Preliminary Results

RNS Number : 6736Y

Conygar Investment Company PLC(The)

03 December 2014

3 December 2014

THE CONYGAR INVESTMENT COMPANY PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2014

The Conygar Investment Company PLC, announces its results for the year ended 30 September 2014.

HIGHLIGHTS

· Net asset value per share increased by 13.1% to 197.5p (2013: 174.6p). EPRA NAV per share increased by 12.0% to 195.9p (2013: 174.9p).

· Pre-tax profit for the year £20.51 million compared with £7.74 million last year.

· Dividend increased by 16.7% to 1.75p per share (2013: 1.5 pence).

· Investment property portfolio valuation up 10.4% on a like for like basis as property market outside of London recovers.

· Total cash of £71 million available for acquisitions. Net debt of £15.6 million representing gearing of 9.2% against net asset value and 9.9% on loan to value basis.

· Zero dividend preference share issue in period raising £29.3 million after costs. Five year term with a coupon of 5.5% per annum.

· Completed sale of 9.6 acres of land at Haverfordwest for £13.75 million, realising a profit of £11.5 million.

· Disposed of five investment properties in the year for a total of £25.7 million, a surplus of £1.6 million over book value.

· Share buy back: the Group acquired 3.5% of its ordinary share capital at a price of 165.5p per share.

· £6 million joint venture created with Mr Fred Done, co-founder of Betfred, to develop and operate a 9 acre, 200 space truck stop at Parc Cybi, Anglesey.

Summary Group Net Assets As At 30 September 2014

		Per Share
	£'m	p
Investment Properties	158.3	184.5
Development Projects	36.9	43.0
Cash	70.8	82.5
Other Net Liabilities	(11.4)	(13.2)
	254.6	296.8
Bank Loans	(54.6)	(63.6)
ZDP Liability	(30.6)	(35.7)
	169.4	197.5

Robert Ware, Chief Executive, commented:

"This has been an excellent year for our company and we are pleased with the progress made. Conygar remains well funded, cash generative and well positioned to take advantage of opportunities as they arise and to exploit our pipeline of development projects. The team has delivered significant profits and an excellent pipeline of projects that will hopefully deliver yet further good returns in the medium term. Despite this, our share price stands at a considerable discount to our stated net asset value which is disappointing given the quality of our investments and the momentum on our developments."

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 2222

Richard Bootle: 020 3100 2222

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 2014.

Net asset value per share increased by 13.1% to 197.5p from 174.6p last year and to 195.9p on an EPRA basis. The major components driving that growth are an increase in the investment property portfolio valuation of £14.0 million, the profit arising from developments of £11.6 million and the net rental income of £10.1 million. The profit before taxation for the year was £20.5 million (2013: £7.7 million).

Net asset value as at 30 September 2014 was £169.4 million compared with £155.1 million at 30 September 2013. During the year, the Group spent £5.2 million on share buy backs and paid a dividend of £1.3 million and excluding these, the net asset value increased by 13.4%.

The Group's investment properties as at 30 September 2014 were independently valued at £158.3 million (2013: £164.8 million), an increase in the valuation of 10.4% for the year on a like for like basis. We have seen a significant recovery in the value of our investment properties driven by both the continuing market recovery outside of London and our asset management initiatives. We also took advantage of this recovery to dispose of properties for a total consideration of £25.7 million realising a profit of £1.6 million.

The Group had cash balances of £70.8 million (2013: £31.6 million) at the year end and bank debt of £55.8 million (2013: £70.5 million). Including the zero dividend preference share liability of £30.6 million, our net gearing is 9.2% or 9.9% on a loan to value basis. The Group continues to generate around £3.3 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 besides a year of record profits for the company, we are pleased at the progress being made on both the development projects and the investment property portfolio. The scheme at Haverfordwest has taken three long years to deliver and the initial success with the Sainsbury's sale is impressive in not only delivering a significant profit but also in providing the cash to exploit the remaining 83 acres.

Progress

The development pipeline continues to make good progress.

In May 2014, we completed the sale of 9.6 acres of land at our development site at Haverfordwest to Sainsbury's Supermarkets Limited for a gross consideration of £13.75 million. This is a pleasing result for the Group creating a profit on this part disposal of £11.5 million. It represents a major landmark in the Haverfordwest development and we will now press ahead with marketing the rest of the site.

In December 2013, we announced the creation of a £6 million joint venture with Mr Fred Done, the co-founder of Betfred, to develop and operate a 9 acre, 200 space truck stop facility at Parc Cybi, Anglesey. Since that time, we have been able to satisfy the various planning conditions and we are now on site with a target of opening early next year. Aside from being an exciting venture, we believe this will act as a catalyst for the other parts of the site we own and the levels of interest we have received are encouraging.

In addition, we have completed the Section 106 planning agreement at Holyhead Waterfront enabling the planning consent to be granted and we have also executed the Section 106 agreement at Fishguard Waterfront. Negotiations continue with potential tenants for the first phase at Pembroke Dock Waterfront in west Wales and we completed the sale of 0.7 acres to Marston's for a family pub and restaurant for a gross consideration of £0.6 million. It is good to see momentum across all the development projects.

