2016 Preliminary Results

RNS Number : 0497S

Conygar Investment Company PLC(The)

16 December 2016

15 December 2016

THE CONYGAR INVESTMENT COMPANY PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2016

The Conygar Investment Company PLC, announces its results for the year ended 30 September 2016.

SUMMARY

· Net asset value per share 196.9p at 30 September 2016 decreased by 3.2% from 203.3p at 30 September 2015 due to the write off of our investment at Pembroke Dock. EPRA NAV per share decreased by 3.1% to 196.9p from 203.2p.

· Acquired a 9.96 acre site from Sainsbury's at Cross Hands, west of Swansea, for £2.25 million, and the 203 acre freehold of the former gas storage facility near Rhosgoch, Anglesey, for £3 million.

· The development pipeline is advancing. At Haverfordwest, infrastructure works have completed, and at Cross Hands detailed planning consent has been granted and construction started. We continue to progress the approvals for the other projects.

· In April 2016, completed the refinancing of three portfolios with a new £48.1 million facility with Lloyds Bank, releasing £21 million after repayment of the two existing loans.

· In December 2016, completed the refinancing of the Edinmore portfolio and Mochdre Commerce Park with a new £21.4 million facility with HSBC Bank, releasing £13 million after repayment of the existing loan.

· Total cash available for acquisitions and development funding of £64 million. Net debt of £27.2 million as at 30 September 2016, representing gearing of 17.9% against net asset value and 20.8% on loan to value basis. Post the HSBC refinancing, net debt of £27.8 million, representing gearing of 18.3% against net asset value and 21.3% on loan to value basis.

· Investment property portfolio valuation of £130.7 million at 30 September 2016, an increase of £1.0 million on a like for like basis. Our average unexpired lease length has risen from 4.8 years at 30 September 2015 to 5.8 years at the year end and this reflects a number of new leases and renewals which have been agreed over the past year.

· Disposed of four investment properties in the year for a total consideration of £7.0 million, a deficit of £0.3 million to the September 2015 valuation after costs.

· Bought back 5.3 million shares (6.4% of ordinary share capital) at an average price of 167 pence per share.

Summary Group Net Assets As At 30 September 2016

		Per Share
	£'m	p
Investment Properties	130.7	169.2
Investment Properties Under Construction	9.5	12.3
Development Projects	40.7	52.8
Cash	63.7	82.5
Other Net Liabilities	(2.7)	(3.5)
	241.9	313.3
Bank Loans	(55.5)	(71.9)
ZDP Liability	(34.4)	(44.5)
	152.0	196.9

Robert Ware, Chief Executive, commented:

"Despite the current political and economic uncertainties, our investment property portfolio has performed well and we expect this to continue in the short to medium term. At the same time, we are pushing the development projects forward and we anticipate that construction work will begin at a number of the sites this year in addition to the ongoing works at Cross Hands. We see the development pipeline as the main driver of shareholder growth in the medium term and this will be a major focus for the Group in the coming years."

Enquiries:

The Conygar Investment Company PLC

Robert Ware: 020 7258 8670

Ross McCaskill: 020 7258 8670

Liberum Capital Limited (Nominated Adviser)

Richard Bootle: 020 3100 2222

Temple Bar Advisory (Public Relations)

Alex Child-Villiers: 07795 425580

Will Barker: 020 7002 1080

Chairman's & Chief Executive's Statement

Results

We present the Group's results for the year ended 30 September 2016.

Net asset value per share decreased by 3.2% to 196.9p from 203.3p last year and to 196.9p (2015: 203.2p) on an EPRA basis. The reason for this fall was the write off of our investment at Pembroke Dock which amounts to £4.8 million or 6.2p per share. This was a difficult decision but we felt that it was necessary given the problems we have faced at this site over the past year and these issues are discussed in detail within the developments section of the Strategic Report. All other parts of the business have performed as expected and the loss for the year before taxation was £4.7 million (2015: £7.8 million profit).

Net asset value as at 30 September 2016 was £152.0 million compared with £167.8 million at 30 September 2015. During the year, the Group spent £8.9 million on share buy backs and paid a dividend of £1.4 million and excluding these, the net asset value decreased by 3.3%, which is attributable to the loss for the year.

The Group's investment properties as at 30 September 2016 were independently valued at £130.7 million (2015: £133.2 million), an increase in the valuation of £1m for the year on a like for like basis. This modest uplift does not truly reflect the performance of the portfolio in the year as it includes a £3 million fall in the value of our building in Aberdeen. As has been well publicised, the Aberdeen market has been hit hard by the crisis in the oil industry and this is reflected in the valuation. If we exclude Aberdeen, the investment property portfolio rose in value by 3.5% in the year on a like for like basis and this is a result of very positive letting activity across the portfolio during the period.

The Group had cash balances of £63.7 million (2015: £57.4 million) at the year end and bank debt of £56.4 million (2015: £38.2 million). Including the zero dividend preference share liability of £34.4 million (2015: £32.5 million), our net gearing is 17.9% or 20.8% on a loan to value basis.

Although the fall in net asset value per share is disappointing, the Group is well placed to deliver the other development projects and the balance sheet remains robust.

Progress

Development Projects

Two development sites were acquired during the year. The first is a 9.96 acre freehold serviced development site acquired from Sainsbury's at Cross Hands, west of Swansea, for £2.25 million plus an overage provision. In April 2016, a planning application was submitted to Carmarthenshire Council for a 106,000 square foot retail development, along with a 562 space car park, to include a family pub and restaurant, food stores, a drive-through restaurant and other retail stores. The detailed planning consent was granted in September 2016 and construction work has now begun.

The second site was acquired in October 2015, and is the freehold of the former gas storage facility site near Rhosgoch, Anglesey, at a cost of £3 million. This 203 acre brownfield site is situated 6.5 miles from the existing and proposed Wylfa Nuclear Power Station. We have agreed an option agreement with Horizon Nuclear Power over the entire site and we hope that this site will be used to house temporary workers who will be employed to construct the new power station.

In May 2016, the group submitted a planning application on its development site at Nottingham Road, Ashby-de-la-Zouch, for a Marks & Spencer "Food Hall", measuring approximately 11,000 square feet with associated parking services and landscaping. We expect to hear the outcome of the application shortly and we will commence construction almost immediately, should planning permission be granted. There are another two acres available for development at the site and discussions are ongoing with potential occupiers of the remaining land.

Investment Property Portfolio

There have been a number of significant lettings and lease renewals which have been agreed during the year.

At Mochdre Commerce Park, an industrial estate strategically located in Colwyn Bay, North Wales, adjoining the A55 expressway, midway between Holyhead and Chester, a lease was signed by Conwy County Council for 60,000 square feet of industrial space and 3.2 acres of open storage land on a 35 year lease, with a first break at year 15 and an initial rent of £240,000 per annum. This letting along with another 20 year lease to a biotech company for approximately 35,000 square feet has resulted in a significant increase in the value of this asset as at 30 September 2016.

