Conygar Inv Regulatory News (CIC)

8 December 2015

THE CONYGAR INVESTMENT COMPANY PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2015

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

HIGHLIGHTS

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

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

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

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

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

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

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

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

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

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

Summary Group Net Assets As At 30 September 2015

Robert Ware, Chief Executive, commented:

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

Enquiries:

The Conygar Investment Company PLC

Robert Ware: 020 7258 8670

Ross McCaskill: 020 7258 8670

Liberum Capital Limited (Nominated Adviser)

Richard Bootle: 020 3100 2222

Temple Bar Advisory (Public Relations)

Alex Child-Villiers: 07795 425580

Will Barker: 020 7002 1080

Chairman's and Chief Executive's Statement

Results

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

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

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

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

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

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

Progress

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

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

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

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

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

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

The contracted annual rent roll of the portfolio was £9.8 million as at 30 September 2015, which is £2.4 million lower than at 30 September 2014, mainly owing to disposals in the year which realised £31.3 million. We continue to work hard at letting vacant space, retaining tenants and pushing down irrecoverable property costs. Our average unexpired lease length has risen from 4.4 years to 4.8 years at 30 September 2015 and this reflects a number of new leases and renewals which have been agreed over the past year. We made 9 disposals in the year for a gross consideration of £31.3 million and all sales were at valuation or above. Overall, this was a surplus of £2.8 million or 9.8% above the 30 September 2014 valuation.

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

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

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

Dividend

The Board is pleased to recommend a final dividend of 1.75p per ordinary share in respect of the year ended 30 September 2015 to be paid on 11 February 2016 to shareholders on the register at 8 January 2016, which is unchanged from last year. Your Board will continue to review the dividend payments annually. More information on the Group's dividend policy can be found within the Strategic Report.

Share Buy Back

During the year, the Group acquired 4,372,350 ordinary shares representing 5.1% of its ordinary share capital, at an average a price of 181.5p per share. This cost approximately £7.9m and, as a result of the buy backs, net asset value per share has been enhanced by 0.9 pence per share. The Group will seek to renew the buy back authority at the forthcoming AGM because we consider it to be a useful capital management tool.

Board Director Changes

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

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

Outlook

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

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

N J Hamway R T E Ware

Chairman Chief Executive

Strategic Report

The Group's Strategic Report provides a review of the business for the financial year; discusses the group's financial position at the year end and explains the principal risks and uncertainties facing the business and how we manage those risks. We also outline the Group's business model and strategy.

Strategy and Business Model

Conygar is an AIM quoted property investment and development group dealing primarily in UK property. Our aim is to invest in property assets and companies where we can add significant value using our property management, development and transaction structuring skills.

The business operates two major strands being the property investment side and the development project side. The investment property portfolio generates surplus cash flow while at the same time we are creating a pipeline of exciting development projects that are well positioned to deliver good returns in the medium term. We continue to focus upon positive cash flow and to utilise modest levels of gearing to enhance returns. Assets are recycled to release capital as opportunities present themselves and we will continue to buy back shares where appropriate. The group is content to hold cash and adopt a patient strategy unless there is a compelling reason to invest.

Position of company at the year end

Following a year of continued growth and profits, the Group improved its strong position at the year end with good underlying earnings, positive cash flow and investment property values that have increased by 3% during the year. The development pipeline is showing signs of progress and construction has commenced at several locations this year. The balance sheet remains strong with cash of £57.4 million and total debt of £70.7 million giving net gearing of 7.9%. The Group has adequate resources to maintain and develop its business and the balance sheet remains both liquid and robust.

Events since the balance sheet date

There were no significant events since the balance sheet date apart from the acquisition at Cross Hands and Rhosgoch which are referred to in the Chairman's and Chief Executive's Statement and under the "Development Projects and Investment Properties Under Construction" heading with this report.

