PRELIMINARY RESULTS FOR THE YEAR END 30 SEPT 2015

RNS Number : 2827I

Conygar Investment Company PLC(The)

08 December 2015

8 December 2015

THE CONYGAR INVESTMENT COMPANY PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2015

The Conygar Investment Company PLC, announces its results for the year ended 30 September 2015.

HIGHLIGHTS

· Net asset value per share increased by 2.9% to 203.3p (2014: 197.5p). EPRA NAV per share increased by 3.7% to 203.2p (2014: 195.9p).

· Pre-tax profit for the year £7.8 million compared with £20.5 million last year.

· Investment property portfolio valuation up 3% on a like for like basis as the property market outside London continues to improve. The development portfolio is valued at cost.

· Total cash of £57 million available for acquisitions. Net debt of £13.3 million representing gearing of 7.9% against net asset value and 10.0% on loan to value basis.

· Disposed of nine investment properties in the year for a gross consideration of £31.3 million, a surplus of £2.8 million or 9.8% over book value.

· Reacquired 9.6 acres of land at Haverfordwest from Sainsbury's for £3 million plus an overage provision.

· After the financial year end, acquired a 9.96 acre site from Sainsbury's at Cross Hands, west of Swansea, for £2.25 million plus an overage provision, and the 203 acre freehold of the former gas storage facility site near Rhosgoch, Anglesey, for £3 million.

· Completed the construction of our Road King joint venture, 200 space truck stop facility at Parc Cybi, Anglesey.

· Dividend held at 1.75p per share (2014: 1.75 pence).

· Share buy back: the Group acquired 5.1% of its ordinary share capital at an average price of 181.5p per share.

Summary Group Net Assets As At 30 September 2015

		Per Share
	£'m	p
Investment Properties	133.2	161.4
Investment Properties Under Construction	3.2	3.8
Development Projects	46.6	56.5
Cash	57.4	69.5
Other Net Liabilities	(2.6)	(3.2)
	237.8	288.0
Bank Loans	(37.5)	(45.4)
ZDP Liability	(32.5)	(39.3)
	167.8	203.3

Robert Ware, Chief Executive, commented:

"This is a solid set of results and follows a year of record profits for the company last year. We continue to grow net asset value per share and are pleased at the progress being made on both the development projects and the investment property portfolio. We believe that our medium term pipeline of development opportunities, along with our asset management initiatives and realisations of the investment properties will deliver further significant growth."

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 and Chief Executive's Statement

Results

We are pleased to present the Group's results for the year ended 30 September 2015.

Net asset value per share increased by 2.9% to 203.3p from 197.5p last year and to 203.2p on an EPRA basis. The major components driving that growth were an increase in the investment property portfolio valuation of £2.7 million, the profit arising from sales of investment properties of £2.4 million and the net rental income of £8.5 million. The profit before taxation for the year was £7.8 million (2014: £20.5 million).

Net asset value as at 30 September 2015 was £167.8 million compared with £169.4 million at 30 September 2014. During the year, the Group spent £7.9 million on share buy backs and paid a dividend of £1.4 million and excluding these, the net asset value increased by 4.6%.

The Group's investment properties as at 30 September 2015 were independently valued at £133.2 million (2014: £158.3 million), an increase in the valuation of 3% for the year on a like for like basis. This uplift in valuation follows the significant recovery in the value of our investment properties seen last year, and highlights the strengthening of the market outside London and the positive impact of our asset management initiatives which will be covered in more detail within the Strategic Report. We have benefitted from a greatly improved market, with many more buyers of properties outside London than a few years ago and occupier demand has also improved. This has enabled us to sell properties for a total consideration of £57 million over the past two years.

The Group had cash balances of £57.4 million (2014: £70.8 million) at the year end and bank debt of £38.2 million (2014: £55.8 million). Including the zero dividend preference share liability of £32.5 million (2014: £30.6 million), our net gearing is 7.9% or 10.0% on a loan to value basis. The Group continues to generate around £3 million per annum of net cash from operations which funds both the development expenditure and any necessary capital expenditure on the investment property portfolio.

This is a solid set of results and follows a year of record profits for the company last year. We are pleased at the progress being made on both the development projects and the investment property portfolio.

Progress

The development pipeline is making good progress and we are pleased to have commenced the infrastructure and related works at several sites, which is an important step in attracting interest from both potential occupiers and purchasers and thereby realising value.

A detailed review of the development projects can be found within the Strategic Report. We should briefly mention three recent acquisitions, which are classified as investment properties under construction, two of which completed shortly after 30 September 2015.

Firstly, following Sainsbury's decision not to develop their 60,000 square foot store at Haverfordwest, West Wales, which we had sold to them for £13.75 million in 2014, we have acquired their interest for £3 million plus an overage provision. We will now develop the 9.6 acre site for a retail / leisure commercial development and submit the amended planning application next year. The infrastructure and highways works to service both this site and the 729 residential units are almost complete. We should therefore be in a position to begin negotiating with various house builders during 2016.

Secondly, in October 2015, we acquired a 9.96 acre freehold serviced development site from Sainsbury's at Cross Hands, west of Swansea, for £2.25 million plus an overage provision. A detailed planning consent had already been granted to Sainsbury's for a 90,792 square foot food store with a six pump petrol filling station along with 495 car parking spaces, and the benefit of this was passed to us at acquisition. The site is located in a prominent location with frontage to the A48 (M), which is the continuation of the M4 motorway, approximately 16 miles west of Swansea. We have identified occupier demand for a mixed retail scheme at this site and agreements for lease are being negotiated with potential tenants. We expect to submit the amended planning application by Spring 2016. Our site forms part of a wider comprehensive re-development area of approximately 50 acres, which includes a residential development of 240 new homes.

Also during October 2015, the group acquired the freehold of the former gas storage facility site near Rhosgoch, Anglesey, for a consideration of £3 million. This 203 acre brownfield site is located approximately 3 miles from Amlwch Port and 6.5 miles from the site of the existing and proposed Wylfa Nuclear Power Station. We believe that this site is ideally located to provide a base for a range of support facilities which are likely to be required by the contractors engaged in the construction of the multi-billion pound nuclear power station project. In addition to this use, the site is well suited to a number of other uses such as a solar farm and gas fuel energy projects.