Our total investment to date in our development portfolio is £36.9 million. We remain on course to deliver schemes, comprising more than 1,700 residential units, 1,300 marina berths and in excess of 400,000 square feet of commercial and retail development. We believe that the potential upside is significant.

The Group's investment properties were independently valued at £158.3 million an increase of 10.4% on a like for like basis. We have benefitted from a greatly improved market and in particular, there are a lot more buyers of properties outside London and occupier demand has improved.

The contracted annual rent roll is £12.2 million as at 30 September 2014, which is £2.2 million lower than at 30 September 2013, mainly owing to disposals in the year which realised £25.7 million. We continue to work hard at letting vacant space, retaining tenants and pushing down irrecoverable property costs. Our average unexpired lease length has fallen from 4.8 years to 4.4 years at 30 September 2014, reflecting the disposal of longer let assets at Aker Village, Aberdeen. The portfolio vacancy rate is 18.2% which is up from last year's 16.7%, however, several negotiations are in progress which will hopefully reduce this in the coming months. Nevertheless, we would always budget for a certain level of voids from the very nature of the portfolio and our policy of disposing of properties once asset management initiatives are complete. We made 5 disposals in the year realising £25.7 million and all sales were at valuation or above, realising a profit of £1.6 million.

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

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% repayable on 9 January 2019 and are listed on the main market of the London Stock Exchange. The net proceeds may be applied towards further acquisitions as well as the development projects providing a useful and flexible source of funding.

In February 2014, the Group entered into a new four year £37.2 million loan with The Royal Bank of Scotland PLC, secured on twenty properties. This loan replaced our previous loan with Lloyds Banking Group due to expire in January 2015. It is pleasing that we have been able to readily refinance our portfolio on excellent terms over the last two years.

At 30 September 2014, the Group had cash of £70.8 million available to pursue investment opportunities. The business is 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 2014 to be paid on 11 February 2015 to shareholders on the register at 9 January 2015. This is an increase of 16.7% over last year. Our dividend policy remains unchanged with the majority of profits retained for reinvestment in the business.

Profit Share

We are pleased that the team has achieved the difficult task of exceeding the 10% per annum hurdle rate to generate a payment this year. The total post tax return to shareholders including dividends since 1 October 2011 has been £40.1 million or 46.7 pence per share over the three years. The share price has more than doubled. A table showing an analysis of the increase in NAV per share is set out in the remuneration report. The pool available for distribution is £8.9 million following the rules also set out in the remuneration report. However, we have restricted this to £8.4 million to prevent double counting caused by the change in the terms implemented after discussion with shareholders in 2012. We have also deducted bonuses to all the staff from the pool, reducing the amount available to Directors. This leaves a pool of £7.7 million for the executive Directors, of which 20% will be deferred at the discretion of the remuneration committee.

Directors will be reinvesting 50% of their net after tax profit share in Conygar shares to be held for a minimum period of two years, as agreed by shareholders at the AGM in February 2013.

Share Buy Back

During the year, the Group acquired 3,142,700 ordinary shares representing 3.5% of its ordinary share capital, at a price of 165.5p per share. This cost approximately £5.2m and, as a result of the buy backs, net asset value per share has been enhanced by 0.3 pence per share. The Group will seek to renew the buy back authority at the forthcoming AGM because we consider it to be a useful capital management tool.

Outlook

Conygar remains well funded, cash generative and able to invest, so we are well positioned to take advantage of opportunities as they arise and to continue to exploit our pipeline of development projects. We are fortunate to have a strong balance sheet and to have limited reliance upon the availability of external funding. The team has delivered significant profits and an excellent pipeline of projects that will hopefully deliver yet further good returns in the medium term. Our share price however still stands at a considerable discount to our stated net asset value and greater still (over 25%) to the potential net asset values quoted in the latest published research. This is very frustrating given the quality of our investments and the momentum on our developments. Your board continues to work hard to reduce and hopefully remove this discount.

All in all, this has been an excellent year for our company and we are pleased with the progress made on all fronts.

N J Hamway R T E Ware

Chairman Chief Executive

Strategic Report

The Group's Strategic Report provides a review of the entire 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 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 continue to focus upon positive cash flow and to 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

Following a year of significant 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 10.4% during the year. The development pipeline is showing signs of progress with some profitable land sales and we are looking to commence construction at several locations within the next twelve months. The balance sheet remains strong with cash of £70.8 million and total debt of £87.0 million giving a net gearing of 9.2%. 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.

Summary of Group Net Assets

The Group net assets as at 30 September 2014 may be summarised as follows:

		Per Share
	£'m	P
Investment Properties	158.3	184.5
Development Projects	36.9	43.0
Cash	70.8	82.5
Other Net Liabilities	(11.4)	(13.2)
	254.6	296.8
Bank Loans	(54.6)	(63.6)
ZDP Liability	(30.6)	(35.7)
	169.4	197.5

Investment properties

Summary of portfolio

	2014	2013
Valuation at 30 September	£158,340,000	£164,765,000
Number of properties	43	45
Contracted rent (pa)	£12,182,000	£14,356,000
Current ERV (pa)	£14,914,000	£16,859,000
Net initial yield	6.51%	7.48%
Equivalent yield	8.33%	8.99%
Reversionary yield	8.74%	9.54%
ERV of vacant units (pa)	£2,461,000	£2,815,000
Vacancy rate	18.2%	16.7%
Average unexpired lease lengths	4.4 years	4.8 years

Asset management

At 30 September 2014, the contracted rent for the investment property portfolio was £12.2 million with an ERV of £14.9 million, the reduction from 2013 being mainly attributable to property disposals in the year. The ERV of vacant space is £2.5 million of which Geoffrey House, Maidenhead, Brennan House, Farnborough and Mochdre, Colwyn Bay account for nearly 60%. The overall vacancy rate in the portfolio is 18.2% up from 16.7% in 2013. The average unexpired lease length decreased to 4.4 years from 4.8 years at 30 September 2013.