Summary of Group Net Assets

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

Investment properties

Summary of portfolio

Asset management

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

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

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

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

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

Disposals

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

Valuation

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

Capital Expenditure

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

Development Projects and Investment Properties Under Construction

Haverfordwest

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

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

Holyhead Waterfront

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

Parc Cybi Business Park, Holyhead

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

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

Rhosgoch

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

Fishguard Waterfront

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

Fishguard Lorry Stop and Distribution Facility

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

Pembroke Dock Waterfront

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

Llandudno Junction

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

Cross Hands

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

King's Lynn, Norfolk

This is a six acre residential development site with planning permission for 94 dwellings near to King's Lynn, Norfolk. We are currently in discussions with various local developers and potential occupiers in order to take this project forward.

Summary of Development Projects

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

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

As previously stated, it is our intention to introduce third party valuations as soon as it is practical to do so. We remain confident that there is significant upside in these projects which will become evident over the medium term.

Financial review

Net Asset Value

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

On an EPRA basis, the net asset value is:

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

The NNNAV or "triple net asset value" is the net asset value taking into account asset revaluations, the mark to market costs of debt and hedging instruments and any associated tax effect. Our investment properties are carried on our balance sheet at independent valuation and there is no associated tax liability. Our development and trading assets are carried at the lower of cost and net realisable value. We have not sought to value these assets as, in our opinion, they are at too early a stage in their development to provide a meaningful figure, so cost is equated to fair value for these purposes. On this basis, there is no material difference between our stated net asset value and NNNAV.

Revaluation

The Group's investment properties were independently valued by Jones Lang LaSalle as at 30 September 2015. In their opinion, the open market value of the investment property portfolio was £133.2 million. The total portfolio increased in value by £2.7m over the year on a like for like basis.

Cash flow

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

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

Net Income From Property Activities

Administrative Expenses

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

Financing

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

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

The finance costs for the year amounted to £4.4 million (2014: £4.8 million), primarily consisting of £2.0 million bank loan interest (2014: £2.7 million) and interest payable on the zero dividend preference shares of £1.7 million (2014: £1.2 million). Finance income amounted to £0.2 million (2014: £0.3 million) reflecting the low returns on short term cash deposits. As a matter of policy, the Group retains instant access to all cash deposits so it is readily available for use in the business.

As at 30 September 2015, TAPP Property Limited maintained a facility with the Royal Bank of Scotland PLC of up to £23,346,000 (2014: £37,195,000) under which £20,174,000 (2014: £27,366,000) had been drawn down. This facility is repayable on or before 5 February 2018 and is secured by fixed and floating charges over the assets of the TAPP Property Limited group and the Lamont companies. The facility is subject to a maximum loan to value covenant of 60% and an interest cover ratio covenant of 225% and a debt to rent cover ratio of 8:1.

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

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

Taxation

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

Capital management

Capital Risk Management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

While the Group does not have a formally approved gearing ratio, the objective above is actively managed through the direct linkage of borrowings to specific property. The Group seeks to ensure that secured borrowing stays within agreed covenants with external lenders.

Treasury Policies

The objective of the Group's treasury policies is to manage the Group's financial risk, secure cost effective funding for the Group's operations and to minimise the adverse effects of fluctuations in the financial markets on the value of the Group's financial assets and liabilities, on reported profitability and on the cash flows of the Group.

The Group finances its activities with a combination of bank loans (£38.2 million), cash and short term deposits (£57.4 million). Other financial assets and liabilities, such as trade receivables and trade payables, arise directly from the Group's operations. The Group may also enter into derivative transactions to manage the interest rate risk arising from the Group's operations and its sources of finance. Derivative instruments may be used to change the economic characteristics of financial instruments in accordance with the Group's treasury policies. Interest rate swaps and interest rate caps amount to an economic hedge of £55.6 million (2014: £66.1 million) of the total loan drawdowns of £38.2 million (2014: £55.8 million) for cashflows to 20 August 2016, but no hedge accounting is used.

The management of cash and similar instruments is monitored weekly with summary cash statements produced on a fortnightly basis and discussed regularly in management and Board meetings. The overall aim is to provide sufficient liquidity to meet the requirements of the business in terms of funding developments and potential acquisitions. Surplus funds are invested with a broad range of institutions with a range of maturities up to a maximum of 180 days. At any point in time, at least half of the Group's cash is held on instant access or short term deposit of less than 30 days.

