Preliminary Results

RNS Number : 5055U

Conygar Investment Company PLC(The)

03 December 2013

 



3 December 2013

THE CONYGAR INVESTMENT COMPANY PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2013

The Conygar Investment Company PLC, announces its results for the year ended 30 September 2013.

HIGHLIGHTS

·           Net asset value per share increased by 5.2% to 174.6p (2012: 165.9p).  EPRA NAV per share increased by 4.8% to 174.9p (2012: 166.9p).

·           Pre-tax profit for the year £7.74 million compared with £7.46 million last year.

·           Net debt of £38.9 million representing gearing of 25.1% against net asset value and 23.6% on loan to value basis.

·           Share buy back: the Group acquired 4.3% of its ordinary share capital at a weighted average price of 96.8p per share.

·           Total cash and undrawn committed facilities exceed £50 million.

·           Investment property portfolio valuation up 2% in the second half of 2013 as property market outside of London shows signs of recovery.

·           Obtained planning permission in respect of the 60,000 square foot Sainsbury's retail food store and 835 residential plots in Haverfordwest.

·           Contracts exchanged with Marston's to sell 0.7 acres for a pub and restaurant at Pembroke Dock.  Significant first step in post-planning phase of development.

·           Obtained planning consent at Parc Cybi Business Park, Holyhead for a 200 space truck stop and logistics depot.

Summary Group Net Assets As At 30 September 2013

		Per Share
	£'m	p
Investment Properties	164.8	185.5
Development Projects	32.2	36.2
Cash	31.6	35.6
Other Net Liabilities	(4.1)	(4.6)
	224.5	252.7
Bank Loans	(69.4)	(78.1)
	155.1	174.6

Robert Ware, Chief Executive, commented:

"Following the turbulent years since the financial crisis, there is now some cause for optimism, as there are definite signs of a recovery and improved market sentiment. This goodwill is beginning to extend outside London, which is benefitting our investment portfolio and we are definitely seeing an upturn in transactional activity, particularly at the occupier level. It is too early to predict the scale of the upturn, as any recovery remains fragile, but the last six months have seen an encouraging improvement.

Conygar remains well funded, cash generative and able to invest, so we are well positioned to take advantage of any market improvement. Our pipeline of development projects are also benefitting from this improved market sentiment and several of these projects are poised to start delivering on their potential.

We continue to grow net asset value per share and this growth should be enhanced further with progress in the development portfolio and as the anticipated recovery starts to take hold."

Enquiries:

The Conygar Investment Company PLC

Robert Ware:                  020 7258 8670

Peter Batchelor:              020 7258 8670

Liberum Capital Limited (Nominated Adviser)

Chris Bowman:               020 3100 2000

Richard Bootle:               020 3100 2000

Tim Graham:                   020 3100 2000

Temple Bar Advisory (Public Relations)

Alex Child-Villiers:          07795 425580

Chairman's & Chief Executive's Statement

Results

We are pleased to present the Group's results for the year ended 30 September 2013.

Net asset value per share increased by 5.2% to 174.6p from 165.9p last year and to 174.9 on an EPRA basis. The major components driving that growth are the profit after tax of £6.2 million and the share buy back programme which added 3 pence per share or 1.9%. The profit before taxation for the year was £7.7 million (2012: £7.5 million) with net property income of £12.9 million (2012: £13.4 million) before financing and overheads.

Net asset value as at 30 September 2013 was £155.1 million compared with £154.0 million at 30 September 2012. During the year, the Group spent £3.9 million on share buy backs and paid a dividend of £1.2 million and excluding these, net asset value increased by 4%.

The Group's investment properties as at 30 September 2013 were independently valued at £164.8 million (2012: £176.0 million), a flat valuation overall for the year on a like for like basis. However, having fallen by nearly 2% at 31 March 2013, we have seen a recovery in the second half of 2013 which reflects an improved sentiment towards property assets outside London and the South East.

The Group had cash balances of £31.6 million (2012: £31.5 million) at the year end and bank debt of £70.5 million (2012: £80.9 million) which is net gearing of 25.1% or 23.6% on a loan to value basis. The Group generates around £3.3 million pa cash from operations which funds development expenditure and capital expenditure on the investment property portfolio.

Progress

The business continued to make good progress during the year. Of particular note was the submission of the planning application for our development at Haverfordwest, Pembrokeshire to build 835 residential properties and a 60,000 square feet Sainsbury's retail food store. In September 2013, we were pleased to announce that the Council had resolved to grant planning permission which will be formally granted upon the signing of a section 106 agreement. This is a major hurdle cleared and we can now work upon the detail of finalising the infrastructure and associated conditions to enable the completion of the conditional sale of the 9 acre site to Sainsbury's. Whilst the final terms of that agreement must remain confidential, the Sainsbury's funds, once received, will enable us to complete all the infrastructure works on the entire site which will provide a catalyst for residential development on the remaining 84 acres.

In May 2013, we announced that conditional contracts had been exchanged with Marston's to sell 0.7 acres at Pembroke Dock for a family pub and restaurant. Aside from being the first step in the post-planning phase, this has also generated interest from other commercial and retail operators in the site. In addition, we have begun exploratory engineering works in the harbour which is another step towards construction.

At Parc Cybi Business Park, Holyhead, we have obtained planning consent for a 200 space truck stop with associated amenities and entered into an agreement with the Welsh Government for the grant of a 999 year lease over 14 developable acres for the truck stop, logistics depot and service units. We have also exercised an option to acquire a further 12 acres of land for which we have already acquired planning consent for 110,000 square feet of distribution warehousing and 30,000 square feet of offices and we are in talks with several potential occupiers. This is in no small way due to the proposed construction of the Wylfa B nuclear power station, which looks increasingly likely, following recent events regarding the construction of Hinkley Point.

Our other development projects all continue to progress and in particular, the developments at Holyhead Waterfront and Fishguard Waterfront, where the section 106 agreements are nearly finalised and discussions with various interested parties continue to move forward.

Overall, the development pipeline is now making excellent progress and whilst it has been frustrating at times, all our projects have obtained planning consents. Our careful approach means that expenditure to date is only £32.2 million and we are not committed to any speculative projects. We remain on course to deliver projects, comprising more than 2,000 residential units, 1,400 marina berths and in excess of 400,000 square feet of commercial and retail development. Our downside risk is managed whilst the upside potential is significant.

