet for long. Our strong balance sheet, with cash deposits in excess of £32 million and no debt, should allow us to pursue opportunities when they arise whilst also further advancing our investment and development portfolio. We will, though, need to raise substantial amounts either as debt, or through joint ventures or asset sales in order to develop the Island Quarter site in Nottingham. This is a major development and is central to the Company's future.

On behalf of the Board, we would like to thank the entire Conygar family of shareholders, advisers and team for their resilience, focus and commitment during such testing times.

N J Hamway R T E Ware

Chairman Chief Executive

Strategic report

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

Strategy and business model

The Conygar Investment Company PLC ("Conygar") is an AIM quoted property investment and development group dealing 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. 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 Group at the year end

The Group net assets as at 30 September 2020 may be summarised as follows:

In spite of the impact from COVID-19, good progress has been made on our investment properties and development projects since we last reported, the details of which are set out below. The Group's balance sheet remains both liquid and robust with cash deposits at 30 September 2020 of £32.1 million and no borrowings. However, the size of the Island Quarter development in Nottingham will require us to seek either debt funding, joint venture partners or to sell assets to take best advantage of the opportunities presented by this development.

Key performance indicators

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

Investment properties and development projects

Nottingham, Nottinghamshire

The Group acquired the 40 acre Island Quarter site in Nottingham city centre in December 2016 for £13.5 million. The Island Quarter is an exciting mixed-use development comprising new homes, grade A office space, creative market, a lifestyle hotel, retail units, student accommodation and a linear park. The signing of the section 106 agreement and subsequent resolution by Nottingham City Council to grant permission for Phase 1 (Canal Turn) enables us cautiously to commence the development, with work scheduled to start on site in November 2020. Phase 1 will include a 20,000 square foot pavilion, for restaurant and events space, as well as a new and substantial public realm to open up the canal basin area and form a focal point for the project. It is important to start this development now, even in the current environment, because it is an essential 'pump primer' for the rest of the site; necessary to achieve the longer term benefits for the project.

Cross Hands, Carmarthenshire

The retail park at Cross Hands is one of few speculative retail developments to be undertaken in South Wales in the last few years, successfully attracting leading brands including Lidl, B&M Retail, Costa Coffee, Iceland Foods, Dominos Pizza and Pets At Home. The completion in the year of the developments for and lettings to Lidl, Burger King and Card Factory demonstrate the strength of the location with 90,000 square feet of the park now let or under offer and one final unit now available.

Holyhead Waterfront, Anglesey

We continue to work on the detailed design and reserved matters application and hope to submit the reserved matters and marine consent applications in early 2021. However, as reported in the chairman's and chief executive's report, the Directors have reassessed this project and have written down the carrying value of the property at 30 September 2020 by £5.0 million.

Parc Cybi business park and Rhosgoch, Anglesey

Following the decision by Horizon Nuclear Power to terminate their option for our 203 acre site in Rhosgoch, and the subsequent announcement by Hitachi in September 2020 of its withdrawal from the Wylfa nuclear power project, we are now considering alternative uses for the site. It is possible that the potential use will be in the renewables sector and we are in early stage discussions with various operators in this regard. As a result of this change in use, we have written down the carrying value at 30 September 2020 by £0.5 million.

Selly Oak, Birmingham

Selly Oak comprises two industrial units let to University Hospitals Birmingham NHS Foundation Trust and Revolution Gymnastics Limited, currently generating income of £0.2 million per annum.

Following the exchange of a conditional contract in 2019 to sell the property, on a subject to planning basis, to a specialist provider of student accommodation, the purchaser submitted a planning application at the start of the year. Alterations and an amended planning application were requested by the local authority and accordingly we hope the application will be determined favourably in the coming months.

Haverfordwest, Pembrokeshire

At Haverfordwest, where we have outline consent for 729 residential units and reserved matters consent for the first phase comprising 115 residential units, we completed the section 38 and section 104 agreements in September 2020 which should enable us to start on site later in the year. Construction of the spine road is planned to commence in December 2020.

