Full Year Results

Market Tech Holdings Limited

("Market Tech" or the "Company" or "the Group")

Full year results

Strong financial and operational growth driven by successful asset management initiatives as well as acquisitions

14 June 2016. Market Tech (LSE: MKT), the UK main market listed company which owns, manages and is developing a unique 16 acre estate of office, retail, leisure and living spaces centred around the iconic Camden Markets, and supported by digital technologies, announces full year results for the year ended 31 March 2016.

Financial highlights

· 31.0% increase in property portfolio valuation to £987.8m, up 12.4% on a like-for-like basis

· 40.2% increase in Net Asset Value to £778.9m (166.3p per share, up 12.2%)

o Real Estate EPRA NAV** up 37.3% to £724.9m (154.7p per share, up 9.9%)

· Total revenue increased 333.0% to £130.3m (2014/15: £30.1m)

o £28.0m from Property (2014/15: £20.1m)

o £102.3m from Digital (2014/15: £10.0m)

· 66.7% increase in adjusted EBITDA* to £20.0m (2014/15: £12.0m)

· Profit before tax of £12.5m (2014/15: £44.1m), after exceptional items of £23.6m including the refinancing, Main Market listing, contingent considerations on acquisitions and other legal and professional fees, resulting in a basic earnings per share from continuing operations of 1.4p (2015: 16.2p)

· Cash and cash equivalents of £149m with a further £100m of facilities drawn since the year end, leading to total available facilities of £249m (31 March 2015 cash and cash equivalents: £86m)

· Loan-to-value of 25.5% (31 March 2015: 27.9%)

Operational highlights

· Passing rent up 22.1% to £32.4m at 31 March 2016 (2015: £26.5m), with contracted rent also up 24.5% to £33.0m (2015: £26.5m)

· Occupancy across the portfolio strong at 93.9% with a Weighted Average Unexpired Lease Term ("WAULT") of 8.4 years, while non-market unit Commercial and FRI leases now account for 56.5% of our passing rent compared to 43.2% last year

· Acquired seven properties in the year for a total cost of £150.2m adding 155,000 sq ft and £5.0m of rental income to the portfolio and strong reversionary potential

· Hawley Wharf construction in progress and marketing campaign underway

· Successful launch of Interchange co-working with over 900 desks, repositioning of 43,000 sq ft of unused space above Stables Market

· Planning permission secured for a mixed-use development at Camden Lock Market bringing the total amount of consented development space across the portfolio to 465,000 sq ft

· Submitted a planning application for an additional 2,600 sq ft extension of our retail site on Camden High Street

· Invested in two digital businesses, Stucco Media (100%) and MiNODES (28%) for a total consideration of £25.6m****

· Placed new shares raising net proceeds of £197m and increasing the free float to 29%, agreed a £900m debt facility with AIG and listed on Main Market of London Stock Exchange

Commenting on the results, Charles Butler, Market Tech's CEO, said: "While this was very much a year of real transformation and progress, which is reflected in the strong operational and financial results, we are only at the start of what we can achieve. In the coming 12 months, we will continue to consider opportunities to buy assets in and around our core estate, while further progressing our significant asset management and development strategies. Our aim is to build on and maintain Camden's rich heritage and unique markets to develop a vibrant and creative ecosystem where Londoners of all demographics want live, work and play. We now have the right people and the right platform in place to achieve that aim, and deliver significant growth in retail income.

"There is some uncertainty in the property market ahead of the referendum on EU membership on 23 June. However, whatever the outcome, we believe the attractiveness of our diverse property portfolio, its affordability for occupiers relative to comparable areas of the city, together with our team's ability to create value from it, support our confidence in Market Tech's prospects."

*Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortisation, adjusted for fair value investment property movements, share based payment charges, exceptional items and foreign currency exchange gain/(loss).

** EPRA adjusted NAV is defined as EPRA NAV calculated on the property and other segment net assets only.

*** contracted rent excludes any rent free periods

**** purchase price including deferred contingent consideration, 25% fully diluted in relation to MiNODES  

Chairman's Statement

I am pleased to report on a year of significant progress across the business, with the implementation of successful asset management and place-making initiatives and further strengthening of our property portfolio, while continuing to enhance and apply our digital offering to benefit our real estate assets. This strong operational performance resulted in a positive set of results. The Group's financial position was further enhanced through a successful equity raising and new debt facilities, and we were pleased to move up to the Official List and Main Market of the London Stock Exchange, thereby achieving one of the goals set out at the time of the Group's IPO. Our success reflects the efforts of all our colleagues and partners and we are pleased to have grown the team by bringing in new talent during the year.

Performance

The results of our strategy are reflected in the strong financial performance for the year, which saw real estate revenues increase by 39.5% and digital revenues exceed £100m. The 12.4% like-for-like valuation uplift in our real estate portfolio reflects the quality of our asset management activities. The successful equity fundraising in July 2015 and the £900m debt facility we secured in December ensure we have the financial strength to continue to implement our disciplined investment strategy.

The Board believes that we can create most value for shareholders by continuing to invest the Group's resources in pursuing our growth strategy. We do not therefore expect to declare a dividend in the near term. We do however recognise the importance of dividends to shareholders and intend to adopt a progressive dividend policy at the appropriate time, as we grow rental income.