The Group's investment properties continue to progress albeit the valuation remained flat over the year. The commercial property market outside London appears to have recovered slightly with our year end valuation recovering the losses in the first half of 2013. It is a trend we hope will continue, whilst acknowledging that any recovery is still in its infancy.

The contracted annual rent roll is £14.4 million as at 30 September 2013, which is £1.4 million lower than at 30 September 2012, mainly owing to a number of 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 slightly to 4.8 years, from 4.5 years at 30 September 2012, reflecting numerous lease renewals. The portfolio vacancy rate is 16.7% which is up from last year's 10.4%.  This is disappointing but not unexpected. The main additional vacancy arises from expiring leases at Maidenhead and Worcester which were not renewed.  However, several negotiations are in progress which will hopefully reduce this. We are also refurbishing some empty floors at Norfolk House, Birmingham which will create desirable space close to the New Street Station redevelopment.  So, whilst vacancy rates will rise in the short term, we expect a reduction as the market recovers. We made six disposals in the year realising £12.7 million of net sales proceeds. All sales were approximately at valuation and we will continue to recycle assets to release capital for other opportunities.

Our investment property portfolio continues to generate surplus cash flow which helps fund the pipeline of development projects which should deliver strong returns in the medium term.

In April 2013, we secured a refinancing of our TOPP portfolio with an £11 million three year loan from The Royal Bank of Scotland. This completes our refinancing of the entire investment property portfolio begun in 2011. The market for real estate debt is still difficult, in particular for secondary assets outside London which require significant and active management, so we are pleased to have obtained good financing at reasonable rates with lenders with whom we have a long-standing relationship. We will continue to seek out good sources of finance.

At 30 September 2013, the Group had cash of £31.6 million available to pursue investment opportunities and in addition, the Group could draw down a further £20 million from our committed bank facility with Lloyds Banking Group. The business is well funded and the balance sheet healthy.

Dividend

The Board is pleased to recommend a final dividend of 1.5p per ordinary share in respect of the year ended 30 September 2013 to be paid on 13 February 2014 to shareholders on the register at 10 January 2014. This is an increase of 20% over last year. Our dividend policy remains unchanged with most profits retained for reinvestment in the business.

Share Buy Back

During the year, the Group acquired 4,009,838 ordinary shares representing 4.3% of its ordinary share capital, at a weighted average price of 96.8p per share. This cost approximately £3.9m and, as a result of the buy backs, net asset value per share has been enhanced by approximately 3 pence per share or 1.9%. The Group will seek to renew the buy back authority at the forthcoming AGM because, whilst our shares no longer trade at such a significant discount to underlying net asset value, we consider it to be a useful capital management tool which has been used to great advantage in the last few years.  In total, the Group has acquired 34,567,819 shares at an average price of 107.0 pence per share since December 2010.

Outlook

Following the turbulent years since the financial crisis, there is now some cause for optimism, as there are definite signs of a recovery and improved market sentiment. This goodwill is beginning to extend outside London, which is benefitting our investment portfolio and we are definitely seeing an upturn in transactional activity, particularly at the occupier level. It is too early to predict the scale of the upturn as any recovery remains fragile but the last six months have seen an encouraging improvement.

Conygar remains well funded, cash generative and able to invest, so we are well positioned to take advantage of any market improvement. Our pipeline of development projects are also benefitting from this improved market sentiment and several of these projects are poised to start delivering on their potential.

We continue to grow net asset value per share and this growth should be enhanced further with progress in the development portfolio and as the anticipated recovery starts to take hold.

NJ Hamway                                                                          R T E Ware

Chairman                                                                               Chief Executive

Strategic Report

The Group Strategic Report provides a review of the entire business for the financial year; discusses the group 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 whilst 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 focus upon positive cash flow and will utilise modest levels of gearing to enhance returns where necessary. 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

The Group maintained its strong position at the year end with good underlying earnings, positive cash flow and investment property values showing signs of some recovery.  The development pipeline is also starting to show signs of progress and we expect to commence construction at several locations within the next twelve months.  The balance sheet also remains strong with cash of £31.6 million and bank debt of £70.5 million giving a net gearing of 25.1%.  The Group has adequate resources to maintain and develop its business whilst managing downside risk and the balance sheet is robust.

Events since the balance sheet date

There were no significant events since the balance sheet date.

Summary of Group Net Assets

The Group net assets as at 30 September 2013 may be summarised as follows:

			Per Share
	£'m		P
Investment Properties	164.8		185.5
Development Projects	32.2		36.2
Cash	31.6		35.6
Other Net Liabilities	(4.1)		(4.6)
	224.5		252.7
Bank Loans	(69.4)		(78.1)
	155.1		174.6

Investment properties

Summary of portfolio

	2013	2012
Valuation at 30 September	£164,765,000	£175,995,000
Number of properties	45	48
Contracted rent (pa)	£14,355,810	£15,766,763
Current ERV (pa)	£16,859,125	£17,549,979
Net initial yield	7.48%	8.22%
Equivalent yield	8.99%	9.15%
Reversionary yield	9.54%	9.48%
ERV of vacant units (pa)	£2,815,274	£2,136,042
Vacancy rate	16.70%	10.40%
Average unexpired lease lengths	4.80 years	4.50 years

Asset management

At 30 September 2013, the contracted rent for the investment property portfolio was £14.4 million with an ERV of £16.9 million, the reduction from 2012 being mainly attributable to property disposals in the year. The ERV of vacant space is £2.8 million of which Geoffrey House, Maidenhead; Blackpole Trading Estate, Worcester; Advantage, Reading and Brunswick Point, Leeds account for the majority. The overall vacancy rate in the portfolio is 16.70% up from 10.40% in 2012, the increase arising from expiring leases at Maidenhead and Worcester that were not renewed. These are being addressed as priorities for the management of the portfolio with a number of options available. The average unexpired lease length increased to 4.80 years from 4.50 years at 30 September 2012, mostly due to lease renewals and new lettings in the period.