A crucial reletting was also achieved after the period end at Kelvin Close, Warrington where Hewlett Packard has agreed to extend their lease by 5 years at an improved rent. This, along with the lettings at Mochdre, are good examples of how the letting market has remained strong in the period leading up to and following the EU referendum and this is the picture we have seen across the majority of the UK. In Scotland, a market which is struggling, we have let Watt Place, Hamilton, an industrial building of 33,000 square feet to Napier University at a very competitive rent. During the year we also let a unit at Kingscourt Leisure Centre in Dundee to Domino's Pizza, which we believe is their largest unit in the UK. The Dundee market has been a particularly difficult one since the financial crash of 2008 and the unit in question had been vacant since construction, which was some time before our ownership. This letting, which might appear overdue, is another example of the team's efforts and this is reflected in the increase in the portfolio valuation as at 30 September 2016.

As mentioned above, our asset in Aberdeen has been written down heavily in the year. There is a considerable amount of office space available in and around the city and with only one year's income left on the current lease, we will continue to work hard to replace the tenant who has already vacated the building. Fortunately, our exposure to Aberdeen was greatly reduced during the year ended 30 September 2014 when we sold two buildings there for a consideration of £15.5 million, which was a significant surplus to our book cost and £1.24 million over the previous valuation in September 2013.

The refurbishment at Brennan House, Farnborough and the Links, Warrington, have now completed and the initial feedback from the marketing process is positive and we expect to announce lettings at both locations in our next update.

The contracted annual rent roll of the portfolio was £9.7 million as at 30 September 2016, which is only £0.1 million lower than at 30 September 2015, despite the disposals in the year. We continue to work hard at letting vacant space, retaining tenants and pushing down irrecoverable property costs. Our average unexpired lease length has risen from 4.8 years to 5.8 years at 30 September 2016 and this reflects a number of new leases and renewals which have been agreed over the past year. We made four disposals in the year for a gross consideration of £7.0 million, which was £0.3 million lower than the 2015 valuation after costs.

Financing

The Group's loan facilities secured on the investment property portfolio have been fully refinanced since the start of 2016.

In April 2016, the Group completed a new five year £48.1 million loan with Lloyds Bank PLC, Jersey Branch, which replaced the two facilities we held with the Royal Bank of Scotland PLC. The interest cost was reduced from 3% and 3.5% per annum margin plus 3 month LIBOR to 1.9% margin plus Bank of England Base Rate and this refinancing also released £21 million to pursue other projects after repayment of the RBS loans.

On 2 December 2016, following the financial year end, the Group also completed a £21.4 million 5 year loan with HSBC Bank PLC. This loan replaced the previous loan facility held with Barclays Bank PLC and the interest cost has been reduced from 3.5% per annum margin plus 3 month LIBOR to 2.15% per annum margin plus 3 month LIBOR and has also released an additional £13 million after repayment of the Barclays loan.

The weighted average cost of debt is 2.26% per annum at the time of writing and we are set to benefit from a continuation of a low interest rate environment.

Dividend

The Board recommends that no final dividend is declared in respect of the year ended 30 September 2016 due to the loss which arose in the year. Your Board will continue to review the dividend payments annually. More information on the Group's dividend policy can be found within the Strategic Report.

Share Buy Back

During the year, the Group acquired 5,299,819 ordinary shares representing 6.4% of its ordinary share capital, at an average a price of 167.4p per share. This cost £8.9m and, as a result of the buy backs, net asset value per share has been enhanced by 2.5 pence per share. Following the year end, and the cancellation of the share premium account on 31 August 2016, the Group has acquired a further 5,070,000 ordinary shares representing 6.1% of its ordinary share capital at an average price of 155.4p per share. This cost £7.9 million and has enhanced net asset value per share by 2.9 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

Despite the current political and economic uncertainties, our investment property portfolio has performed well and we expect this to continue in the short to medium term. At the same time, we are pushing the development projects forward and we anticipate that construction work will begin at a number of the sites this year in addition to the ongoing works at Cross Hands. We see the development pipeline as the main driver of shareholder growth in the medium term and this will be a major focus for the Group in the coming years.

The refinancings, which have completed during the calendar year, mean that we are well funded for the medium term and the significant cash balances we hold will enable us to move quickly should worthwhile opportunities arise.

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 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 two major strands being the property investment side and the development project side. The investment property portfolio generates surplus cash flow while at the same time we are creating a pipeline of development projects that are well positioned to deliver good returns in the medium term. We continue to focus upon positive cash flow and 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

Despite the write down of the investment at Pembroke Dock in the year, the Group is in a strong position at the year end with significant underlying earnings, positive cash flow and investment property values that have increased by 3.5% during the year, excluding our asset in Aberdeen. The development pipeline is progressing and construction is about to start at several more locations this year. The balance sheet remains strong with cash of £63.7 million and total debt of £90.9 million, giving net gearing of 17.9%. 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 were no significant events since the balance sheet date apart from the refinancing with HSBC and the share buy backs, both of which are referred to in the Chairman's and Chief Executive's Statement, and the option agreements completed with Horizon Nuclear Power at Rhosgoch and Parc Cybi.

Summary of Group Net Assets

The Group net assets as at 30 September 2016 may be summarised as follows:

		Per Share
	£'m	p
Investment Properties	130.7	169.2
Investment Properties Under Construction	9.5	12.3
Development Projects	40.7	52.8
Cash	63.7	82.5
Other Net Liabilities	(2.7)	(3.5)
	241.9	313.3
Bank Loans	(55.5)	(71.9)
ZDP Liability	(34.4)	(44.5)
	152.0	196.9

Investment properties

Summary of portfolio

	2016	2015
Valuation at 30 September	£130.7 million	£133.2 million
Number of properties	32	36
Contracted rent (pa)	£9.7 million	£9.8 million
Current ERV (pa)	£11.6 million	£11.9 million
Net initial yield	6.2%	7.16%
Equivalent yield	8.02%	8.02%
Reversionary yield	8.39%	8.35%
ERV of vacant units (pa)	£2.0 million	£1.7 million
Vacancy rate	17.1%	14.1%
Average unexpired lease lengths	5.8 years	4.8 years

Asset management

At 30 September 2016, the contracted rent for the investment property portfolio was £9.7 million with an ERV of £11.6 million. The overall vacancy rate in the portfolio is currently 17.1% which is a rise from 14.1% last year. This increase is due to a number of refurbishments that have taken place during the year. If we exclude our assets at Farnborough and the Links, Warrington, both of which have recently been refurbished, and our asset at Mochdre, the vacancy rate falls to 6.9%. The average unexpired lease length is 5.8 years compared to 4.8 years at 30 September 2015. This is positive and a reflection of the new leases being signed across the portfolio.

In spite of the market slowdown and continuing uncertainty caused to the UK property market by the EU referendum, there has been good progress on a variety of asset management initiatives across the portfolio. Outside the central London office market and parts of Scotland, occupier confidence seems to have held firm and rental values are looking buoyant across the regional market.