There has been good progress on asset management and a greatly improved occupier market combined with many more buyers for properties situated outside London. We continue to 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% of rent is collected within ten days of a quarter.

We are also looking at various refurbishment and redevelopment opportunities at several of our investment properties. In particular, we are submitting a planning application for a proposed redevelopment of the Ashby Gateway site at Ashby Park, Ashby de la Zouch, which would potentially incorporate a food store operator. We are also evaluating a more ambitious redevelopment of our office building, Geoffrey House, Maidenhead, which seeks to take advantage of an improving Thames Valley office market and the beneficial impact of Crossrail as well as a potential refurbishment of the 30,000 square foot Brennan House, Farnborough. At Network House, Wolverhampton, outline planning permission has been obtained for a redevelopment of the existing building to provide a three-storey retail and leisure development. We would only undertake major developments if they were accompanied by a pre-let or forward sale but the improvement in market sentiment has greatly enhanced the outlook for such projects.

Acquisition

In July 2014, we acquired a multi-let freehold industrial site, Mochdre Commerce Park located at Colwyn Bay, north Wales for £2.75 million including costs. The park, which comprises 22 acres and 191,000 square feet of modern industrial space, is strategically located adjoining the A55 expressway midway between Holyhead and Chester. The property is currently part let to 3 tenants with a passing rent of £106,942 per annum which should increase to £166,942 once two lettings currently in advanced negotiation are completed. The remaining 148,000 square feet is currently vacant. The park has suffered from under-investment and offers asset management and development opportunities. We will invest in updating and refurbishing vacant units and potentially developing additional units on a 4 acre development site. Already, we have had enquiries to acquire certain units and are in discussions with regard to several significant lettings so early signs are encouraging and with a purchase price at less than £15 per square foot, there is scope for significant profit.

Disposals

The Group disposed of five investment properties during the year at Blackpole Trading Estate, Worcester; Brunswick Point, Leeds; Sites 1 and 2, Aker Village, Aberdeen; and Advantage 64, a part disposal of Waterfront Business Park, Fleet. Total net sale proceeds were £25.7 million, generating a profit on valuation of £1.6 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 £158.34 million as at 30 September 2014. The investment property portfolio increased in value by 10.4% 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 2014, 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 2014, the Group had no contractual related capital expenditure commitments in excess of £1,000,000.

Development projects

Haverfordwest

In May 2014, having obtained planning consent, we completed the sale of 9.6 acres of land to Sainsbury's for a gross consideration of £13.75 million. We also disposed of an existing property for £0.6m.

Under the terms of the Sainsbury's sale contract, early in the New Year, we will commence the highway and infrastructure works which will serve both the supermarket site and the residential sites.

The total costs of these works are estimated to be £7.8m and will take 12 months to complete. We will then market the residential land which has consent for 729 houses.

Having realised profits of £11.56 million, we continue to carry the remaining investment at cost (£17.21 million). The key to realising additional profits is attracting interest from quality residential house builders who we believe will be attracted by our offering a fully serviced site.

Holyhead Waterfront

During the year, we have finalised and executed the section 106 planning agreement enabling the planning consent to be granted. An area of the development site is now the subject of a village green application which, if successful, could prevent any development on that part of the site. 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. However, a large part of the site, on which we would wish to develop first, is not affected by the application.

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.

Parc Cybi Business Park, Holyhead

In December 2013, we entered into a £6 million joint venture with Mr Fred Done, the co-founder of BetFred, to develop and operate a 9 acre, 200 space truck stop facility at Parc Cybi, Anglesey and having subsequently satisfied the various planning conditions, we are now on site with a target of opening early next year. We are also in discussions with prospective occupiers for a potential logistics and distribution warehousing facility on the adjoining sites which are not part of the joint venture and for which we already have the necessary planning consents. The truck stop facility should act as a catalyst for further activity at this site which is located strategically close to the port of Holyhead and in addition, it will support the logistics involved with the proposed replacement Nuclear Power Station at Wylfa.

Fishguard Waterfront

The section 106 planning agreement has been executed and the outline planning consent issued. The main elements of the scheme are a 450 berth marina with ancillary facilities; 253 residential apartments and other tourist related commercial space.

We have now agreed with Stena Line, who own and operate the port, to move forward and jointly fund a detailed planning application which now includes the infrastructure for a new port and cruise liner berth to be submitted next summer.

Fishguard Lorry Stop and Distribution Facility

We are currently in the process of obtaining detailed planning permission for the construction of a 6 acre, 24 hour lorry stop on part of the land we own, which already has outline consent to service the port of Fishguard. The application has been submitted to the local authority and we await a decision very shortly. In the meantime, discussions continue with both hauliers and the port operator.