Ashby-de-la-Zouch, Leicestershire

As previously reported, in October 2019 we completed the forward sale of the 27,500 square foot food store and garden centre let to B&M Retail Limited realising a further £0.2 million profit in the year.

King's Lynn, Norfolk

This is a six acre residential development site near to King's Lynn. The Group has been in discussions at various times to sell this land but regrettably none of the purchasers were able to complete; some even after exchange of contract. This demonstrates the difficult nature of the current environment. Given the planning permission has now lapsed, the Board has taken the decision to write down the carrying value of the site to £0.53 million at 30 September 2020.

Summary of investment properties

(1) The Group's investment in Nottingham was transferred to investment properties under construction during the year.

(2) The sale of Ashby-de-la-Zouch completed in October 2019.

Summary of development projects

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

(1) As set out above, the Group's investment in Nottingham has been transferred to an investment property under construction.

(2) As set out in the chairman's and chief executive's report, the carrying values of Holyhead Waterfront and Rhosgoch have been written down in the year by £5.0 million and £0.5 million respectively.

(3) As set out in the strategic report, the carrying value for King's Lynn has been written down in the year by £0.2m.

Financial review

Net asset value

The net asset value at 30 September 2020 was £88.8 million (2019: £100.7 million). The primary movements in the year were £1.7 million of net rental income plus £0.2 million from completion of the sale of our investment property at Ashby-de-la Zouch offset by £5.6 million of development costs written off, a £1.7 million reduction in the valuation of Cross Hands, £2.6 million of administrative costs and £4.0 million spent purchasing our own shares.

Cash flow and financing

At 30 September 2020, the Group had cash of £32.1 million and no debt (2019: cash of £39.9 million and no debt).

During the year, the Group used £6.3 million cash in operating activities (2019: used £2.0 million).

The primary cash outflows in the year were £4.0 million to buy back shares and capital costs of £6.3 million including development costs for the Burger King restaurant and drive through at Cross Hands, planning and professional fees to progress the early phase developments at Nottingham, costs to complete the B&M store in Ashby-de-la-Zouch and professional and statutory fees to advance the proposed developments at Haverfordwest and Holyhead Waterfront.

The cash outflows were partly offset by cash proceeds of £3.7 million from the completion of the forward sale of the B&M store at Ashby-de-la-Zouch, resulting in a net cash outflow in the year of £7.8 million (2019: cash outflow of £9.4 million).

Net income from property activities

Administrative expenses

The administrative expenses for the year ended 30 September 2020 were £2.6 million (2019: £2.6 million), The major items were salary costs of £1.9 million (2019: £1.6 million), including an ex gratia payment of £0.3 million to R H McCaskill who stepped down in the year, and various costs arising as a result of the Group being listed on AIM.

Taxation

Current tax is payable, at a rate of 19% for UK registered companies and 20% for those registered in Jersey, on net rental income after deduction of finance costs and administrative expenses. The tax credit for the year of £0.2 million arose from an overprovision in the prior year.

Capital management

Capital risk management

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

The Group does not currently have any borrowings, but may utilise borrowing in the future to fund development projects. When doing so the Group will seek to ensure that it can stay within agreed covenants with its lenders.

Treasury policies

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

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

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

Dividend policy

The Board recommends that no dividend is paid in respect of the year ended 30 September 2020 (2019: £nil).

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

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

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

Share buy backs

During the year, the Group acquired 2,930,845 ordinary shares at an average price of 135.3p, costing £4.0 million, which represented 5.2% of its ordinary share capital. As a result of the share buy backs, the net asset value per share has been enhanced by approximately 2.3p per share. The Group will seek to renew the buy back authority of 14.99% of the issued share capital of the Company at the forthcoming AGM. We consider it to be a vital capital management tool and believe it is prudent to have maximum flexibility given the level of uncertainty we see in the wider economy.

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, strategic risks tend to be longer term than most other risks and, as has been amply demonstrated in the last few years, the economic and wider environment can alter quickly and significantly. Strategic risks identified include global or national events, regulatory and legal changes, market or sector changes and key staff retention.

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 strong balance sheet is good evidence of that.