During the summer of 2016, we completed the refurbishment of Brennan House in Farnborough where approximately £2.5 million was spent to create a very high quality product. We also refurbished two properties at the Links, Warrington for a cost of £1 million. These properties together make up a large proportion of the vacant space and so we hope to substantially reduce the vacancy rate over the coming year. We currently have serious interest at Farnborough reflecting a higher rental level than our original appraisals and hope to have some positive news soon.

At Mochdre Commerce Park, Colwyn Bay, we have signed a lease with the council for a 35 year term on 60,000 square feet in addition to 3.2 acres of open storage land. We have also signed a 20 year lease on another circa 35,000 square feet to a biotech company. The new rental income for these two leases is £395,000 per annum. We are in discussions with a number of parties about the remaining space which represents the other large portion of the vacancy rate.

We continue to maintain good contact with our tenants and work hard to minimise irrecoverable costs and voids. At Ashby de la Zouch we have agreed a new ten year lease with GE at an improved rent and have agreed terms with Marks and Spencer for a "Food Hall" of circa 11,000 square feet. The planning application for this development has been submitted and we hope to be on site early next year.

We have agreed a number of other lease extensions this year, including one at Warrington with Hewlett Packard, where we have agreed a new five-year lease at a higher rent. There have also been renewals at a number of other

locations such as Dundee, Stratford-upon-Avon and Bletchley. A large portion of our vacancy rate is explained by newly refurbished space and we will be working hard both to reduce that figure and boost the contracted rent over the coming year.

Disposals

The Group disposed of four properties during the year, at Horsham, Hinckley, Runcorn and Brighouse for a total consideration of £7.0 million. We will continue to dispose of assets where we feel we can add no further value or if there is a compelling reason to do so.

Valuation

The investment property portfolio has been independently valued by Jones Lang LaSalle at £130.7 million as at 30 September 2016. There was a substantial fall in value at Aberdeen, which has suffered badly from a decrease in oil prices. We had previously disposed of the other two units at a surplus of £1.24 million to the 2013 valuation and will continue to mitigate the risks to the asset as best as we can.

Despite the decline at Aberdeen, the investment property portfolio increased in value reflecting asset management initiatives which have both protected and increased rental income. Assets such as ours continue to require active management to protect value and it is pleasing to see this work rewarded through valuation increases despite the wider market uncertainty.

Capital Expenditure

We incurred £3.7 million of capital expenditure during the year, which was fully financed from our existing cash resources. There will always be a level of refurbishment work required throughout a portfolio of this nature, though as at 30 September 2016, the Group had no contractual related capital expenditure commitments in excess of £1,000,000.

Development Projects and Investment Properties Under Construction

Progress has been made on most of our development projects since we last reported.

Haverfordwest

The substantial infrastructure works to service the 729 residential units and the 9.6 acre retail site were completed on budget at a cost of £3.7m. Two planning applications were submitted simultaneously in June 2016 for 100,000 square feet of retail units, a hotel, a 5 screen cinema and 602 car parking spaces. The applications are currently with Pembrokeshire County Council and we look towards an early determination of the plans in the New Year. We are also in advanced negotiations with a housebuilder for the first phase of the residential development, which we are looking to bring forward next year.

Cross Hands

In April 2016, we submitted a detailed planning application for a 106,000 square foot retail development in Cross Hands, South West Wales. Planning permission was achieved in September and we have appointed a contractor to deliver the first phase of the scheme, who has commenced works. Running in parallel, we are progressing legal agreements with a number of national retailers and will have completed the first phase of the development by October 2017.

Fishguard Harbour

The detailed planning (First Reserved Matters) and marine licence applications, necessary to facilitate the development platform, marina basin and port expansion area, were submitted in January this year. In November 2016, the Phasing Plan for the marina and residential development was approved by Pembrokeshire County Council's planning committee and we envisage that the First Reserved Matters application will be considered early in the New Year. In terms of the marine licence, all the necessary information has been provided to Natural Resources Wales and we are awaiting release of the formal consent.

Working in association with Stena Line, we have prepared a draft Harbour Revision Order and this should be submitted to the Marine Management Organisation early in the New Year. Once this order has been processed and formalised, we will have successfully negotiated all of the statutory consenting processes necessary to commence construction of the project. Once the enabling infrastructure works are underway, we will be turning our attention to the detailed design and subsequent Reserved Matters applications for all the residential development and buildings relating to the operation of the commercial marina.

Pembroke Dock

We have sadly decided to withdraw from this project and write off our total investment of £4.8 million. Having commissioned a detailed feasibility study, the results unfortunately concluded that the cost of constructing the marina would be considerably greater than our first investigation showed (mainly due to the seabed analysis and the resulting lock structure and outer wall that is now needed). Our initial estimates were for the marina to cost £8 million, and unfortunately that figure has now risen to over £17 million, which means that it is not viable.

The land based element at Pembroke Dock had been progressed in tandem and that is viable. We have attracted a number of substantial retailers to the site and the scheme would improve the environment and create considerable employment. However, our contract with the client group, which consists of Pembrokeshire County Council, Milford Haven Port Authority, the Crown Estate and the Welsh Assembly Government, is dependent on the marina being built by 2022. We have met the Council in an attempt to separate the land development from the marina and disappointingly, they have refused to agree to this. Hence our decision to write off our total investment.

Holyhead Waterfront

Earlier this year, Ynys Mon County Council (YMCC) decided to hold a public inquiry to consider the Town & Village Green Application received on behalf of the Waterfront Action Group. This was held in October 2016 and the Inspector was tasked with producing his report by the end of November 2016. YMCC will take the Inspector's report to its planning committee with a view to accepting or rejecting the recommendations contained therein. We are confident that the Inspector will recommend that the Registration Authority (YMCC) reject the application, which presently stands as an impediment to the implementation of the Waterfront project. Discussions are ongoing with various parties some of whom are involved in the Wylfa Newydd project, in respect of providing both residential accommodation and the use of our marine facilities at Soldiers Point.

Parc Cybi Business Park, Holyhead

We have agreed, subject to planning, with a national operator, to construct an 80 bedroom hotel on our 3 acre gateway plot. We hope to progress this new project over the coming year. The truckstop, a joint venture with Fred Done, the founder and owner of Betfred, has improved trading month on month and is now averaging over 140 trucks, 3 evenings per week.

We have signed an option agreement with Horizon Nuclear Power (HNP) whereby they can instruct us to construct a logistics centre on a 6.9 acre site for their use in facilitating the new Wylfa B Nuclear power station. The option runs until December 2022.

Rhosgoch

We have also signed an option agreement with HNP over our entire 203 acre site running until December 2022. Rhosgoch is one of several sites that HNP are considering as a location for housing the temporary construction workers.

Llandudno Junction

In May 2016, Conwy County Borough Council approved our outline planning application for 90,000 sq ft of retail floor space. Working in partnership with the Council, we are now marketing the property with a view to optimising this excellent retail opportunity. Again, we are confident that this project will come forward over the coming 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 have exchanged contracts to sell the site, subject to planning, at book value.