Pembroke Dock Waterfront

The sale of a 0.7 acre site to Marston's for a family pub and restaurant for £600,000 completed which was an important first step in the post-planning phase. Furthermore, we are well advanced with the necessary marine and other consents that will enable the infrastructure works to commence. At the same time, we have re-engineered the original design which, aside from reducing costs, will also facilitate a faster construction process.

The outlook is increasingly encouraging for this mixed-use development comprising of 267 apartments, a 314 berth marina and around 60,000 square feet of retail, leisure and commercial development.

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.

Other Projects

We have a pipeline of other potential projects that are at an early stage. In 2013, we were appointed as preferred developer by Conwy Council, north Wales to promote a 90,000 square feet supermarket on their land at Llandudno Junction. We are continuing to work closely with the Council and have since entered into an overriding lease of the subject land as part of the site assembly process. We are now progressing a planning application for a food retail outlet, petrol filling station and to provide various fast food outlets for an adjoining site which will be submitted in the spring of next year.

We are also pursuing other development possibilities at Aberystwyth, Ludlow and south Wales amongst others, but these are at too early a stage to report anything of note.

Summary of Development Projects

The expenditure in the year on our development land bank amounted to £4.71 million. Our total investment to date is now £36.95 million at cost (analysed below) or 43p 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 with the profits on the early land sales which have delivered the funding to further exploit the schemes.

We remain on target to deliver schemes comprising to date circa 1,700 homes (of which 846 are waterside), 1,300 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.

	2014	2013
	£'m	£'m
Haverfordwest	17.21	15.32
Holyhead Waterfront	9.47	9.34
Pembroke Dock Waterfront	4.51	4.87
Parc Cybi, Holyhead	3.00	0.44
King's Lynn	0.83	0.83
Fishguard Waterfront	1.02	0.86
Fishguard Lorry Stop	0.52	0.58
Other	0.39	-
Total investment to date	36.95	32.24

Financial review

Net Asset Value

The net asset value at the year end was £169.4 million (2013: £155.1 million) representing a 9.2% increase in the period. The primary movements were £14.0 million increase in the value of the investment properties, £10.1 million net rental income, £11.6 million profit on the part disposal of Haverfordwest, £5.2 million spent on purchasing own shares, and the profit share of £8.4 million. Excluding the amounts incurred purchasing own shares and paying dividends, net asset value increased by 13.4% in the year.

On an EPRA basis, the net asset value is:

	2014	2013	2012	2011	2010
	£'m	£'m	£'m	£'m	£'m
Net asset value	169.4	155.1	154.0	158.5	176.6
Preference share liability	-	-	-	7.4	13.3
Share options	8.1	-	-	-	-
Diluted net asset value	177.5	155.1	154.0	165.9	189.9

Fair value of hedging instruments	(0.4)	0.2	0.9	1.4	5.0
EPRA net asset value	177.1	155.3	154.9	167.3	194.9

EPRA NAV per share	195.9p	174.9p	166.9p	153.9p	150.1p
Basic NAV per share	197.5p	174.6p	165.9p	155.2p	150.5p
Diluted NAV per share	196.3p	174.6p	165.9p	152.7p	146.3p

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 2014. In their opinion, the open market value of the investment property portfolio was £158.3 million. The total portfolio increased in value by £14m over the year on a like for like basis.

Cash flow

The Group generated £12.0 million cash in operating activities (2013: £3.3 million generated), of which £2.4 million was incurred as expenditure on development and trading properties.

The Group generated a further £25.4 million cash from the sale of investment properties, spent £3.5 million on the acquisition of investment properties, repaid £51.9 million in bank loans and £37.2 million was drawn down and spent £5.2 million on the purchase of own shares resulting in an overall cash inflow of £39.1 million during the year.

Net Income From Property Activities

	2014	2013
	£'m	£'m
Rental income	13.1	16.0
Direct property costs	(2.9)	(3.1)
Rental surplus	10.2	12.9

Sale of investment properties	25.7	12.9
Cost of investment properties sold	(24.1)	(13.2)
Gain / (loss) on sale of investment properties	1.6	(0.3)

Total net income arising from property activities	11.8	12.6

Administrative Expenses

The administrative expenses for the year ended 30 September 2014 were £12.3 million compared with £2.7 million the previous year. The primary reason for this is the profit share of £8.4 million which has been recognised in the year. The majority of the other costs arise as a result of the Group being quoted on AIM.

Financing

At 30 September 2014, the Group had cash of £70.8 million. The bank debt at 30 September 2014 was £55.8 million and the zero dividend preference shares liability is £30.6 million. The gearing is 9.2% and loan to value is 9.9% 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 4.8%. The fair value of these derivative financial instruments is provided for in full on the balance sheet. As at 30 September 2014, 100% (2013: 100%) of the Group's bank borrowings were hedged.

The finance costs for the year amounted to £4.8 million (2013: £3.7 million), primarily consisting of £2.7 million bank loan interest (2013: £3.1 million) and interest payable on the zero dividend preference shares of £1.2 million (2013: £nil). Finance income amounted to £0.3 million (2013: £0.5 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 2014, TAPP Property Limited maintained a facility with the Royal Bank of Scotland PLC of up to £37,195,000 (2013: £nil) under which £27,366,000 (2013: £nil) 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 2014, 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 £18,455,000 (2013: £19,212,000) of which £18,455,000 (2013: £19,212,000) 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 55% (2013: 56%) and an interest cover ratio covenant of 225%.