Strategy and value creation

We have a focused strategy centred on our core opportunity in Camden Town, which is in a central London borough that attracts some of the highest footfall in the UK, whilst also offering highly attractive property fundamentals and significant repositioning potential. We have assembled 16 acres of real estate in Camden and are unlocking its value by applying our expertise in real estate, innovation and technology. Our vision is to create a distinctive and compelling "eco-system" where Londoners can work, live and play. In doing so, we will have a key role in regenerating Camden to the benefit of our business, our tenants and the local community. We have a good working relationship with the local authority and we are glad to contribute positively to the wider Camden market and Camden Town and our neighbours.

Since IPO, we have invested £249.5m in assembling our property portfolio and we remain focused on identifying investment opportunities in Camden Town and the broader borough that meet our strict criteria. We have also continued to progress our development pipeline, as outlined in the chief executive's statement.

At the same time, we want to be at the forefront of using asset management to maximise the value of our real estate and help our tenants to thrive. A highlight of the year was the launch of our co-working business, Interchange, which makes use of previously vacant floor space across three of our locations. The concept is particularly attractive to entrepreneurs, creative SMEs and technology companies, offering high-quality fit-out and technology services, in a highly collaborative environment.

We are also providing technology to help retail tenants serve and engage with their customers. We also increased our digital capabilities through the acquisition of a 28% holding in retail analytics provider MiNODES and, going forward, technology will play an increasingly important part in unlocking the value of our real estate assets. The technologies we are implementing, which are similar to those used by owners and operators of best-in-class retail environments, have not previously been applied in markets such as ours and give us a real opportunity to drive performance.

During the year, we further strengthened our technology capabilities with the acquisition of Stucco Media, an e-commerce marketing platform. Our aim is to maximise shareholder value from these businesses, as our chief executive outlines below.

Corporate governance and the Board

We believe that effective corporate governance is integral to delivering our strategy, so we can generate value for our shareholders and our other stakeholders. The move to the Main Market in January 2016 reflects our commitment to the principles of good governance.

Good governance requires a strong and well-balanced Board. We were therefore delighted to welcome David Brown and Sharon Baylay, who are both new to Market Tech, and Georg Bucher to the Board.

David joined us as Chief Financial Officer in March 2016. He brings extensive listed company experience that includes M&A and raising finance. On David's appointment, our former CFO Andrew Bull stepped down from the Board to take a more focused role as Group Real Estate Finance Director, following his significant contribution to the successful conclusion of the move to the main market and the debt and equity raisings. Georg joined the Group in 2015 as Head of Corporate Development and Capital Markets, and was appointed to the Board in February 2016. He has over 15 years' experience in investment banking, with a strong focus on European real estate.

In February 2016, we appointed Sharon as a non-executive director. She spent 15 years with Microsoft Corporation and has considerable experience in marketing and communications, complementing the expertise of our other non-executive directors.

Summary

We have made good progress in establishing an attractive and differentiated opportunity for investors, which is well positioned for growth and supports superior returns through the cycle. Camden presents compelling prospects for regeneration and we are confident of creating further value for shareholders

Chief Executive's Statement

This was a highly successful year for Market Tech, during which the business performed well and we laid strong foundations for future growth. In what was only our first full year as a public company, we made huge progress with our strategy and put the right capital structure in place along with the right team to deliver growth.

Strong valuation uplift and revenue growth

Our property portfolio was valued at £987.8m at the year end, an increase of 31.0% with like-for-like valuation increases at all bar one of our properties, this one being Kentish Town falling 1.0% to £10.2m due to increased stamp duty. The like-for-like valuation uplift was £93.5m or 12.4%, as we started to see our asset management work flow through into valuation and rental growth. The like-for-like valuation increase for yielding assets we held throughout the year was 16.9%; a very positive result which outperformed the All Property IPD Total Return of 11.1% for the same period.

Revenue from our real estate portfolio was up 39.5% to £28m, with digital revenues rising from £10m to £102m, benefiting from both acquisitions and organic growth. Adjusted EBITDA increased by 66.7% to £20.0m, with adjusted EBITDA per share of 4.5p, up from 4.4p in 2014/15, after the share issuance during the year (see below). Based on the same number of shares the EBITDA per share would have increased 66.0% to 7.3 pence per share.

A long-term capital structure

A key achievement in the year was securing the capital structure that will underpin successful implementation of our disciplined investment strategy. In July 2015, we placed 90m new shares and generated net proceeds of £197m. In December 2015, we agreed a new ten-year, £900m debt facility with AIG Asset Management of which £300m was drawn down during the year and a further £100m post year end in May 2016. This de-risks our financing by giving us long-term funding at very competitive rates and ensures sufficient cash available to cover the Hawley Wharf development. At the year end, our cash and cash equivalents stood at £149.4m with a further £100m of facilities drawn since the year end, leading to total available facilities of £249m and our LTV was a conservative 25.5%.

Driving value from our real estate portfolio

We made a number of strategic additions to our portfolio, acquiring seven assets in and around our core estate in Camden Town, for a total of £150.2m which added 155,000 sq ft and £5.0m of new rental income to the Group, and provide additional opportunities for value enhancing asset management. We follow a balanced acquisition strategy, buying both yielding and development assets, as we continue to build a portfolio that will generate significant income while managing our overall risk profile.

We also made real progress with driving value from our portfolio. The successful launch of Interchange, our co-working venture, demonstrated our ability to make innovative use of vacant space. We developed the concept, designed and created the space and launched our first building in October 2015. It offers us a sizeable increase in rent over a normal office tenant and is an important part of our overarching objective of creating a destination in Camden where people want to live, work and play. Interchange is in the heart of our estate, allowing people to work there and benefit from the food, leisure and retail offer; thereby improving trade across the entire estate. The launch has been highly successful, with strong demand for space already reflected in high occupancy levels and a net run rate in excess of £55 per sq ft in March 2016.