Operational risks

Operational risks are essentially those risks that might arise from inadequate internal systems, processes, resources or incorrect decision making. Clearly, it is not possible to eliminate operational risk, however 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. Our Executive Directors are very closely involved in the day-to-day running of the business to ensure sound management judgement is applied.

Market risks

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

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

The full repercussions of the unprecedented disruption from the COVID-19 pandemic remain uncertain. It is undeniable that social distancing restrictions and multiple lockdowns continue to impact on the extent of business closures and tenant defaults which in turn have a negative impact on the Group's cash flows, property values and ability to progress its development programme. Continuing low interest rates make our liquidity position a drag on income. However, the Group has income derived from a range of assets and investments providing a diversity of income, is not party to any debt facilities and the management team have adapted to the ongoing restrictions to advance the development portfolio.

Estimation and judgement risks

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

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

Investment properties

The fair values of investment properties are based upon open market value and calculated, where applicable, using a third party valuation provided by an external valuer. Note 11 includes a statement from the external valuer setting out how COVID-19 has impacted on their valuation assumptions at 30 September 2020. Where it is not possible to reliably measure fair value, cost is used instead.

Development properties

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. Where it is not possible to reliably measure fair value, cost is used instead.

Investment properties under construction

The fair value of investment properties under construction rests in planned developments, and is difficult to estimate before the completion of their construction, particularly in the current highly uncertain environment, and hence has been stated at cost.

Financial assets

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

* Term deposit expiring on 30 December 2020.

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

Credit risk

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

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

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

As a result of the impact of COVID-19, the Directors have provided for rental and other arrears due from Peacocks Stores Limited amounting to £49,000 at 30 September 2020 and which remain outstanding at the date of signing these financial statements. A further £49,000 of accrued rent, in connection with a rent spreading adjustment for the income receivable from Peacocks Stores Limited, has also been written back at the balance sheet date. The impaired receivables are based on a review of expected credit losses. Impaired receivables and receivables not considered to be impaired are not material to the financial statements and, therefore, no further analysis is provided.

The credit risk on cash deposits is managed through the Company's policies of monitoring counterparty exposure and the use of counterparties of good financial standing. At 30 September 2020, the credit exposure from cash held with banks was £32.1 million which represents 36.2% of the Group's net assets. As at 30 September 2020, the Group had a single balance of £53,000 (2019: £54,000) where the counter-party had failed to honour a notice deposit and a full impairment provision has been recorded against the balance. All cash deposits are placed with banks whose credit ratings are acceptable to the Board with £10 million held on a fixed rate term deposit which expires on 30 December 2020 and £22.1 million on instant access accounts. Should the credit quality or the financial position of the banks currently utilised significantly deteriorate, cash deposits would be moved to another bank.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group seeks to manage its liquidity risk by ensuring that sufficient cash is available to meet its foreseeable needs. The Group has cash deposits at the balance sheet date of over £32 million. However, we will need to raise substantial amounts either as debt, or through joint ventures or asset sales in order to develop the Island Quarter site in Nottingham.

Section 172 statement

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

This is a new reporting requirement for public companies for accounting periods commencing after 1 January 2019. Further details are included in the report and accounts for the year ended 30 September 2020.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 September 2020

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

CONSOLIDATED Statement of Changes in Equity

for the year ended 30 September 2020

Attributable to the equity holders of the Company

CONSOLIDATED BALANCE SHEET

at 30 September 2020

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 30 September 2020

NOTES TO THE ACCOUNTS

for the year ended 30 September 2020

1. The financial information set out in this announcement is abridged and does not constitute statutory accounts for the year ended 30 September 2020 but is derived from the financial statements. The financial information is not audited. The auditors have reported on the statutory accounts for the year ended 30 September 2020, their report was unqualified and did not contain statements under sections 498(2) or (3) of the Companies Act 2006, and these will be delivered to the registrar of companies following the Company's Annual General Meeting. The financial information has been prepared using the recognition and measurement principle of IFRS.