Whilst tenants remain under pressure, there has been good progress on asset management and there are signs of improving sentiment in the occupier market with a considerable number of enquiries received in the last few months, many of which we hope to convert to letting. We maintain good communication with tenants where leases are shortening or where breaks are impending.  We are fortunate that our arrears remain low and that 95% - 97% of rent is collected within ten days of a quarter.

In terms of lettings, we agreed new lettings contributing £579,136 pa of new income at or around ERV and we agreed lease renewals retaining £1,650,560 pa of income, again at or around ERV.

The highlights include: 

·     A 4 year lease extension to the Scottish Care Inspectorate at Compass House, Dundee at the existing rent of £380,000 pa in return for a twelve month rent free period. Lease expiry is now 19 April 2023.

·     A five year lease extension at Ashby Park, Ashby de la Zouch let to Ceva Logistics Limited at a rent of £357,000 pa. This lease now expires on 10 July 2019.

·     Two leases agreed with Amtek Investments UK Limited at Freebournes Drive, Witham at a total rent of £420,000 pa. These leases expire on 3 June 2022 and are subject to a twelve month rent free period.

·     Letting the 2^nd floor and part 3^rd floor at Advantage, Reading to Acquia at a rent of £149,047 pa. This is a five year lease subject to a sixteen month rent free period.

·     Creating a single unit from three previous units at York House, Felixstowe and letting it to Poundland at a rent of £120,000 pa. This new lease is for a ten year term subject to a twelve month rent free period.

Disposals

The Group disposed of six investment properties during the year at Crystal Drive, Oldbury; Brook Point, Whetstone; Simpson Parkway, Livingston; and 3 buildings at The Links, Warrington.  Total net sale proceeds were £12.7 million, generating a small loss to valuation of £307,000 mostly attributable to professional and other sale fees.  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 £164.8 million as at 30 September 2013.  The investment property portfolio increased in value by 0.4% on a like for like basis, however the valuation increased by 2% from the half year recovering losses in that period which is an encouraging sign.  The investment property market outside central London appears to have recovered slightly and sentiment has improved, which we hope will translate into increased value.  Assets require active management to protect income and value and we are seeing an increase in potential transactions which must be a positive sign. 

Capital Expenditure

We incurred £1 million of capital expenditure during 2013, which was fully financed from our existing cash flow.  We are undertaking refurbishment of some of the space within the Edinmore portfolio, in particular at Norfolk House, Birmingham where, having refurbished the vacant 2^nd floor, we are looking at refurbishing the 3^rd floor.  We are also carrying out small refurbishments of space elsewhere to optimise the chances of letting. We are also resurfacing the car park at the Brunel Centre, Bletchley at a cost of approximately £600,000, although Sainsbury's have agreed to contribute 30% of the cost as part of our joint arrangements with them. Whilst there will always be a level of refurbishment work required throughout the portfolio, as at 30 September 2013 the Group had no contractual capital expenditure commitments in excess of £1,000,000.

Development projects

Haverfordwest

We submitted a planning application for our development at Haverfordwest, Pembrokeshire to build 835 residential properties and a 60,000 square feet Sainsbury's retail food store and in September 2013, the Council resolved to grant planning permission which will be formally granted upon the signing of a section 106 agreement and planning conditions.  We can now work upon the detail of finalising the infrastructure and associated conditions to enable the conditional sale of the 9 acre site to Sainsbury's to complete. Whilst the final terms of that agreement must remain confidential, the receipt from the Sainsbury's sale will enable us to complete all the infrastructure works on the entire site and provide a catalyst to residential development.

In addition, we are continuing to work upon the project to re-develop the riverside area of the town centre, creating a further 74,000 square feet of mixed use space.

Holyhead Waterfront

We have planning permission for this project which includes plans for 326 apartments and townhouses, a 500 berth marina, 50,000 square feet of retail, leisure, restaurants, hotel and office space, with a very flexible design layout, in a prime location overlooking the marina. We are also making a provision for various local amenities and visitor attractions. The site covers in excess of half a mile of water frontage and is being developed jointly with Stena Line Ports Limited.

We are close to finalising the section 106 planning agreement and planning conditions.  We continue discussions with various parties with respect to both the residential and commercial elements of the scheme. The undoubted boost to the local economy provided by the recent commitment of Hitachi to develop the multi-billion pound new Wylfa nuclear power station will certainly help our scheme.

Parc Cybi Business Park, Holyhead

We continue to market our logistics development site at Parc Cybi, and we are in discussions with several potential occupiers.

The logistics development comprising 140,000 square feet of office and distribution warehousing will be complemented by our plans to create a transport hub and 200 space lorry park facility to support the port of Holyhead on an adjacent 14 acre site for which we have now obtained planning consent. We have entered into an agreement with the Welsh Government for the grant of a 999 year lease over 14 developable acres for the truck stop, logistics depot and service units.  We have also exercised an option to acquire a further 12 acres of land for the distribution warehousing and offices and hold an option on a further 5 acres for a logistics hub.

Fishguard Waterfront

The main elements of the scheme include a 450 berth marina with workshops, stores and ancillary facilities; 253 new residential apartments incorporating extensive landscaped gardens and a 19 acre platform for the potential expansion of the existing Stena Line port. We are refining the design and layout of the platform which produces significant capital cost savings.

We have finalised the section 106 planning agreement with the local authority, which should be signed shortly. Negotiations continue with the various landowners; Stena Line, Pembrokeshire County Council and The Crown Estate, who own the relevant surrounding harbour area. We continue to pursue the availability of EU backed Welsh Government infrastructure funds which would greatly improve the viability of the development from a funding perspective.

Fishguard Lorry Stop and Distribution Facility

This 11 acre lorry stop and distribution park project consists of a secure 24 hour truck stop together with approximately 190 spaces for tractor and trailers, vehicle refuelling and wash facilities, plus an amenity building. There will also be around 30,000 square feet of industrial and warehousing units to support the lorry stop. Planning consent has been obtained and the necessary site acquired.  Discussions continue with both hauliers and the port operator, Stena Line. It remains our intention to commence development once we have secured sufficient pre-lets.