During the year, we strengthened our dedicated asset management team and created asset management plans for each of our properties. We achieved new highs for rents, including demand for retail space on Camden High Street with one new tenant signed at £400 Zone A above £60 per sq ft for office space in Camden Wharf, proving the strong growth potential in our portfolio,

Although we are setting new levels, we see a huge opportunity for further rental growth as we capture the difference between ERV and contracted rents and use our place-making skills to enhance Camden as a vibrant location. Average rents per square foot in Camden remain well below those in comparable areas of London (see table 4 in the valuation section below) and we are only at the start of our journey.

Planning and development are also central to our value-creation plans. We have obtained full planning permission at Camden Lock Market to significantly improve and expand the space, although, in order to minimise disruption to trading on the estate, we will not start in site here until Hawley Wharf starts to come online in Q4 2017 to Q1 2018. Our flagship development at Hawley Wharf has progressed significantly, with the school on track to be delivered before term starts in the autumn and retail and leisure units set to come online from Q4 2017. The development will comprise space for whole range of uses including retail, market retail, food and beverage, office and residential. We are planning the types of tenants we want to attract to the development and have begun talking to prospective tenants with a view to pre-letting.

*ERV reflects the ERV adopted for the purposes of the 31 March 2016 Red Book valuation with an adjustments for residential rental income which reflects Passing Rent rather than ERV

We fully embrace the use of technology as an enabler in our asset management strategy. Acquiring a 28% holding in MiNODES has given us tools that are providing significant insight into our estate, while at the same time launching MiNODES' business in the UK. We are using these insights to understand footfall in our markets and improve the customer journey, with the aim of increasing dwell time and average spend per visitor. In addition, we continued to roll out EPOS for our tenants, to help them grow their revenues.

Significant growth in Digital

Market Tech Digital had an excellent year and has become a substantial part of the Group with Revenue increasing from £10m to £102m and EBITDA from £0.5m to £8.3m. We expanded our digital operations through the acquisition of Stucco Media and by using our broad technology skills to help the three businesses - Stucco, Glispa and Fiver - to grow.

The Board believes Market Tech Digital can deliver significant future growth through continued focus and investment. We are conscious, however, that as this division becomes more material to the performance of the Group, we need to consider the best strategy to accelerate its growth and maximise shareholder value.

A year of strong growth ahead

While this was very much a year of real delivery and progress which are reflected in the strong operational and financial results, we are only at the start of what we can achieve. In the coming 12 months, we will continue to consider opportunities to buy assets in and around our core estate, while further progressing our significant asset management and development strategies. Our aim is to build on and maintain Camden's rich heritage and unique markets to create a vibrant and creative ecosystem where Londoners of all demographics want live, work and play. We now have the right people and the right platform in place to achieve that aim, building on the strong progress we have made to date and to deliver significant increases in rental income.

There is some uncertainty in the property market ahead of the referendum on EU membership on 23 June. However, whatever the outcome, we believe the attractiveness of our diverse property portfolio, its affordability for occupiers relative to comparable areas of the city, together with our team's ability to create value from it, support our confidence in Market Tech's prospects.

 Valuation Report

We instructed Jones Lang LaSalle to value our property assets at 31 March 2016, in accordance with the RICS Valuation - Professional Standards 2014 (the "Red Book"), on the basis of fair value.

The table below shows the movement in the portfolio's total valuation during the year. At 31 March 2016, the total value of the property portfolio was £987.8m, an increase of 31.0% from the total value of £753.8m at 31 March 2015.

The table above includes £8.6m of Group-occupied space categorised as Property, Plant and Equipment.

Table 2 breaks down the increase in valuation during the year between the Group's yielding and development assets. The like-for-like increase in the aggregate fair value of assets held throughout the year was 12.4%. However, the like-for-like increase in the aggregate fair value of the Group's yielding assets held throughout the year was 16.9%. This compares favourably with the All Property IPD Total Return for the same period of 11.1%. This return has been achieved after taking into account the additional increase of 1% stamp duty on commercial property, which had a negative effect of £16m.

Table 3 shows our yielding assets. The passing rent on our investment property portfolio totalled £32.3m at 31 March 2016, an increase of 22.1% over the prior year and up 7.5% on a like-for-like basis, with an average occupancy across the portfolio of 93.9%. Stables Market's available NLA as at 31 March 2016 totalled 195,000 sq ft. This excludes approximately 30,000 sq ft of NLA which is attributable to the second phase of the Group's co-working scheme, which came online in May 2016. 

Table 4 below shows the average rents per square foot we are achieving from the investment portfolio's retail and office uses. Within the Retail category, Market Tech's average rent stands at £80 per sq ft while comparable rents range from £260 to £1,475 per sq ft elsewhere in London. At the same time Office rents across London range from £68 to £110 per sq ft, compared to an average across Market Tech's portfolio of £37 per sq ft.

Retail Rent - Comparable rents are based on prime rental rates achieved. Source: Cushman & Wakefield, CBRE. MKT High St rent based on current prime passing Zone A rate. Markets - (1) MKT based on average overall rent/ sq ft

Office Rent - Comparable rents are based on prime rental rates achieved. Source Edward Charles & Partner, Savills and CBRE. MKT rents are based on average overall rates

We consider there to be significant potential for growth in rental income, which is demonstrated by the table below. At the year end, there was a £47.7m gap between passing rent and the ERV.

Table 6 summarises the weighted average unexpired lease terms across our portfolio. This relates to full repairing and insuring ("FRI") and commercial leases and excludes the flexible market occupational licences. Commercial and FRI leases accounted for 56.5% of our passing rent at 31 March 2016 compared to 43.2% last year.