Dividend policy

The Board recommends a final dividend of 1.75p in respect of the year ended 30 September 2015 to be paid on 11 February 2016 to shareholders on the register at 8 January 2016. This is the same level as last year.

Our dividend policy is consistent with the overall strategy of the business: namely to invest in property assets and companies where we can add significant value using our property management, development and transaction structuring skills.

Over the past 6 years we have used the surplus cash flow from the investment property portfolio to enhance these properties by refurbishment, re-letting and extending tenancies, fund the operation of the business, create a medium term pipeline of development opportunities, pay a modest dividend and buy back shares where appropriate.

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

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

The effect of this is that the rental income which we receive will decrease. The present dividend costs approximately £1.44 million per annum. The Board will continue to review our dividend policy each year.

Our focus is, and will continue to be, primarily growth in net asset value per share.

Share buy backs

During the year, the Group acquired 4,372,350 ordinary shares at an average price of 181.5p which represents 5.1% of its ordinary share capital. This cost £7.9 million and net asset value per share has been enhanced by approximately 0.9 pence per share. The Group will seek to renew the buy back authority at the forthcoming AGM and will continue to utilise it as and when it makes sense to do so.

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

Principal risks and uncertainties

Managing risk is an integral element of the Group's management activities and a considerable amount of time is spent assessing and managing risks to the business. Responsibility for risk management rests with the Board, with external advisers used where necessary.

Strategic risks

Strategic risks are risks arising from an inappropriate strategy or through flawed execution of a strategy. By definition, strategies tend to be longer term than most other risks and, as has been amply demonstrated in the last few years, the economic and wider environment can alter quickly and significantly. Strategic risks identified include global or national events, regulatory and legal changes, market or sector changes and key staff retention.

The Board devotes a considerable amount of time and resource to continually monitoring and discussing the environment in which we operate and the potential impacts upon the Group. We are confident we have sufficiently high calibre directors and managers to manage strategic risks.

We are content that the Group has the right approach toward strategy and our financial performance, strong balance sheet and the expansion of the business during a difficult economic period are good evidence of that.

Operational risks

Operational risks are essentially those risks that might arise from inadequate internal systems, processes, resources or incorrect decision making. Clearly, it is not possible to eliminate operational risk, however a considerable amount of time and resource is applied towards ensuring we have the right calibre of staff and external support to minimise such risks, as most operational risks arise from people-related issues. We have also invested in improved IT systems to support the business and protect data. Our executive directors are very closely involved in the day-to-day running of the business to ensure sound management judgement is applied.

The Group has not suffered any material loss from operational risks during the year.

Market risks

Market risks primarily arise from the possibility that the Group is exposed to fluctuations in the values of, or income from, its investment property portfolio and development land bank. This is a key risk to the principal activities of the Group and the exposures are continuously monitored through timely financial and management reporting and analysis of available market intelligence.

Where necessary management take appropriate action to mitigate any adverse impact arising from identified risks and market risks continue to be monitored closely.

Estimation and judgement risks

To be able to prepare accounts according to generally accepted accounting principles, management must make estimates and assumptions that affect the asset and liability items and revenue and expense amounts recorded in the accounts. These estimates are based on historical experience and various other assumptions that management and the board of directors believe are reasonable under the circumstances. The results of these considerations form the basis for making judgements about the carrying value of assets and liabilities that are not readily available from other sources.

The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are the following:

Properties held for Development

The net realisable value of properties held for development requires an assessment of fair value of the underlying assets using property appraisal techniques and other valuation methods. Such estimates are inherently subjective and actual values can only be determined in a sales transaction.

Investment in Joint Ventures

The net realisable value of properties held for development within the joint ventures requires an assessment of fair value of the underlying assets using property appraisal techniques and other valuation methods. Such estimates are inherently subjective and in particular during the early stages of the development process.

Properties held for Investment

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

Interest Rate Risk

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

Financial Liabilities

The Group's policy is to manage the cost of borrowing using variable rate debt. Whilst floating rate borrowings are not exposed to changes in fair value, the Group is exposed to cash flow risk as costs increase if market rates rise. The Group's policy is to use derivative financial instruments to mitigate at least 50% of this risk in order to achieve a sensible and appropriate level of interest rate protection whilst maintaining flexibility to match the commercial trading strategy.