Pembroke Dock Waterfront

In May 2013, we announced that conditional contracts had been exchanged with Marston's to sell 0.7 acres at Pembroke Dock for a family pub and restaurant.  An important and encouraging first step in the post-planning phase, it has generated interest from other commercial and retail operators in the site.

We have also commenced test drilling and engineering works in the harbour which is another step towards construction.  Finally, we continue to negotiate with the Welsh Government with respect to EU based infrastructure funding support.

King's Lynn, Norfolk

This 6 acre residential development opportunity has planning permission for 94 dwellings near to King's Lynn, Norfolk. In addition to the residential development, the site offers some potential for mixed or commercial uses, subject to planning.

Others

We have been appointed by Conwy Council, North Wales as their preferred developers to explore the possibility of providing a 90,000 sq ft supermarket on the Council's land at Llandudno Junction.

Summary of Development Projects

The expenditure in the year on our development land bank amounted to £1.4 million. Our total investment to date is now £32.2 million at cost (analysed below) or 36.3p 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.  In particular, we are pleased at the potential success at Haverfordwest but also at the improved signs of activity elsewhere.

We remain on target to deliver projects comprising more than 2,000 homes (of which 1,200 are waterside), 1,400 marina berths and in excess of 400,000 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.  

	2013	2012
	£'m	£'m
Haverfordwest	15.32	15.26
Holyhead Waterfront	9.34	8.74
Pembroke Dock Waterfront	4.87	4.47
King's Lynn	0.83	0.83
Fishguard Waterfront	0.86	0.76
Fishguard Lorry Stop	0.58	0.52
Parc Cybi, Holyhead	0.44	0.22
Total investment to date	32.24	30.80

Financial review

Net Asset Value

The net asset value at the year end was £155.1 million (2012: £154.0 million) representing a 0.7% increase in the period.  The primary movements were £12.9 million net rental income and £3.9 million spent on purchasing own shares.  Excluding the amounts incurred purchasing own shares and paying dividends, net asset value increased 4% in the year.

On an EPRA basis, the net asset value is:

	2013	2012	2011	2010	2009
	£'m	£'m	£'m	£'m	£'m
Net asset value	155.1	154.0	158.5	176.6	160.9
Preference share liability	-	-	7.4	13.3	12.6
Diluted net asset value	155.1	154.0	165.9	189.9	173.5
Fair value of hedging instruments	0.2	0.9	1.4	5.0	4.4
EPRA net asset value	155.3	154.9	167.3	194.9	177.9
EPRA NAV per share	174.9p	166.9p	153.9p	150.1p	138.2p
Basic NAV per share	174.6p	165.9p	155.2p	150.5p	138.5p
Diluted NAV per share	174.6p	165.9p	152.7p	146.3p	134.8p

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 2013.  In their opinion, the open market value of the investment property portfolio was £164.8 million.  The total portfolio increased in value by £0.7m over the year.

Cash flow

The Group generated £3.3 million cash in operating activities (2012: £4.1 million generated), of which £1.0 million was incurred as expenditure on development and trading properties.

The Group generated a further £12.7 million cash from the sale of investment properties, spent £1.3 million on the acquisition of investment properties, drew down £11 million and repaid £21.4 million in bank loans and spent £3.9 million on the purchase of own shares resulting in an overall cash inflow of £0.1 million during the year.

Net Income From Property Activities

	2013	2012
	£'m	£'m
Rental income	16.0	16.2
Direct property costs	(3.1)	(2.8)
Rental surplus	12.9	13.4
Sale of investment properties	12.9	4.1
Cost of investment properties sold	(13.2)	(3.7)
(Loss) / gain on sale of investment properties	(0.3)	0.4
Total net income arising from property activities	12.6	13.8

Administrative Expenses

The administrative expenses for the year ended 30 September 2013 were £2.7 million, an increase of 10.8% from the previous year. The primary reasons for this are certain increased costs in respect of marketing together with some additional staff costs.  The majority of other costs arise as a result of the Group being quoted on AIM with no significant changes in 2013.

Financing

At 30 September 2013, the Group had cash of £31.6 million. The Group also has unutilised facilities of £20 million with Lloyds Banking Group.

The bank debt at 30 September 2013 was £70.5 million. The gearing is 45.5% and loan to value is 42.8% excluding 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 4.2%. The fair value of these derivative financial instruments is provided for in full on the balance sheet.  As at 30 September 2013, 100% (2012: 100%) of the Group's bank borrowings were hedged.

The finance costs for the year amounted to £3.7 million (2012: £3.3 million), primarily consisting of £3.1 million bank loan interest (2012: £2.7 million).  Finance income amounted to £0.5 million (2012: £0.1 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 2013, TAPP Property Limited maintained a facility with Lloyds Banking Group of up to £78,000,000 (2012: £78,000,000) under which £41,058,000 (2012: £49,387,000) had been drawn down.  This facility is repayable on or before 27 January 2015 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 70% and an interest cover ratio covenant of 150%.

As at 30 September 2013, 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 £19,212,000 (2012: £20,000,000) of which £19,212,000 (2012: £20,000,000) 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 58% and an interest cover ratio covenant of 225%.

In April 2013, we secured a refinancing of the TOPP portfolio with an £11 million loan from The Royal Bank of Scotland, of which £10,242,000 was outstanding at 30 September 2013.  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.

As at 30 September 2012, TOPP Property Limited maintained a facility with Capita of £35,267,000 of which £11,538,000 had been drawn down.  This facility was repaid in full on 18 January 2013.

Taxation

The tax charge for the year of £1.5 million on the pre-tax profit of £7.7 million represents an effective tax charge of 19% (2012: 24%). Tax is payable at the full UK corporation tax rate of 23.5% 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 (£70.5 million), cash and short term deposits (£31.6 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 £71.4 million (2012: £65.8 million) of the total loan drawdowns of £70.4 million (2012: £80.9 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 is pleased to recommend a final dividend of 1.5p per ordinary share in respect of the year ended 30 September 2013 to be paid on 13 February 2014 to shareholders on the register on 6 December 2013. This is an increase of 20% over last year. Our dividend policy is unchanged in that we aim to provide some income return to shareholders but for the most part retain profits for reinvestment in the business. Our primary focus is upon growth in net asset value per share.