Table 7 reconciles the Gross Development value and the Red Book residual value of Hawley Wharf, our key development project

Operating Review

Strategic progress

We made significant progress during 2015/16 against our strategic priorities which are as follows:

1. Asset acquisition and disposal

2. Planning and development

3. Asset management

4. Co-working

5. Technology

The following section sets out how each asset fits our strategic priorities, our progress in the year and our plans to create further value. As a result of our acquisitions and our asset management and development activities (see below) the key statistics relating to our portfolio at the year end were as follows:

Stables Market (Strategic priorities: 2, 3, 4, 5)

Key statisticsValue: £249.6mNLA: 195,000 (241,000)* sq ft of mixed use spacePassing rent: £14.9mEquivalent yield: 5.4%Units: 503

*Stables Market Total NLA of 241,000 sq ft includes 30,000 sq ft relating to the Interchange co-working phase two at the Atrium.

Stables Market is a large mixed-use property with 195,000 sq ft of current net lettable area, which includes, retail, market, restaurant and leisure space, as well as being home to our Triangle and Atrium co-working offices. The Stables Market buildings previously had 46,000 sq ft of unlet space above the main retail and leisure areas, of which 30,000 sq ft has now been developed into office space for the Group's Interchange co-working business which opened during May 2016. The remaining 16,000 sq ft is intended to be redeveloped to increase the amount of co-working space with a focus on the tech, fashion and music industries.

The Market itself includes 503 retail and food units. We are currently delivering the initial phases of a tenant mix re-zoning plan that will focus on driving sales by moving some tenants to positions where we believe they will benefit from improved trade and through the provision of additional occupiers that will attract domestic and local repeat spend. 

As part of this plan, we are focused on increasing the volume of domestic shoppers utilising the market throughout the day. Expanding our co-working platform on the upper parts of Stables Market will play an important role in this process.

We are particularly focused on improving our all day food and beverage offer, to serve our office community and support our event and night-time economy. Since the year end, we have signed Italian food operator Voodoo Ray's and we are close to completing new lettings with a number of exciting and innovative restaurant and food concepts, as well as being under offer with eight new food and beverage concepts that will improve the food offer across the wider Market.

We are also preparing to submit a planning application to refurbish several sections of the Market, to include shop fronts, awnings, movable market units, public realm and services. All our existing refurbishment work on the listed buildings will be complete by September 2016. These works will help us to improve the shopper experience, increase dwell time and attract a better quality of occupier through the provision of attractive, functional and well configured units.

To benefit from our physical and tenant mix upgrades, we are, where appropriate, agreeing base rent and revenue share structures with new operators, to ensure we are aligned with their success.

Camden Lock Market (Strategic priorities: 2, 3, 5)

Key statisticsValue: £125.0mNLA: 48,000 sq ftPassing rent: £4.8mEquivalent yield: N/A as development valuation usedUnits: 91

Camden Lock Market is an existing yielding market asset, with development uplift and significant asset management potential uplift ahead of development.

We have recently signed with KERB to review and manage our West Yard Food Market and expect to increase unit and event income in the first year of activation. We are also developing plans to reconfigure the stall layout on Camden Lock Place and Middle Yard and expect to drive significant uplift in trading and revenues over the next 12 months. We were granted planning permission in early 2016 for a mixed-use market, retail, office, leisure and flexible spaces, representing an additional c 50,000 sq ft of building area and c 23,000 sq ft of open market areas.

Our plan is to start works by the end of Q1 2018 following the Hawley Wharf coming online. This will ensure that two major sections of our estate, and Camden as a major tourist attraction, are not taken off line at the same time. It will also help to keep occupiers focused on the active development, removing any risk of delayed decision making and occupier cannibalisation.

Union Street Market (Strategic priorities: 2, 3)

Key statisticsValue: £30.2mNLA: 7,000 sq ftPassing rent: £2.0mEquivalent yield: 5.1%Units: 206

This yielding market asset is at the heart of Camden Market. We see a significant future uplift in the value of this asset and are analysing ways of maximising development of the site.

The Interchange Building (Strategic priority: 3)

Key statisticsValue: £58.1mNLA: 65,000 sq ft of office accommodationPassing rent: £1.9mEquivalent yield: 4.8%Tenants: 1

This investment asset is an iconic building in Camden which provides 65,000 sq ft of office accommodation and is let in its entirety to Associated Press, with 10 years on the lease remaining. We expect to see significant growth on the current passing rent of £29 per sq ft in the approaching December 2016 rent review. To ensure this is achieved, we are focusing on setting comparable evidence within our portfolio. In March, we signed a tenant on the third floor of Camden Wharf at £65 per sq foot.

Camden Wharf (Strategic priorities: 2, 3, 4)

Key statisticsValue: £51.2mNLA: 49,000 sq ftPassing rent: £1.6mEquivalent yield: 4.7%Tenants: 6

This investment asset is connected to our building on Jamestown Road. It has retail and restaurant space on the ground floor, with tenants including All Saints and Wetherspoons, and offices on the first to third floors.

During the year, we let the vacant third floor office and set a new high for office rents in Camden above £60 per sq ft. Key rent reviews are coming up in 2016 and 2017 and the All Saints 2015 review negotiations are being strengthened by the offers we have received on 251 and 259 High Street. We are intending to submit a planning application by the end of Q3 2016, which will add approximately 11,000 sq ft of NLA to the building.