These acquisitions in October 2015, in addition to our total investment in the development portfolio of £46.6 million as at 30 September 2015, signal that we are deploying more funds into development projects as we feel that this is where there is substantial inherent future value. We remain on course to deliver schemes, comprising more than 1,700 residential units, 1,300 marina berths and in excess of 600,000 square feet of commercial and retail development.

The contracted annual rent roll of the portfolio was £9.8 million as at 30 September 2015, which is £2.4 million lower than at 30 September 2014, mainly owing to disposals in the year which realised £31.3 million. 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 4.4 years to 4.8 years at 30 September 2015 and this reflects a number of new leases and renewals which have been agreed over the past year. We made 9 disposals in the year for a gross consideration of £31.3 million and all sales were at valuation or above. Overall, this was a surplus of £2.8 million or 9.8% above the 30 September 2014 valuation.

The portfolio vacancy rate has fallen from 18.2% last year to 14.1%. The fall in this rate derives from the continued improvement in the occupational market generally and disposals of assets where there were significant voids, such as Norfolk House, Birmingham and Maidenhead. The majority of the vacant space at the year end is at Brennan House, Farnborough, which is currently undergoing a significant refurbishment and is therefore not currently lettable, and at Mochdre, Colwyn Bay, where we hope to let the majority of the vacant space shortly. Excluding these two assets, the vacancy rate is 6.2%. Nevertheless, we expect a certain level of voids due to the nature of our portfolio and our policy of disposing of properties once asset management initiatives are complete.

The investment property portfolio continues to generate significant surplus cash flow which services the debt and funds the majority of development expenditure.

At 30 September 2015, the Group had cash of £57.4 million available to pursue investment opportunities. The business remains well funded and the balance sheet strong.

Dividend

The Board is pleased to recommend a final dividend of 1.75p per ordinary share in respect of the year ended 30 September 2015 to be paid on 11 February 2016 to shareholders on the register at 8 January 2016, which is unchanged from last 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 4,372,350 ordinary shares representing 5.1% of its ordinary share capital, at an average a price of 181.5p per share. This cost approximately £7.9m and, as a result of the buy backs, net asset value per share has been enhanced by 0.9 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.

Board Director Changes

Peter Batchelor, who was our Finance Director, has stepped down from the Board during the year to pursue other projects, although he will continue to work with the Board on a consultancy basis for the next three years. In addition, Steven Vaughan has also stepped down from the Board. As two of our founding directors and shareholders, we will miss them and we wish them every success for the future.

We are pleased to welcome Ross McCaskill to the Board. Ross was appointed Finance Director and Company Secretary on 1 October 2015, having been with the company for five and a half years as Financial Controller.

Outlook

We continue to grow net asset value per share and we believe that our medium term pipeline of development opportunities, along with our asset management initiatives and realisations of the investment properties will deliver further significant growth.

Our balance sheet remains strong and the cash we hold will enable us to take advantage of opportunities as they arise and to fund the development projects. While the market remains competitive for UK commercial property, we anticipate focusing our efforts on bringing the developments to fruition, while at the same time realising the value created in the investment property portfolio, by selling assets where we cannot add further value through our asset management skills.

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 exciting development projects that are well positioned to deliver good returns in the medium term. We continue to focus upon positive cash flow and to utilise 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 company at the year end

Following a year of continued growth and profits, the Group improved its strong position at the year end with good underlying earnings, positive cash flow and investment property values that have increased by 3% during the year. The development pipeline is showing signs of progress and construction has commenced at several locations this year. The balance sheet remains strong with cash of £57.4 million and total debt of £70.7 million giving net gearing of 7.9%. 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 acquisition at Cross Hands and Rhosgoch which are referred to in the Chairman's and Chief Executive's Statement and under the "Development Projects and Investment Properties Under Construction" heading with this report.

Summary of Group Net Assets

The Group net assets as at 30 September 2015 may be summarised as follows:

		Per Share
	£'m	p
Investment Properties	133.2	161.4
Investment Properties Under Construction	3.2	3.8
Development Projects	46.6	56.5
Cash	57.4	69.5
Other Net Liabilities	(2.6)	(3.2)
	237.8	288.0
Bank Loans	(37.5)	(45.4)
ZDP Liability	(32.5)	(39.3)
	167.8	203.3

Investment properties

Summary of portfolio

	2015	2014
Valuation at 30 September	£133.2 million	£158.3 million
Number of properties	36	43
Contracted rent (pa)	£9.8 million	£12.2 million
Current ERV (pa)	£11.9 million	£14.9 million
Net initial yield	7.16%	6.51%
Equivalent yield	8.02%	8.33%
Reversionary yield	8.35%	8.74%
ERV of vacant units (pa)	£1.7 million	£2.5 million
Vacancy rate	14.1%	18.2%
Average unexpired lease lengths	4.8 years	4.4 years

Asset management

At 30 September 2015, the contracted rent for the investment property portfolio was £9.8 million with an ERV of £11.9 million, the reduction from 2014 being mainly attributable to property disposals in the year. The ERV of vacant space is £1.7 million of which Brennan House, Farnborough and Mochdre, Colwyn Bay account for nearly 60%. The overall vacancy rate in the portfolio is 14.1% down from 18.2% in 2014. The average unexpired lease length increased to 4.8 years from 4.4 years at 30 September 2014.

There has been good progress on asset management initiatives across the portfolio, helped in part by the continuing growth of occupier confidence outside London. This increased optimism means that projects to refurbish and re-let now make economic sense. As a result, works on the refurbishment of Brennan House in Farnborough have begun and they will cost approximately £2.5 million and should be completed by the summer of 2016. This should enable us to take advantage of the buoyancy of the Thames Valley office market and achieve a letting soon after completion of the works.

At the Ashby Gateway site, at Ashby Park, Ashby de la Zouch, terms are being negotiated with a major food store operator, following planning permission being granted for the necessary access road. A portion of the site has also been sold subject to planning to a pub/restaurant operator.