Share buy backs

The Group has made extensive use of its share buy back authorities over the last three years utilising surplus cash not required elsewhere in the business and acquiring 34,567,819 shares at a discount to net asset value.

During the year, the Group acquired 4,009,838 ordinary shares representing 4.3% of its ordinary share capital, at a weighted average price of 96.8p per share. This cost £3.9 million and, as a result of the buy backs, net asset value per share has been enhanced by approximately 3 pence per share or 1.9%. 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 and certainly whenever our shares trade at a significant discount to our underlying net asset value.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 September 2013

Note	Year Ended 30 Sep 13 £'000	Year Ended 30 Sep 12 £'000
Rental income	15,904	15,807
Other property income	90	380
Revenue	15,994	16,187
Direct costs of:
Rental income	3,102	2,745
Direct Costs	3,102	2,745
Gross Profit	12,892	13,442
Income from trading investments	41	117
Share of results of joint ventures                                     13	38	24
(Loss) / gain on sale of investment properties                  12	(307)	431
Movement on revaluations of investment properties         12	662	354
Other gains and losses                                                     6	283	(1,259)
Administrative expenses	(2,722)	(2,456)
Operating Profit                                                            3	10,887	10,653
Finance costs                                                                  7	(3,689)	(3,306)
Finance income                                                               7	538	110
Profit Before Taxation	7,736	7,457
Taxation                                                                         8	(1,525)	(1,810)
Profit And Total Comprehensive Income For The Year	6,211	5,647
Attributable to:
-           equity shareholders	6,211	5,647
-           minority shareholders	-	-
	6,211	5,647
Basic earnings per share                                                            10	6.88p	5.60p
Diluted earnings per share                                              10	6.88p	5.60p

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

CONSOLIDATED Statement of Changes in Equity

For the year ended 30 September 2013

Attributable to the equity holders of the Company

	Share Capital	Share Premium	Capital Redemption Reserve		Merger Reserve	Equity Reserve	Treasury Shares	Retained Earnings	Total	Non-Controlling Interests	Total Equity
	£'000	£'000	£'000		£'000	£'000	£'000	£'000	£'000	£'000	£'000
Group
At 1 October 2011	6,169	130,973	-		7,640	650	(24,649)	37,682	158,465	20	158,485
Changes in equity for the year ended 30 September 2012
Profit for the year	-	-	-		-	-	-	5,647	5,647	-	5,647
Total comprehensive income for the year	-	-	-		-	-	-	5,647	5,647	-	5,647
Dividend paid	-	-	-		-	-	-	(1,123)	(1,123)	-	(1,123)
Preference share conversion	1	37	-		(3)	-	-	-	35	-	35
Preference share redemption	-	-	323		(7,637)	(650)	-	7,340	(624)	-	(624)
Purchase of own shares	-	-	-		-	-	(8,463)	-	(8,463)	-	(8,463)
Cancellation of treasury shares	(495)	-	495		-	-	11,275	(11,275)	-	-	-
Reclassification of reserves	-	(6,993)	-		-	-	-	6,993	-	-	-
At 30 September 2012	5,675	124,017	818		-	-	(21,837)	45,264	153,937	20	153,957
Changes in equity for year ended 30 September 2013
At 1 October 2012	5,675	124,017	818		-	-	(21,837)	45,264	153,937	20	153,957
Profit for the year	-	-	-		-	-	-	6,211	6,211	-	6,211
Total comprehensive income for the year	-	-	-		-	-	-	6,211	6,211	-	6,211
Dividend paid	-	-	-		-	-	-	(1,160)	(1,160)	-	(1,160)
Purchase of own shares	-	-	-		-	-	(3,883)	-	(3,883)	-	(3,883)
Cancellation of treasury shares	(750)	-	750		-	-	15,547	(15,547)	-	-	-
At 30 September 2013	4,925	124,017		1,568	-	-	(10,173)	34,768	155,105	20	155,125

CONSOLIDATED BALANCE SHEET           

At 30 September 2013

Company Number:  4907617

		Note		30 Sep 2013 £'000	30 Sep 2012 £'000
	Non-Current Assets
	Property, plant and equipment	11		97	153
	Investment properties	12		164,765	175,995
	Investment in joint ventures	13		5,987	5,523
	Goodwill	15		3,173	3,173
				174,022	184,844
	Current Assets
	Trading Investments	16		-	1,257
	Development and trading properties	17		23,080	22,106
	Trade and other receivables	18		4,332	3,763
	Cash and cash equivalents			31,629	31,515
				59,041	58,641
	Total Assets			233,063	243,485
	Current Liabilities
	Trade and other payables	19		5,511	6,412
	Bank loans	20		1,057	12,286
	Tax liabilities			2,841	2,435
				9,409	21,133
	Non-Current Liabilities
	Bank loans	20		68,299	67,456
	Derivatives	27		230	939
				68,529	68,395
	Total Liabilities			77,938	89,528
	Net Assets			155,125	153,957
	Equity
	Called up share capital	22		4,925	5,675
	Share premium account			124,017	124,017
	Capital redemption reserve			1,568	818
	Treasury shares	23		(10,173)	(21,837)
	Retained earnings			34,768	45,264
	Equity Attributable to Equity Holders			155,105	153,937
	Non-controlling interests			20	20
				155,125	153,957