2. The comparative financial information for the year ended 30 September 2019 was derived from information extracted from the annual report and accounts for that period, which was prepared under IFRS and which has been filed with the UK registrar of companies. The auditors have reported on those accounts, their report was unqualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

3. OPERATING LOSS

Operating loss is stated after charging:

4. PARTICULARS OF EMPLOYEES

The aggregate payroll costs were:

The average monthly number of persons, including Executive Directors, employed by the Company during the year was seven (2019: seven).

5. DIRECTORS' EMOLUMENTS

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

* includes an ex gratia payment of £0.3 million to R H McCaskill who stepped down in the year.

6. FINANCE INCOME AND COST

7. LEASES

Group as lessor:

The Group receives income from investment properties and existing tenants located at several development sites. At 30 September 2020, the minimum lease payments receivable under non-cancellable operating leases were as follows:

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

Group as lessee:

The Group is party to a lease which terminates on 28 April 2022. The lease includes a break clause which the Directors have assumed will not be triggered.

IFRS 16, which was effective for the Group from 1 October 2019, requires lessees to record all leases on the balance sheet as liabilities along with an asset reflecting the right of use of the asset over the lease term.

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

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

8. TAX

As at 30 September 2020, the Group has unused tax losses of £41.0 million (2019: £34.5 million) for which no deferred tax asset has been recognised in the consolidated balance sheet.

9. DIVIDENDS

No dividend will be paid in respect of the year ended 30 September 2020 (2019: nil).

10. LOSS PER SHARE

Loss per share is calculated as the loss attributable to ordinary shareholders of the Company for the year of £7,955,000 (2019: loss of £13,972,000) divided by the weighted average number of shares in issue throughout the year of 54,007,994 (2019: 56,860,879). There are no diluting amounts in either the current or prior years.

11. INVESTMENT PROPERTIES

Freehold investment properties

As at 30 September 2020, Cross Hands was valued by Knight Frank LLP in their capacity as external valuers. The valuation was prepared on a fixed fee basis, independent of the property value and undertaken in accordance with the RICS Valuation - Global Standards 2018 on the basis of fair value, supported by reference to market evidence of transaction prices for similar properties. It assumes a willing buyer and a willing seller in an arm's length transaction and reflects usual deductions in respect of purchaser's costs and SDLT as applicable at the valuation date. The independent valuer makes various assumptions including future rental income, anticipated void costs and the appropriate discount rate or yield.

The valuers have confirmed that the valuation as at 30 September 2020 includes the following statement on market conditions and the impact of COVID-19:

"The outbreak of COVID-19, declared by the World Health Organisation as a "Global Pandemic" on the 11th March 2020, has and continues to impact many aspects of daily life and the global economy - with some real estate markets having experienced lower levels of transactional activity and liquidity. Travel restrictions have been implemented by many countries and "lockdowns" applied to varying degrees. Whilst restrictions have now been lifted in some cases, local lockdowns may continue to be deployed as necessary and the emergence of significant further outbreaks or a "second wave" is possible.

The pandemic and the measures taken to tackle COVID-19 continue to affect economies and real estate markets globally. Nevertheless, as at the valuation date some property markets have started to function again, with transaction volumes and other relevant evidence returning to levels where an adequate quantum of market evidence exists upon which to base opinions of value. Accordingly, and for the avoidance of doubt, our valuation is not reported as being subject to "material valuation uncertainty" as defined by VPS 3 and VPGA 10 of the RICS Valuation - Global Standards.

The fair value of Cross Hands has been determined using an income capitalisation technique whereby contracted rent and market rental values are capitalised with a market capitalisation rate. This technique is consistent with the principles in IFRS 13 and uses significant unobservable inputs, such that the fair value has been classified in all periods as Level 3 in the fair value hierarchy as defined in IFRS 13. For Cross Hands, the key unobservable inputs are the net initial yields and expiry void periods. Net initial yields have been estimated for the individual units at between 5.25% and 10.00% and expiry void periods are projected at 6 months. The principal sensitivity of measurement to variations in the significant unobservable outputs is that decreases in net initial yields and void periods will increase the fair value.

The historical cost of the Group's investment properties as at 30 September 2020 was £13,451,000 (2019: £14,283,000).