Summary of Development Projects

The expenditure in the year on our development land bank amounted to £1.37 million which was offset by a £2.35 million reimbursement of retention funds from Pembrokeshire County Council following completion of the infrastructure works at Haverfordwest. Our total investment to date, after writing off the costs incurred on Pembroke Dock as explained in the Chairman's and Chief Executive's statement, is now £40.82 million (analysed below) or 52.8p per share. We will continue to progress these projects in a risk-averse manner and to avoid any speculative development. In spite of Pembroke Dock, we have had good successes in securing planning consents and several of the projects are beginning to advance.

It is our intention to deliver schemes comprising circa 1,300 homes (of which 579 are waterside), 846 marina berths and in excess of 400,000 square feet of commercial and retail development.

As previously stated, it is 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.

	2016	2015
	£'m	£'m
Haverfordwest	22.18	23.91
Holyhead Waterfront	10.31	10.19
Parc Cybi, Holyhead	4.79	4.59
Fishguard Waterfront	1.52	1.36
Fishguard Lorry Stop	0.54	0.54
King's Lynn	0.87	0.85
Llandudno Junction	0.61	0.43
Other	-	0.07
Pembroke Dock Waterfront	-	4.68
Total investment to date	40.82	46.62

Financial review

Net Asset Value

The net asset value at the year end was £152.0 million (2015: £167.8 million). The primary movements were £4.9 million net rental income plus a £1.0 million increase in the value of the investment properties offset by £6.6 million of finance and administrative costs, £4.8 million to write off Pembroke Dock development costs, and £8.9 million spent on purchasing our own shares. Excluding the amounts incurred purchasing Conygar shares and paying dividends, net asset value decreased by 3.3% in the year.

On an EPRA basis, the net asset value is:

	2016	2015	2014	2013	2012
	£'m	£'m	£'m	£'m	£'m
Net asset value	152.0	167.8	169.4	155.1	154.0
Share options	4.1	4.1	8.1	-	-
Diluted net asset value	156.1	171.9	177.5	155.1	154.0
Fair value of hedging instruments	-	-	(0.4)	0.2	0.9
EPRA net asset value	156.1	177.9	177.1	155.3	154.9

EPRA NAV per share	196.9p	203.2p	195.9p	174.9p	166.9p
Basic NAV per share	196.9p	203.3p	197.5p	174.6p	165.9p
Diluted NAV per share	196.9p	203.3p	196.3p	174.6p	165.9p

The EPRA net asset value is calculated on a fully diluted basis and excludes the impact of hedging instruments as these are held for long term benefit and not expected to crystallise at the balance sheet date.

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 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.

Revaluation

The Group's investment properties were independently valued by Jones Lang LaSalle as at 30 September 2016. In their opinion, the open market value of the investment property portfolio was £130.7 million. The total portfolio increased in value by £1.0m over the year on a like for like basis.

Cash flow

The Group generated £2.5 million cash from operating activities (2015: used £12.9 million).

The primary cash inflows in the year were £6.8 million from the sale of investment properties and £47.1 million (net of costs) from the new Lloyds debt. These were partly offset by cash outflows of £9.8 million to acquire and refurbish investment properties, £29.8 million to repay RBS debt and £8.9 million to buy back shares, resulting in a net cash inflow of £6.3 million during the year.

Net Income From Property Activities

	2016	2015
	£'m	£'m
Rental income	9.4	11.4
Direct property costs	(2.9)	(2.9)
Rental surplus	6.5	8.5
Sale of investment properties	7.0	31.3
Cost of investment properties sold	(7.3)	(28.9)
(Loss)/gain on sale of investment properties	(0.3)	2.4
Total net income arising from property activities	6.2	10.9

Administrative Expenses

The administrative expenses for the year ended 30 September 2016 were £2.4 million compared with £1.5 million the previous year. The primary reason for this increase is the reversal in the prior year of 20% of the 2014 profit share which the remuneration committee decided would not be paid and therefore administrative expenses were credited with £1.75m.

Financing

At 30 September 2016, the Group had cash of £63.7 million. The bank debt at 30 September 2016 was £56.4 million and the zero dividend preference shares liability is £34.4 million. The gearing is 17.9% and loan to value is 20.8% including cash.

The interest rate risk on the facility continues to be managed by way of interest rate caps and the fair value of these derivative financial instruments is provided for in full on the balance sheet. The weighted average cost of all debt including margin is 2.4% and as at 30 September 2016, 66% (2015: 100%) of the Group's bank borrowings were hedged.

The finance costs for the year amounted to £4.1 million (2015: £4.4 million), primarily consisting of £1.6 million bank loan interest (2015: £2.0 million) and interest payable on the zero dividend preference shares of £1.8 million (2015: £1.7 million). Finance income amounted to £0.3 million (2015: £0.2 million) reflecting the low returns on short term cash deposits. As a matter of policy, the Group retains instant access to all cash deposits so it is readily available for use in the business.

As at 30 September 2016, 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 (2015: £nil) under which £48,100,000 (2015: £nil) had been drawn down. This facility is repayable on or before 27 April 2021 and is secured by fixed and floating charges over the assets of the borrowers. The facility is 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 28 April 2016, TAPP Property and TOPP Property repaid the outstanding balances of their facilities with the Royal Bank of Scotland PLC of £25,931,000 (2015: £29,816,000).

As at 30 September 2016, Conygar Dundee Limited, Conygar Hanover Street Limited, Conygar Stafford Limited and Conygar St Helens Limited jointly maintained a facility with Barclays Bank PLC of up to £8,335,000 (2015: £8,335,000) of which £8,335,000 (2015: £8,335,000) had been drawn down. This facility was repayable on or before 21 November 2016 and was secured by fixed and floating charges over the assets of Conygar Dundee Limited, Conygar Hanover Street Limited, Conygar Stafford Limited and Conygar St Helens Limited. The facility was subject to a maximum loan to value covenant of 52% (2015: 52%) and an interest cover ratio covenant of 225%. As set out in the Chairman's and Chief Executive's statement, the loan was repaid in full on 26 October 2016.

Taxation

The tax charge for the year is £0.7 million on the pre-tax loss of £4.7 million. Tax is payable at the full UK corporation tax rate of 20.0% on net rental income after deduction of finance costs and administrative expenses. Deferred taxation has been recognised in the year in respect of the increase in value of the investment properties held by subsidiaries registered in the United Kingdom and this amounts to £1.9 million.

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 (£56.4 million), cash and short term deposits (£63.7 million). 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. Interest

rate caps amount to an economic hedge of between £36.1 million and £37.0 million (2015: £55.6 million) of the total loan drawdowns of £56.4 million (2015: £38.2 million) for cashflows to 27 April 2021, but no hedge accounting is 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 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 2016.

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 seven 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 not made a profit for the year ended 30 September 2016, 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 5,299,819 ordinary shares at an average price of 167.4p which represents 6.4% of its ordinary share capital. This cost £8.9 million and net asset value per share has been enhanced by approximately 2.5 pence per share. The Group will seek to renew the buy back authority at the forthcoming AGM and will continue to utilise it as and when it makes sense to do so.