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

At 30 September 2015, after taking into account interest rate swaps, 100% (2014: 100%) of the Group's bank borrowings were at a fixed rate of interest.

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

(1) Senior bank facility repayable 5 February 2018.

(2) Senior bank facility repayable 20 August 2016.

(3) Senior bank facility repayable 3 April 2016.

Financial Assets

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

Floating rate financial assets comprise cash and short term deposits at call and money market rates for up to thirty days and institutional cash funds.

Credit Risk

The risk of financial loss due to a counterparty's failure to honour its obligations arises principally in connection with property leases, the investment of surplus cash and transactions where the Group sells properties with an element of deferred consideration.

Tenant rent payments are monitored regularly and appropriate action is taken to recover monies owed or if necessary, to terminate the lease. Deferred consideration terms are only agreed with counterparties approved by the Board or where some additional security is available, and there were none as at 30 September 2015 (2014: £nil).

The Group policy has been to invest funds and enter into derivative transactions with a broad range of institutions having investment grade low risk credit ratings and a strong or superior ability to repay short term debt obligations. The unprecedented credit and banking market disruption of the last few years has had a significant impact upon the ability to rely upon either credit ratings or the ability of financial institutions to honour their commitments and the widespread nature of the financial crisis has introduced considerable uncertainty into the process. As at 30 September 2015, the Group had a single balance of £74,000 (2014: £79,000) where the counter-party had failed to honour a notice deposit and a full impairment provision has been recorded against the balance. There are no other receivables which are past due but not impaired.

Liquidity Risk

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans secured on the Group's properties. The Group is exposed to liquidity risk should it encounter difficulties in realising assets mainly through the sale of investment properties. However, the Group maintains a prudent approach to financing and cashflow such that the adverse impact of this can be mitigated.

Price Risk

The Group's exposure to changing market prices on the value of financial instruments may have an impact on the carrying value of financial instruments and would arise principally as a result of entering into swaps or similar transactions to fix interest rates on the Group's borrowings. The Group's policies for managing this risk are to control the levels of fixed rate debt as set out under interest rate risk above. As the Group's assets and liabilities are all denominated in Pounds Sterling, there is currently no exposure to currency risk.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 September 2015

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

CONSOLIDATED Statement of Changes in Equity

For the year ended 30 September 2015

CONSOLIDATED BALANCE SHEET

At 30 September 2015

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 September 2015

NOTES TO THE ACCOUNTS

For the year ended 30 September 2015

1. The financial information set out in this announcement is abridged and does not constitute statutory accounts for the year ended 30 September 2015 but is derived from those financial statements. The financial information is not audited. The auditors have reported on the statutory accounts for the year ended 30 September 2015, their report was unqualified and did not contain statements under sections 498(2) or (3) of the Companies Act 2006, and these will be delivered to the Registrar of Companies following the Company's annual general meeting. The financial information has been prepared using the recognition and measurement principle of IFRS.

2. The comparative financial information for the year ended 30 September 2014 was derived from information extracted from the annual report and accounts for that period, which was prepared under IFRS and which has been filed with the UK Registrar of Companies. The auditors have reported on those accounts, their report was unqualified and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.

3. Operating PROFIT

Operating profit is stated after charging:

4. PARTICULARS OF EMPLOYEES

The aggregate payroll costs of the above were:

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

5. DIRECTORS' EMOLUMENTS

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

7. FINANCE INCOME / COSTS

8. TAXATION ON ORDINARY ACTIVITIES

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

9. DIVIDENDS

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

10. EARNINGS PER SHARE

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

11. PROPERTY, PLANT AND EQUIPMENT

12. INVESTMENT PROPERTIES

Group

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

The properties were valued by Jones Lang LaSalle, independent valuers not connected with the Group, at 30 September 2015 at market value in accordance with the Practice Statements contained in the RICS Appraisal and Valuation Standards published by the Royal Institute of Chartered Surveyors which conform to international valuation standards. The valuations are arrived at by reference to market evidence of transaction prices and completed lettings for similar properties. The properties have been valued individually and not as part of a portfolio and no allowance has been made for expenses of realisation or for any tax which might arise. They assume a willing buyer and a willing seller in an arm's length transaction. The valuations reflect usual deductions in respect of purchaser's costs and SDLT as applicable at the valuation date. The independent valuer makes various assumptions including future rental income, anticipated void cost, the appropriate discount rate or yield.

