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Conygar Investment Company PLC

Conygar Investment Company Significant progress and change made this year

Conygar Investment Company PLC (LON: CIC) has today provided its preliminary results for the year ended 30th September 2018.

Summary

Net asset value per share 201.3p.

· Outline planning submitted to Nottingham City Council for a mixed use scheme consisting of over 2 million square feet.

· Exchanged a lease agreement with Lidl UK to construct a 23,000 square foot store at Cross Hands, south west Wales.

· Disposed of M&S Food Hall at Ashby-de-la-Zouch for £4.4 million.

· Agreed a lease with B&M Retail and a forward sale at Ashby-de-la-Zouch.

· Planning permission granted and construction started for an 80 bed Premier Inn at Parc Cybi, Anglesey. Forward sold for £6.9 million.

· Purchase of industrial property in Selly Oak, Birmingham for £3.5 million in April 2018.

· Sold all 26.3 million Regional REIT shares for £25.5 million.

· Total cash available of £49.3 million with no debt or borrowings.

· Bought back 7.13 million shares (10.7% of ordinary share capital) at an average price of 165.9 pence per share.

Summary Group Net Assets as at 30 September 2018

 

Per Share

£’m

p

Properties and Projects

70.2

117.3

Cash and other net assets

50.1

84.0

Net Assets

120.3

201.3

 

Robert Ware, Conygar Investment Company PLC Chief Executive, commented:

“Significant progress and change has occurred over the year. With the sale of our holding in Regional REIT and the sale or forward sale of certain assets, our balance sheet is now stronger than a year ago, consisting only of our properties and cash reserves, with no debt. We have submitted outline planning for the Nottingham City Centre site, taken full control of the Holyhead Waterfront development, are delivering our properties under construction and are also well positioned to capitalise on other opportunities when they arise.”

Chairman’s & Chief Executive’s Statement

Results

We present the Group’s results for the year ended 30 September 2018.

Net asset value per share was 201.3p (2017: 203.0p).

Significant progress and change has occurred over the year. Following the sale of the investment property portfolio in 2017, the Group has sold all of its holding in Regional REIT Ltd. We have taken full control of the development project at Holyhead Waterfront, which was previously a 50%/50% joint venture with Stena Line. We have sold one asset and conditionally agreed to forward sell two assets taking advantage of the favourable market conditions we have seen for assets with long-term income, let to strong tenants.

As referred to in our interim results for the six months ended 31 March 2018, we have written down the values of two of our development projects, at Fishguard Waterfront and Llandudno Junction, and this has been the main cause of the loss before taxation for the year of £3.8 million (2017: profit of £1.2 million).

Despite this loss, the balance sheet remains strong and now consists of our investment properties under construction and development projects totalling £70.2 million and our cash deposits of £49.3 million.

This places us in a good position to deliver our development pipeline and also to capitalise on opportunities when they arise.

Progress

The Group disposed of its entire holding of 26.3 million shares in Regional REIT Limited, realising a total of £25.5 million. The total gain from the investment property portfolios sold to Regional REIT is £45.7 million over seven years, on an original investment cost of £113.4 million.

The development pipeline has progressed well during the year. In June, the Group submitted an outline planning application for a mixed used scheme of over two million square feet at its 37 acre site in Nottingham City Centre. We have continued to work closely with Nottingham City Council to deliver this exciting project, which will include offices, apartments, student housing, leisure uses and associated community retail offering, along with open public spaces. We expect a decision from the Council with regard to the planning application shortly and we are keen to begin the infrastructure works as soon as possible.

As mentioned above, the Group has decided to sell or forward sell a number of assets which it originally intended to hold to provide long-term income. The unsolicited offers received were compelling and highlight that, despite the current uncertainty in the UK economy, there is still a strong appetite for good quality regional assets. In November 2017, we sold our M&S Food Hall investment in Ashby-de-la-Zouch for £4.35 million, realising a profit of £446,000. At the same site, we exchanged a lease agreement with B&M Retail Ltd to construct a 20,000 square foot store with an additional 7,500 square foot garden centre and parking. Subsequently, an offer was received to forward purchase this asset and once constructed, which we expect will be by next autumn, the disposal will result in the Group receiving £4.3 million for the land and completed development.

On Parc Cybi, Anglesey, detailed planning permission was granted by Ynys Mon County Council (the Isle of Anglesey County Council) for an eighty bedroom hotel, which once built, is subject to a 25 year lease with Premier Inn Hotels Limited. Similarly to Ashby-de-la-Zouch, an offer was received for this asset which will result in the Group receiving net proceeds of £6.9 million for the completed development. These net proceeds equate to a net initial yield of 4.7% and again this disposal highlights the attraction of assets benefitting from long-term income let to high quality occupiers.

In September, we were pleased to announce that we had exchanged a lease agreement with Lidl UK Gmbh to construct a 23,000 square foot store on our retail park at Cross Hands, in south west Wales. Once Lidl is operating, approximately 75,000 square feet of the park will be income generating, leaving just 15,000 square feet of constructed space available to let and 0.75 acres available for future construction. We continue to aim to have this site fully operational by next autumn.