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, strong balance sheet and the expansion of the business during a difficult economic period 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:

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.

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 valuer.

Interest Rate Risk

The Group is exposed to market risk primarily related to interest rates. These exposures are actively monitored as set out below.

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.

In January 2014, the Group issued 30 million zero dividend preference shares (ZDP Shares) raising £29.3 million after costs. Accounted for as a debt instrument, the ZDP Shares have a gross annual redemption yield of 5.5% payable on the fifth anniversary and are listed on the main market of the London Stock Exchange.

At 30 September 2016, after taking into account interest rate swaps, 66% (2015: 100%) 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	30 Sep 15 £'000
Lloyds Bank, Jersey(1)	BOE base + 1.9%	2-5 years	48,100	-
Barclays(2)	LIBOR + 3.5%	Less than 1 year	8,335	8,335
Royal Bank of Scotland (TAPP)(3)	LIBOR +3%	n/a	-	20,174
Royal Bank of Scotland (TOPP)(3)	LIBOR +3.5%	n/a	-	9,642
			56,435	38,151

(1) Senior bank facility repayable 27 April 2021.

(2) Senior bank facility repaid 26 October 2016.

(3) Senior bank facilities repaid 28 April 2016.

Financial Assets

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

	30 Sep 16	30 Sep 15
	£'000	£'000
Fixed rate	-	-
Floating rate	63,662	57,386
	63,662	57,386

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 2016 (2015: none).

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. The unprecedented credit and banking market disruption of the last few years has 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 has introduced considerable uncertainty into the process. As at 30 September 2016, the Group had a single balance of £67,000 (2015: £74,000) 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 cashflow 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 set out under interest rate risk above. As the Group's assets and liabilities are all denominated in Pounds Sterling, there is currently no exposure to currency risk.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 September 2016

Note	Year Ended 30 Sep 16 £'000	Year Ended 30 Sep 15 £'000

Rental income	9,222	10,957
Other property income	213	484
Sale of trading investments	-	300
Revenue	9,435	11,741

Direct costs of:
Rental income	2,909	2,932
Development costs written off	1,581	-
Sale of trading investments	-	211
Direct Costs	4,490	3,143

Gross Profit	4,945	8,598

Share of results of joint ventures 14	(3)	(19)
(Loss)/profit on sale of investment properties 12	(308)	2,436
Surplus on revaluation of investment properties 12	992	2,742
Loss on impairment of goodwill 16	(3,173)	-
Other gains and losses 6	(880)	(309)
Administrative expenses	(2,440)	(1,541)

Operating (Loss)/Profit 3	(867)	11,907
Finance costs 7	(4,135)	(4,379)
Finance income 7	259	226

(Loss)/Profit Before Taxation	(4,743)	7,754
Taxation 8	(706)	(1,316)

(Loss)/Profit And Total Comprehensive (Charge)/Income for the Year	(5,449)	6,438

Attributable to:
- equity shareholders	(5,449)	6,438
- minority shareholders	-	-
	(5,449)	6,438

Basic (loss)/earnings per share 10	(6.90)p	7.72p
Diluted (loss)/earnings per share 10	(6.90)p	7.72p

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

CONSOLIDATED Statement of Changes in Equity

for the year ended 30 September 2016

Attributable to the equity holders of the Company

	Share Capital	Share Premium	Capital Redemption Reserve	Treasury Shares	Retained Earnings	Total	Non-Controlling Interests	Total Equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Group

Changes in equity for the year ended 30 September 2015
At 1 October 2014	4,932	124,128	1,568	(15,384)	54,185	169,429	20	169,449
Profit for the year	-	-	-	-	6,438	6,438	-	6,438

Total comprehensive income for the year	-	-	-	-	6,438	6,438	-	6,438
Issue of share capital	53	1,243	-	-	-	1,296	-	1,296
Dividend paid	-	-	-	-	(1,450)	(1,450)	-	(1,450)
Purchase of own shares	-	-	-	(7,937)	-	(7,937)	-	(7,937)
At 30 September 2015	4,985	125,371	1,568	(23,321)	59,173	167,776	20	167,796

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)/income 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

CONSOLIDATED BALANCE SHEET

at 30 September 2016

	Note	30 Sep 2016 £'000	30 Sep 2015 £'000
Non-Current Assets
Property, plant and equipment	11	21	28
Investment properties	12	130,680	133,190
Investment properties under construction	13	9,476	3,156
Investment in joint ventures	14	10,110	6,660
Loan to joint venture	14	-	3,410
Goodwill	16	-	3,173
		150,287	149,617
Current Assets
Development and trading properties	17	30,739	33,373
Trade and other receivables	18	3,675	4,969
Derivatives	27	44	37
Cash and cash equivalents		63,662	57,386
		98,120	95,765
Total Assets		248,407	245,382

Current Liabilities
Trade and other payables	19	4,263	5,370
Bank loans	20	8,335	17,768
Tax liabilities		243	2,254
		12,841	25,392
Non-Current Liabilities
Bank loans	20	47,210	19,723
Zero dividend preference shares	21	34,415	32,471
Deferred tax		1,902	-
		83,527	52,194
Total Liabilities		96,368	77,586
Net Assets		152,039	167,796

Equity
Called up share capital	22	4,985	4,985
Share premium account		-	125,371
Capital redemption reserve		1,568	1,568
Treasury shares	23	(32,194)	(23,321)
Retained earnings		177,680	59,173

Equity Attributable to Equity Holders		152,039	167,776
Non-controlling interests		-	20
Total Equity		152,039	167,796

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 30 September 2016

	Year Ended 30 Sep 16 £'000	Year Ended 30 Sep 15 £'000
Cash Flows From Operating Activities
Operating (loss)/profit	(867)	11,907
Depreciation and amortisation	21	34
Amortisation of reverse lease premium	104	180
Share of results of joint ventures	3	19
Other gains and losses	17	340
Loss/(gain) on sale of investment properties	308	(2,436)
Revaluation of investment properties	(992)	(2,742)
Loss on impairment of goodwill	3,173	-
Development costs written off	1,581	-

Cash Flows From Operations Before Changes In Working Capital	3,348	7,302
Change in trade and other receivables	1,294	(1,191)
Change in land, development and trading properties	267	(7,102)
Change in trade and other payables	(320)	(9,248)

Cash Flows From Operations	4,589	(10,239)
Finance costs	(1,450)	(2,020)
Finance income	167	207
Tax paid	(815)	(859)
Cash Flows Generated From/(Used In) Operating Activities	2,491	(12,911)

Cash Flows From Investing Activities
Acquisition of and additions to investment properties	(9,759)	(3,979)
Sale proceeds of investment properties	6,842	30,971
Investment in joint ventures	(215)	(573)
Loans repaid by/(advanced to) joint venture	175	(1,206)
Purchase of plant and equipment	(14)	-
Cash Flows (Used In)/Generated From Investing Activities	(2,971)	25,213

Cash Flows From Financing Activities
Bank loans drawn down	48,100	-
Bank loans repaid	(29,816)	(17,578)
Costs paid on new bank loan	(971)	-
Purchase of interest rate cap	(269)	-
Dividend paid	(1,415)	(1,450)
Purchase of own shares	(8,873)	(7,937)
Issue of shares	-	1,296
Cash Flows Generated From/(Used In) Financing Activities	6,756	(25,669)

Net increase/(decrease) in cash and cash equivalents	6,276	(13,367)
Cash and cash equivalents at 1 October	57,386	70,753
Cash and Cash Equivalents at 30 September	63,662	57,386

NOTES TO THE ACCOUNTS

For the year ended 30 September 2016

1. The financial information set out in this announcement is abridged and does not constitute statutory accounts for the year ended 30 September 2016 but is derived from those financial statements. The financial information is not audited. The auditors have reported on the statutory accounts for the year ended 30 September 2016, 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 2015 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 sections 498 (2) or (3) of the Companies Act 2006.