251-259 Camden High Street (Strategic priorities: 2, 3)

Key statisticsValue: £14.3mNLA: 4,400 sq ftPassing rent: £0.5mEquivalent yield: 4.3%Tenants: 5

This is an existing yielding asset, with five shops. We have submitted planning for retail extension at ground and basement levels, which is pending determination. The proposed area of 7,000 sq ft of retail use represents an uplift of c 2,600 sq ft. A separate shop front application will be submitted imminently. Subject to planning, work will commence in Q4 2016, with completion expected in March 2017. We have signed one and are in advance contractual negotiations with two other high quality brands at rents equating to £400 per sq ft ITZA.

1-11 Hawley Crescent (Strategic priorities: 1, 2, 3, 4)

Key statisticsValue: £29.1mNLA: 25,000 sq ftPassing rent: £0.9mEquivalent yield: 4.8%Tenants: 7

This is a mixed office and residential building, which we acquired during the year for total consideration of £31.1m, including £1.2m of stamp duty. The building is in the heart of Camden Town, opposite MTV and behind the planned Camden Town Underground extension. It comprises 19,700 sq ft of office space on the basement, first and second floors, which are let to the Open University, and six residential units on the third and fourth floors.

The current rent passing on the office space equates to £35 per sq ft and we expect to achieve an increase on this level at the approaching April 2017 rent review.

We are considering a planning application to add a residential floor of c 6,300 sq ft. The application will be submitted by the end of Q3 2016.

10 Jamestown Road (Strategic priority: 3)

Key statisticsValue: £27.3mNLA: 28,000 sq ftPassing rent: £1.4mEquivalent yield: 4.8%Tenants: 6

This investment asset is mixed use, with approximately 28,000 sq ft of retail, office and residential space.

Our asset management strategy is again focused on delivering evidence within our portfolio to increase leisure and office rents at review during 2017. The offices are currently let at £32 per sq ft with significant potential for uplift.

31 Kentish Town Road (Strategic priority: 3)

Key statisticsValue: £10.2mNLA: 10,000 sq ftPassing rent: £0.3mEquivalent yield: N/ATenants: 1

This asset comprises 14 apartments under one corporate lease expiring in 2017 and presents reversionary potential.

Utopia Village, Chalcot Road (Strategic priorities: 1, 2, 3, 4)

Key statisticsValue: £44.0mNLA: 45,000 sq ftPassing rent: £0.8mEquivalent yield: 5.1%Tenants: 18

Utopia village is a 45,000 sq ft mews style office complex that acts as an extension to our Interchange co-working platform. It comprises 28 units that are predominantly occupied by technology, music, event and fashion SMEs.

Our strategy is to combine an exciting occupier mix with a great social and events platform to create a desirable community for SMEs that will support short-term rental growth. Since mid-year we have made significant advances in our leasing progress, increasing our contracted rent to £930,000 in March 2016. From March to June 2016, we have added a further £373,000 of income with an additional £118,000 of income under offer.

49 Chalk Farm Road (Strategic priority: 1, 3)

Key statisticsValue: £5.0mNLA: 6,000 sq ftPassing rent: £0.2mEquivalent yield: 4.1%Tenants: 1

We bought this asset, which is opposite Stables Market, for £5 million in October 2015. The asset is currently leased to the live music venue, Barfly.

Strategically located asset (Strategic priorities: 1, 2)

Key statisticsValue: £5.5mNLA: 13,000 sq ftPassing rent: £0.3mEquivalent yield: 4.9% - 6.0%Tenants: 2

We acquired this asset recently for £10.0m. It presents a strong development opportunity and we are currently analysing schemes to explore the overall use-class mix to increase income.

7-11 Herbrand Street (Strategic priority: 1)

Key statisticsValue: £56.9mNLA: 66,000 sq ftPassing rent: £2.8mEquivalent yield: 4.7%Tenants: 1

We acquired this asset for £58.2m, including stamp duty of £2.2m in March 2016. With 66,406 sq. ft. of office space, the building has unique architecture and wide floor plans and is leased to the European Headquarters of McCann, the global advertising agency, on a lease expiring in 2020. It has strong reversionary potential with current rent at just £42 per sq ft.

101 Camley Street (Strategic priority: 1, 2)

In February 2016 we exchanged contracts to acquire 101 Camley Street, King's Cross, which has planning consent for a mixed-use development, including 22,700 sq ft gross internal area of flexible commercial space, 91 private homes and 30 affordable/shared ownership apartments. The total cost is £40.3 million, with completion intended to take place when the existing tenant provides vacant possession, which is planned to happen by 1 November 2016.

We are currently undertaking a review of the existing planning permission and residential layout to generate additional value. Any amendments to the existing permission are expected to be submitted and reviewed no later than Q4 2016.

Hawley Wharf Development (Strategic priorities: 2, 3, 4)

Key statisticsGross development value: £640.4mNet lettable area: 383,000 sq ft

Hawley Wharf is Market Tech's flagship development and will transform this prime canal side site into a mixed-use scheme comprising a new market, retail units, restaurants, offices, an art-house cinema, a food market, residential units and a school. In total, it will provide approximately 550,000 sq ft of gross development area, excluding three public piazzas.

In April 2015, we appointed Mace, a leading independently owned international consultancy and construction company, to oversee the redevelopment of Hawley Wharf. We also appointed specialist contractor McLaughlin & Harvey to build the primary school and nursery. The school is progressing on programme and will be complete in late August 2016.

Groundworks and foundations are predominantly complete (excluding site D/E), with concrete works due to start imminently.