At Mochdre Commerce Park, Colwyn Bay, North Wales, we have now rectified all the historic issues with the site that we inherited at purchase and we have sold two units during the year. Detailed negotiations continue with the Council to lease a number of units and an additional 3.2 acres of Brownfield land and we hope to give an update on this shortly.

We continue to maintain good contact with our tenants and work hard to minimise irrecoverable costs and voids. We have agreed a number of new leases in the past year at a variety of locations such as Swindon, Stratford-upon-Avon and Bletchley. As mentioned above, the vacancy rate is currently 14.1%. The majority of this vacant space is at Farnborough which is being refurbished, and Mochdre, which should be let shortly. Excluding these two assets, the vacancy rate is 6.2%.

Disposals

The Group disposed of nine investment properties during the year namely Maidenhead, two units at Mochdre, Birmingham, Hemel Hempstead, Uddingston, Clevedon, Stafford and Milton Keynes. Total gross sale proceeds were £31.3 million, generating a surplus on the 2014 valuation of £2.8 million. We will continue to dispose of assets as opportunities arise and where no further value can be added by the Group.

Valuation

The investment property portfolio has been independently valued by Jones Lang LaSalle at £133.2 million as at 30 September 2015. The investment property portfolio increased in value by 3% on a like for like basis reflecting both the improved property market and asset management initiatives which have protected rental income. Assets such as ours continue to require active management to protect income and value and it is pleasing to see this work rewarded through valuation increases.

Capital Expenditure

We incurred £0.8 million of capital expenditure during 2015, which was fully financed from our existing cash flow. We are carrying out small refurbishments of space in the portfolio to optimise the chances of letting. There will always be a level of refurbishment work required throughout a portfolio of this nature, though as at 30 September 2015, the Group had no contractual related capital expenditure commitments in excess of £1,000,000.

Development Projects and Investment Properties Under Construction

Haverfordwest

Following the sale of 9.6 acres of land at Haverfordwest, West Wales, to Sainsbury's for a gross consideration of £13.75 million in May 2014, the store group decided that it no longer wished to develop its 60,000 square foot store as planned. We therefore reacquired this land for £3 million plus an overage provision and we will now create a retail / leisure commercial development on the site. The infrastructure and highways works to service this site and the 729 residential units have progressed well during the year and these works should be completed by the end of December 2015, which is two months ahead of our original timetable.

In early 2016, marketing of the serviced residential site will commence and a planning application is being prepared for the retail / leisure development which we intend to submit by March 2016.

Holyhead Waterfront

This mixed use development comprises plans for 326 apartments and townhouses, a 500 berth marina and 50,000 square feet of retail, leisure and commercial space. We are still waiting for a decision to be made regarding the Village Green application which was submitted nearly two years ago and relates to part of our site. As previously reported, we have registered our objection to the application and have engaged the necessary legal representation to challenge, in the strongest terms, the application, should it be taken to a Public Inquiry. We should stress, however, that the majority of the site is not affected by the application and we plan to develop this area first, regardless of the outcome of the Village Green application and we are in preliminary discussions with interested parties.

Parc Cybi Business Park, Holyhead

In April 2015, we completed the construction of a 9 acre, 200 space, 24 hour, truck stop facility at Parc Cybi, Anglesey, as part of our £6 million joint venture, Road King, Holyhead, with Mr Fred Done, the founder and owner of Betfred. The facility opened for business on 7 May 2015 and revenues have improved steadily throughout the first months of trading.

We are in discussions with various occupiers who are interested in leasing the remaining space at this site which is not related to the truck stop and we hope to be able to provide further news in the coming months.

Rhosgoch

We acquired this site just after the financial year end and we anticipate that it will be suitable to provide a range of support facilities required for the construction of the proposed new nuclear power station at Wylfa. We are currently in discussions with potential occupiers both related to the construction of Wylfa and with energy providers. We are well placed to take advantage of the many commercial opportunities which will arise from the £14 billion construction of the proposed new power station.

Fishguard Waterfront

This scheme comprises a 450 berth marina with ancilliary facilities, 253 residential units and tourist related commercial space, for which outline planning consent has been granted and the section 106 planning agreement has also been executed. Good progress has been made with our partners, Stena Line, on the detailed planning and marine consent licences to enable the construction of a 15 acre platform for the residential and marine related commercial development, the marina basin and new port facilities for the berthing of ferries to Ireland and the detailed and substantial applications will be submitted later this month.

Fishguard Lorry Stop and Distribution Facility

In February 2015, we obtained detailed planning permission for the construction of a 6 acre, 24 hour, lorry stop on part of the land we own in Fishguard, West Wales. Discussions continue with both hauliers and the port operator and we are proceeding to install the infrastructure to bring it forward for development.

Pembroke Dock Waterfront

The outlook for this mixed-use development comprising 267 apartments, a 314 berth marina and around 60,000 square feet of retail, leisure and commercial development is increasingly encouraging with a number of retail occupiers showing interest in the site. The application in respect of the Harbour Revision Order is progressing along with those for the various marine licences which are necessary to commence construction, following the re-engineering of the original design to reduce costs and facilitate a faster construction process.

Llandudno Junction

In 2013, we were appointed as preferred developer by Conwy Council, North Wales, to promote a development of approximately 90,000 square feet of retail space on their tenanted land at Llandudno Junction. We continue to work closely with the Council through our overriding lease of the subject land and we expect a decision on the planning application very early in the New Year.

Cross Hands

We have finalised the layout of a revised retail scheme of approximately 95,000 square feet at this site which we acquired from Sainsbury's in October 2015. We are in negotiations with potential tenants and intend to submit the revised planning application, for consideration by Carmarthenshire County Council, by March 2016.

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 currently in discussions with various local developers and potential occupiers in order to take this project forward.

Summary of Development Projects

The expenditure in the year on our development land bank amounted to £9.67 million. Our total investment to date is now £46.62 million at cost (analysed below) or 56.5p per share. We will continue to progress these projects in a risk-averse manner and to avoid any speculative development. To date, we have had good success in securing planning consents and several of the projects are beginning to advance.

We remain on target to deliver schemes comprising circa 1,700 homes (of which 846 are waterside), 1,300 marina berths and in excess of 600,000 square feet of commercial and retail development.