3. Operating PROFIT

Operating profit is stated after charging:

	Year ended	Year ended
	30 Sep 16	30 Sep 15
	£'000	£'000
Audit services - fees payable to the parent company auditor for the audit of the Company and the consolidated financial statements	25	25

Other services - fees payable to the Company auditor for the audit of the Company's subsidiaries pursuant to legislation.	60	60

Other services - fees payable to the Company auditor for tax services	20	20
Depreciation of owned assets	3	7
Lease amortisation	18	27
Operating lease rentals - land and buildings	184	171
Movement on provision for doubtful debts	107	172

4. PARTICULARS OF EMPLOYEES

The aggregate payroll costs of the above were:

	Year ended	Year ended
	30 Sep 16	30 Sep 15
	£'000	£'000
Wages and salaries	1,264	443
Social security costs	165	71
	1,429	514

The average monthly number of persons, including executive directors, employed by the Company during the year was seven (2015: nine).

5. DIRECTORS' EMOLUMENTS

	Year ended	Year ended
	30 Sep 16	30 Sep 15
	£'000	£'000
Emoluments	834	140

Emoluments of highest paid director	352	210

The board of directors comprise the only persons having authority and responsibility for planning, directing and controlling the activities of the Group.

6. OTHER GAINS AND LOSSES

	Year ended 30 Sep 16 £'000	Year ended 30 Sep 15 £'000
Movement in fair value of interest rate swaps	(262)	(340)
Transaction costs	(650)	-
Other	32	31
	(880)	(309)

7. FINANCE INCOME/COSTS

	Year ended	Year ended
Finance Income	30 Sep 16	30 Sep 15
	£'000	£'000
Bank interest and interest receivable	259	226

Finance Costs
Bank loans	(1,584)	(2,021)
Amortisation of arrangement fees	(741)	(642)
ZDP interest payable	(1,810)	(1,716)
	(4,135)	(4,379)

8. TAXATION ON ORDINARY ACTIVITIES

(a) Analysis of tax charge in the year

	Year ended 30 Sep 16 £'000	Year ended 30 Sep 15 £'000
UK Corporation tax based on the results for the year	577	1,302
(Over)/under provision in prior years	(1,773)	14
Current tax	(1,196)	1,316
Deferred tax	1,902	-
	706	1,316

(b) Factors affecting tax charge
The tax assessed on the (loss)/profit for the year differs from the standard rate of corporation tax in the UK of 20.0% (2015: 20.5%)
	Year ended 30 Sep 16 £'000	Year ended 30 Sep 15 £'000
(Loss)/profit before taxation	(4,743)	7,754

(Loss)/profit multiplied by rate of tax	(949)	1,590
Effects of:
Expenses not deductible for tax purposes	1,314	395
Joint venture losses not taxable	10	4
Gains not subject to UK taxation	-	(125)
Revaluation gains not taxable	(198)	(562)
Capital allowances	(78)	-
Losses utilised	(129)	-
Movement in tax losses carried forward	607	-
(Over)/under provision in prior years	(1,773)	14
Current tax (credit)/charge for the year	(1,196)	1,316

9. DIVIDENDS

The directors do not recommend a final dividend in respect of the year ended 30 September 2016 (2015: 1.75 pence per share which amounted to £1,415,000).

10. EARNINGS PER SHARE

The calculation of earnings per ordinary share is based on the loss after tax attributable to equity shareholders of £5,449,000 (2015: profit of £6,438,000) and on the number of shares in issue being the weighted average number of shares in issue during the period of 78,920,377 (2015: 83,429,315). There are no diluting amounts in either the current or prior years.

11. PROPERTY, PLANT AND EQUIPMENT

	Premises Lease £'000	Office Equipment £'000	Furniture & Fittings £'000	Total £'000
Cost
At 1 October 2014	157	75	95	327
Additions	-	-	-	-

At 30 September 2015 and 1 October 2015	157	75	95	327
Additions	-	14	-	14

At 30 September 2016	157	89	95	341

Depreciation/Amortisation
At 1 October 2014	112	63	90	265
Provided during the year	27	2	5	34

At 30 September 2015 and 1 October 2015	139	65	95	299
Provided during the year	18	3	-	21

At 30 September 2016	157	68	95	320


Net book value at 30 September 2016	-	21	-	21

Net book value at 30 September 2015	18	10	-	28

12. INVESTMENT PROPERTIES

	Freehold £'000	Long Leasehold £'000	Reverse Lease Premiums £'000	Total £'000
Valuation at 1 October 2014	136,672	20,996	672	158,340
Additions	728	95	-	823
Disposals	(27,485)	(1,050)	-	(28,535)
Reverse lease premium amortisation	-	-	(180)	(180)
Movement on revaluation	2,637	105	-	2,742
Valuation at 30 September 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

The historical cost of properties held at 30 September 2016 is £161,164,000 (2015: £164,890,000).

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 are arrived at by reference to market evidence of transaction prices and completed lettings for similar properties. The properties have been valued individually and not as part of a portfolio and no allowance has been made for expenses of realisation or for any tax which might arise. They assume 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 makes various assumptions including future rental income, anticipated void cost, the appropriate discount rate or yield.

As at 30 September 2016, the Group has pledged £nil (2015: £95,530,000) of investment property to secure Royal Bank of Scotland debt facilities, £89,955,000 (2015: £nil) of investment property to secure Lloyds Bank, Jersey debt facilities and £33,260,000 (2015: £32,870,000) to secure Barclays Bank PLC debt facilities. Further details of these facilities are provided in note 27.

The property rental income earned from investment property, which is leased out under operating leases amounted to £9,435,000 (2015: £11,441,000).

(Loss)/profit on sale of investment properties	30 Sep 16	30 Sep 15
	£'000	£'000
Gross proceeds on sales of investment properties	6,955	31,335
Costs of sales	(113)	(364)
Net proceeds on sales of investment properties	6,842	30,971
Book value	(7,150)	(28,535)
(Loss)/profit on sale	(308)	2,436

Sensitivity Analysis:

Movement in equivalent yield

If the equivalent yield compresses by 0.5% to 7.52% then the portfolio valuation increases by approximately 7.3%. It reduces by approximately 6.4% if the equivalent yield increases by 0.5% to 8.52%.