TOPP Property Limited maintains an £11 million loan with The Royal Bank of Scotland, of which £9,942,000 was outstanding at 30 September 2014. 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 2013, TAPP Property Limited maintained a facility with Lloyds Banking Group Limited of £78,000,000 of which £41,058,000 had been drawn down. This facility was repaid in full on 5 February 2014.

Taxation

The tax credit for the year of £0.2 million on the pre-tax profit of £20.5 million represents an effective tax charge of 0% (2013: 19%). Tax is payable at the full UK corporation tax rate of 22% 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 (£55.8 million), cash and short term deposits (£70.8 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 £66.1 million (2013: £71.4 million) of the total loan drawdowns of £55.8 million (2013: £70.5 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 1.75p per ordinary share in respect of the year ended 30 September 2014 to be paid on 11 February 2015 to shareholders on the register on 9 January 2015. This is an increase of 16.7% 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

During the year, the Group acquired 3,142,700 ordinary shares representing 3.5% of its ordinary share capital, at a price of 165.5p per share. This cost £5.2 million and net asset value per share has been enhanced by approximately 0.3 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 four years utilising surplus cash not required elsewhere in the business by acquiring 37,710,519 shares at a discount to net asset value equivalent to 32% of ordinary share capital, 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.

At 30 September 2014, after taking into account interest rate swaps, 100% (2013: 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 2014 was as follows:

	Interest Rate	Maturity	30 Sep 14 £'000	30 Sep 13 £'000
Royal Bank of Scotland (TAPP)(1)	LIBOR + 3%	2-5 years	27,366	-
Barclays (2)	LIBOR +3.5%	1-2 years	18,455	19,212
Royal Bank of Scotland (TOPP)(3)	LIBOR +3.5%	1-2 years	9,942	10,242
Lloyds Banking Group (4)	LIBOR +2%	1-2 years	-	41,058
			55,763	70,512

(1) Senior bank facility repayable 5 February 2018.

(2) Senior bank facility repayable 20 August 2016.

(3) Senior bank facility repayable 3 April 2016.

(4) The facility with Lloyds Banking Group maintained by TAPP Property Limited was repaid in full on 5 February 2014.

Financial Assets

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

	30 Sep 14	30 Sep 13
	£'000	£'000
Fixed rate	-	-
Floating rate	70,753	31,629
	70,753	31,629

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 2014 (2013- £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 2014, the Group had a single balance of £79,000 (2013 - £92,000) 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 2014

Note	Year Ended 30 Sep 14 £'000	Year Ended 30 Sep 13 £'000

Rental income	12,838	15,904
Other property income	214	90
Profit on sale of trading investments	14,374	-
Revenue	27,426	15,994

Direct costs of:
Rental income	2,921	3,102
Sale of trading investments	2,812	-
Direct Costs	5,733	3,102

Gross Profit	21,693	12,892

Income from trading investments	-	41
Share of results of joint ventures 13	45	38
Gain / (loss) on sale of investment properties 12	1,624	(307)
Movement on revaluations of investment properties 12	14,044	662
Other gains and losses 6	(32)	283
Administrative expenses	(12,328)	(2,722)

Operating Profit 3	25,046	10,887
Finance costs 7	(4,793)	(3,689)
Finance income 7	257	538

Profit Before Taxation	20,510	7,736
Taxation 8	239	(1,525)

Profit And Total Comprehensive Income For The Year	20,749	6,211

Attributable to:
- equity shareholders	20,749	6,211
- minority shareholders	-	-
	20,749	6,211

Basic earnings per share 10	23.53p	6.88p
Diluted earnings per share 10	23.43p	6.88p

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

CONSOLIDATED Statement of Changes in Equity

For the year ended 30 September 2014

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

At 1 October 2012	5,675	124,017	818		(21,837)	45,264	153,937	20	153,957
Changes in equity for the year ended 30 September 2013
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

Changes in equity for 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

CONSOLIDATED BALANCE SHEET

At 30 September 2014

	Note	30 Sep 2014 £'000	30 Sep 2013 £'000
Non-Current Assets
Property, plant and equipment	11	62	97
Investment properties	12	158,340	164,765
Investment in joint ventures	13	6,087	5,987
Loan to joint venture	13	2,204	-
Goodwill	15	3,173	3,173
		169,866	174,022

Current Assets
Development and trading properties	16	25,485	23,080
Trade and other receivables	17	3,778	4,332
Derivatives	26	377	-
Cash and cash equivalents		70,753	31,629
		100,393	59,041
Total Assets		270,259	233,063

Current Liabilities
Trade and other payables	18	13,832	5,511
Bank loans	19	1,035	1,057
Tax liabilities		1,797	2,841
		16,664	9,409
Non-Current Liabilities
Bank loans	19	53,525	68,299
Zero dividend preference shares	20	30,621	-
Derivatives	26	-	230
		84,146	68,529
Total Liabilities		100,810	77,938