In May, the Group agreed with its partner, Stena Line Ports Limited, to take 100% control of its joint venture development project at Holyhead Waterfront. The transaction enables us to progress with the scheme as planned and we are working towards obtaining detailed planning permission in the coming months. As part of the transaction, Stena was granted 999 year leases of the platform at Soldier’s Quay, which is not required for the waterfront development, and a warehouse, which is situated at Soldier’s Point and is used by Stena. We retain a right to call for a sublease if this warehouse is required for the waterfront development in the future. As part of the transaction, Stena repaid £2.5 million to Conygar, which is Stena’s 50% share of a loan the Group made to the joint venture company. As consideration for the sale of its shares in the joint venture company, Stena received £1 and will receive 20% of the profit after tax of the development once it has completed.

Lastly, in April, we acquired an industrial property in Selly Oak, Birmingham for £3.5 million which generates income of £215,000 per annum. The property is located in a predominantly residential area and it benefits from good medium term redevelopment prospects.

Dividend

The Board recommends that no dividend is declared in respect of the year ended 30 September 2018. More information on the Group’s dividend policy can be found within the Strategic Report.

Share Buy Back

During the year, the Group acquired 7,130,000 ordinary shares representing 10.7% of its ordinary share capital, at an average price of 165.9p per share at a cost of £11.8m. As a result of the buy backs, net asset value per share has been enhanced by 4.4 pence per share. Following the year end, the Group has acquired a further 2,550,000 ordinary shares representing 3.8% of its ordinary share capital at an average price of 171.5p per share. This cost £4.4 million and has enhanced net asset value per share by 1.6 pence per share. The Group will seek to renew the buy back authority at the forthcoming AGM as we consider it to be a useful capital management tool.

Outlook

Our balance sheet is now stronger than a year ago, consisting only of our properties and cash reserves, with no debt. Accordingly, we are well positioned to deliver the development projects and also, to make further acquisitions should the right opportunities arise.

N J Hamway – Chairman
R T E Ware – 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 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. 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 portfolio of investment properties under construction and the development pipeline are progressing and construction is expected to start at several more locations this year. The balance sheet remains strong with cash of £49.3 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.

Summary of Group Net Assets

The Group net assets as at 30 September 2018 may be summarised as follows:

Per Share

£’m

p

Properties and Projects

70.2

117.3

Cash and other net assets

50.1

84.0

Net Assets

120.3

201.3

 

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 sold in the year at an average price of 97 pence per share generating £25.5 million.

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. An outline planning application was submitted in June 2018 and includes 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 we look forward to commencing the infrastructure works as soon as possible.

Cross Hands

We completed the construction of the initial 67,000 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. In September, we exchanged a lease agreement with Lidl UK Gmbh to construct a 23,000 square foot store and associated car parking and subject to the successful determination of a Section 73 application, which has been submitted, we intend to start on site in early 2019, with practical completion planned for the autumn. Once operating, approximately 75,000 square feet of the park will be income generating with other tenants including B&M Retail Ltd, Iceland Foods Limited, Pets at Home Ltd, Peacocks Stores Limited, Costa Coffee Ltd, Dominos PLC and David Jenkins Ltd. There will then be 15,000 square feet of constructed space available to let and 0.75 acres available for construction.

Holyhead Waterfront

At Holyhead Waterfront, we agreed with Stena Line Ports Limited to take 100% control of the joint venture development project. This transaction enables us to progress with the scheme as planned and we will now progress the detailed design and Reserved Matters application for the development over the coming year.

Parc Cybi Business Park and Rhosgoch

At Parc Cybi, Anglesey, we exchanged an agreement for lease with Premier Inn Hotels Ltd to construct an 80-bedroom hotel with a restaurant and bar. We 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 started construction in March and expect to complete in early 2019. The asset has been forward sold and the net sale proceeds from the sale of land and the development agreement will be £6.9 million, representing a yield of 4.7%.

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 was submitted by Horizon Nuclear in June and is currently being examined by the planning inspectorate in a process which is expected to last six months.

Selly Oak

In April, we acquired units 5-9 Selly Oak Industrial Estate in Birmingham for £3.5 million including costs. The units consist of 50,000 square feet and are fully let to University Hospitals Birmingham NHS Foundation Trust and Revolution Gymnastics Limited, generating income of £215,500 per annum. The property is located in a predominantly residential area and has strong short to medium term redevelopment prospects.

Haverfordwest

At Haverfordwest, we successfully discharged the three pre-commencement conditions of the residential permission relating to master planning, phasing and ecology. We plan to submit a reserved matters application for the first phase of approximately one hundred units imminently.

We continue to work on plans for the retail site where we withdrew our planning application in 2017.

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 exchanged an agreement for lease, subject to planning, with B&M Retail for a term of 15 years. In October, a resolution to grant planning was awarded. The construction of the 20,000 square foot store and 7,500 square foot garden centre will start in the New Year. We have agreed to forward sell this asset and it is expected that the net sale proceeds from the sale of land and the development agreement will equate to £4.3 million.

