Full-Year Results

The Conygar Investment Company has reported its full-year results for the 12 months ended 30th September 2015. The results showed a 2.9% increase in its net asset value (NAV) per share and a 3% increase in its investment property portfolio on a like-for-like basis as well as a 4.1 percentage point reduction in its vacancy rate. The UK-focused investment and development group continues to make progress with various refurbishment and redevelopment opportunities at several of its investment properties as well as on its development projects. With the shares offering investors exposure to the high growth property market as well as offering a dividend of 1%, we continue to classify the shares as a hybrid growth and income stock.

Financials

NAV per share increased by 2.9% to 203.3p (FY14: 197.5p). The increase was driven by an increase in the investment property portfolio valuation (of £2.7m), the profit arising from sales of investment properties (of £2.4m) and the net rental income (of £8.5m). Excluding share buy backs (of £7.9m) and paid dividends (of £1.4m), NAV increased by 4.6%. The group’s investment properties were independently valued at £133.2m (2014: £158.3m), an increase in the valuation on a like-for-like basis of 3%. This uplift in valuation follows the significant recovery in the value of its investment properties and highlights the strengthening of the market outside London and the positive impact of its asset management initiatives. A final dividend of 1.75p per ordinary share was declared, which is unchanged on a year earlier. The cash balance at year end was £57.4m (FY14: £70.8m). Including the zero dividend preference share liability of £32.5m (FY14: £30.6m), net gearing is 7.9%, or 10.0% on a loan to value basis.

Property Portfolio and Development Projects

As at 30th Sept. 2015, the contracted annual rent roll of the portfolio was £9.8m, which is £2.4m lower than a year earlier, mainly due to disposals in the year which realised £31.3m. Its average unexpired lease length has risen from 4.4 years to 4.8 years. The expenditure on its development land bank amounted to £9.67m. Its total investment to date is now £46.62m.

Valuation

Shares in Conygar are currently trading at a 17.1% discount to NAV. This contrasts with our selected peer companies that trade at a premium to their most recent NAV. The average premium to NAV of our peer companies is 1.5%, and if we apply this to Conygar’s shares we get an implied value per share of 206p. There could be potential upside for Conygar from its investment portfolio in the form of increases in NAV if the economy and commercial property markets continue to improve or if any future acquisitions perform successfully.