Net Assets		169,449	155,125

Equity
Called up share capital	21	4,932	4,925
Share premium account		124,128	124,017
Capital redemption reserve		1,568	1,568
Treasury shares	22	(15,384)	(10,173)
Retained earnings		54,185	34,768

Equity Attributable to Equity Holders		169,429	155,105
Non-controlling interests		20	20

Total Equity		169,449	155,125

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 September 2014

	Year Ended 30 Sep 14 £'000	Year Ended 30 Sep 13 £'000
Cash Flows From Operating Activities
Operating profit	25,046	10,887
Depreciation and amortisation	47	86
Amortisation of reverse lease premium	188	-
Share of results of joint ventures	(45)	(38)
Other gains and losses	45	(621)
(Gain) / loss on sale of investment properties	(1,624)	307
Movement on revaluation of investment properties	(14,044)	(662)
Dividend income	-	(41)

Cash Flows From Operations Before Changes In Working Capital	9,613	9,918
Change in trade and other receivables	554	(569)
Change in land, development and trading properties	(2,405)	(974)
Change in trade and other payables	8,242	(842)

Cash Generated From Operations	16,004	7,533
Finance costs	(3,445)	(3,155)
Finance income	186	85
Tax paid	(774)	(1,118)
Cash Flows Generated From Operating Activities	11,971	3,345

Cash Flows From Investing Activities
Acquisition of and additions to investment properties	(3,524)	(1,327)
Disposal of trading investments	-	879
Sale proceeds of investment properties	25,429	12,748
Investment in joint ventures	(1)	27
Loans to joint venture	(2,204)	-
Purchase of plant and equipment	(12)	(2)
Dividend income	-	41
Cash Flows Generated From Investing Activities	19,688	12,366

Cash Flows From Financing Activities
Bank loans drawn down	37,195	11,000
Bank loans repaid	(51,944)	(21,413)
Issue of zero dividend preference shares	29,332	-
Dividend paid	(1,332)	(1,160)
Purchase of own shares	(5,211)	(3,882)
Issue of shares	118	-
Re-couponing of interest rate swaps	(41)	(88)
Purchase of interest rate cap	(652)	(54)
Cash Flows Generated From / (Used In) Financing Activities	7,465	(15,597)

Net increase in cash and cash equivalents	39,124	114
Cash and cash equivalents at 1 October	31,629	31,515
Cash and Cash Equivalents at 30 September	70,753	31,629

NOTES TO THE ACCOUNTS

For the year ended 30 September 2014

1. The financial information set out in this announcement is abridged and does not constitute statutory accounts for the year ended 30 September 2014 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 2014, 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 2013 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 14	30 Sep 13
	£'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.	58	53

Other services - fees payable to the company auditor for tax services	20	20
Depreciation of owned assets	20	32
Lease amortisation	27	27
Operating lease rentals - land and buildings	158	167
Movement on provision for doubtful debts	80	(12)

4. PARTICULARS OF EMPLOYEES

The aggregate payroll costs of the above were:

	Year ended	Year ended
	30 Sep 14	30 Sep 13
	£'000	£'000
Wages and salaries	9,749	1,239
Social security costs	1,346	159
	11,095	1,398

The average monthly number of persons, including executive directors, employed by the Company during the year was nine (2013 - nine).

5. DIRECTORS' EMOLUMENTS

	Year ended	Year ended
	30 Sep 14	30 Sep 13
	£'000	£'000
Emoluments (excluding pension contributions)	9,486	994
Emoluments of highest paid director	3,737	323

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 14 £'000	Year ended 30 Sep 13 £'000
Movement in fair value of interest rate swaps	(45)	621
Loss arising on sale of trading investments	-	(370)
Other provision	13	32
	(32)	283

7. FINANCE INCOME / COSTS

	Year ended	Year ended
Finance Income	30 Sep 14	30 Sep 13
	£'000	£'000
Bank interest and interest receivable	257	538

Finance Costs
Bank loans	(2,687)	(3,129)
Loan repayment costs	(54)	(26)
Amortisation of arrangement fees	(859)	(534)
ZDP interest payable	(1,193)	-
	(4,793)	(3,689)

8. TAXATION ON ORDINARY ACTIVITIES

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

	Year ended 30 Sep 14 £'000	Year ended 30 Sep 13 £'000
UK Corporation tax based on the results for the period	-	1,752
(Over) / under provision in prior periods	(239)	(227)
Current tax	(239)	1,525
Deferred tax	-	-
	(239)	1,525

(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 22% (2013 - 23.5%)
	Year ended 30 Sep 14 £'000	Year ended 30 Sep 13 £'000
Profit before taxation	20,510	7,736

Profit multiplied by rate of tax	4,512	1,818
Effects of:
Expenses not deductible for tax purposes	305	37
UK dividend income	-	(10)
(Over) / under provision in prior periods	(239)	(227)
Joint venture profits not taxable	(10)	(9)
Gains not subject to UK taxation	(357)	72
Revaluation gains not taxable	(3,090)	(156)
Losses utilised	(1,360)	-
Tax charge for the year	(239)	1,525