The Group's revenue for the year includes £1,635,000 derived from properties leased out under operating leases (2019: £1,315,000).

12. INVESTMENT PROPERTIES UNDER CONSTRUCTION

Freehold land and buildings

Investment properties under construction comprise freehold land and buildings held for current or future development as investment properties which are reported in the balance sheet at cost.

Following on from the progress made towards commencing the first phase of the development at Nottingham, in addition to the anticipated benefit of retaining this asset for the long term for both rental income and capital appreciation, the Directors have concluded that the property should be transferred in the year from a trading property to an investment property under construction.

The fair value of this property rests in the planned developments, and is difficult to estimate pending confirmation of designs and planning permissions, and hence, in accordance with IAS 40, has been measured at cost until either the fair value becomes readily determinable or construction is complete.

13. INVESTMENT IN SUBSIDIARY UNDERTAKINGS

The companies listed below are the subsidiary undertakings of the Group at 30 September 2020, all of which are wholly owned.

14. DEVELOPMENT AND TRADING PROPERTIES

As set out in note 12, the Directors have transferred the Island Quarter site in Nottingham from a development and trading property to an investment property under construction during the year. As at 30 September 2020, the Group's remaining development and trading properties comprise Haverfordwest, Holyhead Waterfront, Selly Oak, King's Lynn, Parc Cybi Business Park and Rhosgoch.

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

The impact of Hitachi announcing their withdrawal from the proposed nuclear development at Wylfa, a lack of alternative investors, the impact of COVID-19 on Wales and the response of the Wales Assembly Government plus the undoubted pending recession has meant that we have reassessed the carrying values of Holyhead Waterfront and Rhosgoch, leading to write downs of £5.0 million and £0.5 million respectively. Further details on progress for each of the development and trading properties is set out in both the chairman's and chief executive's statement and the strategic report.

15. TRADE AND OTHER RECEIVABLES

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

16. TRADE AND OTHER PAYABLES

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

17. PROVISION FOR LIABILITIES AND CHARGES

The Group is party to a profit share agreement which would become payable on the earlier of the disposal of its retail park at Cross Hands or the date upon which the open market value of Cross Hands is agreed between the parties following completion of the development. The profit share provision has been calculated by reference to the open market value of the property at each balance sheet date after deducting applicable costs. As a result of the reduction in the value of Cross Hands during the year no profit share is payable as at 30 September 2020.

18. SHARE CAPITAL

In December 2010, the Group began a share buyback programme and during the year ended 30 September 2020 purchased 2,930,845 (2019: 3,239,000) shares on the open market at a cost of £3,965,000 (2019: £5,582,000). On 10 September 2020, 2,930,845 ordinary shares of 5p each were transferred out of treasury and cancelled (2019: 3,239,000 ordinary shares of 5p each).

 19. CAPITAL COMMITMENTS

As at 30 September 2020, the Group had contracted capital commitments of £326,000 (2019: £965,000) on its existing properties.

These costs were committed but not provided for in the financial statements.

 20. FINANCIAL INSTRUMENTS

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

Financial assets:

Financial liabilities:

21. EVENTS AFTER THE BALANCE SHEET DATE

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

The report and accounts for the year ended 30 September 2020 will be posted to shareholders shortly and copies may be obtained free of charge for at least one month following their posting by writing to the Company Secretary, The Conygar Investment Company PLC, 1 Duchess Street, London W1W 6AN. They are also available on the website www.conygar.com.

 The Company's Annual General Meeting (the "AGM") will be held at 11.30am on Friday, 18 December 2020. In accordance with current guidance regarding social contact and public gathering, the Company has elected to hold the AGM as a closed meeting via telephone pursuant to the provisions of the Corporate Insolvency and Governance Act 2020. Shareholders are strongly encouraged to vote on all of the resolutions online or by appointing the chairman of the meeting as their proxy in advance of the meeting. The AGM will comprise only the formal votes without any business update.

The Directors of Conygar accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the Directors of Conygar (who have taken all reasonable care to ensure that such is the case) the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.

This announcement is released by The Conygar Investment Company PLC and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Company by Robert Ware, Chief Executive.