As previously stated, it is our intention 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.

	2015	2014
	£'m	£'m
Haverfordwest	23.91	17.21
Holyhead Waterfront	10.19	9.47
Pembroke Dock Waterfront	4.68	4.51
Parc Cybi, Holyhead	4.59	3.00
King's Lynn	0.85	0.83
Fishguard Waterfront	1.36	1.02
Fishguard Lorry Stop	0.54	0.52
Llandudno Junction	0.43	0.11
Other	0.07	0.28
Total investment to date	46.62	36.95

Financial review

Net Asset Value

The net asset value at the year end was £167.8 million (2014: £169.4 million). The primary movements were £2.7 million increase in the value of the investment properties, £8.5 million net rental income, £2.4 million profit on the disposal of investment properties and £7.9 million spent on purchasing our own shares. Excluding the amounts incurred purchasing Conygar shares and paying dividends, net asset value increased by 4.6% in the year.

On an EPRA basis, the net asset value is:

	2015	2014	2013	2012	2011
	£'m	£'m	£'m	£'m	£'m
Net asset value	167.8	169.4	155.1	154.0	158.5
Preference share liability	-	-	-	-	7.4
Share options	4.1	8.1	-	-	-
Diluted net asset value	171.9	177.5	155.1	154.0	165.9

Fair value of hedging instruments	-	(0.4)	0.2	0.9	1.4
EPRA net asset value	171.9	177.1	155.3	154.9	167.3

EPRA NAV per share	203.2p	195.9p	174.9p	166.9p	153.9p
Basic NAV per share	203.3p	197.5p	174.6p	165.9p	155.2p
Diluted NAV per share	203.3p	196.3p	174.6p	165.9p	152.7p

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 and there is no associated tax liability. 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 2015. In their opinion, the open market value of the investment property portfolio was £133.2 million. The total portfolio increased in value by £2.7m over the year on a like for like basis.

Cash flow

The Group used £13 million cash in operating activities (2014: £12.0 million generated), of which £7.1 million was incurred as expenditure on development and trading properties.

The Group generated a further £31.0 million cash from the sale of investment properties, spent £4.0 million on the acquisition of investment properties, repaid £17.6 million in bank loans and spent £7.9 million on the purchase of own shares resulting in an overall cash outflow of £13.4 million during the year.

Net Income From Property Activities

	2015	2014
	£'m	£'m
Rental income	11.4	13.1
Direct property costs	(2.9)	(2.9)
Rental surplus	8.5	10.2

Sale of investment properties	31.3	25.7
Cost of investment properties sold	(28.9)	(24.1)
Gain on sale of investment properties	2.4	1.6

Total net income arising from property activities	10.9	11.8

Administrative Expenses

The administrative expenses for the year ended 30 September 2015 were £1.5 million compared with £12.3 million the previous year. The primary reason for this change is the profit share of £8.4 million which had been recognised in 2014. 20% of the 2014 profit share was deferred at the discretion of the remuneration committee and after due consideration, the remuneration committee decided that the deferred amount would not be paid and therefore administrative expenses for the current year have been credited with £1.75m. The majority of the other costs arise as a result of the Group being quoted on AIM.

Financing

At 30 September 2015, the Group had cash of £57.4 million. The bank debt at 30 September 2015 was £38.2 million and the zero dividend preference shares liability is £32.5 million. The gearing is 7.9% and loan to value is 10.0% including cash.

The interest rate risk on the facility continues to be managed by way of interest rate swaps and interest rate caps. Aside from reducing the on-going interest rate charge in the income statement, all of our external bank debt is fully hedged and the weighted average cost of all debt including margin is 4.6%. The fair value of these derivative financial instruments is provided for in full on the balance sheet. As at 30 September 2015, 100% (2014: 100%) of the Group's bank borrowings were hedged.

The finance costs for the year amounted to £4.4 million (2014: £4.8 million), primarily consisting of £2.0 million bank loan interest (2014: £2.7 million) and interest payable on the zero dividend preference shares of £1.7 million (2014: £1.2 million). Finance income amounted to £0.2 million (2014: £0.3 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 2015, TAPP Property Limited maintained a facility with the Royal Bank of Scotland PLC of up to £23,346,000 (2014: £37,195,000) under which £20,174,000 (2014: £27,366,000) had been drawn down. This facility is repayable on or before 5 February 2018 and is secured by fixed and floating charges over the assets of the TAPP Property Limited group and the Lamont companies. The facility is subject to a maximum loan to value covenant of 60% and an interest cover ratio covenant of 225% and a debt to rent cover ratio of 8:1.

As at 30 September 2015, Conygar Dundee Limited, Conygar Hanover Street Limited, Conygar Stafford Limited and Conygar St Helens Limited ("the borrowers") jointly maintained a facility with Barclays Bank PLC of up to £8,335,000 (2014: £18,455,000) of which £8,335,000 (2014: £18,455,000) had been drawn down. This facility is repayable on or before 20 August 2016 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 52% (2014: 54%) and an interest cover ratio covenant of 225%.

TOPP Property Limited maintains an £11 million loan with The Royal Bank of Scotland, of which £9,642,000 had been drawn down at 30 September 2015. This facility is repayable on or before 3 April 2016 and is secured by fixed and floating charges over the assets of the TOPP Property Limited group. The facility is subject to a maximum loan to value covenant of 55%, interest cover ratio covenant of 225% and a debt to rent cover ratio covenant of 7:1.

Taxation

The tax charge for the year of £1.3 million on the pre-tax profit of £7.8 million represents an effective tax charge of 17% (2014: 0%). Tax is payable at the full UK corporation tax rate of 20.5% on net rental income after deduction of finance costs and administrative expenses. There is no tax payable in respect of investment property capital gains or any valuation uplift, which is the main reason for the low effective tax rate in the current year.

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 (£38.2 million), cash and short term deposits (£57.4 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 swaps and interest rate caps amount to an economic hedge of £55.6 million (2014: £66.1 million) of the total loan drawdowns of £38.2 million (2014: £55.8 million) for cashflows to 20 August 2016, 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 a final dividend of 1.75p in respect of the year ended 30 September 2015 to be paid on 11 February 2016 to shareholders on the register at 8 January 2016. This is the same level as last year.