Movement in ERV

If ERV's increase by 5% then the portfolio valuation increases by approximately 4.4% whilst falling by approximately 4.4% if ERV's decrease by 5%.

Voids

If the void periods assumed in the valuation are decreased by 6 months then the portfolio valuation would increase by approximately 1.7%. If void periods increase by 6 months then the portfolio valuation would decrease by approximately 1.7%.

13. INVESTMENT PROPERTIES UNDER CONSTRUCTION

Investment properties under construction are freehold land and buildings representing investment properties under development or construction and they amount to £9,476,000 (2015: £3,156,000) as at 30 September 2016. 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.

14. INVESTMENTS

Joint Ventures


Investment in Joint Ventures	30 Sep 16 £'000	30 Sep 15 £'000
At 1 October 2015	6,660	6,087
Share of results of joint ventures	(3)	(19)
Investment in joint venture	218	592
Reclassify loan to joint venture	3,235	-
At 30 September 2016	10,110	6,660

The Group has a 50% interest in three joint ventures, Conygar Stena Line Limited which is a property development company, CM Sheffield Limited a property trading company and Roadking Holyhead Limited a truck stop developer and operator.

Loans to Joint Ventures

30 Sep 16

£'000

30 Sep 15

£'000

Roadking Holyhead Limited

3,410

In accordance with IAS 39, the loans to Roadking Holyhead Limited, Conygar Stena Line Limited and C M Sheffield Limited have not been disclosed separately on the balance sheet as the investments in joint ventures at 30 September 2016 are net liabilities when the loans are excluded.

	30 Sep 16 £'000	30 Sep 15 £'000
Conygar Stena Line Limited	7,733	7,406
Roadking Holyhead Limited	3,235	-
C M Sheffield Limited	2	2
	10,970	7,408

The following amounts represent the Group's 50% share of the assets and liabilities, and results of the joint ventures. They are included in the balance sheet and income statement:

	Year ended 30 Sep 16 £'000	Year ended 30 Sep 15 £'000

Assets
Current assets	10,203	10,158
	10,203	10,158

Liabilities
Current liabilities	(93)	(88)
	(93)	(88)

Net Assets	10,110	10,070

Operating loss	(3)	(19)
Finance income	-	-

Loss before tax	(3)	(19)
Tax	-	-

Loss after tax	(3)	(19)

There are no contingent liabilities relating to the Group's interest in joint ventures, and no contingent liabilities of the ventures themselves.

15. FIXED ASSET INVESTMENTS

Subsidiaries

Company name	Principal activity		Country of registration		% of Equity held
Conygar Holdings Ltd	Holding Company		England		100%
Martello Quays Limited	Property trading and development		England		100%
Conygar Wales PLC	Holding Company		England		100%*
Conygar Bedford Square Ltd	Property trading and development		England		100%*
Conygar Properties Ltd	Property trading and development		England		100%*
Conygar Developments Ltd	Property trading and development		England		100%*
Conygar Strand Ltd	Property trading and development		England		100%*
Conygar Hanover Street Ltd	Property investment		England		100%*
The Advantage Property Income Trust Ltd	Property investment		Guernsey		100%*
TAPP Property Ltd	Property investment		Guernsey		100%*
TOPP Holdings Ltd	Property investment		Guernsey		100%*
TAPP Maidenhead Ltd	Property investment		Guernsey		100%*
TOPP Bletchley Ltd	Property investment		Guernsey		100%*
TOPP Property Ltd	Property investment		Guernsey		100%*
Conygar Stena Line Ltd	Property trading and development		England		50%*
CM Sheffield Ltd	Property trading and development		England		50%*
Roadking Holyhead Limited	Property trading and development		England		50%*
Conygar Haverfordwest Ltd	Property trading and development		England		100%*
Conygar Advantage Ltd	Holding company		Guernsey		100%*
Conygar Stafford Ltd	Property investment		England		100%*
Conygar Dundee Ltd	Property investment		England		100%*
Conygar St Helens Ltd	Property investment		England		100%*
Conygar Sunley Ltd	Property investment		England		100%*
Lamont Property Holdings Ltd	Property investment		Jersey		100%*
Lamont Property Acquisition (Jersey) I Ltd	Holding company		Jersey		100%*
Lamont Property Acquisition (Jersey) II Ltd	Property investment		Jersey		100%*
Conygar Cross Hands Ltd	Property investment		Jersey		100%*
Lamont Property Acquisition (Jersey) IV Ltd		Property investment		Jersey		100%*
Lamont Property Acquisition (Jersey) V Ltd		Property investment		Jersey		100%*
Lamont Property Acquisition (Jersey) VII Ltd		Property investment		Jersey		100%*
Conygar Ynys Mon Ltd		Property trading and development		England		100%*
Conygar Haverfordwest Retail Ltd		Dormant		Jersey		100%*
Conygar Ashby Ltd		Dormant		Jersey		100%*

* Indirectly owned

16. GOODWILL


	30 Sep 16	30 Sep 15
	£'000	£'000
At 1 October	3,173	3,173
Impairment in the year	(3,173)	-
At 30 September	-	3,173

The goodwill arose upon the acquisition of the non-controlling interests in Martello Quays Limited and represented the excess of the consideration over the fair value of the identifiable net assets acquired. The goodwill was wholly allocated to the development project within Martello Quays Limited, which was considered to represent a single income and cash generating unit. As set out in the Chairman's and Chief Executive's report, management analysis indicates that the net present value of the project is below the carrying value at 30 September 2016 such that the goodwill has been fully impaired in the current year.

IFRS requires management to undertake an annual test for impairment of indefinite lived assets, such as goodwill, and to test for impairment if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment testing is an area involving management judgment, requiring assessment as to whether the carrying value of the assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate. In calculating the net present value of the future cash flows, certain assumptions are required to be made in respect of highly uncertain matters including management's expectations of:

- Timing and quantum of future capital expenditure;

- Timing and quantum of future revenue streams; and

- The selection of discount rates to reflect the risks involved.

The Group prepares and approves formal five year forecasts for Martello Quays Limited which are used in the value in use calculations. Five years is considered to be the optimum period for a meaningful forecast and takes into account available sources of both internal and external information.

The Group's review includes the key assumptions related to sensitivity in the cash flow projections.

The impairment review is based upon value in use calculations. The period of review is five years and it is assumed that no growth occurs over the period. A range of pre-tax risk adjusted discount rates (5-15%) were used in order to reflect inherent uncertainties and to produce a sensitivity analysis.

Key assumptions used in value in use calculations

- Valuation of completed construction

The valuation of the completed construction is based upon current knowledge of the local market utilising both internal and external sources of information and evidence.

- Budgeted capital expenditure

The cash flow forecasts for capital expenditure are based upon on past experience and estimates provided from both internal and external sources.

- Pre-tax risk adjusted discount rate

The discount rate applied to the cash flows is generally based upon the risk free rate for ten year government bonds adjusted for a risk premium to reflect the systematic risk of the project, likely cost of funding and underlying uncertainties.

17. PROPERTY INVENTORIES


	30 Sep 16	30 Sep 15
	£'000	£'000
Properties held for resale or development	30,739	33,373

18. TRADE AND OTHER RECEIVABLES


	30 Sep 16	30 Sep 15
	£'000	£'000
Trade receivables	834	1,434
Provision for doubtful debts	(48)	(217)
	786	1,217
Amounts owed by group undertakings	-	-
Other receivables	845	1,194
Prepayments and accrued income	2,044	2,558
	3,675	4,969

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


	30 Sep 16	30 Sep 15
	£'000	£'000
Amounts owed to group undertakings	-	-
Social security and payroll taxes	-	-
Trade payables	976	2,805
Accruals and deferred income	3,287	2,565
	4,263	5,370

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


	30 Sep 16	30 Sep 15
	£'000	£'000
Bank loans	56,435	38,151
Debt issue costs	(890)	(660)
	55,545	37,491

Details of the financial liabilities are given in note 29.

21. ZERO DIVIDEND PREFERENCE SHARES

	Year ended 30 Sep 16	Year ended 30 Sep 15
	£'000	£'000

Balance at start of year	32,471	30,621
Share issue costs amortised	134	134
Accrued capital	1,810	1,716
Balance at end of year	34,415	32,471

The Group issued 30,000,000 zero dividend preference shares ('ZDP shares') at 100 pence per share. 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, resulting in a final capital entitlement of 130.7 pence per share. The ZDP shares were listed on the London Stock Exchange on 10 January 2014.

During the year, the Group has accrued for £1,810,000 of additional capital. The total amount repayable at maturity is £39,210,000.

The ZDP shares do not carry the right to vote at general meetings of the Group, although they carry the right to vote as a class on certain proposals which would be likely to materially affect their position. In the event of a winding-up of Conygar ZDP PLC, the capital entitlement of the ZDP shares (except for any undistributed revenue profits) will rank ahead of ordinary shares but behind other creditors of Conygar ZDP PLC.

22. SHARE CAPITAL

Authorised share capital:

	30 Sep 16	30 Sep 15
	£	£
140,000,000 (2015: 140,000,000) Ordinary shares of £0.05 each	7,000,000	7,000,000

Allotted and called up:

Amounts recorded as equity:	30 Sep 16		30 Sep 15
	No	£'000	No	£'000
Ordinary shares of £0.05 each	99,714,123	4,985	99,714,123	4,985

23. TREASURY SHARES

In December 2010, the Group began a share buyback programme and during the year ended 30 September 2016 purchased 5,299,819 (2015: 4,372,350) shares on the open market at a cost of £8,872,556 (2015: £7,937,062). The 22,482,688 (2015: 17,182,869) shares were held in treasury as at 30 September 2016.

24. SHARE BASED PAYMENTS

No options were granted in either the current or prior year.

The Group recognised total expenses of £nil (2015: £nil) in relation to equity settled share-based payment transactions.

25. DEFERRED TAX

Deferred tax liabilities are recognised in the accounts as follows:

	30 Sep 16	30 Sep 15
	£'000	£'000
Revaluation surplus	1,902	-

Deferred tax on the revaluation surplus is calculated on the basis of the chargeable gains that would crystalise on the sale of the property portfolio at each balance sheet date. The calculation takes account of any available indexation on the historic cost of the properties.

26. COMMITMENTS

Group as lessee:

At 30 September 2016, the Group and Company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

	30 Sep 16	30 Sep 15
	£'000	£'000
Within one year	180	90
In the second to fifth years inclusive	311	-
	491	90

Group as lessor:

In addition, the Group holds retail, office, industrial and leisure buildings as investment properties which are let to third parties. These are non-cancellable leases and the income profile based upon the unexpired lease length was as follows:

	30 Sep 16	30 Sep 15
	£'000	£'000
Less than one year	10,553	9,504
Between one and five years	21,723	24,088
Over five years	10,926	14,475
	43,202	48,067

27. FINANCIAL INSTRUMENTS

The interest rate profile of the Group bank borrowings at 30 September 2016 was as follows:

	Interest Rate	Maturity		30 Sep 16 £'000	30 Sep 15 £'000
Lloyds Bank, Jersey (1)	BOE base + 1.9%		2-5 years	48,100	-
Barclays (2)	LIBOR + 3.5%		Less than 1 year	8,335	8,335
Royal Bank of Scotland (TAPP)(3)	LIBOR + 3%		n/a	-	20,174
Royal Bank of Scotland (TOPP)(3)	LIBOR +3.5%		n/a	-	9,642
				56,435	38,151

(1) Senior bank facility repayable 27 April 2021.

(2) Senior bank facility repaid 26 October 2016.

(3) Senior bank facilities repaid 28 April 2016.

In addition to the bank debt, the Group has a financial liability of £34.4 million relating to 30,000,000 zero dividend preference shares ("ZDP Shares") which were issued at 100 pence per share.

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, resulting in a final capital entitlement of 130.7 pence per share.

During the year the Group has accrued for £1,810,000 of additional capital. The total amount repayable at maturity is £39,210,000.

Loans

On 28 April 2016, TAPP Property and TOPP Property repaid the outstanding balances of their facilities with the Royal Bank of Scotland PLC of £25,931,000 (2015: £29,816,000).

Price Risk

Capital Risk Management

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.

Fair Values of Financial Assets and Financial Liabilities

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 2016	30 Sep 2015	30 Sep 2016	30 Sep 2015
	£'000	£'000	£'000	£'000
Financial Assets
Cash	63,662	57,386	63,662	57,386
Loans to joint ventures	10,970	10,818	10,970	10,818
Interest rate derivatives	44	37	44	37

Financial Liabilities
Floating rate borrowings	56,435	38,151	56,435	38,151
Fixed rate borrowings	34,719	32,909	34,719	32,909

Derivative Financial Instruments

	Protected Rate %	Expiry	Market Value at 30 Sep 2016	Market Value at 30 Sep 2015
			£'000	£'000
£37 million (2015: £37 million) cap	2.00 (2015: 2.00)	Feb 2018	-	52
£36.1 million (2015: n/a) cap*	2.50 (2015: n/a)	Apr 2021	44	-
£nil (2015: £4.3 million) swap	n/a (2015: 1.055)	n/a	-	(16)
£nil (2015: £10.3 million) cap	n/a (2015: 0.75)	n/a	-	1
			44	37

* Effective date 5 February 2018

The valuation of the swaps was provided by JC Rathbone Associates Limited, is a tier 2 valuation and represents the change in fair value since execution. The fair value is 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.

The Report and Accounts for the year ended 30 September 2016 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 Secretary, The Conygar Investment Company PLC, Fourth Floor, 110 Wigmore Street, London, W1U 3RW. They are also available on the website www.conygar.com.

The Company's Annual General Meeting will be held at 4:00pm on 7 February 2017 at the offices of Gowling WLG (UK) LLP, 4 More London Riverside, London, SE1 2AU.

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 information is provided by RNS

The company news service from the London Stock Exchange

END

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