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 September 2013

	Year Ended 30 Sep 13 £'000	Year Ended 30 Sep 12 £'000
Cash Flows From Operating Activities
Operating profit	10,887	10,653
Depreciation and amortisation	86	196
Share of results of joint ventures	(38)	(24)
Other gains and losses	(621)	1,341
Loss / (gain) on sale of investment properties	307	(431)
Movement on revaluation of investment properties	(662)	(354)
Dividend income	(41)	(117)
Cash Flows From Operations Before Changes In Working Capital	9,918	11,264
Change in trade and other receivables	(569)	(1,149)
Change in land, development and trading properties	(974)	(1,327)
Change in trade and other payables	(842)	(1,703)
Cash Generated From Operations	7,533	7,085
Finance costs	(3,155)	(2,621)
Finance income	85	110
Tax paid	(1,118)	(434)
Cash Flows Generated From Operating Activities	3,345	4,140
Cash Flows From Investing Activities
Acquisition of and additions to investment properties	(1,327)	(40,247)
Disposal of trading investments	879	-
Sale proceeds of investment properties	12,748	4,047
Investment in joint ventures	27	(33)
Purchase of plant and equipment	(2)	-
Leasehold improvements	-	(1)
Dividend income	41	117
Cash Flows Generated From / (Used In) Investing Activities	12,366	(36,117)
Cash Flows From Financing Activities
Bank loans drawn down	11,000	53,000
Bank loans repaid	(21,413)	(6,827)
Dividend paid	(1,160)	(1,123)
Preference share redemption	-	(8,081)
Purchase of own shares	(3,882)	(7,924)
Re-couponing of interest rate swaps	(88)	(1,177)
Purchase of interest rate cap	(54)	(50)
Cash Flows (Used In) / Generated From Financing Activities	(15,597)	27,818
Net increase / (decrease) in cash and cash equivalents	114	(4,159)
Cash and cash equivalents at 1 October	31,515	35,674
Cash and Cash Equivalents at 30 September	31,629	31,515

NOTES TO THE ACCOUNTS

For the year ended 30 September 2013

1.   The financial information set out in this announcement is abridged and does not constitute statutory accounts for the year ended 30 September 2013 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 2013, 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 2012 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 13	30 Sep 12
	£'000	£'000
Audit services - fees payable to the parent company auditors for the audit of the company and the consolidated financial statements	24	24
Other services - fees payable to the company auditor for the audit of the company's subsidiaries pursuant to legislation.	53	53
Other services - fees payable to the company auditor for tax services	20	20
Depreciation of owned assets	32	29
Lease amortisation	27	27
Operating lease rentals - land and buildings	167	166
Movement on provision for doubtful debts	(12)	(94)

4.     PARTICULARS OF EMPLOYEES

        The aggregate payroll costs of the above were:

	Year ended	Year ended
	30 Sep 13	30 Sep 12
	£'000	£'000
Wages and salaries	1,239	1,204
Social security costs	159	157
	1,398	1,361

The average monthly number of persons, including executive directors, employed by the Company during the year was nine (2012 - seven).

5.     DIRECTORS' EMOLUMENTS

	Year ended	Year ended
	30 Sep 13	30 Sep 12
	£'000	£'000
Emoluments (excluding pension contributions)	994	950
Emoluments of highest paid director	323	300

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 13 £'000	Year ended 30 Sep 12 £'000
Movement in fair value of interest rate swaps	621	(796)
Loss arising on sale of trading investments	(370)	(545)
Other provision	32	82
	283	(1,259)

7.     FINANCE INCOME / COSTS

	Year ended	Year ended
Finance Income	30 Sep 13	30 Sep 12
	£'000	£'000
Bank interest and interest receivable	538	110
Finance Costs
Bank loans	(3,129)	(2,656)
Loan repayment costs	(26)	(99)
Amortisation of arrangement fees	(534)	(438)
Notional interest on preference shares	-	(113)
	(3,689)	(3,306)

8.         TAXATION ON ORDINARY ACTIVITIES

        (a)            Analysis of charge in the year

	Year ended 30 Sep 13 £'000	Year ended 30 Sep 12 £'000
UK Corporation tax based on the results for the period	1,752	1,698
(Over) / under provision in prior periods	(227)	112
Current tax	1,525	1,810
Deferred tax	-	-
	1,525	1,810
(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 23.5% (2012 - 25%)

	Year ended 30 Sep 13 £'000	Year ended 30 Sep 12 £'000
Profit before taxation	7,736	7,457
Profit multiplied by rate of tax	1,818	1,864
Effects of:
Expenses not deductible for tax purposes	37	66
UK dividend income	(10)	(29)
(Over) / under provision in prior periods	(227)	112
Joint venture profits not taxable	(9)	(6)
Gains not subject to UK taxation	72	(108)
Revaluation gains not taxable	(156)	(89)
Tax charge for the year	1,525	1,810

9.       DIVIDENDS

          The directors have recommended a final dividend of 1.5 pence per ordinary share in respect of the year ended 30 September 2013 (2012 - 1.25 pence).  This final dividend will amount to £1,332,000 (2012: £1,160,000), 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 £6,211,000 (2012 - £5,647,000) and on the number of shares in issue being the weighted average number of shares in issue during the period of 90,223,107 (2012 - 100,847,230).  The diluted earnings per share calculation is based on profit for the year of £6,211,000 (2012 - £5,647,000) and on 90,245,450 (2012 - 100,848,260) ordinary shares.  The diluted ordinary shares are calculated as follows:

	2013	2012
	No.	No.
Basic weighted average number of shares	90,223,107	100,847,230
Diluting potential ordinary shares: Employee share options	22,343	1,030
Total diluted	90,245,450	100,848,260

11.     PROPERTY, PLANT AND EQUIPMENT

Group & Company	Premises Lease £'000	Office Equipment £'000	Furniture & Fittings £'000	Total £'000
Cost
At 1 October 2011	156	61	95	312
Additions	1	-	-	1
At 30 September 2012 and 1 October 2012	157	61	95	313
Additions	-	2	-	2
At 30 September 2013	157	63	95	315
Depreciation / Amortisation
At 1 October 2011	31	39	34	104
Provided during the year	27	11	18	56
At 30 September 2012 and 1 October 2012	58	50	52	160
Provided during the year	27	12	19	58
At 30 September 2013	85	62	71	218
Net book value at 30 September 2013	72	1	24	97
Net book value at 30 September 2012	99	11	43	153

12.     INVESTMENT PROPERTIES

          Group

	Freehold £'000	Long Leasehold £'000	Reverse Lease Premiums £'000	Total £'000
Valuation at 1 October 2011	96,886	41,809	455	139,150
Additions	39,937	20	290	40,247
Disposals	(3,616)	-	-	(3,616)
Reverse lease premium amortisation	-	-	(140)	(140)
Movement on revaluation	949	(595)	-	354
Valuation at 30 September 2012	134,156	41,234	605	175,995
Additions	1,015	7	305	1,327
Disposals	(4,950)	(8,105)	-	(13,055)
Reverse lease premium amortisation	-	-	(164)	(164)
Movement on revaluation	232	430	-	662
Valuation at 30 September 2013	130,453	33,566	746	164,765

The historical cost of properties held at 30 September 2013 is £225,878,000 (2012: £244,847,000).