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 6 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.

During this year, we completed the sale of nine properties raising approximately £31 million and an additional £3.4 since the year end. Our policy of selling down our investment portfolio will continue, where appropriate, and we anticipate that over the next year or two that it will become considerably smaller, but remain sufficient to fund the operations of the business.

The funds created by investment property sales will be, in the main, redeployed within the development portfolio, where we believe there is substantial inherent future value. This further investment will be of significant benefit to our ultimate return.

The effect of this is that the rental income which we receive will decrease. The present dividend costs approximately £1.44 million per annum. 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 4,372,350 ordinary shares at an average price of 181.5p which represents 5.1% of its ordinary share capital. This cost £7.9 million and net asset value per share has been enhanced by approximately 0.9 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.

The Group has made extensive use of its share buy back authorities over the last five years utilising surplus cash not required elsewhere in the business by acquiring 42,082,869 shares equivalent to 36% of ordinary share capital, at a discount to net asset value, which has increased net asset value per share by 18p, or 12%.

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 take 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 2015, after taking into account interest rate swaps, 100% (2014: 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 2015 was as follows:

	Interest Rate	Maturity	30 Sep 15 £'000	30 Sep 14 £'000
Royal Bank of Scotland (TAPP)(1)	LIBOR + 3%	2-5 years	20,174	27,366
Barclays (2)	LIBOR +3.5%	Less than 1 year	8,335	18,455
Royal Bank of Scotland (TOPP)(3)	LIBOR +3.5%	Less than 1 year	9,642	9,942
			38,151	55,763

(1) Senior bank facility repayable 5 February 2018.

(2) Senior bank facility repayable 20 August 2016.

(3) Senior bank facility repayable 3 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 15	30 Sep 14
	£'000	£'000
Fixed rate	-	-
Floating rate	57,386	70,753
	57,386	70,753

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 2015 (2014: £nil).

The Group policy has been to invest funds and enter into derivative transactions with a broad range of institutions having investment grade low risk credit ratings and a strong or superior ability to repay short term debt obligations. 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 2015, the Group had a single balance of £74,000 (2014: £79,000) 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 2015

Note	Year Ended 30 Sep 15 £'000	Year Ended 30 Sep 14 £'000

Rental income	10,957	12,838
Other property income	484	214
Sale of trading investments	300	14,374
Revenue	11,741	27,426

Direct costs of:
Rental income	2,932	2,921
Sale of trading investments	211	2,812
Direct Costs	3,143	5,733

Gross Profit	8,598	21,693

Share of results of joint ventures 14	(19)	45
Gain on sale of investment properties 12	2,436	1,624
Movement on revaluation of investment properties 12	2,742	14,044
Other gains and losses 6	(309)	(32)
Administrative expenses	(1,541)	(12,328)

Operating Profit 3	11,907	25,046
Finance costs 7	(4,379)	(4,793)
Finance income 7	226	257

Profit Before Taxation	7,754	20,510
Taxation 8	(1,316)	239

Profit And Total Comprehensive Income For The Year	6,438	20,749

Attributable to:
Equity shareholders	6,438	20,749
Minority shareholders	-	-
	6,438	20,749

Basic earnings per share 10	7.72p	23.53p
Diluted earnings per share 10	7.72p	23.43p

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

CONSOLIDATED Statement of Changes in Equity

For the year ended 30 September 2015

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 2014
At 1 October 2013	4,925	124,017	1,568	(10,173)	34,768	155,105	20	155,125
Profit for the year	-	-	-	-	20,749	20,749	-	20,749

Total comprehensive income for the year	-	-	-	-	20,749	20,749	-	20,749
Issue of share capital	7	111	-	-	-	118	-	118
Dividend paid	-	-	-	-	(1,332)	(1,332)	-	(1,332)
Purchase of own shares	-	-	-	(5,211)	-	(5,211)	-	(5,211)
At 30 September 2014	4,932	124,128	1,568	(15,384)	54,185	169,429	20	169,449

Changes in equity for 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

CONSOLIDATED BALANCE SHEET

At 30 September 2015

	Note	30 Sep 2015 £'000	30 Sep 2014 £'000
Non-Current Assets
Property, plant and equipment	11	28	62
Investment properties	12	133,190	158,340
Investment properties under construction	13	3,156	-
Investment in joint ventures	14	6,660	6,087
Loan to joint venture	14	3,410	2,204
Goodwill	16	3,173	3,173
		149,617	169,866

Current Assets
Development and trading properties	17	33,373	25,485
Trade and other receivables	18	4,969	3,778
Derivatives	27	37	377
Cash and cash equivalents		57,386	70,753
		95,765	100,393
Total Assets		245,382	270,259

Current Liabilities
Trade and other payables	19	5,370	13,832
Bank loans	20	17,768	1,035
Tax liabilities		2,254	1,797
		25,392	16,664
Non-Current Liabilities
Bank loans	20	19,723	53,525
Zero dividend preference shares	21	32,471	30,621
		52,194	84,146
Total Liabilities		77,586	100,810

Net Assets		167,796	169,449

Equity
Called up share capital	22	4,985	4,932
Share premium account		125,371	124,128
Capital redemption reserve		1,568	1,568
Treasury shares	23	(23,321)	(15,384)
Retained earnings		59,173	54,185

Equity Attributable to Equity Holders		167,776	169,429
Non-controlling interests		20	20

Total Equity		167,796	169,449

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 September 2015

	Year Ended 30 Sep 15 £'000	Year Ended 30 Sep 14 £'000
Cash Flows From Operating Activities
Operating profit	11,907	25,046
Depreciation and amortisation	34	47
Amortisation of reverse lease premium	180	188
Share of results of joint ventures	19	(45)
Other gains and losses	340	45
Gain on sale of investment properties	(2,436)	(1,624)
Movement on revaluation of investment properties	(2,742)	(14,044)

Cash Flows From Operations Before Changes In Working Capital	7,302	9,613
Change in trade and other receivables	(1,191)	554
Change in land, development and trading properties	(7,102)	(2,405)
Change in trade and other payables	(9,248)	8,242