As part of our pre-letting strategy for Hawley Wharf, we have appointed CBRE and KLM as retail and leisure agents and CBRE and Savills as residential agents. We have also appointed Heavenly as our marketing consultant and we will be launching the new branding and vision document in June 2016.

Co-working

During the financial year, we successfully launched Interchange, our co-working initiative. Co-working is an essential part of our place-making strategy in Camden, attracting growth businesses to our estate and building a professional community in a modern and creative working environment. Co-working also offers the opportunity to generate greater income by maximising utilisation and efficiency of our office space. Our objective is to achieve net rental income that is at least 25% higher than a standard market lease.

Interchange currently offers 43,000 sq ft of flexible co-working space for SMEs, entrepreneurs, creative and tech businesses, and makes innovative use of previously unused space in the Triangle and Atrium buildings above Stables Market. In addition, Utopia Village with 45,000 sq ft provides 28 larger office spaces for more-established companies that are attracted to the area or those that might have grown out of the more flexible co-working space but still like access to the community.

We launched phase 1 in the Triangle building in October 2015, with 278 desks. Phase 2, in the Atrium building, offers 650 desks and went live on 1 May 2016. At the date of this report, the Triangle building was over 85% let, with the Atrium building over 70% let. Tenants include a broad variety of fast-growing businesses such as Doctify, Eve Mattresses, Parcelly and Osper, well as major and more established names such as Viacom (MTV), KPMG and Cisco.

Both the Triangle and Atrium buildings offer flexible working spaces, hot-desking and private offices to rent on a monthly rolling contract.

Rents are on a per desk basis and include rates, utilities, service and use of common areas as well as free coffee and beverages. The members also benefit from an integrated restaurant, as well as from a broad variety of community events and service offerings.

Co-working is providing members with fully flexible and highly efficient private spaces, that can be occupied immediately and expanded on demand, with no requirement to spend upfront capex or the need to commit to long-term leases, while benefiting from a highly energized community.

We target stable occupancy within six months of launching a new site, which we consider to be around 95%. With the first two sites, we expect a stable occupancy to return in excess of £80 per sq ft. At March 2016 our Triangle building had been open for four months and had not reached stable occupancy but achieved a net return in excess of £55 per sq ft. There is additional value with having co-working within our Markets through repeat all-day spend across food, beverage and retail.

Our target for yield on costs for the launch of the Triangle and Atrium buildings is 34.4%. We envisage further expansion of our co-working within our current estate, as well as potentially in locations outside of it. For such expansion we expect a return on investment for any new opening in excess of 15%.

Market Tech Digital

Market Tech Digital performed strongly during the year, with revenue of £102m up from £10m, EBITDA of £8.3, up from £0.5m on the prior year.

During the year we acquired Stucco Media for consideration of up to £22.8m, with a combination of cash and shares. We have combined Stucco Media with Glispa and Fiver, which were already part of the Group, and it contributed to the strong growth experienced during the year.

This division therefore now comprises three businesses: Fiver, a speciality value online retailer; Glispa, our Berlin based mobile in app marketing business; and Stucco Media, which operates innovative and cost-effective algorithmic ecommerce marketplace technology, for online retailers such as eBay and Amazon. All three companies have third-party customers and have continued to grow revenue from these customers, along with acquiring new customers during the year. While less material to the growth of their businesses, they also make their services available to each other. For example, Glispa provides in-app advertising for Fiver and Stucco provides platform services to Fiver, as well as services to Camdenmarket.com, our online shopfront for our market retailers.

Our strategy has to been to use the broad digital expertise within Market Tech, combined with our reach into the industry, to help the management teams of the three companies strengthen and grow their businesses. This has involved marketing and product direction, along with due diligence on potential complementary bolt-on acquisitions. This approach was very successful during the year and in particular Glispa performed exceptionally, ending the year with a more diversified product range, serving advertisers in over 50 countries and a year-on-year revenue increase of 62.7%.

We migrated Fiver onto a new more stable and scalable platform during the year, to set it up for its next phase of marketing investment and growth.

Stucco continues to diversify its core business geographically and has now launched in the UK, Canada and Germany and has also launched its service via mobile. It is investing in a business to customer platform, to better engage with the end user and complement its existing business to business platform.

Chief financial officer's review

Financial highlights

· Net Asset Value of 166.3 pence per share, up 12.2%

· Total property value of £987.8m, like-for-like up 12.4%

· ERV £80.1m up 26.9%

· Adjusted EBITDA* £20m, up 66.7%

· Loan-to-value of 25.5%

· New £900m ten year facility with AIG

· Effective interest rate 4.9% (2015: 6.4%)

· Cash interest rate 2.7% (2015: 3.6%)

· Cash and undrawn committed facilities £249m

Financial results

To provide more relevant measures of the recurring underlying performance of the business, we present underlying income measures on an adjusted basis to exclude the impact of exceptional items, share based payments and foreign-exchange movements.

Total revenue generated was £130.3m, comprising £28.0m from property operations and £102.3m from Digital operations. Adjusted EBITDA grew 66.7% to £20.0m.

Property

Property revenue benefited from 7.5% like-for-like growth in contracted rent and the impact of acquisitions during the year. The following table breaks out the growth in contracted rent, and shows the significant reversionary potential within the estate and the opportunities that the development programme will bring. 

ERV includes the benefit of the developments at Hawley Wharf, Camden Lock Market, Stables Market and Camden High Street, and shows a gap of £47.1m to contracted rent, and a like-for-like increase of 15.2%.

Real Estate EBITDA has grown less strongly due to investment in co-working, events and head-office teams to support the growth of the group.

The management team is now appropriately resourced to deliver the planned ERV growth.