9. DIVIDENDS

The directors have recommended a final dividend of 1.75 pence per ordinary share in respect of the year ended 30 September 2014 (2013 - 1.5 pence). This final dividend will amount to £1,502,000 (2013: £1,332,000), 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 £20,749,000 (2013 - £6,211,000) and on the number of shares in issue being the weighted average number of shares in issue during the period of 88,174,984 (2013 - 90,223,107). The diluted earnings per share calculation is based on profit for the year of £20,749,000 (2013 - £6,211,000) and on 88,563,656 (2013 - 90,245,450) ordinary shares. The diluted ordinary shares are calculated as follows:

	2014	2013
	No.	No.
Basic weighted average number of shares	88,174,984	90,223,107

Diluting potential ordinary shares: Employee share options	388,672	22,343
Total diluted	88,563,656	90,245,450

11. PROPERTY, PLANT AND EQUIPMENT

	Premises Lease £'000	Office Equipment £'000	Furniture & Fittings £'000	Total £'000
Cost
At 1 October 2012	157	61	95	313
Additions	-	2	-	2

At 30 September 2013 and 1 October 2013	157	63	95	315
Additions	-	12	-	12

At 30 September 2014	157	75	95	327

Depreciation / Amortisation
At 1 October 2012	58	50	52	160
Provided during the year	27	12	19	58

At 30 September 2013 and 1 October 2013	85	62	71	218
Provided during the year	27	1	19	47

At 30 September 2014	112	63	90	265


Net book value at 30 September 2014	45	12	5	62
Net book value at 30 September 2013	72	1	24	97

12. INVESTMENT PROPERTIES

	Freehold £'000	Long Leasehold £'000	Reverse Lease Premiums £'000	Total £'000
Valuation at 1 October 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
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

The historical cost of properties held at 30 September 2014 is £192,162,000 (2013: £225,878,000).

The properties were valued by Jones Lang LaSalle, independent valuers not connected with the Group, at 30 September 2014 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 £nil (2013 - £91,305,000) of investment property to secure Lloyds Banking Group debt facilities, £106,500,000 (2013 - £30,575,000) to secure Royal Bank of Scotland debt facilities and £47,090,000 (2013 - £42,875,000) to secure Barclays Bank PLC debt facilities. Further details of these facilities are provided in note 26.

The property rental income earned from investment property, which is leased out under operating leases amounted to £13,052,000 (2013 - £15,994,000).

Gain on sale of investment properties	30 Sep 14	30 Sep 13
	£'000	£'000
Gross proceeds on sales of investment properties	25,670	12,890
Costs of sales	(241)	(142)
Net proceeds on sales of investment properties	25,429	12,748
Book value	(23,805)	(13,055)
Gain / (loss) on sale	1,624	(307)

Sensitivity Analysis:

Movement in equivalent yield

If the equivalent yield compresses by 0.5% to 7.83% then the portfolio valuation increases by approximately 6.8%. It reduces by approximately 5.9% if the equivalent yield increases by 0.5% to 8.83%.

Movement in ERV

If ERV's increase by 5% then the portfolio valuation increases by approximately 4.1% whilst falling by approximately 4.0% 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 2.0%. If void periods increase by 6 months then the portfolio valuation would decrease by approximately 2.0%.

13. INVESTMENTS

Joint Ventures


Investment in Joint Ventures	30 Sep 14 £'000	30 Sep 13 £'000
At 1 October 2013	5,987	5,523
Share of profit retained by joint ventures	45	38
Investment in joint venture	55	426
At 30 September 2014	6,087	5,987

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 14

£'000

30 Sep 13

£'000

Roadking Holyhead Limited

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 14 £'000	30 Sep 13 £'000
Conygar Stena Line Limited	6,709	6,557
C M Sheffield Limited	2	2
	6,711	6,559

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 14 £'000	Year ended 30 Sep 13 £'000

Assets
Current assets	8,322	6,019
	8,322	6,019

Liabilities
Current liabilities	(31)	(32)
	(31)	(32)

Net Assets	8,291	5,987

Operating profit	45	38
Finance income	-	-

Profit before tax	45	38
Tax	-	-

Profit after tax	45	38

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 14	30 Sep 13	30 Sep 14	30 Sep 13
	£'000	£'000	£'000	£'000
At 1 October 2013 and 30 September 2014	-	-	3,269	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 14	30 Sep 13
	£'000	£'000
At 1 October 2013 and 30 September 2014	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. PROPERTY INVENTORIES


	30 Sep 14	30 Sep 13
	£'000	£'000
Properties held for resale or development	25,485	23,080

17. TRADE AND OTHER RECEIVABLES


	30 Sep 14	30 Sep 13
	£'000	£'000
Trade receivables	682	1,217
Provision for doubtful debts	(45)	(125)
	637	1,092
Amounts owed by group undertakings	-	-
Other receivables	74	74
Prepayments and accrued income	3,067	3,166
	3,778	4,332

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.

18. TRADE AND OTHER PAYABLES


	30 Sep 14	30 Sep 13
	£'000	£'000
Social security and payroll taxes	1,222	53
Trade payables	803	1,665
Accruals and deferred income	11,807	3,793
	13,832	5,511

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.

19. BANK LOANS


	30 Sep 14	30 Sep 13
	£'000	£'000
Bank loans	55,764	70,512
Debt issue costs	(1,204)	(1,156)
	54,560	69,356

Details of the financial liabilities are given in note 26.