Cash (Used In) / Generated From Operations	(10,239)	16,004
Finance costs	(2,020)	(3,445)
Finance income	207	186
Tax paid	(859)	(774)
Cash Flows (Used In) / Generated From Operating Activities	(12,911)	11,971

Cash Flows From Investing Activities
Acquisition of and additions to investment properties	(3,979)	(3,524)
Sale proceeds of investment properties	30,971	25,429
Investment in joint ventures	(573)	(1)
Loans to joint venture	(1,206)	(2,204)
Purchase of plant and equipment	-	(12)
Cash Flows Generated From Investing Activities	25,213	19,688

Cash Flows From Financing Activities
Bank loans drawn down	-	37,195
Bank loans repaid	(17,578)	(51,944)
Issue of zero dividend preference shares	-	29,332
Dividend paid	(1,450)	(1,332)
Purchase of own shares	(7,937)	(5,211)
Issue of shares	1,296	118
Re-couponing of interest rate swaps	-	(41)
Purchase of interest rate cap	-	(652)
Cash Flows (Used In) / Generated From Financing Activities	(25,669)	7,465

Net (decrease) / increase in cash and cash equivalents	(13,367)	39,124
Cash and cash equivalents at 1 October	70,753	31,629
Cash and Cash Equivalents at 30 September	57,386	70,753

NOTES TO THE ACCOUNTS

For the year ended 30 September 2015

1. The financial information set out in this announcement is abridged and does not constitute statutory accounts for the year ended 30 September 2015 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 2015, 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 2014 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 15	30 Sep 14
	£'000	£'000
Audit services - fees payable to the parent company auditor for the audit of the company and the consolidated financial statements	25	24

Other services - fees payable to the company auditor for the audit of the company's subsidiaries pursuant to legislation.	60	58

Other services - fees payable to the company auditor for tax services	20	20
Depreciation of owned assets	7	20
Lease amortisation	27	27
Operating lease rentals - land and buildings	171	158
Movement on provision for doubtful debts	172	80

4. PARTICULARS OF EMPLOYEES

The aggregate payroll costs of the above were:

	Year ended	Year ended
	30 Sep 15	30 Sep 14
	£'000	£'000
Wages and salaries	443	9,749
Social security costs	71	1,346
	514	11,095

The average monthly number of persons, including executive directors, employed by the Company during the year was nine (2014: nine).

5. DIRECTORS' EMOLUMENTS

	Year ended	Year ended
	30 Sep 15	30 Sep 14
	£'000	£'000
Emoluments (excluding pension contributions)	140	9,486
Emoluments of highest paid director	210	3,737

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 15 £'000	Year ended 30 Sep 14 £'000
Movement in fair value of interest rate swaps / caps	(340)	(45)
Other	31	13
	(309)	(32)

7. FINANCE INCOME / COSTS

	Year ended	Year ended
Finance Income	30 Sep 15	30 Sep 14
	£'000	£'000
Bank interest and interest receivable	226	257

Finance Costs
Bank loans	(2,021)	(2,687)
Loan repayment costs	-	(54)
Amortisation of arrangement fees	(642)	(859)
ZDP interest payable	(1,716)	(1,193)
	(4,379)	(4,793)

8. TAXATION ON ORDINARY ACTIVITIES

(a) Analysis of charge / (credit) in the year

	Year ended 30 Sep 15 £'000	Year ended 30 Sep 14 £'000
UK Corporation tax based on the results for the year	1,302	-
Under / (over) provision in prior years	14	(239)
Current tax	1,316	(239)
Deferred tax	-	-
	1,316	(239)

(b) Factors affecting tax charge
The tax assessed on the profit for the year differs from the standard rate of corporation tax in the UK of 20.5% (2014: 22%)
	Year ended 30 Sep 15 £'000	Year ended 30 Sep 14 £'000
Profit before taxation	7,754	20,510

Profit multiplied by rate of tax	1,590	4,512
Effects of:
Expenses not deductible for tax purposes	395	305
Under / (over) provision in prior periods	14	(239)
Joint venture losses / (profits) not taxable	4	(10)
Gains not subject to UK taxation	(125)	(357)
Revaluation gains not taxable	(562)	(3,090)
Losses utilised	-	(1,360)
Tax charge for the year	1,316	(239)

9. DIVIDENDS

The directors have recommended a final dividend of 1.75 pence per ordinary share in respect of the year ended 30 September 2015 (2014: 1.75 pence). This final dividend will amount to £1,444,000 (2014: £1,502,000), if approved at the AGM. In accordance with IFRS, it has not been included as a liability in the financial statements.

10. EARNINGS PER SHARE

The calculation of earnings per ordinary share is based on the profit after tax attributable to equity shareholders of £6,438,000 (2014: £20,749,000) and on the number of shares in issue being the weighted average number of shares in issue during the period of 83,429,315 (2014: 88,174,984). The diluted earnings per share calculation is based on profit for the year of £6,438,000 (2014: £20,749,000) and on 83,429,315 (2014: 88,563,656) ordinary shares. The diluted ordinary shares are calculated as follows:

	2015	2014
	No.	No.
Basic weighted average number of shares	83,429,315	88,174,984

Diluting potential ordinary shares: Employee share options	-	388,672
Total diluted	83,429,315	88,563,656

11. PROPERTY, PLANT AND EQUIPMENT

	Premises Lease £'000	Office Equipment £'000	Furniture & Fittings £'000	Total £'000
Cost
At 1 October 2013	157	63	95	315
Additions	-	12	-	12

At 30 September 2014 and 1 October 2014	157	75	95	327
Additions	-	-	-	-

At 30 September 2015	157	75	95	327

Depreciation / Amortisation
At 1 October 2013	85	62	71	218
Provided during the year	27	1	19	47

At 30 September 2014 and 1 October 2014	112	63	90	265
Provided during the year	27	2	5	34

At 30 September 2015	139	65	95	299


Net book value at 30 September 2015	18	10	-	28

Net book value at 30 September 2014	45	12	5	62

12. INVESTMENT PROPERTIES

Group

	Freehold £'000	Long Leasehold £'000	Reverse Lease Premiums £'000	Total £'000
Valuation at 1 October 2013	130,453	33,566	746	164,765
Additions	3,212	198	114	3,524
Disposals	(9,595)	(14,210)	-	(23,805)
Reverse lease premium amortisation	-	-	(188)	(188)
Movement on revaluation	12,602	1,442	-	14,044
Valuation at 30 September 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

The historical cost of properties held at 30 September 2015 is £164,890,000 (2014: £192,162,000).