The Group has pledged £95,530,000 (2014: £106,500,000) of investment property to secure Royal Bank of Scotland debt facilities and £32,870,000 (2014: £47,090,000) to secure Barclays Bank PLC debt facilities. Further details of these facilities are provided in note 27.

The property rental income earned from investment property, which is leased out under operating leases amounted to £11,441,000 (2014: £13,052,000).

Sensitivity Analysis:

Movement in equivalent yield

If the equivalent yield compresses by 0.5% to 7.52% then the portfolio valuation increases by approximately 7.0%. It reduces by approximately 6.5% if the equivalent yield increases by 0.5% to 8.52%.

Movement in ERV

If ERV's increase by 5% then the portfolio valuation increases by approximately 3.9% whilst falling by approximately 3.8% if ERV's decrease by 5%.

Voids

If the void periods assumed in the valuation are decreased by 6 months then the portfolio valuation would increase by approximately 1.5%. If void periods increase by 6 months then the portfolio valuation would decrease by approximately 1.5%.

13. INVESTMENT PROPERTIES UNDER CONSTRUCTION

Investment properties under construction are freehold land and buildings representing investment properties under development or construction and they amount to £3,156,000 (2014: £nil) as at 30 September 2015. These properties comprise landholdings for current or future development as investment properties. This methodology has been adopted because the value of these properties is dependent on a detailed knowledge of the planning status, the competitive position of the assets and a range of complex development appraisals. The fair value of these properties rests in the planned developments, and is difficult to estimate pending confirmation of designs and planning permission, and hence has been estimated by the directors at cost as an approximation to fair value.

14. INVESTMENTS

Joint Ventures

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

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.

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:

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

15. FIXED ASSET INVESTMENTS

Subsidiaries

* Indirectly owned

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

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

- Timing and quantum of future capital expenditure;

- Timing and quantum of future revenue streams; and

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

The Group prepares and approves formal five year forecasts for Martello Quays Limited which are used in the value in use calculations. Five years is considered to be the optimum period for a meaningful forecast and takes into account available sources of both internal and external information. The Group's review includes the key assumptions related to sensitivity in the cash flow projections.

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

Key assumptions used in value in use calculations

- Valuation of completed construction

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

- Budgeted capital expenditure

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

- Pre-tax risk adjusted discount rate

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

Sensitivity to changes in assumptions

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

17. PROPERTY INVENTORIES

18. TRADE AND OTHER RECEIVABLES

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

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

Details of the financial liabilities are given in note 27.

21. ZERO DIVIDEND PREFERENCE SHARES

The Group issued 30,000,000 zero dividend preference shares ('ZDP shares') at 100 pence per share. The ZDP shares have an entitlement to receive a fixed cash amount on 9 January 2019, being the maturity date, but do not receive any dividends or income distributions. Additional capital accrues to the ZDP shares on a daily basis at a rate equivalent to 5.5% per annum, resulting in a final capital entitlement of 130.7 pence per share. The ZDP shares were listed on the London Stock Exchange on 10 January 2014.

During the year the Group has accrued for £1,716,000 of additional capital. The total amount repayable at maturity is £39,210,000.

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

22. SHARE CAPITAL

Authorised share capital:

Allotted and called up:

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

Allotted and Called Up

23. TREASURY SHARES

In December 2010, the Group began a share buyback programme and during the year ended 30 September 2015 purchased 4,372,350 (2014: 3,142,700) shares on the open market at a cost of £7,937,062 (2014: £5,211,572). The 17,182,869 (2014: 12,810,519) shares were held in treasury as at 30 September 2015.

24. SHARE BASED PAYMENTS

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

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

25. DEFERRED TAX ASSET

Deferred tax assets are recognised in the accounts as follows:

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

26. COMMITMENTS

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

Group as lessee:

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