20. ZERO DIVIDEND PREFERENCE SHARES

		Year ended 30 Sep 14
		£'000

Balance at start of period		-
Share issue		30,000
Unamortised share issue costs		(572)
Accrued capital		1,193
Balance at end of period		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 period, the Group has accrued for £1,193,000 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.

21. SHARE CAPITAL

Authorised share capital:

	30 Sep 14	30 Sep 13
	£	£
140,000,000 (2013- 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 14		30 Sep 13
	No	£'000	No	£'000
Ordinary shares of £0.05 each	98,619,123	4,932	98,489,123	4,925

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

Allotted and Called Up

	Price £	No.	£'000
At 30 September 2012		113,489,123	5,675

Cancellation of treasury shares - 25 January 2013	0.05	(15,000,000)	(750)
At 30 September 2013		98,489,123	4,925



Exercise of options	0.05	130,000	7
		98,619,123	4,932

22. TREASURY SHARES

In December 2010, the Group began a share buyback programme and during the year ended 30 September 2014 purchased 3,142,700 (2013 - 4,009,838) shares on the open market at a cost of £5,211,572 (2013 - £3,882,229). The 12,810,519 (2013 - 9,667,819) shares were held in treasury as at 30 September 2014.

23. 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 recognised total expenses of £nil (2013 - £nil) in relation to equity settled share-based payment transactions.

24. DEFERRED TAX ASSET

Deferred tax assets are recognised in the accounts as follows:

	30 Sep 14		30 Sep 13
	Provided £'000	Not Provided £'000	Provided £'000	Not Provided £'000
Share based payments	-	2	-	2
Losses	-	-	-	1,464
	-	2	-	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.

25. COMMITMENTS

The Group is committed to provide a further £796,000 to the Roadking Holyhead Limited joint venture for further capital expenditure.

Group as lessee:

At 30 September 2014, the Group and Company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

	30 Sep 14	30 Sep 13
	£'000	£'000
Within one year	126	126
In the second to fifth years inclusive	90	216
	216	342

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 14	30 Sep 13
	£'000	£'000
Less than one year	11,163	13,457
Between one and five years	24,260	33,841
Over five years	14,808	18,726
	50,231	66,024

26. FINANCIAL INSTRUMENTS

The interest rate profile of the Group bank borrowings at 30 September 2014 was as follows:

	Interest Rate	Maturity	30 Sep 14 £'000	30 Sep 13 £'000
Royal Bank of Scotland (TAPP)(1)	LIBOR + 3%	2-5 years	27,366	-
Barclays (2)	LIBOR +3.5%	1-2 years	18,455	19,212
Royal Bank of Scotland (TOPP)(3)	LIBOR +3.5%	1-2 years	9,942	10,242
Lloyds Banking Group (4)	LIBOR +2%	1-2 years	-	41,058
			55,763	70,512

(1) Senior bank facility repayable 5 February 2018.

(2) Senior bank facility repayable 20 August 2016.

(3) Senior bank facility repayable 3 April 2016.

(4) The facility with Lloyds Banking Group maintained by TAPP Property Limited was repaid in full on 5 February 2014.

In addition to the bank debt, the Group has a financial liability of £30.6 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 period the Group has accrued for £1,193,000 of additional capital. The total amount repayable at maturity is £39,210,000.

Loans

On 5 February 2014, TAPP Property Limited repaid the outstanding balance of the facility with Lloyds Banking Group of £39,237,000 (2013: £41,058,000).

As at 30 September 2014, TOPP Property Limited and TOPP Bletchley Limited maintained a facility with the Royal Bank of Scotland PLC of up to £9,942,000 (2013: £10,242,000) of which £9,942,000 (2013: £10,242,000) 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.

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 2014	30 Sep 2013	30 Sep 2014	30 Sep 2013
	£'000	£'000	£'000	£'000
Financial Assets
Cash	70,753	31,629	70,753	31,629
Loans to joint ventures	8,915	6,559	8,915	6,559
Interest rate derivatives	377	-	377	-

Financial Liabilities
Floating rate borrowings	55,764	70,512	55,764	70,512
Fixed rate borrowings	31,193	-	31,193	-
Interest rate swaps	-	230	-	230

Derivative Financial Instruments

	Protected Rate %	Expiry	Market Value at 30 Sep 2014	Market Value at 30 Sep 2013
			£'000	£'000
£37 million (2013: £nil) cap	2.00 (2013: n/a)	Feb 2018	375	-
£9.0 million (2013: £13.3 million) swap	1.33 (2013: 1.33)	Feb 2015	(25)	(128)
£12.7 million (2013: £12.7 million) swap	1.33 (2013: 1.33)	Feb 2015	(35)	(121)
£15.3 million (2013: £15.3 million) swap	0.99 (2013: 0.99)	Feb 2015	(23)	(75)
£14.5 million (2013: £15.2 million) swap	1.055 (2013: 1.055)	Aug 2016	15	(32)
£4 million (2013: £4 million) cap	1.00 (2013: 1.00)	Aug 2016	23	41
£10.6 million (2013: £10.9 million) cap	0.75 (2013: 0.75)	April 2016	47	85
			377	(230)

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 2014 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 4 February 2015 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.

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

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

This information is provided by RNS

The company news service from the London Stock Exchange

END

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