The properties were valued by Jones Lang LaSalle, independent valuers not connected with the Group, at 30 September 2015 at market value in accordance with the Practice Statements contained in the RICS Appraisal and Valuation Standards published by the Royal Institute 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.

The Group has pledged £95,530,000 (2014: £106,500,000) of investment property to secure Royal Bank of Scotland debt facilities and £32,870,000 (2014: £47,090,000) 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 £11,441,000 (2014: £13,052,000).

Gain on sale of investment properties	30 Sep 15	30 Sep 14
	£'000	£'000
Gross proceeds on sales of investment properties	31,335	25,670
Costs of sales	(364)	(241)
Net proceeds on sales of investment properties	30,971	25,429
Book value	(28,535)	(23,805)
Gain on sale	2,436	1,624

Sensitivity Analysis:

Movement in equivalent yield

If the equivalent yield compresses by 0.5% to 7.52% then the portfolio valuation increases by approximately 7.0%. It reduces by approximately 6.5% 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 3.9% whilst falling by approximately 3.8% 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 1.5%. If void periods increase by 6 months then the portfolio valuation would decrease by approximately 1.5%.

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 £3,156,000 (2014: £nil) as at 30 September 2015. 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 15 £'000	30 Sep 14 £'000
At 1 October 2014	6,087	5,987
Share of results of joint ventures	(19)	45
Investment in joint venture	592	55
At 30 September 2015	6,660	6,087

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

Loans to Joint Ventures

30 Sep 15

£'000

30 Sep 14

£'000

Roadking Holyhead Limited

3,410

2,204

3,410

2,204

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

	30 Sep 15 £'000	30 Sep 14 £'000
Conygar Stena Line Limited	7,406	6,709
C M Sheffield Limited	2	2
	7,408	6,711

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 15 £'000	Year ended 30 Sep 14 £'000

Assets
Current assets	10,158	8,322
	10,158	8,322

Liabilities
Current liabilities	(88)	(31)
	(88)	(31)

Net Assets	10,070	8,291

Operating (loss) / profit	(19)	45
Finance income	-	-

(Loss) / profit before tax	(19)	45
Tax	-	-

(Loss) / profit after tax	(19)	45

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%*
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 Acquisition (Jersey) I Ltd	Property investment	Jersey	100%*
Lamont Property Acquisition (Jersey) II Ltd	Property investment	Jersey	100%*
Lamont Property Acquisition (Jersey ) III 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%*

* Indirectly owned

16. GOODWILL
	30 Sep 15	30 Sep 14
	£'000	£'000
At 1 October 2014 and 30 September 2015	3,173	3,173

The goodwill arose upon the acquisition of the non-controlling interests in Martello Quays Limited and represents the excess of the consideration over the fair value of the identifiable net assets acquired. The goodwill has been wholly allocated to the development project within Martello Quays Limited, which is considered to represent a single income and cash generating unit. Management analysis indicates that the net present value of the project exceeds its carrying value and therefore no impairment is appropriate.

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.

Sensitivity to changes in assumptions

Management believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of the project to exceed its recoverable amount.

17. PROPERTY INVENTORIES


	30 Sep 15	30 Sep 14
	£'000	£'000
Properties held for resale or development	33,373	25,485

18. TRADE AND OTHER RECEIVABLES


	30 Sep 15	30 Sep 14
	£'000	£'000
Trade receivables	1,434	682
Provision for doubtful debts	(217)	(45)
	1,217	637
Amounts owed by group undertakings	-	-
Other receivables	1,194	74
Prepayments and accrued income	2,558	3,067
	4,969	3,778

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 15	30 Sep 14
	£'000	£'000
Social security and payroll taxes	-	1,222
Trade payables	2,805	803
Accruals and deferred income	2,565	11,807
	5,370	13,832

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 15	30 Sep 14
	£'000	£'000
Bank loans	38,151	55,764
Debt issue costs	(660)	(1,204)
	37,491	54,560

Details of the financial liabilities are given in note 27.

21. ZERO DIVIDEND PREFERENCE SHARES

	Year ended 30 Sep 15	Year ended 30 Sep 14
	£'000	£'000

Balance at start of year	30,621	-
Share issue	-	30,000
Share issue costs	-	(669)
Share issue costs amortised	134	97
Accrued capital	1,716	1,193
Balance at end of year	32,471	30,621

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 £1,716,000 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 the 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 15	30 Sep 14
	£	£
140,000,000 (2014: 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 15		30 Sep 14
	No	£'000	No	£'000
Ordinary shares of £0.05 each	99,714,123	4,985	98,619,123	4,932

The movement on the group's share capital during the year was as follows:

Allotted and Called Up

	Price £	No.	£'000
At 30 September 2013		98,489,123	4,925

Exercise of options	0.05	130,000	7
At 30 September 2014		98,619,123	4,932

Exercise of options	0.05	1,095,000	53
		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 2015 purchased 4,372,350 (2014: 3,142,700) shares on the open market at a cost of £7,937,062 (2014: £5,211,572). The 17,182,869 (2014: 12,810,519) shares were held in treasury as at 30 September 2015.

24. SHARE BASED PAYMENTS

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

The Group recognised total expenses of £nil (2014: £nil) in relation to equity settled share-based payment transactions.

25. DEFERRED TAX ASSET

Deferred tax assets are recognised in the accounts as follows:

Group and Company	30 Sep 15		30 Sep 14
	Provided £'000	Not Provided £'000	Provided £'000	Not Provided £'000
Share based payments	-	2	-	2
Losses	-	-	-	-
	-	2	-	2

The deferred tax asset in respect of the trading losses carried forward has not been recognised on the basis that it is uncertain when taxable profits will be available for offset.