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 in discussions to sell this site and will provide an update on the potential disposal when we next report.

Fishguard Harbour

At Fishguard Harbour, we announced in January that we can no longer progress our plans for this mixed-use marina development and we have therefore written off a total of £2.4 million.

Llandudno Junction

We have been working with Conwy County Council, as its preferred development partner, to bring forward 90,000 square feet of retail floor space at its Old Brickworks site. Due to the profound difficulties in the retail sector and our belief that we will not be able to deliver the park as planned, it was decided that this investment should be written off. We are continuing to work with the Council and potential occupiers to devise alternative schemes for the site.

Summary of Investment Properties

2018

2017

£’m

£’m

Nottingham

15.00

14.01

Cross Hands

9.64

8.14

Haverfordwest (Retail)

3.59

3.52

Selly Oak 1

3.57

Rhosgoch

3.47

3.46

Parc Cybi, Holyhead

2.83

1.61

Ashby-de-la-Zouch 2

0.13

3.55

Total investment to date

38.23

34.29

 

1. On 30 April 2018, the Company acquired units 5-9 Selly Oak Industrial Estate.

2. The Marks and Spencer Food Hall development was completed in the year and, having received an unsolicited offer of £4.35m, was disposed of in November 2017.

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.

2018

2017

£’m

£’m

Haverfordwest

22.14

22.03

Holyhead Waterfront 1

8.85

10.26

King’s Lynn

0.87

0.87

Fishguard Lorry Stop 2

0.07

0.54

Fishguard Waterfront 2

2.17

Llandudno Junction

0.71

Total investment to date

31.93

36.58

 

1. Includes £2.5m received from Stena Line Ports Limited.

2. The Company is unable to progress its proposals for a mixed-use development.

Financial review

Net Asset Value

The net asset value at the year end was £120.3 million (2017: £135.8 million). The primary movements in the year were £1.8 million from investment property sales and net rental income plus £1.6 million of dividends from Regional REIT Limited offset by a £2.1 million loss on the sale of the Regional REIT shares, £3.2 million of development costs written off, £3.1 million of administrative costs and £11.8 million spent on purchasing our own shares. Following the cancellation of the share options in 2016, there are no diluting items to the basic NAV per share.

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 £1.0 million cash in operating activities (2017: used £0.2 million).

The primary cash outflows in the year were £3.5 million to purchase Selly Oak, £4.2 million incurred on investment properties under construction and £11.8 million to buy back shares. These were offset by £4.3 million from the sale of an investment property, £25.5 million from the sale of Regional REIT shares and £2.5 million received from Stena Line Ports following the release of their interest in the Stena Line joint venture, resulting in a cash inflow during the year of £12.1 million (2017: cash outflow of £26.5 million).

Net Income From Investment Property Activities

2018

2017

£’m

£’m

Rental income

1.5

5.0

Direct property costs

(0.2)

(1.6)

Rental surplus

1.3

3.4

Profit on sale of group undertakings*

1.5

Sale of investment property

4.3

Cost of investment property sold

(3.8)

Total net income arising from investment property activities

1.8

4.9

*Profit arising from the sale of the investment property portfolio to Regional REIT Limited.

Administrative Expenses

The administrative expenses for the year ended 30 September 2018 were £3.1 million compared with £2.7 million the previous year. The major items were salary costs of £1.9 million (2017: £1.7 million) and various costs arising as a result of the Group being listed on AIM.

Financing

At 30 September 2018, the Group had cash of £49.3 million (2017: £37.2 million). The increase has resulted mainly from sale of both the Regional REIT shares and investment property, partly offset by the cash used in buying back shares, administrative costs, the purchase of Selly Oak and investing in the investment properties under construction and development projects.

As at 30 September 2018, the Group does not maintain any bank loan facilities.

Taxation

The tax credit for the year is £0.1 million on the pre-tax loss of £3.8 million and comprises £0.1 million of current tax offset by a £0.2 million deferred tax credit. 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 deferred tax liability of £0.2 million, recognised at 30 September 2017, has been reversed in the year following the sale of all the Regional REIT shares.

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.

Dividend policy

The Board recommends that no dividend is paid in respect of the year ended 30 September 2018.

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 nine 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.

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 7,130,000 ordinary shares at an average price of 165.9p which represents 10.7% of its ordinary share capital. This cost £11.8 million and net asset value per share has been enhanced by approximately 4.4 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.

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:

Property held for Investment

The fair value of property held for investment is based upon open market value and is calculated using a third party valuation provided by an external valuer.

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 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, 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.

As at 30 September 2018, the Group does not maintain any bank loan facilities or derivative financial instruments.

Financial Assets

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

30 Sep 18

30 Sep 17

£’000

£’000

Floating rate

49,262

37,170

 

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 2018 (2017: 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 2018, the Group had a single balance of £57,000 (2017: £59,000) 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.