The properties were valued by Jones Lang LaSalle, independent valuers not connected with the Group, at 30 September 2013 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.

The Group has pledged £91,305,000 (2012 - £102,550,000) of investment property to secure Lloyds Banking Group debt facilities, £30,575,000 (2012 - £31,805,000) to secure Royal Bank of Scotland debt facilities and £42,875,000 (2012 - £42,360,000) 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 £15,994,000 (2012 - £16,187,000).

Gain on sale of investment properties	30 Sep 13	30 Sep 12
	£'000	£'000
Gross proceeds on sales of investment properties	12,890	4,126
Costs of sales	(142)	(79)
Net proceeds on sales of investment properties	12,748	4,047
Book value	(13,055)	(3,616)
(Loss) / gain on sale	(307)	431

Sensitivity Analysis:

Movement in equivalent yield

If the equivalent yield compresses by 0.5% to 8.49% then the portfolio valuation increases by approximately 6.3%. It reduces by approximately 5.7% if the equivalent yield increases by 0.5% to 9.49%.

Movement in ERV

If ERV's increase by 5% then the portfolio valuation increases by approximately 4% whilst falling by approximately 3.9% 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 1.9%. If void periods increase by 6 months then the portfolio valuation would decrease by approximately 1%.

Material Contractual Obligation

At 30 September 2013, TOPP Bletchley Limited was jointly obligated with Sainsbury's to resurface the car park at the Brunel Centre, Bletchley at a cost of approximately £600,000.

13.     INVESTMENTS

          Joint Ventures

	30 Sep 13 £'000	30 Sep 12 £'000
At 1 October 2012	5,523	5,466
Share of profit retained by joint ventures	38	24
Investment in joint venture	426	33
At 30 September 2013	5,987	5,523

        The Group has a 50% interest in a joint venture, Conygar Stena Line Limited, which is a property development company.  It also has a 50% interest in a joint venture, CM Sheffield Limited, which is a property trading company.

Loans to Joint Ventures

	30 Sep 13 £'000		30 Sep 12 £'000
Conygar Stena Line Limited	6,557		5,652
CM Sheffield Limited	2		2
	6,559		5,654

In accordance with IAS 19, the loans to joint ventures have not been disclosed separately on the balance sheet as the investments in joint ventures are net liabilities when the loans are excluded.

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 13 £'000	Year ended 30 Sep 12 £'000
Assets
Current assets	6,019	5,538
	6,019	5,538
Liabilities
Current liabilities	(32)	(15)
	(32)	(15)
Net Assets	5,987	5,523
Operating profit	38	24
Finance income	-	-
Profit before tax	38	24
Tax	-	-
Profit after tax	38	24

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

14.   FIXED ASSET INVESTMENTS

        Subsidiaries

	Group		Company
	30 Sep 13	30 Sep 12	30 Sep 13	30 Sep 12
	£'000	£'000	£'000	£'000
At 1 October 2012 and 30 September 2013	-	-	3,218	3,218

          The principal companies in which the Company's interest is more than 10% are as follows:

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	60%*
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%*

        *  Indirectly owned

15.   GOODWILL

	30 Sep 13	30 Sep 12
	£'000	£'000
At 1 October 2012 and 30 September 2013	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.

16.   TRADING INVESTMENTS

	30 Sep 13		30 Sep 12
	£'000		£'000
At 1 October 2012	1,257		1,802
Additions	-		-
Disposals	(1,257)		-
Loss on fair value revaluation	-		(545)
At 30 September 2013	-		1,257

17.   PROPERTY INVENTORIES

	30 Sep 13	30 Sep 12
	£'000	£'000
Properties held for resale or development	23,080	22,106

18.   TRADE AND OTHER RECEIVABLES

	30 Sep 13	30 Sep 12
	£'000	£'000
Trade receivables	1,217	1,155
Provision for doubtful debts	(125)	(127)
	1,092	1,028
Amounts owed by group undertakings	-	-
Other receivables	74	74
Prepayments and accrued income	3,166	2,661
	4,332	3,763

       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 13	30 Sep 12
	£'000	£'000
Amounts owed to group undertakings	-	-
Social security and payroll taxes	53	46
Trade payables	1,665	1,559
Accruals and deferred income	3,793	4,807
	5,511	6,412

        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 13	30 Sep 12
	£'000	£'000
Bank loans	70,512	80,925
Debt issue costs	(1,156)	(1,183)
	69,356	79,742

        Details of the financial liabilities are given in note 27.

21.     PREFERENCE SHARES

	30 Sep 13	30 Sep 12
	£'000	£'000
Preference shares	-	-

        As part of the offer for The Advantage Property Income Trust Limited, the Company issued 62,979,750 convertible preference shares of £0.01 each, of which none (2012:  none) were outstanding at the year end.  The preference shares were convertible at any point into ordinary shares at the option of the preference shareholder.  The conversion rate was one ordinary share for five preference shares.  Any preference shares not converted were redeemed for £0.25 each on 31 December 2011.

        Although equity share capital at law, the preference shares were classified as hybrid instruments under IFRS consisting of a discounted debt element of £0.20 per share and an equity element of £0.02 per share which was credited to an equity reserve.  A notional interest element was charged to the income statement over the period to redemption.