Digital

The Group's Digital segment primarily consists of Fiver, acquired on 5 December 2014, Glispa, acquired on 16 March 2015 and Stucco Media, which was acquired during the year under review on 7 May 2015.

The digital business has performed well, with revenue up 47.6% on a like-for-like basis against pro forma performance for 2015.

Reconciliation of Adjusted EBITDA to Statutory Earnings

The income statement gain on revaluation of the Group's property portfolio was £34.3m, and together with a £2.6m gain taken to the revaluation reserve, the total increase in valuation of the Group's property portfolio was £36.9m after taking into account capital expenditure.

Exceptional net operating items for the period totalled £4.7m. The Group incurred £3.3m of costs in connection with the move from AIM to the Full List. Other legal and professional costs of £2.8m relate to certain professional costs in connection with business combinations and to ongoing litigation with IBRC. These costs were offset by the fair value increase of the Group's investment in Shazam (£0.9m) and a fair value gain resulting from the purchase of intellectual property (£1.0m) during the year.

Finance costs for the period totalled £12.6m, which includes £6.8m debt interest and amortised fees expense (net of capitalised interest and fees of £4.6m) on the existing AIG facility and those facilities repaid during the year with Nomura and Bank of Cyprus, and £5.6m interest expense on the convertible loan notes. In addition, exceptional financing costs of £13.3m were incurred relating mainly to the repayment of the Nomura and Bank of Cyprus facilities (£10.9m) and the cost of the Group's swaption entered into during the year (£2.0m).

Tax on the business' adjusted profits was £2.8m, and in addition a further charge of £2.2m relates mainly to deferred tax expense movement of £0.9m for revaluation of property during period, and tax of £1.0m due to a capital gain crystallised due to the jurisdiction transfer of intellectual property.

Profit after tax for the year ended 31 March 2016, after deducting the minority interest attributable to the non-controlling shareholder's interest in Glispa, was £6.3m. On an adjusted basis, underlying earnings were £3.4m (2015: £4.4m loss).

Balance Sheet

* EPRA NAV is Net Assets adjusted to add back deferred tax liabilities on property revaluations (2016 - £5.2m, 2015 - £4.3m) and deduct the fair value of interest rate caps (2016 - nil, 2015 - £0.1m)

Net Asset Value grew to £778.9m, with the underlying driver being a like-for-like increase of 12% in the external valuation conducted by Jones Lang LaSalle, offset by increases in stamp duty land tax, which valuers are required to reflect in their valuations irrespective of whether the assets will be sold or retained. Significant work has been completed in the year relating to capital structure, with NAV increased by £196.9m net by the share placing in July 2015 together with shares issued for the acquisition of Stucco less a number of one-off exceptional costs referred to above which will not recur.

EPRA NAV for the Group (after adding back deferred tax relating to property valuations and derivative values), closed at £784.1m or 167.4p per share, up 12.1%. This comprised 154.7p per share for the real estate business, and 12.7p per share for the digital segment.

Acquisitions

A number of property acquisitions were completed in the year to 31 March 2016 following rigorous financial and strategic assessment. A total of £150.2m was spent acquiring seven properties. In addition, the Group has committed to purchase 101 Camley Street for £40.3m which will complete by November 2016.

In terms of digital, in May 2015, the Group acquired Stucco Media, a leading ecommerce marketing platform for consideration of up to £22.8m ($34m), with a combination of cash and shares, and spent £2.8m (€3.6m) on a 28% share in MiNODES.

Cash flows and net debt

The following table summarises the movements in net debt. The key features are:

· Total capex of £206.6m including acquisition of property and digital assets

· Net proceeds of £196.9m from the July 2015 share placing

· Increase in net debt of £41.7m to £252.1m

· New loan facilities resulted in increased cash balance of £149.4m (2015: £85.9m)

Debt and gearing

* Effective interest rate is the total interest charge (including amounts capitalised) on total borrowings. Cash interest rate is calculated on year end balance

The Group has aimed to match the long-term and predictable property rental flows with long-term and predictable financing costs. As such the Group has extended the maturity of its financing to a weighted average of over eight years, and has substantially eliminated the medium and long-term risk arising from interest rate volatility. At the year end, the Group's debt position was fully fixed rate (2015: 96.4%).

The gearing measure most widely used in the property industry is loan-to-value ('LTV'). LTV is calculated on the basis of net debt divided by the value of the Group's property portfolio, reflecting a conservative LTV of 25.5%.

Following last years' successful £100m IPO and issue of £112.5m senior unsecured convertible bonds, the Group's refinancing was completed in the year:

· In July 2015, £196.9m net proceeds were raised through an equity placing.

· The debt obligations with Nomura International Plc and Bank of Cyprus and the undrawn working capital loan facility from majority shareholder, Citwax Investments Limited, were repaid and cancelled.

· In December 2015, the Group agreed a new ten year £900m secured debt facility arranged by AIG Asset Management (Europe) Limited. The facility includes a £450m committed facility, with £300m drawn at the balance sheet date, an additional £100m drawn since the year end and a further £50m available for draw down, subject to certain conditions, until December 2017. Attractive rates were achieved, and the overall cash cost of borrowing has been reduced.

The Group has £249m of cash and unutilised available facilities, which is more than enough to complete our pipeline of committed developments, and a further £50m drawable subject to conditions.

In addition, the AIG facility has two future drawdown pools of £150m and £300m respectively, subject to lender consent and the Group has unencumbered assets which could support further borrowing.