26. COMMITMENTS

The Group is not committed to provide any further funding (2014: £796,000 commitment) to the Roadking Holyhead Limited joint venture for further capital expenditure.

Group as lessee:

At 30 September 2015, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

	30 Sep 15	30 Sep 14
	£'000	£'000
Within one year	90	126
In the second to fifth years inclusive	-	90
	90	216

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 15	30 Sep 14
	£'000	£'000
Less than one year	9,504	11,163
Between one and five years	24,088	24,260
Over five years	14,475	14,808
	48,067	50,231

27. FINANCIAL INSTRUMENTS

The interest rate profile of the Group bank borrowings at 30 September 2015 was as follows:

	Interest Rate	Maturity	30 Sep 15 £'000	30 Sep 14 £'000
Royal Bank of Scotland (TAPP)(1)	LIBOR + 3%	2-5 years	20,174	27,366
Barclays (2)	LIBOR +3.5%	Less than 1 year	8,335	18,455
Royal Bank of Scotland (TOPP)(3)	LIBOR +3.5%	Less than 1 year	9,642	9,942
			38,151	55,763

(1) Senior bank facility repayable 5 February 2018.

(2) Senior bank facility repayable 20 August 2016.

(3) Senior bank facility repayable 3 April 2016.

In addition to the bank debt, the Group has a financial liability of £32.5 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 £1,716,000 of additional capital. The total amount repayable at maturity is £39,210,000.

Loans

As at 30 September 2015, TOPP Property Limited and TOPP Bletchley Limited maintained a facility with the Royal Bank of Scotland PLC of up to £9,642,000 (2014: £9,942,000) of which £9,642,000 (2014: £9,942,000) had been drawn down. This facility is repayable on or before 3 April 2016 and is secured by fixed and floating charges over the assets of the TOPP Property Limited group. The facility is subject to a maximum loan to value covenant of 55%, interest cover ratio covenant of 225% and a debt to rent cover ratio covenant of 7:1. The facility is subject to quarterly repayments of £75,000.

As at 30 September 2015, 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 (2014: £18,455,000) of which £8,335,000 (2014: £18,445,000) had been drawn down. This facility is repayable on or before 20 August 2016 and is 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 is subject to a maximum loan to value covenant of 52% (2014: 54%) and an interest cover ratio covenant of 225%. The loan is amortised by 1% of the outstanding loan amount per quarter, if the loan to value is greater than 40%.

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 2015	30 Sep 2014	30 Sep 2015	30 Sep 2014
	£'000	£'000	£'000	£'000
Financial Assets
Cash	57,386	70,753	57,386	70,753
Loans to joint ventures	10,818	8,915	10,818	8,915
Interest rate derivatives	37	377	37	377

Financial Liabilities
Floating rate borrowings	38,151	55,764	38,151	55,764
Fixed rate borrowings	32,909	31,193	32,909	31,193

Derivative Financial Instruments

	Protected Rate %	Expiry	Market Value at 30 Sep 2015	Market Value at 30 Sep 2014
			£'000	£'000
£37 million (2014: £37 million) cap	2.00 (2014: 2.00)	Feb 2018	52	375
£4.3 million (2014: £14.5 million) swap	1.055 (2014: 1.055)	Aug 2016	(16)	15
£4 million (2014: £4 million) cap	1.00 (2014: 1.00)	Aug 2016	-	23
£10.3 million (2014: £10.6 million) cap	0.75 (2014: 0.75)	April 2016	1	47
£nil (2014: £9.0 million) swap	n/a (2014: 1.33)	n/a	-	(25)
£nil (2014: £12.7 million) swap	n/a (2014: 1.33)	n/a	-	(35)
£nil (2014: £15.3 million) swap	n/a (2014: 0.99)	n/a	-	(23)
			37	377

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 2015 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 3 February 2016 at the offices of Wragge Lawrence Graham & Co 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.

AIM The AIM market of the London Stock Exchange PLC

EPRA European Public Real Estate Association

EPRA EPS A measure of earnings per share designed by EPRA to present underlying earnings from core operating activities

EPRA NAV A measure of net asset value designed by EPRA presenting net asset value excluding the effects of fluctuations in value in instruments that are held for long term benefit, net of deferred tax

EPS Earnings per share, calculated as the earnings for the period after tax attributable to members of the parent Company divided by the weighted average number of shares in issue in the period

Equivalent Yield The constant capitalisation rate which, if applied to all cash flows from an investment property, equates to the market rent

Net Initial Yield Annual net rents expressed as a percentage of the investment property valuation

NAV Net asset value

Reversionary Yield The anticipated yield which the Net Initial Yield will rise to once the rent reaches the ERV

Conygar The Conygar Investment Company PLC

TAP The Advantage Property Income Trust Limited

Loan to Value The amount of borrowing divided by the value of investment property expressed as a percentage

PBT Profit before taxation

UK United Kingdom

ERV Estimated Rental Value being the open market rent as estimated by the Company's valuers

NNNAV or Triple Asset Value A measure of net asset value taking into account asset revaluations, the fair value of debt and any associated tax effects

Passing Rent The annual gross rental income excluding the effects of lease incentives

Tenant Break An option in a lease for a tenant to terminate that lease early

Lease Re-gear A mutual re-negotiation of a lease between landlord and tenant prior to a lease expiry date

Average Unexpired Lease Length The average unexpired lease term expressed in years weighted by rental income

Rent-Free Period A lease incentive offering the tenant a period without paying rent

Vacancy Rate The estimated rental value of vacant properties expressed as a percentage of the total estimated rental value of the portfolio

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR EAAAXEAXSFAF

Companies

Conygar Investment Company (CIC)

Friday, 22nd November 2024

COMPANIES COVERED:

GAW AMGO ITH

Games Workshop shares jump in early trade as interim results are on track to impress, and Ithaca Energy continues its march higher off yesterday’s dividend news but Amigo slips as options for the future remain limited.

Full Archive

UK 100

Latest directors dealings

15 hours ago Cerillion
17 hours ago Associated British Foods
17 hours ago B&M European Value Retail S.A. (DI)
17 hours ago B&M European Value Retail S.A. (DI)
17 hours ago Haleon

All directors dealings today