The movement on the preference shares during the year was as follows:

	30 Sep 2013	30 Sep 2012
	£'000	£'000
At 30 September 2012	-	7,376
Conversions to ordinary shares in the period at carrying value	-	(31)
Notional interest charge	-	114
Redemption	-	(7,459)
At 30 September 2013	-	-

22.   SHARE CAPITAL

        Authorised share capital:

	30 Sep 13	30 Sep 12
	£	£
140,000,000 (2012- 140,000,000) Ordinary shares of £0.05 each	7,000,000	7,000,000
150,000,000 (2012- 150,000,000) Preference shares of £0.01 each	1,500,000	1,500,000

          Allotted and called up:

Amounts recorded as equity:	30 Sep 13		30 Sep 12
	No	£'000	No	£'000
Ordinary shares of £0.05 each	98,489,123	4,925	113,489,123	5,675

          Amounts recorded as liability:

	30 Sep 13		30 Sep 12
	No	£'000	No	£'000
Preference shares of £0.01 each (Note 21)	-	-	-	-

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

Allotted and Called Up

	Price £	No.	£'000
At 30 September 2011		123,362,223	6,169
Share issue - 14 November 2011	1.100	12,000	1
Share issue - 30 November 2011	1.100	5,900	-
Share issue - 19 December 2011	1.100	7,000	-
Share issue - 30 December 2011	1.100	2,000	-
Cancellation of treasury shares - 12 January 2012	0.05	(9,900,000)	(495)
At 30 September 2012		113,489,123	5,675
Cancellation of treasury share - 25 January 2013		(15,000,000)	(750)
		98,489,123	4,925

        Share Premium

Following the redemption of the preference shares during the year ended 30 September 2012, an amount of £6,993,000 was identified as having been incorrectly classified as share premium rather than merger reserve.  A transfer of £6,993,000 was made to retained earnings in order to correct this position.

23.   TREASURY SHARES

In December 2010, the Group began a share buyback programme and during the year ended 30 September 2013 purchased 4,009,838 (2012 - 9,320,000) shares on the open market at a cost of £3,882,229 (2012 - £8,464,000).  As can be seen in note 22 above, on 25 January 2013, 15,000,000 ordinary shares of 5 pence each were transferred out of treasury and cancelled.  The remaining 9,667,819 (2012 - 20,567,981) shares bought back were held in treasury as at 30 September 2013.

24.   SHARE BASED PAYMENTS

Details of options granted over the Company's share capital are given in the Directors' Remuneration Report.  No options were granted in either the current or prior year.

The Group and Company recognised total expenses of £nil (2012 - £nil) in relation to equity settled share-based payment transactions.

25.   DEFERRED TAX ASSET

        Deferred tax assets are recognised in the accounts as follows:

	30 Sep 13		30 Sep 12
	Provided £'000	Not Provided £'000	Provided £'000	Not Provided £'000
Share based payments	-	2	-	2
Losses	-	1,464	-	1,464
	-	1,466	-	1,466

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

        Group as lessee:

       At 30 September 2013, the Group and Company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

	30 Sep 13	30 Sep 12
	£'000	£'000
Within one year	126	126
In the second to fifth years inclusive	216	342
	342	468

       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 13	30 Sep 12
	£'000	£'000
Less than one year	13,457	14,488
Between one and five years	33,841	40,513
Over five years	18,726	20,067
	66,024	75,068

27.   FINANCIAL INSTRUMENTS

The interest rate profile of the Group bank borrowings at 30 September 2013 was as follows:

	Interest Rate	Maturity	30 Sep 13 £'000	30 Sep 12 £'000
Lloyds Banking Group (1)	LIBOR +2%	2 - 5 years	41,058	49,387
Capita (2)	5.24%	Less than 1 year	-	11,538
Barclays (3)	LIBOR +3.5%	2 - 5 years	19,212	20,000
Royal Bank of Scotland (4)	LIBOR +3.5%	2 - 5 years	10,242	-
			70,512	80,925

(1)  Senior bank facility repayable 27 January 2015.  Margin is on sliding scale from 2% to 3.5% subject to loan to value covenants.

(2)  Interest rate was fixed until expiry on 18 January 2013.

(3)  Senior bank facility repayable 20 August 2016.

(4) Senior bank facility repayable 3 April 2016.

Loans

As at 30 September 2013, TAPP Property Limited maintained a facility with the Lloyds Banking Group of up to £78,000,000 (2012: £78,000,000) under which £41,058,000 (2012: £49,387,000) had been drawn down.  This facility is repayable on or before 27 January 2015 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 70% and an interest cover ratio covenant of 150%.  Due to this loan to value covenant, the maximum loan available at the year end was £63,700,000 and so the Group could draw down approximately £20,000,000.

On 18 January 2013, TOPP Property Limited repaid the outstanding balance of the facility with Capita of £11,538,000 (2012: £11,538,000).

As at 30 September 2013, TOPP Property Limited and TOPP Bletchley Limited maintained a facility with the Royal Bank of Scotland PLC of up to £10,242,000 (2012: £nil) of which £10,242,000 (2012: £nil) 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 2013, 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 £19,212,000 (2012: £20,000,000) of which £19,212,000 (2012: £20,000,000) 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 56% (2012: 58%) 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 2013	30 Sep 2012	30 Sep 2013	30 Sep 2012
	£'000	£'000	£'000	£'000
Financial Assets
Cash	31,629	31,515	31,629	31,515
Trading investments	-	1,257	-	1,257
Loans to joint ventures	6,559	5,564	6,559	5,564
Financial Liabilities
Floating rate borrowings	70,512	69,387	70,512	69,387
Fixed rate borrowings	-	11,538	-	11,424
Interest rate swaps	230	939	230	939
Preference share liability	-	-	-	-

Derivative Financial Instruments

	Protected Rate %	Expiry	Market Value at 30 Sep 2013	Market Value at 30 Sep 2012
			£'000	£'000
£13.3 million (2012: £21.8 million) swap	1.33 (2012: 1.33)	Feb 2015	(128)	(393)
£12.7 million (2012: £12.7 million) swap	1.33 (2012: 1.33)	Feb 2015	(121)	(229)
£15.3 million (2012: £15.3 million) swap	0.99 (2012: 0.99)	Feb 2015	(75)	(153)
£15.2 million (2012: £16 million) swap	1.055 (2012: 1.055)	Aug 2016	(32)	(199)
£4 million (2012: £4 million) cap	1.00 (2012: 1.00)	Aug 2016	41	35
£10.9 million (2012: £nil) cap	0.75 (2012: n/a)	April 2016	85	-
			(230)	(939)

       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 2013 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 Thursday, 6 February 2014 at the offices of Wragge & Co LLP, 3 Waterhouse Square, 142 Holborn, London, EC1N 2SW.

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.

GLOSSARY OF TERMS

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

GLOSSARY OF TERMS

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

Lease Length

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

 

END

 

 

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