Going concern

At 31 March 2016 the Group's cash and undrawn committed facilities were £249m which is more than sufficient to meet the expected capex on current committed projects. With weighted average debt maturity exceeding eight years, an LTV of 25.5% and sufficient headroom against all financial covenants, there continues to be a reasonable expectation that the Company and Group will have adequate resources to meet both on-going and future commitments for the foreseeable future. Accordingly, the Directors have prepared the Annual Report & Accounts on a going concern basis.

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 MARCH 2016

* Adjusted EBITDA is defined as Earnings Before Interest, Taxes, Depreciation, Amortisation and adjusted for fair value investment property movements, share based payment charges, exceptional items and foreign currency exchange gain/(loss).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2016

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2016

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2016

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 MARCH 2016

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2016

1. BASIS OF PREP

The financial information contained in this announcement has been prepared on the basis of the accounting policies set out in the financial statements for the year ended 31 March 2016. Whilst the financial information included in this announcement has been computed in accordance with IFRS, as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRS. The financial information does not constitute the Group's financial statements for the periods ended 31 March 2016 or 31 March 2015, but is derived from those financial statements. Those accounts give a true and fair view of the assets, liabilities, financial position and results of the Group. The auditors' reports on both the 31 March 2016 and 31 March 2015 financial statements were unqualified and did not draw attention to any matters by way of emphasis.

2. Operating segments

* Adjusted EBITDA is defined as Earnings Before Interest, Taxes, Depreciation, Amortisation and adjusted for fair value investment property movements, share based payment charges, exceptional items and foreign currency exchange gain/(loss).

The segment information provided for the reportable segments for the year ended 31 March 2015 is as follows:

* Adjusted EBITDA is defined as Earnings Before Interest, Taxes, Depreciation, Amortisation and adjusted for fair value investment property movements, share based payment charges, exceptional items and foreign currency exchange gain/(loss).

‡ The Digital segment was acquired by the Group as part of the restructuring that occurred on 5 December 2014. The results for Digital for the year end 31 March 2015 are for the period from the date of acquisition.

There were no discontinued operations during the year ended 31 March 2016. In 2015 total revenue, including discontinued operations, for the group was £34,341,000 and adjusted EBITDA was £11,815,000.

3. Exceptional items

Listing fees are the non-recurring cost of acquiring the AIM public listing together with related transaction costs incurred by the Group in the year to 31 March 2015. In the year to 31 March 2016, the Group incurred a further £3.3m of costs in connection with the move from the AIM to the Full List.

Legal and professional costs relate to certain professional costs in connection with business combinations and to ongoing litigation. The ongoing litigation relates to the IBRC proceedings (for the mis-selling of interest rate swaps and a breach by IBRC of its terms) and to proceedings against certain companies within the Group for damages caused after a fire.

The onerous contract provision relates to the Group's estimated provision to exit an operational contract.

Reorganisation costs relate to the exceptional costs incurred by the Group in the year to 31 March 2015, the majority of which are in respect of the subsidiary, Fiver London Limited, within the Group's Digital operating segment. They reflect one-off costs the Group incurred post acquisition to reorganise Fiver London Limited's operations in order to achieve stronger growth in that company going forward.

4. Finance costs

5. Income tax credit/(charge)

The credit for the year can be reconciled to the profit per the income statement as follows:

6. Earnings per share

The convertible bond is non-dilutive in the year however it has the potential to become dilutive in future periods. 

Adjusted EBITDA per Share

Adjusted EBITDA used to calculate adjusted EBITDA per share is defined as Earnings Before Interest, Taxes, Depreciation, Amortisation and adjusted for fair value investment property movements, share based payment charges, exceptional items and foreign currency exchange gain/(loss).

7. Intangible assets

8. Property, plant and equipment

9. Investment properties

Valuation Process

Investment properties are stated at fair value as at 31 March 2016 based on external valuations performed by professionally qualified valuers. The Group's property portfolio is valued at 31 March 2016 by Jones Lang LaSalle Limited on the basis of fair value in accordance with The RICS Valuation - Professional Standards. The valuations are based on information provided by the Group which includes a tenancy schedule, as reconciled (tenant, rent, lease commencement, lease expiry, applicable break options, areas, details of any additional income, operating costs and net operating income forecast) and any supplementary documentation, such as copy leases and details of tenure.

The valuations are prepared using industry standard valuation software, Argus Capitalisation and Argus Developer. The valuations are based on assumptions which are typically market related, such as market rents and yields and are based on the professional judgment of the respective valuer and market observations. Each property has been valued in isolation based on the unique nature, characteristics and perceived risk of that property.

As part of each half-yearly valuation exercise, discussion of the valuation process, methodology and results takes place at a meeting between the external valuers and key management at which the key assumptions and estimates are reviewed together with consideration of the valuers' reasons for significant valuation movements on individual properties from the previous valuations.

Interest on 45% of the Nomura Senior debt and 31% of the AIG debt has been capitalised resulting in £4.6m (2015: £0.8m) interest being capitalised in the year. This represents the portion of the debt loaned in relation to assets under construction.

Valuation Methodology

The fair value of investment properties and land and buildings classified as property, plant and equipment is determined using the 'investment method' whereby capitalisation yields derived from market transactions involving comparable investment properties are applied to the estimated net current and future cash flows expected to be generated by the investment property, which the valuer calculates using comparable market information, to obtain a market rental value.

The fair value of an investment property undergoing construction is derived using the 'residual method' whereby the costs required to complete the development, including a notional cost of finance and an estimated risk factor or "profit on cost", are deducted from the net development value arrived at under the 'investment method'.

The key unobservable inputs used in the valuation of the properties at 31 March 2016 are as follows: