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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in anydoubt as to the action you should take you are recommended to seek your own financial adviceimmediately from an independent financial adviser, who is authorised under the Financial Servicesand Markets Act 2000 (as amended) if you are in the United Kingdom, or from another appropriatelyauthorised independent financial adviser if you are in a territory outside the United Kingdom.

A copy of this document, which constitutes a prospectus relating to Conygar ZDP PLC (the ‘‘Issuer’’) inconnection with the issue of ZDP shares of £0.01 each in the capital of the Issuer (‘‘ZDP Shares’’),prepared in accordance with the Prospectus Rules of the Financial Conduct Authority (‘‘FCA’’) made underSection 84 of FSMA, has been filed with the FCA in accordance with Rule 3.2 of the Prospectus Rules.

Application has been made to the UK Listing Authority and to the London Stock Exchange respectively foradmission of the ZDP Shares: (i) to the Official List (by way of a standard listing under Chapter 14 of theListing Rules); and (ii) to the London Stock Exchange’s main market for listed securities. It is expected thatAdmission will become effective and that unconditional dealings in the ZDP Shares will commence on theLondon Stock Exchange at 8.00 a.m. (London time) on 10 January 2014. The attention of prospectiveinvestors is drawn, in particular, to the Risk Factors set out on pages 11 to 17 of this prospectus.

CONYGAR ZDP PLC(a company incorporated in England and Wales with registered number 8794437)

a wholly-owned subsidiary of

THE CONYGAR INVESTMENT COMPANY PLC(a company incorporated in England and Wales with registered number 4907617)

Placing of 30 million ZDP Shares

at a Placing Price of £1.00 per ZDP Share

Sole Bookrunner and Financial Adviser

LIBERUM CAPITAL LIMITED

Liberum Capital Limited, which is authorised and regulated by the FCA, is acting for the Issuer and theParent and for no-one else in connection with the matters described in this prospectus and will not beresponsible to anyone other than the Issuer and the Parent for providing the protections afforded to itsclients, nor for providing advice in relation to the contents of this prospectus or any transaction orarrangement referred to herein.

The distribution of this prospectus and/or the transfer of the ZDP Shares in certain jurisdictions may berestricted by law. No action has been or will be taken to permit a public offering of the ZDP Shares or topermit the possession or distribution of this prospectus (or any other offering or publicity materials relatedto the ZDP Shares) in any jurisdiction where action for that purpose may be required. Accordingly, neitherthis prospectus nor any advertisement or any other offering material may be distributed or published in anyjurisdiction except under circumstances that will result in compliance with any applicable laws andregulations. Persons into whose possession this prospectus comes should inform themselves about andobserve any such restrictions. Any failure to comply with these restrictions may constitute a violation of thesecurities law of any such jurisdictions.

This prospectus does not constitute an offer to sell, or the solicitation of an offer to acquire or subscribefor, ZDP Shares in any jurisdiction where such an offer or solicitation is unlawful or would impose anyunfulfilled registration, qualification, publication or approval requirements on the Issuer, the Parent orLiberum. The offer and sale of ZDP Shares have not been and will not be registered under the applicablesecurities laws of the United States, Australia, Canada, South Africa or Japan. Subject to certainexceptions, the ZDP Shares may not be offered or sold within the United States, Australia, Canada, SouthAfrica or Japan or to any national, resident or citizen of the United States, Australia, Canada, South Africaor Japan.

APPLICATION HAS BEEN MADE FOR THE ZDP SHARES TO BE ADMITTED TO A STANDARDLISTING ON THE OFFICIAL LIST. A STANDARD LISTING WILL AFFORD INVESTORS IN THE ISSUERA LOWER LEVEL OF REGULATORY PROTECTION THAN THAT AFFORDED TO INVESTORS INCOMPANIES WITH PREMIUM LISTINGS ON THE OFFICIAL LIST, WHICH ARE SUBJECT TOADDITIONAL OBLIGATIONS UNDER THE LISTING RULES OF THE FCA.

CONTENTS

SUMMARY 3

RISK FACTORS 11

IMPORTANT NOTICES 18

CONSEQUENCES OF A STANDARD LISTING 21

EXPECTED TIMETABLE 23

PLACING STATISTICS 23

DEALING CODES 23

DIRECTORS AND ADVISERS OF THE ISSUER 24

PART I – INFORMATION ON THE PLACING 25

PART II – INFORMATION ON THE ISSUER 28

PART III – INFORMATION ON THE PARENT 30

PART IV – VALUATION REPORT 38

PART V – DETAILS OF THE ZDP SHARES 47

PART VI – PRINCIPAL BASES AND ASSUMPTIONS 50

PART VII – TAXATION 51

PART VIII – ADDITIONAL INFORMATION 54

PART IX – DEFINITIONS 87

APPENDIX – PART A – ANNUAL REPORTS AND AUDITED CONSOLIDATEDFINANCIAL STATEMENTS OF THE GROUP FOR THE YEARENDED 30 SEPTEMBER 2011

A-1

PART B – ANNUAL REPORTS AND AUDITED CONSOLIDATEDFINANCIAL STATEMENTS OF THE GROUP FOR THE YEARENDED 30 SEPTEMBER 2012

A-68

PART C – ANNUAL REPORTS AND AUDITED CONSOLIDATEDFINANCIAL STATEMENTS OF THE GROUP FOR THE YEARENDED 30 SEPTEMBER 2013

A-137

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SUMMARY

Summaries are made up of disclosure requirements known as ‘Elements’. These elements arenumbered in Sections A-E (A.1-E.7).

This summary contains all the Elements required to be included in a summary for this type ofsecurity and issuer. Because some Elements are not required to be addressed there may be gapsin the numbering sequence of the Elements.

Even though an Element may be required to be inserted into the summary because of the type ofsecurity and issuer, it is possible that no relevant information can be given regarding theElement. In this case a short description of the Element is included in the summary with themention of ‘not applicable’.

Section A – Introduction and warnings

A.1 Warning This summary should be read as an introduction to thisprospectus. Any decision to invest in the ZDP Shares should bebased on consideration of this prospectus as a whole.

Where a claim relating to the information contained in this prospectus isbrought before a court, the plaintiff investor might, under the nationallegislation of the Member States, have to bear the costs of translatingthis prospectus before legal proceedings are initiated.

Civil liability attaches to those persons responsible for this summary,including any translation of this summary, but only if this summary ismisleading, inaccurate or inconsistent when read together with the otherparts of this prospectus or it does not provide, when read together withthe other parts of this prospectus, key information in order to aidinvestors when considering whether to invest in the ZDP Shares.

A.2 Use of prospectusby financialintermediaries

Not applicable. The Issuer is not engaging any financial intermediariesfor any resale of securities requiring a prospectus after publication of thisprospectus.

Section B – Issuer and the guarantor

B.1 Legal and CommercialName

The Issuer’s legal and commercial name is Conygar ZDP PLC.

B.2 Domicile/Legal Form/Legislation/ Countryof Incorporation

The Issuer was incorporated in England and Wales on 28 November2013 as a public limited company with registered number 8794437. Theprincipal legislation under which the Issuer operates is the Act. TheIssuer is domiciled in the United Kingdom.

B.3 Nature of issuer/Current operations/Principal activities

The Issuer is a wholly owned subsidiary of the Parent and wasincorporated by the Parent to be the issuer of the ZDP Shares.

The Issuer has not traded and, following completion of the Placing, theIssuer’s only material financial obligations will be in respect of the ZDPShares and its only material assets will be its loan of the Net PlacingProceeds to the Parent pursuant to the Loan Agreement and theobligation of the Parent to put the Issuer in a position to meet itsobligations in respect of the ZDP Shares pursuant to the ContributionAgreement.

B.4a Known trends Not applicable.

B.5 Group structure The Issuer is a wholly-owned subsidiary of the Parent formed solely forthe purpose of issuing the ZDP Shares. The Issuer has no subsidiaries.

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B.6 Notifiable interests The Issuer is not aware of any person (other than the Parent) who,directly or indirectly, jointly or severally, owns or controls 3 per cent. ormore of the issued ordinary shares of the Issuer or who could, directly orindirectly, jointly or severally, exercise control over the Issuer.

Major shareholders in the Issuer do not have voting rights in respect ofthe Issuer’s share capital which differ from those of any othershareholder holding shares in the same class in the Issuer.

B.7 Historical financialinformation

Not applicable to the Issuer which has no historical financial information.

B.8 Pro forma financialinformation

Not applicable. No pro-forma financial information has been included inthis prospectus.

B.9 Profit forecast Not applicable. No profit forecast or estimate is made in this prospectus.

B.10 Qualifications in theaudit report

Not applicable. No qualified audit report.

B.11 Working capitalinsufficiency

Not applicable. The Issuer is of the opinion that the working capitalavailable to it is sufficient for its present requirements, that is for at leastthe next 12 months from the date of this prospectus.

B.18 Guarantee Immediately following Admission, the Issuer will lend the Net PlacingProceeds to the Parent by way of an interest free loan pursuant to theLoan Agreement. The Loan Agreement and supporting documentationcontain certain provisions to protect the interests of the Issuer and theZDP Shareholders. The loan will be repayable in full, inter alia, on theZDP Repayment Date.

The Parent has entered into the Contribution Agreement pursuant towhich, inter alia, the Parent has undertaken to contribute (by way of gift,capital contribution or otherwise) such funds to the Issuer as will ensurethat the Issuer will have sufficient assets on the ZDP Repayment Date tosatisfy the ZDP Capital Entitlement then due and to pay any operationalcosts or expenses incurred by the Issuer.

Dividends and other payments to the Shareholders will be restrictedwhile the ZDP Shares are in issue unless the Cover is at least 3.5 timesand the Investment Property Cover is at least 2.5 times immediatelyfollowing any such payment.

B.19 Section B informationabout the guarantor as ifit were the issuer of thesame type of securitythat is the subject ofthe guarantee

Information on the Parent required for this summary is included inrespect of each paragraph of this section B as follows:

B.1 – Legal andCommercial Name

The Parent’s legal and commercial name is The Conygar InvestmentCompany PLC.

B.2 – Domicile/LegalForm/Legislation/Country of Incorporation

The Parent was incorporated in England and Wales on 22 September2003 as a public limited company with registered number 4907617. Theprincipal legislation under which the Parent operates is the Act.

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B.3 – Nature of issuer/Current operations/Principal activities

The Parent is domiciled in the United Kingdom. The Parent is an AIMquoted holding company of a property investment and developmentgroup dealing primarily in UK property.

B.4a – Known trends The Directors believe that the commercial property market outsideLondon appears to have recovered slightly and sentiment has improved,which is reflected by the Group’s investments recovering losses sufferedin the first half of 2013. The Group’s investment portfolio has beenindependently valued at £164.8 million as at 30 September 2013 with theinvestment property portfolio increased in value by 0.4 per cent. on a likefor like basis since 30 September 2012, however the valuation increasedby 2 per cent. since 30 March 2013, recovering losses from 1 October2012 to 30 March 2013.

The Group’s development projects continue to make progress and theGroup currently expect them to deliver projects comprising more than2,000 residential units, 1,400 marina berths and in excess of 400,000square feet of commercial and retail development. The Group hascommitted £32.2 million to the development projects and is not currentlycommitted to any speculative development projects.

The investment property portfolio of the Group has a contracted rent rollof £14.4 million per annum and continues to generate surplus cash flowwhich helps fund the pipeline of the Group’s development projects.

B.5 – Group structure The Parent’s property and development assets are held directly throughthe Parent and indirectly through wholly-owned subsidiary undertakings.

The Issuer is a wholly-owned subsidiary of the Parent formed solely forthe purpose of issuing the ZDP Shares. The Issuer has no subsidiaries.

B.6 – Notifiable interests As at the close of business on the Latest Practicable Date, in so far as isnotified to the Parent, the following persons were directly or indirectlyinterested in 3 per cent. or more of the Parent’s issued share capital:

Name No of Shares %

Legal & General Group plc 8,903,333 10.02

Fidelity Worldwide Investments (FIL Ltd) 5,071,404 5.71

Majedie Asset Management Limited 4,932,657 5.55

Robert Ware 3,750,000 4.22

Bimaljit Singh Sandhu 3,063,789 3.45

Ennismore Fund Management Limited 2,925,250 3.29

Those persons referred to above do not have voting rights in respect ofthe Parent’s share capital which differ from those of any otherShareholder. The Parent is not aware of any person who could,directly or indirectly, jointly or severally, exercise control over the Parent.

Neither the Parent nor any of the Directors are aware of anyarrangements, the operation of which may at a subsequent date resultin a change of control over the Parent.

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B.7 – Historical financialinformation

Selected historical financial information for the Parent for the financialperiods ended 30 September 2011, 30 September 2012 and30 September 2013:

30 September

2011

30 September

2012

30 September

2013

Total fixed assets (investments)

(£m)

148.0 184.8 174.0

Total assets (£m) 208.9 243.5 233.1

Total liabilities (£m) 50.4 89.5 77.9

Net assets (£m) 158.5 154.0 155.1

Net Asset Value per Share (p) 155.2p 165.9p 174.6p

Earnings per Ordinary Share (p) 0.98p 5.60p 6.88p

Dividends per Ordinary Share 1.1p 1.25p 1.5p

Revenue reserves (£m)(1) 13.0 23.4 24.6(1)Calculated as retained earnings or losses less Ordinary Shares held in treasury.

Save for the conversion into Ordinary Shares and/or the redemption of62,902,335 Preference Shares from 28 October 2010 to 31 December2011, the repurchase of, in aggregate, 34,567,819 Ordinary Shares from2 December 2010 to 1 August 2013 (which were subsequently held intreasury) and the cancellation of 24,900,000 Ordinary Shares fromtreasury on 12 January 2012 and 24 January 2013, there has been nosignificant change in the financial condition and operating results of theGroup during the financial periods ended 30 September 2011,30 September 2012 and 30 September 2013.

There has been no significant change in the financial condition andoperating results of the Group since 30 September 2013, being the dateof the last published audited consolidated financial statements of theParent.

B.8 – Pro formafinancial information

Not applicable. No pro-forma financial information has been included inthis prospectus. The Placing is of such a size that it is not considered tobe a gross significant change for the Parent.

B.9 – Profit forecast Not applicable. No profit estimates or forecasts for the Group have beenmade.

B.10 – Qualifications inthe audit report

Not applicable. The audit reports on the historical financial information ofthe Parent contained within this prospectus are not qualified.

B.11 – Working capitalinsufficiency

Not applicable. The Parent is of the opinion that the working capitalavailable to the Group is sufficient for its present requirements, that is forat least the next 12 months from the date of this prospectus.

B.18 – Guarantee Immediately following Admission, the Issuer will lend the Net PlacingProceeds to the Parent by way of an interest free loan pursuant to theLoan Agreement. The Loan Agreement and supporting documentationcontain certain provisions to protect the interests of the Issuer and theZDP Shareholders. The loan will be repayable in full, inter alia, on theZDP Repayment Date.

The Parent has entered into the Contribution Agreement pursuant towhich, inter alia, the Parent has undertaken to contribute (by way of gift,capital contribution or otherwise) such funds to the Issuer as will ensurethat the Issuer will have sufficient assets, inter alia, on the ZDPRepayment Date to satisfy the ZDP Capital Entitlement then due and topay any operational costs or expenses incurred by the Issuer.

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Dividends and other payments to the Shareholders of the Parent will berestricted while the ZDP Shares are in issue unless the Cover is at least3.5 times and the Investment Property Cover is at least 2.5 timesimmediately following any such payment.

Section C – Securities

C.1 Type and class ofsecurities being offered

The Placing comprises a limited offer by the Issuer of 30 million ZDPShares to raise Gross Placing Proceeds of £30 million (Net PlacingProceeds of approximately £29.3 million). The Directors havedetermined that the ZDP Shares will be issued at £1.00 per ZDPShare. The Placing is not being underwritten.

The ISIN of the ZDP Shares is GB00BH4TCL65, the SEDOL code for theZDP Shares is BH4TCL6. The ticker for the Issuer is CICZ.

C.2 Currency of thesecurities issue

The ZDP Shares are denominated in Sterling.

C.3 Number of shares issued As at the Latest Practicable Date, there were 50,000 ordinary shares of£1.00 each in the capital of the Issuer (fully paid) in issue.

C.4 Description of the rightsattaching to thesecurities

The Issuer has a fixed life and shall be placed into voluntary liquidationfollowing a general meeting on the ZDP Repayment Date, followingwhich ZDP Shareholders will be entitled to receive the ZDP CapitalEntitlement, which is equivalent to a Gross Redemption Yield of 5.5 percent. based on the Placing Price.

The ZDP Shares carry (i) no right to any dividends; and (ii) no votingrights save in respect of a resolution to wind up the Issuer or to approvecertain specified matters which would be likely to affect materially theposition of the ZDP Shareholders.

C.5 Restrictions on thefree transferability of thesecurities

Subject to the Issuer’s Articles (and the restrictions on transfer containedtherein), a ZDP Shareholder may transfer all or any of its uncertificatedZDP Shares in any manner which is permitted by the Act or in any othermanner which is from time to time approved by the Board.

A transfer of a certificated ZDP Share shall be in any usual form or in anyother form approved by the Board. An instrument of transfer of acertificated ZDP Share shall be signed by or on behalf of the transferorand, unless the ZDP Share is fully paid, by or on behalf of the transferee.

C.6 Admission Application will be made to the UK Listing Authority and the LondonStock Exchange respectively for admission of the ZDP Shares to theOfficial List (by way of a standard listing under Chapter 14 of the ListingRules) and to trading on the London Stock Exchange’s main market forlisted securities. It is expected that Admission will become effective andthat dealings will commence on 10 January 2014.

C.7 Dividend policy Not applicable. No dividends will be paid in respect of the ZDP Shares.

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Section D – Risks

D.1 Key information on thekey risks that arespecific to the issueror its industry

The valuation of the Group’s properties may not reflect their actualsale priceProperty and property-related assets are inherently subjective asregards value due to the individual nature of each property. There isno assurance that the valuations of the properties will reflect actual saleprices even where any such sales occur shortly after the relevantvaluation date.

Changes in general economic conditions, fluctuations in the valueand rental income of properties

Rental income and the market value of the Group’s properties may beadversely affected by a number of the following factors: the overalleconomic conditions, local real estate conditions, the Group’s ability todevelop and redevelop its properties in order to maximise returns oninvestment, the financial condition of the Group’s tenant, high orincreasing vacancy rates, changes in laws and governmentalregulations, potential environmental or other legal liabilities, availabilityof financing and changes in interest rates. Significant reductions in theGroup’s rental income or value of its properties could have a materialadverse effect on the Parent’s ability to meet its obligations to the Issuerand thereby the Issuer’s ability to meet its obligations to the ZDPShareholders.

Rental income and defaults

In the event of a default by a tenant or during any other void period, theGroup will suffer a rental shortfall and incur additional expenses until theproperty is re-let.

Dependency on tenants, ability to continue to lease properties oneconomically favourable terms and tenant default

The Group’s performance depends on its ability to lease space in itsproperties on economically favourable terms. Results of operations maybe adversely affected if a significant number of tenants are or a majortenant is unable to meet their or its obligations under their or its leases orif there is a decrease in demand for vacant properties so that the Groupis unable to find new tenants at economically favourable rental prices.

Lack of funding for future tenant improvements

While the Group intends to manage its cash position or financingavailability to pay for any improvements or other benefits required forreletting and to meet the loss of revenue that may result, the Groupcannot be certain that it will have adequate sources of funding availableto it for such purposes in the future.

Inability to sell a property

The Issuer cannot predict whether the Group will be able to sell anyproperty for the price or on the terms set by it, or whether any price orother terms offered by a prospective purchaser would be acceptable to it.Nor can the Group predict the length of time needed to find a willingpurchaser and to complete the sale of a property. If the Parent seeks tosell one or more properties to finance its commitments to the Issuer,there is no certainty that it will be able to do so at the required price or atall.

Commercial risks associated with real estate development

The Group’s development programme is likely to involve a higher degreeof risk than is associated with its investment properties. Inaccurateassessment of a development opportunity or a decrease in tenantdemand due to competition from other commercial real estate propertiesor adverse market conditions, could result in a substantial proportion of

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the development remaining vacant after completion and exert pressureon the Group to provide rental incentives to tenants. Such vacancies andrental incentives would affect the level of rental income obtained, theamount of realised sales proceeds and the value of the developmentproperty all of which could have a material adverse effect on the Group’sbusiness, financial condition, results of operations or future prospects.

D.3 Key information on thekey risks that arespecific to the securities

ZDP Capital Entitlement is not guaranteedNeither the ZDP Capital Entitlement nor the Accrued Capital Entitlementon an earlier winding up of the Issuer is guaranteed. The Issuer’s abilityto pay such amounts is dependent on it having sufficient cash resourcesto meet such obligation and therefore on the Parent meeting itsobligation under the Contribution Agreement to contribute such fundsto the Issuer so as to ensure the Issuer has sufficient assets at therelevant time. The ability of the Parent to meet its obligations under theContribution Agreement depends on its ability to realise value from itssubsidiary undertakings or to borrow or otherwise raise funds at therelevant time. Events or changes that will have a material adverse effecton the business of the Parent and its subsidiary undertakings or on theGroup’s ability to realise its properties for their present value may have amaterial adverse effect on the Parent’s ability to meet such obligations.

Subordination of ZDP Share obligations to the Group’s otherobligations

The Issuer will have no material assets other than its loan of the NetPlacing Proceeds to the Parent pursuant to the Loan Agreement and theobligation of the Parent to put the Issuer in a position to meet itsobligations in respect of the ZDP Shares pursuant to the ContributionAgreement. The Parent’s obligations under the Contribution Agreementare structurally subordinated to the liabilities of its subsidiaryundertakings and any relevant lenders may have recourse against theassets of the relevant security pools, which include most of the Group’sproperties. Accordingly if there are defaults under such facilities and thelenders were to enforce that security.

No guarantee active trading market will develop for ZDP Shares

Listing should not be taken as implying that there will be a liquid marketfor the ZDP Shares. The ZDP Shares may not be widely distributed andthere is currently no active trading market for the ZDP Shares.

Changes to tax legislation may negatively impact the returns frominvesting in the ZDP Shares

Any change in taxation legislation in the UK could affect the taxation ofreturns derived from investing in ZDP Shares. Statements in thisprospectus concerning the taxation of investors in shares are based oncurrent law and practice, which is subject to change.

Interest rate rises may lead to reductions in the market value of theZDP Shares

The market value of the ZDP Shares will be affected by changes ingeneral interest rates, with upward movements in interest rates likely tolead to reductions in the market value of the ZDP Shares, as thedifferential in return profile between the ZDP Shares and alternativeinvestments is likely to narrow.

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Section E – Offer

E.1 Net proceeds and costsof the Issue

The Gross Placing Proceeds are £30 million, the expenses of the Placingare approximately £29.3 million and the Net Placing Proceeds areapproximately £700,000.

E.2a Reason for offer and useof proceeds

The Net Placing Proceeds will be applied towards further acquisitions ofinvestment properties and in realising value from the Group’sdevelopment projects in line with the Group’s stated strategy ofinvesting in property assets and companies where the Directorsbelieve the Group can add significant value using its propertymanagement, development and transaction structuring skills.

E.3 Terms and conditionsof the offer

The Placing is subject to the Placing Agreement becoming unconditionalin accordance with its terms, the principal outstanding condition beingAdmission occurring on or before 8.00 a.m. London time on 10 January2014 (or such later time or date as the Issuer and Liberum may agreebeing no later than 1 February 2014).

E.4 Material interests Not applicable. No interest is material to the Placing.

Save for any conflict of interest which may arise between the Parent orthe Issuer, there are no conflicts of interest between, (i) any duties to theParent or to the Issuer, of any of the Directors of the Parent or Directorsof the Issuer, and (ii) their private interests and/or other duties.

E.5 Name of person sellingsecurities/lock upagreements

Not applicable.

E.6 Dilution Not applicable. The ZDP Shares are required to be accounted for as debtunder IFRS

E.7 Expenses charged tothe investor

Not applicable. No expenses will be charged to ZDP Shareholders.

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RISK FACTORS

You should consider carefully the risks set out below and the other information containedin this prospectus with respect to the ZDP Shares. Each of the risks highlighted belowcould have a material adverse effect on the business, operations, financial condition orprospects of the Issuer and the Group, which, in turn, could have a material adverse effecton the amount which investors will receive in respect of the ZDP Shares. In addition, eachof the risks highlighted below could adversely affect the trading price of the ZDP Shares orthe rights of investors under the ZDP Shares and, as a result, investors could lose some orall of their investment.

You should note that the risks described below are not the only risks the Issuer and theGroup face. Described below are only those risks relating to the Issuer, the Group and theZDP Shares that are considered to be material. There may be additional risks that the Issuerand the Group currently consider not to be material or of which the Issuer or the Group isnot currently aware, and any of these risks could have the effects set out above.

An investment in the ZDP Shares is suitable only for investors who are capable ofevaluating the merits and risks of such an investment and who have sufficient resources tobe able to bear losses (which may equal the whole amount of their investment) that mayresult from such an investment. An investment in the ZDP Shares should constitute part ofa diversified investment portfolio.

You should read this prospectus in its entirety. Investing in the ZDP Shares involves certainrisks.

Risks relating to the ZDP Shares

Consequences of a standard listing

The ZDP Shares are expected to be admitted to the standard listing segment of the Official Listunder Chapter 14 of the Listing Rules and, as a consequence, the additional ongoing requirementsand protections applicable under the Listing Rules to a company admitted to the premium listingsegment of the Official List will not apply to the Issuer.

Chapter 14 of the Listing Rules, which sets out the requirements for standard listings, does notrequire the Issuer to comply with, inter alia, the provisions of Chapters 6 to 13 of the Listing Rules,being additional requirements for listing of equity securities (listing principles, sponsors, continuingobligations, significant transactions, related party transactions, dealing in own securities andtreasury shares and contents of circulars).

Subordination of ZDP Share obligations to the Group’s other obligations

The ZDP Shares rank ahead of the other classes of shares in the Issuer in the event of a windingup. However, the Issuer will have no assets other than its loan of the Net Placing Proceeds to theParent pursuant to the Loan Agreement and the obligation of the Parent to put the Issuer in aposition to meet its obligations in respect of the ZDP Shares pursuant to the ContributionAgreement.

The Parent has agreed under the Contribution Agreement that it will not, without the prior sanctionof a special resolution of the ZDP Shareholders passed at a separate general meeting of suchholders, incur additional third party borrowings that would rank in priority or pari passu to theParent’s payment obligations under the Loan Agreement or the Contribution Agreement if itsaggregate third party borrowings that rank in priority or pari passu to the Issuer’s paymentobligations under the Loan Agreement or the Contribution Agreement (including, for the avoidanceof doubt, the ZDP Shares at their then Accrued Capital Entitlement) would thereby exceed 55 percent. of the total assets of the Group.

All the Group’s real estate assets are held directly by the Parent or by subsidiary undertakings ofthe Parent.

The Parent’s obligations under the Contribution Agreement are structurally subordinated to theliabilities of its subsidiary undertakings and any relevant lenders may have recourse against theassets of the relevant security pools, which include most of the Group’s properties. Accordingly ifthere are defaults under such facilities and the lenders were to enforce that security, it could havea material adverse effect on the Parent’s ability to meet its obligations to the Issuer and therebythe Issuer’s ability to meet its obligations to the ZDP Shareholders.

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The ZDP Capital Entitlement is not guaranteed

ZDP Shareholders only have the right to receive the ZDP Capital Entitlement on the ZDPRepayment Date or, in limited circumstances, the Accrued Capital Entitlement on an earlier windingup of the Issuer. For example, in the event of a change of control in the Parent, the Issuer will calla class meeting of ZDP Shareholders to consider proposals for the continuation of the Issuer. Ifsuch proposals are not approved by a special resolution of the ZDP Shareholders, excluding anyvotes cast by persons acting in concert with the controlling shareholder(s), the Issuer will be woundup. ZDP Shareholders wishing to realise their investment earlier will have to dispose of their ZDPShares through the market.

Neither the ZDP Capital Entitlement nor the Accrued Capital Entitlement on an earlier winding upof the Issuer is guaranteed. The Issuer’s ability to pay such amounts is dependent on it havingsufficient cash resources to meet such obligation and therefore on the Parent meeting its obligationunder the Contribution Agreement to contribute such funds to the Issuer so as to ensure the Issuerhas sufficient assets at the relevant time. If the Parent does not, or is unable to, meet itsobligations under the Contribution Agreement, the Issuer will be unable to pay the ZDP CapitalEntitlement or the Accrued Capital Entitlement on an earlier winding up of the Issuer and ZDPShareholders may lose some or all of their investment. The ability of the Parent to meet itsobligations under the Contribution Agreement depends on its ability to realise value from itssubsidiary undertakings or to borrow or otherwise raise funds at the relevant time. Events orchanges that will have a material adverse effect on the business of the Parent and its subsidiaryundertakings or on the Group’s ability to realise its properties for their present value may have amaterial adverse effect on the Parent’s ability to meet such obligations.

There is no guarantee an active trading market will develop for ZDP Shares

Admission should not be taken as implying that there will be a liquid market for the ZDP Shares.The ZDP Shares may not be widely distributed and there is currently no active trading market forthe ZDP Shares.

There can be no guarantee an active trading market will develop or be sustained for the ZDPShares after Admission. If an active trading market is not developed or maintained, the liquidityand trading prices of the ZDP Shares could be adversely affected.

Interest rate rises may lead to reductions in the market value of the ZDP Shares

The market value of the ZDP Shares will be affected by changes in general interest rates, withupward movements in interest rates likely to lead to reductions in the market value of the ZDPShares, as the differential in return profile between the ZDP Shares and alternative investments islikely to narrow.

The ZDP Shares may trade at a discount

If the ZDP Shares are traded after Admission, they may trade at a discount to their AccruedCapital Entitlement, depending upon prevailing interest rates, the market for similar securities,general economic conditions and the financial condition and prospects of the Group. The value ofthe ZDP Shares can go down as well as up.

Other factors that may impact on market price and the realisable value of the ZDP Shares

The market price and the realisable value of the ZDP Shares, will be affected by interest rates,supply and demand for the ZDP Shares, market conditions and general investor sentiment. Assuch, the market value and the realisable value (prior to redemption) of the ZDP Shares willfluctuate and may vary considerably. In addition, the published market price of the ZDP Shares willbe, typically, their middle market price. Due to the potential difference between the middle marketprice of the ZDP Shares and the price at which the ZDP Shares can be sold, there is noguarantee that the realisable value of the ZDP Shares will be the same as the published marketprice.

Risks relating to the Group’s real estate assets that may affect the Parent’s ability to comply withits obligations in respect of the ZDP Shares

The following risk factors are those considered to be material in respect of the Group’s real estateassets and may singly or in combination reduce the value of the Group’s real estate assets and/orits reserves which could have a material adverse effect on the Parent’s ability to meet its

AI 9.2.1

12


obligations to the Issuer and thereby the Issuer’s ability to meet its obligations to the ZDPShareholders.

Commercial risks associated with real estate development

The Group’s development programme is likely to involve a higher degree of risk than is associatedwith its investment properties and will require the Group to assess each development opportunity,including the return on investment, transport and other infrastructure attributes of the location, thequality of the specification, the configuration and the flexibility of accommodation and the timingand delivery of the completed property. Inaccurate assessment of a development opportunity or adecrease in tenant demand due to competition from other commercial real estate properties oradverse market conditions, could result in a substantial proportion of the development remainingvacant after completion and exert pressure on the Group to provide rental incentives to tenants.Such vacancies and rental incentives would affect the level of rental income obtained, the amountof realised sales proceeds and the value of the development property all of which could have amaterial adverse effect on the Parent’s ability to meet its obligations to the Issuer and thereby theIssuer’s ability to meet its obligations to the ZDP Shareholders.

Any costs associated with potential investments which do not proceed to completion

The Group incurs certain third party costs associated with the sourcing of suitable investments.The Group can give no assurance as to the level of such costs, and given that there can be noguarantee that the Group will be successful in its negotiations to acquire any given investment.The greater the number of deals that do not reach completion, the greater the likely impact of suchcosts on the Group’s business, financial condition, results of operations or future prospects all ofwhich could have a material adverse effect on the Parent’s ability to meet its obligations to theIssuer and thereby the Issuer’s ability to meet its obligations to the ZDP Shareholders.

Risk associated with real estate development planning application and approval process

In the event that planning applications for the Parent’s development projects are unsuccessful orare granted subject to constraints or conditions which the Parent regards as unacceptable oronerous (and which the Parent is unsuccessful, or concludes is unlikely to be successful, inremoving), then the Parent may conclude that is not likely to realise anticipated value from suchdevelopment opportunities and, accordingly, may decide not to proceed with, or to defer,construction. In any event, the decision to proceed with construction of any development willdepend upon the Parent’s assessment that such development project is likely to provide asatisfactory return on investment having regard to such factors as the cost of construction, timingand delivery of completed property, planning and development constraints and conditions, and localand general market conditions. The Parent may defer or decide not to proceed with construction ofany development that does not satisfactorily meet its assessment criteria. The failure to obtainsatisfactory planning permission or any decision to defer or not proceed with construction couldhave a material adverse effect on the Parent’s ability to meet its obligations to the Issuer andthereby the Issuer’s ability to meet its obligations to the ZDP Shareholders.

Construction of the Group’s developments may be subject to delays or disruptions that areoutside of the Group’s control

The Group will depend on skilled third party contractors for the timely construction of itsdevelopments in accordance with international standards of quality and safety. The process ofconstruction may be delayed or disrupted by a number of factors, such as inclement weather oracts of nature, industrial accidents and defective building methods or materials. Any of thesefactors, alone or in combination, could delay or disrupt the construction process by halting theconstruction process or damaging materials or the development itself. In addition, the costs ofconstruction depend primarily on the costs of materials and labour, which may be subject tosignificant unforeseen increases. The Group may not be able to recover cost overruns under itsinsurance policies or from the responsible contractor or sub-contractor or may incur holding costsand the development may decrease in value, any of which could have a material adverse effect onthe Parent’s ability to meet its obligations to the Issuer and thereby the Issuer’s ability to meet itsobligations to the ZDP Shareholders.

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The Group’s development projects will be subject to the hazards and risks normally associatedwith the construction and development of commercial real estate

The Group’s development projects will be subject to the hazards and risks normally associated withthe construction and development of commercial real estate, including personal injury and propertydamage. The occurrence of any of these events could result in significant increased operatingcosts, reputational damage, fines, legal fees, or criminal prosecution of the companies within theGroup, and their directors or management, all of which could have a material adverse effect on theParent’s ability to meet its obligations to the Issuer and thereby the Issuer’s ability to meet itsobligations to the ZDP Shareholders.

The valuation of the Group’s real estate assets may not reflect their actual sale price

Real estate and real estate-related assets are inherently subjective as regards value due to theindividual nature of each property. As a result, valuations are subject to uncertainty. There is noassurance that the valuations of the Group’s real estate assets will reflect actual sale prices evenwhere any such sales occur shortly after the relevant valuation date.

Availability of investment opportunities

The availability of potential investments which meet the Parent’s strategy will depend on the stateof the economy and financial markets in the UK. Neither the Issuer nor the Parent can offerassurance that the Parent will be able to identify and make investments that are consistent with itsstrategy or that it will be able to fully invest its available capital.

Investment opportunities that may be identified by the Parent as being potential investments for theParent may be in the process of due diligence and/or negotiation or discussion. There is noguarantee that these investment opportunities will continue to be available in the future at a time orin a form which is convenient for the Parent or that the Parent will or will be able to invest in theseopportunities. The inability to find or agree terms of such investment opportunities could have amaterially adverse effect on the financial position and prospects of the Parent. This could have amaterial adverse effect on the Parent’s ability to meet its obligations to the Issuer and thereby theIssuer’s ability to meet its obligations to the ZDP Shareholders.

Rental income and defaults

The performance of the Group would be adversely affected by a further downturn in the UKproperty market in terms of capital value or a weakening of rental yields. In the event of a defaultby a tenant or during any other void period, the Group will suffer a rental shortfall and incuradditional expenses until the property is re-let. These expenses could include legal and surveyor’scosts in re-letting, maintenance costs, insurances, rates and marketing costs.

Certain of the Group’s properties have some level of vacancy. Certain of the Group’s investmentproperties may be suited to the particular needs of a specific tenant. The Group may have difficultyin obtaining a new tenant for any vacant space it has in its properties. If the vacancy continues fora longer period of time, the Group may suffer reduced revenues resulting in less cash availablefrom ordinary operations to meet the Parent’s obligations to the Issuer under the ContributionAgreement. In addition, the resale value of a property could be diminished because the marketvalue of a particular property will depend principally on the value of the leases of such property.This could have a material adverse effect on the Parent’s ability to meet its obligations to theIssuer and thereby the Issuer’s ability to meet its obligations to the ZDP Shareholders.

Dependency on tenants, ability to continue to lease properties on economically favourableterms and tenant default

The Group’s performance depends on its ability to lease space in its properties on economicallyfavourable terms. Results of operations may be adversely affected if a significant number oftenants are, or a major tenant is, unable to meet their obligations under their leases or if there is adecrease in demand for vacant properties so that the Group is unable to find new tenants ateconomically favourable rental prices.

Certain of the Group’s investment properties are occupied by a single tenant. Therefore thesuccess of those properties will depend on the financial stability of that tenant or of that tenantremaining a tenant. Lease payment defaults by tenants or the termination of a lease with a majortenant will cause the Group to suffer reduced revenue. A default by a tenant on its lease paymentscould force the Group to meet that tenant’s costs relating to this property. In the event of a tenant

14


default, the Group may experience delays in enforcing its rights as landlord and may incursubstantial costs, including litigation and related expenses, in protecting its investment and re-letting its property. If a lease is terminated, the Group may be unable to lease the property for therent previously received for a long period or at all or to sell the property without incurring a loss.This could have a material adverse effect on the Parent’s ability to meet its obligations to theIssuer and thereby the Issuer’s ability to meet its obligations to the ZDP Shareholders.

Competition with other participants in the real estate industry

The Group faces competition from other United Kingdom and international property groups andother commercial organisations active in the property markets. The Group also faces the threat ofnew competitors emerging. Competition in the property market may lead to an oversupply ofcommercial premises through overdevelopment, to prices for existing properties or land fordevelopment being inflated through competing bids by potential purchasers or to the maximumrents to be achieved from existing properties being adversely impacted by an oversupply ofcommercial space. Accordingly, the existence of such competition may have a material adverseimpact on the Group’s ability to secure tenants for its properties at satisfactory rental rates and ona timely basis and to acquire properties or develop land at satisfactory cost. This could have amaterial adverse effect on the Parent’s ability to meet its obligations to the Issuer and thereby theIssuer’s ability to meet its obligations to the ZDP Shareholders.

Inability to sell a real estate asset

The real estate market in the UK is affected by many factors that are beyond the Group’s control,such as general economic conditions, availability of financing, interest rates and other factors,including investor/buyer supply and demand. Real estate assets are relatively illiquid and moredifficult to realise than equities or bonds.

The Group cannot predict whether it will be able to sell any real estate investment for the price oron the terms set by it, or whether any price or other terms offered by a prospective purchaserwould be acceptable to it. The Group cannot also predict the length of time needed to find a willingpurchaser and to complete the sale of an investment. As a consequence the Parent is subject toprice risk resulting from this market illiquidity and may be required to sell investments at belowtheir current carrying value in order to provide funding to cover operating costs and other capitalcommitments.

The Group may be required to expend funds to correct defects or to make improvements before areal estate investment can be sold. The Group cannot be certain that it will have funds available tocorrect such defects or to make such improvements in the longer term. In acquiring a real estateasset, the Group may have agreed to restrictions that prohibit the sale of that real estate asset fora period of time or impose other restrictions, such as a limitation on the amount of debt that canbe placed or repaid on that real estate asset. These provisions would restrict the Group’s ability tosell a real estate asset. The inability to sell real estate assets could have a material adverse effecton the Parent’s ability to meet its obligations to the Issuer and thereby the Issuer’s ability to meetits obligations to the ZDP Shareholders.

Uninsured losses

The Parent will attempt to ensure that all of the Group’s real estate assets are adequately insuredto cover all losses. However, changes in the cost or availability of insurance could expose theGroup to uninsured losses. In the event that any of the real estate assets incurs a loss that is notfully covered by insurance, the value of the Group’s assets will be reduced by any such uninsuredloss. In addition, the Group may have no source of funding to repair or reconstruct the damagedasset and it cannot be certain that any such sources of funding will be available to it for suchpurposes in the future. Such eventualities could have a materially adverse effect on the Parent’sability to meet its obligations to the Issuer and thereby the Issuer’s ability to meet its obligations tothe ZDP Shareholders.

Discovery of previously undetected environmentally hazardous conditions

Under various UK environmental laws, a current or previous owner or operator of real propertymay be liable for the cost of removing or taking other remedial measures with regard to hazardousor toxic substances on such property. Such laws also generally require property owners oroperators to conduct environmental evaluation of the land and property, and they are thereforegenerally considered to be responsible and liable for the presence of such hazardous or toxic

15


substances. Environmental laws may also impose restrictions on the manner in which property maybe used or the type of business and activity conducted on the same. A property owner whoviolates environmental laws may be subject to sanctions which are enforced by governmentalagencies but which, in certain circumstances, may be initiated by private parties. In connection withthe acquisition and ownership of properties, the Group may be exposed to such costs. The cost ofdefending environmental claims or of compliance with environmental regulatory requirements or ofremediating any contaminated property could materially adversely affect the Group’s business,assets or results of operations and, consequently, have a material adverse effect on the Parent’sability to meet its obligations to the Issuer and thereby the Issuer’s ability to meet its obligations tothe ZDP Shareholders.

Breach of financial covenants

Should there be a future property market recession in the UK (of a similar nature to thatexperienced in the UK after the ‘‘credit crunch’’ in 2008) that causes a substantial fall in theunderlying asset value of the Group’s investments, which the Directors consider is possible butpresently unlikely, this could result in the Group breaching the financial covenants contained in oneor more of the Group’s loan facilities. Such a resultant breach may require the Group to repaysuch borrowings in whole or in part, together with any attendant costs (including the costs ofdisposing of any assets comprised in the Group’s investment property portfolio at less than theirmarket value or at a time and in circumstances where the realisation proceeds are reducedbecause of a downturn in property values generally or because there is limited time to market theproperty) and this could have a material adverse effect on the Parent’s ability to meet itsobligations to the Issuer and thereby the Issuer’s ability to meet its obligations to the ZDPShareholders.

The Group may not be able to secure non-recourse financing on satisfactory terms

The intention of the Group is to limit any lender’s recourse only to the assets or the entity makingthe acquisition in question with a view to ring-fencing the risks associated with those assets fromthe Group’s other assets. Although it is the Group’s intention to fund acquisitions using non-recourse financing, if the Group is not able to obtain non-recourse financing, the assets of theGroup as a whole may be at risk and, although the Directors do not presently intend to havecross-default provisions between ring-fenced portfolios, any cross-default provisions in the Group’sother loan facilities could magnify the effect of a default under a particular loan facility if such aprovision were exercised and this could have a material adverse effect on the Parent’s ability tomeet its obligations to the Issuer and thereby the Issuer’s ability to meet its obligations to the ZDPShareholders.

Changes in general economic conditions and fluctuations in the value of real estate assets

Any future property market recession in the UK could materially adversely affect the value of theGroup’s real estate assets. The market value of the Group’s real estate assets may be adverselyaffected by a number of the following factors:

* the overall conditions in the national and local economies in which the Group operates, suchas growth or contraction in gross domestic product, employment trends, consumer sentimentand the level of inflation and interest rates;

* local real estate conditions, such as the level of demand for and supply of commercial andresidential space;

* the Group’s ability to develop its real estate projects in order to maximise returns oninvestment from capital appreciation of the investment;

* external factors including major world events such as war or ‘‘acts of God’’ such as floodsand earthquakes;

* changes in laws, governmental regulations and major policy shifts;

* potential environmental or other legal liabilities;

* unforeseen capital expenditures;

* availability of financing; and

* changes in interest rates.

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Significant reductions in the value of the Group’s real estate assets could have a material adverseeffect on the Parent’s ability to meet its obligations to the Issuer and thereby the Issuer’s ability tomeet its obligations to the ZDP Shareholders.

Risks relating to the Group that could affect its ability to meet its obligations in respect of theZDP Shares

Dependence on the Parent’s Board

The Group’s ability to achieve its strategy is partially dependent on the performance of theExecutive Directors in terms of the acquisition and disposal of the Group’s investment properties,the carrying out of the Group’s development projects, the management of such properties and thedetermination of any financing arrangements. The performance of the Executive Directors cannotbe guaranteed. Failure by the Executive Directors to manage assets effectively could materiallyadversely affect the Group’s business, assets or results of operations and, consequently, have amaterial adverse effect on the Parent’s ability to meet its obligations to the Issuer and thereby theIssuer’s ability to meet its obligations to the ZDP Shareholders.

Consequently, the future ability of the Parent to successfully pursue its strategy may, among otherthings, depend on the ability of the ability of the Parent to retain its existing Executive Directorsand other staff and/or to recruit individuals of similar experience and calibre. Whilst the Parent hasendeavoured to ensure that the Executive Directors are suitably incentivised, the retention ofExecutive Directors cannot be guaranteed. Furthermore, in the event of a departure of anExecutive Director, there is no guarantee that the Parent would be able to recruit a suitablereplacement or that any delay in doing so would not adversely affect the performance of theParent. Events impacting but not entirely within the Parent’s control, such as its financialperformance, it being acquired or making acquisitions or changes to its internal policies andstructures could in turn affect its ability to retain Executive Directors.

In addition, the Issuer has no employees and no separate facilities and is reliant on the Parent,which has significant discretion as to the implementation of the Issuer’s operating policies andstrategies.

Risk relating to taxation

Changes in tax status, legislation or practice

Any change in the Issuer’s tax status, or in tax legislation or practice in the United Kingdom couldaffect the ability of the Parent to meet its obligations under the Loan Agreement and theContribution Agreement and/or the Issuer to meet its obligations in respect of the ZDP Shares.

Any change in taxation legislation or practice in the United Kingdom could also affect the taxtreatment of the ZDP Shares and the tax treatment of the ZDP Capital Entitlement, such astreating gains realised on sale of ZDP Shares as income, which is currently taxed at higher ratesthan capital gains.

Statements in this prospectus concerning the UK taxation treatment of UK ZDP Shareholders arebased upon current UK tax law and published practice, which law and practice are in principlesubject to change (potentially with retrospective effect) that could adversely affect the Issuer and/orthe Group and/or post-tax returns to ZDP Shareholders.

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IMPORTANT NOTICES

General

In assessing an investment in the Issuer, investors should rely only on the information in thisprospectus. No person has been authorised to give any information or make any representations inrelation to the Issuer or the Parent other than those contained in this prospectus and, if given ormade, such information or representations must not be relied upon as having been authorised bythe Issuer, the Directors, the Parent, Liberum, or any other person. Neither the delivery of thisprospectus nor any subscription or purchase of ZDP Shares made pursuant to this prospectusshall, under any circumstances, create any implication that there has been no change in the affairsof the Issuer and/or the Group since, or that the information contained herein is correct at any timesubsequent to, the date of this prospectus.

Apart from the responsibilities and liabilities, if any, which may be imposed on Liberum by FSMAor the regulatory regime established thereunder, Liberum accepts no responsibility whatsoever forthe contents of this prospectus or for any other statement made or purported to be made by it, oron its behalf, in connection with the Issuer, the Parent, the Group, the ZDP Shares or the Placing.Liberum accordingly disclaims all and any liability whether arising in tort, contract or otherwise(save as referred to above), which it might otherwise have in respect of this prospectus or anysuch statement.

The distribution of this prospectus in jurisdictions other than the United Kingdom may be restrictedby law and persons into whose possession this prospectus comes should inform themselves aboutand observe any such restrictions.

This prospectus does not constitute, and may not be used for the purposes of, an offer or aninvitation to apply for any ZDP Shares by any person: (i) in any jurisdiction in which such offer orinvitation is not authorised; or (ii) in any jurisdiction in which the person making such offer orinvitation is not qualified to do so; or (iii) to any person to whom it is unlawful to make such offeror invitation. The distribution of this prospectus and the offering of ZDP Shares in certainjurisdictions may be restricted. Accordingly, persons into whose possession this prospectus comesare required to inform themselves about and observe any restrictions as to the offer or sale ofZDP Shares and the distribution of this prospectus under the laws and regulations of anyjurisdiction in connection with any applications for ZDP Shares, including obtaining any requisitegovernmental or other consent and observing any other formality prescribed in such jurisdiction.Save for the United Kingdom, no action has been taken or will be taken in any jurisdiction by theIssuer that would permit a public offering of ZDP Shares in any jurisdiction where action for thatpurpose is required, nor has any such action been taken with respect to the possession ordistribution of this prospectus other than in any jurisdiction where action for that purpose isrequired.

The ZDP Shares are being offered and issued outside the United States in reliance on RegulationS. The ZDP Shares have not been nor will they be registered under the U.S. Securities Act or withany securities regulatory authority of any state or other jurisdiction of the United States. In addition,the Issuer has not registered and will not register under the U.S. Investment Company Act. TheZDP Shares have not been approved or disapproved by the SEC, any state securities commissionin the United States or any other U.S. regulatory authority, nor have any of the foregoingauthorities passed upon or endorsed the merits of the offering or the issue of the ZDP Shares orthe accuracy or adequacy of this prospectus. Any representation to the contrary is a criminaloffence in the United States and the re-offer or resale of any of the ZDP Shares in the UnitedStates may constitute a violation of U.S. law.

In connection with the Placing, Liberum and any of its Affiliates acting as an investor for its or theirown account(s), may subscribe for ZDP Shares and, in that capacity, may retain, purchase, sell,offer to sell or otherwise deal for its or their own account(s) in such securities of the Issuer, anyother securities of the Issuer or other related investments in connection with the Placing orotherwise. Accordingly, references in this prospectus to the ZDP Shares being issued, offered,subscribed or otherwise dealt with, should be read as including any issue or offer to, orsubscription or dealing by, Liberum and any of its Affiliates acting as an investor for its or theirown account(s). Neither Liberum nor any of its Affiliates intends to disclose the extent of any suchinvestment or transactions otherwise than in accordance with any legal or regulatory obligation todo so.

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Presentation of information

Currency presentation

Unless otherwise indicated, all references in this prospectus to ‘‘Sterling’’, ‘‘Pounds Sterling’’, ‘‘£’’or ‘‘pence’’ are to the lawful currency of the UK.

Definitions

A list of defined terms used in this prospectus is set out at Part IX of this prospectus.

Governing law

Unless otherwise stated, statements made in this prospectus are based on the law and practicecurrently in force in England and Wales and are subject to changes therein.

Investment considerations

The contents of this prospectus are not to be construed as advice relating to legal, financial,taxation, investment or any other matters. Prospective investors should inform themselves as to:

* the legal requirements within their own countries for the subscription for, purchase, holding,transfer or other disposal of ZDP Shares;

* any foreign exchange restrictions applicable to the subscription for, purchase, holding, transferor other disposal of ZDP Shares which they might encounter; and

* the income and other tax consequences which may apply in their own countries as a result ofthe subscription for, purchase, holding, transfer or other disposal of ZDP Shares.

Prospective investors must rely upon their own representatives, including their own legal advisersand accountants, as to legal, tax, investment or any other related matters concerning the Issuerand an investment in the ZDP Shares.

An investment in the ZDP Shares should be regarded as a long term investment.

This prospectus should be read in its entirety before making any investment in the ZDP Shares. AllZDP Shareholders are entitled to the benefit of, are bound by and are deemed to have notice of,the provisions of the Issuer’s memorandum of association and Articles, which investors shouldreview.

Website

The contents of the Parent’s website www.conygar.com do not form part of this prospectus.Prospective investors should base their decision whether or not to invest in the ZDP Shares on thecontents of this prospectus alone.

For the attention of prospective investors in the European Economic Area

In relation to each member state of the European Economic Area which has implemented theProspectus Directive (each, a ‘‘Relevant Member State’’), no ZDP Shares have been offered orwill be offered pursuant to the Placing to the public in that Relevant Member State prior to thepublication of a prospectus in relation to the ZDP Shares which has been approved by thecompetent authority in that Relevant Member State, or, where appropriate, approved in anotherRelevant Member State and notified to the competent authority in that Relevant Member State, allin accordance with the Prospectus Directive, except that offers of ZDP Shares to the public maybe made at any time under the following exemptions under the Prospectus Directive, if they areimplemented in that Relevant Member State:

a) to any legal entity which is a qualified investor as defined in the Prospectus Directive;

b) to fewer than 100, or, if the Relevant Member State has implemented the relevant provisionof Directive 2010/73/EU (the ‘‘2010 PD Amending Directive’’), 150 natural or legal persons(other than qualified investors as defined in the Prospectus Directive) in such RelevantMember State; or

c) in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of ZDP Shares shall result in a requirement for the publication of aprospectus pursuant to Article 3 of the Prospectus Directive or any measure implementing theProspectus Directive in a Relevant Member State and each person who initially acquires any ZDPShares or to whom any offer is made under the Placing will be deemed to have represented,

19


acknowledged and agreed that it is a ‘‘qualified investor’’ within the meaning of Article 2(1)(e) ofthe Prospectus Directive.

For the purposes of this provision, the expression an ‘‘offer to the public’’ in relation to any offerof ZDP Shares in any Relevant Member State means a communication in any form and by anymeans presenting sufficient information on the terms of the offer and any ZDP Shares to beoffered so as to enable an investor to decide to purchase or subscribe for the ZDP Shares, as thesame may be varied in that Relevant Member State by any measure implementing the ProspectusDirective in that Relevant Member State and the expression ‘‘Prospectus Directive’’ meansDirective 2003/71/EC and the amendments thereto, including the 2010 PD Amending Directive, tothe extent implemented in the Relevant Member State and includes any relevant implementingmeasure in each Relevant Member State.

The distribution of this prospectus in other jurisdictions may be restricted by law and thereforepersons into whose possession this prospectus comes should inform themselves about andobserve any such restrictions.

Forward-looking statements

This prospectus includes statements that are, or may be deemed to be ‘‘forward-lookingstatements’’. These forward-looking statements can be identified by the use of forward-lookingterminology, including the terms ‘‘believes’’, ‘‘estimates’’, ‘‘plans’’, ‘‘projects’’, ‘‘anticipates’’,‘‘expects’’, ‘‘intends’’, ‘‘may’’, ‘‘will’’, or ‘‘should’’ or, in each case, their negative or othervariations or comparable terminology. These forward-looking statements include all matters that arenot historical facts. They appear in a number of places throughout this prospectus and includestatements regarding the Group’s intentions, beliefs or current expectations concerning, amongother things, the Group’s financial condition and prospects.

By their nature, forward-looking statements involve risk and uncertainty because they relate tofuture events and circumstances. A number of factors could cause results and developments todiffer materially from those expressed or implied by the forward-looking statements including,without limitation, the factors discussed in the sections entitled ‘‘Risk Factors’’ on pages 11 to 17of this prospectus and in Part III of this prospectus.

Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements in this prospectus reflect the Issuer’s and the Parent’s current view with respectto future events and are subject to risks relating to future events and other risks, uncertainties andassumptions relating to the Group. Investors should specifically consider the factors identified inthis prospectus which could cause actual results to differ before making an investment decision.Subject to the requirements of the Prospectus Rules, the Listing Rules and Disclosure andTransparency Rules, neither the Issuer nor the Parent undertakes any obligation publicly to releasethe result of any revisions to any forward-looking statements in this prospectus that may occur dueto any change in the Issuer’s or the Parent’s (as applicable) expectations or to reflect events orcircumstances after the date of this prospectus. For the avoidance of doubt, nothing in thisparagraph constitutes a qualification of the working capital statement contained in paragraph 16 ofPart VIII of this prospectus.

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CONSEQUENCES OF A STANDARD LISTING

Application will be made for the ZDP Shares to be admitted to a standard listing on the Official Listpursuant to Chapter 14 of the Listing Rules, which sets out the requirements for standard listings.The Issuer will not formally be subject to the Listing Principles (as set out in Chapter 7 of theListing Rules) and will not be required to comply with them.

As a consequence of the standard listing, additional on-going requirements and protectionsapplicable to a premium listing under the Listing Rules will not apply to the Issuer. Shareholderswill therefore not receive the full protections of the Listing Rules otherwise associated with apremium listing.

An applicant that is applying for a standard listing of equity securities must comply with all therequirements listed in Chapter 2 of the Listing Rules, which specifies the requirements for listing forall securities. Where an application is made for the admission to the Official List of a class ofshares, at least 25 per cent. of shares of that class must be distributed to the public in one ormore EEA states. Listing Rule 14.3 sets out the continuing obligations applicable to the issuer andrequires that the issuer’s listed securities must be admitted to trading on a regulated market at alltimes. The applicant must have a minimum number of shares of any listed class (25 per cent.) inpublic hands at all times in the relevant jurisdictions and must notify the FCA as soon as possibleif these holdings fall below the stated level. There is a number of other continuing obligations setout in Chapter 14 of the Listing Rules that will be applicable to the Issuer.

These include requirements as to:

a) forwarding of circulars and other documentation to the FCA for publication through thenational storage mechanism, and related notification to a Regulatory Information Service;

b) the provision of contact details of appropriate persons nominated to act as a first point ofcontact with the FCA in relation to compliance with the Listing Rules and the Disclosure andTransparency Rules;

c) the form and content of temporary and definitive documents of title;

d) the appointment of a registrar;

e) Regulatory Information Service notification obligations in relation to a range of debt and equitycapital issues; and

f) compliance with, in particular, Chapters 4, 5 (if applicable) and 6 of the Disclosure andTransparency Rules.

Chapter 14 of the Listing Rules, which sets out the requirements for standard listings, does notrequire the Issuer to comply with, inter alia, the provisions of Chapters 6 to 13 of the Listing Rulesbeing additional requirements for listing of equity securities (listing principles, sponsors, continuing,obligations, significant transactions, related party transactions, dealing in own securities andtreasury shares and contents of circulars).

Chapter 6 of the Listing Rules contains additional requirements for the listing of equity securities,which are only applicable for companies with a ‘‘premium’’ listing. Consequently, the Issuer doesnot intend to comply with such provisions.

The Issuer is not required, and does not intend, to appoint a listing sponsor under Chapter 8 of theListing Rules to guide the Issuer in understanding and meeting its responsibilities under the ListingRules.

The provisions of Chapter 9 of the Listing Rules (continuing obligations) will not apply to theIssuer. Chapter 9 includes provisions relating to transactions, including, inter alia, requirementsrelating to further issues of shares, the ability to issue shares at a discount in excess of 10 percent. of market value, notifications and contents of financial information. The Issuer is not requiredto comply with Chapters 10, 11, 12 and 13 under the Listing Rules (significant transactions, relatedparty transactions, dealing in own securities, treasury shares and the content of circulars).

The Contribution Agreement and the Issuer’s Articles (relevant provisions of each of which are setout in Part VIII of this prospectus) contain certain limitations on the actions of the Parent and theIssuer which are designed to protect the interests of the ZDP Shareholders. For example, exceptwith the previous sanction of a special resolution of the ZDP Shareholders, the Parent will act incompliance with, and will procure that the other members of the Group shall act in compliancewith, the provisions relating to itself and other members of the Group set out in the Issuer’s

21


Articles (as more particularly described at paragraph 8.4.1 of Part VIII of this prospectus). TheParent has also undertaken that it will remain the sole holder of the Issuer’s ordinary shares.

In the event that the Issuer voluntarily decides to comply with any Listing Rules which areapplicable solely to companies with a premium listing, it should be noted that neither the UKListing Authority nor the London Stock Exchange will have the authority to monitor the Issuer’svoluntary compliance with any of the Listing Rules applicable to companies with a premium listing(and will not do so) nor will they impose sanctions in respect of any breach of such requirementsby the Issuer.

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EXPECTED TIMETABLE

Publication of this prospectus 7 January 2014

Admission and dealings in the ZDP Shares commences 8.00 a.m. on 10 January 2014

CREST accounts credited in respect of the ZDP Shares 10 January 2014

Share certificates despatched in respect of the ZDP Shares week commencing 27 January 2014(or as soon as possible thereafter)

The dates and times specified are subject to change and will be notified by the Issuer through a Regulatory Information Service. Allreferences to times in this prospectus are to London times unless otherwise stated.

PLACING STATISTICS

The following Placing statistics are based on, and should be read in conjunction with, theAssumptions set out in Part VI of this prospectus. The attention of prospective investors is alsodrawn to the Risk Factors set out on pages 11 to 17 of this prospectus.

Placing Price £1.00

Number of ZDP Shares being issued pursuant to the Placing 30 million

Gross Placing Proceeds £30 million

Net Placing Proceeds £29.3 million

ZDP Capital Entitlement per ZDP Share 130.7 pence

Gross Redemption Yield per ZDP Share at the Placing Price 5.5 per cent.

Cover for the ZDP Shares at Admission based on the Placing Price 4.71x

Investment Property Cover for the ZDP Shares at Admission based on thePlacing Price

5.76x

DEALING CODES

The dealing codes for the ZDP Shares will be as follows:

ISIN GB00BH4TCL65

SEDOL BH4TCL6

Ticker CICZ

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DIRECTORS AND ADVISERS OF THE ISSUER

Directors of the Issuer

Nigel Hamway (Chairman)Robert Ware

Peter Batchelor

Directors of the Parent

Nigel Hamway (Chairman)Robert Ware

Peter BatchelorSteven Vaughan

Preston RablMichael Wigley

all of

Registered office of the Issuer and the Parent

Fourth Floor110 Wigmore StreetLondon W1U 3RW

Sole bookrunner and financial adviserLiberum Capital Limited

Ropemaker Place, Level 1225 Ropemaker Street

London EC2Y 9LY

Company secretaryPeter Batchelor


Valuers to the GroupJones Lang LaSalle Limited

22 Hanover SquareLondon W1S 1JA

Solicitors to the IssuerLawrence Graham LLP

4 More London RiversideLondon SE1 2AU

AuditorRees Pollock

35 New Bridge StreetLondon EC4V 6BW

RegistrarShare Registrars Limited

Suite EFirst Floor

9 Lion and Lamb YardFarnham

Surrey GU9 7LLSolicitors to the sole bookrunner

and financial adviserStephenson Harwood LLP

1 Finsbury CircusLondon EC2M 7SH

24


PART I

INFORMATION ON THE PLACING

Introduction

The Conygar Investment Company PLC is the holding company of a property trading, investmentand development group primarily dealing in UK property. The Group aims to acquire propertyassets and companies that own property assets where the Directors believe the Group can addvalue using property management, development and transaction structuring skills.

The Group was formed in September 2003 and was admitted to trading on AIM in October 2003.Following an acquisition that constituted a reverse takeover, the Group was re-admitted to tradingon AIM in August 2009.

The Group’s investment property portfolio currently consists of 45 properties located across theUnited Kingdom. The portfolio was independently valued at £164.8 million as at 30 September2013. The contracted annual rent roll was £14.4 million as at 30 September 2013 and net propertyincome amounted to £12.9 million.

The Group’s development property portfolio consists of 7 projects which should deliver more than2,000 residential units, 1,400 marina berths and in excess of 400,000 square feet of commercialand retail development. The aggregate cost of the development projects as at 30 September 2013amounted to £32.2 million.

The most recently published audited Net Asset Value (as at 30 September 2013) is £155.1 million,which includes cash of £31.6 million and total bank debt of £70.5 million. Profit before taxationamounted to £7.7 million as at 30 September 2013.

The Issuer

The Issuer is a wholly owned subsidiary of the Parent and was incorporated by the Parent to bethe issuer of the ZDP Shares. The Issuer has not carried on any business prior to the date of thisprospectus.

The ZDP Shares

The ZDP Shareholders will be entitled to receive a capital sum on the ZDP Repayment Date,being 9 January 2019. The capital sum per ZDP Share will be £1.00 increased at an equivalentannual rate equal to the Gross Redemption Yield from 10 January 2014 compounding daily untilthe ZDP Repayment Date, which results in a ZDP Capital Entitlement of 130.7 pence per ZDPShare.

A repayment of the ZDP Capital Entitlement on the ZDP Repayment Date would generate a GrossRedemption Yield of 5.5 per cent. based on the Placing Price and the Assumptions. Furthermore,the ZDP Capital Entitlement would, on Admission, have a Cover of 4.71 times and an InvestmentProperty Cover of 5.76 times.

The Placing

The Placing comprises a limited offer by the Issuer of 30 million ZDP Shares to raise GrossPlacing Proceeds of £30 million (Net Placing Proceeds of approximately £29.3 million). TheDirectors have determined that the ZDP Shares will be issued at £1.00 per ZDP Share. ThePlacing is not being underwritten.

The Issuer, the Parent and Liberum have entered into the Placing Agreement pursuant to whichLiberum has agreed, as agent for the Issuer, to use its reasonable endeavours to procuresubscribers for the ZDP Shares under the Placing at the Placing Price in return for the payment bythe Issuer of placing commissions. A summary of the terms of the Placing Agreement is set out inparagraph 11.5 of Part VIII of this prospectus.

In the event that there are any significant changes affecting any of the matters described in thisprospectus or where any significant new matters have arisen after the publication of thisprospectus and prior to Admission, the Issuer will publish a supplementary prospectus. Thesupplementary prospectus will give details of the significant change(s) or the significant newmatter(s).

25

Should the Placing be aborted or fail to complete for any reason, monies received will be returnedwithout interest at the risk of the applicant.

Definitive certificates in respect of ZDP Shares in certificated form will be dispatched by post in theweek commencing 27 January 2014. Temporary documents of title will not be issued.

Reasons for the Placing and use of proceeds

Immediately following Admission, the Issuer will lend the Net Placing Proceeds to the Parent byway of an interest free loan pursuant to the Loan Agreement. The Net Placing Proceeds will beapplied towards further acquisitions of investment properties and in realising value from the Group’sdevelopment projects in line with the Group’s stated strategy of investing in property assets andcompanies where the Directors believe the Group can add significant value using its propertymanagement, development and transaction structuring skills.

Clearing and settlement

Payment for the ZDP Shares should be made in accordance with settlement instructions providedto placees by (or on behalf of) the Issuer or Liberum.

ZDP Shares will be issued in registered form and may be held in either certificated oruncertificated form and settled through CREST from Admission. In the case of ZDP Shares to beissued in uncertificated form pursuant to the Placing, these will be transferred to successfulapplicants through the CREST system. Accordingly, settlement of transactions in the ZDP Sharesfollowing Admission may take place within the CREST system if any ZDP Shareholder so wishes.

CREST is a paperless book-entry settlement system operated by Euroclear which enablessecurities to be evidenced otherwise than by certificates and transferred otherwise than by writteninstrument. CREST is a voluntary system and ZDP Shareholders who wish to receive and retainshare certificates will be able to do so.

The Issuer will arrange for Euroclear to be instructed on 10 January 2014 to credit the appropriateCREST accounts of the subscribers concerned or their nominees with their respective entitlementsto ZDP Shares. The names of subscribers or their nominees investing through their CRESTaccounts will be entered directly on to the share register of the Issuer.

The transfer of ZDP Shares out of the CREST system following the Placing should be arrangeddirectly through CREST. However, an investor’s beneficial holding held through the CREST systemmay be exchanged, in whole or in part, only upon the specific request of the registered holder toCREST for share certificates or an uncertificated holding in definitive registered form. If a ZDPShareholder or transferee requests ZDP Shares to be issued in certificated form and is holdingsuch ZDP Shares outside CREST, a share certificate will be despatched either to him or hisnominated agent (at his risk) within 21 days of completion of the registration process or transfer,as the case may be, of the ZDP Shares. ZDP Shareholders holding definitive certificates may electat a later date to hold such ZDP Shares through CREST or in uncertificated form provided theysurrender their definitive certificates.

Dealings

Application has been made to the UK Listing Authority and the London Stock Exchange for theZDP Shares issued pursuant to the Placing to be admitted to listing on the standard segment ofthe Official List (by way of a standard listing under Chapter 14 of the Listing Rules) and to tradingon the London Stock Exchange’s main market for listed securities respectively.

It is expected that Admission will become effective and that unconditional dealing in the ZDPShares will commence at 8.00 a.m. on 10 January 2014. Dealings in ZDP Shares in advance ofthe crediting of the relevant stock account shall be at the risk of the person concerned.

The ISIN number of the ZDP Shares is GB00BH4TCL65 and the SEDOL code is BH4TCL6. TheIssuer does not guarantee that at any particular time market maker(s) will be willing to make amarket in the ZDP Shares, nor does it guarantee the price at which a market will be made in theZDP Shares.

The Main Market and the Official List

The London Stock Exchange’s main market is an EU regulated market. Consequently, uponAdmission the Issuer will be subject to the Prospectus Rules, the Disclosure and Transparency

26


Rules (further details of which are set out at paragraph 3.7 of Part VIII of this prospectus) and theMarket Abuse Directive (as implemented in the United Kingdom).

Overseas Persons

The attention of potential investors in the Placing who are not resident in, or who are not citizensof, the UK is drawn to the paragraphs below.

The offer of ZDP Shares under the Placing to Overseas Persons may be affected by the laws ofthe relevant jurisdictions. Such persons should consult their professional advisers as to whetherthey require any government or other consents or need to observe any applicable legalrequirements to enable them to obtain ZDP Shares under the Placing. It is the responsibility of allOverseas Persons receiving this prospectus and/or wishing to subscribe for ZDP Shares under thePlacing to satisfy themselves as to full observance of the laws of the relevant territory inconnection therewith, including obtaining all necessary governmental or other consents that may berequired and observing all other formalities needing to be observed and paying any issue, transferor other taxes due in such territory.

No person receiving a copy of this prospectus in any territory other than the UK may treat thesame as constituting an offer or invitation to him/her, unless in the relevant territory such an offercan lawfully be made to him/her without compliance with any further registration or other legalrequirements.

Investors should additionally consider the provisions set out under the heading Important Noticeson pages 18 to 20 of this prospectus.

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PART II

INFORMATION ON THE ISSUER

Information on the Issuer and intra-group arrangements

The Issuer is a wholly-owned subsidiary of the Parent and has been established solely for thepurpose of issuing the ZDP Shares. The Issuer has not traded and has no business or employees.Following the Placing, the Parent will continue to control all of the voting shares in the Issuer,although ZDP Shareholders will have protections afforded to them by virtue of the class rightsattached to ZDP Shares and the protections afforded to the Issuer under the ContributionAgreement.

As from the date of issue of the ZDP Shares, the Issuer’s only material financial obligations will bein respect of the ZDP Shares and its only material assets will be its rights under the LoanAgreement, under which it will lend the Net Placing Proceeds to the Parent, and its right to receivecontributions from the Parent under the Contribution Agreement. The loan will be interest free andunsecured.

In order, however, for the Issuer to be in a position to repay the ZDP Capital Entitlement on theZDP Repayment Date (or earlier if required), the Issuer and the Parent have entered intoarrangements whereby sufficient assets of the Parent are required to be made available to theIssuer to meet the ZDP Capital Entitlement or the Accrued Capital Entitlement on an earlierwinding up of the Issuer.

The Parent has undertaken in the Contribution Agreement to contribute such funds to the Issuer aswill ensure that the Issuer will have sufficient assets to pay the Accrued Capital Entitlement on theZDP Shares (including the ZDP Capital Entitlement on the ZDP Repayment Date) and to pay alloperational costs and expenses incurred by the Issuer. In addition, the Parent and the Issuer haveundertaken not to take certain specified actions without the previous sanction of a specialresolution of the ZDP Shareholders passed at a separate general meeting.

The provisions of the Loan Agreement and the Contribution Agreement are more fully described inparagraphs 11.1 and 11.2 of Part VIII of this prospectus respectively.

The Issuer has not traded. As from the date of issue of the ZDP Shares, the Issuer’s only materialfinancial obligations will be in respect of the ZDP Shares and its only material assets will be itsrights under the Loan Agreement, under which it will lend the Net Placing Proceeds to the Parent,and its right to receive contributions from the Parent under the Contribution Agreement.

The Directors intend to meet the Parent’s obligations under the Contribution Agreement throughany one or more of (i) income generated from the Group’s property assets; (ii) the realisation orsale of those assets; (iii) through borrowing or other financing; or (iv) a fresh issue of shares orsecurities by it or any of its subsidiary undertakings. Investors should note that neither the ZDPCapital Entitlement nor the Accrued Capital Entitlement on an earlier winding up of the Issuer isguaranteed and is dependent upon the Parent having sufficient assets to satisfy its obligationsunder the Contribution Agreement and the Loan Agreement.

Features of the ZDP Shares

ZDP Shareholders will be entitled to receive a capital sum on the ZDP Repayment Date, being9 January 2019. The capital sum per ZDP Share will be £1.00 increased at an equivalent annualrate equal to the Gross Redemption Yield from 10 January 2014 compounding daily until the ZDPRepayment Date, which results in a ZDP Capital Entitlement of 130.7 pence per ZDP Share.

The ZDP Shares carry no rights to receive dividends out of the revenue or any other profits of theIssuer. The ZDP Shares do not normally carry the right to vote at general meetings although theycarry the right to vote at general meetings as a class on certain proposals which would be likely tomaterially affect their position. Furthermore, under the terms of the Contribution Agreement, certainactions may not be taken by the Parent without the prior consent as a class of ZDP Shareholders.

A repayment of the ZDP Capital Entitlement would generate a Gross Redemption Yield of 5.5 percent. based on the Placing Price and the Assumptions. Furthermore, the ZDP Capital Entitlementwould, on Admission, have a Cover of 4.71 times and an Investment Property Cover of 5.76 times.

The Gross Redemption Yield is not and should not be taken as a forecast of profits and there canbe no assurance that the ZDP Capital Entitlement will be repaid on the ZDP Repayment Date or

28


the Accrued Capital Entitlement on the date of any winding up of the Issuer prior to the ZDPRepayment Date.

Further information on the rights attaching to the ZDP Shares is set out in Part V and paragraph 8of Part VIII of this prospectus.

Additional information on the Issuer

Board of the Issuer and Corporate Governance

The Board of the Issuer consists of the Nigel Hamway, Robert Ware and Peter Batchelor, furtherdetails of whom are set out in Part III of this prospectus. The ZDP Board will not be entitled toadditional remuneration in respect of the provision of services to the Issuer. The Parent will beresponsible for all and any amounts which may become payable to the board of the Issuer inrespect of expenses for which they are entitled to be reimbursed as directors of a wholly ownedsubsidiary of the Parent. The amount of remuneration received by the Directors from the Parent forthe last full financial year is set out in paragraph 6.8 of Part VIII of this prospectus.

The Issuer is not obliged to comply with the UK Corporate Governance Code nor does the Issuerintend to comply with that Code on a voluntary basis. The Issuer is a special purpose vehicleformed solely to issue the ZDP Shares. Its costs and expenses are all borne by the Parentpursuant to the Contribution Agreement and therefore it has no actual business (in terms oftransactions or cash flows) of its own. Its only assets are its rights under the Loan Agreement andthe Contribution Agreement.

In the opinion of the Directors the interests of the Issuer and the ZDP Shareholders will beadequately covered by the governance procedures applicable to the Parent (details of which areset out in Part III of this prospectus).

It is intended that the ZDP Board will meet quarterly to consider compliance with the terms of theContribution Agreement and the interim and annual reports of the Issuer.

Given that the Issuer will have no actual business (in terms of transactions or cash flows) it is notconsidered necessary to have any independent directors and all matters relevant for considerationby the ZDP Board can be considered and addressed by non-independent directors who will havedue regard to the interests of the ZDP Shareholders.

Operating costs and expenses

The Issuer’s annual operating expenses will be borne by the Parent in accordance with the termsof the Contribution Agreement.

Dividends

The Issuer does not intend to pay dividends while the ZDP Shares are in issue.

Further information

Further information about the Issuer is set out in Part III of this prospectus.

Capital and indebtedness of the Issuer

As at the date of this prospectus, save for the proposed issue of the Placing Shares, the Issuerdoes not have any guaranteed, unguaranteed, secured or unsecured indebtedness, includingindirect and contingent indebtedness.

Profile of typical investor

An investment in the ZDP Shares is intended to constitute part of a diversified investment portfoliofor institutional or high net worth/sophisticated investors who are seeking exposure to a wholerange of sectors and markets. An investor in the ZDP Shares will be capable of evaluating therisks (including potential capital loss) and merits of such investments. Any investor must be able toaccept the possibility of losses and an investment in ZDP Shares is only intended for investorswho can afford to set aside the invested capital for a number of years.

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PART III

INFORMATION ON THE PARENT

Introduction

The Conygar Investment Company PLC is the holding company of a property trading, investmentand development group primarily dealing in UK property. The Group aims to acquire propertyassets and companies that own property assets where the Directors believe the Group can addvalue using property management, development and transaction structuring skills.

The Group was formed in September 2003 and was admitted to trading on AIM in October 2003.Following an acquisition that constituted a reverse takeover the Group was re-admitted to tradingon AIM in August 2009.

Strategy

The Group aims to acquire property assets and companies that own significant property assetswhere the Directors believe the Group can add significant value using property management,development and transaction structuring skills.

The Group’s strategy is to acquire property assets that are under-valued or where value can beadded and to realise the assets as soon as practicable in order to repay any associated fundingand to recycle the capital into other opportunities and to fund the Group’s development projects.The objective is to achieve capital appreciation in the Net Asset Value per Share.

The Group operates two major strands: property investment and development projects. Theinvestment property portfolio generates surplus cash flow whilst at the same time the Group iscreating a pipeline of development projects that the Directors currently believe are well positionedto deliver good returns in the medium term. The Group focuses upon positive cash flow andcurrently intend to utilise modest levels of gearing to enhance returns where necessary. Assets arerecycled to release capital as opportunities present themselves. The Directors are content to holdcash and adopt a patient strategy unless there is a compelling reason to invest.

The strategy of the Parent focuses upon debt repayment as a priority and it is the intention thatthis will continue to be the approach adopted in the future. The Parent also seeks to minimiseadministrative overhead and utilises in-house expertise in property, development, corporate financeand taxation where possible.

At any point in time, the Parent is evaluating a pipeline of opportunities many of which do not fulfilthe Parent’s criteria for investment. As a majority of evaluation work is carried out in-house, theDirectors endeavour to keep abort costs to a minimum. Whilst the principal geographical focus isthe UK, the Parent will also consider overseas opportunities whether forming all or part of anoverall transaction. The Parent has no particular property sector focus, having owned retail,industrial and office assets. The Parent will enter into joint venture arrangements where it theDirectors consider it beneficial to do so.

Current trading and outlook

The Directors believe that the commercial property market outside London appears to haverecovered slightly and sentiment has improved, which is reflected by the Group’s investmentsrecovering losses suffered in the first half of 2013. The Group’s investment portfolio has beenindependently valued at £164.8 million as at 30 September 2013 with the investment propertyportfolio increased in value by 0.4 per cent. on a like for like basis since 30 September 2012,however the valuation increased by 2 per cent. since 30 March 2013, from the half year recoveringlosses in that earlier period.

The investment property portfolio of the Group has a contracted rent roll of £14.4 million perannum and continues to generate surplus cash flow which helps fund the Group’s developmentprojects.

As at the date of this prospectus, the Group has available cash of approximately £31.6 million tobe applied towards advancing its development projects and making further acquisitions. In addition,the Group can draw down a further £20 million from its committed bank facility with Lloyds BankingGroup plc. The Group remains well funded to continue to invest in the recovering UK real estatesector.

30


The Group’s immediate focus is to continue to progress its substantial pipeline of developmentprojects which are well positioned to benefit from the improving market sentiment and to continueto seek other investment opportunities. The Directors maintain a positive outlook on the businessfor the medium term and trading results continue in line with the Directors expectations.

On 4 December 2013 the Parent entered into a joint venture agreement with Mr. Fred Done ofBetfred through his truck stop subsidiary Road King, to develop and operate a truck stop facility atits site at Parc Cybi, Holyhead, Anglesey. The joint venture (Road King Holyhead) will occupy the14 acre site on the development site and create a 200 space truck stop and associated amenitiestogether with ten logistic support units. The Parent and Road King have each committed£2.5 million to the joint venture in order to fund the construction and start up of the truck stopoperations.

Net assets of the Group

The net assets of the Group as at 30 September 2013 were as follows:

£m

perOrdinary

Share(pence)

Investment properties 164.8 185.5Development projects 32.2 36.2Cash 31.6 35.6Other net liabilities (4.1) (4.6)

224.5 252.7Bank loans (69.4) (78.1)

155.1 174.6

Description of the Group’s existing investment property portfolio

The Group’s investment property portfolio consists of 45 properties with an aggregate value as at30 September 2013 (the date of the most recent valuation) of £164.8 million. An analysis andoverview of the Group’s investment property portfolio as at 30 September 2013 is set out below.

Summary of investment property portfolio

2013 2012

Valuation at 30 September £164,765,000 £175,995,000

Number of properties 45 48

Contracted rent (per annum) £14,355,810 £15,766,763

Current ERV (per annum) £16,859,125 £17,549,979

Net initial yield 7.48% 8.22%

Equivalent yield 8.99% 9.15%

Reversionary yield 9.54% 9.48%

ERV of vacant units (per annum) £2,815,274 £2,136,042

Vacancy rate 16.70% 10.40%

Average unexpired lease lengths 4.80 years 4.50 years

Asset management

At 30 September 2013, the contracted rent for the Group’s investment property portfolio was£14.4 million with an ERV of £16.9 million, the reduction from 2012 being mainly attributable toproperty disposals in the year. The ERV of vacant space was £2.8 million of which GeoffreyHouse, Maidenhead; Blackpole Trading Estate, Worcester; Advantage, Reading and BrunswickPoint, Leeds account for the majority. The overall vacancy rate in the portfolio was 16.70 per cent.up from 10.40 per cent. in 2012, the increase arising from expiring leases at Maidenhead andWorcester that were not renewed. The average unexpired lease length increased to 4.80 years

31


from 4.50 years at 30 September 2012, principally due to lease renewals and new lettings in theperiod.

Whilst tenants remain under pressure, there has been good progress on asset management andthere are signs of improving sentiment in the occupier market with the Group recently receiving aconsiderable number of enquiries, many of which the Directors hope to convert to letting. TheGroup maintains good communication with tenants where leases are shortening or where breaksare impending and is fortunate that arrears remain low and that 95 per cent. to 97 per cent. of rentis collected within ten days of a quarter.

In terms of lettings, the Group agreed new lettings contributing £579,136 per annum of newincome at or around ERV and agreed lease renewals retaining £1,650,560 per annum of income,again at or around ERV. The highlights include:

* A 4 year lease extension to the Scottish Care Inspectorate at Compass House, Dundee atthe existing rent of £380,000 per annum in return for a twelve month rent free period. Leaseexpiry is now 19 April 2023.

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

* Two leases agreed with Amtek Investments UK Limited at Freebournes Drive, Witham at atotal rent of £420,000 per annum. These leases expire on 3 June 2022 and are subject to atwelve month rent free period.

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

* Creating a single unit from three previous units at York House, Felixstowe and letting it toPoundland at a rent of £120,000 per annum. This new lease is for a ten year term subject toa twelve month rent free period.

Disposals

The Group disposed of six investment properties during the year at Crystal Drive, Oldbury; BrookPoint, Whetstone; Simpson Parkway, Livingston and 3 buildings at The Links, Warrington. Total netsale proceeds were £12.7 million, generating a small loss to valuation of £307,000 mostlyattributable to professional and other sale fees. The Group will continue to dispose of assets asopportunities arise and where no further value can be added.

Valuation

The investment property portfolio has been independently valued by Jones Lang LaSalle at£164.8 million as at 30 September 2013. The investment property portfolio increased in value by0.4 per cent. on a like for like basis, however the valuation increased by 2 per cent. from the halfyear recovering losses in that period which is an encouraging sign. The investment property marketoutside central London appears to have recovered slightly and sentiment has improved, which theParent Directors hope will translate into increased value. Assets require active management toprotect income and value and the Group is seeing an increase in potential transactions.

Capital Expenditure

The Group incurred £1 million of capital expenditure during 2013, which was fully financed fromexisting cash flow. The Group is undertaking refurbishment of some of the space within theEdinmore portfolio, in particular at Norfolk House, Birmingham where, having refurbished the vacant2nd floor, the Group is looking at refurbishing the 3rd floor. The Group is also carrying out smallrefurbishments of space elsewhere to optimise the chances of letting and is also resurfacing thecar park at the Brunel Centre, Bletchley at a cost of approximately £600,000, although Sainsbury’shave agreed to contribute 30 per cent. of the cost as part of joint arrangements with them. Whilstthere will always be a level of refurbishment work required throughout the portfolio, as at30 September 2013 the Group had no contractual capital expenditure commitments in excess of£1,000,000.

Development projects

Haverfordwest

The Group submitted a planning application for its development at Haverfordwest, Pembrokeshireto build 835 residential properties and a 60,000 square feet Sainsbury’s retail food store and in

32


September 2013, the Council resolved to grant planning permission which will be formally grantedupon the signing of a section 106 agreement and planning conditions. The Group can now workupon the detail of finalising the infrastructure and associated conditions to enable the conditionalsale of the 9 acre site to Sainsbury’s to complete.

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

Holyhead Waterfront

The Group has planning permission for this project which includes plans for 326 apartments andtownhouses, a 500 berth marina, 50,000 square feet of retail, leisure, restaurants, hotel and officespace, with a very flexible design layout, in a prime location overlooking the marina. The Group isalso making a provision for various local amenities and visitor attractions. The site covers inexcess of half a mile of water frontage and is being developed jointly with Stena Line PortsLimited.

The Group is close to finalising the section 106 planning agreement and planning conditions anddiscussions continue with various parties with respect to both the residential and commercialelements of the scheme. The undoubted boost to the local economy provided by the recentcommitment of Hitachi to develop the multi-billion pound new Wylfa nuclear power station willcertainly help this scheme.

Parc Cybi Business Park, Holyhead

The Group continues to market its logistics development site at Parc Cybi, and is in discussionswith several potential occupiers.

The logistics development comprising 140,000 square feet of office and distribution warehousingwill be complemented by plans to create a transport hub and 200 space lorry park facility tosupport the port of Holyhead on an adjacent 14 acre site for which planning consent has now beenobtained. The Group has entered into an agreement with the Welsh Government for the grant of a999 year lease over 14 developable acres for the truck stop, logistics depot and service units andhas also exercised an option to acquire a further 12 acres of land for the distribution warehousingand offices whilst at the same time holding an option on a further 5 acres for a logistics hub.

Fishguard Waterfront

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

The section 106 planning agreement is being finalised with the local authority, which should besigned shortly. Negotiations continue with the various landowners; Stena Line, PembrokeshireCounty Council and The Crown Estate, who own the relevant surrounding harbour area. The Groupcontinues to pursue the availability of EU backed Welsh Government infrastructure funds whichwould greatly improve the viability of the development from a funding perspective.

Fishguard Lorry Stop and Distribution Facility

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

Pembroke Dock Waterfront

In May 2013, the Group announced that conditional contracts had been exchanged with Marston’sto sell 0.7 acres at Pembroke Dock for a family pub and restaurant. An important and encouragingfirst step in the post-planning phase, it has generated interest from other commercial and retailoperators in the site.

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The Group has also commenced test drilling and engineering works in the harbour which isanother step towards construction and continues to negotiate with the Welsh Government withrespect to EU based infrastructure funding support.

King’s Lynn, Norfolk

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

Others

The Group has been appointed by Conwy Council, North Wales as their preferred developers toexplore the possibility of providing a 90,000 sq ft supermarket on the Council’s land at LlandudnoJunction.

Summary of Development Projects

The expenditure in the year on the development land bank amounted to £1.4 million. The Group’stotal investment to date is now £32.2 million at cost (analysed below) or 36.3p per share. Projectswill continue to be progressed in a risk-averse manner and to avoid any speculative development.To date, the Group has had good success in securing planning consents and several of theprojects are beginning to advance. The Group remains on target to deliver projects comprisingmore than 2,000 homes (of which 1,200 are waterside), 1,400 marina berths and in excess of400,000 square feet of commercial and retail development. It is the Group’s intention to introducethird party valuations as soon as it is practical to do so.

2013 2012£’m £’m

Haverfordwest 15.32 15.26Holyhead Waterfront 9.34 8.74Pembroke Dock Waterfront 4.87 4.47King’s Lynn 0.83 0.83Fishguard Waterfront 0.86 0.76Fishguard Lorry Stop 0.58 0.52Parc Cybi, Holyhead 0.44 0.22

Total investment to date 32.24 30.80

Dividend policy

In keeping with the Parent’s current policy, the Directors intend to maintain a dividend policy whichaims to provide Shareholders with a regular dividend but, for the most part, the profits of theParent will be retained in the business for future investment. The Group’s primary focus is upongrowth in Net Asset Value per Share.

Gearing policy

The Group may use gearing, including bank borrowings or similar, as part of financing its activitiesand to enter into derivative instruments to manage the interest rate risk arising from these sourcesof finance. The Group seeks to ensure that borrowing stays within agreed covenants with externallenders. Under the Parent’s Articles the Parent has the ability to borrow up to an amount equal tofour times the aggregate amount paid up on the issued share capital of the Parent and the amountstanding to the credit of its capital and revenue reserves.

In addition, until the payment of the ZDP Capital Entitlement to ZDP Shareholders, the Parent willnot in accordance with the terms of the Contribution Agreement incur additional third partyborrowings that would rank in priority or pari passu to the Accrued Capital Entitlement of the ZDPShares unless the Cover Test and the Investment Property Cover Test are met.

ZDP Shares are treated as debt under IFRS.

As at the Latest Practicable Date, the Group had bank borrowings of £70.2 million. The gearingratio of debt to total assets based on the total assets of £233.1 million as at 30 September 2013,was therefore 30.1 per cent. The Group has and continues to satisfy all of the covenantsassociated with these borrowings.

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Share repurchases

If the Directors, at their absolute discretion, consider it to be in the best interests of Shareholdersas a whole to do so, the Parent may purchase its own Ordinary Shares for cancellation or to beheld in treasury. Any such purchases will be subject to the provisions of the Act, the Articles, anyinsider dealing rules, the AIM Rules and other applicable legislation.

A renewal of the authority to make market purchases of Ordinary Shares and a new authority tomake market purchases of ZDP Shares will be sought from Shareholders at each annual generalmeeting.

For the avoidance of doubt, purchases of Ordinary Shares will be made only through the market,where the Directors believe such purchases will enhance Shareholder value and increase the NetAsset Value per Share for remaining Shareholders. Purchases of ZDP Shares will be made only atprices not exceeding their Accrued Capital Entitlement unless the Directors determine that apurchase at a higher price is in the interest of Shareholders as a whole.

Directors

Nigel Hamway (Non-executive Chairman)

Nigel Hamway, aged 57, qualified as a member of the Institute of Chartered Accountants inEngland and Wales with Peat Marwick after obtaining a degree from Cambridge University. Hejoined Dubilier plc as chief financial accountant, leaving to take up a position in internationalcorporate finance at Charterhouse Bank in 1986, becoming a director in 1990. From 1991 to thepresent he has been a director of Charterhouse Development Capital. For several years he wasresponsible for Charterhouse’s international investment business. He has had extensive boardexperience in many countries and businesses.

Robert Ware (Chief Executive)

Robert Ware, aged 59, served as a director of Development Securities plc between 1988 and1994, filing the roles of joint managing director and finance director in the latter stage of his tenure.In 1994 he left to take up the position of managing director of Dunton Group plc where he stayeduntil November 1996. He joined MEPC plc in June 1997 serving first as corporate developmentdirector and then as deputy chief executive between June 1997 and June 2003. He is a non-executive director of Tarsus Group plc and chairman of Terra Catalyst Fund, Marwyn ValueInvestors Ltd, Marwyn Management Partners Limited and Chalkstream Limited.

Peter Batchelor (Finance Director)

Peter Batchelor, aged 50, joined MEPC plc as Head of Taxation in January 1999 and also servedas company secretary from January 2002 until September 2003. His responsibilities includedcorporate finance, taxation and secretariat. Prior to joining MEPC, Peter was a senior manager inthe London Office of Ernst & Young where he specialised in advising on tax and corporate financematters. He is a Fellow of the Institute of Chartered Accountants in England and Wales and aFellow of the Chartered Institute of Taxation.

Preston Rabl (Corporate Director)

Preston Rabl, aged 64, was previously Chairman of Laxey Partners Limited and is also a directorof various private companies. He is a Chartered Accountant and was a partner in stockbrokersHenderson Crosthwaite. He jointly founded WPP plc from which he resigned in 1987, since whenhe has been an investor in, director of or advisor to various public and private companies.

Steven Vaughan (Property Director)

Steven Vaughan, aged 55, joined MEPC plc as corporate development executive in 1997. Asidefrom managing various development projects, he was responsible for the Callaghan Square, CardiffPFI development which was a part of the Cardiff urban regeneration scheme. Prior to joiningMEPC, Steven worked for DeVere plc, Development Securities plc and Lambert Smith Hampton.Heis a member of the Royal Institution of Chartered Surveyors.

Michael Wigley (Non-executive Director)

Michael Wigley, aged 74, was a stockbroker in the City of London from 1964 until his retirement in1999. The majority of that time was spent with the firm of Anderson where he was senior partner

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at the time of the takeover by Matheson Investment Limited in 1987. He was a director of thelatter company until 1997. He was Chairman and latterly a non-executive director of DevelopmentSecurities plc between 1990 and 2000. He is a non-executive director of Premier Energy andWater Trust plc.

Corporate Governance and internal controls

The Parent is committed to high standards of corporate governance. The Board is accountable tothe Shareholders for good corporate governance. As the Parent is an AIM quoted company it isnot required to comply with the UK Corporate Governance Code.

Internal Controls

The Directors acknowledge that they are responsible for the Parent’s systems of internal controland for reviewing their effectiveness. The systems are designed to manage rather than eliminatethe risk of failure to achieve the Parent’s strategic objectives, and can only provide reasonable notabsolute assurance against material misstatement or loss.

The Parent’s legal risk management processes and system of internal control procedures includethe following:

* management structure: authority to operate is delegated to executive management withinlimits set by the Board. The appointment of executives to the most senior positions within theParent requires the approval of the Board;

* identification and evaluation of business risks: the major financial, commercial, legal,regulatory and operating risks within the Parent are identified through annual reportingprocedures;

* information and financial reporting systems: the Parent’s planning and financial reportingprocedures include detailed operational budgets for the year ahead. The Board reviews andapproves them;

* investment appraisal: a budgetary process and authorisation levels regulate capitalexpenditure. For expenditure beyond specified levels, detailed written proposals have to besubmitted to the Board. Commercial, legal and financial due diligence work is carried out if abusiness is to be acquired; and

* audit committee: the audit committee monitors the controls which are in place and anyperceived weakness in the control environment. The audit committee also considers anddetermines relevant action in respect of any control issues raised by external auditors.

The Board

The Board currently comprises the chief executive, the finance director, the property director, acorporate director and two independent non-executive directors, of whom one is Chairman. Theseindividuals demonstrate a range of experience and sufficient calibre to bring independent judgementon issues of strategy, performance, resources and standards of conduct which are vital to thesuccess of the Parent. The Board is responsible to Shareholders for the proper management of theParent.

The Board has a formal schedule of matters specifically reserved to it. The Directors have accessto the advice and services of the company secretary who is responsible to the Board for ensuringthat Board procedures are followed and that applicable rules and regulations are complied with. Inaddition, the company secretary ensures that the Directors receive appropriate training asnecessary. The appointment and removal of the company secretary is a matter for the Board as awhole.

The Board meets approximately ten times a year, reviewing trading performance, ensuringadequate funding, setting and monitoring strategy, examining major acquisition possibilities andreporting to Shareholders. The non-executive Directors have a particular responsibility to ensurethat the strategies proposed by the Executive Directors are fully considered. The Chairman ensuresthat the Directors may take independent professional advice as required.

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The following committees deal with specific aspects of the Parent’s affairs:

Remuneration Committee

The Parent’s remuneration committee is chaired by Nigel Hamway and its other member is MichaelWigley. It is responsible for making recommendations to the Board, within agreed terms ofreference, on the Parent’s framework of executive remuneration and its cost. The committeedetermines the contract terms. Remuneration and other benefits for each of the ExecutiveDirectors, including performance related bonus schemes, pension rights and compensationpayments. The Board itself determines the remuneration of the non-executive Directors. The non-executive Directors are not involved in any discussions or decision about their own remuneration.

Audit Committee

The audit committee is chaired by Nigel Hamway and its other member is Michael Wigley. Theaudit committee meets not less than two times annually. The committee also provides a forum forreporting by the Parent’s external auditors. Meetings are also attended, by invitation, by the chiefexecutive and the finance director.

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PART IV

VALUATION REPORT

Jones Lang LaSalle30 Warwick StreetLondon W1B 5NH

TEL: +44 (0)20 7493 4933FAX: +44 (0)20 7087 5555

www.joneslanglasalle.com

Report Date 7 January 2014

Addressees The DirectorsConygar ZDP PLC (the ‘‘Issuer’’)Fourth Floor110 Wigmore StreetLondon W1U 3RW

The DirectorsThe Conygar Investment Company PLC (the ‘‘Parent’’)Fourth Floor110 Wigmore StreetLondon W1U 3RW

Liberum Capital Limited (‘‘Liberum’’)Ropemaker Place, Level 1225 Ropemaker StreetLondon EC2V 9LY

Valuation Date 30 September 2013

Capacity of Valuer External

The Properties

All investment property assets of the Group.

Instruction

To value on the basis of Market Value the Properties as at the Valuation Date in accordance withthe Parent’s instructions.

We understand that this valuation report (the ‘‘Valuation Report’’) is required for inclusion in aprospectus (the ‘‘Prospectus’’) which is to be published by the Issuer on or about 7 January 2014.

Purpose of Valuation

We understand that the Valuation Report is required firstly, to confirm to the directors of the Parentthe current Market Value of the property assets of the Group, secondly, for inclusion in theProspectus in respect of the listing on the standard listing segment of the Official List of the UKLAand admission to trading on the main market of the London Stock Exchange of the ZDP Shares tobe issued by the Issuer and, thirdly, by Liberum in relation to its obligations as financial adviserand sole bookrunner in connection with the Placing.

Market Value

£164,765,000 exclusive of VAT, which may be summarised as follows:

Freehold *Long Leasehold **Short Leasehold

£152,570,000(40 properties)

£10,845,000(5 properties)

£1,350,000(1 property)

* more than 80 years unexpired

** less than 80 years unexpired

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Market Value (excluding the Special Assumption referred to below in the paragraph headed‘‘Variation from Standard Assumptions’’)

£163,595,000 exclusive of VAT, which may be summarised as follows:

Freehold *Long Leasehold **Short Leasehold£151,575,000 £10,670,000 £1,350,000(40 properties) (5 properties) (1 property)

* more than 80 years unexpired

** less than 80 years unexpired

We have valued the properties individually and no account has been taken of any discount orpremium that may be negotiated in the market if all or part of the portfolio was to be marketedsimultaneously, either in lots or as a whole.

Our opinion of Market Value is based upon the Scope of Work and Valuation Assumptionsattached, and has been primarily derived using comparable recent market transactions on arm’slength terms.

Report Format

The Appendix to this Valuation Report comprises relevant details of the properties whichindividually comprise more than 56 per cent. of the Parent’s portfolio. It comprises the 10 largestassets in the Parent’s property portfolio by Market Value as at the Valuation Date (the ‘‘MaterialProperties’’).

Compliance with Valuation Standards

The valuations have been prepared in accordance with the RICS Valuation – ProfessionalStandards, (March 2012) published by The Royal Institution of Chartered Surveyors.

Market Conditions

The values stated in this Valuation Report represent our objective opinion of Market Value inaccordance with the definition set out below as of the date of valuation. Amongst other things, thisassumes that the properties had been properly marketed and that exchange of contracts tookplace on the Valuation Date.

Assumptions

The property details on which each valuation is based are as set out in this Valuation Report. Wehave made various assumptions as to tenure, letting, town planning, and the condition and repairof buildings and sites – including ground and groundwater contamination – as set out below. If anyof the information or assumptions on which the valuation is based is subsequently found to beincorrect, the valuation figures may also be incorrect and should be reconsidered.

Variation from Standard Assumptions

Three of the properties were acquired within a special purpose vehicle arrangement, where theusual industry standard purchaser’s costs of 5.7625 per cent. were reduced to 2.225 per cent. Ouropinion of the Market Value is provided on the Special Assumption that it is possible to sell theproperties on the same basis. This is a Special Assumption within the RICS Valuation –Professional Standards, (March 2012).

Valuer

The properties have been valued by a valuer who is qualified for the purpose of the valuation inaccordance with the RICS Valuation – Professional Standards, (March 2012).

Independence

The total fees, including the fee for this assignment, earned by Jones Long LaSalle (or othercompanies forming part of the same group of companies within the UK) from the Parent is lessthan 1 per cent. of the total UK revenues.

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Responsibility

For the purposes of Prospectus Rule 5.5.3R(2)(f), we are responsible for this Valuation Report andaccept responsibility for the information contained in this Valuation Report and confirm that to thebest of our knowledge (having taken all reasonable care to ensure that such is the case), theinformation contained in this Valuation Report is in accordance with the facts and contains noomissions likely to affect its import. This Valuation Report complies with Rule 5.6.5G of theProspectus Rules and paragraphs 128 to 130 of the ESMA Update of the CESRRecommendations for the consistent implementation of the European Commission’s Regulation onProspectuses 809/2004.

Reliance and Publication

This Valuation Report has been prepared for inclusion in the Prospectus. The contents of thisValuation Report may only be used for the specific purpose to which they refer. Before theValuation Report, or any part thereof, is reproduced or referred to, in any document, circular orstatement, the valuer’s written approval as to the form and context of such publication or disclosuremust first be obtained such approval not to be unreasonably withheld or delayed. Such publicationor disclosure will not be permitted unless, where relevant it incorporates the Assumptions referredto here.

Yours faithfully

John Asquith FRICSDirector

For and on behalf ofJones Lang LaSalle

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SCOPE OF WORK & SOURCES OF INFORMATION

Sources of Information

We have carried out our work based upon information supplied to us by the Parent, as set outwithin this Valuation Report, which we have assumed to be correct and comprehensive.

The Properties

Our Valuation Report contains a brief summary of the property details on which our valuation hasbeen based.

Inspections

We have inspected the majority of the properties externally during the last twelve months.

Areas

We have not measured the properties but have relied upon the floor areas provided, which weunderstand have been measured in compliance with the RICS Code of Measuring Practice, 6thEdition.

Environmental matters

We have not undertaken, nor are we aware of the content of, any environmental audit or otherenvironmental investigation or soil survey which may have been carried out on the properties andwhich may draw attention to any contamination or the possibility of any such contamination. Wehave not carried out any investigations into the past or present uses of the properties, nor of anyneighbouring land, in order to establish whether there is any potential for contamination and havetherefore assumed that none exists.

We have assumed that the Properties possess current Energy Performance Certificates (EPCs) asrequired under the Government’s Energy Performance of Buildings Directive.

Repair and Condition

We have not carried out building surveys, tested services, made independent site investigations,inspected woodwork, exposed parts of the structure which were covered, unexposed orinaccessible, nor arranged for any investigations to be carried out to determine whether or not anydeleterious or hazardous materials or techniques have been used, or are present, in any part ofthe properties. We are unable, therefore, to give any assurance that the Properties are free fromdefect.

Town planning

We have not undertaken planning enquiries.

Titles, Tenures and Lettings

Details of title/tenure under which the properties are held and of lettings to which they are subjectare as supplied to us. We have not generally examined nor had access to all the deeds, leases orother documents relating thereto. Where information from deeds, leases or other documents isrecorded in this report, it represents our understanding of the relevant documents. We shouldemphasise, however, that the interpretation of the documents of title (including relevant deeds,leases and planning consents) is the responsibility of your legal adviser. We have not conductedcredit enquiries on the financial status of any tenants. We have, however, reflected our generalunderstanding of purchasers’ likely perceptions of the financial status of tenants.

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VALUATION ASSUMPTIONS

Capital Values

Each valuation has been prepared on the basis of ‘‘Market Value’’ which is defined as: ‘‘Theestimated amount for which an asset or liability should exchange on the date of valuation betweena willing buyer and a willing seller in an arm’s-length transaction after proper marketing where theparties had each acted knowledgeably, prudently and without compulsion’’. No allowances havebeen made for any expenses of realization nor for taxation which might arise in the event of adisposal. Acquisition costs have not been included in our valuation. No account has been taken ofany inter-Issuer leases or arrangements, nor of any mortgages, debentures or other charges. Noaccount has been taken of the availability or otherwise of capital based Government or EuropeanCommunity grants.

All property is considered as if free and clear of all mortgages or other charges, which may besecured thereon. No allowance is made for the possible impact of potential legislation which isunder consideration.

It does not necessarily represent the amount that might be agreed by negotiation, or determined byan Expert, Arbitration or Court, at rent review or lease renewal.

The properties have been valued by adopting the investment approach where we apply acapitalisation rate, as a multiplier, against the current rent and, if any, reversionary incomestreams. Where there is an actual exposure or a risk or irrecoverable costs, including those ofachieving a letting, an allowance is reflected in the valuation.

Rental Values

Rental values indicated in our Valuation Report are those which have been adopted by us asappropriate in assessing the capital value and are not necessarily appropriate for other purposes,nor do they necessarily accord with the definition of Market Rent, as defined in the RICS Valuation– Professional Standards, (March 2012).

The Properties

Where appropriate we have regarded the shop fronts of retail and showroom accommodation asforming an integral part of the building. Landlord’s fixtures such as lifts, escalators, central heatingand other normal service installations have been treated as an integral part of the building and areincluded within our valuations. Process plant and machinery, tenants’ fixtures and specialist tradefittings have been excluded from our valuations. All measurements, areas and ages quoted in ourValuation Report are approximate.

Environmental Matters

In the absence of any information to the contrary, we have assumed that:

(a) the properties are not contaminated and are not adversely affected by any existing orproposed environmental law; and

(b) any processes which are carried out on the properties which are regulated by environmentallegislation are properly licensed by the appropriate authorities. High voltage electrical supplyequipment may exist within, or in close proximity of, the properties.

The National Radiological Protection Board (‘‘NRPB’’) has advised that there may be a risk, inspecified circumstances, to the health of certain categories of people. Public perception may,therefore, affect marketability and future value of the property. Our valuation reflects our currentunderstanding of the market and we have not made a discount to reflect the presence of thisequipment.

Repair and Condition

In the absence of any information to the contrary, we have assumed that:

(a) there are no abnormal ground conditions, nor archaeological remains, present which mightadversely affect the current or future occupation, development or value of the properties;

(b) the Properties are free from rot, infestation, structural or latent defect;

(c) no currently known deleterious or hazardous materials or suspect techniques have been usedin the construction of, or subsequent alterations or additions to, the Properties; and

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(d) the services, and any associated controls or software, are in working order and free fromdefect.

We have otherwise had regard to the age and apparent general condition of the properties.Comments made in the property details do not purport to express an opinion about, or adviseupon, the condition of uninspected parts and should not be taken as making an impliedrepresentation or statement about such parts.

Title, Tenure, Planning and Lettings

Unless stated otherwise within this Valuation Report, and in the absence of any information to thecontrary, we have assumed that:

(a) the properties possess a good and marketable title free from any onerous or hamperingrestrictions or conditions;

(b) all buildings have been erected either prior to planning control, or in accordance with planningpermissions, and have the benefit of permanent planning consents or existing use rights fortheir current use;

(c) the Properties are not adversely affected by town planning or road proposals;

(d) all buildings comply with all statutory and local authority requirements including building, fireand health and safety regulations;

(e) only minor or inconsequential costs will be incurred if any modifications or alterations arenecessary in order for occupiers of each Property to comply with the provisions of theDisability Discrimination Act 1995;

(f) all rent reviews are upward only and are to be assessed by reference to full current marketrents;

(g) there are no tenant’s improvements that will materially affect our opinion of the rent thatwould be obtained on review or renewal;

(h) tenants will meet their obligations under their leases, and are responsible for insurance,payment of business rates, and all repairs, whether directly or by means of a service charge;

(i) there are no user restrictions or other restrictive covenants in leases which would adverselyaffect value;

(j) where more than 50 per cent. of the floorspace of a property is in residential use, theLandlord and Tenant Act 1987 (the ‘‘Act’’) gives certain rights to defined residential tenants toacquire the freehold/head leasehold interest in the property. Where this is applicable, we haveassumed that necessary notices have been given to the residential tenants under theprovisions of the Act, and that such tenants have elected not to acquire the freehold/headleasehold interest. Disposal on the open market is therefore unrestricted;

(k) where appropriate, permission to assign the interest being valued herein would not bewithheld by the landlord where required; and

(l) vacant possession can be given of all accommodation which is unlet or is let on a serviceoccupancy.

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APPENDIX: DETAILS OF MATERIAL PROPRETIES

Property Location and Description Floor Area OwnershipInterest

Net PassingRent perannum

Aker SolutionsVillage, KirkhillIndustrial Estate,AberdeenAB12 0NA

Aberdeen is the third largest cityin Scotland and centre of the oiland gas industry. The property islocated on Kirkhill IndustrialEstate, adjacent to Aberdeenairport.

192,219(sq.ft.)

17,858 (sqm)

VirtualFreeholdLease fromAberdeenCity Councilexpiring in2994 at £1per annum.

£2,011,341

The property comprises goodquality office and industrialaccommodation over 3 sites witha total site area of approximately23.5 acres. Each of the sites islet on separate leases to thesame tenant. The stated floorarea excludes rentalisedexternal yard space.

Ashby ParkAshby-de-la-Zouche,LE 651JG

Ashby-de-la-Zouche is locatedbetween Nottingham andBirmingham. The property itselfis in a prominent location, atjunction 13 of the A42, whichconnects the two cities.

94,580 (sq.ft)

8,787 (sqm)

Freehold £1,004,953

The property is on a businesspark and consists of 2 officebuildings and a office/warehouse/production hybridunit. There is also adevelopment site ofapproximately 3.2 acres withplanning permission foremployment use.

The property is multi-let.

Norfolk House,Small BrookQueens Way,BirminghamB5 4LJ

The property is located inBirmingham city centre adjacentto both New Street Station andThe Bull Ring Shopping Centre.

98,061 (sq.ft)

9,110 (sqm)

Freehold £821,857

The property comprises 12retail/leisure units on the groundfloor with 6 floors of officesabove. There are 13 car parkingspaces. Approximately 79% ofthe income comes from theoffice accommodation, some ofwhich has recently beenrefurbished to a high standard.The property is multi-let withsome vacant space currentlyavailable.

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The BrunelCentre, BletchleyMK2 2ES

Bletchley is a suburb of MiltonKeynes and the centre forms theprime retail provision in the town.

96,331 (sq.ft.)

8,949 (sqm)

Freehold £873,112

The centre consists of a coveredshopping mall of 21 retail unitsconstructed in the 1970’s,together with WeatherburnCourt, an extension completedin 2003 and let to Wilkinson’s. Inaddition to the retail units, thereis office space at first floor level.There is a surface car park with280 spaces. The majority of theoffices are vacant.

KingscourtLeisure Complex,Dundee DD4 7SN

Dundee is the fourth largest cityin Scotland. The property is on amain arterial route to the north ofthe city.

87,039 (sq.ft)

8,086 (sqm)

Heritableinterest(Freehold)

£677,895

The property comprises a multi-let mixed use leisuredevelopment, anchored by a 10screen Odeon cinema. There isalso a Health club, a Laserquestgame unit and 2 further vacantunits. There is parking for 675cars.

WaterfrontBusiness Park,Fleet Road, FleetGU51 3TY

Fleet is in Hampshire, 40 milessouthwest of London. Theproperty is adjacent to Fleetrailway station, 1 mile northeastof the town centre.

36,739 (sq.ft)

3,413 (sqm)

Freehold £720,000

The property consists of 3detached office buildings whichwere constructed in the late1990’s. The properties provideGrade A space and have a totalof 209 car parking spaces.

One building of 6,397 sq.ft. iscurrently vacant and the other 2are let to a single tenant.

Brunswick Point,Wade Lane,Leeds LS2 8NQ

The property is off the A58 ringroad in Leeds, 2 miles fromLeeds train station.

62,873 (sq.ft)

5,841 (sqm)

Freehold £390,531

The property was developed inthe late 1980’s as a purpose builtoffice building and is arrangedover basement, ground and 6upper floors. The propertyprovides good quality officespace and has 28 car parkingspaces.

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The property is part let to asingle tenant with the remainderbeing vacant.

Kelvin Close,Birchwood,Warrington WA37PB

Warrington is betweenManchester and Liverpool, at theintersection of the M6 and M62motorways. The property islocated close to the M62 andnear to Birchwood train station.

49,432 (sq.ft)

4,592 (sqm)

Freehold £583,000

The property is an office buildingconstructed in 1990 andarranged over ground and firstfloor. It provides well specifiedopen plan office space and has263 car parking spaces.

The property is entirely let to onetenant.

Advantage,Castle Street,Reading RG17DX

Reading is 40 miles west ofLondon and the property is welllocated in the town centre on thejunction of Castle Street and theA329 inner ring road.

24,915 (sq.ft)

(2,315 sqm)

Freehold £185,856

The property is a 5 storeydetached office buildingconstructed in 1983 andsubstantially refurbished in 2009to provide high specificationoffices. There are 56 car parkingspaces. The property is currentlymulti-let with some vacantspace.

Pagoda Park,Westmead DriveSwindon SN57UN

Swindon is 85 miles west ofLondon and the property is in anestablished commercial location1 mile from the railway station.

41,112 (sq.ft)

(3,819 sqm)

Freehold £461,835

The property was developed in1988 and comprises two officebuildings and one Research andDevelopment building.

The property occupies a site of3.79 acres and provides 150 carparking spaces. It is currentlymulti-let to 3 tenants.

Note: Conygar owns 100 per cent. of each of the above assets.

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PART V

DETAILS OF THE ZDP SHARES

The Issuer has two classes of share: ZDP Shares and ordinary shares.

The rights attaching to each of these classes of share set out in the Issuer’s Articles and certainadditional protections for ZDP Shareholders contained in the Contribution Agreement (copies ofwhich are available for inspection at the addresses set out in paragraph 21 of Part VIII of thisprospectus) are as follows:

1. INCOME

1.1 The holder of the ordinary shares in the Issuer (all of which are at the date of thisprospectus, and until the ZDP Repayment Date will be, beneficially owned by the Parent) isentitled to receive all the revenue profits of the Issuer which are available for distribution.

1.2 The ZDP Shares carry no entitlement to any dividends or to participate in the revenue profitsof the Issuer.

2. RETURN OF CAPITAL

2.1 The Issuer has a fixed life and shall be placed into voluntary liquidation following a generalmeeting of the Issuer on the ZDP Repayment Date, following which ZDP Shareholders will beentitled to receive the ZDP Capital Entitlement. Further details of the life of the Issuer are setout at paragraph 8.2 of Part VIII of this prospectus.

2.2 The Issuer may be wound up earlier than this if:

(a) there is an event of default under the terms of the Loan Agreement and/or theContribution Agreement and ZDP Shareholders do not approve alternative proposals asa waiver by special resolution passed at a separate general meeting of such holders; or

(b) in the event of a change of control of the Parent (see paragraph 4 below), ZDPShareholders do not approve alternative proposals as a waiver by special resolutionpassed at a separate general meeting of such holders.

2.3 If the Issuer is wound up before the ZDP Repayment Date, ZDP Shareholders will be entitledto receive the Accrued Capital Entitlement of the ZDP Shares up to the date of the windingup.

3. VOTING

The ZDP Shares do not generally carry the right to vote at general meetings of the Issuer,although they carry the right to vote as a class on certain proposals which would be likely tomaterially affect their position. These include the issue of a new class of zero dividend preferenceshares by the Parent or any member of the Group which effectively rank ahead of the ZDP Sharesby virtue of being entitled to a return of capital prior to the ZDP Repayment Date.

Further information on the rights attaching to the ZDP Shares is set out in paragraph 8.4 of PartVIII of this prospectus.

4. CHANGE OF CONTROL OF THE PARENT

If there is a change of control of the Parent whereby a single Shareholder or group ofShareholders acting in concert (as defined in the City Code on Takeovers and Mergers) becomethe holder(s) of 50 per cent. or more of the shares carrying voting rights at general meetings ofthe Parent, the Issuer will call a class meeting of ZDP Shareholders to consider proposals for thecontinuation of the Issuer. If such proposals are not approved by a special resolution of the ZDPShareholders, excluding any votes cast by persons acting in concert with the controllingshareholder(s), the Issuer will be wound up. Further details are contained in paragraph 8.2 of PartVIII of this prospectus.

5. CONTRIBUTION AGREEMENT

5.1 The Parent and the Issuer have entered into a Contribution Agreement dated 7 January 2014pursuant to which the Parent has undertaken to contribute (by way of gift, capital contributionor otherwise) such funds to the Issuer as will ensure that the Issuer will have sufficient

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assets: (i) on the ZDP Repayment Date to satisfy the ZDP Capital Entitlement then due; (ii)the Accrued Capital Entitlement on the date of any winding up of the Issuer prior to the ZDPRepayment Date; and (iii) to pay any operational costs or expenses incurred by the Issuer.

5.2 In addition to the rights of the ZDP Shares contained in the Issuer’s Articles, the ContributionAgreement contains further protections for ZDP Shareholders. In particular, the Parentundertakes to the Issuer that, for so long as the Parent’s obligations under the ContributionAgreement remain outstanding:

(a) it will remain the holder of all the ordinary shares in the Issuer from time to time inissue;

(b) it shall not without the previous sanction of a special resolution of the ZDP Shareholderspassed at a separate general meeting of such holders convened and held in accordancewith the provisions of the Issuer Articles:

(i) issue any further shares or rights to subscribe for further shares or securitiesconvertible into shares or reclassify any issued share capital of the Parent intoshares of a particular class where, in each case, such shares rank, or would onissue, conversion or reclassification rank, as to capital in priority to or pari passuwith the Parent’s payment obligations under the Contribution Agreement, save thatthe Parent may, subject to the provisions of the Parent’s Articles, issue any suchfurther shares, rights or securities provided that the Parent Directors shall havecalculated and the auditors of the Parent shall have reported to the ParentDirectors on such calculations within 30 days prior to the proposed issue orreclassification that, were the further shares to be issued or the shares to bereclassified or rights of subscription or conversion to be issued and immediatelyexercised at the date of the report, the ZDP Shares in issue immediately thereafterwould have a Cover of not less than 3.5 times and an Investment Property Coverof not less than 2.5 times;

(ii) redeem or repurchase any Ordinary Shares unless the Parent Directors shall havecalculated (at a date not more than 30 days prior to the date of the proposedredemption or repurchase (the ‘‘Calculation Date’’)) that, were the proposedredemption or repurchase to take effect as at the Calculation Date, the ZDPShares in issue immediately thereafter would have a Cover of not less than 3.5times and an Investment Property Cover of not less than 2.5 times;

(iii) pass a resolution to reduce the capital of the Parent (including its uncalled capital)in any manner unless the Parent Directors shall have calculated (at a date notmore than 30 days prior to the date of the proposed reduction of capital) that, werethe reduction of capital to take effect as at the Calculation Date, the ZDP Shares inissue immediately thereafter would have a Cover of not less than 3.5 times and anInvestment Property Cover of not less than 2.5 times; or

(iv) pass a resolution for the voluntary winding-up of the Parent, such winding-up totake effect prior to 9 January 2019;

(v) make any distribution of capital, provided that any such distribution will bepermitted where the Parent Directors determine that the ZDP Shares in issueimmediately thereafter would have a Cover of not less than 3.5 times and anInvestment Property Cover of not less than 2.5 times;

(vi) make any distribution of income, provided that any such distribution will bepermitted where the Parent Directors determine that the ZDP Shares in issueimmediately thereafter would have a Cover of not less than 3.5 times and anInvestment Property Cover of not less than 2.5 times;

(vii) incur additional third party borrowings that would rank in priority or pari passu tothe Parent’s payment obligations under the Loan Agreement or the ContributionAgreement if its aggregate third party borrowings that rank in priority or pari passuto the Issuer’s payment obligations under the Loan Agreement or the ContributionAgreement (including, for the avoidance of doubt, the ZDP Shares at their thenAccrued Capital Entitlement) would thereby exceed 55 per cent. of the total assetsof the Group; and

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(viii) make any change to the Parent’s business which at the time of making suchchange appears likely in the reasonable opinion of the Parent Directors to bematerially prejudicial to the holders of the ZDP Shares.

(c) except with the previous sanction of a special resolution of the ZDP Shareholderspassed at a separate general meeting of such holders convened and held in accordancewith the provisions of the Issuer Articles, it will act in compliance with, and will procurethat the other members of the Group shall act in compliance with, the provisions relatingto itself and other members of the Group set out in the Issuer’s Articles (as moreparticularly described at paragraph 8.4.1 of Part VIII of this prospectus);

(d) except with the previous sanction of a special resolution of the ZDP Shareholderspassed at a separate general meeting of such holders convened and held in accordancewith the provisions of the Issuer Articles or as required from time to time by the UKListing Authority or any other relevant legal or regulatory requirement, from the date ofallotment and issue of the ZDP Shares it shall ensure that the board of directors of theIssuer as constituted from time to time comprises only individuals who are directors ofthe Parent;

(e) it shall calculate the Cover and the Investment Property Cover as soon as practicablefollowing the finalisation of the Group’s quarterly valuations of its investments and, inany event, at least once per calendar quarter and shall notify the Parent Directorswithout delay in the event that the Cover shall at any time be less than 3.5 times or theInvestment Property Cover shall at any time be less than 2.5 times;

(f) it shall notify the ZDP Shareholders without delay if at any time the Directors considerthat the Parent will or may be unable to meet its obligations under the ContributionAgreement in full on the ZDP Repayment Date; and

(g) it shall have due regard to the interests of the ZDP Shareholders.

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PART VI

PRINCIPAL BASES AND ASSUMPTIONS

Set out below are the principal bases and assumptions used in calculating the illustrative financialstatistics contained in the Placing Statistics on page 23 and Part I of this prospectus in relation tothe ZDP Shares. For the avoidance of doubt, the Assumptions have not been used in preparingthe working capital statements set out in paragraph 16 of Part VIII of this prospectus.

There can be no guarantee that the Assumptions set out below will be realised. In particular,market gains or losses between the Latest Practicable Date and the date of Admission will affectthe amount of the Parent’s assets at Admission and annual running expenses of the Parent mayexceed the assumed level. Accordingly, no reliance should be placed on the illustrative financialstatistics derived from the Assumptions set out below. The attention of prospective investors is alsodrawn to the Risk Factors on pages 11 to 17 of this prospectus. The Assumptions used are:

* On the Latest Practicable Date, the Parent had 98,489,123 Ordinary Shares in issue. As at30 September 2013 the Net Asset Value was £155.1 million and the Net Asset Value perShare was 174.6 pence.

* The capital accrual of a ZDP Share is 5.5 per cent., compounded daily from 10 January 2014(the anticipated date of Admission) up to (but excluding) the ZDP Repayment Date.

* The ZDP Capital Entitlement of 130.7 pence per ZDP Share is paid on the ZDP RepaymentDate.

* The Net Placing Proceeds are £29.3 million and are received and available for investmentfrom the date of Admission.

* There are no changes to the number of ZDP Shares prior to the ZDP Repayment Date.

* No corporation tax or capital gains tax is payable by the Issuer; and no other changes occurin any relevant taxation law and practice.

* There are no changes to generally accepted accounting practices relevant to the Issuer or theParent and no material changes to their accounting policies.

* The Parent has a life beyond the ZDP Repayment Date.

* The Issuer does not issue any new ZDP Shares (other than those in respect of the Placing)nor does it repurchase ZDP Shares during the period up to the ZDP Repayment Date.

* The Net Placing Proceeds will be applied towards further acquisitions of investment propertiesand in realising value from the Group’s development projects in line with the Group’s statedstrategy of investing in property assets and companies where it can add significant valueusing its property management, development and transaction structuring skills.

* The rights attaching to ordinary shares of the Issuer and the ZDP Shares set out in theArticles at Admission are not altered.

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PART VII

TAXATION

Introduction

The information below, which relates only to United Kingdom taxation, summarises the advicereceived by the Board from the Issuer’s legal advisers in so far as applicable to the Issuer and topersons who are resident in the United Kingdom for taxation purposes and who hold ZDP Sharesas an investment. It is based on current United Kingdom tax law and published practice,respectively, which law or practice is, in principle, subject to any subsequent changes therein(potentially with retrospective effect). Certain ZDP Shareholders, such as dealers in securities,collective investment schemes, insurance companies and persons acquiring their ZDP Shares inconnection with their employment may be taxed differently and are not considered. The taxconsequences for each ZDP Shareholder of investing in the ZDP Shares may depend upon theZDP Shareholder’s own tax position and upon the relevant laws of any jurisdiction to which theZDP Shareholder is subject.

If you are in any doubt about your tax position, you should consult your professional adviser.

United Kingdom

The Issuer

The Issuer will not be required to withhold tax at source when paying the ZDP Capital Entitlement.

Shareholders

UK Individual Shareholders

The Finance Act 2013 contains provisions (the ‘‘disguised interest’’ provisions) that are intended tomake returns that are ‘‘economically equivalent to interest’’ subject to tax as income. Theseprovisions are in principle capable of applying to zero dividend preference shares. However, thelegislation includes provisions that seek to exclude returns derived from certain shares that areadmitted to trading on a regulated market from being taxed as income where certain conditions aremet as follows:

* at the time the shares are issued there are no arrangements involving the shares that wouldproduce a return that is ‘‘economically equivalent to interest’’ and

* no subsequent ‘‘relevant arrangement’’ is made by any person (including a shareholder) inrelation to the shares. A ‘‘relevant arrangement’’ is an arrangement which it is reasonable toassume the main purpose (or one of the main purposes) of which is to secure thatarrangements involving the shares will produce a return that is ‘‘economically equivalent tointerest’’. For a return to be considered ‘‘economically equivalent to interest’’, one of therequirements is that there must be no ‘‘practical likelihood’’ that it will cease to be produced.

HMRC’s published guidance confirms that shares admitted to trading on a regulated market will bewithin the excluded shares exception unless the shareholder’s return is virtually guaranteed onlaunch, for example where the company’s portfolio is not exposed to investment risk. However, UKindividual ZDP Shareholders are reminded that a subsequent ‘‘relevant arrangement’’ made by anyperson could result in the disguised interest provisions applying to the ZDP Shares even wherethose provisions did not apply to the ZDP Shares at the time that they were issued.

Provided that the disguised interest provisions do not apply to the ZDP Shares, individualShareholders who are resident in the UK for tax purposes will generally be subject to capital gainstax in respect of any gains realised on the sale of their ZDP Shares to third parties or the disposalof their ZDP Shares on a winding up of the Issuer, with the gain calculated as the disposalproceeds received less the sum of the base cost of their ZDP Shares plus incidental sellingexpenses. Each such individual has an annual exemption, such that capital gains tax is onlychargeable on gains arising from all sources during the tax year in excess of this figure. Theannual exemption is £10,900 for the tax year 2013-2014. Capital gains tax will be charged at 18per cent. for basic rate tax payers and 28 per cent. for higher and additional rate tax payers inrespect of the tax year 2013-2014 subject to the availability or relief for capital losses. Noindexation allowance will be available to such ZDP Shareholders.

UK resident individual ZDP Shareholders should note that proceeds (over and above the amountoriginally subscribed for the ZDP Shares) received on a redemption or repurchase of the ZDP

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Shares by the Issuer other than in the course of a winding up of the Issuer would fall to be treatedas a distribution to ZDP Shareholders. Such a distribution would be charged to income tax.

UK Corporate Shareholders

Subject to the potential application of certain provisions contained in Part 6 to the Corporation TaxAct 2009 that are discussed below, ZDP Shareholders within the charge to UK corporation tax willbe subject to UK corporation tax on chargeable gains realised:

* on the sale of their ZDP Shares to third parties; or

* where the ZDP Capital Entitlement is received pursuant to a liquidation of the Issuer.

The current rate of corporation tax is 23 per cent. and is scheduled to reduce to 21 per cent. from1 April 2014 and then to 20 per cent. from 1 April 2015.

Any chargeable gains realised by ZDP Shareholders within the charge to UK corporation tax willgenerally be calculated by reference to the disposal proceeds received less the sum of the basecost of their ZDP Shares plus indexation allowance and incidental selling expenses.

UK resident corporate ZDP Shareholders should note that proceeds (over and above the amountoriginally subscribed for the ZDP Shares) received on a redemption or repurchase of the ZDPShares by the Issuer other than in the course of a winding up of the Issuer would fall to be treatedas a distribution to ZDP Shareholders. Such a distribution would potentially be taxable as income,but would generally qualify to be treated as exempt under Part 9A of the Corporation Tax Act 2009for a UK resident corporate ZDP Shareholder that is not a ‘‘small company’’.

ZDP Shareholders within the charge to UK corporation tax should, however, note the provisions ofChapter 2A (Disguised interest) and Chapter 6A (Shares Accounted for as Liabilities) of Part 6 tothe Corporation Tax Act 2009. Those provisions can apply where an arrangement on the sharesproduce a return which is ‘‘economically equivalent to interest’’, one of the requirements for whichis that there must be no ‘‘practical likelihood’’ that the return will cease to be produced. Wherethese provisions apply, sums paid to such ZDP Shareholders on the sale, redemption or otherdisposal of their ZDP Shares will not be treated as capital receipts but will instead be taken intoaccount in determining amounts taxable under the UK loan relationships regime.

ISAs and SIPPs

It is expected that the ZDP Shares will be eligible for inclusion in an ISA. The subscription limit foran ISA account is £11,520 (for the tax year 2013/2014). The ZDP Shares should also qualify as apermissible asset for inclusion in a SIPP.

Stamp Duty and Stamp Duty Reserve Tax (SDRT)

Transfers on sale of the ZDP Shares will generally be subject to UK stamp duty at the rate of 0.5per cent. of the consideration given for the transfer, which is usually payable by the purchaser.

An agreement to transfer the ZDP Shares will normally give rise to a charge to stamp duty reservetax (‘‘SDRT’’) at the rate of 0.5 per cent. of the amount or value of the consideration payable forthe transfer. If a duly stamped transfer in respect of the agreement is produced within six years ofthe date on which the agreement is made (or, if the agreement is conditional, the date upon whichthe agreement becomes unconditional) any SDRT paid is repayable, generally with interest, andotherwise the SDRT charge is cancelled.

Paperless transfers of ZDP Shares within the CREST system will generally be liable to SDRT,rather than stamp duty, at the rate of 0.5 per cent. of the amount or value of the considerationpayable. CREST is obliged to collect SDRT on relevant transactions settled within the CRESTsystem. Deposits of ZDP Shares into CREST will not generally be subject to SDRT, unless thetransfer into CREST is itself for consideration.

No stamp duty or SDRT will arise in relation to the issue of ZDP Shares to issuers of depositoryreceipts or providers of clearance services.

The above statement is intended as a general guide to the current stamp duty and SDRT positionand does not relate to persons such as market makers, brokers, dealers, intermediaries andpersons connected with depositary arrangements and clearance services.

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Other United Kingdom tax considerations

The attention of individuals resident in the United Kingdom for United Kingdom tax purposes isdrawn to the provisions of Chapter 2 of Part 13 of the Income Tax Act 2007, which may renderthem liable to income tax in respect of any undistributed income of the Issuer or any capital sumreceived from the Issuer.

If any shareholder is in doubt as to his taxation position, he is strongly recommended toconsult an independent professional adviser without delay.

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PART VIII

ADDITIONAL INFORMATION

1. RESPONSIBILITY

The Issuer, the Parent and the Directors, whose names are set out on page 24 of this prospectus,accept responsibility for the information contained in this prospectus. To the best of the knowledgeand belief of the Issuer, the Parent and the Directors (who have taken all reasonable care toensure that such is the case), such information is in accordance with the facts and does not omitanything likely to affect the import of such information.

2. THE ISSUER AND THE GROUP

The Issuer

2.1 The Issuer was incorporated in England and Wales on 28 November 2013 with registerednumber 8794437 under the Act as a company limited by shares with the name Conygar ZDPPLC which is its current legal and commercial name.

2.2 On 6 January 2014, the Issuer obtained a certificate pursuant to section 761 of the Actentitling it to trade and do business. The liability of its members is limited.

2.3 Since its incorporation, the Issuer has not commenced operations, nor carried on anysignificant business and no accounts of the Issuer have been made up.

2.4 The principal legislation under which the Issuer was formed and operates, and under whichthe ZDP Shares are issued, is the Act. The Issuer is not authorised by the FCA. The Issuerhas no employees.

2.5 The Issuer is domiciled in England. The registered office and principal place of business ofthe Issuer is at Fourth Floor, 110 Wigmore Street, London W1U 3RW; Tel. No.: 020 72588670.

2.6 Rees Pollock has been the only auditor of the Issuer since its incorporation.

2.7 The life of the Issuer is limited and it will be wound up on 9 January 2019 (or earlier ifrequired).

The Parent

2.8 The Parent was incorporated under the 1985 Act and trades under the name The ConygarInvestment Company PLC.

2.9 The Parent is domiciled in the United Kingdom and was incorporated and registered inEngland and Wales on 22 September 2003 as a public limited company with the name TheConygar Investment Company PLC and registered number 04907617. On 23 September2003, the Parent obtained a trading certificate pursuant to section 117 of the 1985 Act. Theliability of its members is limited.

2.10 The registered office and principal place of business of the Parent is at Fourth Floor, 110Wigmore Street, London W1U 3RW; Tel. No.: 020 7258 8670.

2.11 The Parent’s auditors during the period covered by the historical financial information of theParent (as set out in Appendix to this prospectus) were Rees Pollock, 35 New Bridge Street,London EC4V 6BW, which is regulated by the Institute of Chartered Accountants in Englandand Wales.

2.12 The Parent is the holding company of the Group. The Parent has the following significantundertakings as at the date of this prospectus:

Company name Principal activityCountry ofregistration Holding

Conygar Holdings Ltd Holding Company England 100%Martello Quays Limited Property trading and development England 100%Conygar Wales PLC Holding Company England 60%*Conygar Bedford Square Ltd Property trading and development England 100%*Conygar Properties Ltd Property trading and development England 100%*Conygar Developments Ltd Property trading and development England 100%*Conygar Strand Ltd Property trading and development England 100%*

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Company name Principal activityCountry ofregistration Holding

Conygar Hanover Street Ltd Property investment England 100%*The Advantage Property IncomeTrust Ltd Property investment Guernsey 100%*TAPP Property Ltd Property investment Guernsey 100%*TAPP Holdings Ltd Property investment Guernsey 100%*TAPP Maidenhead Ltd Property investment Guernsey 100%*TAPP Bletchley Ltd Property investment Guernsey 100%*TAPP Property Ltd Property investment Guernsey 100%*Conygar Stena Line Ltd Property trading and development England 50%*CM Sheffield Ltd Property trading and development England 50%*Conygar Haverfordwest Ltd Property trading and development England 100%*Conygar Advantage Ltd Holding company Guernsey 100%*Conygar Stafford Ltd Property investment England 100%*Conygar Dundee Ltd Property investment England 100%*Conygar St Helens Ltd Property investment England 100%*Conygar ZDP PLC issuer of ZDP Shares England 100%Conygar Sunley Ltd Property investment England 100%*Lamont Property Acquisition(Jersey) I Ltd Property investment Jersey 100%*Lamont Property Acquisition(Jersey) II Ltd Property investment Jersey 100%*Lamont Property Acquisition(Jersey) III Ltd Property investment Jersey 100%*Lamont Property Acquisition(Jersey) IV Ltd Property investment Jersey 100%*Lamont Property Acquisition(Jersey) V Ltd Property investment Jersey 100%*Lamont Property Acquisition(Jersey) VII Ltd Property investment Jersey 100%*Roadking Holyhead Ltd Property development England 50%

*indirectly owned

3. SHARE CAPITAL OF THE ISSUER

3.1 The Issuer’s issued share capital as at the date of this prospectus is as follows:

Amount Nominal value Number

Ordinary shares £50,000 £1.00 each 50,000ZDP Shares Nil £0.01 each Nil

3.2 The Issuer’s issued and fully paid share capital immediately following Admission is expectedto be as follows:


Ordinary shares £50,000 £1.00 each 50,000ZDP Shares £300,000 £0.01 each 30,000,000

3.3 The Directors have been authorised, pursuant to the Articles, to allot the ZDP Shares up to amaximum nominal amount of £300,000 in connection with the Placing, such authority toexpire on 28 February 2014.

3.4 The ZDP Shares have been allotted and issued in accordance with the Issuer’s Articles andthe Act, conditionally upon Admission, pursuant to a resolution of the Board passed on6 January 2014.

3.5 No share or loan capital of the Issuer is under option or has been agreed, conditionally orunconditionally, to be put under option and no convertible securities, exchangeable securitiesor securities with warrants have been issued by the Issuer.

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3.6 The ZDP Shares will be in registered form and, from Admission, will be capable of being heldin uncertificated form and title to such shares may be transferred by means of a relevantsystem (as defined in the CREST Regulations). Where ZDP Shares are held in certificatedform, share certificates will be sent to the registered members or their nominated agent (attheir own risk) within 10 days of completion of the registration process or transfer, as thecase may be, of the ZDP Shares. Where ZDP Shares are held in CREST, the relevantCREST stock account of the registered members will be credited.

3.7 As the ZDP Shares are to be admitted to the Official List (by way of a standard listing underChapter 14 of the Listing Rules), the Issuer will be subject to the Disclosure Rules andTransparency Rules. However, for the purposes of continuing obligations and the applicationof the Disclosure Rules and Transparency Rules on an ongoing basis, the Issuer will besubject to the Disclosure Rules and Transparency Rules to a reduced extent as the Issuerwill be considered to be an issuer of ‘‘preference shares’’ (as defined in the Listing Rules) forthe purposes of the Disclosure Rules and Transparency Rules. Accordingly, DTR 4 (Periodicfinancial reporting) and DTR 6 (Access to information) will apply to the Issuer but with areduced application that is specified in the Disclosure Rules and Transparency Rules to applyto an issuer of preference shares. Additionally, DTR 5 (Vote holder and issuer notificationrules) will not apply to the Issuer at all.

4. SHARE CAPITAL OF THE PARENT

4.1 The issued share capital of the Parent as at the date of this prospectus is, and immediatelyfollowing Admission is expected to be, as follows:


Ordinary Shares £4,924,456 £0.05 each 98,489,123

4.2 As at the date of this prospectus, the Parent held 9,667,819 Ordinary Shares in treasury,accordingly the number of issued Ordinary Shares outside treasury as at the date of thisprospectus is 88,821,304.

4.3 The number of Ordinary Shares subject to options as at the date of this prospectus are:

Share option scheme Exercise price Number

Robert Ware (b) £1.185 650,000(c) £2.00 2,025,000

Peter Batchelor (b) £1.185 425,000(c) £2.00 550,000

Steve Vaughan (a) £0.90 130,000(b) £1.185 325,000(c) £2.00 645,000

Total 4,750,000

The options are exercisable between the following dates:

(a) 10 March 2006 and 10 March 2014

(b) 15 March 2009 and 15 March 2016

(c) 19 February 2009 and 19 February 2017

4.4 As at 30 September 2010, the Parent’s issued share capital comprised 117,391,133 OrdinaryShares and 62,313,045 Preference Shares. Since then, there have been the followingchanges to the issued share capital of the Parent:

4.4.1 in accordance with the conversion of 466,500 Preference Shares, the Parent issuedand allotted 93,300 Ordinary Shares on 28 October 2010 at the issue price of 110pper Ordinary Share;

4.4.2 the Parent acquired for cash in the market 1,405,000 Ordinary Shares on 2 December2010 at the price of 108p per Ordinary Share which were subsequently held intreasury;

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4.4.3 the Parent acquired for cash in the market 160,000 Ordinary Shares on 3 December2010 at the price of 108p per Ordinary Share which were subsequently held intreasury;






4.4.9 the Parent acquired for cash in the market 1,000,000 Ordinary Shares on 4 January2011 at the price of 111p per Ordinary Share which were subsequently held intreasury;

4.4.10 the Parent acquired for cash in the market 4,079,047 Ordinary Shares on 8 February2011 at the price of 118p per Ordinary Share which were subsequently held intreasury;

4.4.11 the Parent acquired for cash in the market 328,739 Ordinary Shares on 9 February2011 at the price of 118p per Ordinary Share which were subsequently held intreasury;

4.4.12 in accordance with the conversion of 15,000,000 Preference Shares, the Parent issuedand allotted 3,000,000 Ordinary Shares on 9 February 2011 at the issue price of 110pper Ordinary Share;

4.4.13 the Parent acquired for cash in the market 204,000 Ordinary Shares on 14 March2011 at the price of 115p per Ordinary Share which were subsequently held intreasury;

4.4.14 the Parent acquired for cash in the market 1,743,214 Ordinary Shares on 15 March2011 at the price of 115.5p per Ordinary Share which were subsequently held intreasury;

4.4.15 the Parent acquired for cash in the market 190,000 Ordinary Shares on 16 March2011 at the price of 115.5p per Ordinary Share which were subsequently held intreasury;



4.4.18 the Parent acquired for cash in the market 122,000 Ordinary Shares on 30 March2011 at the price of 115p per Ordinary Share which were subsequently held intreasury;


4.4.20 in accordance with the conversion of 94,010 Preference Shares, the Parent issued andallotted 18,802 Ordinary Shares on 15 April 2011 at the issue price of 110p perOrdinary Share;

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4.4.21 the Parent acquired for cash in the market 200,000 Ordinary Shares on 24 May 2011at the price of 115.5p per Ordinary Share which were subsequently held in treasury;

4.4.22 the Parent acquired for cash in the market 150,000 Ordinary Shares on 25 May 2011at the price of 115.5p per Ordinary Share which were subsequently held in treasury;

4.4.23 the Parent acquired for cash in the market 1,800,000 Ordinary Shares on 26 May2011 at the price of 115.5p per Ordinary Share which were subsequently held intreasury;

4.4.24 the Parent acquired for cash in the market 1,752,381 Ordinary Shares on 27 May2011 at the price of 115.5p per Ordinary Share which were subsequently held intreasury;

4.4.25 in accordance with the conversion of 22,000 Preference Shares, the Parent issued andallotted 4,400 Ordinary Shares on 31 May 2011 at the issue price of 110p perOrdinary Share;

4.4.26 the Parent acquired for cash in the market 2,270,167 Ordinary Shares on 1 June 2011at the price of 118p per Ordinary Share which were subsequently held in treasury;

4.4.27 the Parent acquired for cash in the market 572,981 Ordinary Shares on 2 June 2011at the price of 118p per Ordinary Share which were subsequently held in treasury;

4.4.28 in accordance with the conversion of 14,215,740 Preference Shares, the Parent issuedand allotted 2,843,148 Ordinary Shares on 6 June 2011 at the issue price of 110p perOrdinary Share;

4.4.29 the Parent acquired for cash in the market 1,765,000 Ordinary Shares on 13 June2011 at the price of 115.5p per Ordinary Share which were subsequently held intreasury;

4.4.30 the Parent acquired for cash in the market 900,000 Ordinary Shares on 29 July 2011at the price of 105p per Ordinary Share which were subsequently held in treasury;

4.4.31 in accordance with the conversion of 57,000 Preference Shares, the Parent issued andallotted 11,400 Ordinary Shares on 15 August 2011 at the issue price of 110p perOrdinary Share;

4.4.32 in accordance with the conversion of 60,000 Preference Shares, the Parent issued andallotted 12,000 Ordinary Shares on 14 November 2011 at the issue price of 110p perOrdinary Share;

4.4.33 in accordance with the conversion of 29,500 Preference Shares, the Parent issued andallotted 5,900 Ordinary Shares on 30 November 2011 at the issue price of 110p perOrdinary Share;

4.4.34 in accordance with the conversion of 35,000 Preference Shares, the Parent issued andallotted 7,000 Ordinary Shares on 19 December 2011 at the issue price of 110p perOrdinary Share;

4.4.35 in accordance with the conversion of 10,000 Preference Shares, the Parent issued andallotted 2,000 Ordinary Shares on 30 December 2011 at the issue price of 110p perOrdinary Share;

4.4.36 the Parent redeemed the remaining 32,323,095 Preference Shares for £0.25 perPreference Share on 31 December 2011;

4.4.37 the Parent transferred and cancelled 9,900,000 Ordinary Shares which had been heldin treasury on 12 January 2012;

4.4.38 the Parent acquired for cash in the market 2,000,000 Ordinary Shares on 21 March2012 at the price of 90p per Ordinary Share which were subsequently held in treasury;

4.4.39 the Parent acquired for cash in the market 125,000 Ordinary Shares on 4 September2012 at the price of 86p per Ordinary Share which were subsequently held in treasury;

4.4.40 the Parent acquired for cash in the market 2,300,000 Ordinary Shares on17 September 2012 at the price of 90p per Ordinary Share which were subsequentlyheld in treasury;

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4.4.41 the Parent acquired for cash in the market 3,700,000 Ordinary Shares on17 September 2012 at the price of 90p per Ordinary Share which were subsequentlyheld in treasury;

4.4.42 the Parent acquired for cash in the market 595,000 Ordinary Shares on 18 September2012 at the price of 90p per Ordinary Share which were subsequently held in treasury;

4.4.43 the Parent acquired for cash in the market 600,000 Ordinary Shares on 28 September2012 at the price of 89.58p per Ordinary Share which were subsequently held intreasury;

4.4.44 the Parent acquired for cash in the market 2,459,838 Ordinary Shares on 12 December2012 at the price of 85.52p per Ordinary Share which were subsequently held intreasury;

4.4.45 the Parent transferred and cancelled 15,000,000 Ordinary Shares which had been heldin treasury on 24 January 2013;

4.4.46 the Parent acquired for cash in the market 150,000 Ordinary Shares on 15 February2013 at the price of 102.5p per Ordinary Share which were subsequently held intreasury;

4.4.47 the Parent acquired for cash in the market 270,000 Ordinary Shares on 23 May 2013at the price of 117p per Ordinary Share which were subsequently held in treasury;

4.4.48 the Parent acquired for cash in the market 330,000 Ordinary Shares on 25 June 2013at the price of 118.5p per Ordinary Share which were subsequently held in treasury;and

4.4.49 the Parent acquired for cash in the market 300,000 Ordinary Shares on 1 August 2013at the price of 126.5p per Ordinary Share which were subsequently held in treasury.

4.5 As at 30 September 2013, the Parent’s issued share capital comprised 98,489,123 OrdinaryShares.

5. SUBSTANTIAL SHARE INTERESTS

The Issuer

5.1 The Issuer is not aware of any person (other than the Parent) who, directly or indirectly,jointly or severally, owns or controls 3 per cent. or more of the issued ordinary shares of theIssuer. Major shareholders in the Issuer do not have voting rights in respect of the Issuer’sshare capital which differ from those of any other shareholder holding shares in the sameclass in the Issuer. Save for the Parent, the Issuer is not aware of any person who could,directly or indirectly, jointly or severally, exercise control over the Issuer.

5.2 Neither the Issuer nor any of the Directors are aware of any arrangements, the operation ofwhich may at a subsequent date result in a change of control of the Issuer.

The Parent

5.3 As at the close of business on the Latest Practicable Date, in so far as is notified to theParent, the following persons were directly or indirectly interested in 3 per cent. or more of itsissued share capital:

Name No of Shares %

Legal & General Group plc 8,903,333 10.02Fidelity Worldwide Investments (FIL Ltd) 5,071,404 5.71Majedie Asset Management Limited 4,932,657 5.55Robert Ware 3,750,000 4.22Bimaljit Singh Sandhu 3,063,789 3.45Ennismore Fund Management Limited 2,925,250 3.29

5.4 Those persons referred to in paragraph 5.3 do not have voting rights in respect of theParent’s share capital which differ from those of any other shareholder. The Parent is notaware of any person who could, directly or indirectly, jointly or severally, exercise control overthe Parent.

5.5 Neither the Parent nor any of the Directors of the Parent are aware of any arrangements, theoperation of which may at a subsequent date result in a change of control of the Parent.

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6. DIRECTORS OF THE ISSUER AND THE PARENT

The Issuer

6.1 None of the Directors of the Issuer are entitled to be paid any remuneration (including anycontingent or deferred compensation) or to be granted any benefits in kind by the Issuer forhis services as a director of the Issuer.

6.2 No remuneration is permitted to be paid to the Directors of the Issuer under the Issuer’sArticles for as long as they are directors of any other member of the Group.

6.3 There are no existing or proposed service contracts between any of the Directors of theIssuer and the Issuer.

6.4 No amounts have been set aside or accrued by the Issuer to provide pension retirement orsimilar benefits for the Directors of the Issuer.

6.5 No loan has been granted to, nor any guarantee provided for the benefit of, any of theDirectors of the Issuer by any member of the Group.

6.6 None of the Directors of the Issuer have, or had, any interest in any transaction which is orwas unusual in its nature or conditions or significant to the business of the Group and whichhas been effected by the Group since incorporation and which remains in any wayoutstanding or unperformed.

6.7 None of the Directors of the Issuer have an interest in the share capital of the Issuer or inany options in respect of such capital.

The Parent

6.8 The aggregate remuneration paid and benefits in kind granted to the Directors by the Parentin respect of the financial year ended 30 September 2013 was approximately £994,000 andwas made up as follows:

Basic Salary£’000

Fees£’000

Total£’000

Nigel Hamway — 60 60Robert Ware 323 — 323Peter Batchelor 280 — 280Preston Rabl 88 — 88Steven Vaughan 198 — 198Michael Wigley — 45 45

Total 889 105 994

No non-cash benefits were paid to Directors. Fees of £104,250 were also paid to AmberhookProperties Limited, a company controlled by Preston Rabl.

6.9 No amounts have been set aside or accrued by the Parent to provide pension retirement orsimilar benefits for the Directors. None of the service agreements or letters of appointment ofthe Parent Directors provide for benefits upon termination.

6.10 The service contracts and letters of appointment of the Directors include the following terms:

Date of ContractUnexpired Term

(Months)Notice Period

(Months)

Nigel Hamway 25 October 2007 35 6Robert Ware 25 October 2007 N/A 12Peter Batchelor 25 October 2007 N/A 12Preston Rabl 29 October 2009 N/A 12Steven Vaughan 25 October 2007 N/A 12Michael Wigley 25 October 2007 35 6

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6.11 As at the Latest Practicable Date, the following Directors have interests in the Parent:

DirectorNumber of

Ordinary SharesPercentage of issued

share capital

Nigel Hamway 984,000 1.11Robert Ware 3,750,000 4.22Peter Batchelor 830,001 0.93Preston Rabl 1,345,480 1.51Steven Vaughan 495,000 0.56Michael Wigley 330,000 0.37

6.12 As at the Latest Practicable Date, the Directors hold options to acquire Ordinary Shares asfollows:

Date of grant Exercise dates NumberExercise

Price

Robert Ware 16 March 2006 15 March 2009 to15 March 2016

650,000 £1.185

20 March 2007 19 February 2009 to19 February 2017

2,025,000 £2.00

Peter Batchelor 16 March 2006 15 March 2009 to15 March 2016

425,000 £1.185

20 March 2007 19 February 2009 to19 February 2017

550,000 £2.00

Steven Vaughan 11 March 2004 10 March 2006 to10 March 2014

130,000 £0.90

16 March 2006 15 March 2009 and15 March 2016

325,000 £1.185

20 March 2007 19 February 2009 and19 February 2017

645,000 £2.00

6.13 Save as set out in this Part VIII, none of the Directors, including any connected person, theexistence of which is known to or who could with reasonable diligence be ascertained by thatDirector whether or not held through another party, has an interest in the share capital of theParent or in any options in respect of such capital.

6.14 No loan has been granted to, nor any guarantee provided for the benefit of, any of theDirector by any member of the Group.

6.15 None of the Directors has, or has had, any interest in any transaction which is or wasunusual in its nature or conditions or significant to the business of the Group and which hasbeen effected by the Group since incorporation and which remains in any way outstanding orunperformed.

6.16 As at the date of this prospectus, there are no potential conflicts of interest between:

6.16.1 any duties to the Parent of the Parent Directors and their private interests and/or otherduties; and

6.16.2 any duties to the Issuer of the Issuer Directors and their private interests and/or otherduties.

6.17 The Parent maintains directors’ and officers’ liability insurance for the benefit of the Directors.

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6.18 In addition to their directorships of the Issuer and the Parent, the Directors hold or have heldthe directorships and are or were members of the partnerships, as listed in the table below,over or within the past five years.

Name Current directorships/partnerships Past directorships/partnerships

Nigel Hamway 1 Rawlinson Road ManagementLimitedBlackbird Academy TrustCharterhouse Development CapitalLimitedFamily Links (EducationalProgrammes)Oxford LiederOxford Educational PartnershipLimitedQuickheart LimitedThe Progress Foundation

CAF Syndication LimitedCharterhouse General Partners(VI) Limited)Charterhouse General PartnersLimitedOhbia LimitedTTP Capital Partners Limited

Robert Ware Tarsus Group PlcTerra Catalyst FundMartello Quays LimitedBeverston Mews ManagementCompany LimitedWes Real Estate LLPMarwyn Capital LimitedMarwyn Value Investors LimitedMarwyn Investment ManagementLimitedMarwyn Investment Group LimitedMarwyn Partners LimitedMarwyn Management Partners plcConygar Strand LimitedConygar Developments LimitedConygar Wales PLCConygar Stena Line LimitedConygar Holdings LimitedConygar Properties LimitedConygar Bedford Square LimitedConygar Haverfordwest LimitedConygar Sunley LimitedConygar Dundee LimitedConygar St Helens LimitedConygar Stafford LimitedD III LLPW1 (Freehold) No. 5 LimitedConygar Hanover Street LimitedOxiana Property LLPFilm Development PartnershipChalkstream Investment CompanyLimited

Tarsus Group LimitedMatterley Holdings LLP (dissolved26/10/2010)Raven Mount LimitedNR Nordic & Russia Properties LtdWoodley Lodge InvestmentsLimited (dissolved 13/10/2010)Marwyn Alternative Capital LimitedGartmore Go Dealing Limited(dissolved 25/02/2012)Gartmore Growth Opportunities Ltd(dissolved 12/07/2012)Marwyn Alternative Capital (Pte)LtdRaven Mount Group Limited

Peter Batchelor Ashby Park ManagementCompany LimitedBigglesworth Investments LimitedC M Sheffield LimitedConygar Advantage LimitedConygar Bedford Square LimitedConygar Dundee LimitedConygar Hanover Street LimitedConygar Haverfordwest Limited

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Name Current directorships/partnerships Past directorships/partnerships

Conygar Holdings LimitedConygar Properties LimitedConygar St Helens LimitedConygar Stena Line LimitedConygar Stafford LimitedConygar Strand LimitedConygar Sunley LimitedConygar Wales PlcMartello Quays LimitedMetropolitan Film Partnership LLPOxiana Property LLPPackham Leisure LimitedRoadking Holyhead LimitedThe Advantage Property IncomeTrust LimitedTOPP Bletchley LimitedTOPP Property LimitedTAPP Property LimitedTOPP Holdings LimitedTAPP Maidenhead Limited

Preston Rabl Wes Real Estate LLPAmberhook Investments LimitedBlueford LimitedAmberhook Properties LimitedBurton Court Capital Advisors (UK)LimitedLothian LimitedIMI Capital LimitedLaxey Partners (UK) LimitedTDG Limited

Steven Vaughan Ashby Park ManagementCompany LimitedC M Sheffield LimitedConygar Bedford Square LimitedConygar Dundee LimitedConygar Hanover Street LimitedConygar Haverfordwest LimitedConygar Holdings LimitedConygar St Helens LimitedConygar Stafford LimitedConygar Strand Limited

Almura Building Products LimitedOxiana Property LLP

Michael Wigley Pollok & Corrour LimitedPremier Energy and Water TrustPlc

6.19 Save as disclosed at paragraph 6.20 below, at the date of this prospectus:

6.19.1 none of the Directors has had any convictions in relation to fraudulent offences for atleast the previous five years;

6.19.2 none of the Directors has been declared bankrupt or has been a director of acompany or been a member of an administrative, management or supervisory body ora senior manager of a company within the previous five years which has entered intoany bankruptcy, receivership or liquidation proceedings;

6.19.3 none of the Directors has been subject to any official public incrimination and/orsanctions by statutory or regulatory authorities (including designated professionalbodies) or has been disqualified by a court from acting as a member of the

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administrative, management or supervisory bodies of an issuer or from acting in themanagement or conduct of the affairs of any issuer for at least the previous five years;and

6.19.4 none of the Directors are aware of any contract or arrangement subsisting in whichthey are materially interested and which is significant to the business of the Issuer orthe Parent which is not otherwise disclosed in this prospectus.

6.20 Robert Ware was a member of Matterley Holdings LLP which carried out a solvent members’voluntary liquidation in July 2010.

7. EMPLOYEES

The average number of employees of the Parent for each financial year covered by the historicalfinancial information up to the date of this prospectus is as follows:

Average number ofemployees*

Financial year ended 30 September 2011 7Financial year ended 30 September 2012 7Financial year ended 30 September 2013 9

* including Directors.

8. MEMORANDUM AND ARTICLES OF THE ISSUER

A summary of the main provisions of the Articles is set out below:

8.1 Objects

The Issuer’s memorandum and articles of association do not contain an objects clause.Accordingly, the Issuer has unlimited objects.

8.2 Life

8.2.1 The Issuer shall have a fixed life and shall be placed into voluntary liquidationfollowing a general meeting on 9 January 2019 convened for the purposes of passinga winding-up resolution, such a resolution being a special resolution either at thatgeneral meeting or any other general meeting for the purposes of considering windingup the Issuer (a ‘‘Winding-Up Resolution’’).

8.2.2 The vote on any Winding-Up Resolution shall be taken on a poll. Each shareholdervoting against the Winding-Up Resolution shall have one vote per share. Eachshareholder voting for the Winding-Up Resolution shall have such total number ofvotes for each share held by them that the aggregate number of votes cast in favourof the Winding-Up Resolution is the greater of four times the number of votes castagainst the Winding-Up Resolution and one vote per share. No shareholder shall haveweighted voting rights in any other circumstance.

8.2.3 In addition to the foregoing, in the event of a change of control of the Parent, theDirectors shall, within 20 days of such change of control, convene a general meetingof ZDP Shareholders at which they shall propose an ordinary resolution (the‘‘Continuation Resolution’’) that the Issuer continue in existence. At the same timeas convening that meeting, the Directors shall convene a general meeting of the Issuerand shall propose a Winding-Up Resolution which shall be conditional on theContinuation Resolution not being passed. For the purposes of this Article, a change ofcontrol shall be deemed to occur where a person or any person acting in concert withit (as such term is defined in the Takeover Code) becomes interested in and exercisesvoting control over shares representing 50 per cent. or more of the shares carryingvoting rights at general meetings of the Parent (the ‘‘Controller’’). The votes attachedto any ZDP Shares owned or controlled by the Controller or any person acting inconcert with the Controller shall be disregarded for the purposes of determiningwhether the Continuation Resolution has been passed.

8.2.4 The Directors shall also convene a general meeting of ZDP Shareholders at whichthey shall propose a Continuation Resolution if an event of default occurs under theLoan Agreement or in the event of a breach of the Contribution Agreement, in each

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case within 20 days of such default or breach or, if later, the date by which it may beremedied in accordance with Loan Agreement and/or Contribution Agreement hasexpired. At the same time as convening that meeting, the Directors shall propose aWinding-Up Resolution, conditional on the Continuation Resolution not being passed.

8.3 Share rights

The holders of the ordinary shares and the ZDP Shares shall have the following rights:-

8.3.1 As to dividends:

(a) the ZDP Shares carry no rights to receive dividends out of the revenue or anyother profits of the Issuer;

(b) the ordinary shares carry the right to receive the profits of the Issuer available fordistribution and determined to be distributed by way of interim and/or finaldividends and at such times as the Directors may determine.

8.3.2 As to winding-up, the assets of the Issuer available for distribution to members inaccordance with the Act shall be applied as follows:

(a) first there shall be paid to the holders of the ZDP Shares an amount equal to£1.00 per ZDP Share as increased each day from 10 January 2014 up to andincluding 9 January 2019 at the daily compound rate which results in a finalentitlement of 130.7 pence on 9 January 2019; and

(b) second, there shall be paid to the holders of the ordinary shares the surplusassets of the Issuer available for distribution.

8.3.3 As to voting:

(a) ZDP Shares

(i) the holders of the ZDP Shares shall have the right to receive notice ofgeneral meetings of both the Issuer and, for information only, the Parent butshall not have the right to attend or vote either at any general meeting ofthe Parent or of the Issuer unless in respect of the Issuer only when thebusiness of the meeting includes any resolution to vary, modify or abrogateany of the special rights attached to the ZDP Shares or any resolution towind up the Issuer and at any meeting where any such business is to beconsidered such holders shall be entitled to vote on resolutions in relation tosuch business alone; and

(ii) where by virtue of the provisions of sub-paragraph 8.3.3(a)(i) above theholders of the ZDP Shares are entitled to vote, every such holder present inperson or by a duly authorised representative (if a corporation) at a meetingshall, subject always to paragraph 8.2, in relation to such business, haveone vote in respect of every ZDP Share held by him.

(b) ordinary shares

(i) the holders of the ordinary shares shall have the right to receive notice ofand attend and vote at general meetings of the Issuer; and

(ii) each holder of ordinary shares being present in person or by a dulyauthorised representative (if a corporation) at a meeting shall upon a showof hands have one vote and upon a poll each such holder present in personor by proxy or by a duly authorised representative (if a corporation) shallhave one vote in respect of every ordinary share held by him;

8.4 Class rights

8.4.1 Subject to paragraphs 8.4.2 and 8.4.3 below, the Issuer shall not without the previoussanction of a special resolution of the holders of the ZDP Shares passed at a separategeneral meeting of such holders of ZDP Shares convened and held in accordance withthe provisions of the Issuer Articles:

(a) issue and shall, so far as it is able, procure that no other member of the Groupshall, issue (other than to the Parent or any directly or indirectly wholly ownedsubsidiary thereof), further shares or securities, or rights to subscribe for or toconvert or exchange any securities into shares or securities, save that no such

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sanction shall be required in circumstances where the Cover Test and theInvestment Property Cover Test are satisfied immediately following such issue offurther shares or securities, or rights to subscribe for or to convert or exchangeany securities into shares or securities;

(b) pass a resolution amending Article 163 (as described in paragraph 8.2 above) orreleasing the Directors from their obligation to convene a general meeting on9 January 2019 at which a resolution will be proposed requiring the Issuer to bewound up voluntarily;

(c) convene a general meeting at which a resolution will be proposed requiring theIssuer to be wound up voluntarily other than in accordance with Article 163 (asdescribed in paragraph 8.2 above);

(d) pass, and shall so far as it is able, procure that no other member of the Groupshall pass, a resolution to reduce the capital of the Issuer or any member of theGroup in any manner, including any resolution authorising the directors of therelevant member of the Group to purchase shares in such company, save that nosuch sanction shall be required in circumstances where the Cover Test and theInvestment Property Cover Test are satisfied immediately following any purchasepursuant to any such resolution;

(e) permit the Issuer or permit any other member of the Group either to increase theaggregate principal amount of monies borrowed by the Issuer or any othermember of the Group (excluding monies borrowed by any one of such companiesfrom any other of them but including monies borrowed from bankers fortemporary purposes only and in the ordinary course of business) such that thelimits and the restrictions stated in the articles of association of the Parent (ifany) or the Contribution Agreement would be breached or amend such limits andrestrictions;

(f) pass a resolution resulting in less than two individuals from the board of directorsof the Parent being on the board of directors of the Issuer as constituted fromtime to time;

(g) pass, and shall, so far as it is able, procure that no other member of the Groupshall pass, any resolution which authorises the directors of the relevant companyto pay a dividend or other distribution or make a capital distribution or otherwisemake a payment in cash or kind to the shareholders of the relevant company,save that no such sanction shall be required in circumstances where the CoverTest and the Investment Property Cover Test are satisfied immediately followingsuch payment or making of dividend provided that, in the case of the payment ofany dividend or other distribution or the making of any capital distribution orotherwise the making of a payment in cash or kind by a member of the Group toshareholders who are also members of the Group (‘‘Intra Group Distributions’’),this paragraph 8.4.1(f) shall not be breached if the Cover and the InvestmentProperty Cover Test immediately prior to the making of the Intra GroupDistribution is not reduced as a result); or

(h) make any variation of the terms of the Loan Agreement or ContributionAgreement which, at the time of being made, could reasonably be considered tobe materially prejudicial to the interests of the holders of the ZDP Shares.

For the purpose of this sub-paragraph 8.4.1, the ‘‘Cover Test’’ and the ‘‘InvestmentProperty Cover Test’’ are that the Directors of the Issuer are satisfied (afterconsulting the Issuer’s auditors in cases of doubt) that, in their reasonable opinion(acting in good faith), were the actions detailed in this sub-paragraphs 8.4.1(a), (d) and(g) above (each an ‘‘Action’’) to take place on the date specified by the Directors ofthe Issuer for such calculation (the ‘‘Calculation Date’’) those ZDP Shares in issueimmediately thereafter would have Cover not less than 3.5 times and InvestmentProperty Cover of not less than 2.5 times. In calculating such Cover and theInvestment Property Cover, the Directors of the Issuer shall:

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(i) use the figures set out in the most recent audited financial statements of theGroup in accordance with IFRS adjusted, if applicable, to take into account anysubsequent valuations of the Group’s investments and adjusted to reflect thecash held by the Group, accrued liabilities and expenses, prepayments and anyother creditors and debtors;

(ii) assume that the Action had been undertaken at the end of the month prior to theCalculation Date;

(iii) aggregate the capital entitlements of the existing ZDP Shares and the capitalentitlements of any new ZDP Shares or reclassified shares or securities or rights;

(iv) aggregate the capital entitlements of the existing ZDP Shares and the capitalentitlements of any new ZDP Shares (or any other shares ranking as to capital inpriority thereto or pari passu therewith) to be issued or reclassified as aforesaid,in each case as at the Calculation Date; and

(v) make such other adjustments as they consider reasonably appropriate.

8.4.2 notwithstanding sub-paragraphs 8.3.3(a) and 8.4.1 above, if any offer is made (whetherby the Issuer or any other person, including proposals for a reduction or cancellation ofcapital, capitalisation issue, share purchase or repurchase and/or redemption of sharesof the relevant class or any shares issued in substitution therefor) to all the holders ofZDP Shares, (other than the offeror and/or persons acting in concert with the offeror)which becomes or is declared unconditional in all respects (or would so become or bedeclared subject only to the passing of any Recommended Resolution (as definedbelow)) prior to 9 January 2019, and which enables the holders of the ZDP Shares toreceive no later than 9 January 2019 an amount in cash not less than that to whichthe Directors of the Issuer estimate (so far as practicable at the time and on the basisof such assumptions as they may reasonably deem appropriate) that the holders of theZDP Shares would otherwise have been entitled on a winding-up of the Issuer inaccordance with the Articles on the date of such cash payment applying the rate atwhich the premium over the Placing Price accrues up to 9 January 2019 (whether ornot such offer is accepted in any particular case and ignoring any option to receivealternative consideration) and such offer is recommended by the Directors of the Issuerand stated to be, in the opinion of a financial adviser appointed by the Directors of theIssuer, fair and reasonable the provisions of subparagraph 8.4.4 below shall apply tothe holders of ZDP Shares in relation to any resolution or resolutions (a‘‘Recommended Resolution’’) proposed at any general meeting of the Issuer or atany separate meeting of the holders of ZDP Shares save that the provisions of sub-paragraph 8.4.4 below shall cease as regards such shareholders if any Director of theIssuer considers that the aforementioned offer is unlikely to be honoured or the offerorbreaches a material term of the offer or otherwise manifests an intention not toimplement the offer;

8.4.3 notwithstanding sub-paragraphs 8.3.3(a) and 8.4.1 above, if at any time on or before9 January 2019 a resolution (a ‘‘Reconstruction Resolution’’) is proposed at anygeneral meeting of the Issuer or at any separate meeting of any class(es) ofshareholders (including the meeting to be convened to consider the winding-up of theIssuer) to sanction any form of arrangement for the transfer of all or part of theIssuer’s assets to another entity or any proposals for a reduction or cancellation ofcapital, capitalisation issue, share purchase or repurchase and/ or redemption of anyshares (including, without limitation, any further resolutions which the Directors of theIssuer consider to be necessary or desirable for the purposes of effecting suchproposals) and which enables the holders of the ZDP Shares to receive, no later than9 January 2019, an amount in cash not less than that to which the Directors estimate(so far as practicable at the time and on the basis of such assumptions as they mayreasonably deem appropriate) that such holders would otherwise have been entitled ona winding-up of the Issuer in accordance with the Articles on 9 January 2019 then(ignoring any option to receive their entitlements otherwise than in cash) provided sucharrangement or proposal is recommended by the Directors of the Issuer and stated tobe, in the opinion of a financial adviser appointed by the Directors of the Issuer, fairand reasonable, the provisions of sub-paragraph 8.4.4 below shall apply to the holders

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of the shares in relation to such resolution(s) save that such provisions shall cease asregards such shareholders if the arrangement is not implemented in accordance withits terms; and

8.4.4 where this sub-paragraph 8.4.4 applies in respect of any resolution, the holders of ZDPShares present in person, by a duly authorised representative (if a corporation) or byproxy and entitled to vote, and who shall vote in favour of such resolution shallcollectively have four times the number of votes cast against any such resolution andthe previous sanction of the ZDP Shareholders by way of a special resolution shall notbe required in any case provided that where, notwithstanding the foregoing, suchsanction is required in any case by law, all ZDP Shareholders present in person, by aduly authorised representative (if a corporation) or by proxy and entitled to vote atsuch meeting and who shall vote in favour of any resolutions recommended by theDirectors shall collectively (in respect of the rights attached to all such shares) havefour times the number of votes cast against the resolution. The vote on anyRecommended Resolution or Reconstruction Resolution shall be taken on a poll.

8.5 Variation of rights

Subject to the provisions of the Act as amended and every other statute for the time being inforce concerning companies and affecting the Issuer (the ‘‘Statutes’’), if at any time the sharecapital of the Issuer is divided into different classes, any of the rights for the time beingattached to any shares may from time to time be varied or abrogated in such manner (if any)as may be provided in the Articles by such rights or, in the absence of any such provision,either with the consent in writing of the holders of not less than three-quarters in nominalvalue of the issued shares of the relevant class (excluding shares of that class held astreasury shares) or with the sanction of a special resolution passed at a separate generalmeeting of the holders of the shares of the class duly convened and held in accordance withthe Act. At every such separate general meeting the necessary quorum shall be not less thantwo persons present (in person or by proxy) holding at least one-third of the nominal amountpaid up on the issued shares of the relevant class (but at any adjourned meeting any holderof shares of the class present in person or by proxy shall be a quorum), any holder of sharesof the class present in person or by proxy may demand a poll and every such holder shall ona poll have one vote for every share of the class held by him. Where the rights of some onlyof the shares of any class are to be varied, the foregoing provisions apply as if each group ofshares of the class differently treated formed a separate class whose rights are to be varied.

8.6 Transfers of shares

A share in certificated form may be transferred by means of an instrument of transfer inwriting in any usual form or any other form approved by the Directors, which is executed byor on behalf of the transferor and, where the share is not fully paid, by or on behalf of thetransferee. A share in uncertificated form may be transferred by means of the relevantelectronic system concerned.

In their absolute discretion, the Directors may refuse to register any transfer of a share incertificated form (or renunciation of a renounceable letter of allotment) which is not fully paidprovided that if the share is listed on the Official List such refusal does not prevent dealingsin the shares from taking place on an open and proper basis. The Directors may also refuseto register a transfer of a share in certificated form unless the instrument of transfer:

8.6.1 is delivered for registration to the registered office of the Issuer or such other place asthe Directors may from time to time determine and is accompanied (except in the caseof (a) a transfer by a recognised person where a certificate has not been issued, (b) atransfer of an uncertificated share or (c) a renunciation) by the certificate for the shareto which it relates and such other evidence as the Directors may reasonably require toprove the title of the transferor or person renouncing and the due execution of thetransfer or renunciation by him or, if the transfer or renunciation is executed by someother person on his behalf, the authority of that person to do so;

8.6.2 is in respect of only one class of share; and

8.6.3 is not in favour of more than four transferees.

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The Directors may refuse to register a transfer of a share in uncertificated form in such othercircumstances as may be permitted or required by the CREST Regulations and the relevantsystem.

If the Directors refuse to register a transfer of a share, they shall as soon as practicable andin any event within two months after the date on which the transfer was lodged with theIssuer or, in the case of an uncertificated share, the date on which the appropriate instructionwas received by or on behalf of the Issuer in accordance with the CREST Regulations sendto the transferee notice of refusal.

No fee shall be charged for the registration of any instrument of transfer or other document orinstruction relating to or affecting the title to any share.

8.7 Alteration of share capital

The Issuer may from time to time by ordinary resolution:

(i) consolidate and divide all or any of its share capital into shares of larger nominalamount than its existing shares;

(ii) subject to the provisions of the Act, sub-divide its shares, or any of them, into sharesof a smaller nominal amount than its existing shares; and

(iii) determine that, as between the shares resulting from such a sub-division, one or moreshares may, as compared with the others, have any such preferred, deferred or otherspecial rights or be subject to any such restrictions, as the Issuer has power to attachto new shares.

8.8 Restrictions on rights: failure to respond to a section 793 notice

If a shareholder, or any other person appearing to be interested in shares held by thatshareholder, fails to provide the information requested in a notice given to him under section793 of the Act by the Issuer in relation his interest in shares (the ‘‘default shares’’) within 14of the service of the notice (or, where the default shares represent at least 0.25 per cent. oftheir class, 14 days of service of the notice), sanctions shall apply unless the Directorsdetermine otherwise. The sanctions available are the suspension of the right to attend or vote(whether in person or by representative or proxy) in respect of the default shares at anygeneral meeting or any separate meeting of the holders of any class or on any poll or toexercise any other right conferred by membership in relation to any such meeting or poll and,where the default shares represent at least 0.25 per cent. in nominal value of the issuedshares of their class (excluding treasury shares), the withholding of any dividend payable inrespect of those shares and the restriction of the transfer of any shares (subject to certainexceptions).

8.9 Untraced shareholders

Subject to various notice requirements, the Issuer may sell any of a shareholder’s shares if,during a period of 12 years, at least three cash dividends (either interim or final) on suchshares have become payable and no cheque for amounts payable in respect of such shareshas been presented and no warrant or other method of payment has been effected and nocommunication has been received by the Issuer from the shareholder or person concerned.

8.10 Appointment of the Directors

Unless the Issuer determines otherwise by ordinary resolution, the number of Directors (otherthan alternate Directors) shall not be subject to any maximum but shall not be less than two.

Subject to the Articles, the Issuer may by ordinary resolution appoint a person who is willingto act as a Director either to fill a vacancy or as an additional Director. The Directors mayappoint a person who is willing to act, and is permitted by law to do so, to be a Director,either to fill a vacancy or as an additional Director.

8.11 Powers of the Directors

The business of the Issuer shall be managed by the Directors who, subject to the provisionsof the Act, the Articles and to any directions given by special resolution to take, or refrainfrom taking, specified action, may exercise all the powers of the Issuer, whether relating to

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the management of the business or not. Any Director may appoint any other Director, or anyother person approved by resolution of the Directors and willing to act and permitted by lawto do so, to be an alternate Director.

8.12 Voting at board meetings

No business shall be transacted in any meeting of the Directors unless a quorum is presentand the quorum may be fixed by the Directors; unless so fixed at any other number thequorum shall be two. A Director shall not be counted in the quorum present in relation to amatter or resolution on which he is not entitled to vote but shall be counted in the quorumpresent in relation to all other matters or resolutions considered or voted on at the meeting.An alternate Director who is not himself a Director shall, if his appointor is not present, becounted in the quorum.

Questions arising at a meeting of the Directors shall be decided by a majority of votes. In thecase of an equality of votes, the chairman of the meeting shall have a second or castingvote.

8.13 Restrictions on voting

Subject to any other provision of the Articles, a Director shall not vote at a meeting of theDirectors on any resolution concerning a matter in which he has an interest which is to hisknowledge a material interest (other than an interest in shares, debentures or other securitiesof, or otherwise in or through, the Issuer) unless his interest arises only because the casefalls within certain limited categories in the Articles.

8.14 Directors’ interests

Subject to the provisions of the Act and provided that the Director has disclosed to the otherDirectors the nature and extent of any material interest of his, the Director, notwithstandinghis office, may be a party to, or otherwise interested in, any transaction or arrangement withthe Issuer or in which the Issuer is otherwise interested and may be a Director or otherofficer of, or employed by, or a party to any transaction or arrangement with, or otherwiseinterested in, any body corporate in which the Issuer is interested.

8.15 Indemnity

Subject to the provisions of the Act but without prejudice to any indemnity to which he mayotherwise be entitled,, the Issuer may indemnify any person who is or was a Director orofficer of the Issuer or a director or officer of an associated company (except the Auditor orthe auditors of an associated company) against (a) all costs, charges, losses, damages andliabilities whether in connection with any negligence, default, breach of duty or breach of trustor otherwise by him in relation to the Issuer or any associated company and purchase andmaintain insurance for any person who is a Director or officer or employee of the Issuer or ofan associated company or of any company in which the Issuer has an interest whether director indirect (excluding the Auditor or the auditors of an associated company or of a companyin which the Issuer has an interest however direct or indirect) or who is or was at any time atrustee of any pension fund or employee benefits trust in which any employee of the Issuer orof any such other company or subsidiary undertaking is or has been interested in relation toanything done or omitted to be done or alleged to have been done or omitted to be done asa Director, officer, employee or trustee .

8.16 General meetings

In the case of the annual general meeting, twenty-one clear days’ notice at the least shall begiven to all the members and to the auditors. All other general meetings shall also beconvened by not less than twenty-one clear days’ notice to all those members and to theauditors unless the Issuer offers members an electronic voting facility and a special resolutionreducing the period of notice to not less than fourteen clear days has been passed in whichcase a general meeting may be convened by not less than fourteen clear days’ notice inwriting.

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No business shall be transacted at any meeting unless a quorum is present when themeeting proceeds to business. Save as otherwise provided in the Articles, two personsentitled to attend and vote upon the business to be transacted, each being a shareholder or aproxy for a shareholder or a duly authorised representative of a corporation which is ashareholder shall be a quorum.

A shareholder is entitled to appoint another person as his proxy to exercise all or any of hisrights to attend and to speak and vote at a meeting of the Issuer. A shareholder may appointmore than one proxy in relation to a meeting, provided that each proxy is appointed toexercise the rights attached to a different share or shares held by him. Subject to theprovisions of the Act, any corporation (other than the Issuer itself) which is a shareholdermay, by resolution of its directors or other governing body, authorise such person(s) to act asits representative(s) at any meeting of the Issuer, or at any separate meeting of the holdersof any class of shares. Delivery of an appointment of proxy shall not preclude a shareholderfrom attending and voting at the meeting or at any adjournment of it.

The Directors may attend and speak at general meetings and at any separate meeting of theholders of any class of shares, whether or not they are shareholders.

A poll on a resolution may be demanded at a general meeting either before a vote on a showof hands on that resolution or immediately after the result of a show of hands on thatresolution is declared.

9. MEMORANDUM AND ARTICLES OF THE PARENT

Memorandum of Association

The Memorandum of Association of the Parent provides that its principal object and purpose is tocarry on business as a general commercial company. Its obligation and purposes are set out in fullin clause 4 of the Memorandum of Association.

Articles of Association

9.1 Allotment of Share Capital

Subject to the provisions of the Acts and to any relevant authority of the Parent in generalmeeting required by the Acts, unissued shares at the date of adoption of the Articles and anyshares thereafter created shall be at the disposal of the Board, which may allot (with orwithout conferring rights of renunciation), grant options over, offer or otherwise deal with ordispose of them or rights to subscribe for or convert any security into shares to such persons(including the Directors themselves), at such times and generally on such terms andconditions as the Board may decide, provided that no share shall be issued at a discount.

9.2 Transfer of Shares

Each member may transfer all or any of his shares by instrument of transfer in writing in anyusual form or in any form approved by the Board. Such instrument shall be executed by oron behalf of the transferor and (in the case of a transfer of a share which is not fully paid up)by or on behalf of the transferee. The transferor shall be deemed to remain the holder ofsuch share until the name of the transferee is entered in the register of members of theParent in respect of it.

The Board may, in its absolute discretion and without giving any reason, refuse to registerany share transfer unless:

(a) it is in respect of a share which is fully paid up;

(b) it is in respect of a share on which the Parent has no lien;

(c) it is in respect of only one class of share;

(d) it is in favour of a single transferee or not more than four joint transferees;

(e) it is duly stamped (if so required); and

(f) it is delivered for registration to the registered office of the Parent or such other placeas the Board may from time to time determine, accompanied (except in the case of atransfer by a recognised person where a certificate has not been issued) by thecertificate for the shares to which it relates and such other evidence as the Board may

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reasonably require to prove the title of the transferor and the due execution by him ofthe transfer or, if the transfer is executed by some other person on his behalf, theauthority of that person to do so;

provided that the Board shall not refuse to register any transfer or renunciation of partly paidshares which are traded on the London Stock Exchange on the grounds that they are partlypaid shares in circumstances where such refusal would prevent dealings in such shares fromtaking place on an open and proper basis.

Subject to the Articles, a member may transfer all or any of his uncertificated shares bymeans of the relevant system or in any other manner which is permitted by the Statutes andis from time to time approved by the Directors and the Parent shall register such transfer inaccordance with the Statutes.

The Directors may, in their absolute discretion and without giving any reason, refuse toregister any transfer of an uncertificated share where permitted by the Regulations.

9.3 Alteration of Share Capital

The Parent in general meeting may from time to time by ordinary resolution:

(a) increase its share capital by such sum to be divided into shares of such amount asthe resolution prescribes;

(b) consolidate and divide all or any of its share capital into shares of larger nominalamount than its existing shares;

(c) cancel any shares which at the date of the passing of the resolution have not beentaken or agreed to be taken by any person, and diminish the amount of its sharecapital by the amount of the shares so cancelled; and

(d) subject to the provisions of the Acts, sub-divide its shares or any of them into sharesof smaller amount, and may by such resolution determine that, as between the sharesresulting from such subdivision, one or more of the shares may, as compared with theothers, have any such preferred, deferred or other special rights or be subject to anysuch restrictions as the Parent has power to attach to unissued or new shares.

Subject to the provisions of the Acts to any rights for the time being attached to any shares(a) the Parent may by special resolution reduce its share capital or any capital redemptionreserve or share premium account in any manner; and (b) purchase any of its own shares ofany class (including redeemable shares).

9.4 Variation of Class Rights

If at any time the share capital of the Parent is divided into shares of different classes, any ofthe rights for the time being attached to any share or class of shares in the Parent (andnotwithstanding that the Parent may be or be about to be in liquidation) may be varied orabrogated in such manner (if any) as may be provided by such rights or, in the absence ofany such provision, either with the consent in writing of the holders of not less than three-quarters in nominal value of the issued shares of the class or with the sanction of a specialresolution passed at a separate general meeting of the holders of shares of the class dulyconvened and held as provided in the Articles (but not otherwise).

Subject to the terms on which any shares may be issued, the rights or privileges attached toany class of shares shall not be deemed to be varied or abrogated by the creation or issue ofany new shares ranking pari passu in all respects (save as to the date from which such newshares shall rank for dividend) with or subsequent to those already issued or by the purchaseor redemption by the Parent of its own shares in accordance with the provisions of the Actsand the Articles.

9.5 Annual General Meetings and General Meetings

An annual general meeting shall be convened on not less than 21 clear days’ notice inwriting. An annual general meeting may be convened on shorter notice provided that all ofthe members entitled to attend and vote at the meeting agree.

A general meeting shall be convened on not less than 14 clear days’ notice in writing.

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Each notice shall specify whether the meeting is a general meeting or an annual generalmeeting, the place, time and day of the meeting, the text of any special resolution that isbeing considered and specifying also, in the case of special business, the general nature ofthat business and shall be given to those members that are entitled to receive notices. Inevery notice there shall appear a statement that a member entitled to attend and vote isentitled to appoint one or more proxies to attend, speak and vote instead of him; a holder ofmore than one ordinary share may appoint different proxies in relation to each or any ofthose ordinary shares; and that a proxy need not be a member. The right of a member toparticipate in the business of any general meeting shall include without limitation the right tospeak, vote on a show of hands, vote on a poll, be represented by a proxy and have accessto all documents which are required by the Acts or the Articles to be made available at themeeting.

The accidental omission to send a notice of meeting or, in cases where it is intended that itbe sent out with the notice, an instrument of proxy to, or the non-receipt of either by, anyperson entitled to receive the same shall not invalidate the proceedings at that meeting.

9.6 Voting

Subject to the provisions of the Acts, to any special terms as to voting on which any sharesmay have been issued or may for the time being be held and to any suspension orabrogation of voting rights pursuant to the Articles, at any general meeting every memberwho is present in person or by proxy shall on a show of hands have one vote and everymember present in person or by proxy shall on a poll have one vote for each share of whichhe is the holder, save that, if a member appoints more than one proxy, the proxies appointedby that member shall have only one vote between them.

If two or more persons are joint holders of a share, then in voting on any question the vote ofthe senior who tenders a vote, whether in person or by proxy, shall be accepted to theexclusion of the votes of the other joint holders. For this purpose seniority shall bedetermined by the order in which the names of the holders stand in the register of membersof the Parent.

No member shall, unless the Board otherwise determines, be entitled to vote at a generalmeeting or at any separate meeting of the holders of any class of shares, either in person orby proxy, in respect of any share held by him or to exercise any right as a member unless allcalls or other sums presently payable by him in respect of that share in the Parent have beenpaid to the Parent.

9.7 Directors

Unless and until otherwise determined by the Parent by ordinary resolution, the number ofDirectors (other than any alternate Directors) shall be not more than ten or less than two.

The Parent may by ordinary resolution appoint a person who is willing to act to be a Director,either to fill a vacancy or as an addition to the existing Board, but the total number ofDirectors shall not exceed any maximum number fixed in accordance with the Articles.

Without prejudice to the power of the Parent to appoint any person to be a Director pursuantto the Articles, the Board shall have power at any time to appoint any person who is willing toact as a Director, either to fill a vacancy or as an addition to the existing Board, but the totalnumber of Directors shall not exceed any maximum number fixed in accordance with theArticles. Any Director so appointed shall retire at the annual general meeting of the Parentnext following such appointment and shall not be taken into account in determining thenumber of Directors who are to retire by rotation at such meeting.

Subject to the provisions of the Acts, the Board may from time to time appoint one or moreof its body to hold any employment or executive office (including that of Managing Director)for such term (subject to the provisions of the Acts) and subject to such other conditions asthe Board thinks fit in accordance with Article 116. The Board may revoke or terminate anysuch appointment without prejudice to any claim for damages for breach of contract betweenthe Director and the Parent.

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No person, other than a Director retiring (by rotation or otherwise), shall be appointed or re-appointed a Director at any general meeting unless:

(a) he is recommended by the Board; or

(b) not less than seven nor more than 42 clear days before the date appointed for themeeting, notice duly executed by a member (other than the person to be proposed)qualified to vote at the meeting has been given to the Parent of the intention topropose that person for appointment or re-appointment, stating the particulars whichwould, if he were so appointed or re-appointed, be required to be included in theParent’s register of Directors, together with notice executed by that person of hiswillingness to be appointed or re-appointed, is lodged at the registered office of theParent.

A Director shall not be required to hold any shares of the Parent.

The Directors may, from time to time, appoint any person to be President of the Parent forsuch period and on such terms as they may think fit.

The remuneration of the Directors for their services in the office of director shall in theaggregate not exceed £100,000 per annum and such remuneration shall be divided amongstthe Directors as they shall agree or, in default of agreement, equally. The Directors may alsobe paid by way of additional remuneration such further sums as the Parent in generalmeeting may from time to time determine, and any such additional remuneration shall bedivided among the Directors as they shall agree or, in default of agreement, equally.

Each Director shall be entitled to be repaid all reasonable travelling, hotel and other expensesproperly incurred by him in or about the performance of his duties as a Director, including anyexpenses incurred in attending meetings of the Board or any committee of the Board orgeneral meetings or separate meetings of the holders of any class of shares or of debenturesof the Parent.

If by arrangement with the Board any Director shall perform or render any special duties orservices outside his ordinary duties as a Director and not in his capacity as a holder ofemployment or executive office, he may be paid such reasonable additional remuneration inaddition to any additional remuneration to which he is entitled under Article 109.1 (whether byway of salary, commission, participation in profits or otherwise) as the Board may from timeto time determine.

The Board may exercise all the powers of the Parent to provide pensions or other retirementor superannuation benefits and to provide death or disability benefits or other allowances orgratuities (whether by insurance or otherwise) for, or to institute and maintain any institution,association, society, club, trust, other establishment or profit-sharing, share incentive, sharepurchase or employees’ share scheme calculated to advance the interests of the Parent or tobenefit, any person who is or has at any time been a Director of the Parent or any companywhich is a holding company or a subsidiary undertaking of or allied to or associated with theParent or any such holding company or subsidiary undertaking or any predecessor inbusiness of the Parent or of any such holding company or subsidiary undertaking, and for anymember of his family (including a spouse or former spouse) and any person who is or wasdependent on him. For such purpose the Board may establish, maintain, subscribe andcontribute to any scheme, institution, association, club, trust or fund and pay premiums.

9.8 Retirement of Directors

At each annual general meeting of the Parent, one-third of the Directors or, if their number isnot three or a multiple of three, the number nearest to but not exceeding one-third shall retirefrom office. If there are fewer than three Directors, one Director shall retire from office. ADirector who retires at an annual general meeting (whether by rotation or otherwise) may, ifwilling to act, be re-appointed. If he is not re-appointed or deemed to have been re-appointed,he shall retain office until the meeting appoints someone in his place or, if it does not do so,until the end of the meeting.

Subject to the provisions of the Articles, all the Directors shall be subject to retirement byrotation in accordance with Article 97 and the Directors to retire at a particular annual generalmeeting shall include, so far as necessary to obtain the number required, first, any Directorwho wishes to retire and not offer himself for re-election and secondly, those Directors who

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have been longest in office since their last appointment or re-appointment. As between two ormore Directors who have been in office an equal length of time, the Director to retire shall, indefault of agreement between them, be determined by lot. The Directors to retire on eachoccasion (both as to number and identity) shall be determined by the composition of theBoard at the start of business on the date of the notice convening the annual general meetingnotwithstanding any change in the number or identity of the Directors after that time butbefore the close of the meeting.

Without prejudice to the provisions for retirement (by rotation or otherwise) contained in theArticles, the office of a Director shall be vacated if the Director resigns his office by writtennotice; if he ceases to be a Director by virtue of the Acts; is removed from office pursuant tothe Articles or becomes prohibited by law from being a Director; if he becomes insolvent,suspends payment or compounds with his creditors; if he is convicted of an indictableoffence; he becomes of unsound mind or incapable; both he and his alternate Director shallhave absented themselves from meetings of the Board for a consecutive period of six monthsand the Board resolves that the office shall be vacated; or he is requested to resign by allthe other Directors by notice in writing.

9.9 Directors’ Interests

Subject to the provisions of the Acts and the Articles, a Director, notwithstanding his office:

(a) may enter into or otherwise be interested in any contract, arrangement, transaction orproposal with the Parent or in which the Parent is otherwise interested, either in regardto his tenure of any office or place of profit or as vendor, purchaser or otherwise;

(b) may hold any other office or place of profit under the Parent (except that of auditor orof auditor of a subsidiary of the Parent) in conjunction with the office of Director andmay act by himself or through his firm in a professional capacity for the Parent, and inany such case on such terms as to remuneration and otherwise as the Board mayarrange, either in addition to or in lieu of any remuneration provided for by any otherArticle;

(c) may be a Director or other officer, or employed by, or a party to any transaction orarrangement with or otherwise interested in, any company promoted by the Parent orin which the Parent is otherwise interested or as regards which the Parent has anypowers of appointment; and

(d) shall not be liable to account to the Parent for any profit, remuneration or other benefitrealised by any such office, employment, contract, arrangement, transaction orproposal,

and no such contract, arrangement, transaction or proposal shall be avoided on the groundsof any such interest or benefit.

Unless the circumstances referred to in sections 177(5), 177(6), 182(5) or 182(6) of the Actapply (in which case no disclosure is required), a Director who, to his knowledge, is in anyway (directly or indirectly) interested in any contract, arrangement, transaction or proposalwith the Parent shall declare the nature and extent of his interest by:

(a) notice in writing under section 184 of the Act;

(b) general notice under section 185 of the Act; or

(c) at the meeting of the Board at which the question of entering into the contract,arrangement, transaction or proposal is first considered, if he knows his interest thenexists or, in any other case, at the first meeting of the Board after he knows that he isor has become so interested.

Save as provided in this Article, a Director shall not vote on, or be counted in the quorum inrelation to, any resolution of the Board or of a committee of the Board concerning anycontract, arrangement, transaction or any proposal whatsoever to which the Parent is or is tobe a party and in which he has an interest which (together with any interest of any personconnected with him within the meaning of section 252 of the Act) is to his knowledge amaterial interest otherwise than by virtue of his interests in shares or debentures or othersecurities of or otherwise in or through the Parent, unless the resolution concerns any of thefollowing matters:

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(a) the giving to him of any guarantee, security or indemnity in respect of money lent to orobligations incurred by him at the request of or for the benefit of the Parent or any ofits subsidiaries;

(b) the giving to a third party of any guarantee, security or indemnity in respect of a debtor obligation of the Parent or any of its subsidiaries for which he himself has assumedresponsibility in whole or in part, either alone or jointly with others, under a guaranteeor indemnity or by the giving of security;

(c) any proposal concerning an offer of shares or debentures or other securities of or bythe Parent or any of its subsidiaries in which offer he is or may be entitled toparticipate as a holder of securities or in the underwriting or sub-underwriting of whichhe is to participate;

(d) any contract, arrangement, transaction or proposal concerning any other bodycorporate in which he (together with persons connected with him within the meaning ofsection 252 of the Act) does not to his knowledge have an interest in one per cent ormore of the issued equity share capital of any class of such body corporate or of thevoting rights available to members of such body corporate;

(e) any contract, arrangement, transaction or proposal relating in any way to a retirementbenefits scheme which has been approved by or is subject to and conditional onapproval by the Parent Revenue for taxation purposes;

(f) any contract, arrangement, transaction or proposal for the benefit of employees of theParent or any of its subsidiaries which does not award him any privilege or benefit notgenerally awarded to the employees to whom such arrangement relates; or

(g) any contract, arrangement, transaction or proposal concerning the purchase and/ormaintenance of any insurance policy pursuant to Article 178.

A Director shall not vote or be counted in the quorum on any resolution of the Board orcommittee of the Board concerning his own appointment (including fixing or varying the termsof his appointment or its termination) as the holder of any office or place of profit with theParent or any company in which the Parent is interested. Where proposals are underconsideration concerning the appointment (including fixing or varying the terms of appointmentor its termination) of two or more Directors to offices or places of profit with the Parent or anycompany in which the Parent is interested, such proposals may be divided and a separateresolution considered in relation to each Director. In such case each of the Directorsconcerned (if not otherwise debarred from voting under the Articles) shall be entitled to vote(and be counted in the quorum) in respect of each resolution except that concerning his ownappointment.

9.10 Borrowing Powers

Subject to the provisions of the Articles, the Directors may exercise all the powers of theParent to borrow or raise money and to mortgage or charge all or any part of its undertaking,property and uncalled capital and to issue debentures and other securities whether outright oras security (principal or collateral) for any debt, liability or obligation of the Parent or any thirdparty.

The aggregate amount owing by the Parent and all its subsidiary undertakings in respect ofmoneys borrowed by them or any of them shall not at any time without the previous sanctionof the Parent in general meeting exceed an amount equal to four times the aggregate of:

(a) the amount paid up on the issued share capital of the Parent; and

(b) the amounts standing to the credit of the capital and revenue reserves (including,without limitation, any share premium account, capital redemption reserve, revaluationreserve or merger reserve) of the Parent and its subsidiary undertakings, plus or minusany balance standing to the credit or debit on profit and loss account,

all as shown in the then latest audited consolidated balance sheet of the Parent and itssubsidiary undertakings but after:

(c) making such adjustments as may be appropriate in respect of any variation in theinterest of the Parent in subsidiary undertakings and in such paid up share capital andreserves since the date of the relevant balance sheet;

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(d) deducting the amount of any distributions not attributable to the Parent out of profits(whether of a capital or revenue nature) accrued prior to the date of such balancesheet which have been made, declared, or recommended since such date and werenot provided for in the balance sheet; and

(e) deducting amounts attributable to goodwill or other intangible items.

9.11 Dividends

Subject to the provisions of the Acts and of the Articles, the Parent may by ordinaryresolution declare dividends to be paid to members according to their respective rights andinterests in the profits of the Parent. However, no dividend shall exceed the amountrecommended by the Board.

Subject to the provisions of the Acts, the Board may declare and pay such interim dividends(including any dividend payable at a fixed rate) as appears to the Board to be justified by theprofits of the Parent available for distribution.

Except as otherwise provided by the rights attached to shares, all dividends shall be declaredand paid according to the amounts paid up (otherwise than in advance of calls) on the shareson which the dividend is paid. Subject as aforesaid, all dividends shall be apportioned andpaid proportionately to the amounts paid up on the shares during any portion or portions ofthe period in respect of which the dividend is paid, but if any share is issued on termsproviding that it shall rank for dividend as from a particular date, it shall rank for dividendaccordingly.

The Board may, at its discretion, make provisions to enable such depositary and/or memberas the Board shall from time to time determine to receive dividends duly declared in acurrency or currencies other than sterling.

The Board may, before recommending any dividend create reserves out of the profits of theParent and apply any sums as it thinks fit. The Board may also, without placing the same toreserve, carry forward any profits which it may think prudent not to distribute.

9.12 Unclaimed Dividends

All dividends, interest, or other sum payable and unclaimed for 12 months after havingbecome payable may be invested or otherwise made use of by the Board for the benefit ofthe Parent until claimed and the Parent shall not be constituted a trustee in respect thereof.All dividends unclaimed for a period of 12 years after having become due for payment shall(if the Board so resolves) be forfeited and shall cease to remain owing by the Parent.

9.13 Notices

The Parent may give any notice or document (including a share certificate) to a member,either personally or by sending it by post or other delivery service in a prepaid envelopeaddressed to the member at his registered address or by leaving it at that address or in anysuch manner and form permitted by the Acts. In the case of a member registered on anoverseas branch register any such notice or document may be posted either in the UnitedKingdom or in the territory in which such branch register is maintained.

In the case of joint holders of a share, all notices or documents shall be given to the jointholder whose name stands first in the register of members of the Parent in respect of thejoint holding. Notice so given shall be sufficient notice to all the joint holders.

Any notice to be given by the Parent to the members or any of them, and not otherwiseprovided for by the Articles, shall be sufficiently given if given by advertisement in at leastone leading daily newspaper published in the United Kingdom and, where the Parent keepsan overseas branch register, in at least one leading daily newspaper published in the territoryin which such register is maintained. Any notice given by advertisement shall be deemed tohave been served at noon on the day on which the advertisement first appears.

If at any time by reason of the threat of or of the suspension, interruption or curtailment ofpostal services within the United Kingdom the Parent is or would be unable effectively toconvene a general meeting by notices sent through the post, a general meeting may beconvened by a notice advertised in at least two leading daily newspapers (at least one of

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which shall be a national newspaper) and, where the Parent keeps an overseas branchregister, in at least one leading daily newspaper published in the territory in which suchregister is maintained.

9.14 Winding Up

If the Parent shall be wound up, the assets remaining after payment of the debts andliabilities of the Parent and the costs of the liquidation shall be applied, first in repaying to themembers the amounts paid up on the shares held by them respectively, and the balance (ifany) shall be distributed among the members in proportion to the aggregate nominal value ofthe shares held by them respectively. Provided always that the provisions hereof shall besubject to the rights of the holders of shares (if any) issued upon special conditions.

In a winding up, any part of the assets of the Parent, including any shares in or securities ofother companies, may, with the sanction of a special resolution of the Parent, be divided bythe liquidator among the members of the Parent in specie, or may, with the like sanction, bevested in trustees for the benefit of such members, and the liquidation of the Parent may beclosed and the Parent dissolved but so that no member shall be compelled to accept anyshares whereon there is any liability.

10. THE TAKEOVER CODE

10.1 Mandatory bid

The City Code on Takeovers and Mergers (the ‘‘City Code’’) applies to the Issuer and theParent. Under the City Code, if an acquisition of ordinary shares were to increase theaggregate holding of the acquirer and any parties acting in concert with it to ordinary sharescarrying 30 per cent. or more of the voting rights in the Issuer or the Parent, the acquirerand, depending on the circumstances, persons acting in concert with the acquirer (‘‘concertparties’’), if any, would be required (except with the consent of the Panel on Takeovers andMergers (the ‘‘Panel’’)) to make a cash offer for shares not already owned by the acquirer orits concert parties (if any) at a price not less than the highest price paid for shares by itsconcert parties (if any) during the previous 12 months or (where there has been noacquisition of shares of the relevant class) at a comparable price agreed by the Panel. Asimilar obligation to make such a mandatory cash offer would also arise on the acquisition ofshares by a person holding (together with its concert parties, if any) shares carrying at least30 per cent. but not more than 50 per cent. of the voting rights in the Issuer or the Parent ifthe effect of such acquisition were to increase the percentage of the aggregate voting rightsheld by the acquirer and its concert parties (if any).

10.2 Squeeze-out rules

Under the Act, if a person (the offeror) who has made a general offer to acquire the ordinaryshares were to acquire or unconditionally contract to acquire, not less than 90 per cent. invalue of the ordinary shares to which the offer relates, the offeror could then compulsorilyacquire the remaining ordinary shares. In order to do so, the offeror would have to send astatutory notice to outstanding ordinary shareholders within three months of the last day onwhich the offer can be accepted telling them that the offeror wishes to acquire their ordinaryshares and send a statutory declaration to the Issuer or the Parent stating that the conditionsfor the giving of the notice have been satisfied. Six weeks later, the offeror must send a copyof the statutory notice together with, if the ordinary shares are registered, an executedinstrument of transfer of the outstanding shares in the offeror’s favour to the Issuer or theParent and pay the consideration to the Issuer or the Parent, as appropriate, which wouldhold the consideration on trust for outstanding ordinary shareholders. The considerationoffered to those ordinary shareholders whose shares are compulsorily acquired must, ingeneral, be the same as the consideration that was available under the general offer.

10.3 Sell-out rules

The Act gives minority ordinary shareholders, a right to be bought out in certaincircumstances by a person who has made a general offer as described in paragraph 10.2above. If, at any time before the end of the period within which the general offer can beaccepted, the offeror has acquired, or contracted to acquire, ordinary shares representing notless than 90 per cent. in value of all the ordinary shares in the Issuer or the Parent, any

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ordinary shareholder to which the general offer relates who has not accepted the generaloffer can, by a written communication to the offeror, require it to acquire the shareholdershares. The offeror is required to give each shareholder notice of his right to be bought outwithin one month of that right arising. The offeror may impose a time limit on the rights ofminority shareholders to be bought out, but that period cannot end less than three monthsafter the end of the acceptance period. If a shareholder exercises his rights, the offeror isentitled and bound to acquire those shares on the terms of the offer or on such other termsas may be agreed.

11. MATERIAL CONTRACTS

The following contracts, not being contracts entered into in the ordinary course of business, havebeen entered into by the Issuer or any other member of the Group within the two yearsimmediately preceding the date of this prospectus and are, or may be, material. There are no othercontracts entered into by the Issuer or any member of the Group which include an obligation orentitlement which is material to the Group as at the date of this prospectus.

11.1 Loan Agreement

The Loan Agreement dated 7 January 2014 between the Issuer and the Parent pursuant towhich the Issuer agrees to make an interest free loan to the Parent of an aggregate amountequal to the Net Placing Proceeds, such amounts to be advanced by the Issuer to the Parenton receipt by the Issuer of the Net Placing Proceeds. Amounts advanced under the LoanAgreement will be repayable in full on the ZDP Repayment Date and otherwise on the termsand conditions set out in the Loan Agreement.

11.2 Contribution Agreement

The Parent and the Issuer have entered into a Contribution Agreement dated 7 January 2014pursuant to which the Parent has undertaken to contribute (by way of gift, capital contributionor otherwise) such funds to the Issuer as will ensure that the Issuer will have sufficientassets: (i) on the ZDP Repayment Date to satisfy the ZDP Capital Entitlement then due; (ii)the Accrued Capital Entitlement on the date of any winding up of the Issuer prior to the ZDPRepayment Date; and (iii) to pay any operational costs or expenses incurred by the Issuer.The Contribution Agreement contains protections for ZDP Shareholders (in addition to thoseprovided under the Issuer’s Articles) a description of which provisions are set out inparagraph 5 of this Part V of this prospectus.

11.3 Registrar agreement

The Registrar Agreement between the Issuer and Share Registrars Limited dated 7 January2014, pursuant to which the Registrar has been appointed as registrar to the Issuer. TheRegistrar shall be entitled to receive an annual fee from the Issuer based on activity. TheRegistrar shall also be entitled to reimbursement of all out of pocket costs, expenses andcharges properly incurred on behalf of the Issuer.

This agreement shall continue for a period of twelve months, unless terminated earlier inaccordance with the agreement. At the expiry of twelve months, this agreement shallautomatically renew for successive periods of twelve months, unless terminated in accordancewith the agreement. Either party may terminate the Registrar Agreement on not less than sixmonths’ notice in writing to the other party.

Either party may terminate the Registrar Agreement at any time by notice in writing to theother, on the occurrence of certain events.

The Registrar Agreement is governed by and construed in accordance with the laws ofEngland and Wales.

11.4 Nominated adviser agreement

The Nominated Adviser and Broker Agreement dated 21 December 2012 between the Parentand Liberum, pursuant to which Liberum has agreed to act as nominated adviser and brokerto the Parent for the purposes of the AIM Rules. The appointment commenced on 15 January2013. The Parent has agreed to pay Liberum an annual fee of £40,000 plus VAT for itsservices under the Nominated Adviser and Broker Agreement.

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11.5 Placing agreement

The Placing Agreement dated 7 January 2014 between the Issuer, the Parent and Liberumpursuant to which, subject to certain conditions, Liberum has agreed to use reasonableendeavours to procure subscribers for ZDP Shares at the Placing Price.

The Placing Agreement may be terminated by Liberum in certain customary circumstancesprior to Admission. The Issuer has appointed Liberum as financial adviser and bookrunner inconnection with the Placing.

The obligation of the Issuer to issue the ZDP Shares and the obligation of Liberum to use itsreasonable endeavours to procure subscribers for ZDP Shares is conditional upon certainconditions that are typical for an agreement of this nature. These conditions include, amongothers: (i) Admission occurring and becoming effective by 8.00 a.m. on or prior to 10 January2014 (or such later time and/or date, not being later than 1 February 2014, as the Issuer andLiberum may agree); and (ii) the Placing Agreement not having been terminated inaccordance with its terms.

In consideration for its services in relation to the Placing and conditional upon completion ofthe Placing, Liberum will be paid a commission calculated by reference to the Gross PlacingProceeds. ‘‘Gross Placing Proceeds’’ means an amount in Pounds Sterling equal to theaggregate, before any deductions or payments of fees or commissions, of the total grossproceeds raised under the Placing equal to the number of ZDP Shares issued at the PlacingPrice pursuant to the Placing. Liberum is also entitled under the Placing Agreement to retainagents.

The Issuer and the Parent have given warranties to Liberum concerning, inter alia, theaccuracy of the information contained in this prospectus. The Issuer, the Parent have alsogiven indemnities to Liberum. The warranties and indemnities given by the Issuer and theParent are in customary form for an agreement of this nature.

The Placing Agreement is governed by and construed in accordance with English law.

12. SUMMARY OF THE PRINCIPAL TERMS OF THE CONYGAR INVESTMENT COMPANYSHARE OPTION PLAN

12.1 Summary of the principal terms of The Conygar Investment Company Share Option Plan (the‘‘Option Scheme’’)

12.2 Operation

The Option Scheme is operated by the Remuneration Committee of the Parent’s Board (the‘‘Committee’’).

12.3 HMRC approval

The Option Scheme is divided into two parts. One part (the ‘‘Approved Part’’) has beendesigned to qualify for approval by the HMRC under the Income Tax (Earnings and Pensions)Act 2003 (the ‘‘Income Tax Act 2003’’). Options granted under the Approved Part arereferred to as ‘‘Approved Options’’.

The other part (the ‘‘Unapproved Part’’ contained at Appendix III to the rules of the OptionScheme) does not qualify for HMRC approval. Accordingly the Unapproved Part allowsgreater flexibility than is permitted under the Approved Part. In particular, the £30,000individual limit (see below) does not apply to options granted under Appendix III. Optionsgranted under the Unapproved Part are referred to as ‘‘Unapproved Options’’. ‘‘Options’’ or‘‘Option’’ shall mean an Approved Option (or Approved Options) or an Unapproved Option (orUnapproved Options) as the context shall require or permit.

12.4 Grant of Options

(a) Eligibility

Any full-time Director (i.e. one who is contractually required to work at least 25 hoursper week) (and ‘‘Executive Director’’) and any other employee of the Group, iseligible to be granted options under the Approved Part at the discretion of theCommittee. Any Executive Director and any other employee of the Parent or theGroup will be eligible to be granted options under the Unapproved Part.

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(b) When Options may be granted

Approved Options may be granted within any period of 42 days following either: (i)approval of the Option Scheme by HMRC; or (ii) the announcement of any results ofthe Parent in each year; or (iii) the issue of shares by the Parent. Approved Optionswill not be granted more than 10 years after the date of the approval of the OptionScheme by HMRC.

Unapproved Options may be granted within any period of 42 days following either: (i)the date that the Option Scheme is adopted by the Parent; or (ii) the announcement ofany results of the Parent in each year; or (iii) the issue of shares by the Parent.Unapproved Options will not be granted more than 10 years after the date that theOption Scheme is adopted by the Parent.

If the Committee is prevented from granting options within the periods describedabove, by statute, order, regulation or government directive, it may grant options withinthe period of 21 days after the lifting of such restrictions. Options may also be grantedat other times in exceptional circumstances.

(c) Option exercise price

The price at which optionholders may acquire Ordinary Shares on the exercise of theirApproved Options will be determined by the Committee at the time of grant and mustnot be less than the higher of: (a) the nominal value of an Ordinary Share; and (b) themiddle market quotation of an Ordinary Share as derived from the Daily Official List ofthe London Stock Exchange for the dealing day immediately preceding the date ofgrant.

The price at which optionholders may acquire Ordinary Shares on the exercise of theirUnapproved Options will be determined by the Committee as its reasonable opinion ofthe market value of an Ordinary Share at the time of grant or, where the grant followsan issue of shares by the Parent, the price at which shares are issued by the Parent,and where the Unapproved Option is an option to subscribe it will not be less thenominal value of an Ordinary Share.

(d) Individual limit

At any one time, the Approved Options which any optionholder may hold under theOption Scheme and any other share option scheme (excluding savings-relatedschemes) approved under the Income Tax Act 2003 and established by the Parent (orany associated company), must be limited to Ordinary Shares with a market value(calculated at the date of grant of each option) that does not exceed £30,000.

12.5 Option Scheme limits

The number of issued Ordinary Shares over which options may be granted under the OptionScheme will be limited as follows:

(i) to the extent that the Parent’s market capitalisation is less than £100 million, the grantof Options will be limited so that the number of Ordinary Shares issued, or remainingissuable, pursuant to rights granted under the Option Scheme will not exceed 15 percent. of the Parent’s issued ordinary share capital at the date of grant;

(ii) if the Parent’s market capitalisation exceeds £100 million, the grant of Options will belimited so that the number of Ordinary Shares issued, or remaining issuable, pursuantto rights granted under the Option Scheme after the Parent’s market capitalisationexceeds £100 million will not exceed 10 per cent. of any additional Ordinary Sharesissued by the Parent after the Parent’s market capitalisation exceeds £100 million.

12.6 Performance conditions

All options granted under the Option Scheme are subject to performance conditions set bythe Committee. The performance conditions are designed to link the exercise of options to thegrowth in the share price of the Parent.

It is intended that the conditions attached to the initial set of Options granted under theOption Scheme will require that the Parent’s share price growth over a two year periodexceeds 20 per cent. compound per annum. The starting price for measuring share pricegrowth will be the placing price and the end price will be the average of the mid market value

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of a share in the Parent over the 30 days ending on the second anniversary of the date ofAdmission. The performance condition may be re-tested on an annual basis if it is notachieved on the second anniversary.

Options granted after 14 March 2006 require that the annual percentage growth in theParent’s share price exceeds that of the FTSE Small Cap Index over the two year periodmeasured from the date upon which the Options are granted. This performance condition maybe retested on an annual basis if it is not achieved on the second anniversary.

The Committee has power to vary any performance condition after the option has beengranted if, because of a change in circumstances, it considers the condition to have becomeunfair or impractical.

12.7 Exercise of Options

An Option will normally be exercisable between two and ten years from the date of grant. Ifan optionholder ceases to qualify as an eligible employee or director, any outstanding Optiongranted to him under the Option Scheme will lapse subject to the limited exercise periodsreferred to below.

If an optionholder ceases to be employed within the Group by reason of: death; injury ordisability; redundancy; retirement at 55; his employing company leaving the Group; or hisemployment being transferred out of the Group, his Option will be exercisable within a limitedperiod, whether or not the performance conditions have been satisfied. If for some otherreason an optionholder no longer qualifies as an eligible employee or Executive Director, theCommittee will retain a discretion to allow that optionholder to exercise his Options within alimited period. The Committee may extend that period to a longer period and/or make theexercise subject to conditions.

Options will also be exercisable within a limited period in the event of a takeover of theParent; its reconstruction or amalgamation with another Parent by virtue of a compromise orarrangement sanctioned by the court (a ‘‘Section 425 scheme’’); or the voluntary winding upof the Parent. In these circumstances Options will be exercisable whether or not theperformance conditions have been satisfied, save that for Unapproved Options in the event ofa takeover of the Parent, or a Section 425 scheme, an option may not be exercised unlessthe Committee is satisfied with the performance of the Parent over the period since the datethat the option was granted.

12.8 Variation of share capital

In the event of any increase or variation in the share capital of the Parent (whether by way ofcapitalisation, rights issue, sub-division or consolidation of the Ordinary Shares), the exerciseprice under each subsisting Option and/or the number and nominal value of Ordinary Sharescomprised in the Option may be adjusted by the Committee in such manner as it decides isfair and reasonable. In the case of Approved Options, the prior approval of HMRC will alsobe required.

12.9 Rights attaching to shares

Any Ordinary Shares allotted (or transferred) pursuant to the exercise of an Option will rankequally in all respects with the other Ordinary Shares in issue on the date of allotment (ortransfer).

12.10 Amendments to the Option Scheme

The Board may amend the Option Scheme in any way it thinks fit save that no amendmentmay be made which would adversely affect the subsisting rights of optionholders, without theconsent of the optionholder whose rights would be adversely affected by the amendment.

In the case of Approved Options, the prior approval of the HMRC will also be required to theamendment of key features of the Option Scheme.

12.11 General

The Parent will at all times keep available sufficient authorised and unissued Ordinary Sharesto satisfy the exercise of all options granted under the Option Scheme taking into accountarrangements for such options to be satisfied with issued shares.

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An Option will be personal to the optionholder and may not be assigned, charged, transferredor otherwise disposed of except as provided under the rules of the Option Scheme.

No optionholder will be entitled, on the termination of their employment with a member of theGroup, to any compensation for the loss of any rights under the Option Scheme.

Benefits under the Option Scheme will not be pensionable.

This is a summary of the main features of the Option Scheme but does not form part of itand should not be taken as affecting its interpretation.

13. SUMMARY OF THE PRINCIPAL TERMS OF THE PROFIT SHARING PLAN OF THE PARENT

The profit sharing plan of the Parent is an annual plan in which executive directors and seniorexecutives of the Parent will be entitled to an allocation of a profit sharing pool.

The scheme is based upon the increase in the audited fully diluted Net Asset Value per Share.The profit sharing pool is 20 per cent. of any increase in the Net Asset Value per Share at30 September over the previous highest Net Asset Value per Share (the ‘‘high watermark’’). Thisensures that executive directors and senior executives of the Parent cannot accrue any profit sharetwice in respect of the same Net Asset Value growth. The previous high watermark was at30 September 2011.

Before any payment accrues, the increase in fully diluted Net Asset Value per Share must exceeda hurdle of 10 per cent. compounded annually since the last high watermark (152.7p at30 September 2011). In addition the discount of the price of an Ordinary Share to the fully dilutedNet Asset Value per Share must not exceed 35 per cent.

Executive directors and senior executives of the Parent are required to invest a minimum of 50 percent. of any profit share payment in Ordinary Shares which must be held for a minimum of twoyears subject to certain good leaver provisions.

The remuneration committee has absolute discretion over participation, pool allocation anddetermination of performance conditions save in a limited number of circumstances coveringchange in control and certain good leaver provisions.

14. RELATED PARTY TRANSACTIONS

14.1 There have not been and are currently no agreements or other arrangements betweenmembers of the Group and individuals or entities, that may be deemed to be related parties,for the period from 1 October 2010 until the date of this prospectus save as disclosed in thefinancial statements (see note 28 to the financial statements of the Group for the year ended30 September 2011, note 28 to the financial statements of the Group for the year ended30 September 2012 and note 27 to the financial statements of the Group for the year ended30 September 2013), all of which are reproduced at the Appendix to this prospectus.

14.2 Save for:

14.2.1 the Contribution Agreement (further details of which are set out in paragraph 11.2 ofthis Part VIII);

14.2.2 the Loan Agreement (further details of which are set out in paragraph 11.1 of this PartVIII),

the Issuer has not entered into any related party transaction in the period from the date of itsincorporation to the date of this prospectus.

15. LITIGATION

15.1 There are no governmental, legal or arbitration proceedings (including any such proceedingswhich are pending or threatened of which the Issuer is aware) which may have, or have hadin the 12 months preceding the date of this prospectus, a significant effect on the financialposition or profitability of the Issuer.

15.2 There are no governmental, legal or arbitration proceedings (including any such proceedingswhich are pending or threatened of which the Parent is aware) which may have, or have hadin the 12 months preceding the date of this prospectus, a significant effect on the financialposition or profitability of the Group.

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16. WORKING CAPITAL

16.1 The Issuer is of the opinion that the working capital available to it is sufficient for its presentrequirements, that is for at least the next 12 months from the date of this prospectus.

16.2 The Parent is of the opinion that the working capital available to the Group is sufficient for itspresent requirements, that is for at least the next 12 months from the date of this prospectus.

17. CAPITALISATION AND INDEBTEDNESS

The Parent

Set out below is a statement of capitalisation and indebtedness in relation to the Group.

The capitalisation and indebtedness information set out below has been extracted withoutmaterial adjustment from the Parent’s annual reports and audited consolidated financialstatements of the Group for the year ended 30 September 2013.

As at30 September 2013

Indebtedness £ millionTotal current debtGuaranteed —Secured 1.1Unguaranteed/Unsecured 1.7Total current debt 2.8

Total non-current debtGuaranteed —Secured 69.4Unguaranteed/Unsecured —

Total non-current debt 69.4


Capitalisation £ millionShareholders’ equityShare Capital 4.9Legal reserve 125.6Other reserves 24.6

Total capitalisation 155.1

As at the date of this prospectus, there has been no material change to the capitalisation ofthe Parent since 30 September 2013.

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Net Indebtedness £ millionCash 31.6Cash equivalent —Trading securities —

Liquidity 31.6Current financial receivable 1.2Current bank debt (1.1)Other current financial debt (1.7)Current financial debt (2.8)Net current financial liquidity 30.0Non-current bank debt (69.4)Other non-current loans —Non-current financial indebtedness (69.4)Net financial indebtedness (39.4)

18. NO SIGNIFICANT CHANGE

18.1 There has been no significant change in the financial or trading position of the Group since30 September 2013, being the date of the last published audited consolidated financialstatements of the Parent.

18.2 There has been no significant change in the financial or trading position of the Issuer sincethe date of its incorporation.

19. THIRD PARTY INFORMATION

Where third party information has been referenced in this prospectus, the source of that third partyinformation has been disclosed. All information contained in this prospectus that has been sourcedfrom third parties has been accurately reproduced and, as far as the Issuer is aware and able toascertain from information published by such third parties, no facts have been omitted which wouldrender the reproduced information inaccurate or misleading.

20. GENERAL

20.1 The Placing of the ZDP Shares is being carried out on behalf of the Issuer by Liberum.

20.2 Liberum is registered in England and Wales under number 5912554 and its registered officeis at Ropemaker Place Level 12, 25 Ropemaker Street, London EC2Y 9LY. Liberum isregulated by the Financial Conduct Authority and is acting in the capacity of financial adviserand bookrunner to the Issuer. Liberum has given, and has not withdrawn, its written consentto the issue of this prospectus with the inclusion of its name and references to it in the formand context in which they appear.

20.3 Jones Lang LaSalle was incorporated as private limited a company in England and Wales on25 October 1974 with registered number 01188567. Jones Lang LaSalle is not a shareholderin the Issuer.

20.4 Jones Lang LaSalle accepts responsibility for its report set out at Part IV of this prospectus.Jones Lang LaSalle declares that, having taken all reasonable care to ensure that such is thecase, the information contained at Part IV of this prospectus, for which it is responsible is, tothe best of its knowledge, in accordance with the facts and contains no omission likely toaffect its import.

20.5 Jones Lang LaSalle has given and not withdrawn its written consent to the inclusion in thisprospectus of its report at Part IV of this prospectus and to the issue of this prospectus withreferences to its name in the form and context in which such references appear and hasauthorised the contents of its report of this prospectus, in the form and context in which it isincluded, and references to it for the purposes of the Prospectus Rules.

20.6 The issue of the ZDP Shares will not result in dilution to Parent Shareholders. The ZDPShares are accounted for as debt and are not being issued to existing shareholders of theParent.

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20.7 No application is being made for the ZDP Shares to be dealt with in or on any stockexchange or investment exchange other than the London Stock Exchange’s main market forlisted securities.

20.8 The Issuer confirms that no material change has occurred to the value of the property assetsof the Group since 30 September 2013, the effective date of the valuation report in Part IV ofthis prospectus.

21. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of this prospectus, the Loan Agreement, the Contribution Agreement, the Issuer’s Articles,the Parent’s Articles, the valuation report set out at Part IV of this prospectus and the annualreports and audited consolidated financial statements of the Group for each of the three financialyears ended 30 September 2011, 2012 and 2013 will be available for inspection at the registeredoffice of the Issuer during normal business hours on any weekday (Saturdays and public holidaysexcepted) until the date of Admission.

Dated: 7 January 2014

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PART IX

DEFINITIONS

The following definitions apply in this prospectus unless the context otherwise requires:

‘‘1985 Act’’ means the Companies Act 1985

‘‘Accrued Capital Entitlement’’ means the entitlement of a ZDP Share on any particular datereflecting the Placing Price plus the amount accrued at the GrossRedemption Yield

‘‘Act’’ or ‘‘Companies Act 2006’’ means the Companies Act 2006

‘‘Admission’’ means the admission of the ZDP Shares to a standard listing onthe Official List and to trading on the London Stock Exchange’smain market for listed securities

‘‘Affiliate’’ means an affiliate of, or person affiliated with, a specified person;a person that directly, or indirectly through one or moreintermediaries, controls or is controlled by, or is under commoncontrol with, the person specified

‘‘AIM’’ means the market of that name operated by the London StockExchange

‘‘AIM Rules’’ means the rules governing the operation of AIM comprising theAIM Rules for Companies, the AIM Rules for Nominated Advisersand the AIM Note for Investing Companies

‘‘Articles’’ means the articles of association of the Issuer or the Parent (asthe context may require)

‘‘Assumptions’’ means the assumptions set out in Part VI of this prospectus

‘‘Audit Committee’’ means the audit committee of the Parent from time to time

‘‘Auditor’’ means Rees Pollock

‘‘Contribution Agreement’’ means the contribution agreement between the Issuer and theParent dated 7 January 2014, further details of which are set outin paragraph 11.2 of Part VIII of this prospectus

‘‘Cover’’ means the ratio of (i) the Net Asset Value plus the AccruedCapital Entitlement to (ii) the ZDP Capital Entitlement

‘‘Cover Test’’ has the meaning set out in paragraph 8.4.1 of Part VIII of thisprospectus

‘‘CREST’’ means the facilities and procedures for the time being of theUncertificated System of which Euroclear has been approved as‘Authorised Operator’ pursuant to the Regulations

‘‘Directors’’ or ‘‘Board’’ means the board of directors of the Issuer and/or the Parent (asthe context may require) and ‘‘Director’’ means any one of them

‘‘Disclosure and TransparencyRules’’ or ‘‘DTRs’’

means the disclosure rules and transparency rules made by theFCA under Part VI of FSMA

‘‘EEA’’ means the European Economic Area

‘‘ERISA’’ means the U.S. Employee Retirement Income Security Act of1974, as amended from time to time, and the applicableregulations promulgated thereunder

‘‘ERV’’ estimated rental value

‘‘EU’’ means the European Union

‘‘Euroclear’’ means Euroclear UK & Ireland Limited

‘‘Executive Directors’’ means Robert Ware, Peter Batchelor, Steven Vaughan andPreston Rabl

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‘‘Financial Conduct Authority’’or ‘‘FCA’’

means the Financial Conduct Authority

‘‘FSMA’’ means the Financial Services and Markets Act 2000, as amended

‘‘GDP’’ means gross domestic product

‘‘GFA’’ means gross floor area

‘‘Gross Placing Proceeds’’ means the aggregate value of the ZDP Shares issued under thePlacing at the Placing Price

‘‘Gross Redemption Yield’’ means the maximum annualised return, based on theAssumptions, that can be achieved, before taxation, in terms ofcapital from purchasing a ZDP Share at the Placing Price andholding it until the ZDP Repayment Date

‘‘Group’’ means the Parent and all of its subsidiaries from time to time,including the Issuer

‘‘IFRS’’ means International Financial Reporting Standards

‘‘Investment Property Cover’’ means the ratio of (i) the aggregate value of the Group’sinvestment properties plus cash and cash equivalents or anymarketable security to (ii) the ZDP Capital Entitlement

‘‘Investment Property CoverTest’’

has the meaning set out in paragraph 8.4.1 of Part VIII of thisprospectus

‘‘ISA’’ means an individual savings account

‘‘ISIN’’ means International Securities Identification Number

‘‘Issuer’’ means Conygar ZDP PLC, a public company limited by sharesand incorporated in England and Wales under the on28 November 2013 with registered number 08794437

‘‘Latest Practicable Date’’ means 6 January 2014

‘‘Liberum’’ means Liberum Capital Limited

‘‘Listing Rules’’ means the listing rules made by the UK Listing Authority pursuantto Part VI of FSMA

‘‘Loan Agreement’’ means the loan agreement between the Issuer and the Parentdated 7 January 2014, further details of which are set out inparagraph 11.1 of Part VIII of this prospectus

‘‘London Stock Exchange’’ or‘‘LSE’’

means the London Stock Exchange plc

‘‘Net Asset Value’’ means the value of the assets of the Group less its liabilities(including accrued but unpaid fees), determined by the Directorsin their absolute discretion in accordance with the accountingprinciples adopted by the Directors

‘‘Net Asset Value per Share’’ means the Net Asset Value divided by the number of OrdinaryShares in issue at the relevant time

‘‘Net Placing Proceeds’’ means the Gross Placing Proceeds less the applicable fees andexpenses of the Placing payable by the Issuer

‘‘Nominated Adviser’’ means Liberum, in its capacity as nominated adviser to theParent for the purposes of the AIM Rules

‘‘Official List’’ means the official list of the UK Listing Authority

‘‘Ordinary Shares’’ means ordinary shares of £0.05 each in the capital of the Parent

‘‘Overseas Persons’’ means persons who are resident in, or who are citizens of, or whohave registered addresses in, territories other than the UK

‘‘Parent’’ means The Conygar Investment Company PLC

‘‘Placee’’ means a person subscribing for ZDP Shares under the Placing

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‘‘Placing’’ means the placing of ZDP Shares at the Placing Price asdescribed in this prospectus

‘‘Placing Agreement’’ means the conditional placing agreement between the Issuer, theParent and Liberum, a summary of which is set out in paragraph11.5 of Part VIII of this prospectus

‘‘Placing Price’’ means £1.00 per ZDP Share

‘‘Preference Shares’’ means preference shares of £0.01 each in the capital of theParent, all of which were redeemed or converted into OrdinaryShares on or before 31 December 2011

‘‘Prospectus Directive’’ means Directive 2003/71/EC of the European Parliament andCouncil on the prospectus to be offered when transferablesecurities are offered to the public or admitted to trading

‘‘Prospectus Rules’’ means the prospectus rules made by the UK Listing Authorityunder section 73(A) of FSMA

‘‘Registrar’’ means Share Registrars Limited or such other person or personsfrom time to time appointed by the Issuer

‘‘Registrar Agreement’’ means the registrar agreement between the Issuer and theRegistrar, a summary of which is set out in paragraph 11.3 of PartVIII of this prospectus

‘‘Regulation S’’ means Regulation S promulgated under the U.S. Securities Act

‘‘Regulations’’ means the Uncertificated Securities Regulations 2001 (S1 2001No.3755#)

‘‘RIS’’ or ‘‘RegulatoryInformation Service’’

means a regulatory information service as defined in the ListingRules

‘‘Risk Factors’’ means the risk factors pertaining to the Issuer and the Group setout on pages 11 to 17 of this prospectus

‘‘SDRT’’ means Stamp Duty Reserve Tax

‘‘SEC’’ means the U.S. Securities and Exchange Commission

‘‘SEDOL’’ means the Stock Exchange Daily Official List

‘‘Shareholders’’ means holders of Ordinary Shares

‘‘SIPP’’ means a self-invested personal pension

‘‘sqm’’ means square metres

‘‘Sterling’’ or ‘‘Pounds Sterling’’ means the lawful currency of the United Kingdom

‘‘U.S. Investment CompanyAct’’

means the U.S. Investment Company Act of 1940, as amended

‘‘U.S. Securities Act’’ means the U.S. Securities Act of 1933, as amended

‘‘UK’’ or ‘‘United Kingdom’’ means the United Kingdom of Great Britain and Northern Ireland

‘‘UK Corporate GovernanceCode’’

means the UK Corporate Governance Code as published by theUK Financial Reporting Council

‘‘UK Listing Authority’’ or‘‘UKLA’’

means the Financial Conduct Authority as the competentauthority for listing in the United Kingdom

‘‘uncertificated form’’ or ‘‘inuncertificated form’’

means recorded on the register as being held in uncertificatedform in CREST and title to which may be transferred by means ofCREST

‘‘Uncertificated System’’ means any computer-based system and its related facilities andprocedures that are provided by an Authorised Operator and bymeans of which title to units of a security (including shares) canbe evidenced and transferred in accordance with the Regulationswithout a written certificate or instrument

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‘‘United States’’ or ‘‘U.S.’’ means the United States of America, its territories andpossessions, any state of the United States of America and theDistrict of Columbia

‘‘VAT’’ means Value Added Tax

‘‘ZDP Board’’ means Nigel Hamway, Robert Ware and Peter Batchelor acting intheir capacities as directors of the Issuer

‘‘ZDP Capital Entitlement’’ means the accrued capital entitlement of a ZDP Share on theZDP Repayment Date

‘‘ZDP Repayment Date’’ means 9 January 2019

‘‘ZDP Share’’ means zero dividend preference shares of £0.01 each issued bythe Issuer that entitle their holders to a capital repayment equal tothe Accrued Capital Entitlement on the ZDP Repayment Date

‘‘ZDP Shareholder’’ means a holder of ZDP Shares

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APPENDIX

PART A – ANNUAL REPORTS AND AUDITED CONSOLIDATED FINANCIALSTATEMENTS OF THE GROUP FOR THE YEAR ENDED 30 SEPTEMBER 2011

A-1


The Conygar InvestmentCompany PLC

Report And Accounts30 September 2011

A-2

The Conygar Investment Company PLC, the property investment and development company announcesits results for the year ended 30 September 2011.

HIGHLIGHTS

● 2011 was another successful year for Conygar.

● NAV per share of 155.2p was up 3.1% (2010: 150.5p). EPRA NAV per share increased by 2.5%to 153.9p (2010: 150.1p).

● Final dividend proposed for the year of 1.1p per ordinary share.

● Progress made on the development land bank with expenditure in the year of £14.8 million.Purchased 93 acres of residential development land at Haverfordwest, Pembrokshire. Conditionaldisposal of 9 acres to Sainsbury’s to build a 60,000 square foot food store.

● Strong cash flow and debt capacity for future acquisitions, with total cash and undrawn committedfacilities exceeding £85 million.

● Sold £13.5 million of investment properties.

● Share buy back: the Group acquired 17.2% of its ordinary share capital at a weighted average priceof 116.1p per share.

Summary Group Net Assets As At 30 September 2011

Per Share£’m p

Investment Properties 139.2 136.3Development Projects 29.4 28.8Cash 35.7 35.0Other Net Liabilities (4.7) (4.7)

–––––––––––

199.6Bank Loans (33.7) (33.0)Preference Shares (7.4) (7.2)

––––––––––– –––––––––––

158.5 155.2––––––––––– –––––––––––––––––––––– –––––––––––

1

The Conygar Investment Company PLC

YEAR ENDED 30 SEPTEMBER 2011

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

Conygar has an experienced Board chaired by Nigel Hamway with Robert Ware as chief executive. Themanagement team has an excellent track record and has demonstrated cash management expertise bothbefore and during the current economic downturn.

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WHO WE ARE

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Page

Directors and Advisers 4

Chairman’s & Chief Executive’s Statement 5

Business Review 8

Financial Review 13

Corporate Governance Report 15

Directors’ Remuneration Report 17

Directors’ Report 21

Independent Auditors’ Report 25

Consolidated Statement of Comprehensive Income 27

Consolidated Statement of Changes in Equity 28

Company Statement of Changes in Equity 29

Consolidated Balance Sheet 30

Company Balance Sheet 31

Consolidated Cash Flow Statement 32

Company Cash Flow Statement 33

Notes to the Accounts 34

Investment Property Portfolio 61

Glossary of Terms 65

Notice of Annual General Meeting 66

Form of Proxy 71

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CONTENTS

Registered in England No. 04907617

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The Board of Directors

N J Hamway (Non-Executive Chairman)R T E Ware (Chief Executive)

P A Batchelor (Finance Director)S M Vaughan (Property Director)

P M C Rabl (Director)M D Wigley (Non-Executive Director)

Company Secretary

P A Batchelor

Registered Office


Auditors Solicitors

Rees Pollock Wragge & Co LLP35 New Bridge Street 55 Colmore RowLondon EC4V 6BW Birmingham B3 2AS

Nominated Adviser & Stockbroker Registrars

Oriel Securities Limited Share Registrars Limited150 Cheapside Suite E

London EC2V 6ET First Floor9 Lion and Lamb Yard

FarnhamSurrey GU9 7LL

Registered Number

04907617

Website

www.conygar.com

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DIRECTORS AND ADVISERS

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Results

The year ended 30 September 2011 has been another successful and effective year for Conygar. In thesedifficult economic times, we have continued to grow net asset value per share and have a strong balancesheet. We are pleased to be able to report a net asset value per share of 155.2p, which is an increase of3.1% from last year. The major components of that growth are the profit after tax of £1.1 million and theimpact of the share buy back. Net asset value was £158.5 million compared with £176.6 million at30 September 2010, however, the Group spent £24.6 million on share buybacks during 2011 and paid adividend of £1.2 million. Excluding these, net assets increased by 4.3%. On an EPRA basis net assetvalue per share increased by 2.5% to 153.9p.

The profit before taxation for the year was £1.8 million (2010: £14.9 million). However, the previousyear included a £5.5 million profit from sale of properties and a revaluation gain of £7.2 million. Netproperty income was £10.0 million (2010: £12.4 million) before financing and overheads. The uncertaintiming of our acquisition, sales and development expenditure mean that our profits cannot be expectedto be a smooth progression. We are not an earnings or income yield business: our focus is on net assetvalue growth.

However, the Group has generated profits after tax of £29.4 million in the last three years, with a returnon equity averaging 7.1% pa. This is despite a deliberate policy of holding cash for investmentopportunities which depresses returns. If adjusted for cash, the net return rises to 16.4% pa which, giventhe economic turmoil since October 2008, is a creditable performance.

The Group’s investment properties as at 30 September 2011 were independently valued at£139.2 million and have an annual contracted rent roll of £12.1 million. On a like for like basis with lastyear, the portfolio remained broadly flat, showing a small overall gain of £401,000. In view of thesecondary and regional nature of the portfolio, we are pleased that value was maintained, reflecting theactive asset management work protecting value.

The development land bank continues to be held at cost of £29.4 million, after additions of a further£14.8 million during 2011. We will revalue it once the various planning issues are sufficiently advancedso that a sensible appraisal can be produced. These projects represent a considerable amount of potentialupside and we continue to invest time, money and effort into bringing them to fruition. We areparticularly encouraged by our conditional disposal of 9 acres at Haverfordwest to Sainsbury’s, for a foodstore, with whom we hope to develop other opportunities. The waterfront projects move ahead, albeit ina difficult market and we are pleased to have been able to access certain infrastructure grant funds. All ofthese matters are covered in more detail under Business Review on page 8.

Acquisitions and disposals

In November 2010, we purchased 86 acres of land at Haverfordwest, Pembrokeshire, close to the towncentre for £14 million, which has outline planning consent for 900 residential units. In June 2011, weacquired a further 7 acres adjoining the site for £0.3 million.

The Group disposed of four investment properties during the year at Whetstone Business Park, Leicester;Southgate Retail Park, Derby; Fishers Grove, Portsmouth and Caswell Road, Northampton for total netproceeds of £13.5 million, generating a small surplus of £167,000 over valuation. We will continue todispose of assets as opportunities arise and where no further value can be added by the Group.

Dividend

The Board is pleased to recommend a final dividend of 1.1p per ordinary share in respect of the yearended 30 September 2011 to be paid on 10 January 2012 to shareholders on the register on 9 December2011. This is an increase of 10% over last year which reflects the continued progress of the business. TheBoard has decided against the payment of interim dividends.

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CHAIRMAN’S & CHIEF EXECUTIVE’S STATEMENT

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Share Buy Back

Having announced the share buy back programme last year, the Group acquired 21,237,981 ordinaryshares representing 17.2% of its ordinary share capital, at a weighted average price of 116.1p per share.This used cash of £24.65 million and, as a result of the buy backs, net asset value has been enhanced byapproximately 7.6 pence per share or 5.05%.

We continue to be disappointed by the discount of the share price to the net asset value per share andwill utilise the share buy back authority where it makes sense to do so.

Financing

At 30 September 2011, the Group had cash of £35.7 million available to pursue investment opportunitieswhich, when combined with funds available from the committed bank facility, increases to £85 million.This excludes any further finance available in respect of new acquisitions. Bank debt was £34.8 millioncompared with £35.6 million last year. The Group continues to have net cash and bank debt was at 25%loan to value overall.

During November 2011, the Group re-couponed its existing interest rate swaps from 2.38% to 1.33%,having already reduced them during the year from 5.2%. Aside from reducing the on-going interest ratecharge in the income statement, we retain the hedging protection on 85% of our external bank debt andthe weighted average cost of all debt including margin has fallen to 4.44%.

Also during November 2011, the Group drew down £33 million from its facility with Lloyds BankingGroup for potential use on acquisitions. This increases bank debt to £64.4 million or 46% loan to value,ignoring cash. The Group takes the view that the ability to deploy cash quickly remains a majorcompetitive advantage when competing for acquisition opportunities.

Summary of Group Net Assets

The Group net assets as at 30 September 2011 may be summarised as follows:

Per Share£’m p

Investment Properties 139.2 136.3Development Projects 29.4 28.8Cash 35.7 35.0Other Net Liabilities (4.7) (4.7)

–––––––––––

199.6Bank Loans (33.7) (33.0)Preference Shares (7.4) (7.2)

––––––––––– –––––––––––

158.5 155.2––––––––––– –––––––––––––––––––––– –––––––––––

Outlook

It is extremely difficult to determine the outlook in a world that veers from one crisis to another. Ourpolicy remains that of sticking to what we know best and rigorously searching for undervalued assets anddevelopment opportunities. We will continue to realise assets where we believe we can add no furthervalue.

Generally, the banks still have not de-geared their property books and those that have, now require morecapital to cover other exposures, with the European crisis adding further uncertainties and capitalrequirements. Many borrowers still have to re-finance expiring loans, but recent experience shows that

6


CHAIRMAN’S & CHIEF EXECUTIVE’S STATEMENT (continued)

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banks are reluctant to face the challenge of non-performing loans and asset value shortfalls. The fulleffects of the austerity measures have yet to bite, and the coming years will be difficult. We have beenconsistent in our message throughout: this situation requires careful management, patience and, most ofall, nerve.

For Conygar, the outlook remains positive and we are starting to see the benefits of our strategy comingthrough. The balance sheet remains strong and, most important of all, liquid. Our development projectsare starting to bear fruit and we continue to invest in these projects which will produce good returns inthe medium term. Our investment property portfolio continues to hold up very well in a difficultenvironment owing to the massive amount of work by our team on asset management and we continueto evaluate opportunities in a highly selective and disciplined way. We would like to announce anotherdeal but we will not overpay just to be able to do that.

We believe that Conygar is stronger today than it was in 2008, when the world went awry. We have showngrowth in net assets, have been consistently profitable and have guarded our liquidity for theopportunities which will surely come, including where appropriate, share buy backs.

We remain very positive about the future for your business.

N J Hamway R T E Ware

Chairman Chief Executive

29 November 2011

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Investment Properties

Summary of portfolio

2011 2010

Valuation at 30 September £139,150,000 £151,145,000Number of properties 41 45Contracted rent (pa) £12,070,501 £13,350,440Current ERV (pa) £13,665,893 £14,704,211Net initial yield 7.86% 8.25%Equivalent yield 8.92% 8.84%Reversionary yield 9.35% 9.18%ERV of vacant units (pa) £1,611,451 £2,063,236Vacancy rate 11.19% 14.03%Average unexpired lease lengths 5.21 years 5.92 years

Asset management

At 30 September 2011, the contracted rent for the investment property portfolio was £12.1 million withan ERV of £13.7 million. The ERV of vacant space is £1.6 million of which Advantage, Reading andBrunswick Point, Leeds account for 50% by rental value. This has reduced from 71% in 2010 owing tothe successful letting of part of Advantage, Reading (see below). The overall vacancy rate in the portfoliois 11.19% down from 14.03% in 2010 and whilst there remains much to do this is a pleasing trend. Wecontinue to seek out occupiers and can afford to be highly competitive, however, the challenge remains asignificant one, particularly outside London.

In terms of lettings:

● We agreed 12 new lettings contributing £616,141 pa of new income at an aggregate premium of1.03% to ERV.

● We agreed 8 lease renewals retaining £681,691 pa of income at an aggregate discount of 1.75% toERV.

● We agreed 3 rent reviews at £70,500 pa of income at an aggregate discount of 6.37% to ERV.

The highlights include:

Advantage, Reading

In March 2011, we let 8,448 square feet at Advantage, Reading to Atex Group Limited on a twelve yearlease, with a tenant only break at year seven. The rent is £185,856 pa, subject to fixed uplifts for whichthe tenant is receiving a two year rent free period. We have agreed to finance the tenant fit-out of£350,000 which will be repaid in eight quarterly instalments. The tenant has also taken the right of firstrefusal over another floor. This is an important letting as this is the largest void in the portfolio andReading is a competitive occupier market. Having attracted one occupier, we are already seeing interestfrom other potential occupiers.

Unit 11/13 Brunel Centre, Bletchley

We have let a 2,975 square foot, previously vacant, unit to Brighthouse on the basis of 10 years fromMarch 2011, with a tenant break after five years. The rent will be £17,500 pa rising to £37,000 in yeartwo and £40,000 thereafter. We have made a capital contribution of £60,000 towards their fit-out costs.This both reduces the void and enhances the value of this property.

8


BUSINESS REVIEW

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Kingscourt Leisure Complex, Dundee

A 5,666 square foot unit has been let to Laser Quest for a period of 10 years from April 2011 at £26,895pa, with a mutual break after five years. This unit has been vacant since the property was constructed, sois a significant breakthrough and has generated interest in two further vacant units which are currentlyunder negotiation.

Armytage Road, Brighouse

A new lease was completed to the existing tenant, Owens Corning, on the basis of 10 years fromSeptember 2011, with a tenant only break in 2016. The passing rent of £155,000 pa has been maintainedwith a six month rent free period.

Sandwell Business Park, Oldbury

The tenant, Cadbury UK Limited, has now undertaken a £2 million refurbishment of this property andhas re-occupied it as one of the four core Cadbury distribution hubs in the UK. This re-affirms thecommitment of Cadbury to this 128,305 square foot warehouse/distribution unit which is let to themuntil September 2020 at £725,000 pa.

We have also begun a number of refurbishment initiatives, incurring some £1,079,000 of capitalexpenditure during 2011 and this level of capital expenditure will likely continue in 2012. In particular,we are upgrading Waterfront Business Park, Fleet; York House, Felixstowe and Silver Court, WelwynGarden City. However, we have chosen to defer our proposed £2 million refurbishment of BrunswickPoint, Leeds. The extremely weak occupier market in Leeds means little likelihood of realising adequatevalue for that level of expenditure and the funds can be better employed elsewhere.

By their nature, most of our transactions remain relatively small but the team is highly focussed onactively managing the portfolio to protect the income and cash flow. As ever, we try to ensure closecontact with tenants and to chase debts promptly. Clearly we cannot buck the market and, in particular,retail tenants are under enormous pressure. We try to work with them to manage the situation, often withsuccess, but occasionally we must bow to the inevitable. We typically collect 93-98% of rent within tendays and arrears are less than 1% of the rent roll.

Disposals

The Group disposed of four investment properties during the year at Whetstone Business Park, Leicester;Southgate Retail Park, Derby; Fishers Grove, Portsmouth and Caswell Road, Northampton for total netproceeds of £13.5 million, generating a small surplus of £167,000 over valuation.

The largest asset disposed of was Whetstone Business Park, Leicester which accounted for £6.97 millionof the total net sale proceeds, having been acquired as part of the Lamont portfolio in 2009 for£6.58 million. It was over rented with a tenant not in occupation and wishing to exit the lease in 2014.Whilst the income was good in the short term, we could only see downward pressure on the valuation,so we opted to sell and achieved a good price in this market.

The other significant asset was Southgate Retail Park, Derby which was sold for £4.74 million or 3.5%ahead of valuation. This property had a number of vacant retail units, with little occupational demand ina competitive over-supplied market.

We will continue to dispose of assets as opportunities arise and where no further value can be added bythe Group.

9


BUSINESS REVIEW (continued)

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Valuation

The investment property portfolio has been independently valued by Jones Lang LaSalle (who acquiredKing Sturge LLP in 2011) at £139.2 million as at 30 September 2011, comprising £97.4 million for theTAP portfolio and £41.8 million for the Lamont portfolio. The total portfolio increased in value by£401,000, so broadly flat compared with 2010.

There continues to be considerable downward pressure on values of property outside London owing toa flat investor market, scarce finance and tenants’ businesses operating in a tough economic climate.Active asset management is required to protect value and our investment in capital expenditure is allfinanced out of surplus cash flow from the portfolio.

Development Projects

Haverfordwest

In November 2010, we purchased 86 acres of land at Haverfordwest, Pembrokeshire, close to the towncentre for £14 million. This has planning consent for 900 residential units. We subsequently acquired afurther 7 acres adjoining our site for £0.3 million taking our total site to 93 acres.

We have now exchanged contracts with Sainsbury’s for the sale of 9 acres for a supermarket, subject tothe obtaining of a suitable planning consent. We intend to submit a planning application early next yearfor a retail food store comprising 60,000 square feet of sales floor space, a restaurant, a 500 space carpark and filling station. Our application will also include proposals for circa 800 residential plots on ourremaining site. We have held a joint public exhibition of the proposals with Sainsbury’s and we can nowfinalise our application.

The acquisition of this site in this challenging economic climate was, we believe, opportune at a cost ofless than £15,000 per plot. The addition of Sainsbury’s will significantly change the economics of theproject and, if successful, will enable us to bring forward the residential development, having more thancovered all our infrastructure and services costs through the net proceeds from Sainsbury’s. It is too earlyto ascertain the exact figures until the planning application is submitted and consultation underway.

Holyhead Waterfront

The planning application has been submitted for a mixed use development. The application includesplans for 385 apartments and townhouses, a 500 berth marina, 50,000 square feet of retail, leisure,restaurants, hotel and office space, with a very flexible design layout and in prime location overlookingthe marina. We are also making a provision for various local amenities and visitor attractions. The sitecovers in excess of half a mile of water frontage and is being developed jointly with Stena Line PortsLimited. Conygar has spent £8.61 million to date and additional funding and development partners willbe introduced as the scheme progresses.

The Council has now received all statutory and non-statutory consultation responses and we have heldvarious meetings with local planning officers to establish what further work is required in order that theCouncil can take the application forward to a determination at committee. As anticipated, we have had awide range of responses some of which require further work. We are confident that all issues can beadequately addressed by our design team and we are seeking a determination during the first quarter of2012.


We continue to market our development site at Parc Cybi, and discussions are ongoing with severaltransport operators, as well as the logistics industry supporting the nearby £15 billion nuclear powerproject at Wylfa. We were pleased to have received the go-ahead from the Welsh Government Business

10



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Minister for the purchase of a further 9 acres in order to develop a transport hub and lorry park forapproximately 140 heavy goods vehicles. We hope to submit a planning application in respect of this muchneeded facility within the next three months. This has taken a considerable amount of lobbying by ourdevelopment team but we are delighted that the project has now received the political support it requires.In addition, the employment creation associated with the scheme has enabled us to secure the offer ofsubstantial funding from the Wales European Funding Office. Finally, the Welsh Government has recentlyannounced that Anglesey will be designated as an Enterprise Zone and whilst the exact benefits are stillbeing determined, it is highly likely that enhanced capital allowances and business rate reliefs will formpart of any incentives, giving developments such as Parc Cybi a major boost.


In October 2011, we submitted, in conjunction with Stena Line Ports Limited, a planning application fora mixed use marina development at Fishguard in West Wales. The main elements of the scheme includea 450 berth marina with workshops, stores and ancillary facilities; 253 new residential apartmentsincorporating extensive landscaped gardens and a 19 acre platform for the potential expansion of theexisting Stena Line port. The end value of the development is expected to be in excess of £100 million.

We are particularly pleased to be working with our partners at Holyhead, Stena Line, and to have receivedthe support of Pembrokeshire County Council and The Crown Estate, who own much of the surroundingharbour area. The proposal will transform the area, create much needed employment opportunities andfurther enhance and ensure the future of the commercial port.

Clearly, the planning process for such a comprehensive proposal will attract considerable scrutiny but webelieve the economic drivers for the plans are strong and the backing received thus far is extremelyencouraging. We expect to be able to report further progress in May 2012, by which time we are hopefulof receiving planning consent.


We have recently completed the acquisition of this 11 acre site in Fishguard for £330,000 which is sitednear the Stena Line owned port. In May 2011, we obtained outline planning consent for a lorry stop anddistribution park. The proposal includes a secure 24 hour truck stop together with approximately 190spaces for tractor and trailers, vehicle refuelling and wash facilities, plus an amenity building. There willalso be around 30,000 square feet of industrial and warehousing units to support the lorry stop.

As this project will also offer significant employment and infrastructure benefits to the community, webelieve we will secure an offer of grant funding from the South West Wales Property Development Fundand discussions are currently taking place with both hauliers and the port operator, Stena Line. It is ourintention to start development once we have secured sufficient pre-lets.


Work on the various design and engineering solutions continues at this £100 million development of thePembroke Dock Waterfront in West Wales. We were pleased to report that the client group, comprisingPembrokeshire County Council, the Welsh Government, the Crown Estate and the Milford Haven PortAuthority, recognising the current state of the market, has consented to our adopting a phased approach,which is a massive boost to the project, as it permits the first phase of the project to begin sooner thanwould otherwise have been the case. We are in discussions with several potential tenants with a view tomoving ahead with the first phase, which in turn will kick-start the entire development.


In August 2011, we acquired a 6 acre residential development opportunity, which was under the controlof the Irish NAMA vehicle, with planning permission for 94 dwellings near to King’s Lynn, Norfolk for

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£799,000. In addition to the residential development, the site offers some potential for mixed orcommercial uses, subject to planning. We are currently looking at options to improve the scheme whichoffers good potential upside, subject to current market conditions.

Aberystwyth

In November 2011, in conjunction with Sainsbury’s, we have taken an option to purchase a site atAberystwyth Park Lodge, Aberystwyth. We are looking to develop a food retail supermarket together witha petrol filling station and car park. This is at a very early stage but work has commenced on a planningapplication which will be submitted as soon as possible. We hope to be able to report further on this indue course.


The expenditure in the year on our development land bank amounted to £14.8 million, reflecting theprogress made on all development projects. Our total investment to date is now £29.4 million at cost(analysed below) or 29p per share. We consider that, as the projects continue to progress, they will deliverpotentially significant upside.

Our three waterfront developments are expected to develop in excess of 1,200 waterside homes and 1,400marina berths, together with mixed use supporting development. Our other development sites, such asHaverfordwest, add the potential for a further 890 homes and the possible development of a new 60,000square foot Sainsbury’s retail food store. The two development projects at Parc Cybi, Holyhead andFishguard Lorry Stop complement the waterfront developments through the development of muchneeded lorry stop and storage facilities. There are several other projects at an early stage or in negotiation.

It is extremely difficult to provide shareholders with a meaningful guide as to valuation of the variousprojects. The mysteries of the planning process and the early stage of the projects make accurate costingand predictions unreliable, in our opinion. It is our intention to introduce third party valuations as soonas it is meaningful to do so. Suffice to say, we are comfortable that carrying the projects at cost is theprudent thing to do. However, we believe that there is significant upside in these projects which willbecome evident over the medium term.

2011 2010£’m £’m

Haverfordwest 14.69 1.41Holyhead Waterfront 8.61 8.47Pembroke Dock Waterfront 4.41 4.40King’s Lynn 0.80 -Fishguard Waterfront 0.58 0.35Parc Cybi, Holyhead 0.18 -Fishguard Lorry Stop 0.15 -

––––––––––– –––––––––––

Total investment to date 29.42 14.63––––––––––– –––––––––––––––––––––– –––––––––––

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Net Asset Value

The net asset value at the year end was £158.5 million (2010: £176.6 million) representing a 10.2%decrease in the period. The primary movement was the £24.6 million spent on purchasing own shares.

On an EPRA basis, the net asset value is:

2011 2010 2009£’m £’m £’m

Net asset value 158.5 176.6 160.9Preference share liability 7.4 13.3 12.6

––––––––––– ––––––––––– –––––––––––

Diluted net asset value 165.9 189.9 173.5

Fair value of hedging instruments 1.4 5.0 4.4EPRA net asset value 167.3 194.9 177.9

––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– –––––––––––

EPRA NAV per share 153.9p 150.1p 138.2p––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– –––––––––––

Basic NAV per share 155.2p 150.5p 138.5p––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– –––––––––––

Diluted NAV per share 152.7p 146.3p 134.8p––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– –––––––––––

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

The NNNAV or “triple net asset value” is the net asset value taking into account asset revaluations, themark to market costs of debt and hedging instruments and any associated tax effect. Our investmentproperties are carried on our balance sheet at independent valuation and there is no associated taxliability. Our development and trading assets are carried at the lower of cost and net realisable value. Wehave not sought to value these assets as, in our opinion, they are at too early a stage in their developmentto provide a meaningful figure, so cost is equated to fair value for these purposes. On this basis, there isno 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 September2011. In their opinion, the open market value of the investment property portfolio was £139.2 million.The total portfolio increased in value by £401,000 over the year.

Cashflow

The Group used £11.9 million cash in operating activities (2010: £15.5 million generated), of which£14.7 million was incurred as expenditure on development and trading properties.

The Group generated a further £13.5 million cash from the sale of investment properties and spent£24.6 million on the purchase of own shares resulting in an overall cash outflow of £31.6 million duringthe year.

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FINANCIAL REVIEW

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Net Income From Property Activities

2011 2010£’m £’m

Rental income 13.0 15.4Direct property costs (3.0) (3.0)

––––––––––– –––––––––––

Rental surplus 10.0 12.4––––––––––– –––––––––––

Sale of trading properties – 3.1Direct costs of trading properties sold – (3.2)

––––––––––– –––––––––––

Trading (deficit) – (0.1)––––––––––– –––––––––––

Sale of investment properties 13.5 58.8Cost of investment properties sold (13.3) (53.3)

––––––––––– –––––––––––

Gain on sale of investment properties 0.2 5.5––––––––––– –––––––––––

Total net income arising from property activities 10.2 17.8––––––––––– –––––––––––––––––––––– –––––––––––

Administrative Expenses

The administrative expenses for the year ended 30 September 2011 were £5.2 million, an increase of73% from the previous year. The primary reasons for this are the profit share payment of £2.6 million tothe executive directors and a reduction of £0.9 million in fees incurred in respect of abortive transactions.The majority of other costs arise as a result of the Group being quoted on AIM with no significantchanges in 2011.

Taxation

The tax charge for the year of £0.7 million on the pre-tax profit of £1.8 million represents an effectivetax charge of 39% (2010: 4.0%). Tax is payable at the full UK corporation tax rate of 27% on net rentincome after deduction of finance costs and administrative expenses. The current year tax charge is higherowing to the preference share interest being non-deductible. There is no tax payable in respect ofinvestment property capital gains or any reduction uplift, which is the main reason for the low effectivetax rate in the prior year.

Financing

At 30 September 2011, the Group had cash of £35.7 million increasing to £62.6 million in November2011 following a drawdown of £33 million from the Lloyds Banking Group facility. Following thisdrawdown, the Group has unutilised facilities of £22 million.

The bank debt at 30 September 2011 was £33.7 million increasing to £64.4 million in November 2011.This remains the only debt within the Group and is non-recourse to the parent company. The loan tovalue is 46% so there is capacity to raise further funding should it be required. This excludes any furtherfinance that might be released from re-financing any cash funded acquisitions.

The interest rate risk on the facility continues to be managed by way of interest rate swaps. DuringNovember 2011, the Group re-couponed its existing interest rate swaps from 2.38% to 1.33%, havingalready reduced it during the year from 5.2%. This significantly reduces the ongoing interest rate chargein the income statement whilst retaining the hedging protection. The fair value of these derivativefinancial instruments is provided for in full on the balance sheet. The Group’s financing and treasurystrategy is covered in more detail in note 30.

The finance costs for the year amounted to £3.9 million (2010: £7.6 million), primarily consisting of£2.8 million bank loan interest (2010: £4.3 million). Loan repayment costs fell from £2.2 million to£48,000. Finance income amounted to £0.2 million (2010: £0.3 million) reflecting the low returns onshort term cash deposits.

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FINANCIAL REVIEW (continued)

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Statement by the Directors on Compliance with the Provisions of the Combined Code

The company complies with the provisions set out in Section 1 of the Combined Code to the extentappropriate for a company of its size and nature of business.

The Workings of the Board and its Committees

The Board

The board currently comprises the chief executive, the finance director, the property director, a corporatedirector and two independent non-executive directors, of whom one is chairman. These demonstrate arange of experience and sufficient calibre to bring independent judgement on issues of strategy,performance, resources and standards of conduct which are vital to the success of the company. Theboard is responsible to shareholders for the proper management of the company. A statement of thedirectors’ responsibilities in respect of the financial statements and a statement on going concern is givenon page 23.

The board has a formal schedule of matters specifically reserved to it. All directors have access to theadvice and services of the company secretary who is responsible to the board for ensuring that boardprocedures are followed and that applicable rules and regulations are complied with. In addition, thecompany secretary ensures that the directors receive appropriate training as necessary. The appointmentand removal of the company secretary is a matter for the board as a whole.

The board meets approximately ten times a year, reviewing trading performance, ensuring adequatefunding, setting and monitoring strategy, examining major acquisition possibilities and reporting toshareholders. The non-executive directors have a particular responsibility to ensure that the strategiesproposed by the executive directors are fully considered. The chairman ensures that the directors maytake independent professional advice as required at the company’s expense.

The following committees deal with specific aspects of the group’s affairs.


The company’s remuneration committee is chaired by N J Hamway and its other member is M D Wigley.It is responsible for making recommendations to the board, within agreed terms of reference, on thecompany’s framework of executive remuneration and its cost. The committee determines the contractterms, remuneration and other benefits for each of the executive directors, including performance relatedbonus schemes, pension rights and compensation payments. The board itself determines theremuneration of the non-executive directors. The non-executive directors are not involved in anydiscussions or decisions about their own remuneration.

Further details of the company’s policies on remuneration, service contracts and compensation paymentsare included in the Directors’ Remuneration Report on pages 17 to 20.

Audit Committee

The audit committee is chaired by N J Hamway and its other member is M D Wigley, and meets not lessthan two times annually. The committee also provides a forum for reporting by the company’s externalauditors. Meetings are also attended, by invitation, by the chief executive and the finance director.

The audit committee is responsible for reviewing a wide range of matters including the half-year andannual financial statements before their submission to the board and monitoring the controls which arein force to ensure the integrity of the information reported to the shareholders. The audit committeeadvises the board on the appointment of external auditors and on their remuneration both for audit andnon-audit work, and discusses the nature, scope and results of the audit with external auditors. The auditcommittee keeps under review the cost effectiveness and the independence and objectivity of the externalauditors.

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CORPORATE GOVERNANCE REPORT

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Relations with Shareholders

Communications with shareholders are given high priority. Pages 5 to 14 of these financial statementsinclude a detailed review of the business and future developments. There is regular dialogue withshareholders. The company’s website is found at www.conygar.com.

The board uses the Annual General Meeting and results meetings to communicate with private andinstitutional investors and welcomes their participation. Details of resolutions to be proposed at theAnnual General Meeting on 5 January 2012 can be found in the notice of the meeting on page 66.

Internal Control

The directors acknowledge that they are responsible for the company’s systems of internal control andfor reviewing its effectiveness. The systems are designed to manage rather than eliminate the risk of failureto achieve the company’s strategic objectives, and can only provide reasonable, not absolute, assuranceagainst material misstatement or loss.

The company’s key risk management processes and system of internal control procedures include thefollowing:

● Management structure: Authority to operate is delegated to executive directors within limits set bythe board. The appointment of executives to the most senior positions within the group requiresthe approval of the board.

● Identification and evaluation of business risks: The major financial, commercial, legal, regulatoryand operating risks within the group are identified through annual reporting procedures.

● Information and financial reporting systems: The group’s planning and financial reportingprocedures include detailed operational budgets for the year ahead. The board reviews andapproves them.

● Investment appraisal: A budgetary process and authorisation levels regulate capital expenditure.For expenditure beyond specified levels, detailed written proposals have to be submitted to theboard. Commercial, legal and financial due diligence work is, where possible, carried out if abusiness is to be acquired.

● Audit Committee: The audit committee monitors the controls which are in place and any perceivedweakness in the control environment. The audit committee also considers and determines relevantaction in respect of any control issues raised by external auditors.

16


CORPORATE GOVERNANCE REPORT (continued)

A-18

Information Not Subject to Audit


The company’s remuneration committee is chaired by N J Hamway and its other member is M D Wigley.The committee makes recommendations to the board, within agreed terms of reference, on an overallremuneration package for executive directors and any other senior executives.

Remuneration Policy and Review

The company’s policy on directors’ remuneration remains that the overall remuneration package shouldbe sufficiently competitive to attract, retain and motivate high quality executives capable of achieving thegroup’s objectives and thereby enhancing shareholder value. The package consists of a basic salary whichis set below market rates with the potential for significant performance related bonuses (including shareoptions) aligned to growth in shareholder value. All group employees are employed by the company.

The details of individual components of the executive remuneration package and service contracts aresummarised below.

Basic salary and benefits: The salary and benefits are reviewed annually at the complete discretion of theremuneration committee. No increase in basic salary was awarded during this year. At present, thedirectors receive no benefits. Basic salaries are comparable with the lower quartile of comparablecompanies, but sufficient to retain directors.

Profit sharing plan: The profit sharing plan is an annual plan in which executive directors and seniorexecutives will be entitled to an allocation of a profit sharing pool based upon the increase in the net assetvalue of the company adjusted for property revaluation, attributable taxation, fair value of debt andadjusted to neutralise the effect of any capital raising (“adjusted net asset value”). The profit sharing poolis 20% of any increase in the adjusted net asset value at 30 September 2011 over the previous highestadjusted net asset value (“high watermark”). This ensures that executive directors cannot accrue anyprofit share twice in respect of the same net asset value growth. The previous high watermark was at 30September 2009.

In addition, the increase in adjusted net asset value per share must exceed a hurdle of 6% compoundedannually since the last high watermark (134.8p at 30 September 2009).

Executive directors are required to invest a minimum of 50% of any profit share payment in shares of thecompany which must be held for a minimum of two years except subject to certain good leaverprovisions.

The remuneration committee has absolute discretion over participation, pool allocation anddetermination of performance conditions save in a limited number of circumstances covering change incontrol and certain good leaver provisions.

Share options: The share options are awarded by the remuneration committee. The maximum number ofoptions that can be awarded is currently limited to 15% of the company’s issued share capital. Theexercise price of options awarded is the higher of the nominal value of the shares and the market priceon the date of award. No share options were awarded during the year and it is not intended that anyfurther options be granted by the company.

Pensions:The company does not make contributions to directors’ pension plans other than through salarysacrifice arrangements.

Service contracts: The company’s policy is for all executive directors to have contracts of employment withprovision for termination on no more than 12 months’ notice.

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DIRECTORS’ REMUNERATION REPORT

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Non-executive directors

None of the non-executive directors have service contracts. Letters of Appointment provide for a periodof three years which may be extended by mutual agreement for a further three years. The letters ofappointment were extended on 25 October 2010. The remuneration of the non-executive directors takesthe form solely of fees, which are set by the board having taken advice on appropriate levels. Thenon-executive directors are not involved in any discussions or decision about their own remuneration.

Service contracts

The service contracts and letters of appointment of the directors include the following terms:

Date of Contract Unexpired Term Notice Period(Months) (Months)

Executive Directors

R T E Ware 25 October 2007 N/A 12

P A Batchelor 25 October 2007 N/A 12

P M C Rabl 29 October 2009 N/A 12

S M Vaughan 25 October 2007 N/A 12

Non-Executive Directors

N J Hamway 25 October 2007 23 6

M D Wigley 25 October 2007 23 6

Mr Ware and Mr Wigley retire by rotation and, being eligible, offer themselves for re-election.

Audited Information

Directors’ emoluments

Basic Profit PensionSalary Share Contribution Fees 2011 2010£’000 £’000 £’000 £’000 £’000 £’000

Executive Directors

R T E Ware 300 1,192 – – 1,492 300

P A Batchelor 250 662 – – 912 250

P M C Rabl 75 398 – – 473 94

S M Vaughan 175 398 – – 573 175


N J Hamway – – – 60 60 60

M D Wigley – – – 40 40 40–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––

800 2,650 – 100 3,550 919–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––––––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––

No non-cash benefits were paid to Directors.

Fees of £38,250 (2010: £51,000) were also paid to Amberhook Properties Limited, a company controlled byMr P M C Rabl.

18


DIRECTORS’ REMUNERATION REPORT (continued)

A-20

Profit Sharing Plan

The Group profit sharing plan has triggered a payment of £2.65 million to the executive directors, havingexceeded the net asset growth hurdle of a compounded 6% per annum over the two years since the planlast paid out. In that period, the Group has earned £19.7 million in profits before taxation and profitshare. The profit sharing plan requires that the executive directors reinvest at least 50% of their after-taxbonus in shares which must be held for a minimum of two years. However, the executive directors arereinvesting 75% of their after-tax bonus in shares. The non-executive directors consider it essential tocontinue to reward good performance. This further investment in shares will align the Board’s interestseven more closely with those of the other shareholders and the Board will own over 8.7% of the sharesafter these purchases.

Interests in Options

The company has a share option scheme by which executive directors and other senior executives are ableto subscribe for ordinary shares in the company and acquire shares in the company. The interests of thedirectors were as follows:

ExpiredAt Awarded Exercised unexercised At

1 October during during during 30 SeptemberExercise 2010 the year the year the year 2011

Price No. No. No. No. No.

R T E Ware (b) £1.185 650,000 – – – 650,000

(c) £2.00 2,025,000 – – – 2,025,000

P A Batchelor (b) £1.185 425,000 – – – 425,000

(c) £2.00 550,000 – – – 550,000

S M Vaughan (a) £0.90 130,000 – – – 130,000

(b) £1.185 325,000 – – – 325,000

(c) £2.00 645,000 – – – 645,000





The directors may only exercise the options awarded to them in respect of (a) if the company’s share pricehas grown by 20% per annum compounded over the two year period measured from the date upon whichthe options are granted. These performance conditions have been achieved and accordingly the shareoptions awarded in respect of (a) have vested.

Options awarded under (b) and (c) may only be exercised if the annual percentage growth in thecompany’s share price exceeds that of the FTSE Small Cap Index over the two year period measuredfrom the date upon which the options are granted. This performance condition may be retested on anannual basis if it is not achieved on the second anniversary. These performance conditions have beenachieved in respect of the share options awarded under (b) and accordingly they have vested.

19



A-21

The market price of the company’s shares on 30 September 2011 was 96.5 p per share. The highest andlowest market prices during the year for each share option that is unexpired at the end of the year are asfollows:

Highest Lowest

Options in issue during the year 120.0p 92.5p

The interests of the directors to subscribe for or acquire ordinary shares have not changed since the year-end.

This report was approved by the Board on 29 November 2011 and signed on its behalf by:

P A Batchelor

Company Secretary

20



A-22

Directors’ Report

The directors present their report and the accounts of the group and the company for the year ended 30September 2011.

Principal Activities and Review of the Business

The principal activity of the group and the company during the year was property trading, acquiringproperty assets with development and investment potential, and investing in companies with significantproperty assets. The company’s principal subsidiaries are listed in note 14 to the accounts.

A review of the company’s activities and likely future developments during this year is dealt with in theChairman’s and Chief Executive’s Statement and the Business and Financial Review.

Principal Risks and Uncertainties

Managing risk is an integral element of the Group’s management activities and a considerable amount oftime is spent assessing and managing risks to the business. Responsibility for risk management rests withthe 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 amplydemonstrated in the last few years, the economic and wider environment can alter quickly andsignificantly. 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 continually monitoring and discussingthe environment in which we operate and the potential impacts upon the Group. We are confident wehave sufficiently high calibre directors and managers to manage strategic risks and the Remunerationreport details the policy towards retaining high quality personnel.

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 goodevidence 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 aconsiderable amount of time and resource is applied towards ensuring we have the right calibre of staffand 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 executivedirectors are very closely involved in the day-to-day running of the business to ensure sound managementjudgement 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 valuesof, or income from, its investment property portfolio and development land bank. This is a key risk to theprincipal activities of the Group and the exposures are continuously monitored through timely financialand management reporting and analysis of available market intelligence.

21


DIRECTORS’ REPORT

A-23

Where necessary management take appropriate action to mitigate any adverse impact arising fromidentified risks. The performance of the business is detailed in the Business Review on page 8 and marketrisks continue to be monitored closely.

Liquidity and credit risks

Liquidity, credit and other financial risks are discussed in note 30 on pages 56 to 60.

Significant Events Since the Balance Sheet Date

Details of significant events since the balance sheet date are contained in note 31 to the accounts.

Results and Dividends

The group’s trading results for the year and the group’s and company’s financial position at the end ofthe period are shown in the attached accounts.

The directors have recommended a final dividend of 1.1 pence per ordinary share in respect of the yearended 30 September 2011 (2010 – 1 pence).

The Directors and Their Interests in the Shares of the Company

The directors who served the company during the year together with their beneficial and family interestsin the shares of the company were as follows:

Ordinary Shares of £0.05 eachAt At

30 September 2011 1 October 2010

N J Hamway 897,000 807,000

R T E Ware 5,000,000 5,000,000

P A Batchelor 590,001 590,001

P M C Rabl 711,190 711,190

S M Vaughan 375,000 375,000

M D Wigley 330,000 300,000––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Details of the directors’ options to subscribe for shares in the company are disclosed in the Directors’Remuneration Report.

Directors’ Indemnities

The company has made qualifying third party indemnity provisions for the benefit of its directors whichwere made during the year and remain in force at the date of this report.

22


DIRECTORS’ REPORT (continued)

A-24

Major Interests in Shares

At 29 November 2011, the directors had been notified of the following interests in excess of 3% of thecompany’s issued share capital:

Name No of Shares %

Black Rock Inc 9,360,934 9.17Legal & General Group plc 8,733,333 8.55Aviva Investors Global Services Limited 8,342,695 8.17R T E Ware 5,000,000 4.89

Creditor Payment Policy and Practice

It is the company’s policy that payments to suppliers are made in accordance with those terms andconditions agreed between the company and its suppliers, provided that all trading terms and conditionshave been complied with.

At 30 September 2011, the company had an average of nil days (2010 – nil days) purchases outstandingin trade creditors. The group had an average of 19 days (2010 – 38 days) outstanding in trade creditors.

Charitable Donations and Political Contributions

The company made no political donations during the year. The company made charitable donations of£17,750 (2010 - £650) during the year.

Financial Instruments

Details of the group’s financial instruments are given in note 30.

Going Concern

After making enquiries, the directors have a reasonable expectation that the company has adequateresources to continue in operational existence for the foreseeable future. For this reason, they continueto adopt the going concern basis in preparing the financial statements.

Directors’ Responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordancewith applicable law and regulations. The directors are required to prepare financial statements for thegroup in accordance with the International Financial Reporting Standards as adopted by the EuropeanUnion (‘IFRS’) and have elected to prepare financial statements for the company in accordance withIFRS. Company law requires the directors to prepare such financial statements in accordance with IFRS,the Companies Act 2006 and Article 4 of the IAS Regulation. Under company law the directors must notapprove the financial statements unless they are satisfied that they give a true and fair view of the state ofthe affairs of the company and the group and of the profit or loss of the group for that period.

International Accounting Standard 1 requires that the financial statements present fairly for eachfinancial year the company’s financial position, financial performance and cash flows. This requires thefaithful representation of the effect of transactions, other events and conditions in accordance with thedefinitions and recognition criteria for assets, liabilities, income and expenses set out in the InternationalAccounting Standards Board’s ‘Framework for the preparation and presentation of financial statements’.In virtually all circumstances, a fair presentation will be achieved by compliance with all the applicableInternational Financial Reporting Standards. Directors are also required to:

● properly select and apply accounting policies;

23



A-25

● present information, including accounting policies, in a manner that provides relevant, reliable,comparable and understandable information; and

● provide additional disclosures when compliance with the specific requirements in IFRS isinsufficient to enable users to understand the impact of particular transactions, other events andconditions on the entity’s financial position and performance.

The directors are responsible for keeping adequate accounting records that are sufficient to show andexplain the company’s transactions and disclose with reasonable accuracy at any time the financialposition of the company and to enable them to ensure that the financial statements comply with theCompanies Act 2006. The directors are also responsible for safeguarding the assets of the company andthe group and hence for taking reasonable steps for the prevention and detection of fraud and otherirregularities.

Electronic Publication

The directors are also responsible for the maintenance and integrity of the investor information containedon the website. Legislation in the UK concerning the preparation and dissemination of financialstatements may differ from legislation in other jurisdictions.

Provision of Information to Auditors

Each of the persons who is a director at the date of approval of this annual report confirms that:

● so far as the director is aware, there is no relevant audit information of which the company’sauditors are unaware;

● the director has taken all the steps that he ought to have taken as a director in order to makehimself aware of any relevant audit information and to establish that the company’s auditors areaware of that information.

Auditors

Rees Pollock have expressed their willingness to continue in office and a resolution to re-appoint them asauditors for the ensuing year will be proposed at the forthcoming annual general meeting.

Annual General Meeting

The Annual General Meeting of the Company will be held on Thursday, 5 January 2012 at 3.00pm atthe offices of Wragge & Co LLP, 3 Waterhouse Square, 142 Holborn, London EC1N 2SW.

The notice of meeting and the resolutions to be proposed at that meeting are attached on page 66.

In addition to ordinary business, there are resolutions to give a director’s authority to disapplypre-exemption rights and allot equity securities together with resolutions to give share buy backauthorities.

By Order of the Board

P A Batchelor

Company Secretary

29 November 2011

24



A-26

35 New Bridge Street

London EC4V 6BW

Telephone 020 7778 7200

Fax 020 7329 6408

Independent Auditors’ Report to the Members of The Conygar Investment Company PLC

We have audited the group and parent company financial statements (the ‘financial statements’) of TheConygar Investment Company PLC for the year ended 30 September 2011 which comprise theconsolidated statement of comprehensive income, the consolidated and parent company statement ofchanges in equity, the consolidated and parent company balance sheets, the consolidated and parentcompany cash flow statements, and the related notes. The financial framework that has been applied intheir preparation is applicable law and International Financial Reporting Standards (IFRSs) as adoptedby the European Union and, as regards the parent company financial statements, as applied inaccordance with the Companies Act 2006.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to thecompany’s members those matters which we are required to state to them in an auditors’ report and forno other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility toanyone other than the company and the company’s members, as a body, for this report, or the opinionswe have formed.

Respective Responsibilities of Directors and Auditors

As explained more fully in the Directors’ Responsibilities Statement set out on page 23, the directors areresponsible for the preparation of financial statements and for being satisfied that they give a true and fairview. Our responsibility is to audit and express opinion on the financial statements in accordance withapplicable law and International Standards on Auditing (UK and Ireland). Those standards require us tocomply with the Auditing Practice Board’s (APB’s) Ethical Standards for Auditors.

Scope of the Audit of the Financial Statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statementssufficient to give reasonable assurance that the financial statements (including that part of the directors’remuneration report cross referenced from the financial statements and marked as audited information)are free from material misstatement, whether caused by fraud or error. This includes an assessment of:whether the accounting policies are appropriate to the group’s and the parent company’s circumstancesand have been consistently applied and adequately disclosed; the reasonableness of significant accountingestimates made by the directors; and the overall presentation of the financial statements.

Opinion on Financial Statements

In our opinion:

● the financial statements (including that part of the directors’ remuneration report cross referencedfrom the financial statements and marked as audited information) give a true and fair view of thegroup’s and of the parent company’s affairs as at 30 September 2011 and of the group’s profit forthe year then ended;

● the financial statements have been properly prepared in accordance with IFRSs as adopted by theEuropean Union;

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INDEPENDENT AUDITORS’ REPORT

A-27

● the parent company financial statements have been properly prepared in accordance with IFRSsas adopted by the European Union and as applied in accordance with the provisions of theCompanies Act 2006; and

● the financial statements have been prepared in accordance with the requirements of the CompaniesAct 2006.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion the information given in the directors’ report for the financial period for which thefinancial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires usto report to you if, in our opinion:

● adequate accounting records have not been kept by the parent company, or returns adequate forour audit have not been received from branches not visited by us; or

● the parent company financial statements and the part of the Directors’ Remuneration Report thathas been audited are not in agreement with the accounting records and returns; or

● certain disclosures of directors’ remuneration specified by law are not made; or

● we have not received all the information and explanations we require for our audit.

Catherine Kimberlin (Senior statutory auditor)

For and on behalf of Rees Pollock, Statutory AuditorLondon

29 November 2011

26


INDEPENDENT AUDITORS’ REPORT (continued)

A-28

Year YearEnded Ended

30 Sep 11 30 Sep 10Note £’000 £’000

Sales of properties – 3,100Rental income 13,010 15,415

–––––––––– ––––––––––

Revenue 13,010 18,515–––––––––– ––––––––––

Direct costs of:Sales of properties – 5,052Rental income 2,965 2,955Write-down of property inventory – (1,830)

–––––––––– ––––––––––

Direct Costs 2,965 6,177–––––––––– ––––––––––

Gross Profit 10,045 12,338

Gain in respect of acquisition 24 – 608Income from trading investments 81 –Share of results of joint ventures 13 (11) (10)Gain on sale of trading investments 49 –Gain on sale of investment properties 12 167 5,529Movement on revaluation of investment properties 12 401 7,205Other gains and losses 6 (17) (475)Administrative expenses (5,207) (3,011)

–––––––––– ––––––––––

Operating Profit 3 5,508 22,184Finance costs 7 (3,925) (7,586)Finance income 7 178 280

–––––––––– ––––––––––

Profit Before Taxation 1,761 14,878Taxation 8 (683) (637)

–––––––––– ––––––––––

Profit And Total Comprehensive Income For The Year 1,078 14,241–––––––––– –––––––––––––––––––– ––––––––––

Attributable to:– equity shareholders 1,078 14,219– minority shareholders – 22

–––––––––– ––––––––––

1,078 14,241–––––––––– –––––––––––––––––––– ––––––––––

Basic earnings per share 10 0.98p 12.13pDiluted earnings per share 10 0.98p 11.57p

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

27


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the year ended 30 September 2011

The notes on pages 34 to 60 form part of these accounts

A-29

Attributable to the equity holders of the CompanyNon-

Share Share Merger Equity Treasury Retained Controlling TotalCapital Premium Reserve Reserve Shares Earnings Total Interests Equity£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Group

At 1 October 2009 5,809 123,094 7,640 1,254 – 23,126 160,923 1,122 162,045Changes in equity for

the year ended

30 September 2010

Profit for the year – – – – – 14,219 14,219 22 14,241–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

Total comprehensive income for the year – – – – – 14,219 14,219 22 14,241Credit to equity for equity settled share based payment – – – – – 434 434 – 434Issue of share capital 56 896 – – – – 952 – 952Issue of preference shares – – – 2 – – 2 – 2Preference share conversion 5 99 – (9) – – 95 – 95Purchase of non-controlling interests – – – – – – – (1,124) (1,124)

–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

At 30 September 2010 5,870 124,089 7,640 1,247 – 37,779 176,625 20 176,645–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

Changes in equity for

year ended

30 September 2011

At 1 October 2010 5,870 124,089 7,640 1,247 – 37,779 176,625 20 176,645Profit for the year – – – – – 1,078 1,078 – 1,078

–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

Total comprehensive income for the year – – – – – 1,078 1,078 – 1,078

Dividend paid – – – – – (1,175) (1,175) – (1,175)

Preference share conversion 299 6,884 – (597) – – 6,586 – 6,586

Purchase of own shares – – – – (24,649) – (24,649) – (24,649)

–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

At 30 September 2011 6,169 130,973 7,640 650 (24,649) 37,682 158,465 20 158,485–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––––––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

28


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the year ended 30 September 2011


A-30

Share Share Merger Equity Treasury Retained TotalCapital Premium Reserve Reserve shares Earnings Equity£’000 £’000 £’000 £’000 £’000 £’000 £’000

Company

At 1 October 2009 5,809 123,094 7,640 1,254 – (3,357) 134,440Changes in equity for

the year ended

30 September 2010

Credit to equity for equity settled share based payment – – – – – 434 434

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Net income recognised directly in equity – – – – – 434 434Profit for the year – – – – – 34,667 34,667

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Total comprehensive income for the year – – – – – 35,101 35,101Issue of share capital 56 896 – – – – 952Issue of preference shares – – – 2 – – 2Preference share conversion 5 99 – (9) – – 95

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

At 30 September 2010 5,870 124,089 7,640 1,247 – 31,744 170,590––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Changes in equity for

year ended

30 September 2011

At 1 October 2010 5,870 124,089 7,640 1,247 – 31,744 170,590Profit for the year – – – – – (2,961) (2,961)

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Total comprehensive income for the year – – – – – (2,961) (2,961)Dividend paid – – – – – (1,175) (1,175)Preference share conversion 299 6,884 – (597) – – 6,586Purchase of own shares – – – – (24,649) – (24,649)

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

At 30 September 2011 6,169 130,973 7,640 650 (24,649) 27,608 148,391––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

29


COMPANY STATEMENT OF CHANGES IN EQUITY for the year ended 30 September 2011


A-31

30 Sep 2011 30 Sep 2010Note £’000 £’000

Non-Current Assets

Property, plant and equipment 11 208 219Investment properties 12 139,150 151,145Investment in joint ventures 13 5,466 5,344Goodwill 15 3,173 3,173

–––––––––– ––––––––––

147,997 159,881–––––––––– ––––––––––

Current Assets

Trading Investments 16 1,802 –Development and trading properties 17 20,779 6,111Trade and other receivables 18 2,614 2,230Cash and cash equivalents 35,674 67,322

–––––––––– ––––––––––

60,869 75,663–––––––––– ––––––––––

Total Assets 208,866 235,544

Current Liabilities

Trade and other payables 19 7,441 5,766Preference shares 21 7,376 –Tax liabilities 532 677

–––––––––– ––––––––––

15,349 6,443–––––––––– ––––––––––

Non-Current Liabilities

Bank loans 20 33,664 34,090Preference shares 21 – 13,324Derivatives 30 1,368 5,042

–––––––––– ––––––––––

35,032 52,456–––––––––– ––––––––––

Total Liabilities 50,381 58,899–––––––––– ––––––––––

Net Assets 158,485 176,645–––––––––– –––––––––––––––––––– ––––––––––

Equity

Called up share capital 22 6,169 5,870Share premium account 130,973 124,089Merger reserve 7,640 7,640Equity reserve 650 1,247Treasury shares 23 (24,649) –Retained earnings 37,682 37,779

–––––––––– ––––––––––

Equity Attributable to Equity Holders 158,465 176,625Non-controlling interests 20 20

–––––––––– ––––––––––

Total Equity 158,485 176,645–––––––––– –––––––––––––––––––– ––––––––––

The accounts on pages 27 to 60 were approved by the Board and authorised for issue on 29 November 2011and are signed on its behalf by:

R T E WARE

P A BATCHELOR }30


CONSOLIDATED BALANCE SHEETat 30 September 2011

Company number 04907617


A-32

30 Sep 2011 30 Sep 2010Note £’000 £’000

Non-Current Assets

Investment in subsidiary undertakings 14 3,218 3,218Property, plant and equipment 11 208 219

–––––––––– ––––––––––

3,426 3,437–––––––––– ––––––––––

Current Assets

Trading investments 16 1,802 –Development and trading properties 17 4,851 3,481Trade and other receivables 18 121,792 119,785Cash and cash equivalents 28,464 59,040

–––––––––– ––––––––––

156,909 182,306–––––––––– ––––––––––

Total Assets 160,335 185,743

Current Liabilities

Trade and other payables 19 3,807 1,152Preference shares 21 7,376 –Tax liabilities 761 677

–––––––––– ––––––––––

11,944 1,829Non-Current Liabilities

Preference shares 21 – 13,324–––––––––– ––––––––––

– 13,324–––––––––– ––––––––––

Total Liabilities 11,944 15,153–––––––––– ––––––––––

Net Assets 148,391 170,590–––––––––– –––––––––––––––––––– ––––––––––

Equity

Called up share capital 22 6,169 5,870Share premium account 130,973 124,089Merger reserve 7,640 7,640Equity reserve 650 1,247Treasury shares 23 (24,649) –Retained earnings 27,608 31,744

–––––––––– ––––––––––

Total Equity 148,391 170,590–––––––––– –––––––––––––––––––– ––––––––––

The accounts on pages 27 to 60 were approved by the Board and authorised for issue on 29 November2011 and are signed on its behalf by:

R T E WARE

P A BATCHELOR }

31


COMPANY BALANCE SHEETat 30 September 2011



A-33


30 Sep 11 30 Sep 10£’000 £’000

Cash Flows From Operating Activities

Operating profit 5,508 22,184Depreciation and amortisation 165 35Share of results of joint ventures (11) (10)Other gains and losses 39 (136)Gain on sale of investment properties (167) (5,529)Movement on revaluation of investment properties (401) (7,205)Dividend income (81) –Gain in respect of acquisition – (608)Share based payment charge – 434

–––––––––– ––––––––––

Cash Flows From Operations Before Changes In Working Capital 5,052 9,165Change in trade and other receivables (384) 16,845Change in land, development and trading properties (14,668) 977Change in trade and other payables 1,675 (6,326)

–––––––––– ––––––––––

Cash (Used In)/Generated From Operations (8,325) 20,661Finance costs (2,878) (6,457)Finance income 178 280Tax (paid)/received (828) 1,054

–––––––––– ––––––––––

Cash Flows (Used In)/Generated From Operating Activities (11,853) 15,538–––––––––– ––––––––––

Cash Flows From Investing Activities

Acquisition of investment properties (1,080) (44,763)Acquisition of trading investments (2,277) –Disposal of trading investments 455 –Sale proceeds of investment properties 13,531 57,937Investment in joint ventures (111) (243)Acquisition of non-controlling interests – (76)Purchase of plant and equipment (36) (99)Leasehold improvements (8) (148)Dividend income 81 –

–––––––––– ––––––––––

Cash Flows Generated From Investing Activities 10,555 12,608–––––––––– ––––––––––

Cash Flows From Financing Activities

Bank loans repaid (834) (64,023)Dividend paid (1,175) -Issue of shares – 372Purchase of own shares (24,649) –Re-couponing of interest rate swaps (3,692) –

–––––––––– ––––––––––

Cash Flows Used In Financing Activities (30,350) (63,651)–––––––––– ––––––––––

Net decrease in cash and cash equivalents (31,648) (35,505)Cash and cash equivalents at 1 October 67,322 102,827

–––––––––– ––––––––––

Cash and Cash Equivalents at 30 September 35,674 67,322–––––––––– –––––––––––––––––––– ––––––––––

32


CONSOLIDATED CASH FLOW STATEMENTfor the year ended 30 September 2011


A-34


30 Sep 11 30 Sep 10£’000 £’000

Cash Flows From Operating Activities

Operating (loss)/profit (2,410) 35,456Depreciation and amortisation 55 35Other gains and losses 20 136Dividend income (2,625) –Share based payment charge – 434Write down of inter-company balance – 2,649Gain on transfer of subsidiary – (31,204)

–––––––––– ––––––––––

Cash Flows From Operations Before Changes In Working Capital (4,960) 7,506Change in trade and other receivables (132) 130Change in land, developments and trading properties (1,370) (268)Change in trade and other payables 2,225 (5,061)

–––––––––– ––––––––––

Cash Generated From Operations (4,237) 2,307Finance income 171 265Tax paid – (154)

–––––––––– ––––––––––

Cash Flows From Operating Activities (4,066) 2,418–––––––––– ––––––––––


Acquisition of trading investments (2,277) –Disposal of trading investments 455 –Purchase of plant and equipment (36) (99)Leasehold improvements (8) (148)

–––––––––– ––––––––––

Cash Flows Used In Investing Activities (1,866) (247)–––––––––– ––––––––––


Issue of shares – 372Dividend paid (1,175) –Loans to joint venture (132) (274)Loans to subsidiaries (1,313) (40,226)Dividend income 2,625 –Purchase of own shares (24,649) –

–––––––––– ––––––––––

Cash Flows Used In Financing Activities (24,644) (40,128)–––––––––– ––––––––––

Net decrease in cash and cash equivalents (30,576) (37,957)Cash and cash equivalents at 1 October 59,040 96,997

–––––––––– ––––––––––

Cash and Cash Equivalents at 30 September 28,464 59,040–––––––––– –––––––––––––––––––– ––––––––––

33


COMPANY CASH FLOW STATEMENTfor the year ended 30 September 2011


A-35

1. Accounting policies and general information

1a General Information

The Conygar Investment Company PLC (“the Company”) is a company incorporated and domiciledin England and Wales, is AIM listed and registered at Companies House under registration number4907617.

The Company’s subsidiaries are shown in note 14. The Company and its subsidiaries are collectivelyreferred to below as “the Group”.

The Company’s principal activity is property trading, property investment, acquiring property assetswith development and investment potential, and investing in companies with significantproperty assets.

1b Basis of Preparation

The Company has prepared the accounts on the basis of all applicable IFRS, including allInternational Accounting Standards (IAS), Standing Interpretations Committee (SIC)interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC)interpretations issued by the International Accounting Standards Board (IASB) with effective datesfor accounting periods beginning on or after 1 October 2010, together with those parts of theCompanies Act 2006 applicable to companies reporting under IFRS.

The consolidated financial information has been prepared on the historical cost basis except forinvestment properties, derivatives and listed investments which are accounted for at fair value.

1c Summary of Significant Accounting Policies

The principal accounting policies of the Group are set out below. These policies have beenconsistently applied to all of the periods presented, unless otherwise stated.

Interpretations and Amendments to Published Standards Effective In The Accounts

For the purposes of the preparation of the accounts, the Group has applied all standards andinterpretations that will be effective for the accounting periods commencing on or after 1 October 2010.

The following standards and interpretations have been adopted:

– Amendment to IFRS 1 “First time adoption” – financial instrument disclosures (effective foraccounting periods beginning on or after 1 July 2010);

– Amendment to IFRS 2 “Share-based payment” – group cash-settled share-based paymenttransactions (effective for accounting periods beginning on or after 1 January 2010);

– Amendment to IAS 32 “Financial instruments: presentation” – classification of rights issues(effective for accounting periods beginning on or after 1 February 2010);

– IFRIC 15 “Agreements for the construction of real estate” (EU-endorsed for accounting periodsbeginning on or after 1 January 2010);

– IFRIC 18 “Transfers of assets from customers” (EU-endorsed for accounting periods beginning onor after 31 October 2009);

– IFRIC 19 “Extinguishing financial liabilities with equity” (effective for accounting periodsbeginning on or after 1 July 2010);

34


NOTES TO THE ACCOUNTSfor the year ended 30 September 2011

A-36

1. Accounting policies and general information (continued)

Management has assessed the impact of the standards and interpretations on the Group and concludedthey are not applicable to the Group’s circumstances and do not require amendment of the Group’saccounting policies.

Standards, Interpretations and Amendments to Published Standards That Are Not Yet

Effective

Certain new standards, amendments and interpretations to existing standards have been publishedthat are mandatory for the Group’s accounting periods beginning on or after 1 October 2011 or laterperiods but which the Group has not adopted early are as follows:

– IFRS 9 “Financial instruments” (effective for accounting periods beginning on or after 1 January2013)*;

– IFRS 10 “Consolidated financial arrangements” (effective for accounting periods beginning onor after 1 January 2013)*;

– IFRS 11 “Joint arrangements” (effective for accounting periods beginning on or after 1 January2013)*;

– IFRS 12 “Disclosures of interests in other entities” (effective for accounting periods beginning onor after 1 January 2013)*;

– IFRS 13 “Fair value measurement” (effective for accounting periods beginning on or after1 January 2013)*;

– IFRIC 20 “Stripping costs in the production phase of a surface mine” (effective from accountingperiods beginning on or after 1 January 2013)*;

– Revised IAS 27 “Separate financial statements” (effective for accounting periods beginning on orafter 1 January 2013)*;

– Revised IAS 28 “Associates and joint ventures” (effective for accounting periods beginning on orafter 1 January 2013)*;

– Amendment IAS 24 “Related party transactions” (effective for accounting periods beginning onor after 1 January 2011);

– Amendment to IFRS 1 “First time adoption” – fixed dates and hyperinflation (effective fromaccounting periods beginning on or after 1 July 2011);

– Amendment to IFRS 7 “Financial instruments : disclosures” – transfers of financial assets(effective for accounting periods beginning on or after 1 July 2011);

– Amendment to IAS 12 “Income taxes on deferred tax” (effective for accounting periodsbeginning on or after 1 January 2012)*;

– Amendment to IAS 19 “Employee benefits” (effective for accounting periods beginning on orafter 1 January 2013)*;

– Amendment to IAS 1 “Financial statement presentation” (effective for accounting periodsbeginning on or after 1 January 2012)*;

– Amendment to IFRIC 14 “Prepayments of a minimum funding requirement” (effective foraccounting periods beginning on or after 1 January 2011).

* Yet to be endorsed by the EU

35


NOTES TO THE ACCOUNTS (continued)

A-37


Management continues to monitor the IASB’s on-going work on improvements to financial reportingbut does not currently believe that the amendments and interpretations listed above will have amaterial effect on the Group’s reported income or net assets.

Basis of Consolidation The Group accounts consolidate those of the Company and all of itssubsidiary undertakings drawn up to 30 September each year. Subsidiary undertakings are thoseentities over which the Group has the ability to govern the financial and operating policies throughthe exercise of voting rights. The results of subsidiaries acquired or sold are consolidated for theperiods from or to the date on which control passed. Acquisitions are accounted for under theacquisition method.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being theexcess of the cost of the business combination over the Group’s interest in the net fair value of theidentifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’sinterest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilitiesexceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately fromthe Group’s equity therein. Non-controlling interests consist of the amount of these interests at thedate of the original business combination and the minority’s share of changes in equity since the dateof the combination.

All intra group balances, transactions, income and expenses and profit and losses on transactionsbetween the Company and its subsidiaries and between subsidiaries are eliminated.

Revenue Recognition Property revenue consists of gross rental income on an accruals basis,together with sales of trading, development and investment properties. Rental income receivable inthe period from lease commencement to the earlier of lease expiry and any tenant’s option to breakis spread evenly over that period. Any incentive for lessees to enter into a lease agreement and anycosts associated with entering into the lease are spread over the same period.

A property is regarded as sold when the significant risks and returns have been transferred to thebuyer. For conditional exchanges, sales are recognised when the conditions are satisfied.

Revenue in respect of investment and other income represents investment income, fees andcommissions earned on an accruals basis and profits or losses recognised on investments held for theshort term. Dividends are recognised when the shareholders’ right to receive payment has beenestablished. Interest income is accrued on a time basis, by reference to the principal outstanding andthe effective interest rate.

Operating Profit Operating profit is stated after charging income from trading investments and afterthe share of results of joint ventures but before finance costs and finance income.

Expenses All expenses are accounted for on an accruals basis. They are charged through the incomestatement with the exception of share issue expenses, which are charged to the share premiumaccount.

Pension CostsThe group makes voluntary contributions to the defined contribution plans of certainemployees, including directors. A defined contribution plan is a pension plan under which the grouppays fixed contributions to a separate entity. The group has no legal or constructive obligation to payfurther contributions if the fund does not hold sufficient assets to pay all employees the benefitsrelating to employee service in the current and prior periods. The contributions are recognised as anemployee benefit expense when they are due. Prepaid contributions are recognised as an asset to theextent that a cash refund or reduction in future payments is available.

36



A-38


Profit sharing plan The Group has a profit sharing plan which is an annual plan in which executivedirectors and senior executives will be entitled to an allocation of a profit sharing pool based uponthe increase in the net asset value of the company adjusted for property revaluation, attributabletaxation, fair value of debt and adjusted to neutralise the effect of any capital raising (“adjusted netasset value”).

Share Based Payments The Group provides equity-settled share-based payments in the form ofshare options.

IFRS 2 “Share-based payment” is applied to all share-based payment arrangements granted after7 November 2002 that had not vested prior to 1 October 2005. Equity-settled share-based paymentsare measured at fair value (excluding the effect of non market-based vesting conditions) at the dateof grant. The fair value determined at the date of grant is expensed on a straight line basis over thevesting period, based on the Group’s estimate of shares which will eventually vest and adjusted forthe effect of non market-based vesting conditions. The Group uses an appropriate valuation modelutilising a Monte Carlo simulation in order to arrive at a fair value at the date share options aregranted.

Property, Plant and Equipment Property, plant and equipment is stated at cost less accumulateddepreciation.

Depreciation Depreciation is charged so as to write off the cost of assets, over their estimated usefullives, using the straight line method, on the following basis:

Plant and equipment - 25% per annumFurniture and fittings - 20% per annum

Amortisation The lease of the Company’s premises is amortised over the length of the lease.

Taxation The taxation charge represents the sum of tax currently payable and deferred tax. Thecharge for current taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using rates that have been enacted or substantively enactedby the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carryingamounts of assets and liabilities in the financial statements and the corresponding tax bases used inthe computation of taxable profit and is accounted for using the balance sheet liability method.Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred taxassets are recognised to the extent that it is probable that taxable profits will be available against whichdeductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to theextent that it is no longer probable that sufficient taxable profits will be available to allow all or partof the assets to be recovered.

Deferred tax is calculated at the tax rates that have been enacted or substantially enacted by thebalance sheet date and are expected to apply in the period when the liability is settled or the asset isrealised. It is recognised in the Income Statement except when it relates to items credited or chargeddirectly to equity, in which case the deferred tax is also dealt with in equity.

Investment Properties In accordance with IAS 40 (Revised) both long leasehold and freeholdproperties which are held to earn rentals and/or for capital appreciation have been accounted for asinvestment properties.

37



A-39


Investment properties are initially recognised at cost, being the fair value of the consideration given,including acquisition costs associated with the investment property. Subsequent costs, includingreverse lease premiums, are capitalised to the extent that such costs have an ongoing benefit to theproperty.

After initial recognition, investment properties are measured at fair value, with unrealised gains andlosses recognised in the Income Statement. Fair value is based on the market value, at the balancesheet date, of the properties as provided by Jones Lang LaSalle, a firm of independent charteredsurveyors, in accordance with the Practice Statements contained in the RICS Appraisal and ValuationStandards published by the Royal Institution of Chartered Surveyors.

Investments In Joint Ventures A joint venture is an entity in which the Group has an interest. Thejoint venture operates in the same way as other entities, except that a contractual arrangementbetween the venturers establishes joint control over the economic activity of that entity.

The Group’s interests in jointly controlled entities are incorporated in the financial information usingthe equity method of accounting. Investments in joint ventures are carried in the balance sheet at costas adjusted by post acquisition changes in the Group’s share of the net assets of the associate, less anyimpairment in the value of the individual investments. The Group’s share of the net profit or loss ofthe joint venture is shown as a single line item in the consolidated income statement.

Where the Group transacts with a joint venture and profit or loss arising is eliminated to the extentof the Group’s interest in the relevant joint venture.

Investment In Subsidiaries Investments in subsidiaries are held in the Company balance sheet atcost and reviewed annually for impairment.

Goodwill Goodwill, representing the excess of the cost of acquisition over the fair value of theGroup’s share of the identifiable net assets acquired, is initially recognised as an asset at cost and issubsequently measured at cost less any accumulated impairment losses. Goodwill which is recognisedas an asset is reviewed for impairment at least annually. For the purposes of impairment testing,goodwill is allocated to each of the group’s cash generating units expected to benefit from thesynergies of the combination. Cash generating units to which goodwill has been allocated are testedfor impairment annually, or more frequently where there is an indication that the unit may beimpaired. If the recoverable amount of the cash generating unit is less than the carrying amount ofthe unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocatedto the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount ofeach asset of the unit. The recoverable amount is the higher of fair value less costs to sell and valuein use. In assessing the value in use, the estimated future cash flows are discounted to their presentvalue using a pre-tax discount rate that reflects current market assessments of the time value of moneyand risks specific go to the cash generating unit. An impairment loss is recognised immediately inprofit and loss and is not subsequently reversed.

Development and Trading Properties Development and trading properties held for sale areinventory and are included in the Balance Sheet at the lower of cost and net realisable value. Costcomprises the original purchase price of the property together with directly attributable acquisitioncosts. Where multiple properties are acquired as part of a single transaction the purchase price anddirectly attributable costs are allocated to the individual units based on independent valuations. Netrealisable value represents the estimated selling price less all estimated costs of completion.

Cash and Cash Equivalents Cash and cash equivalents are carried in the Balance Sheet at cost.For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand,deposits with banks and other short term liquid investments with original maturities of three monthsor less.

38



A-40


Trade Receivables Trade receivables are measured at initial recognition at fair value, and aresubsequently measured at amortised cost using the effective interest rate method. Appropriateallowances for estimated irrecoverable amounts are recognised in profit or loss when there is objectiveevidence that the asset is impaired. The allowance recognised is measured as the difference betweenthe asset’s carrying amount and the present value of the estimated future cash flows discounted at theeffective interest rate computed at initial recognition.

Borrowing and Borrowing Costs Interest bearing bank loans and overdrafts are initially recordedat fair value, net of direct finance and other costs yet to be amortised and are subsequently measuredat amortised cost using the effective interest rate method. Finance and other costs incurred in respectof the obtaining and maintenance of borrowings are accounted for on an accruals basis using theeffective interest rate method and written off to the Income Statement over the length of theassociated borrowings. Borrowing costs that are directly attributable to the acquisition, constructionor production of assets which necessarily take a substantial period of time to get ready for theirintended use or sale are capitalised as part of the cost of that asset.

Trade Payables Trade payables are recognised initially at fair value, and are subsequently measuredat amortised cost using the effective interest rate method.

Trading Investments Trading investments are measured at fair value. Gains and losses on there-measurement of trading investments are recognised directly in the statement of comprehensiveincome. Fair values of these investments are based on quoted market prices where available.

Derivative Financial Instruments Derivative financial assets and financial liabilities arerecognised on the Balance Sheet when the Group becomes a party to the contractual provisions ofthe instrument. Derivatives are initially recorded at fair value and are subsequently remeasured to fairvalue based on mid-market prices, estimated future cash flows and forward rates as appropriate.

Financial liabilities and equity Financial liabilities and equity instruments are classified accordingto the substance of the contractual arrangements entered into. An equity instrument is any contractthat evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Equity instruments Equity instruments issued by the Group are recorded at the proceeds received,net of direct issue costs. Dividend distributions to the company’s shareholders are recognised as aliability in the Group’s financial statements in the period in which the dividend is approved by theCompany’s shareholders.

Treasury shares Shares which have been repurchased are classified as Treasury Shares and shownas a separate item within equity. They are recognised at the trade date for the amount of considerationpaid, together with directly attributable costs. This is presented as a deduction from total equity.

Preference shares Preference shares are regarded as compound instruments, consisting of a liabilitycomponent and an equity component. At the date of issue, the fair value of the liability componentis estimated using the prevailing market interest rate for similar non-convertible debt. The differencebetween the proceeds of issue of the convertible loan notes and the fair value assigned to the liabilitycomponent, representing the embedded option to convert the liability into equity of the Group, isincluded in equity.

Issue costs are apportioned between the liability and equity components of the convertible loan notesbased on their relative carrying amounts at the date of issue. The portion relating to the equitycomponent is charged directly against equity.

39



A-41


The interest expense on the liability component is calculated by applying the prevailing marketinterest rate for similar non-convertible debt to the liability component of the instrument. Thedifference between this amount and the interest paid is added to the carrying amount of theconvertible loan note.

Leasing The Group has entered into commercial property leases as lessor of its investment propertyportfolio. As the terms of these leases do not transfer substantially all the risks and rewards ofownership to the lessee they are classified as operating leases. Rentals receivable under operatingleases are credited to income on a straight line basis over the term of the relevant lease. Benefitsgranted as an incentive to enter into an operating lease are also spread on a straight line basis overthe lease term.

The group leases its office premises. As the terms of the lease do not transfer substantially all the risksand rewards of ownership to the Company, the lease is classified as an operating lease. Rentalspayable under operating leases are charged to income on a straight line basis over the term of therelevant lease.

Use of Estimates and Judgements To be able to prepare accounts according to generally acceptedaccounting principles, management must make estimates and assumptions that affect the asset andliability items and revenue and expense amounts recorded in the accounts. These estimates are basedon historical experience and various other assumptions that management and the board of directorsbelieve are reasonable under the circumstances. The results of these considerations form the basis formaking judgements about the carrying value of assets and liabilities that are not readily available fromother sources.

The key sources of estimation uncertainty that have a significant risk of causing material adjustmentto 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 theunderlying assets using property appraisal techniques and other valuation methods. Such estimatesare 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 anassessment of fair value of the underlying assets using property appraisal techniques and othervaluation methods. Such estimates are inherently subjective and in particular during the early stagesof the development process.

Properties Held for Investment

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

Share Based Payments

The estimation of share based payment costs, which require the use of an appropriate valuationmodel, including estimations for inputs into the valuation model covering vesting period, expectedlife, the number of awards that will ultimately vest and judgements relating to the probability ofmeeting non-market performance conditions and the continuing participation of employees. Furtherdetails on share based payments are given in note 25.

40



A-42


Deferred Tax Asset

The calculation and assessment of recoverability of the deferred tax asset involves variousassumptions regarding the tax deductibility of the vested share options and the recoverability of thatdeduction. Details may be found in note 26.

2. Segmental information

The Group has adopted IFRS 8 Operating Segments with effect from 1 October 2009. IFRS 8requires the identification of the Group’s operating segments which are defined as being discretecomponents of the Group’s operations whose results are regularly reviewed by the board of directors.The Group divides its business into the following segments:

● Investment properties, which are owned or leased by the Group for long-term income and forcapital appreciation, and trading properties which are owned or leased with the intention to sell;and,

● Development properties, which include sites, developments in the course of construction andsites available for sale.

There was no revenue or profit/loss relating to the development properties and therefore only thesegmented balance sheet can be reported.

Balance Sheet

30 September 2011 30 September 2010Investment Development Group Investment Development GroupProperties Properties Other Total Properties Properties Other Total

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Investment properties 139,150 – – 139,150 151,145 – – 151,145Investment in joint

ventures – 5,466 – 5,466 – 5,344 – 5,344Goodwill – 3,173 – 3,173 – 3,173 – 3,173Development &

trading properties – 20,779 – 20,779 – 6,111 – 6,111––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

139,150 29,418 – 168,568 151,145 14,628 – 165,773Other assets 9,849 – 30,449 40,298 8,863 – 60,908 69,771

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Total assets 148,999 29,418 30,449 208,866 160,008 14,628 60,908 235,544Liabilities (41,578) – (8,803) (50,381) (44,304) – (14,595) (58,899)

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Net assets 107,421 29,418 21,646 158,485 115,704 14,628 46,313 176,645––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

41



A-43

3. Operating profit

Operating profit is stated after charging:

Year ended Year ended30 Sep 11 30 Sep 10

£’000 £’000

Audit services – fees payable to the parent company auditors for the audit of the company and the consolidated financial statements 24 23

–––––––––– ––––––––––

Other services – fees payable to the company auditor for the audit of the company’s subsidiaries pursuant to legislation. 43 35

–––––––––– ––––––––––

Other services – fees payable to the company auditor for tax services 15 11

–––––––––– ––––––––––

Depreciation of owned assets 28 31–––––––––– ––––––––––

Lease amortisation 27 16–––––––––– ––––––––––

Operating lease rentals – land and buildings 219 148–––––––––– ––––––––––

Share based payments charge – 434–––––––––– ––––––––––

Cost of inventories recognised as an expense – 5,052–––––––––– ––––––––––

Write downs of inventories recognised as an expense – (1,830)–––––––––– ––––––––––

Movement on provision for doubtful debts 66 (183)–––––––––– ––––––––––

4. Particulars of employees

The aggregate payroll costs of the above were:


£’000 £’000

Wages and salaries 3,802 1,054Social security costs 507 125Pension costs – 20

–––––––––– ––––––––––

4,309 1,199–––––––––– –––––––––––––––––––– ––––––––––

The average monthly number of persons, including executive directors, employed by the Companyduring the year was seven (2010 – seven).

42



A-44

5. Directors’ emoluments


£’000 £’000

Emoluments (excluding pension contributions) 3,550 899–––––––––– –––––––––––––––––––– ––––––––––

Pension contributions – 20–––––––––– –––––––––––––––––––– ––––––––––

Emoluments of highest paid director 1,492 280–––––––––– –––––––––––––––––––– ––––––––––

Pension contributions of highest paid director – 20–––––––––– –––––––––––––––––––– ––––––––––

Emoluments includes a £2.65 million payment under the Conygar profit sharing plan (2010 – £nil).No (2010: one) director received a contribution to a defined contribution pension scheme in the yearas part of a salary sacrifice arrangement.

The board of directors comprise the only persons having authority and responsibility for planning,directing and controlling the activities of the Group. In addition to the emoluments disclosed above,the Group incurred share based payment charges of £nil (2010: £434,000). The aggregatecompensation of key management personnel as defined by IAS 24 “Related Party Disclosures” wastherefore £3,550,000 (2010: £1,333,000).

6. Other gains and losses


£’000 £’000

Movement in fair value of interest rate swaps (18) (611)Movement in fair value of trading investments (70) –Other provision 71 136

–––––––––– ––––––––––

(17) (475)–––––––––– –––––––––––––––––––– ––––––––––

7. Finance income/costs


£’000 £’000

Finance income

Bank interest 178 280–––––––––– –––––––––––––––––––– ––––––––––

Finance Costs

Bank loans (2,816) (4,266)Loan repayment costs (48) (2,191)Amortisation of arrangement fees (423) (339)Notional interest on preference shares (638) (790)

–––––––––– ––––––––––

(3,925) (7,586)–––––––––– –––––––––––––––––––– ––––––––––

43



A-45

8. Taxation on ordinary activities

(a) Analysis of charge in the year


£’000 £’000

UK Corporation tax based on the results for the period 519 589Over provision in prior periods 164 (44)

–––––––––– ––––––––––

Current tax 683 545Deferred tax – 92

–––––––––– ––––––––––

683 637–––––––––– –––––––––––––––––––– ––––––––––

(b) Factors affecting tax charge

The tax assessed on the profit for the year differs from the standard rate of corporation tax in the UKof 27% (2010 – 28%)


£’000 £’000

Profit before taxation 1,761 14,878–––––––––– –––––––––––––––––––– ––––––––––

Profit multiplied by rate of tax 476 4,166Effects of:Expenses not deductible for tax purposes 220 123UK dividend income (24) –Gain on acquisition not taxable – (170)Under / (over) provision in prior periods 164 (44)Share based payment not deductible for tax purposes – 121Schedule 23 deduction in respect of share options – (86)Deferred tax no longer required – 92Gains not subject to UK taxation (45) (1,548)Revaluation gains not taxable (108) (2,017)

–––––––––– ––––––––––

Tax charge for the year 683 637–––––––––– –––––––––––––––––––– ––––––––––

9. Dividends

The directors have recommended a final dividend of 1.1 pence per ordinary share in respect of the yearended 30 September 2011 (2010 – 1 pence). This final dividend will amount to £1,124,000 (2010:£1,175,000), if approved at the AGM. In accordance with IFRS, it has not been included as a liability inthe financial statements.

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10. Earnings per share

The calculation of earnings per ordinary share is based on the profit after tax attributable to equityshareholders of £1,078,000 (2010 – £14,219,000) and on the number of shares in issue being theweighted average number of shares in issue during the period of 109,602,651 (2010 – 117,203,241).The diluted earnings per share calculation is based on profit for the year of £1,717,000 (2010 –£15,009,000) and on 119,171,352 (2010 – 129,720,010) ordinary shares and is non-dilutive. Thediluted ordinary shares are calculated as follows:

2011 2010No. No.

Basic weighted average number of shares 109,602,651 117,203,241Diluting potential ordinary shares:Employee share options 22,446 27,057Preference shares 9,546,255 12,489,712

––––––––––––– –––––––––––––

Total diluted 119,171,352 129,720,010––––––––––––– –––––––––––––––––––––––––– –––––––––––––

11. Property, plant and equipment

Group & Company Premises Office FurnitureLease Equipment & Fittings Total£’000 £’000 £’000 £’000

Cost

At 1 October 2009 – 21 – 21Additions 148 23 76 247

–––––––––– –––––––––– –––––––––– ––––––––––

At 30 September 2010 and 1 October 2010 148 44 76 268Additions 8 17 19 44

–––––––––– –––––––––– –––––––––– ––––––––––

At 30 September 2011 156 61 95 312–––––––––– –––––––––– –––––––––– ––––––––––

Depreciation/Amortisation

At 1 October 2009 – 14 – 14Provided during the year 4 15 16 35

–––––––––– –––––––––– –––––––––– ––––––––––

At 30 September 2010 and 1 October 2010 4 29 16 49Provided during the year 27 10 18 55

–––––––––– –––––––––– –––––––––– ––––––––––

At 30 September 2011 31 39 34 104–––––––––– –––––––––– –––––––––– ––––––––––

Net book value at

30 September 2011 125 22 61 208–––––––––– –––––––––– –––––––––– –––––––––––––––––––– –––––––––– –––––––––– ––––––––––

Net book value at 30 September 2010 144 15 60 219

–––––––––– –––––––––– –––––––––– –––––––––––––––––––– –––––––––– –––––––––– ––––––––––

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12. Investment properties

GroupReverse

Long LeaseFreehold Leasehold Premiums Total

£’000 £’000 £’000 £’000

Valuation at 1 October 2009 141,357 7,805 2,427 151,589Fair value with subsidiaries 12,593 32,170 – 44,763Additions 75 (8) – 67Disposals (49,447) (1,050) (1,760) (52,257)Reverse lease premium amortisation – – (222) (222)Movement on revaluation 4,119 3,086 – 7,205

–––––––––– –––––––––– –––––––––– ––––––––––

Valuation at 30 September 2010 108,697 42,003 445 151,145Additions 961 (2) 120 1,079Disposals (13,365) – – (13,365)Reverse lease premium amortisation – – (110) (110)Movement on revaluation 593 (192) – 401

–––––––––– –––––––––– –––––––––– ––––––––––

Valuation at 30 September 2011 96,886 41,809 455 139,150

–––––––––– –––––––––– –––––––––– –––––––––––––––––––– –––––––––– –––––––––– ––––––––––

The historical cost of properties held at 30 September 2011 is £211,359,000 (2010: £233,328,000).

The properties were valued by Jones Lang LaSalle, independent valuers not connected with theGroup, at 30 September 2011 at market value in accordance with the Practice Statements containedin the RICS Appraisal and Valuation Standards published by the Royal Institution of CharteredSurveyors which conform to international valuation standards.

The Group has pledged £105,085,000 (2010 – £112,310,000) of investment property to secureLloyds Banking Group debt facilities and £34,065,000 (2010 – £35,235,000) to secure Capita debtfacilities. Further details of these facilities are provided in note 30.

The property rental income earned from investment property, which is leased out under operatingleases amounted to £13,010,000 (2010 – £15,099,000).

Gain on sale of investment properties

30 Sep 11 30 Sep 10£’000 £’000

Gross proceeds on sales of investment properties 13,645 58,755Costs of sales (113) (818)

––––––––––––– –––––––––––––

Net proceeds on sales of investment properties 13,532 57,937Book value (13,365) (52,408)

––––––––––––– –––––––––––––

Gain on sale 167 5,529––––––––––––– –––––––––––––––––––––––––– –––––––––––––

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13. Investments

Joint Ventures

30 Sep 11 30 Sep 10£’000 £’000

At 1 October 2010 5,344 5,087Share of loss retained by joint ventures (11) (10)Investment in joint venture 133 267

––––––––––––– –––––––––––––

At 30 September 2011 5,466 5,344––––––––––––– –––––––––––––––––––––––––– –––––––––––––

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

The following amounts represent the Group’s 50% share of the assets and liabilities, and results ofthe joint ventures. They are included in the balance sheet and income statement:


£’000 £’000Assets

Current assets 5,485 5,348––––––––––––– –––––––––––––

5,485 5,348Liabilities

Current liabilities (19) (4)––––––––––––– –––––––––––––

(19) (4)––––––––––––– –––––––––––––

Net Assets 5,466 5,344––––––––––––– –––––––––––––––––––––––––– –––––––––––––

Operating loss (11) (10)Finance income – –

––––––––––––– –––––––––––––

Loss before tax (11) (10)Tax – –

––––––––––––– –––––––––––––

Loss after tax (11) (10)––––––––––––– –––––––––––––––––––––––––– –––––––––––––

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

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14. Fixed asset investments

Subsidiaries

Group Company30 Sep 11 30 Sep 10 30 Sep 11 30 Sep 10

£’000 £’000 £’000 £’000

At 1 October 2010 – – 3,218 31,333Additions – – – 680Disposals – – – (28,795)

–––––––––– –––––––––– –––––––––– ––––––––––

At 30 September 2011 – – 3,218 3,218–––––––––– –––––––––– –––––––––– –––––––––––––––––––– –––––––––– –––––––––– ––––––––––

The addition last year arose from the acquisition of the remaining 2.15% of the issued share capitalof The Advantage Property Income Trust Limited (“TAP”). As at 8 January 2010, the Companyowned 100% of the total issued share capital of TAP. On 30 September 2010, the Companytransferred the beneficial interest in its holding in TAP to Conygar Holdings Limited for a totalconsideration of £60,000,000, being the estimated market value of the beneficial interest at that date.

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

Country of % of Company name Principal activity registration Equity held

Conygar Holdings Ltd Holding Company England 100%Martello Quays Limited Property trading and development England 100%Conygar Wales PLC Holding Company England 60%*Conygar Bedford Square Ltd Property trading and development England 100%*Conygar Properties Ltd Property trading and development England 100%*Conygar Developments Ltd Property trading and development England 100%*Conygar Strand Ltd Property trading and development England 100%*Conygar Hanover Street Ltd Property trading and development England 100%*The Advantage Property Property investment Guernsey 100%*Income Trust LtdTAPP Property Ltd Property investment Guernsey 100%*TOPP Holdings Ltd Property investment Guernsey 100%*TAPP Maidenhead Ltd Property investment Guernsey 100%*TOPP Bletchley Ltd Property investment Guernsey 100%*TOPP Property Ltd Property investment Guernsey 100%*Conygar Stena Line Ltd Property trading and development England 50%*CM Sheffield Ltd Property trading and development England 50%*Conygar Haverfordwest Ltd Property trading and development England 60%*Conygar Advantage Limited Holding company Guernsey 100%Lamont Property Acquisition Property investment Jersey 100%*(Jersey) I Ltd Lamont Property Acquisition Property investment Jersey 100%*(Jersey) II Ltd Lamont Property Acquisition Property investment Jersey 100%*(Jersey ) III LtdLamont Property Acquisition Property investment Jersey 100%*(Jersey) IV LtdLamont Property Acquisition Property investment Jersey 100%*(Jersey) V Ltd Lamont Property Acquisition Property investment Jersey 100%*(Jersey) VII Ltd

* Indirectly owned

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15. Goodwill

Group30 Sep 11 30 Sep 10

£’000 £’000

At 1 October 2010 and 30 September 2011 3,173 3,173–––––––––– –––––––––––––––––––– ––––––––––

The goodwill arose upon the acquisition of the non-controlling interests in Martello Quays Limitedand 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 generating unit. The development project is still at anearly stage, but management have prepared forecasts indicating that the net present value of the projectexceeds its carrying value when discounted at the Group’s weighted average cost of capital.

16. Trading investments

£’000

At 1 October 2010 –Additions 2,277Disposals (405)Loss on fair value revaluation (70)

––––––––––

At 30 September 2011 1,802––––––––––––––––––––

17. Property inventories


£’000 £’000 £’000 £’000

Properties held for resale or development 20,779 6,111 4,851 3,481–––––––––– –––––––––– –––––––––– –––––––––––––––––––– –––––––––– –––––––––– ––––––––––

18. Trade and other receivables


£’000 £’000 £’000 £’000

Trade receivables 878 2,286 – –Provision for doubtful debts (138) (245) – –

–––––––––– –––––––––– –––––––––– ––––––––––

740 2,041 – –Amounts owed by group undertakings – – 121,324 119,449Other receivables 74 132 296 192Prepayments and accrued income 1,800 57 172 144

–––––––––– –––––––––– –––––––––– ––––––––––

2,614 2,230 121,792 119,785–––––––––– –––––––––– –––––––––– –––––––––––––––––––– –––––––––– –––––––––– ––––––––––

The directors consider that the carrying amount of trade and other receivables approximates to theirfair value due to the short term nature of these financial assets.

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19. Trade and other payables


£’000 £’000 £’000 £’000

Amounts owed to group undertakings – – 528 97Social security and payroll taxes 413 45 413 45Trade payables 687 1,300 145 543Other payables – 69 – 277Accruals and deferred income 6,341 4,352 2,721 190

–––––––––– –––––––––– –––––––––– ––––––––––

7,441 5,766 3,807 1,152–––––––––– –––––––––– –––––––––– –––––––––––––––––––– –––––––––– –––––––––– ––––––––––

The directors consider that the carrying amounts of the trade and other payables approximate to theirfair value due to the short period of repayment.

20. Bank loans


£’000 £’000 £’000 £’000

Bank loans 34,752 35,586 – –Debt issue costs (1,088) (1,496) – –

–––––––––– –––––––––– –––––––––– ––––––––––

33,664 34,090 – ––––––––––– –––––––––– –––––––––– –––––––––––––––––––– –––––––––– –––––––––– ––––––––––

Details of the financial liabilities are given in note 30.

21. Preference shares


£’000 £’000 £’000 £’000

Preference shares 7,376 13,324 7,376 13,324–––––––––– –––––––––– –––––––––– –––––––––––––––––––– –––––––––– –––––––––– ––––––––––

As part of the offer for The Advantage Property Income Trust Limited, the Company issued62,902,335 convertible preference shares of £0.01 each of which 32,457,595 (2010: 62,313,045)were outstanding at the year end. The preference shares are convertible at any point into ordinaryshares at the option of the preference shareholder. The conversion rate is one ordinary share for fivepreference shares. Any preference shares not converted are redeemable for £0.25 each on31 December 2011.

Although equity share capital at law, the preference shares are classified as hybrid instruments underIFRS consisting of a discounted debt element of £0.20 per share and an equity element of £0.02 pershare which has been credited to an equity reserve. A notional interest element is charged to theincome statement over the period to redemption.

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21. Preference shares (continued)

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

30 Sep 11 30 Sep 10£’000 £’000

At 30 September 2010 13,324 12,612Fair value of preference shares at date of issue – 18Equity components – (2)

––––––––– –––––––––

Liability component at date of issue 13,324 12,628Conversions to ordinary shares in the period at carrying value (6,586) (95)Notional interest charge 638 791

––––––––– –––––––––

At 30 September 2011 7,376 13,324––––––––– –––––––––––––––––– –––––––––

22. Share capital

Authorised share capital:

30 Sep 11 30 Sep 10£ £

140,000,000 (2010– 140,000,000) Ordinary shares of £0.05 each 7,000,000 7,000,000150,000,000 (2010– 150,000,000) Preference shares of £0.01 each 1,500,000 1,500,000

–––––––––––– –––––––––––––––––––––––– ––––––––––––

Allotted and called up:

Amounts recorded as equity:

30 Sep 11 30 Sep 10No £’000 No £’000

Ordinary shares of £0.05 each 123,362,223 6,169 117,391,133 5,870–––––––––––––– –––––––––––– –––––––––––––– –––––––––––––––––––––––––– –––––––––––– –––––––––––––– ––––––––––––

Amounts recorded as liability:

30 Sep 11 30 Sep 10No £’000 No £’000

Preference shares of £0.01 each (Note 21) 32,457,595 325 62,313,045 623–––––––––––––– –––––––––––– ––––––––––––– –––––––––––––––––––––––––– –––––––––––– ––––––––––––– ––––––––––––

The Preference shares were issued in connection with the offer for The Advantage Property IncomeTrust Limited. They are convertible at any stage into Ordinary shares. The conversion rate is oneOrdinary share for five Preference shares. Any Preference shares not converted are redeemable for£0.25 each on 31 December 2011.

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22. Share capital (continued)

During the year, the Company issued 5,971,090 (2010: 90,240) ordinary shares of £0.05 each inrespect of conversions of 29,855,450 (2010: 451,200) preference shares. The carrying value of theliability which was treated as consideration for these issues was £6,885,000 (2010: £93,000) and£597,000 (2010: £9,000) was transferred from equity reserve to reflect the equity elements of thepreference shares.

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

Allotted and Called Up

Price£ No. £’000

At 30 September 2009 116,172,721 5,809Share issue – 7 October 2009 1.140 350,880 18Share issue – 20 October 2009 1.155 45,696 2Share issue – 17 November 2009 1.100 18,049 1Share issue – 26 November 2009 1.100 1,380 –Share issue – 10 December 2009 0.595 (average) 625,000 31Share issue – 14 December 2009 1.100 1,532 –Share issue – 7 January 2010 1.200 106,416 6Share issue – 7 January 2010 1.100 21,000 1Share issue – 2 February 2010 1.100 1,316 –Share issue – 10 February 2010 1.100 43,297 2Share issue – 18 August 2010 1.100 3,846 –

––––––––––––––– –––––––––––––––

At 30 September 2010 117,391,133 5,870Share issue – 28 October 2010 1.100 93,300 5Share issue – 9 February 2011 1.100 3,000,000 150Share issue – 15 April 2011 1.100 18,802 1Share issue – 31 May 2011 1.100 4,400 –Share issue – 6 June 2011 1.100 2,843,148 142Share issue – 15 August 2011 1.100 11,440 1

––––––––––––––– –––––––––––––––

123,362,223 6,169––––––––––––––– –––––––––––––––––––––––––––––– –––––––––––––––

23. Treasury shares

In December 2010, the Group began a share buyback programme and during the year ended30 September 2011 purchased 21,237,981 shares on the open market at a cost of £24,649,000. Allof these shares were held in treasury as at 30 September 2011.

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24. Acquisitions

On 24 November 2009, the Group acquired six Jersey-based companies (the “Lamont portfolio”)which hold seven freehold and long leasehold buildings for a total cash consideration of £44,763,000.Although effected through the acquisition of separate legal entities, the Lamont portfolio does not insubstance constitute a business combination as defined by IFRS 3 and has accordingly been treatedas an asset purchase. The portfolio consisted of:

● Brennan House, Farnborough Aerospace Centre, Hampshire

● Three units at Aker Village, Kirkhill, Aberdeen

● Cambridge Road, Whetstone Business Park, Leicester (sold during the year ended30 September 2011)

● Kelvin II, Kelvin Close, Birchwood Park, Warrington

● Crystal Drive, Sandwell Business park, Oldbury, West Midlands

The annual rent roll was, at the time of acquisition, approximately £4.41 million representing a netinitial yield of 9.8%. The buildings comprised 562,000 sq ft of lettable space and occupy some47 acres.

The Group also acquired the remaining 2.15% of the issued share capital of The Advantage PropertyIncome Trust Limited (“TAP”) and thereby owned 100% of the issued share capital of the companyby 8 January 2010.

The transaction was accounted for by the purchase method of accounting:

30 Sep 11 30 Sep 10£’000 £’000

Share of net assets acquired – 1,281Gain in respect of acquisition – (608)

––––––––– –––––––––

Total consideration – 673––––––––– –––––––––––––––––– –––––––––

Satisfied by:Ordinary shares at fair value – 580Preference shares at fair value – 17Cash – 76

––––––––– –––––––––

– 673––––––––– –––––––––––––––––– –––––––––

25. Share based payments

Details of options granted over the Company’s share capital are given in the Directors’ RemunerationReport on page 19. No options were granted in either the current or prior year.

The Group and Company recognised total expenses of £nil (2010 – £434,000) in relation to equitysettled share-based payment transactions.

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26. Deferred tax asset

Deferred tax assets are recognised in the accounts as follows:

Group and Company 30 Sep 11 30 Sep 10Provided Not Provided Provided Not Provided

£’000 £’000 £’000 £’000

Share based payments – 2 – 2Losses – 1,464 – 1,464

–––––––– –––––––– –––––––– ––––––––

– 1,466 – 1,466–––––––– –––––––– –––––––– –––––––––––––––– –––––––– –––––––– ––––––––

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

Movements on the recognised assets are as follows:


£’000

At 1 October 2009 92Debit to profit and loss account (92)

–––––––––––––––

At 30 September 2010 –––––––––––––––––––––––––––––––

At 1 October 2010 and 30 September 2011 –––––––––––––––––––––––––––––––

27. Commitments

Group as lessee:

At 30 September 2011, the Group and Company had outstanding commitments for future minimumlease payments under non-cancellable operating leases, which fall due as follows:

30 Sep 11 30 Sep 10£’000 £’000

Within one year 126 187In the second to fifth years inclusive 503 503

––––––––– –––––––––

629 690––––––––– –––––––––––––––––– –––––––––

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27. Commitments (continued)

Group as lessor:

In addition, the Group holds retail, office, industrial and leisure buildings as investment propertieswhich are let to third parties. These are non-cancellable leases and the income profile based upon theunexpired lease length was as follows:

30 Sep 11 30 Sep 10£’000 £’000

Less than one year 11,397 13,950Between one and five years 36,112 36,791Over five years 21,560 27,269

––––––––– –––––––––

69,069 78,010––––––––– –––––––––––––––––– –––––––––

At 30 September 2011, the Group was committed to complete a purchase of land at Clun Bach,Fishguard, provided a number of conditions precedent relating to the receipt of suitable planningconsents are met. A deposit of £36,500 was paid on 4 August 2010. The acquisition was completedin November 2011.

28. Related party transactions

The Company has made advances to the following subsidiaries in order to provide both long termand additional working capital funding. All amounts are repayable upon demand, are non-interestbearing and will be repaid from the trading activities of those subsidiaries. No provisions have beenmade against the outstanding amounts.

30 Sep 11 30 Sep 10£’000 £’000

Subsidiaries

Conygar Bedford Square Limited (447) (68)Conygar Strand Limited (52) 1,289Martello Quays Limited 1,308 1,276Conygar Holdings Limited 97,561 104,511Conygar Haverfordwest Limited 14,700 –Conygar Wales PLC (29) –Conygar Advantage Limited 5 –

––––––––– –––––––––

113,046 107,008––––––––– –––––––––––––––––– –––––––––

30 Sep 11 30 Sep 10£’000 £’000

Joint Ventures

Conygar Stena Line Limited 5,595 5,465C M Sheffield Limited 2 -

––––––––– –––––––––

5,597 5,465––––––––– –––––––––––––––––– –––––––––

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28. Related party transactions (continued)

The loans to Conygar Stena Line Limited may be analysed as:

30 Sep 11 30 Sep 10£’000 £’000

Secured interest bearing loan 2,575 2,445Unsecured non-interest bearing shareholder loan 3,020 3,020

––––––––– –––––––––

5,595 5,465––––––––– –––––––––––––––––– –––––––––

During the year, the Company received a management fee from Conygar Stena Line Limited of£50,000 (2010 – £50,000) in respect of management services.

The Company issued a non interest bearing loan of £5,500,000 to The Advantage Property IncomeTrust Limited last year and £3,347,000 was repaid in the year, leaving a balance of £2,153,000outstanding as at 30 September 2011.

During the year, the Company received £2,544,000 (2010: £10,588,000) of dividend income fromConygar Holdings Limited.

29. Loss of parent company

As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the Companyis not presented as part of these financial statements. The parent company’s loss for the year amountsto £2,961,000 (2010 – profit of £34,667,000).

30. Financial instruments

Treasury Policies

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

The Group finances its activities with a combination of bank loans, cash and short term deposits.Other financial assets and liabilities, such as trade receivables and trade payables, arise directly fromthe Group’s operations. The Group may also enter into derivative transactions to manage the interestrate risk arising from the Group’s operations and its sources of finance. The Group does not trade infinancial instruments. The main risks associated with the Group’s financial assets and liabilities areset out below, together with the policies currently applied by the board for their management.Derivative instruments may be used to change the economic characteristics of financial instrumentsin accordance with the Group’s treasury policies. Following the acquisition of TAP, the Group hasinherited a number of interest rate swaps which were used to reduce TAP’s exposure to changes ininterest rates. The interest rate swaps amount to an economic hedge of £34.5 million (2010:£34.5 million) of the total loan facilities of £34.8 million (2010: £35.6 million) for cashflows to17 February 2015, but no hedge accounting is used.

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

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30. Financial instruments (continued)

Market Risk

The Group is exposed to market risk primarily related to interest rates. These exposures are activelymonitored.

As the Group’s assets and liabilities are all denominated in Pounds Sterling there is currently noexposure to currency risk.

Interest Rate Risk

Financial Liabilities

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

As part of the TAP acquisition, the Group inherited a number of interest rate swaps in which theGroup agrees to exchange, at specified intervals, the difference between fixed and variable interestamounts calculated by reference to an agreed upon notional principal. At 30 September 2011, aftertaking into account interest rate swaps, 100% (2010: 100%) of the Group’s bank borrowings were ata fixed rate of interest, and the increase on this percentage on last year is due to the fact that the costof breaking the swap instruments is prohibitively high with swap rates at historic lows. The hedgingstrategy is currently under review.

The interest rate profile of the Group bank borrowings at 30 September 2011was as follows:

InterestRate Maturity 30 Sep 2011 30 Sep 2010

£’000 £’000

Lloyds Banking Group (1) LIBOR +2% 2 – 5 years 20,150 20,150Capita (2) 5.24% 2 – 5 years 14,602 15,435

––––––––– –––––––––

34,752 35,585––––––––– –––––––––––––––––– –––––––––

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

(2) Interest rate fixed until 18 January 2013.

The Group also issued 62,902,335 preference shares during the year ended 30 September 2009which are redeemable at 25p each on 31 December 2011 to the extent they are not converted intoordinary shares by the preference shareholder.

As at 30 September 2011 there were 32,457,595 (2010: 62,313,045) preference shares in issue andtherefore £8,114,000 (2010: £15,578,000) is potentially repayable on 31 December 2011.

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Financial Assets

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

30 Sep 11 30 Sep 10£’000 £’000

Fixed rate – –Floating rate 35,674 67,322

––––––––– –––––––––

35,674 67,322––––––––– –––––––––––––––––– –––––––––

The interest rate profile of the Company’s cash and derivatives at the balance sheet date was asfollows:

30 Sep 11 30 Sep 10£’000 £’000

Fixed rate – –Floating rate 28,464 59,040

––––––––– –––––––––

28,464 59,040––––––––– –––––––––––––––––– –––––––––

Floating rate financial assets comprise cash and short term deposits at call and money market ratesfor 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 inconnection with property leases, the investment of surplus cash and transactions where the Groupsells properties with an element of deferred consideration.

Tenant rent payments are monitored regularly and appropriate action is taken to recover moniesowed or if necessary to terminate the lease. Deferred consideration terms are only agreed withcounterparties approved by the board or where some additional security is available, and there werenone as at 30 September 2011 (2010 – £nil).

The Group policy has been to invest funds and enter into derivative transactions with a broad rangeof institutions having investment grade low risk credit ratings and a strong or superior ability to repayshort term debt obligations. The unprecedented credit and banking market disruption of the lastthree years has had a significant impact upon the ability to rely upon either credit ratings or the abilityof financial institutions to honour their commitments and the widespread nature of the financial crisishas introduced considerable uncertainty into the process. As at 30 September 2011, the Group hada single balance of £207,000 (2010 – £278,000) where the counter-party had failed to honour anotice deposit and a full impairment provision has been recorded against the balance.

There are no other receivables which are past due but not impaired.

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Liquidity Risk

The Group’s objective is to maintain a balance between continuity of funding and flexibility throughthe use of bank loans secured on the Group’s properties. The Group is exposed to liquidity riskshould 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 adverseimpact of this can be mitigated.

Loans

As at 30 September 2011, TAPP Property Limited maintained a facility with the Lloyds BankingGroup of up to £78,000,000 (2010: £78,000,000) under which £20,150,000 (2010 – £20,150,000)had been drawn down. This facility is repayable on or before 27 January 2015 and is secured by fixedand floating charges over the assets of the TAPP Property Limited group and the Lamont companies.The facility is subject to a maximum loan to value covenant of 70% and an interest cover ratiocovenant of 150%.

As at 30 September 2011, TOPP Property Limited maintained a facility with Capita of £35,267,000(2010: £35,267,000) of which £14,601,000 (2010 – £15,435,000) had been drawn down. Thisfacility is repayable on or before 18 January 2013 and is secured by fixed and floating charges overthe assets of the TOPP Property Limited group. The facility is subject to a maximum loan to valuecovenant of 70% and an interest cover ratio covenant of 135%.

Price Risk

The Group’s exposure to changing market prices on the value of financial instruments may have animpact on the carrying value of financial instruments and would arise principally as a result ofentering into swaps or similar transactions to fix interest rates on the Group’s borrowings. TheGroup’s policies for managing this risk are to control the levels of fixed rate debt as set out underinterest rate risk above.

Capital Risk Management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as agoing concern in order to provide returns for shareholders and benefits for other stakeholders and tomaintain 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 activelymanaged through the direct linkage of borrowings to specific trading property. The Group seeks toensure that secured borrowing does not exceed 70% of the current market value of such property.

Fair Values of Financial Assets and Financial Liabilities

The fair values of all the Group’s financial assets and liabilities are set out below:

Book Value Book Value Fair Value Fair Value30 Sep 2011 30 Sep 2010 30 Sep 2011 30 Sep 2010

£’000 £’000 £’000 £’000Financial Assets

Cash 35,674 67,322 35,674 67,322


Floating rate borrowings 20,150 20,150 20,150 20,150Fixed rate borrowings 14,601 15,435 14,235 15,250Interest rate swaps 1,368 5,042 1,368 5,042Preference share liability 7,376 13,324 7,376 13,324

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The fair values of all the Company’s financial assets and liabilities are set out below:

Book Value Book Value Fair Value Fair Value30 Sep 2011 30 Sep 2010 30 Sep 2011 30 Sep 2010

£’000 £’000 £’000 £’000Financial Assets

Cash 28,464 59,040 28,464 59,040


Preference share liability 7,376 13,324 7,376 13,324

Derivative Financial Instruments

Market MarketValue at Value at

Protected 30 Sep 11 30 Sep 10rate % Expiry £’000 £’000

£21.8 million (2010: £21.8 million) swap 2.38 (2010: 5.135) Feb 2015 (865) (3,182)£12.7 million (2010: £12.7m) swap 2.38 (2010: 5.15) Feb 2015 (503) (1,860)

–––––––––– ––––––––––

(1,368) (5,042)–––––––––– –––––––––––––––––––– ––––––––––

The valuation of the swaps was provided by JC Rathbone Associates Limited, is a tier 2 valuation andrepresents the change in fair value since execution. The fair value is derived from the present value ofthe future cash flows discounted at rates obtained by means of the current yield curve appropriate forthose instruments.

The fair value of the Group’s trade debtors and other receivables and trade creditors and otherpayables is not considered to vary from historic cost due to the short term nature of these financialassets and liabilities. As such, they are excluded from the disclosure.

31. Events since the balance sheet date

Since 30 September 2011, we completed the acquisition of Fishguard Lorry Stop (otherwise referredto as land at Clun Bach, Fishguard) for £330,000.

In November 2011, we have taken an option to purchase a site at Aberystwyth Park Lodge,Aberystwyth, which, in conjunction with a local developer and Sainsbury’s, we hope to develop intoa food retail supermarket together with petrol filling station and car park.

On 11 November 2011, we drew down £33 million of our Lloyds Banking Group facility taking theoutstanding loan amount on that facility to £49.79 million.

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Property Address

Total Area (sq ft)

Industrial

Aberdeen

Aker Village, Kirkhill Industrial Estate 192,219

Brighouse

Armytage Road 50,390

Clevedon

Units 5a, 5b, 5c, 6a and 6b Tweed Road Industrial Estate 31,024

Hemel Hempstead

3 Cherry Trees Lane 91,525

Kettering

Travis Perkins/Kettering Tiles, Linnell Way 18,329

Livingston

3/3a Baird Road, Kirkton Campus 13,752

Livingston

1 Simpson Parkway, Kirkton Campus 32,821

Livingston

Development Site, Kirkton Campus –

Milton Keynes

Advantage One, Third Avenue, Bletchley 28,348

Oldbury

Crystal Drive, Sandwell Business Park 127,845

Runcorn

Units 1001/1004 Lime Court, Manor Park 56,153

Stratford Upon Avon

Swan Development, Avenue Farm Industrial Estate 33,965

Telford

Unit C, Hortonwood 31,950

Uddingston

Unit 6, Bedlay View, Tannochside Park 31,102

Witham

3, 16 and 18 Freebournes Road 145,902

Worcester

Unit 15b Blackpole Trading Estate 100,135

61


INVESTMENT PROPERTY PORTFOLIOfor the year ended 30 September 2011

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Total Area (sq ft)

Leisure

Dundee

Kingscourt Leisure Complex, Douglas Road 87,360

Offices

Farnborough

Brennan House, Farnborough Aerospace Centre 30,010

Fleet

Integration House, Ancells Business Park, Rye Close 11,679

Fleet

Waterfront Business Park, Fleet Road 36,739

Leeds

Brunswick Point 62,873

Livingston

1 Garbett Road, Kirkton Campus 5,032

Livingston

6 Fleming Road, Kirkton Campus 10,108

Maidenhead

Geoffrey House, Vanwall Business Park 29,460

Reading

AdVantage Reading, Castle Street 24,915

Swindon

Pagoda Park, Westmead Drive 41,112

Warrington

Kelvin II, Kelvin Close, Birchwood Park 50,553

Warrington

The Links, Kelvin Close 53,185

Welwyn Garden City

Units 1-6 Silver Court, Watchmead 46,751

Whetstone

Brook Point, 1412 – 1420 High Road 13,194

Retail

Ayr

156 and 158 – 160 High Street 8,601

Ayr

52/56 Newmarket Street 7,717

62


INVESTMENT PROPERTY PORTFOLIO (continued)for the year ended 30 September 2011

A-64

Total Area (sq ft)

Bletchley

The Brunel Centre 96,644

Felixstowe

York House, 96 – 102a Hamilton Road 19,545

Hinckley

70 – 76 Castle Street 5,367

Horsham

7 West Street 4,929

Rugeley

Shrewsbury Arms Shopping Mall, High Street 9,633

Retail Warehouse

Birmingham

Trident Retail Park 29,485

Coventry

Halfords, 36 Foleshill Road 14,888––––––––––––––––

Total Area 1,685,240––––––––––––––––––––––––––––––––

Regional Distribution Valuation (%)

South East 37.48%

Eastern 1.31%

East Midlands 1.20%

South West 3.93%

Yorkshire & Humberside 5.58%

Scotland 26.03%

North West 10.50%

West Midlands 13.97%––––––––––––––––

Total 100.00%––––––––––––––––––––––––––––––––

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Sector Distribution Valuation (%)

High Street Retail (South East) 1.04%

High Street Retail (Rest of UK) 4.57%

Shopping Centres 6.54%

Retail warehousing 3.09%

Offices (South East) 24.66%

Offices (Rest of UK) 16.84%

Industrial (South East) 5.22%

Industrial (Rest of UK) 32.39%

Leisure 5.65%––––––––––––––––

Total 100.00%––––––––––––––––––––––––––––––––

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AIM The AIM Market of the London Stock Exchange PLC

EPRA European Public Real Estate Association

EPRA EPS A measure of earnings per share designed by EPRA to presentunderlying earnings from core operating activities

EPRA NAV A measure of net asset value designed by EPRA presenting netasset value excluding the effects of fluctuations in value ininstruments that are held for long term benefit, net of deferred tax

EPS Earnings per share, calculated as the earnings for the period aftertax attributable to members of the parent Company divided bythe weighted average number of shares in issue in the period

Equivalent Yield The constant capitalisation rate which, if applied to all cash flowsfrom an investment property, equates to the market rent

Net Initial Yield Annual net rents expressed as a percentage of the investmentproperty valuation

NAV Net asset value

Reversionary Yield The anticipated yield which the Net Initial Yield will rise to oncethe rent reaches the ERV

Conygar The Conygar Investment Company PLC

TAP The Advantage Property Income Trust Limited

Loan to Value The amount of borrowing divided by the value of investmentproperty expressed as a percentage

PBT Profit before taxation

UK United Kingdom

ERV Estimated Rental Value being the open market rent as estimatedby the Company’s valuers

NNNAV or Triple Asset Value A measure of net asset value taking into account assetrevaluations, the fair value of debt and any associated tax effects

Passing Rent The annual gross rental income excluding the effects of leaseincentives

Tenant Break An option in a lease for a tenant to terminate that lease early

Lease Re-gear A mutual re-negotiation of a lease between landlord and tenantprior to a lease expiry date

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

Rent-Free Period A lease incentive offering the tenant a period without paying rent

Vacancy Rate The estimated rental value of vacant properties expressed as apercentage of the total estimated rental value of the portfolio

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GLOSSARY OF TERMS

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PART B – ANNUAL REPORTS AND AUDITED CONSOLIDATED FINANCIALSTATEMENTS OF THE GROUP FOR THE YEAR ENDED 30 SEPTEMBER 2012

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227218 Conygar Cover 30/11/2012 15:36 Page i

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227218 Conygar Cover 30/11/2012 15:36 Page ii

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The Conygar Investment Company PLC, announces its results for the year ended 30 September 2012.

HIGHLIGHTS

● Net asset value per share increased by 7% to 165.9p (2011: 155.2p). EPRA NAV per shareincreased by 8% to 166.9p (2011: 153.9p).

● Pre-tax profit for the year £7.46 million compared with £1.76 million last year.

● Acquired a portfolio of nine freehold and long leasehold properties (the “Edinmore portfolio”)for £39.8 million with a net initial yield of 10.6%. Valued at £42.4 million as at 30 September2012.

● Obtained planning consents for our £100 million waterfront development at Fishguard, WestWales and our mixed-use marina development at Holyhead, Anglesey, Wales.

● Net debt of £48.2 million representing gearing of 31.3% against net asset value and 27.4% onloan to value basis.

● Strong cash flow and debt capacity for future acquisitions, with total cash and undrawncommitted facilities exceeding £50 million.

● Share buy back: the Group acquired 9.1% of its ordinary share capital at a weighted average

price of 90.8p per share.

● Post period end, submitted planning application in respect of the 60,000 square footSainsbury’s retail food store and 835 residential plots in Haverfordwest.


Per Share £’m p

Investment Properties 176.0 189.6Development Projects 30.8 33.2Cash 31.5 33.9Other Net Liabilities (4.6) (5.0) ––––––––––– –––––––––––

233.7 251.7Bank Loans (79.7) (85.8) ––––––––––– –––––––––––

154.0 165.9 ––––––––––– ––––––––––– ––––––––––– –––––––––––

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

The Board is chaired by Nigel Hamway with Robert Ware as chief executive. The management team hasan excellent track record and has demonstrated cash management expertise both before and during thecurrent economic downturn.

2


WHO WE ARE


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Page



Business Review 8

Financial Review 14
















Form of Proxy 71

3


CONTENTS



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Company Secretary

P A Batchelor

Registered Office


Auditors Solicitors

Rees Pollock Wragge & Co LLP 35 New Bridge Street 55 Colmore Row London EC4V 6BW Birmingham B3 2AS


Oriel Securities Limited Share Registrars Limited 150 Cheapside Suite E London EC2V 6ET First Floor 9 Lion and Lamb Yard Farnham Surrey GU9 7LL

Registered Number

04907617

Website

www.conygar.com

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Results

We are pleased to report a net asset value per share of 165.9p, which is an increase of 7% from last year.The major components of that growth are the profit after tax of £5.6 million and the positive impact ofthe share buy back programme. Net asset value as at 30 September 2012 was £154.0 million comparedwith £158.5 million at 30 September 2011. However, the Group spent £8.5 million on share buybacksduring 2012 and paid a dividend of £1.1 million. Excluding these, net assets increased by 3%. On anEPRA basis, net asset value per share increased by 8% to 166.9p.

The profit before taxation for the year was £7.5 million (2011: £1.8 million). Net property income was£13.4 million (2011: £10.0 million) before financing and overheads. Whilst our primary focus is ongrowing net asset value per share, it is also good to see the improved profitability of the business.

The Group’s investment properties as at 30 September 2012 were independently valued at£176.0 million (2011: £139.2 million) and have an annual contracted rent roll of £15.8 million (2011:£12.1 million). The Edinmore portfolio acquired in the year increased in value by 6% whilst the existingproperties fell by 1.6%, on a like for like basis. We continue to concentrate on asset management and theresult is pleasing given the difficulties being experienced in the property market outside central London.

The development land bank is held at cost of £30.8 million (2011: £29.4 million), after additions of afurther £1.4 million during 2012. During the year, we were pleased to announce the granting of outlineplanning permission for our two mixed use marina developments at Holyhead Waterfront, Anglesey andFishguard, West Wales. We have also now submitted the planning application in respect of the 60,000square foot Sainsbury’s retail food store and 835 residential plots at Haverfordwest. The developmentteam continues to deliver good progress on all of our projects and, whilst the planning process isfrustratingly slow, we remain on target to deliver projects comprising more than 2,000 homes, 1,400marina berths and in excess of 400,000 square feet of commercial and retail development. All of thesematters are covered in more detail under the Business Review on page 8.

The Group continues to deliver on its strategy, having established an investment property portfoliogenerating surplus cash flow whilst at the same time creating a pipeline of exciting development projectsthat are well positioned to deliver good returns in the medium term. The business is well funded and thebalance sheet remains strong. We will recycle assets to release capital as opportunities present themselvesand will continue to buy back shares to enhance net asset value per share. This is a business model thathas delivered growth throughout the nine year life of the Group.

Acquisitions and disposals

In December 2011, we acquired a portfolio of properties from a consortium including a subsidiary ofCaledonia Investments plc and Buccleuch Property in an off-market transaction for a total cashconsideration, including all costs, of £39.8 million (the “Edinmore portfolio”). The annual rent roll isapproximately £4.2 million representing a net initial yield of 10.6%. This high yielding portfolio has agood spread of risk and offers considerable upside from both lease re-gears and developmentopportunities. It fits well with our strategy of acquiring assets with strong existing cash flow to which wecan add further value.

The Group disposed of four investment properties during the year for total net proceeds of £4.05 million,generating a surplus of £431,000 over valuation. We will continue to dispose of assets as opportunitiesarise and where no further value can be added by the Group.

Dividend

The Board is pleased to recommend a final dividend of 1.25p per ordinary share in respect of the yearended 30 September 2012 to be paid on 22 January 2013 to shareholders on the register on 7 December2012. This is an increase of 14% over last year. Our dividend policy is unchanged in that we will aim to

5




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provide some income return to shareholders but for the most part retain profits for reinvestment in thebusiness.

Share Buy Back

During the year, the Group acquired 9,320,000 ordinary shares representing 9.1% of its ordinary sharecapital, at a weighted average price of 90.8p per share. This cost £8.5 million and, as a result of the buybacks, net asset value per share has been enhanced by approximately 6.5 pence per share or 4%. TheGroup will seek to renew the buy back authority at the forthcoming AGM and will continue to utilise itas and when it makes sense to do so and certainly whilst our shares continue to trade at such a significantdiscount to our underlying value.

Financing

At 30 September 2012, the Group had bank debt of £81 million and cash of £32 million available topursue investment opportunities and to fund progress on our developments. When combined with fundsavailable from the committed bank facility, this amount increases to £50 million. This excludes anyfurther finance available in respect of new acquisitions. The Group bank debt stands at 46% loan to valueor 27% net of cash.

During November 2011, the Group re-couponed its existing interest rate swaps from 2.38% to 1.33%,having already reduced them during the previous financial year from 5.2%. In June 2012, we entered intoa new interest rate swap agreement for the remaining £15.3 million unhedged balance of our externalbank debt with a fixed rate of 0.99%. Aside from reducing the on-going interest rate charge in the incomestatement, our external bank debt is now fully hedged and the weighted average cost of all debt includingmargin has fallen to 4.44%.

Also during November 2011, the Group drew down £33 million from its facility with Lloyds BankingGroup, which was used to acquire the Edinmore portfolio. The ability to deploy cash quickly was a majorcompetitive advantage when acquiring this portfolio.

In August 2012, we announced the £20 million refinancing of the Edinmore portfolio with Barclays BankPLC. This four year facility is secured on the nine properties of the Edinmore portfolio and is fully fixedfor the term at an all in cost of 4.5%.

We are presently in discussions with several banks with a view to refinancing the £11.5 million debtfacility which matures in January 2013. The assets secured on this facility are valued at £31 million so weare confident that refinancing is a viable proposition. In any event, we have the cash available to repay thefacility whilst negotiations continue.

Review of Remuneration Policy

At the last Annual General Meeting, the Chairman committed to consult with a wide range ofshareholders with respect to the Group’s remuneration arrangements for Executive Directors. We havealso monitored and reviewed the topical debates in this area. It is essential that remuneration remainssufficiently competitive to attract, retain and motivate high quality management to achieve challengingtargets. The Group has been well run and has continued to grow through one of the worst downturns inliving memory. However, we acknowledge that bonus payments, in whatever form, should only arise fortrue out-performance and to that end, we have increased the post-tax hurdle rate on the Profit SharingPlan to 10% per annum on a cumulative basis. In addition, we have introduced a share price condition.The remuneration committee does not intend to pay out a bonus unless the market share price is at least65% of audited net asset value per share. We have also made a number of lesser amendments to clarifyand simplify the Plan, but in the main, our shareholder consultees were satisfied that the basic structureis appropriate for our business model. The remuneration report is on page 18.

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Per Share £’m p

Investment Properties 176.0 189.6 Development Projects 30.8 33.2 Cash 31.5 33.9 Other Net Liabilities (4.6) (5.0) ––––––––––– –––––––––––

233.7 251.7Bank Loans (79.7) (85.8) ––––––––––– –––––––––––

154.0 165.9 ––––––––––– ––––––––––– ––––––––––– –––––––––––

Outlook

There can be no doubt the going remains exceedingly tough. With a fragile economy, struggling to climbout of recession combined with continued scarce financing, the property market remains weak,particularly outside London. Signs of recovery are few. Businesses and households remain cautious, andrightly so, given the considerable challenges still to be met, whether domestically or further afield.

Notwithstanding the backdrop of general economic struggles, the outlook for Conygar remains promisingand our cautious business model ensures we manage the downside whilst positioning the Group to takefull advantage of the upside. The balance sheet is strong and we are well funded. We continue to makegood progress on both development projects and the investment property portfolio, whilst managing theassociated risks.

We remain positive about the future for your business and look forward to continuing our progressparticularly in the development portfolio during the forthcoming year.



28 November 2012

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Investment Properties


2012 2011


Asset management

At 30 September 2012, the contracted rent for the investment property portfolio was £15.8 million withan ERV of £17.5 million. The ERV of vacant space is £2.1 million of which Advantage, Reading andBrunswick Point, Leeds account for 40% by rental value. The overall vacancy rate in the portfolio is10.40%, down from 11.19% in 2011 and the average unexpired lease length fell to 4.50 years from 5.21years at 30 September 2011, mostly due to the impact of acquiring the Edinmore portfolio.

Clearly tenants and their businesses remain under pressure and therefore we seek to maintain closecommunication and early discussions with tenants where leases are shortening or breaks impending. Weare fortunate that our arrears are less than 1% of the rent roll and that 95% - 98% of rent is collectedwithin ten days of a quarter.

In terms of lettings:

● We agreed 4 new lettings contributing £156,212 pa of new income at or around ERV.

● We agreed 16 lease renewals retaining £1,775,581 pa of income at an aggregate premium of 7.55%to ERV.


Norfolk House, Birmingham

The 4th and part 5th floors of Norfolk House, Birmingham were let to the Secretary of State, occupyinga total of 19,279 sq ft on two leases expiring on 25 March 2015. The total annual rent payable is just over£250,000. Each of the leases had a break clause on 24 March 2013. Following discussions with thetenant’s managing agent, terms were agreed for the break clauses to be removed from the leases in returnfor a rent free period of 6 weeks. The passing rents of just over £250,000 per annum will therefore rununtil lease expiry in 2015. It is particularly good news to obtain another 2 years’ income secured atexisting levels of rent in return for only 6 weeks’ rent free and is a good example of the importance ofmaintaining close and frequent dialogue with occupiers.

8


BUSINESS REVIEW


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31 Foleshill Road, Coventry

31 Foleshill Road comprises 14,888 sq ft and is let to Halfords Limited on a lease which was due to expireon the 23 June 2016. A re-gear of the lease to Halfords has subsequently completed on the followingterms:

● Term – 10 years from 29 June 2012.

● Tenant Breaks – none.

● Rent – as existing, £209,281 per annum.

● Incentives – 18 months’ rent free from 29 September 2012.

As a consequence of the re-gearing of the lease, the valuation of this asset increased by £115,000 and,more importantly, the investment is now a more attractive proposition, which provides Conygar withfurther flexibility with regard to its strategy for this asset going forward.

7 West Street, Horsham

7 West Street, Horsham was let in the latter part of 2010 to British Bookshops and Stationers Limited ona 10 year lease at £95,000 per annum. However, British Bookshops and Stationers Limited became acasualty of the difficult retail market in 2011 and went into Administration with the lease beingdisclaimed by the Administrator on 19 March 2011.

The property was subsequently marketed and a letting to C & H Fabrics Limited has been completed.The lease is for a term of 10 years from 20 December 2011, at an improved rent of £105,000 per annum,which is in line with ERV. The tenant was granted a three month rent free period during its fit out,followed by six months’ rent free, which has been provided by discounting the annual rent by 50% forthe first year of the term.

The tenant, C & H Fabrics Limited, was founded in 1933 and has seven retail outlets in the South East,with the new branch at Horsham adding to that portfolio. The tenant carried out a substantial refit of theproperty and created a new staircase to link the ground floor and first floor in order to trade on the firstfloor, which was poor quality storage previously. The letting of 7 West Street, Horsham on a 10 year leaseat a rent of £105,000 per annum to a long established retailer represents an excellent outcome forConygar, in what is a challenging environment in the retail sector, at present.

15b Blackpole Trading Estate, Worcester

The property consists of a 100,000 sq ft industrial unit on an established trading estate in Worcester andis let in its entirety to Exel Europe, who use the property for the servicing of a distribution contract withNetwork Rail. They have always been reluctant to enter into long term leasing commitments, which donot mirror the terms of their distribution contract. During the financial year, two separate transactionshave been concluded with Exel Europe:

● In December 2011, a lease for a further year to 31 December 2012 was completed, at an increasedrent of £390,000 per annum (ERV £360,000 per annum) to reflect a short term extension to theirNetwork Rail contract. This reflects an 8.3% uplift on the passing rent and on ERV.

● In advance of the lease expiry in December 2012, a reversionary lease has been completed, whichwill retain Exel at the new passing rent until 30 September 2013.

Discussions are ongoing with respect to the tenant’s continued occupation of the property but, for now,the income has been retained in a very difficult local market.

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Disposals

The Group disposed of four investment properties during the year at Carnoustie House, Warrington;Hortonwood, Telford; and Units 1 and 2 Silver Court, Welwyn. Total net sale proceeds were£4.05 million, generating a surplus over valuation of £431,000. We will continue to dispose of assets asopportunities arise and where no further value can be added by the Group.

Valuations

The investment property portfolio has been independently valued by Jones Lang LaSalle at £176.0million as at 30 September 2012. The investment property portfolio marginally increased in value by0.2%, however the Edinmore portfolio acquired in the year increased in value by 6%, whilst the existingproperties fell in value by 1.6%, on a like for like basis. The investment property market outside centralLondon continues to be difficult and challenging. Assets require active management to protect incomeand value.

Capital Expenditure

We incurred £429,000 of capital expenditure during 2012, which was fully financed from our existingcash flow. We are undertaking refurbishment of some of the space within the Edinmore portfolio, inparticular at Norfolk House, Birmingham where the vacant 2nd floor will be brought up to standard. Itis likely that this level of capital expenditure will continue into 2013.

Summary of Edinmore Portfolio – Acquired December 2011

Ashby Park, Ashby de la Zouch

Three freehold office buildings totalling 95,000 square feet let to three tenants, Alstom Power, FindelEducation and Hill Rom Limited, with a total rental income of £1,059,000 pa. There is also a 3 acredevelopment site.

Norfolk House, Birmingham

A 115,000 square foot freehold building consisting of 89,000 square feet of office space with the balancebeing retail space and is located next to the Bull Ring in Birmingham City centre. It should benefit fromthe nearby redevelopment of New Street Station, The Pallisades Shopping Centre, and a new 250,000square foot store for John Lewis. The current rental income is £1,039,000 pa.

Watt Place, Hamilton International Technology Park, Blantyre

A 34,300 square foot freehold industrial unit let to motor vehicle component manufacturer, CTSCorporation UK Limited on a lease expiring in February 2016. The current rental income is£189,000 pa.

Compass House, Dundee

A 30,500 square foot heritable office building in Dundee’s prime waterfront location that is let to TheScottish Ministers until March 2019. Total rental income is £380,000 pa.

Witham Park House, Lincoln

A former factory divided into three separate freehold blocks and converted into 101,000 square feet ofoffices. The majority of the building is let to Lincolnshire County Council with lease expiry dates rangingfrom 2012 to 2018. Current rental income is £461,000 pa.

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Charles House, Northampton

A 28,600 square foot freehold building built over 5 floors let on a number of short leases. Current rentalincome is £185,000 pa.

Tollgate Business Park, Stafford

A 55,000 square foot freehold industrial/office building let to Elster Metering until April 2015 at£291,000 pa.

1 Cotham Street, St Helens

A 41,600 square foot freehold building let to Wilkinsons at £466,000 pa and purpose built for them witha lease expiry in October 2015.

Network House, Wolverhampton

A 33,300 square foot freehold building consisting of 14,000 square feet of offices and 19,300 square feetof retail space. The existing office accommodation is currently vacant, however, the property offers aredevelopment opportunity. Current rental income is £80,000 pa.

DEVELOPMENT PROJECTS

Haverfordwest

This 93 acre site at Haverfordwest, Pembrokeshire, close to the town centre already has planning consentfor 900 residential units.

However, we have a conditional contract with Sainsbury’s for the sale of 9 acres for a supermarket, subjectto the obtaining of a suitable planning consent. The planning application was submitted in November2012 for a retail food store comprising 60,000 square feet of sales floor space, a restaurant, a 500 spacecar park and filling station. Our application also includes proposals for 835 residential plots on ourremaining site.

As stated previously, the addition of Sainsbury’s to this development will significantly change theeconomics of the project and, if successful, enable us to bring forward the residential development, havingmore than covered all our infrastructure and services costs through the net proceeds from Sainsbury’s.We shall make a further announcement in due course.

Holyhead Waterfront

We are pleased to have received planning permission for our mixed use development. The consentincludes plans for 326 apartments and townhouses, a 500 berth marina, 50,000 square feet of retail,leisure, restaurants, hotel and office space, with a very flexible design layout and in a prime locationoverlooking the marina. We are also making a provision for various local amenities and visitor attractions.The site covers in excess of half a mile of water frontage and is being developed jointly with Stena LinePorts Limited.

The obtaining of this consent was a massive effort by the team and followed a considerable amount ofwork in dealing with the myriad of issues associated with a complex regeneration scheme of this nature.We are currently in the process of finalising the section 106 planning agreement and planning conditions.Simultaneously, we are in discussions with various parties with respect to both the residential andcommercial elements of the scheme. The undoubted boost to the local economy provided by the recentcommitment of Hitachi to develop the multi-billion pound Wylfa B nuclear power station will certainlyhelp our scheme.

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We continue to market our logistics development site at Parc Cybi, and discussions are continuing withseveral potential occupiers. Having been designated an Enterprise zone, we are confident that the site willbenefit from occupier incentives such as business rate exemption. We were also pleased to have obtainedthe offer of £2.2 million of EU funding which will be used to drive forward the first phase developmentconsisting of 130,000 square feet of office and distribution warehousing.

The logistics development will be complemented by our plans to create a transport hub and lorry parkfacility to support the port of Holyhead on an adjacent 9 acre site. The planning application for thisdevelopment has been submitted.


We were extremely pleased to be granted outline planning consent for our mixed use marina developmentat Fishguard in West Wales. The main elements of the scheme include a 450 berth marina with workshops,stores and ancillary facilities; 253 new residential apartments incorporating extensive landscaped gardensand a 19 acre platform for the potential expansion of the existing Stena Line port. The end value of thedevelopment is expected to be in excess of £100 million.

We have recently successfully completed an archaeological survey in the area and are negotiating a section106 planning agreement with the local authority. We are also working with local organisations andbusinesses who are helping us shape the detail of the proposed development. We also commencednegotiations with the various landowners; Stena Line, Pembrokeshire County Council and The CrownEstate, who own the relevant surrounding harbour area. The proposal will transform the area, createmuch needed employment opportunities and further enhance and ensure the future of the commercialport and we believe that certain EU backed Welsh Government infrastructure funds might be availablefor funding support which would be a valuable benefit given the difficulty accessing sensible private sectordevelopment funding in the UK at present.


This lorry stop and distribution park project consists of a secure 24 hour truck stop together withapproximately 190 spaces for tractor and trailers, vehicle refuelling and wash facilities, plus an amenitybuilding. There will also be around 30,000 square feet of industrial and warehousing units to support thelorry stop. Planning consent has been obtained and the necessary site acquired.

As this project offers significant employment and infrastructure benefits to the community, we havesecured an offer of £1.1 million grant funding from the South West Wales Property Development Fundand discussions are currently taking place with both hauliers and the port operator, Stena Line. It remainsour intention to commence development once we have secured sufficient pre-lets.


Work on the various design and engineering solutions continues at this £100 million development of thePembroke Dock Waterfront in West Wales and we are in the process for applying for the consents andlicences necessary to progress work in the harbour. At the same time, we are in discussions with severalpotential tenants and occupiers with a view to moving ahead with the first phase of the development. Wehave also submitted an application to an EU backed Welsh Government infrastructure fund for fundingsupport which would help fund the significant infrastructure works at this development.

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This 6 acre residential development opportunity has planning permission for 94 dwellings near to King’sLynn, Norfolk. In addition to the residential development, the site offers some potential for mixed orcommercial uses, subject to planning. We have since renewed the planning permission, subject tocompletion of the Section 106 agreement, and the site is being actively marketed.


The expenditure in the year on our development land bank amounted to £1.4 million. Our totalinvestment to date is now £30.8 million at cost (analysed below) or 33p per share. We will continue toprogress these projects in a risk-averse manner and to avoid any speculative development. The planningprocess for complex schemes can be frustrating and the slow economic recovery acts to deferdevelopment projects such as ours. However, our strong balance sheet enables us to continue to invest inthe projects so we are positioned to generate significant returns as and when the market recovers.

The development team continues to deliver good progress on all seven of our projects and we remain ontarget to deliver projects comprising more than 2,000 homes (of which 1,200 are waterside), 1,400marina berths and in excess of 400,000 square feet of commercial and retail development. We are alsoaccessing government and EU funding support through grants (in the case of Parc Cybi and FishguardLorrystop) or infrastructure funding for projects such as Pembroke Dock and Fishguard Waterfront. Thissupport can make significant differences to the viability and deliverability of such developments and weare spending considerable time ensuring we optimise our entitlement.

It remains difficult to provide shareholders with a meaningful guide as to the valuation of the variousprojects. It is our intention to introduce third party valuations as soon as it is practical to do so. We believethat there is significant upside in these projects which will become evident over the medium term.

2012 2011 £’m £’m

Haverfordwest 15.26 14.69Holyhead Waterfront 8.74 8.61Pembroke Dock Waterfront 4.47 4.41King’s Lynn 0.83 0.80Fishguard Waterfront 0.76 0.58Fishguard Lorry Stop 0.52 0.15Parc Cybi, Holyhead 0.22 0.18 ––––––––––– –––––––––––

Total investment to date 30.80 29.42 ––––––––––– ––––––––––– ––––––––––– –––––––––––

13




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Net Asset Value

The net asset value at the year end was £154.0 million (2011: £158.5 million) representing a 2.9%decrease in the period. The primary movements were £13.4 million net rental income and £8.5 millionspent on purchasing own shares. Excluding the amounts incurred purchasing own shares and payingdividends, net asset value increased 3.2% in the year.


2012 2011 2010 £’m £’m £’m

Net asset value 154.0 158.5 176.6Preference share liability – 7.4 13.3 ––––––––––– ––––––––––– –––––––––––

Diluted net asset value 154.0 165.9 189.9 Fair value of hedging instruments 0.9 1.4 5.0 ––––––––––– ––––––––––– –––––––––––

EPRA net asset value 154.9 167.3 194.9 ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

EPRA NAV per share 166.9p 153.9p 150.1p ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

Basic NAV per share 165.9p 155.2p 150.5p ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

Diluted NAV per share 165.9p 152.7p 146.3p ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

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


Revaluation

The Group’s investment properties were independently valued by Jones Lang LaSalle as at 30 September2012. In their opinion, the open market value of the investment property portfolio was £176.0 million.The total portfolio increased in value by £354,000 over the year.

Cashflow

The Group generated £4.1 million cash in operating activities (2011: £11.9 million used), of which£1.3 million was incurred as expenditure on development and trading properties.

The Group generated a further £4.0 million cash from the sale of investment properties, spent£40.2 million on the acquisition of investment properties, spent £8.1 million on redeeming preferenceshares, drew down £53.0 million and repaid £6.8 million in bank loans and spent £8.5 million on thepurchase of own shares, resulting in an overall cash outflow of £4.2 million during the year.

14


FINANCIAL REVIEW


A-84


2012 2011 £’m £’m

Rental income 16.2 13.0Direct property costs (2.8) (3.0) ––––––––––– –––––––––––

Rental surplus 13.4 10.0 ––––––––––– –––––––––––

Sale of investment properties 4.1 13.5Cost of investment properties sold (3.7) (13.3) ––––––––––– –––––––––––

Gain on sale of investment properties 0.4 0.2 ––––––––––– –––––––––––

Total net income arising from property activities 13.8 10.2 ––––––––––– ––––––––––– ––––––––––– –––––––––––


The administrative expenses for the year ended 30 September 2012 were £2.5 million, a decrease of 53%from the previous year. The primary reason for this is the profit share payment of £2.6 million paid in2011 to the executive directors. The majority of other costs arise as a result of the Group being quotedon AIM with no significant changes in 2012.

Taxation

The tax charge for the year of £1.8 million on the pre-tax profit of £7.5 million represents an effectivetax charge of 24% (2011: 39%). Tax is payable at the full UK corporation tax rate of 25% on net rentincome after deduction of finance costs and administrative expenses. The prior year tax charge was higherowing to the preference share interest being non-deductible. There is no tax payable in respect ofinvestment property capital gains or any valuation uplift, which is the main reason for the low effectivetax rate in the current year.

Financing

At 30 September 2012, the Group had cash of £31.5 million. The Group also has unutilised facilities of£22 million with Lloyds Banking Group.

The bank debt at 30 September 2012 was £80.9 million. The loan to value is 46% excluding cash so thereis capacity to raise further funding should it be required. This excludes any further finance that might bereleased from re-financing any cash funded acquisitions.

The interest rate risk on the facility continues to be managed by way of interest rate swaps. DuringNovember 2011, the Group re-couponed its existing interest rate swaps from 2.38% to 1.33%, havingalready reduced them during the previous financial year from 5.2%. In June 2012, we entered into a newinterest rate swap agreement for the remaining £15.3 million unhedged balance of our external bank debtwith a fixed rate of 0.99%. Aside from reducing the on-going interest rate charge in the income statement,all of our external bank debt is hedged and the weighted average cost of all debt including margin hasfallen to 4.44%. The fair value of these derivative financial instruments is provided for in full on thebalance sheet. The Group’s financing and treasury strategy is covered in more detail in note 30.

In August 2012, we announced the £20 million refinancing of the Edinmore portfolio with Barclays BankPLC. This four year facility is secured on the nine properties of the Edinmore portfolio and is fully fixedfor the term at an all in cost of 4.5%.

The finance costs for the year amounted to £3.3 million (2011: £3.9 million), primarily consisting of£2.7 million bank loan interest (2011: £2.8 million). Finance income amounted to £0.1 million (2011:£0.2 million) reflecting the low returns on short term cash deposits. As a matter of policy, the Groupretains instant access to all cash deposits so it is readily available for use in the business.

15


FINANCIAL REVIEW (continued)


A-85

Statement by the Directors on Compliance with the Provisions of the Combined Code

The company complies with the provisions set out in Section 1 of the Combined Code to the extentappropriate for a company of its size and nature of business.


The Board







Further details of the company’s policies on remuneration, service contracts and compensation paymentsare included in the Directors’ Remuneration Report on pages 18 to 21.

Audit Committee



16




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The board uses the Annual General Meeting and results meetings to communicate with private andinstitutional investors and welcomes their participation. Details of resolutions to be proposed at theAnnual General Meeting on 15 January 2013 can be found in the notice of the meeting on page 67.

Internal Control

The directors acknowledge that they are responsible for the company’s systems of internal control and forreviewing its effectiveness. The systems are designed to manage rather than eliminate the risk of failure toachieve the company’s strategic objectives, and can only provide reasonable, not absolute, assuranceagainst material misstatement or loss.




● Information and financial reporting systems: The group’s planning and financial reportingprocedures include detailed operational budgets for the year ahead. The board reviews andapproves them.



17




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The company’s remuneration committee is chaired by N J Hamway and its other member is M D Wigley.The committee makes recommendations to the board, within agreed terms of reference, on an overallremuneration package for executive directors and any other senior executives.


The company’s policy on directors’ remuneration remains that the overall remuneration package shouldbe sufficiently competitive to attract, retain and motivate high quality executives capable of achieving thegroup’s objectives and thereby enhancing shareholder value. The package consists of a basic salary whichis set at the lower end of market rates with the potential for significant performance related bonusesaligned to growth in shareholder value as represented by net assets per share. All group employees areemployed by the company.


Basic salary and benefits: The salary and benefits are reviewed annually at the complete discretion of theremuneration committee. At present, the directors receive no benefits. Basic salaries remain comparablewith the lower quartile of comparable companies, but sufficient to retain directors.

Profit sharing plan: The profit sharing plan is an annual plan in which executive directors and seniorexecutives will be entitled to an allocation of a profit sharing pool. Following a review and consultationprocess by the remuneration committee during the year which included discussions with holders of some60% of the shares in the company, the plan rules have been amended as follows:

● the major change is the increase in the post-tax hurdle rate from 6% to 10% based upon theincrease in fully diluted net asset value per share as per the audited accounts

● the discount of share price to fully diluted net asset value per share must not exceed 35%

● the remuneration committee have discretionary powers to vary the rules to exclude any anomaliesor unjustified gains

● employee termination provisions have been simplified to ensure no excessive payments accrue toleavers

● in the interests of full transparency, a schedule showing the full calculation will be published in thefinancial statements should any profit share accrue

The scheme is based upon the increase in the audited fully diluted net asset value per share of thecompany. The profit sharing pool is 20% of any increase in the net asset value per share at 30 Septemberover the previous highest net asset value per share (“high watermark”). This ensures that executivedirectors cannot accrue any profit share twice in respect of the same net asset value growth. The previoushigh watermark was at 30 September 2011.

Before any payment accrues, the increase in fully diluted net asset value per share must now exceed ahurdle of 10% compounded annually since the last high watermark (152.7p at 30 September 2011). Thisresults in a target net asset value per share of:

2012 2013 2014

Target 168.0p 184.8p 203.2pActual 165.9p – –

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The actual diluted net asset value per share for the year ended 30 September 2012 was 165.9p and isbelow the target of 168.0p.

Executive directors are required to invest a minimum of 50% of any profit share payment in shares of thecompany which must be held for a minimum of two years subject to certain good leaver provisions.


Share options: The share options were awarded by the remuneration committee. No share options wereawarded during the year and it is not intended that any further options be granted by the company.

Pensions: The company does not make contributions to directors’ pension plans other than through salarysacrifice arrangements. Recent legislative changes in respect of compulsory pension provision and auto-enrolment may eventually force changes upon the company.

Service contracts: The company’s policy is for all executive directors to have contracts of employment withprovision for termination on no more than 12 months’ notice.


None of the non-executive directors have service contracts. Letters of Appointment provide for a periodof three years which may be extended by mutual agreement for a further three years. The letters ofappointment were extended on 25 October 2010. The remuneration of the non-executive directors takesthe form solely of fees, which are set by the board having taken advice on appropriate levels. The non-executive directors are not involved in any discussions or decision about their own remuneration.

Service contracts


Date of Contract Unexpired Term Notice Period (Months) (Months)Executive Directors








Mr Batchelor and Mr Rabl retire by rotation and, being eligible, offer themselves for re-election.

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Audited Information


2012 2011 Basic Basic Profit Salary Fees Total Salary share Fees Total £’000 £’000 £’000 £’000 £’000 £’000 £’000Executive Directors

R T E Ware 300 – 300 300 1,192 – 1,492

P A Batchelor 275 – 275 250 662 – 912

P M C Rabl 83 – 83 75 398 – 473

S M Vaughan 192 – 192 175 398 – 573


N J Hamway – 60 60 – – 60 60

M D Wigley – 40 40 – – 40 40 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––

850 100 950 800 2,650 100 3,550 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––


Fees of £34,500 (2011: £38,250) were also paid to Amberhook Properties Limited, a company controlledby Mr P M C Rabl.



Expired At Awarded Exercised unexercised At 1 October during during during 30 September Exercise 2011 the year the year the year 2012 Price No. No. No. No. No.

R T E Ware (b) £1.185 650,000 – – – 650,000

(c) £2.00 2,025,000 – – – 2,025,000

P A Batchelor (b) £1.185 425,000 – – – 425,000

(c) £2.00 550,000 – – – 550,000

S M Vaughan (a) £0.90 130,000 – – – 130,000

(b) £1.185 325,000 – – – 325,000

(c) £2.00 645,000 – – – 645,000





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A-90

The directors may only exercise the options awarded to them in respect of (a) if the company’s share pricehas grown by 20% per annum compounded over the two year period measured from the date upon whichthe options are granted. These performance conditions have been achieved and accordingly the shareoptions awarded in respect of (a) have vested.


The market price of the company’s shares on 30 September 2012 was 90.75p per share. The highest andlowest market prices during the year for each share option that is unexpired at the end of the year are asfollows:

Highest Lowest

Options in issue during the year 100.75p 82p

The interests of the directors to subscribe for or acquire ordinary shares have not changed since the year-end.

This report was approved by the Board on 28 November 2012 and signed on its behalf by:

P A Batchelor

Company Secretary

21




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Directors’ Report

The directors present their report and the accounts of the group and the company for the year ended30 September 2012.


The principal activity of the group and the company during the year was property trading, propertyinvestment, acquiring property assets with development and investment potential, and investing incompanies with significant property assets. The company’s principal subsidiaries are listed in note 14 tothe accounts.

A review of the company’s activities and likely future developments during this year is dealt with in theChairman’s and Chief Executive’s Statement and the Business and Financial Review.

Principal Risks and Uncertainties


Strategic risks


The Board devotes a considerable amount of time and resource continually monitoring and discussingthe environment in which we operate and the potential impacts upon the Group. We are confident wehave sufficiently high calibre directors and managers to manage strategic risks and the Remunerationreport details the policy towards retaining high quality personnel.


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 aconsiderable amount of time and resource is applied towards ensuring we have the right calibre of staffand 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 executivedirectors are very closely involved in the day-to-day running of the business to ensure sound managementjudgement is applied.


Market risks


22


DIRECTORS’ REPORT


A-92

Where necessary management take appropriate action to mitigate any adverse impact arising fromidentified risks. The performance of the business is detailed in the Business Review on page 8 and marketrisks continue to be monitored closely.

Liquidity and credit risks

Liquidity, credit and other financial risks are discussed in note 30 on pages 57 to 61.


There were no significant events since the balance sheet date.



The directors have recommended a final dividend of 1.25 pence per ordinary share in respect of the yearended 30 September 2012 (2011 – 1.1 pence).



Ordinary Shares of £0.05 each At At 30 September 2012 1 October 2011

N J Hamway 967,000 897,000

R T E Ware 5,500,000 5,000,000

P A Batchelor 830,001 590,001

P M C Rabl 851,190 711,190

S M Vaughan 495,000 375,000

M D Wigley 330,000 330,000––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––



The company has made qualifying third party indemnity provisions for the benefit of its directors whichwere made during the year and remain in force at the date of this report.

23




A-93


At 28 November 2012, the directors had been notified of the following interests in excess of 3% of thecompany’s issued share capital:

Name No of Shares %

Black Rock Inc 9,360,934 10.08R T E Ware 5,500,000 5.92Legal & General Group plc 5,233,333 5.64Bimaljit Singh Sandhu 3,063,789 3.30Laxey Partners Limited 2,943,847 3.17Ennismore Fund Management Limited 2,925,250 3.15Berkeley Square Common Investment Fund Limited 2,900,000 3.12



At 30 September 2012, the company had an average of 8 days (2011 – nil days) purchases outstandingin trade creditors. The group had an average of 20 days (2011 – 19 days) outstanding in trade creditors.


The company made no political donations during the year. The company made charitable donations of£20,190 (2011 – £17,750) during the year.



Going Concern

After making enquiries, the directors have a reasonable expectation that the company has adequateresources to continue in operational existence for the foreseeable future. For this reason, they continue toadopt the going concern basis in preparing the financial statements.


The directors are responsible for preparing the Annual Report and the financial statements in accordancewith applicable law and regulations. The directors are required to prepare financial statements for thegroup in accordance with the International Financial Reporting Standards as adopted by the EuropeanUnion (‘IFRS’) and have elected to prepare financial statements for the company in accordance withIFRS. Company law requires the directors to prepare such financial statements in accordance with IFRS,the Companies Act 2006 and Article 4 of the IAS Regulation. Under company law, the directors mustnot approve the financial statements unless they are satisfied that they give a true and fair view of the stateof the affairs of the company and the group and of the profit or loss of the group for that period.

International Accounting Standard 1 requires that the financial statements present fairly for each financialyear the company’s financial position, financial performance and cash flows. This requires the faithfulrepresentation of the effect of transactions, other events and conditions in accordance with the definitionsand recognition criteria for assets, liabilities, income and expenses set out in the International AccountingStandards Board’s ‘Framework for the preparation and presentation of financial statements’. In virtually

24




A-94

all circumstances, a fair presentation will be achieved by compliance with all the applicable InternationalFinancial Reporting Standards. Directors are also required to:


● make judgements and accounting estimates that are reasonable and prudent;



The directors are responsible for keeping adequate accounting records that are sufficient to show andexplain the company’s transactions and disclose with reasonable accuracy at any time the financialposition of the company and the group and to enable them to ensure that the financial statements complywith the Companies Act 2006. The directors are also responsible for safeguarding the assets of thecompany and the group and hence for taking reasonable steps for the prevention and detection of fraudand other irregularities.






● the director has taken all the steps that he ought to have taken as a director in order to make himselfaware of any relevant audit information and to establish that the company’s auditors are aware ofthat information.

Auditors



The Annual General Meeting of the Company will be held on Tuesday, 15 January 2013 at 4.00pm at theoffices of Wragge & Co LLP, 3 Waterhouse Square, 142 Holborn, London EC1N 2SW.


In addition to ordinary business, there are resolutions to give a director’s authority to disapplypre-exemption rights and allot equity securities together with resolutions to give share buy backauthorities and to amend the articles of association for the redemption of the preference shares.


P A Batchelor

Company Secretary

28 November 2012

25




A-95


London EC4V 6BW

Telephone 020 7778 7200

Fax 020 7329 6408

Independent Auditors’ Report to the Members of The Conygar Investment Company PLC

We have audited the financial statements of The Conygar Investment Company PLC for the year ended30 September 2012 which comprise the consolidated statement of comprehensive income, theconsolidated and company statement of changes in equity, the consolidated and company balance sheets,the consolidated and company cash flow statements, and the related notes. The financial framework thathas been applied in their preparation is applicable law and International Financial Reporting Standards(IFRSs) as adopted by the European Union and, as regards the parent company financial statements, asapplied in accordance with the Companies Act 2006.



As explained more fully in the Directors’ Responsibilities Statement set out on pages 24 to 25, thedirectors are responsible for the preparation of the financial statements and for being satisfied that theygive a true and fair view. Our responsibility is to audit and express an opinion on the financial statementsin accordance with applicable law and International Standards on Auditing (UK and Ireland). Thosestandards require us to comply with the Auditing Practice Board’s Ethical Standards for Auditors.


An audit involves obtaining evidence about the amounts and disclosures in the financial statementssufficient to give reasonable assurance that the financial statements are free from material misstatement,whether caused by fraud or error. This includes an assessment of: whether the accounting policies areappropriate to the group’s and the parent company’s circumstances and have been consistently appliedand adequately disclosed; the reasonableness of significant accounting estimates made by the directors;and the overall presentation of the financial statements.

In addition, we read all the financial and non-financial information in the Report and Accounts to identifymaterial inconsistencies with the audited financial statements. If we become aware of any apparentmisstatements or inconsistencies we consider the implication for our report.

26


INDEPENDENT AUDITORS’ REPORT


A-96


In our opinion:

● the financial statements give a true and fair view of the group’s and of the parent company’s affairsas at 30 September 2012 and of the group’s profit for the year then ended;

● the group financial statements have been properly prepared in accordance with IFRSs as adoptedby the European Union;

● the parent company financial statements have been properly prepared in accordance with IFRSs asadopted by the European Union and as applied in accordance with the provisions of theCompanies Act 2006; and



In our opinion:

● the part of the Directors’ Remuneration Report to be audited has been properly prepared inaccordance with the Companies Act 2006.

● the information given in the Directors’ Report for the financial year for which the financialstatements are prepared is consistent with the financial statements.




● the parent company financial statements are not in agreement with the accounting records andreturns; or





28 November 2012

27


INDEPENDENT AUDITORS’ REPORT (continued)


A-97

Year Year Ended Ended 30 Sep 12 30 Sep 11 Note £’000 £’000

Rental income 15,807 13,010Other property income 380 – –––––––––– ––––––––––

Revenue 16,187 13,010 –––––––––– ––––––––––

Direct costs of: Rental income 2,745 2,965 –––––––––– ––––––––––

Direct Costs 2,745 2,965 –––––––––– ––––––––––

Gross Profit 13,442 10,045

Income from trading investments 117 81Share of results of joint ventures 13 24 (11)Gain on sale of trading investments – 49Gain on sale of investment properties 12 431 167Movement on revaluations of investment properties 12 354 401Other gains and losses 6 (1,259) (17)Administrative expenses (2,456) (5,207) –––––––––– ––––––––––

Operating Profit 3 10,653 5,508Finance costs 7 (3,306) (3,925)Finance income 7 110 178 –––––––––– ––––––––––

Profit Before Taxation 7,457 1,761Taxation 8 (1,810) (683) –––––––––– ––––––––––

Profit And Total Comprehensive Income For The Year 5,647 1,078 –––––––––– –––––––––– –––––––––– ––––––––––

Attributable to:– equity shareholders 5,647 1,078– minority shareholders – – –––––––––– ––––––––––

5,647 1,078 –––––––––– –––––––––– –––––––––– ––––––––––



28





A-98

Attributable to the equity holders of the Company Capital Non- Share Share redemption Merger Equity Treasury Retained Controlling Total Capital Premium reserve Reserve Reserve Shares Earnings Total Interests Equity £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000Group

At 1 October 2010 5,870 124,089 – 7,640 1,247 – 37,779 176,625 20 176,645Changes in equity

for the year ended

30 September 2011

Profit for the year – – – – – – 1,078 1,078 – 1,078 ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––

Total comprehensive income for the year – – – – – – 1,078 1,078 – 1,078

Dividend paid – – – – – – (1,175) (1,175) – (1,175)

Preference share conversion 299 6,884 – – (597) – – 6,586 – 6,586

Purchase of own shares – – – – – (24,649) – (24,649) – (24,649) ––––––– –––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––– ––––––– ––––––––

At 30 September

2011 6,169 130,973 – 7,640 650 (24,649) 37,682 158,465 20 158,485 ––––––– –––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––– ––––––– ––––––––

Changes in equity

for the year ended

30 September 2012

At 1 October 2011 6,169 130,973 – 7,640 650 (24,649) 37,682 158,465 20 158,485Profit for the year – – – – – – 5,647 5,647 – 5,647 ––––––– –––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––– ––––––– ––––––––

Total comprehensive income for the year – – – – – – 5,647 5,647 – 5,647

Dividend paid – – – – – – (1,123) (1,123) – (1,123)

Preference share conversion 1 37 – (3) – – – 35 – 35

Preference share redemption – (6,993) 323 (7,637) (650) – 14,333 (624) – (624)

Purchase of own shares – – – – – (8,463) – (8,463) – (8,463)

Cancellation of treasury shares (495) – 495 – – 11,275 (11,275) – – –

––––––– –––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––– ––––––– ––––––––

At 30 September

2012 5,675 124,017 818 – – (21,837) 45,264 153,937 20 153,957 ––––––– –––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––– ––––––– –––––––– ––––––– –––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––– ––––––– ––––––––

29





A-99

Capital Share Share Redemption Merger Equity Treasury Retained Total Capital Premium Reserve Reserve Reserve Shares Earnings Equity £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Company

At 1 October 2010 5,870 124,089 – 7,640 1,247 – 31,744 170,590Changes in equity

for the year ended

30 September 2011

Loss for the year – – – – – – (2,961) (2,961) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Total comprehensive income and expenditure for the year – – – – – – (2,961) (2,961)Dividend paid – – – – – – (1,175) (1,175)Preference share conversion 299 6,884 – – (597) – – 6,586Purchase of own shares – – – – – (24,649) – (24,649) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

At 30 September

2011 6,169 130,973 – 7,640 650 (24,649) 27,608 148,391 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Changes in equity

for the year ended

30 September 2012

At 1 October 2011 6,169 130,973 – 7,640 650 (24,649) 27,608 148,391Loss for the year – – – – – – (2,464) (2,464) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Total comprehensive income and expenditure for the year – – – – – – (2,464) (2,464)Dividend paid – – – – – – (1,123) (1,123)Preference share conversion 1 37 – (3) – – – 35Preference share redemption – (6,993) 323 (7,637) (650) – 14,333 (624)Purchase of own shares – – – – – (8,463) – (8,463)Cancellation of treasury shares (495) – 495 – – 11,275 (11,275) – ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

At 30 September

2012 5,675 124,017 818 – – (21,837) 27,079 135,752 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

30





A-100

30 Sep 2012 30 Sep 2011 Note £’000 £’000Non-Current Assets

Property, plant and equipment 11 153 208Investment properties 12 175,995 139,150Investment in joint ventures 13 5,523 5,466Goodwill 15 3,173 3,173 –––––––––– ––––––––––

184,844 147,997 –––––––––– ––––––––––

Current Assets

Trading Investments 16 1,257 1,802Development and trading properties 17 22,106 20,779Trade and other receivables 18 3,763 2,614Cash and cash equivalents 31,515 35,674 –––––––––– ––––––––––

58,641 60,869 –––––––––– ––––––––––

Total Assets 243,485 208,866

Current Liabilities

Trade and other payables 19 6,412 7,441Bank loans 20 12,286 –Preference shares 21 – 7,376Tax liabilities 2,435 532 –––––––––– ––––––––––

21,133 15,349 –––––––––– ––––––––––


Bank loans 20 67,456 33,664Derivatives 30 939 1,368 –––––––––– ––––––––––

68,395 35,032 –––––––––– ––––––––––

Total Liabilities 89,528 50,381 –––––––––– ––––––––––

Net Assets 153,957 158,485 –––––––––– –––––––––– –––––––––– ––––––––––Equity

Called up share capital 22 5,675 6,169Share premium account 124,017 130,973Capital Redemption Reserve 818 –Merger reserve – 7,640Equity reserve – 650Treasury shares 23 (21,837) (24,649)Retained earnings 45,264 37,682 –––––––––– ––––––––––

Equity Attributable to Equity Holders 153,937 158,465Non-controlling interests 20 20 –––––––––– ––––––––––

Total Equity 153,957 158,485 –––––––––– –––––––––– –––––––––– ––––––––––

The accounts on pages 28 to 61 were approved by the Board and authorised for issue on 28 November 2012and are signed on its behalf by:

R T E WARE P A BATCHELOR }

31






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Investment in subsidiary undertakings 14 3,218 3,218Property, plant and equipment 11 153 208 –––––––––– ––––––––––

3,371 3,426 –––––––––– ––––––––––

Current Assets

Trading investments 16 1,257 1,802Development and trading properties 17 5,649 4,851Trade and other receivables 18 106,256 121,792Cash and cash equivalents 21,403 28,464 –––––––––– ––––––––––

134,565 156,909 –––––––––– ––––––––––

Total Assets 137,936 160,335

Current Liabilities

Trade and other payables 19 1,423 3,807Preference shares 21 – 7,376Tax liabilities 761 761 –––––––––– ––––––––––

2,184 11,944 –––––––––– ––––––––––


Net Assets 135,752 148,391 –––––––––– –––––––––– –––––––––– ––––––––––

Equity

Called up share capital 22 5,675 6,169Share premium account 124,017 130,973Capital redemption reserve 818 –Merger reserve – 7,640Equity reserve – 650Treasury shares 23 (21,837) (24,649)Retained earnings 27,079 27,608 –––––––––– ––––––––––

Total Equity 135,752 148,391 –––––––––– –––––––––– –––––––––– ––––––––––

The accounts on pages 28 to 61 were approved by the Board and authorised for issue on 28 November2012 and are signed on its behalf of:


32






A-102

Year Year Ended Ended 30 Sep 12 30 Sep 11 £’000 £’000Cash Flows From Operating Activities

Operating profit 10,653 5,508Depreciation and amortisation 196 165Share of results of joint ventures (24) (11)Other gains and losses 1,341 39Gain on sale of investment properties (431) (167)Movement on revaluation of investment properties (354) (401)Dividend income (117) (81) –––––––––– ––––––––––

Cash Flows From Operations Before Changes In Working Capital 11,264 5,052Change in trade and other receivables (1,149) (384)Change in land, development and trading properties (1,327) (14,668)Change in trade and other payables (1,703) 1,675 –––––––––– ––––––––––

Cash Generated From/(Used In) Operations 7,085 (8,325)Finance costs (2,621) (2,878)Finance income 110 178Tax paid (434) (828) –––––––––– ––––––––––

Cash Flows Generated From/(Used In) Operating Activities 4,140 (11,853) –––––––––– ––––––––––


Acquisition of investment properties (40,247) (1,080)Acquisition of trading investments – (2,277)Disposal of trading investments – 455Sale proceeds of investment properties 4,047 13,531Investment in joint ventures (33) (111)Purchase of plant and equipment – (36)Leasehold improvements (1) (8)Dividend income 117 81 –––––––––– ––––––––––

Cash Flows (Used In)/Generated From Investing Activities (36,117) 10,555 –––––––––– ––––––––––


Bank loans drawn down 53,000 –Bank loans repaid (6,827) (834)Dividend paid (1,123) (1,175)Preference share redemption (8,081) –Purchase of own shares (7,924) (24,649)Re-couponing of interest rate swaps (1,177) (3,692)Purchase of interest rate cap (50) – –––––––––– ––––––––––

Cash Flows Generated From/(Used In) Financing Activities 27,818 (30,350) –––––––––– ––––––––––

Net decrease in cash and cash equivalents (4,159) (31,648)Cash and cash equivalents at 1 October 35,674 67,322 –––––––––– ––––––––––

Cash and Cash Equivalents at 30 September 31,515 35,674 –––––––––– –––––––––– –––––––––– ––––––––––

33





A-103


Operating loss (2,454) (2,410)Depreciation and amortisation 56 55Other gains and losses 545 20Dividend income (117) (2,625) –––––––––– ––––––––––

Cash Flows From Operations Before Changes In Working Capital (1,970) (4,960)Change in trade and other receivables 1 (132)Change in land, developments and trading properties (798) (1,370)Change in trade and other payables (2,384) 2,225 –––––––––– ––––––––––

Cash Used In Operations (5,151) (4,237)Finance income 105 171 –––––––––– ––––––––––

Cash Flows Used In Operating Activities (5,046) (4,066) –––––––––– ––––––––––

Cash Flows Used In Investing Activities

Acquisition of trading investments – (2,277)Disposal of trading investments – 455Purchase of plant and equipment – (36)Leasehold improvements (1) (8)Dividend income 117 2,625 –––––––––– ––––––––––

Cash Flows Used In Investing Activities 116 759 –––––––––– ––––––––––


Dividend paid (1,123) (1,175)Preference share redemption (8,081) –Loans to joint venture (58) (132)Loans from/(to) subsidiaries 15,595 (1,313)Purchase of own shares (8,464) (24,649) –––––––––– ––––––––––

Cash Flows Used In Financing Activities (2,131) (27,269) –––––––––– ––––––––––



34





A-104





The Company’s principal activity is property trading, property investment, acquiring property assetswith development and investment potential, and investing in companies with significant propertyassets.







For the purposes of the preparation of the accounts, the Group has applied all standards andinterpretations that will be effective for the accounting periods commencing on or after 1 October2011.


– IAS 24 (revised) “Related party disclosures” (effective for accounting periods beginning on orafter 1 January 2011);

– Amendment to IFRS 7 “Financial Instruments: Disclosures” – transfers of assets (effective foraccounting periods beginning on or after 1 July 2011);

– Amendment to IFRS 1 “First time adoption” – fixed dates and hyperinflation (effective foraccounting periods beginning on or after 1 July 2011);

– IFRIC 14 “Prepayments of a minimum funding requirement” (effective for accounting periodsbeginning on or after 1 January 2011);

35




A-105


Management has assessed the impact of the standards and interpretations on the Group andconcluded they are not applicable to the Group’s circumstances and do not require amendment ofthe Group’s accounting policies.


Effective


– IFRS 9 “Financial instruments” (effective for accounting periods beginning on or after 1 January2015)*;

– IFRS 10 “Consolidated financial arrangements” (effective for accounting periods beginning on orafter 1 January 2013)*;

– IFRS 11 “Joint arrangements” (effective for accounting periods beginning on or after 1 January2013)*;

– IFRS 12 “Disclosures of interests in other entities” (effective for accounting periods beginning onor after 1 January 2013)*;

– IFRS 13 “Fair value measurement” (effective for accounting periods beginning on or after1 January 2013)*;

– IFRIC 20 “Stripping costs in the production phase of a surface mine” (effective from accountingperiods beginning on or after 1 January 2013)*;

– Revised IAS 27 “Separate financial statements” (effective for accounting periods beginning on orafter 1 January 2013)*;

– Revised IAS 28 “Associates and joint ventures” (effective for accounting periods beginning on orafter 1 January 2013)*;

– Amendment IFRS 7 “Financial Instruments: Disclosures” – offsetting financial assets andfinancial liabilities (effective for accounting periods beginning on or after 1 January 2013)*;

– Amendment to IAS 32 “Financial Instruments Presentation” – offsetting financial assets andfinancial liabilities (effective from accounting periods beginning on or after 1 January 2014)*;

– Amendment to IFRS 1 “First time adoption” – government loans (effective for accountingperiods beginning on or after 1 January 2013)*;

– Amendment to IAS 12 “Income taxes on deferred tax” (effective for accounting periodsbeginning on or after 1 January 2012)*;

– Amendment to IAS 19 “Employee benefits” (effective for accounting periods beginning on orafter 1 January 2013) (endorsed);

– Amendment to IAS 1 “Financial statement presentation” (effective for accounting periodsbeginning on or after 1 July 2012) (endorsed);


36




A-106












Pension Costs The group makes voluntary contributions to the defined contribution plans of certainemployees, including directors. A defined contribution plan is a pension plan under which the grouppays fixed contributions to a separate entity. The group has no legal or constructive obligation to payfurther contributions if the fund does not hold sufficient assets to pay all employees the benefitsrelating to employee service in the current and prior periods. The contributions are recognised as anemployee benefit expense when they are due. Prepaid contributions are recognised as an asset to theextent that a cash refund or reduction in future payments is available.

37




A-107


Profit sharing plan The Group has a profit sharing plan which is an annual plan in which executivedirectors and senior executives will be entitled to an allocation of a profit sharing pool based upon theincrease in the net asset value per share of the company.


IFRS 2 “Share-based payment” is applied to all share-based payment arrangements granted after 7November 2002 that had not vested prior to 1 October 2005. Equity-settled share-based paymentsare measured at fair value (excluding the effect of non market-based vesting conditions) at the dateof grant. The fair value determined at the date of grant is expensed on a straight line basis over thevesting period, based on the Group’s estimate of shares which will eventually vest and adjusted forthe effect of non market-based vesting conditions. The Group uses an appropriate valuation modelutilising a Monte Carlo simulation in order to arrive at a fair value at the date share options aregranted.



Plant and equipment – 25% per annumFurniture and fittings – 20% per annum


Taxation The taxation charge represents the sum of tax currently payable and deferred tax. Thecharge for current taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using rates that have been enacted or substantively enactedby the balance sheet date.






38




A-108







Goodwill and Impairment reviews Goodwill, representing the excess of the cost of acquisitionover the fair value of the Group’s share of the identifiable net assets acquired, is initially recognisedas an asset at cost and is subsequently measured at cost less any accumulated impairment losses.Goodwill which is recognised as an asset is reviewed for impairment at least annually. For thepurposes of impairment testing, goodwill is allocated to each of the group’s cash generating unitsexpected to benefit from the synergies of the combination. Cash generating units to which goodwillhas been allocated are tested for impairment annually, or more frequently where there is an indicationthat the unit may be impaired. If the recoverable amount of the cash generating unit is less than thecarrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount ofany goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of thecarrying amount of each asset of the unit. The recoverable amount is the higher of fair value less coststo sell and value in use. In assessing the value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects current market assessments of the timevalue of money and risks specific go to the cash generating unit. An impairment loss is recognisedimmediately in profit and loss and is not subsequently reversed.



39




A-109





Trading Investments Trading investments are measured at fair value. Gains and losses on the re-measurement of trading investments are recognised directly in the statement of comprehensiveincome. Fair values of these investments are based on quoted market prices where available.





Preference shares Preference shares are regarded as compound instruments, consisting of a liabilitycomponent and an equity component. At the date of issue, the fair value of the liability component isestimated using the prevailing market interest rate for similar non-convertible debt. The differencebetween the proceeds of issue of the convertible loan notes and the fair value assigned to the liabilitycomponent, representing the embedded option to convert the liability into equity of the Group, isincluded in equity.


40




A-110



Leasing The Group has entered into commercial property leases as lessor of its investment propertyportfolio. As the terms of these leases do not transfer substantially all the risks and rewards ofownership to the lessee they are classified as operating leases. Rentals receivable under operatingleases are credited to income on a straight line basis over the term of the relevant lease. Benefitsgranted as an incentive to enter into an operating lease are also spread on a straight line basis over thelease term.









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



41




A-111


Deferred Tax Asset







Balance Sheet

30 September 2012 30 September 2011 Investment Development Group Investment Development Group Properties Properties Other Total Properties Properties Other Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000



trading properties – 22,106 – 22,106 – 20,779 – 20,779 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

175,995 30,802 – 206,797 139,150 29,418 – 168,568Other assets 13,651 – 23,037 36,688 9,849 – 30,449 40,298 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Total assets 189,646 30,802 23,037 243,485 148,999 29,418 30,449 208,866Liabilities (86,551) – (2,977) (89,528) (41,578) – (8,803) (50,381) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Net assets 103,095 30,802 20,060 153,957 107,421 29,418 21,646 158,485 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

42




A-112

3. Operating profit


Year ended Year ended 30 Sep 12 30 Sep 11 £’000 £’000


–––––––––– ––––––––––

Other services – fees payable to the company auditor for the audit of the company’s subsidiaries pursuant to legislation 53 43

–––––––––– ––––––––––


–––––––––– ––––––––––

Depreciation of owned assets 29 28 –––––––––– ––––––––––

Lease amortisation 27 27 –––––––––– ––––––––––

Operating lease rentals – land and buildings 166 219 –––––––––– ––––––––––

Movement on provision for doubtful debts (94) 66 –––––––––– ––––––––––




Wages and salaries 1,204 3,802Social security costs 157 507 –––––––––– ––––––––––

1,361 4,309 –––––––––– –––––––––– –––––––––– ––––––––––

The average monthly number of persons, including executive directors, employed by the Companyduring the year was seven (2011 – seven).

43




A-113



Emoluments (excluding pension contributions) 950 3,550 –––––––––– –––––––––– –––––––––– ––––––––––

Emoluments of highest paid director 300 1,492 –––––––––– –––––––––– –––––––––– ––––––––––

Last year, emoluments included a £2.65 million payment under the Conygar profit sharing plan.

The board of directors comprise the only persons having authority and responsibility for planning,directing and controlling the activities of the Group.



Movement in fair value of interest rate swaps (796) (18)Movement in fair value of trading investments (545) (70)Other provision 82 71 –––––––––– ––––––––––

(1,259) (17) –––––––––– –––––––––– –––––––––– ––––––––––



Finance income

Bank interest 110 178 –––––––––– –––––––––– –––––––––– ––––––––––

Finance costs

Bank loans (2,656) (2,816)Loan repayment costs (99) (48)Amortisation of arrangement fees (438) (423)Notional interest on preference shares (113) (638) –––––––––– ––––––––––

(3,306) (3,925) –––––––––– –––––––––– –––––––––– ––––––––––

44




A-114




UK Corporation tax based on the results for the period 1,698 519Under provision in prior periods 112 164 –––––––––– ––––––––––

Current tax 1,810 683Deferred tax – – –––––––––– ––––––––––

1,810 683 –––––––––– –––––––––– –––––––––– ––––––––––


The tax assessed on the profit for the year differs from the standard rate of corporation tax in the UKof 25% (2011 – 27%).


Profit before taxation 7,457 1,761 –––––––––– –––––––––– –––––––––– ––––––––––

Profit multiplied by rate of tax 1,864 476Effects of:Expenses not deductible for tax purposes 66 220UK dividend income (29) (24)Under provision in prior periods 112 164Joint venture profits not taxable (6) –Gains not subject to UK taxation (108) (45)Revaluation gains not taxable (89) (108) –––––––––– ––––––––––

Tax charge for the year 1,810 683 –––––––––– –––––––––– –––––––––– ––––––––––

9. Dividends

The directors have recommended a final dividend of 1.25 pence per ordinary share in respect of theyear ended 30 September 2012 (2011 – 1.1 pence). This final dividend will amount to £1,160,000(2011: £1,124,000), if approved at the AGM. In accordance with IFRS, it has not been included asa liability in the financial statements.

45




A-115


The calculation of earnings per ordinary share is based on the profit after tax attributable to equityshareholders of £5,647,000 (2011 – £1,078,000) and on the number of shares in issue being theweighted average number of shares in issue during the period of 100,847,230 (2011 – 109,602,651).The diluted earnings per share calculation is based on profit for the year of £5,647,000 (2011 –£1,717,000) and on 100,848,260 (2011 – 119,171,352) ordinary shares. The diluted ordinary sharesare calculated as follows:

2012 2011 No. No.

Basic weighted average number of shares 100,847,230 109,602,651

Diluting potential ordinary shares:Employee share options 1,030 22,446Preference shares – 9,546,255 ––––––––––––– –––––––––––––

Total diluted 100,848,260 119,171,352 ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––


Group & Company Premises Office Furniture Lease Equipment & Fittings Total £’000 £’000 £’000 £’000

Cost

At 1 October 2010 148 44 76 268Additions 8 17 19 44 –––––––––– –––––––––– –––––––––– ––––––––––

At 30 September 2011 and 1 October 2011 156 61 95 312

Additions 1 – – 1 –––––––––– –––––––––– –––––––––– ––––––––––

At 30 September 2012 157 61 95 313 –––––––––– –––––––––– –––––––––– ––––––––––


At 1 October 2010 4 29 16 49Provided during the year 27 10 18 55 –––––––––– –––––––––– –––––––––– ––––––––––


Provided during the year 27 11 18 56 –––––––––– –––––––––– –––––––––– ––––––––––

At 30 September 2012 58 50 52 160 –––––––––– –––––––––– –––––––––– ––––––––––

Net book value at

30 September 2012 99 11 43 153 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––


–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––

46




A-116


Group Reverse Long Lease Freehold Leasehold Premiums Total £’000 £’000 £’000 £’000

Valuation at 1 October 2010 108,697 42,003 445 151,145Additions 961 (2) 120 1,079Disposals (13,365) – – (13,365)Reverse lease premium

amortisation – – (110) (110)Movement on revaluation 593 (192) – 401 –––––––––– –––––––––– –––––––––– ––––––––––


Additions 39,937 20 290 40,247Disposals (3,616) – – (3,616)Reverse lease premium



–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––


The properties were valued by Jones Lang LaSalle, independent valuers not connected with theGroup, at 30 September 2012 at market value in accordance with the Practice Statements containedin the RICS Appraisal and Valuation Standards published by the Royal Institution of CharteredSurveyors which conform to international valuation standards.

The Group has pledged £102,550,000 (2011 – £105,085,000) of investment property to secureLloyds Banking Group debt facilities, £31,805,000 (2011 – £34,065,000) to secure Capita debtfacilities and £42,360,000 (2011 – £nil) to secure Barclays Bank PLC debt facilities. Further detailsof these facilities are provided in note 30.


Gain on sale of investment properties

30 Sep 12 30 Sep 11 £’000 £’000

Gross proceeds on sales of investment properties 4,126 13,645Costs of sales (79) (113) ––––––––––––– –––––––––––––

Net proceeds on sales of investment properties 4,047 13,532Book value (3,616) (13,365) ––––––––––––– –––––––––––––

Gain on sale 431 167 ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

47




A-117

13. Investments

Joint Ventures

30 Sep 12 30 Sep 11 £’000 £’000

At 1 October 2011 5,466 5,344Share of profit/(loss) retained by joint ventures 24 (11)Investment in joint ventures 33 133 ––––––––––––– –––––––––––––

At 30 September 2012 5,523 5,466 ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––




Assets

Current assets 5,538 5,485 ––––––––––––– –––––––––––––


Current liabilities (15) (19) ––––––––––––– –––––––––––––

(15) (19) ––––––––––––– –––––––––––––

Net Assets 5,523 5,466 ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Operating profit/(loss) 24 (11)Finance income – – ––––––––––––– –––––––––––––

Profit/(loss) before tax 24 (11)Tax – – ––––––––––––– –––––––––––––

Profit/(loss) after tax 24 (11) ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––


48




A-118


Subsidiaries

Group Company 30 Sep 12 30 Sep 11 30 Sep 12 30 Sep 11 £’000 £’000 £’000 £’000At 1 October 2011 and

30 September 2012 – – 3,218 3,218 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––



Conygar Holdings Ltd Holding Company England 100%Martello Quays Limited Property trading and development England 100%Conygar Wales PLC Holding Company England 60%*Conygar Bedford Square Ltd Property trading and development England 100%*Conygar Properties Ltd Property trading and development England 100%*Conygar Developments Ltd Property trading and development England 100%*Conygar Strand Ltd Property trading and development England 100%*Conygar Hanover Street Ltd Property investment England 100%*The Advantage Property Property investment Guernsey 100%*Income Trust LtdTAPP Property Ltd Property investment Guernsey 100%*TOPP Holdings Ltd Property investment Guernsey 100%*TAPP Maidenhead Ltd Property investment Guernsey 100%*TOPP Bletchley Ltd Property investment Guernsey 100%*TOPP Property Ltd Property investment Guernsey 100%*Conygar Stena Line Ltd Property trading and development England 50%*CM Sheffield Ltd Property trading and development England 50%*Conygar Haverfordwest Ltd Property trading and development England 60%*Conygar Advantage Ltd Holding company Guernsey 100%*Conygar Stafford Ltd Property investment England 100%*Conygar Dundee Ltd Property investment England 100%*Conygar St Helens Ltd Property investment England 100%*Lamont Property Acquisition Property investment Jersey 100%*(Jersey) I LtdLamont Property Acquisition Property investment Jersey 100%*(Jersey) II LtdLamont Property Acquisition Property investment Jersey 100%*(Jersey) III LtdLamont Property Acquisition Property investment Jersey 100%*(Jersey) IV LtdLamont Property Acquisition Property investment Jersey 100%*(Jersey) V LtdLamont Property Acquisition Property investment Jersey 100%*(Jersey) VII Ltd

* Indirectly owned

49




A-119

15. Goodwill

Group 30 Sep 12 30 Sep 11 £’000 £’000

At 1 October 2011 and 30 September 2012 3,173 3,173 –––––––––– –––––––––– –––––––––– ––––––––––

The goodwill arose upon the acquisition of the non-controlling interests in Martello Quays Limitedand represents the excess of the consideration over the fair value of the identifiable net assetsacquired. The goodwill has been wholly allocated to the development project within Martello QuaysLimited, which is considered to represent a single income and cash generating unit. Managementanalysis indicates that the net present value of the project exceeds its carrying value and therefore noimpairment is appropriate.

IFRS requires management to undertake an annual test for impairment of indefinite lived assets, suchas goodwill, and to test for impairment if events or changes in circumstances indicate that the carryingamount of an asset may not be recoverable. Impairment testing is an area involving managementjudgment, requiring assessment as to whether the carrying value of the assets can be supported by thenet present value of future cash flows derived from such assets using cash flow projections which havebeen 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 includingmanagement’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 areused in the value in use calculations. Five years is considered to be the optimum period for ameaningful forecast and takes into account available sources of both internal and externalinformation. The Group’s review includes the key assumptions related to sensitivity in the cash flowprojections.

The impairment review is based upon value in use calculations. The period of review is five years andit 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 marketutilising 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 estimatesprovided 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 yeargovernment bonds adjusted for a risk premium to reflect the systematic risk of the project, likelycost of funding and underlying uncertainties.

50




A-120

15. Goodwill (continued)

Sensitivity to changes in assumptions

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


30 Sep 12 30 Sep 11 £’000 £’000

At 1 October 2011 1,802 –Additions – 2,277Disposals – (405)Loss on fair value revaluation (545) (70) –––––––––– ––––––––––

At 30 September 2012 1,257 1,802 –––––––––– –––––––––– –––––––––– ––––––––––


Group Company 30 Sep 12 30 Sep 11 30 Sep 12 30 Sep 11 £’000 £’000 £’000 £’000

Properties held for resale or development 22,106 20,779 5,649 4,851 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––



Trade receivables 1,155 878 – –Provision for doubtful debts (127) (138) – – –––––––––– –––––––––– –––––––––– ––––––––––

1,028 740 – –Amounts owed by group undertakings – – 105,789 121,324Other receivables 74 74 318 296Prepayments and accrued income 2,661 1,800 149 172 –––––––––– –––––––––– –––––––––– ––––––––––

3,763 2,614 106,256 121,792 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––


51




A-121



Amounts owed to group undertakings – – 528 528Social security and payroll taxes 46 413 46 413Trade payables 1,559 687 620 145Accruals and deferred income 4,807 6,341 229 2,721 –––––––––– –––––––––– –––––––––– ––––––––––

6,412 7,441 1,423 3,807 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––


20. Bank loans


Bank loans 80,925 34,752 – –Debt issue costs (1,183) (1,088) – – –––––––––– –––––––––– –––––––––– ––––––––––

79,742 33,664 – – –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––




Preference shares – 7,376 – 7,376 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––

As part of the offer for The Advantage Property Income Trust Limited, the Company issued62,979,750 convertible preference shares of £0.01 each, of which none (2011: 32,457,595) wereoutstanding at the year end. The preference shares were convertible at any point into ordinary sharesat the option of the preference shareholder. The conversion rate was one ordinary share forfive preference shares. Any preference shares not converted were redeemed for £0.25 each on31 December 2011.

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

52




A-122



30 Sep 12 30 Sep 11 £’000 £’000

At 30 September 2011 7,376 13,324Conversions to ordinary shares in the period at carrying value (31) (6,586)Notional interest charge 114 638Redemption (7,459) – ––––––––––––– –––––––––––––

At 30 September 2012 – 7,376 ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

22. Share capital


30 Sep 12 30 Sep 11 £ £

140,000,000 (2011– 140,000,000) Ordinary shares of £0.05 each 7,000,000 7,000,000150,000,000 (2011– 150,000,000) Preference shares of £0.01 each 1,500,000 1,500,000 ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––



30 Sep 12 30 Sep 11 No £’000 No £’000

Ordinary shares of £0.05 each 113,489,123 5,675 123,362,223 6,169 –––––––––––––– –––––––––––– –––––––––––––– –––––––––––– –––––––––––––– –––––––––––– –––––––––––––– ––––––––––––


30 Sep 12 30 Sep 11 No £’000 No £’000

Preference shares of £0.01 each (Note 21) – – 32,457,595 325 –––––––––––––– –––––––––––– ––––––––––––– –––––––––––– –––––––––––––– –––––––––––– ––––––––––––– ––––––––––––

The Preference shares were issued in connection with the offer for The Advantage Property IncomeTrust Limited. They were convertible at any stage into Ordinary shares. The conversion rate was oneOrdinary share for five Preference shares. Any Preference shares not converted were redeemed for£0.25 each on 31 December 2011.

During the year, the Company issued 26,900 (2011: 5,971,000) ordinary shares of £0.05 each inrespect of conversions of 134,500 (2011: 29,855,450) preference shares. The carrying value of theliability which was treated as consideration for these issues was £37,000 (2011: £6,885,000) and£3,000 (2011: £597,000) was transferred from the merger (2011 – equity) reserve to reflect theequity elements of the preference shares.

53




A-123


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


Price £ No. £’000

At 30 September 2010 117,391,133 5,870

Share issue – 28 October 2010 1.100 93,300 5Share issue – 9 February 2011 1.100 3,000,000 150Share issue – 15 April 2011 1.100 18,802 1Share issue – 31 May 2011 1.100 4,400 –Share issue – 6 June 2011 1.100 2,843,148 142Share issue – 15 August 2011 1.100 11,440 1 ––––––––––––––– –––––––––––––––

At 30 September 2011 123,362,223 6,169

Share issue – 14 November 2011 1.100 12,000 1Share issue – 30 November 2011 1.100 5,900 –Share issue – 19 December 2011 1.100 7,000 –Share issue – 30 December 2011 1.100 2,000 –Cancellation of

treasury shares – 12 January 2012 0.05 (9,900,000) (495) ––––––––––––––– –––––––––––––––

113,489,123 5,675 ––––––––––––––– ––––––––––––––– ––––––––––––––– –––––––––––––––

23. Treasury shares

In December 2010, the Group began a share buyback programme and during the year ended30 September 2012 purchased 9,320,000 (2011 – 21,237,981) shares on the open market at a costof £8,464,000 (2011 – £24,649,000). As can be seen in note 22 above, on 12 January 2012,9,900,000 ordinary shares of 5 pence each were transferred out of treasury and cancelled. Theremaining 20,657,981 (2011 – 21,237,981) shares bought back were held in treasury as at30 September 2012.

24. Acquisitions

On 16 December 2011, the Group acquired nine freehold and long leasehold buildings (the“Edinmore portfolio”) from a consortium including the Edinmore group and Buccleuch Property, fora total cash consideration of £39.8 million. The annual rent roll was, at the time of acquisition,approximately £4.22 million representing a net initial yield of 10.56%. The portfolio consists of:

● Ashby Park, Ashby de la Zouch

● Norfolk House, Birmingham

● Watt Place, Hamilton International Technology Park, Blantyre

● Compass House, Dundee

● Witham Park, Lincoln

● Charles House, Northampton

● Tollgate Business Park, Stafford

● 1 Cotham Street, St Helens

● Network House, Wolverhampton

54




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The Group and Company recognised total expenses of £nil (2011 – £nil) in relation to equity settledshare-based payment transactions.



Group and Company 30 Sep 12 30 Sep 11 Provided Not Provided Provided Not Provided £’000 £’000 £’000 £’000

Share based payments – 2 – 2Losses – 1,464 – 1,464 –––––––– –––––––– –––––––– ––––––––

– 1,466 – 1,466 –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––


27. Commitments

Group as lessee:


30 Sep 12 30 Sep 11 £’000 £’000

Within one year 126 126In the second to fifth years inclusive 342 503 ––––––––– –––––––––

468 629 ––––––––– ––––––––– ––––––––– –––––––––

Group as lessor:


30 Sep 12 30 Sep 11 £’000 £’000

Less than one year 14,488 11,397Between one and five years 40,513 36,112Over five years 20,067 21,560 ––––––––– –––––––––

75,068 69,069 ––––––––– ––––––––– ––––––––– –––––––––

55




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The Company has made advances to the following subsidiaries in order to provide both long termand additional working capital funding. All amounts are repayable upon demand, are non-interestbearing and will be repaid from the trading activities of those subsidiaries. No provisions have beenmade against the outstanding amounts.

30 Sep 12 30 Sep 11 £’000 £’000Subsidiaries

Conygar Bedford Square Limited (447) (447)Conygar Strand Limited (52) (52)Martello Quays Limited 1,381 1,308Conygar Holdings Limited 88,806 97,561Conygar Haverfordwest Limited 15,285 14,700Conygar Wales PLC (29) (29)Conygar Advantage Limited 10 5 ––––––––– –––––––––

104,954 113,046 ––––––––– ––––––––– ––––––––– –––––––––

30 Sep 12 30 Sep 11 £’000 £’000Joint Ventures

Conygar Stena Line Limited 5,652 5,595C M Sheffield Limited 2 2 ––––––––– –––––––––

5,654 5,597 ––––––––– ––––––––– ––––––––– –––––––––


30 Sep 12 30 Sep 11 £’000 £’000

Secured interest bearing loan 2,632 2,575Unsecured non-interest bearing shareholder loan 3,020 3,020 ––––––––– –––––––––

5,652 5,595 ––––––––– ––––––––– ––––––––– –––––––––

During the year, the Company received a management fee from Conygar Stena Line Limited of£50,000 (2011 – £50,000) in respect of management services.

The outstanding balance of £2,153,000 of the non interest bearing loan of £5,500,000 the Companyissued to The Advantage Property Income Trust Limited in 2010 was repaid in the year. TheAdvantage Property Income Trust Limited has loaned the company £5,347,000 in the year.

During the year, the Company received £nil (2011: £2,544,000) of dividend income from ConygarHoldings Limited.

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29. Loss of parent company

As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the Companyis not presented as part of these financial statements. The parent company’s loss for the year amountsto £2,464,000 (2011 – loss of £2,961,000).


Treasury Policies


The Group finances its activities with a combination of bank loans, cash and short term deposits.Other financial assets and liabilities, such as trade receivables and trade payables, arise directly fromthe Group’s operations. The Group may also enter into derivative transactions to manage the interestrate risk arising from the Group’s operations and its sources of finance. The main risks associated withthe Group’s financial assets and liabilities are set out below, together with the policies currentlyapplied by the board for their management. Derivative instruments may be used to change theeconomic characteristics of financial instruments in accordance with the Group’s treasury policies.Following the acquisition of TAP, the Group inherited a number of interest rate swaps which wereused to reduce TAP’s exposure to changes in interest rates. These have been added to in the currentfinancial year and the interest rate swaps amount to an economic hedge of £65.8 million (2011:£34.5 million) of the total loan drawdowns of £80.9 million (2011: £34.8 million) for cashflows to20 August 2016, but no hedge accounting is used.

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

Market Risk



Interest Rate Risk



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As part of the TAP acquisition, the Group inherited a number of interest rate swaps in which theGroup agrees to exchange, at specified intervals, the difference between fixed and variable interestamounts calculated by reference to an agreed upon notional principal. At 30 September 2012, aftertaking into account interest rate swaps, 100% (2011: 100%) of the Group’s bank borrowings were ata fixed rate of interest.

The interest rate profile of the Group bank borrowings at 30 September 2012 was as follows:

Interest Rate Maturity 30 Sep 12 30 Sep 11 £’000 £’000

Lloyds Banking Group (1) LIBOR +2% 2 – 5 years 49,387 20,150Capita (2) 5.24% Less than 1 year 11,538 14,602Barclays (3) LIBOR +3.5% 1 – 4 years 20,000 – ––––––––– –––––––––

80,925 34,752 ––––––––– ––––––––– ––––––––– –––––––––

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

(2) Interest rate fixed until 18 January 2013.

(3) Senior bank facility repayable 20 August 2016.

Financial Assets


30 Sep 12 30 Sep 11 £’000 £’000

Fixed rate – –Floating rate 31,515 35,674 ––––––––– –––––––––

31,515 35,674 ––––––––– ––––––––– ––––––––– –––––––––


30 Sep 12 30 Sep 11 £’000 £’000


21,403 28,464 ––––––––– ––––––––– ––––––––– –––––––––


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Credit Risk


Tenant rent payments are monitored regularly and appropriate action is taken to recover monies owedor, if necessary, to terminate the lease. Deferred consideration terms are only agreed withcounterparties approved by the board or where some additional security is available, and there werenone as at 30 September 2012 (2011 – £nil).

The Group policy has been to invest funds and enter into derivative transactions with a broad rangeof institutions having investment grade low risk credit ratings and a strong or superior ability to repayshort term debt obligations. The unprecedented credit and banking market disruption of the last threeyears has had a significant impact upon the ability to rely upon either credit ratings or the ability offinancial institutions to honour their commitments and the widespread nature of the financial crisishas introduced considerable uncertainty into the process. As at 30 September 2012, the Group hada single balance of £125,000 (2011 – £207,000) where the counter-party had failed to honour anotice deposit and a full impairment provision has been recorded against the balance.


Liquidity Risk

The Group’s objective is to maintain a balance between continuity of funding and flexibility throughthe use of bank loans secured on the Group’s properties. The Group is exposed to liquidity risk shouldit 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 ofthis can be mitigated.

Loans

As at 30 September 2012, TAPP Property Limited maintained a facility with the Lloyds BankingGroup of up to £78,000,000 (2011: £78,000,000) under which £49,387,000 (2011: £20,150,000)had been drawn down. This facility is repayable on or before 27 January 2015 and is secured by fixedand floating charges over the assets of the TAPP Property Limited group and the Lamont companies.The facility is subject to a maximum loan to value covenant of 70% and an interest cover ratiocovenant of 150%.

As at 30 September 2012, TOPP Property Limited maintained a facility with Capita of £35,267,000(2011: £35,267,000) of which £11,538,000 (2011: £14,601,000) had been drawn down. This facilityis repayable on or before 18 January 2013 and is secured by fixed and floating charges over the assetsof the TOPP Property Limited group. The facility is subject to a maximum loan to value covenant of70% and an interest cover ratio covenant of 135%.

As at 30 September 2012, Conygar Dundee Limited, Conygar Hanover Street Limited, ConygarStafford Limited and Conygar St Helens Limited jointly maintained a facility with Barclays BankPLC of up to £20,000,000 (2011: £nil) of which £20,000,000 (2011: £nil) had been drawn down.This facility is repayable on or before 20 August 2016 and is secured by fixed and floating chargesover the assets of the Conygar Dundee Limited, Conygar Hanover Street Limited, Conygar StaffordLimited and Conygar St Helens Limited. The facility is subject to a maximum loan to value covenantof 58% and an interest cover ratio covenant of 225%.

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Price Risk




While the Group does not have a formally approved gearing ratio, the objective above is activelymanaged through the direct linkage of borrowings to specific property. The Group seeks to ensurethat secured borrowing does not exceed 70% of the current market value of such property.



Book Value Book Value Fair Value Fair Value 30 Sep 12 30 Sep 11 30 Sep 12 30 Sep 11 £’000 £’000 £’000 £’000Financial Assets

Cash 31,515 35,674 31,515 35,674Trading investments 1,257 1,802 1,257 1,802


Floating rate borrowings 69,387 20,150 69,387 20,150Fixed rate borrowings 11,538 14,601 11,424 14,235Interest rate swaps 939 1,368 939 1,368Preference share liability – 7,376 – 7,376



Cash 21,403 28,464 21,403 28,464


Preference share liability – 7,376 – 7,376

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Market Market Value at Value at Protected 30 Sep 12 30 Sep 11 rate % Expiry £’000 £’000£21.8 million (2011: £21.8 million) swap 1.33 (2011: 2.38) Feb 2015 (393) (865)£12.7 million (2011: £12.7 million) swap 1.33 (2011: 2.38) Feb 2015 (229) (503)£15.3 million (2011: £nil) swap 0.99 (2011: n/a) Feb 2015 (153) –£16 million (2011: £nil)swap 1.055 (2011: n/a) Aug 2016 (199) –£4 million cap (2011: £nil) 1.00 (2011: n/a) Aug 2016 35 – –––––––––– ––––––––––

(939) (1,368) –––––––––– –––––––––– –––––––––– ––––––––––



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Property Address

Total Area (sq ft)

Industrial

Aberdeen


Blantyre

Unit B Watt Place, Hamilton International Technology Park, Blantyre 34,338

Brighouse


Clevedon


Hemel Hempstead

3 Cherry Trees Lane –

Kettering


Livingston


Livingston

1 Simpson Parkway, Kirkton Campus 32,821

Livingston


Milton Keynes


Oldbury

Crystal Drive, Sandwell Business Park 127,845

Runcorn


Stafford

Elster Metering, Tollgate Business Park 55,181

Stratford Upon Avon


Uddingston


Witham


Worcester


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Total Area (sq ft)

Leisure

Dundee


Offices

Ashby de la Zouch

Ashby Park, Ashby de la Zouch 138,342

Birmingham

Norfolk House, Birmingham 114,841

Dundee

Compass House, Dundee 30,342

Farnborough


Fleet


Fleet


Leeds


Lincoln

Witham Park House, Lincoln 105,345

Livingston


Livingston


Maidenhead


Northampton

Charles House, Northampton 28,213

Reading


Swindon


Warrington


Warrington


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Total Area (sq ft)

Welwyn Garden City

Units 3-6 Silver Court, Watchmead 29,756

Whetstone

Brook Point, 1412 – 1420 High Road 13,192

Retail

Ayr

156 and 158 – 160 High Street 8,601

Ayr

52 / 56 Newmarket Street 10,717

Bletchley


Felixstowe


Hinckley


Horsham

7 West Street 4,929

Rugeley


St Helens

1 Cotham Street, St Helens 41,619

Wolverhampton

Network House, Wolverhampton 33,127

Retail Warehouse

Birmingham


Coventry

Halfords, 36 Foleshill Road 14,888

––––––––––––––––

Total Area 2,121,543 –––––––––––––––– ––––––––––––––––

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Regional Distribution Valuation (%)

South East 26.78%

Eastern 0.99%

East Midlands 10.55%

South West 3.66%

Yorkshire & Humberside 4.38%

Scotland 24.66%

North West 10.29%

West Midlands 18.69% ––––––––––––––––

Total 100.00% –––––––––––––––– ––––––––––––––––

Sector Distribution Valuation (%)

High Street Retail (South East) 0.89%

High Street Retail (Rest of UK) 6.92%

Shopping Centres 5.26%

Retail warehousing 2.36%

Offices (South East) 17.49%

Offices (Rest of UK) 30.87%

Industrial (South East) 4.15%

Industrial (Rest of UK) 27.18%

Leisure 4.88% ––––––––––––––––

Total 100.00% –––––––––––––––– ––––––––––––––––

65




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AIM The AIM market of the London Stock Exchange PLC







NAV Net asset value






UK United Kingdom









66


GLOSSARY OF TERMS


A-136

PART C – ANNUAL REPORTS AND AUDITED CONSOLIDATED FINANCIALSTATEMENTS OF THE GROUP FOR THE YEAR ENDED 30 SEPTEMBER 2013

A-137




230845 Conygar Cover 09/12/2013 18:01 Page i

A-138

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

HIGHLIGHTS

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

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

● Net debt of £38.9 million representing gearing of 25.1% against net asset value and 23.6% onloan to value basis.

● Share buy back: the Group acquired 4.3% of its ordinary share capital at a weighted average

price of 96.8p per share.

● Contracts exchanged with Marston’s to sell 0.7 acres for a pub and restaurant at Pembroke

Dock. Significant first step in post-planning phase of development.

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

● Investment property portfolio valuation up 2% in the second half of 2013 as property marketoutside of London shows signs of recovery.

● Obtained planning permission in respect of the 60,000 square foot Sainsbury’s retail foodstore and 835 residential plots in Haverfordwest.

● Obtained planning consent at Parc Cybi Business Park, Holyhead for a 200 space truck stop

and logistics depot.


Per Share £’m p

Investment Properties 164.8 185.5Development Projects 32.2 36.2Cash 31.6 35.6Other Net Liabilities (4.1) (4.6) ––––––––––– –––––––––––

224.5 252.7Bank Loans (69.4) (78.1) ––––––––––– –––––––––––

155.1 174.6 ––––––––––– ––––––––––– ––––––––––– –––––––––––

1




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Page



Strategic Report 7
















Form of Proxy 71

2


CONTENTS



A-140





Company Secretary

P A Batchelor

Registered Office


Auditors Solicitors

Rees Pollock Wragge & Co LLP 35 New Bridge Street 55 Colmore Row London EC4V 6BW Birmingham B3 2AS


Liberum Capital Limited Share Registrars Limited Ropemaker Place, Level 12 Suite E 25 Ropemaker Street First Floor London EC2Y 9LY 9 Lion and Lamb Yard Farnham Surrey GU9 7LL

Registered Number

04907617

Website

www.conygar.com

3




A-141

Results

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

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

Net asset value as at 30 September 2013 was £155.1 million compared with £154.0 million at30 September 2012. During the year, the Group spent £3.9 million on share buy backs and paid adividend of £1.2 million and excluding these, net asset value increased by 4%.

The Group’s investment properties as at 30 September 2013 were independently valued at£164.8 million (2012: £176.0 million), a flat valuation overall for the year on a like for like basis.However, having fallen by nearly 2% at 31 March 2013, we have seen a recovery in the second half of2013 which reflects an improved sentiment towards property assets outside London and the South East.

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

Progress

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

In May 2013, we announced that conditional contracts had been exchanged with Marston’s to sell0.7 acres at Pembroke Dock for a family pub and restaurant. Aside from being the first step in thepost-planning phase, this has also generated interest from other commercial and retail operators in thesite. In addition, we have begun exploratory engineering works in the harbour which is another steptowards construction.

At Parc Cybi Business Park, Holyhead, we have obtained planning consent for a 200 space truck stopwith associated amenities and entered into an agreement with the Welsh Government for the grant of a999 year lease over 14 developable acres for the truck stop, logistics depot and service units. We have alsoexercised an option to acquire a further 12 acres of land for which we have already acquired planningconsent for 110,000 square feet of distribution warehousing and 30,000 square feet of offices and we arein talks with several potential occupiers. This is in no small way due to the proposed construction of theWylfa B nuclear power station, which looks increasingly likely, following recent events regarding theconstruction of Hinkley Point.

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

Overall, the development pipeline is now making excellent progress and whilst it has been frustrating attimes, all our projects have obtained planning consents. Our careful approach means that expenditure todate is only £32.2 million and we are not committed to any speculative projects. We remain on course to

4




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deliver projects, comprising more than 2,000 residential units, 1,400 marina berths and in excess of400,000 square feet of commercial and retail development. Our downside risk is managed whilst theupside potential is significant.

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

The contracted annual rent roll is £14.4 million as at 30 September 2013, which is £1.4 million lowerthan at 30 September 2012, mainly owing to a number of disposals in the year. We continue to work hardat letting vacant space, retaining tenants and pushing down irrecoverable property costs. Our averageunexpired lease length has risen slightly to 4.8 years, from 4.5 years at 30 September 2012, reflectingnumerous lease renewals. The portfolio vacancy rate is 16.7% which is up from last year’s 10.4%. This isdisappointing but not unexpected. The main additional vacancy arises from expiring leases atMaidenhead and Worcester which were not renewed. However, several negotiations are in progress whichwill hopefully reduce this. We are also refurbishing some empty floors at Norfolk House, Birminghamwhich will create desirable space close to the New Street Station redevelopment. So, whilst vacancy rateswill rise in the short term, we expect a reduction as the market recovers. We made six disposals in the yearrealising £12.7 million of net sales proceeds. All sales were approximately at valuation and we willcontinue to recycle assets to release capital for other opportunities.

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

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

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

Dividend

The Board is pleased to recommend a final dividend of 1.5p per ordinary share in respect of the yearended 30 September 2013 to be paid on 13 February 2014 to shareholders on the register at 10 January2014. This is an increase of 20% over last year. Our dividend policy remains unchanged with most profitsretained for reinvestment in the business.

Share Buy Back

During the year, the Group acquired 4,009,838 ordinary shares representing 4.3% of its ordinary sharecapital, at a weighted average price of 96.8p per share. This cost approximately £3.9 million and, as a resultof the buy backs, net asset value per share has been enhanced by approximately 3 pence per share or 1.9%.The Group will seek to renew the buy back authority at the forthcoming AGM because, whilst our sharesno longer trade at such a significant discount to underlying net asset value, we consider it to be a usefulcapital management tool which has been used to great advantage in the last few years. In total, the Grouphas acquired 34,567,819 shares at an average price of 107.0 pence per share since December 2010.

5




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Outlook

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

Conygar remains well funded, cash generative and able to invest, so we are well positioned to takeadvantage of any market improvement. Our pipeline of development projects are also benefitting fromthis improved market sentiment and several of these projects are poised to start delivering on theirpotential.

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



2 December 2013

6




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The Group Strategic Report provides a review of the entire business for the financial year; discusses thegroup financial position at the year end and explains the principal risks and uncertainties facing thebusiness 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 inUK property. Our aim is to invest in property assets and companies where we can add significant valueusing our property management, development and transaction structuring skills.

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

Position of company at the year end

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

Events since the balance sheet date




Per Share £’m p

Investment Properties 164.8 185.5 Development Projects 32.2 36.2 Cash 31.6 35.6 Other Net Liabilities (4.1) (4.6) ––––––––––– –––––––––––

224.5 252.7Bank Loans (69.4) (78.1) ––––––––––– –––––––––––

155.1 174.6 ––––––––––– ––––––––––– ––––––––––– –––––––––––

7


STRATEGIC REPORT


A-145

Investment properties


2013 2012


Asset management

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

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

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


● A 4 year lease extension to the Scottish Care Inspectorate at Compass House, Dundee at theexisting rent of £380,000 pa in return for a twelve month rent free period. Lease expiry is now19 April 2023.

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

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

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

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

8


STRATEGIC REPORT (continued)


A-146

Disposals

The Group disposed of six investment properties during the year at Crystal Drive, Oldbury; Brook Point,Whetstone; Simpson Parkway, Livingston; and three buildings at The Links, Warrington. Total net saleproceeds were £12.7 million, generating a small loss to valuation of £307,000 mostly attributable toprofessional and other sale fees. We will continue to dispose of assets as opportunities arise and where nofurther value can be added by the Group.

Valuation

The investment property portfolio has been independently valued by Jones Lang LaSalle at£164.8 million as at 30 September 2013. The investment property portfolio increased in value by 0.4%on a like for like basis, however the valuation increased by 2% from the half year recovering losses in thatperiod which is an encouraging sign. The investment property market outside central London appears tohave recovered slightly and sentiment has improved, which we hope will translate into increased value.Assets require active management to protect income and value and we are seeing an increase in potentialtransactions which must be a positive sign.

Capital Expenditure

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

Development projects

Haverfordwest

We submitted a planning application for our development at Haverfordwest, Pembrokeshire to build835 residential properties and a 60,000 square feet Sainsbury’s retail food store and in September 2013,the Council resolved to grant planning permission which will be formally granted upon the signing of asection 106 agreement and planning conditions. We can now work upon the detail of finalising theinfrastructure and associated conditions to enable the conditional sale of the 9 acre site to Sainsbury’s tocomplete. Whilst the final terms of that agreement must remain confidential, the receipt from theSainsbury’s sale will enable us to complete all the infrastructure works on the entire site and provide acatalyst to residential development.

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

Holyhead Waterfront

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

We are close to finalising the section 106 planning agreement and planning conditions. We continuediscussions with various parties with respect to both the residential and commercial elements of the

9




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scheme. The undoubted boost to the local economy provided by the recent commitment of Hitachi todevelop the multi-billion pound new Wylfa nuclear power station will certainly help our scheme.


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

The logistics development comprising 140,000 square feet of office and distribution warehousing will becomplemented by our plans to create a transport hub and 200 space lorry park facility to support the portof Holyhead on an adjacent 14 acre site for which we have now obtained planning consent. We haveentered into an agreement with the Welsh Government for the grant of a 999 year lease over14 developable acres for the truck stop, logistics depot and service units. We have also exercised an optionto acquire a further 12 acres of land for the distribution warehousing and offices and hold an option ona further 5 acres for a logistics hub.


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

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


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


In May 2013, we announced that conditional contracts had been exchanged with Marston’s to sell0.7 acres at Pembroke Dock for a family pub and restaurant. An important and encouraging first step inthe post-planning phase, it has generated interest from other commercial and retail operators in the site.

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


This 6 acre residential development opportunity has planning permission for 94 dwellings near to King’sLynn, Norfolk. In addition to the residential development, the site offers some potential for mixed orcommercial uses, subject to planning.

Others

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

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The expenditure in the year on our development land bank amounted to £1.4 million. Our totalinvestment to date is now £32.2 million at cost (analysed below) or 36.3p per share. We will continue toprogress these projects in a risk-averse manner and to avoid any speculative development. To date, wehave had good success in securing planning consents and several of the projects are beginning to advance.In particular, we are pleased at the potential success at Haverfordwest but also at the improved signs ofactivity elsewhere.

We remain on target to deliver projects comprising more than 2,000 homes (of which 1,200 arewaterside), 1,400 marina berths and in excess of 400,000 square feet of commercial and retaildevelopment.

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

2013 2012 £’m £’m

Haverfordwest 15.32 15.26Holyhead Waterfront 9.34 8.74Pembroke Dock Waterfront 4.87 4.47King’s Lynn 0.83 0.83Fishguard Waterfront 0.86 0.76Fishguard Lorry Stop 0.58 0.52Parc Cybi, Holyhead 0.44 0.22 ––––––––––– –––––––––––

Total investment to date 32.24 30.80 ––––––––––– ––––––––––– ––––––––––– –––––––––––

Financial review

Net Asset Value

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


2013 2012 2011 2010 2009 £’m £’m £’m £’m £’m

Net asset value 155.1 154.0 158.5 176.6 160.9Preference share liability – – 7.4 13.3 12.6 ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

Diluted net asset value 155.1 154.0 165.9 189.9 173.5 Fair value of hedging instruments 0.2 0.9 1.4 5.0 4.4 ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

EPRA net asset value 155.3 154.9 167.3 194.9 177.9 ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

EPRA NAV per share 174.9p 166.9p 153.9p 150.1p 138.2p ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

Basic NAV per share 174.6p 165.9p 155.2p 150.5p 138.5p ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

Diluted NAV per share 174.6p 165.9p 152.7p 146.3p 134.8p ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

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


Revaluation

The Group’s investment properties were independently valued by Jones Lang LaSalle as at 30 September2013. In their opinion, the open market value of the investment property portfolio was £164.8 million.The total portfolio increased in value by £0.7 million over the year.

Cash flow

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

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


2013 2012 £’m £’m

Rental income 16.0 16.2Direct property costs (3.1) (2.8) ––––––––––– –––––––––––

Rental surplus 12.9 13.4 ––––––––––– –––––––––––

Sale of investment properties 12.9 4.1Cost of investment properties sold (13.2) (3.7) ––––––––––– –––––––––––

(Loss)/gain on sale of investment properties (0.3) 0.4 ––––––––––– –––––––––––

Total net income arising from property activities 12.6 13.8 ––––––––––– ––––––––––– ––––––––––– –––––––––––


The administrative expenses for the year ended 30 September 2013 were £2.7 million, an increase of10.8% from the previous year. The primary reasons for this are certain increased costs in respect ofmarketing together with some additional staff costs. The majority of other costs arise as a result of theGroup being quoted on AIM with no significant changes in 2013.

Financing

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

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The bank debt at 30 September 2013 was £70.5 million. The gearing is 45.5% and loan to value is 42.8%excluding cash.

The interest rate risk on the facility continues to be managed by way of interest rate swaps and interestrate caps. Aside from reducing the on-going interest rate charge in the income statement, all of ourexternal bank debt is fully hedged and the weighted average cost of all debt including margin is 4.2%.The fair value of these derivative financial instruments is provided for in full on the balance sheet. As at30 September 2013, 100% (2012: 100%) of the Group’s bank borrowings were hedged.

The finance costs for the year amounted to £3.7 million (2012: £3.3 million), primarily consisting of£3.1 million bank loan interest (2012: £2.7 million). Finance income amounted to £0.5 million(2012: £0.1 million) reflecting the low returns on short term cash deposits. As a matter of policy, theGroup retains instant access to all cash deposits so it is readily available for use in the business.

As at 30 September 2013, TAPP Property Limited maintained a facility with Lloyds Banking Group ofup to £78,000,000 (2012: £78,000,000) under which £41,058,000 (2012: £49,387,000) had beendrawn down. This facility is repayable on or before 27 January 2015 and is secured by fixed and floatingcharges over the assets of the TAPP Property Limited group and the Lamont companies. The facility issubject to a maximum loan to value covenant of 70% and an interest cover ratio covenant of 150%.

As at 30 September 2013, Conygar Dundee Limited, Conygar Hanover Street Limited, Conygar StaffordLimited and Conygar St Helens Limited jointly maintained a facility with Barclays Bank PLC of up to£19,212,000 (2012: £20,000,000) of which £19,212,000 (2012: £20,000,000) had been drawn down.This facility is repayable on or before 20 August 2016 and is secured by fixed and floating charges overthe assets of Conygar Dundee Limited, Conygar Hanover Street Limited, Conygar Stafford Limited andConygar St Helens Limited. The facility is subject to a maximum loan to value covenant of 58% and aninterest cover ratio covenant of 225%.

In April 2013, we secured a refinancing of the TOPP portfolio with an £11 million loan from The RoyalBank of Scotland, of which £10,242,000 was outstanding at 30 September 2013. This facility is repayableon or before 3 April 2016 and is secured by fixed and floating charges over the assets of the TOPPProperty Limited group. The facility is subject to a maximum loan to value covenant of 55%, interestcover ratio covenant of 225% and a debt to rent cover ratio covenant of 7:1.

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

Taxation

The tax charge for the year of £1.5 million on the pre-tax profit of £7.7 million represents an effectivetax charge of 19% (2012: 24%). Tax is payable at the full UK corporation tax rate of 23.5% on net rentalincome after deduction of finance costs and administrative expenses. There is no tax payable in respectof investment property capital gains or any valuation uplift, which is the main reason for the low effectivetax rate in the current year.

Capital management


The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a goingconcern in order to provide returns for shareholders and benefits for other stakeholders and to maintainan 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 managedthrough the direct linkage of borrowings to specific property. The Group seeks to ensure that securedborrowing stays within agreed covenants with external lenders.

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Treasury Policies

The objective of the Group’s treasury policies is to manage the Group’s financial risk, secure cost effectivefunding for the Group’s operations and to minimise the adverse effects of fluctuations in the financialmarkets on the value of the Group’s financial assets and liabilities, on reported profitability and on thecash flows of the Group.

The Group finances its activities with a combination of bank loans (£70.5 million), cash and short termdeposits (£31.6 million). Other financial assets and liabilities, such as trade receivables and tradepayables, arise directly from the Group’s operations. The Group may also enter into derivativetransactions to manage the interest rate risk arising from the Group’s operations and its sources offinance. Derivative instruments may be used to change the economic characteristics of financialinstruments in accordance with the Group’s treasury policies. Interest rate swaps and interest rate capsamount to an economic hedge of £71.4 million (2012: £65.8 million) of the total loan drawdowns of£70.5 million (2012: £80.9 million) for cashflows to 20 August 2016, but no hedge accounting is used.

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

Dividend policy

The Board is pleased to recommend a final dividend of 1.5p per ordinary share in respect of the yearended 30 September 2013 to be paid on 13 February 2014 to shareholders on the register on 10 January2014. This is an increase of 20% over last year. Our dividend policy is unchanged in that we aim toprovide some income return to shareholders but for the most part retain profits for reinvestment in thebusiness. Our primary focus is upon growth in net asset value per share.

Share buy backs

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

During the year, the Group acquired 4,009,838 ordinary shares representing 4.3% of its ordinary sharecapital, at a weighted average price of 96.8p per share. This cost £3.9 million and, as a result of the buybacks, net asset value per share has been enhanced by approximately 3 pence per share or 1.9%. TheGroup will seek to renew the buy back authority at the forthcoming AGM and will continue to utilise itas and when it makes sense to do so and certainly whenever our shares trade at a significant discount toour underlying net asset value.

Principal risks and uncertainties


Strategic risks


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


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 aconsiderable amount of time and resource is applied towards ensuring we have the right calibre of staffand 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 executivedirectors are very closely involved in the day-to-day running of the business to ensure sound managementjudgement is applied.


Market risks


Where necessary management take appropriate action to mitigate any adverse impact arising fromidentified 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 mustmake estimates and assumptions that affect the asset and liability items and revenue and expense amountsrecorded in the accounts. These estimates are based on historical experience and various otherassumptions 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 ofassets 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 tothe carrying amounts of assets and liabilities within the next financial year are the following:


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


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

Properties held for Investment

The fair value of properties held for investment is based upon open market value and is calculated usinga 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 activelymonitored as set out below.

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

At 30 September 2013, after taking into account interest rate swaps, 100% (2012: 100%) of the Group’sbank borrowings were at a fixed rate of interest.


Interest 30 Sep 13 30 Sep 12 Rate Maturity £’000 £’000

Lloyds Banking Group (1) LIBOR +2% 2 – 5 years 41,058 49,387Capita (2) 5.24% Less than 1 year – 11,538Barclays (3) LIBOR +3.5% 2 – 5 years 19,212 20,000Royal Bank of Scotland (4) LIBOR +3.5% 2 – 5 years 10,242 – ––––––––––– –––––––––––

70,512 80,925 ––––––––––– ––––––––––– ––––––––––– –––––––––––

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

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


(4) Senior bank facility repayable 3 April 2016.

Financial Assets


30 Sep 13 30 Sep 12 £’000 £’000

Fixed rate – –Floating rate 31,629 31,515 ––––––––––– –––––––––––

31,629 31,515 ––––––––––– ––––––––––– ––––––––––– –––––––––––

Floating rate financial assets comprise cash and short term deposits at call and money market rates forup 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 inconnection with property leases, the investment of surplus cash and transactions where the Group sellsproperties with an element of deferred consideration.

Tenant rent payments are monitored regularly and appropriate action is taken to recover monies owed orif necessary, to terminate the lease. Deferred consideration terms are only agreed with counterpartiesapproved by the board or where some additional security is available, and there were none as at30 September 2013 (2012: £nil).

The Group policy has been to invest funds and enter into derivative transactions with a broad range ofinstitutions having investment grade low risk credit ratings and a strong or superior ability to repay shortterm debt obligations. The unprecedented credit and banking market disruption of the last few years hashad a significant impact upon the ability to rely upon either credit ratings or the ability of financialinstitutions to honour their commitments and the widespread nature of the financial crisis has introduced

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considerable uncertainty into the process. As at 30 September 2013, the Group had a single balance of£92,000 (2012: £125,000) where the counter-party had failed to honour a notice deposit and a fullimpairment provision has been recorded against the balance.


Liquidity Risk

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

Price Risk

The Group’s exposure to changing market prices on the value of financial instruments may have animpact on the carrying value of financial instruments and would arise principally as a result of enteringinto swaps or similar transactions to fix interest rates on the Group’s borrowings. The Group’s policies formanaging 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 exposureto currency risk.

This report was approved by the Board on 2 December 2013 and signed on its behalf by:

R T E Ware

Chief Executive

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The Board







Further details of the company’s policies on remuneration, service contracts and compensation paymentsare included in the Directors' Remuneration Report on pages 20 to 23.

Audit Committee



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The board uses the Annual General Meeting and results meetings to communicate with private andinstitutional investors and welcomes their participation. Details of resolutions to be proposed at theAnnual General Meeting on 6 February 2014 can be found in the notice of the meeting on page 67.

Internal Control

The directors acknowledge that they are responsible for the company’s systems of internal control and forreviewing its effectiveness. The systems are designed to manage rather than eliminate the risk of failure toachieve the company’s strategic objectives, and can only provide reasonable, not absolute, assuranceagainst material misstatement or loss.




● Information and financial reporting systems: The group's planning and financial reportingprocedures include detailed operational budgets for the year ahead. The board reviews andapproves them.



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The company's remuneration committee is chaired by N J Hamway and its other member is M D Wigley.The committee makes recommendations to the board, within agreed terms of reference, on an overallremuneration package for executive directors and any other senior executives.


The company's policy on directors' remuneration remains that the overall remuneration package shouldbe sufficiently competitive to attract, retain and motivate high quality executives capable of achieving thegroup's objectives and thereby enhancing shareholder value. The package consists of a basic salary, whichis set at the lower end of market rates, with the potential for significant performance related bonusesaligned to growth in shareholder value, as represented by net assets per share. All group employees areemployed by the company.


Basic salary and benefits: The salary and benefits are reviewed annually at the complete discretion of theremuneration committee. At present, the directors receive no benefits. Basic salaries remain comparablewith the lower quartile of comparable companies, but sufficient to retain directors.

Profit sharing plan: The profit sharing plan is an annual plan in which executive directors and seniorexecutives will be entitled to an allocation of a profit sharing pool. Following a review and consultationprocess by the remuneration committee last year, which included discussions with holders of some 60%of the shares in the company, the plan rules have been amended as follows:

● the major change is the increase in the post-tax hurdle rate from 6% to 10% based upon theincrease in fully diluted net asset value per share as per the audited accounts

● the discount of share price to fully diluted net asset value per share must not exceed 35%

● the remuneration committee have discretionary powers to vary the rules to exclude any anomaliesor unjustified gains

● employee termination provisions have been simplified to ensure no excessive payments accrue toleavers

● in the interests of full transparency, a schedule showing the full calculation will be published in thefinancial statements should any profit share accrue

The scheme is based upon the increase in the audited fully diluted net asset value per share of thecompany. The profit sharing pool is 20% of any increase in the net asset value per share at 30 Septemberover the previous highest net asset value per share (“high watermark”). This ensures that executivedirectors cannot accrue any profit share twice in respect of the same net asset value growth. The previoushigh watermark was at 30 September 2011.

Before any payment accrues, the increase in fully diluted net asset value per share must now exceed ahurdle of 10% compounded annually since the last high watermark (152.7p at 30 September 2011). Thisresults in a target net asset value per share of:

2012 2013 2014

Target 168.0p 184.8p 203.2pActual 165.9p 174.6p –

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The actual diluted net asset value per share for the year ended 30 September 2013 was 174.6p and isbelow the target of 184.8p.

Executive directors are required to invest a minimum of 50% of any profit share payment in shares of thecompany which must be held for a minimum of two years subject to certain good leaver provisions.


Share options: The share options were awarded by the remuneration committee. No share options wereawarded during the year and it is not intended that any further options be granted by the company.

Pensions: The company does not make contributions to directors’ pension plans other than through salarysacrifice arrangements. Recent legislative changes in respect of compulsory pension provision andauto-enrolment may eventually force changes upon the company.

Service contracts: The company's policy is for all executive directors to have contracts of employment withprovision for termination on no more than 12 months' notice.


None of the non-executive directors have service contracts. Letters of Appointment provide for a periodof three years which may be extended by mutual agreement for a further three years. The letters ofappointment were extended on 25 October 2013. The remuneration of the non-executive directors takesthe form solely of fees, which are set by the board having taken advice on appropriate levels. Thenon-executive directors are not involved in any discussions or decision about their own remuneration.

Service contracts


Date of Contract Unexpired Term Notice Period (Months) (Months)

Executive Directors








Mr Hamway and Mr Vaughan retire by rotation and, being eligible, offer themselves for re-election.

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Audited Information


2013 2012 Basic Basic Salary Fees Total Salary Salary Fees Total Salary £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000Executive Directors

R T E Ware 323 – 323 335 300 – 300 300

P A Batchelor 280 – 280 280 275 – 275 250

P M C Rabl 88 – 88 88 83 – 83 75

S M Vaughan 198 – 198 198 192 – 192 175


N J Hamway – 60 60 – – 60 60 –

M D Wigley – 45 45 – – 40 40 – ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

889 105 994 901 850 100 950 800 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––


Fees of £104,250 (2012: £34,500) were also paid to Amberhook Properties Limited, a companycontrolled by Mr P M C Rabl.



Expired At Awarded Exercised unexercised At 1 October during during during 30 September Exercise 2012 the year the year the year 2013 Price No. No. No. No. No.

R T E Ware (b) £1.185 650,000 – – – 650,000

(c) £2.00 2,025,000 – – – 2,025,000

P A Batchelor (b) £1.185 425,000 – – – 425,000

(c) £2.00 550,000 – – – 550,000

S M Vaughan (a) £0.90 130,000 – – – 130,000

(b) £1.185 325,000 – – – 325,000

(c) £2.00 645,000 – – – 645,000





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The directors may only exercise the options awarded to them in respect of (a) if the company's share pricehas grown by 20% per annum compounded over the two year period measured from the date upon whichthe options are granted. These performance conditions have been achieved and accordingly the shareoptions awarded in respect of (a) have vested.


The market price of the company's shares on 30 September 2013 was 133p per share. The highest andlowest market prices during the year for each share option that is unexpired at the end of the year are asfollows:

Highest Lowest

Options in issue during the year 133p 86p

The interests of the directors to subscribe for or acquire ordinary shares have not changed since theyear end.

This report was approved by the Board on 2 December 2013 and signed on its behalf by:

P A Batchelor

Company Secretary

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Directors’ Report

The directors present their report and the accounts of the group and the company for the year ended 30September 2013.


The principal activity of the group and the company during the year was property trading, propertyinvestment, acquiring property assets with development and investment potential, and investing incompanies with significant property assets. The company’s principal subsidiaries are listed in note 14 tothe accounts.

A review of the company’s activities and likely future developments during this year is dealt with in theChairman’s and Chief Executive’s Statement and the Strategic Report.





The directors have recommended a final dividend of 1.5 pence per ordinary share in respect of the yearended 30 September 2013 (2012: 1.25 pence).



Ordinary Shares of £0.05 each At At 30 September 2013 30 September 2012

N J Hamway 984,000 967,000

R T E Ware 3,550,000 5,500,000

P A Batchelor 830,001 830,001

P M C Rabl 1,145,480 851,190

S M Vaughan 495,000 495,000

M D Wigley 330,000 330,000––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––



The company has made qualifying third party indemnity provisions for the benefit of its directors whichremain in force at the date of this report.

24


DIRECTORS’ REPORT


A-162


At 2 December 2013, the directors had been notified of the following interests in excess of 3% of thecompany’s issued share capital:

Name No of Shares %

Legal & General Group plc 8,903,333 10.02Fidelity Worldwide Investments (FIL Ltd) 5,071,404 5.71Majedie Asset Management Limited 4,932,657 5.55R T E Ware 3,550,000 4.00Bimaljit Singh Sandhu 3,063,789 3.45Ennismore Fund Management Limited 2,925,250 3.29



At 30 September 2013, the company had an average of 6 days (2012: 8 days) purchases outstanding intrade creditors. The group had an average of 16 days (2012: 20 days) outstanding in trade creditors.


The group made no political donations during the year. The group made charitable donations of £51,068(2012: £20,190) during the year.



Going Concern

After making enquiries, the directors have a reasonable expectation that the company has adequateresources to continue in operational existence for the foreseeable future. For this reason, they continue toadopt the going concern basis in preparing the financial statements.


The directors are responsible for preparing the Annual Report and the financial statements in accordancewith applicable law and regulations. The directors are required to prepare financial statements for thegroup in accordance with the International Financial Reporting Standards as adopted by the EuropeanUnion (‘IFRS’) and have elected to prepare financial statements for the company in accordance withIFRS. Company law requires the directors to prepare such financial statements in accordance with IFRS,the Companies Act 2006 and Article 4 of the IAS Regulation. Under company law the directors must notapprove the financial statements unless they are satisfied that they give a true and fair view of the state ofthe affairs of the company and the group and of the profit or loss of the group for that period.

International Accounting Standard 1 requires that the financial statements present fairly for each financialyear the company’s financial position, financial performance and cash flows. This requires the faithfulrepresentation of the effect of transactions, other events and conditions in accordance with the definitionsand recognition criteria for assets, liabilities, income and expenses set out in the International AccountingStandards Board’s ‘Framework for the preparation and presentation of financial statements’. In virtuallyall circumstances, a fair presentation will be achieved by compliance with all the applicable InternationalFinancial Reporting Standards. Directors are also required to:

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● make judgements and accounting estimates that are reasonable and prudent;



The directors are responsible for keeping adequate accounting records that are sufficient to show andexplain the company’s transactions and disclose with reasonable accuracy at any time the financialposition of the company and the group and to enable them to ensure that the financial statements complywith the Companies Act 2006. The directors are also responsible for safeguarding the assets of thecompany and the group and hence for taking reasonable steps for the prevention and detection of fraudand other irregularities.

The directors have chosen, in accordance with S414c (11) of the Companies Act 2006, to includePrincipal Risks and Uncertainties within the Strategic Report.






● the director has taken all the steps that he ought to have taken as a director in order to make himselfaware of any relevant audit information and to establish that the company’s auditors are aware ofthat information.

Auditors



The Annual General Meeting of the Company will be held on Thursday, 6 February 2014 at 4.00pm atthe offices of Wragge & Co LLP, 3 Waterhouse Square, 142 Holborn, London EC1N 2SW.


In addition to ordinary business, there are resolutions to give a director’s authority to disapply pre-exemption rights and allot equity securities together with resolutions to give share buy backauthorities.


P A Batchelor

Company Secretary

2 December 2013

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London EC4V 6BW

Telephone 020 7778 7200

Fax 020 7329 6408

We have audited the financial statements of The Conygar Investment Company PLC for the year ended30 September 2013 which comprise the consolidated statement of comprehensive income, theconsolidated and company statement of changes in equity, the consolidated and company balance sheets,the consolidated and company cash flow statements, and the related notes. The financial framework thathas been applied in their preparation is applicable law and International Financial Reporting Standards(IFRSs) as adopted by the European Union and, as regards the parent company financial statements, asapplied in accordance with the Companies Act 2006.



As explained more fully in the Directors’ Responsibilities Statement set out on pages 25 to 26, thedirectors are responsible for the preparation of the financial statements and for being satisfied that theygive a true and fair view. Our responsibility is to audit and express an opinion on the financial statementsin accordance with applicable law and International Standards on Auditing (UK and Ireland). Thosestandards require us to comply with the Auditing Practice Board’s Ethical Standards for Auditors.


An audit involves obtaining evidence about the amounts and disclosures in the financial statementssufficient to give reasonable assurance that the financial statements are free from material misstatement,whether caused by fraud or error. This includes an assessment of: whether the accounting policies areappropriate to the group’s and the parent company’s circumstances and have been consistently appliedand adequately disclosed; the reasonableness of significant accounting estimates made by the directors;and the overall presentation of the financial statements.

In addition, we read all the financial and non-financial information in the Report and Accounts to identifymaterial inconsistencies with the audited financial statements and to identify any information that isapparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by usin the course of performing the audit. If we become aware of any apparent misstatements orinconsistencies we consider the implication for our report.


In our opinion:

● the financial statements give a true and fair view of the group’s and of the parent company’s affairsas at 30 September 2013 and of the group’s profit for the year then ended;

● the group financial statements have been properly prepared in accordance with IFRSs as adoptedby the European Union;

27


INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF THECONYGAR INVESTMENT COMPANY PLC


A-165

● the parent company financial statements have been properly prepared in accordance with IFRSs asadopted by the European Union and as applied in accordance with the provisions of theCompanies Act 2006; and



In our opinion:

● the part of the Directors’ Remuneration Report to be audited has been properly prepared inaccordance with the Companies Act 2006.

● the information given in the Strategic and Directors’ Reports for the financial year for which thefinancial statements are prepared is consistent with the financial statements.




● the parent company financial statements are not in agreement with the accounting records andreturns; or





2 December 2013

28


INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF THECONYGAR INVESTMENT COMPANY PLC (continued)


A-166

Year Year Ended Ended 30 Sep 13 30 Sep 12 Note £’000 £’000

Rental income 15,904 15,807Other property income 90 380 –––––––––– ––––––––––

Revenue 15,994 16,187 –––––––––– ––––––––––

Direct costs of: Rental income 3,102 2,745 –––––––––– ––––––––––

Direct Costs 3,102 2,745 –––––––––– ––––––––––

Gross Profit 12,892 13,442Income from trading investments 41 117Share of results of joint ventures 13 38 24(Loss)/gain on sale of investment properties 12 (307) 431Movement on revaluations of investment properties 12 662 354Other gains and losses 6 283 (1,259)Administrative expenses (2,722) (2,456) –––––––––– ––––––––––

Operating Profit 3 10,887 10,653Finance costs 7 (3,689) (3,306)Finance income 7 538 110 –––––––––– ––––––––––

Profit Before Taxation 7,736 7,457Taxation 8 (1,525) (1,810) –––––––––– ––––––––––

Profit And Total Comprehensive Income For The Year 6,211 5,647 –––––––––– –––––––––– –––––––––– ––––––––––

Attributable to: – equity shareholders 6,211 5,647– minority shareholders – – –––––––––– ––––––––––

6,211 5,647 –––––––––– –––––––––– –––––––––– ––––––––––



29





A-167

Attributable to the equity holders of the Company Capital Non- Share Share Redemption Merger Equity Treasury Retained Controlling Total Capital Premium Reserve Reserve Reserve Shares Earnings Total Interests Equity £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000Group

At 1 October 2011 6,169 130,973 – 7,640 650 (24,649) 37,682 158,465 20 158,485Changes in equity

for the year ended

30 September 2012

Profit for the year – – – – – – 5,647 5,647 – 5,647 ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––

Total comprehensiveincome for the year – – – – – – 5,647 5,647 – 5,647

Dividend paid – – – – – – (1,123) (1,123) – (1,123)

Preference shareconversion 1 37 – (3) – – – 35 – 35

Preference shareredemption – – 323 (7,637) (650) – 7,340 (624) – (624)

Purchase of ownshares – – – – – (8,463) – (8,463) – (8,463)

Cancellation oftreasury shares (495) – 495 – – 11,275 (11,275) – – –

Reclassificationof reserves – (6,993) – – – – 6,993 – – – ––––––– –––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––– ––––––– ––––––––

At 30 September

2012 5,675 124,017 818 – – (21,837) 45,264 153,937 20 153,957 ––––––– –––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––– ––––––– ––––––––

Changes in equity

for year ended

30 September 2013

At 1 October 2012 5,675 124,017 818 – – (21,837) 45,264 153,937 20 153,957Profit for the year – – – – – – 6,211 6,211 – 6,211 ––––––– –––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––– ––––––– ––––––––

Total comprehensiveincome for the year – – – – – – 6,211 6,211 – 6,211

Dividend paid – – – – – – (1,160) (1,160) – (1,160)

Purchase of own shares – – – – – (3,883) – (3,883) – (3,883)

Cancellation of treasuryshares (750) – 750 – – 15,547 (15,547) – – – ––––––– –––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––– ––––––– ––––––––

At 30 September

2013 4,925 124,017 1,568 – – (10,173) 34,768 155,105 20 155,125 ––––––– –––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––– ––––––– –––––––– ––––––– –––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––– ––––––– ––––––––

30





A-168

Capital Share Share Redemption Merger Equity Treasury Retained Total Capital Premium Reserve Reserve Reserve Shares Earnings Equity £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Company

At 1 October 2011 6,169 130,973 – 7,640 650 (24,649) 27,608 148,391Changes in equity

for the year ended

30 September 2012 Loss for the year – – – – – – (2,464) (2,464) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Total comprehensiveincome andexpenditure for theyear – – – – – – (2,464) (2,464)Dividend paid – – – – – – (1,123) (1,123)Preference shareconversion 1 37 - (3) – – – 35Preference shareredemption - - 323 (7,637) (650) – 7,340 (624)Purchase of ownshares – – – – – (8,463) – (8,463)Cancellation oftreasury shares (495) – 495 – – 11,275 (11,275) –Reclassificationof reserves – (6,993) – – – – 6,993 – ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

At 30 September

2012 5,675 124,017 818 – – (21,837) 27,079 135,752 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Changes in equity

for year ended

30 September 2013

At 1 October 2012 5,675 124,017 818 – – (21,837) 27,079 135,752Profit for the year – – – – – – 11,569 11,569 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Total comprehensiveincome andexpenditure for theyear – – – – – – 11,569 11,569Dividend paid – – – – – – (1,160) (1,160)Purchase of ownshares – – – – – (3,883) – (3,883)Cancellation oftreasury shares (750) – 750 – – 15,547 (15,547) – ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

At 30 September

2013 4,925 124,017 1,568 – – (10,173) 21,941 142,278 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

31





A-169


Property, plant and equipment 11 97 153Investment properties 12 164,765 175,995Investment in joint ventures 13 5,987 5,523Goodwill 15 3,173 3,173 –––––––––– ––––––––––

174,022 184,844 –––––––––– ––––––––––

Current Assets

Trading Investments 16 – 1,257Development and trading properties 17 23,080 22,106Trade and other receivables 18 4,332 3,763Cash and cash equivalents 31,629 31,515 –––––––––– ––––––––––

59,041 58,641 –––––––––– ––––––––––

Total Assets 233,063 243,485

Current Liabilities Trade and other payables 19 5,511 6,412Bank loans 20 1,057 12,286Tax liabilities 2,841 2,435 –––––––––– ––––––––––

9,409 21,133 –––––––––– ––––––––––


Bank loans 20 68,299 67,456Derivatives 29 230 939 –––––––––– ––––––––––

68,529 68,395 –––––––––– ––––––––––


Net Assets 155,125 153,957 –––––––––– –––––––––– –––––––––– ––––––––––

Equity

Called up share capital 22 4,925 5,675Share premium account 124,017 124,017Capital redemption reserve 1,568 818Treasury shares 23 (10,173) (21,837)Retained earnings 34,768 45,264 –––––––––– ––––––––––

Equity Attributable to Equity Holders 155,105 153,937Non-controlling interests 20 20 –––––––––– ––––––––––

Total Equity 155,125 153,957 –––––––––– –––––––––– –––––––––– ––––––––––

The accounts on pages 29 to 62 were approved by the Board and authorised for issue on 2 December 2013and are signed on its behalf by:


32






A-170


Investment in subsidiary undertakings 14 3,218 3,218Property, plant and equipment 11 97 153 –––––––––– ––––––––––

3,315 3,371 –––––––––– ––––––––––

Current Assets

Trading investments 16 – 1,257Development and trading properties 17 6,060 5,649Trade and other receivables 18 120,206 106,256Cash and cash equivalents 14,164 21,403 –––––––––– ––––––––––

140,430 134,565 –––––––––– ––––––––––

Total Assets 143,745 137,936 Current Liabilities

Trade and other payables 19 948 1,423Tax liabilities 519 761 –––––––––– ––––––––––

1,467 2,184 –––––––––– ––––––––––


Net Assets 142,278 135,752 –––––––––– –––––––––– –––––––––– ––––––––––

Equity

Called up share capital 22 4,925 5,675Share premium account 124,017 124,017Capital redemption reserve 1,568 818Treasury shares 23 (10,173) (21,837)Retained earnings 21,941 27,079 –––––––––– ––––––––––

Total Equity 142,278 135,752 –––––––––– –––––––––– –––––––––– ––––––––––

The accounts on pages 29 to 62 were approved by the Board and authorised for issue on 2 December 2013and are signed on its behalf by:


33






A-171


Operating profit 10,887 10,653Depreciation and amortisation 86 196Share of results of joint ventures (38) (24)Other gains and losses (621) 1,341Loss/(gain) on sale of investment properties 307 (431)Movement on revaluation of investment properties (662) (354)Dividend income (41) (117) –––––––––– ––––––––––

Cash Flows From Operations Before Changes In Working Capital 9,918 11,264Change in trade and other receivables (569) (1,149)Change in land, development and trading properties (974) (1,327)Change in trade and other payables (842) (1,703) –––––––––– ––––––––––

Cash Generated From Operations 7,533 7,085Finance costs (3,155) (2,621)Finance income 85 110Tax paid (1,118) (434) –––––––––– ––––––––––

Cash Flows Generated From Operating Activities 3,345 4,140 –––––––––– ––––––––––

Cash Flows From Investing Activities Acquisition of and additions to investment properties (1,327) (40,247)Disposal of trading investments 879 -Sale proceeds of investment properties 12,748 4,047Investment in joint ventures 27 (33)Purchase of plant and equipment (2) –Leasehold improvements – (1)Dividend income 41 117 –––––––––– ––––––––––

Cash Flows Generated From/(Used In) Investing Activities 12,366 (36,117) –––––––––– ––––––––––

Cash Flows From Financing Activities Bank loans drawn down 11,000 53,000Bank loans repaid (21,413) (6,827)Dividend paid (1,160) (1,123)Preference share redemption – (8,081)Purchase of own shares (3,882) (7,924)Re-couponing of interest rate swaps (88) (1,177)Purchase of interest rate cap (54) (50) –––––––––– ––––––––––

Cash Flows (Used In)/Generated From Financing Activities (15,597) 27,818 –––––––––– ––––––––––

Net increase/(decrease) in cash and cash equivalents 114 (4,159)Cash and cash equivalents at 1 October 31,515 35,674 –––––––––– ––––––––––


34





A-172


Operating loss (2,711) (2,454)Depreciation and amortisation 82 56Other gains and losses – 545Dividend income (41) (117) –––––––––– ––––––––––

Cash Flows From Operations Before Changes In Working Capital (2,670) (1,970)Change in trade and other receivables 93 1Change in land, developments and trading properties (411) (798)Change in trade and other payables (475) (2,384) –––––––––– ––––––––––

Cash Used In Operations (3,463) (5,151)Finance income 70 105Tax paid (215) – –––––––––– ––––––––––

Cash Flows Used In Operating Activities (3,608) (5,046) –––––––––– ––––––––––

Cash Flows Generated From Investing Activities Disposal of trading investments 879 –Purchase of plant and equipment (2) –Leasehold improvements – (1)Dividend income 41 117 –––––––––– ––––––––––

Cash Flows Generated From Investing Activities 918 116 –––––––––– ––––––––––

Cash Flows From Financing Activities Dividend paid (1,160) (1,123)Preference share redemption – (8,081)Loans to joint ventures (1) (58)Loans from subsidiaries 494 15,595Purchase of own shares (3,882) (8,464) –––––––––– ––––––––––

Cash Flows Used In Financing Activities (4,549) (2,131) –––––––––– ––––––––––



35





A-173





The Company’s principal activity is property trading, property investment, acquiring property assetswith development and investment potential, and investing in companies with significant propertyassets.







For the purposes of the preparation of the accounts, the Group has applied all standards andinterpretations that will be effective for the accounting periods commencing on or after 1 October2012.


– Amendment to IAS 1, “Financial statement presentation” regarding other comprehensive income(effective for accounting periods on or after 1 July 2012);

– FRC UK governance code 2012 (effective for accounting periods starting on or after 1 October2012);

– FRC UK Auditing Standard, ISA (UK&I) 700 (effective for accounting periods starting on orafter 1 October 2012);

Management has assessed the impact of the standards and interpretations on the Group andconcluded they are not applicable to the Group’s circumstances and do not require amendment ofthe Group’s accounting policies.

36




A-174



Effective


– Amendment to IAS 12, “Income taxes” on deferred tax (effective for accounting periods on orafter 1 January 2012);

– Amendment to IFRS 1, “First time adoption” on fixed dates and hyperinflation (effective foraccounting periods beginning on or after 1 July 2011);

– Amendment to IAS 19, “Employee benefits” (effective for accounting periods beginning on orafter 1 January 2013);

– IFRS 10 “Consolidated financial statements” (effective for accounting periods beginning on orafter 1 January 2013);

– IFRS 11 “Joint arrangements” (effective for accounting periods beginning on or after 1 January2013);

– IFRS 12 “Disclosures of interest in other entities” (effective for accounting periods beginning onor after 1 January 2013);

– IFRIC 10, 11 and 12 on transition guidance (effective from accounting periods beginning on orafter 1 January 2013);

– IFRS 13 “Fair value measurement” (effective for accounting periods beginning on or after1 January 2013);

– IAS 27 (revised 2011) “Separate financial statements” (effective for accounting periods beginningon or after 1 January 2013);

– IAS 28 (revised 2011) “Associates and joint ventures” (effective for accounting periods beginningon or after 1 January 2013);

– Amendment to IFRS 7 “Financial Instruments: Disclosures’, on offsetting financial assets andfinancial liabilities” (effective from accounting periods beginning on or after 1 January 2013);

– Amendment to IAS 32, “Financial instruments presentation” on offsetting financial assets andfinancial liabilities (effective for accounting periods beginning on or after 1 January 2014);

– Amendment to IFRS 1 “First time adoption” on government loans (effective for accountingperiods beginning on or after 1 January 2013);

– Amendment to IFRS 10 “Consolidated financial statements” IFRS 12 and IAS 27 for investmententities (effective for accounting periods beginning on or after 1 January 2014)*;

– IFRS 9 “Financial instruments” – classification and measurement (effective for accountingperiods beginning on or after 1 January 2015)*;

– Amendments to IAS 36, “Impairment of assets” (effective for accounting periods beginning onor after 1 January 2014)*;

– Amendment to IAS 39 “Financial instruments: Recognition and measurement”, on novation ofderivatives and hedge accounting (effective for accounting periods beginning on or after 1 January2014)*;

– IFRIC 20 “Stripping costs in the production phase of a surface mine” (effective for accountingperiods beginning on or after 1 January 2013);

– IFRIC 21, “Levies” (effective for accounting periods beginning on or after 1 January 2014)*;


37




A-175












Pension CostsThe group makes voluntary contributions to the defined contribution plans of certainemployees, including directors. A defined contribution plan is a pension plan under which the grouppays fixed contributions to a separate entity. The group has no legal or constructive obligation to payfurther contributions if the fund does not hold sufficient assets to pay all employees the benefitsrelating to employee service in the current and prior periods. The contributions are recognised as anemployee benefit expense when they are due. Prepaid contributions are recognised as an asset to theextent that a cash refund or reduction in future payments is available.

38




A-176


Profit sharing plan The Group has a profit sharing plan which is an annual plan in which executivedirectors and senior executives will be entitled to an allocation of a profit sharing pool based upon theincrease in the net asset value per share of the company.


IFRS 2 “Share-based payment” is applied to all share-based payment arrangements granted after7 November 2002 that had not vested prior to 1 October 2005. Equity-settled share-based paymentsare measured at fair value (excluding the effect of non market-based vesting conditions) at the dateof grant. The fair value determined at the date of grant is expensed on a straight line basis over thevesting period, based on the Group’s estimate of shares which will eventually vest and adjusted forthe effect of non market-based vesting conditions. The Group uses an appropriate valuation modelutilising a Monte Carlo simulation in order to arrive at a fair value at the date share options aregranted.



Plant and equipment – 25% per annumFurniture and fittings – 20% per annum


Taxation The taxation charge represents the sum of tax currently payable and deferred tax. Thecharge for current taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using rates that have been enacted or substantivelyenacted by the balance sheet date.






39




A-177







Goodwill and Impairment reviews Goodwill, representing the excess of the cost of acquisitionover the fair value of the Group’s share of the identifiable net assets acquired, is initially recognisedas an asset at cost and is subsequently measured at cost less any accumulated impairment losses.Goodwill which is recognised as an asset is reviewed for impairment at least annually. For thepurposes of impairment testing, goodwill is allocated to each of the group’s cash generating unitsexpected to benefit from the synergies of the combination. Cash generating units to which goodwillhas been allocated are tested for impairment annually, or more frequently where there is an indicationthat the unit may be impaired. If the recoverable amount of the cash generating unit is less than thecarrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount ofany goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of thecarrying amount of each asset of the unit. The recoverable amount is the higher of fair value less coststo sell and value in use. In assessing the value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects current market assessments of the timevalue of money and risks specific go to the cash generating unit. An impairment loss is recognisedimmediately in profit and loss and is not subsequently reversed.



40




A-178





Trading Investments Trading investments are measured at fair value. Gains and losses on the re-measurement of trading investments are recognised directly in the statement of comprehensiveincome. Fair values of these investments are based on quoted market prices where available.





Preference shares Preference shares are regarded as compound instruments, consisting of a liabilitycomponent and an equity component. At the date of issue, the fair value of the liability component isestimated using the prevailing market interest rate for similar non-convertible debt. The differencebetween the proceeds of issue of the convertible loan notes and the fair value assigned to the liabilitycomponent, representing the embedded option to convert the liability into equity of the Group, isincluded in equity.


41




A-179



Leasing The Group has entered into commercial property leases as lessor of its investment propertyportfolio. As the terms of these leases do not transfer substantially all the risks and rewards ofownership to the lessee they are classified as operating leases. Rentals receivable under operatingleases are credited to income on a straight line basis over the term of the relevant lease. Benefitsgranted as an incentive to enter into an operating lease are also spread on a straight line basis over thelease term.





The fair value of properties held for investment is based upon open market value and is calculatedusing a third party valuation provided by an external independent valuer. The valuations are basedupon assumptions including future rental income, anticipated void cost, the appropriate discount rateor yield. The independent valuers also take into consideration market evidence for comparableproperties in respect of both transaction prices and rental agreements.

Properties Held for Development




42




A-180




Deferred Tax Asset







Balance Sheet

30 September 2013 30 September 2012 Investment Development Group Investment Development Group Properties Properties Other Total Properties Properties Other Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000



trading properties – 23,080 – 23,080 – 22,106 – 22,106 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

164,765 32,240 – 197,005 175,995 30,802 – 206,797Other assets 21,598 – 14,460 36,058 13,651 – 23,037 36,688 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Total assets 186,363 32,240 14,460 233,063 189,646 30,802 23,037 243,485Liabilities (74,888) – (3,050) (77,938) (86,551) – (2,977) (89,528) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Net assets 111,475 32,240 11,410 155,125 103,095 30,802 20,060 153,957 ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

43




A-181

3. Operating profit




–––––––––– ––––––––––

Other services – fees payable to the company auditor for the audit of the company’s subsidiaries pursuant to legislation. 53 53

–––––––––– ––––––––––


–––––––––– ––––––––––

Depreciation of owned assets 32 29 –––––––––– ––––––––––

Lease amortisation 27 27 –––––––––– ––––––––––

Operating lease rentals – land and buildings 167 166 –––––––––– ––––––––––

Movement on provision for doubtful debts (12) (94) –––––––––– ––––––––––




Wages and salaries 1,239 1,204Social security costs 159 157 –––––––––– ––––––––––

1,398 1,361 –––––––––– –––––––––– –––––––––– ––––––––––

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

44




A-182



Emoluments (excluding pension contributions) 994 950 –––––––––– –––––––––– –––––––––– ––––––––––

Emoluments of highest paid director 323 300 –––––––––– –––––––––– –––––––––– ––––––––––

The board of directors comprise the only persons having authority and responsibility for planning,directing and controlling the activities of the Group.



Movement in fair value of interest rate swaps 621 (796)Loss arising on sale of trading investments (370) (545)Other provision 32 82 –––––––––– ––––––––––

283 (1,259) –––––––––– –––––––––– –––––––––– ––––––––––



Finance income

Bank interest and interest receivable 538 110 –––––––––– –––––––––– –––––––––– ––––––––––

Finance costs

Bank loans (3,129) (2,656)Loan repayment costs (26) (99)Amortisation of arrangement fees (534) (438)Notional interest on preference shares – (113) –––––––––– ––––––––––

(3,689) (3,306) –––––––––– –––––––––– –––––––––– ––––––––––

45




A-183




UK Corporation tax based on the results for the period 1,752 1,698(Over)/under provision in prior periods (227) 112 –––––––––– ––––––––––

Current tax 1,525 1,810Deferred tax – – –––––––––– ––––––––––

1,525 1,810 –––––––––– –––––––––– –––––––––– ––––––––––


The tax assessed on the profit for the year differs from the standard rate of corporation tax in the UKof 23.5% (2012 – 25%).


Profit before taxation 7,736 7,457 –––––––––– –––––––––– –––––––––– ––––––––––

Profit multiplied by rate of tax 1,818 1,864Effects of:Expenses not deductible for tax purposes 37 66UK dividend income (10) (29)(Over) / under provision in prior periods (227) 112Joint venture profits not taxable (9) (6)Gains not subject to UK taxation 72 (108)Revaluation gains not taxable (156) (89) –––––––––– ––––––––––

Tax charge for the year 1,525 1,810 –––––––––– –––––––––– –––––––––– ––––––––––

9. Dividends

The directors have recommended a final dividend of 1.5 pence per ordinary share in respect of theyear ended 30 September 2013 (2012 – 1.25 pence). This final dividend will amount to £1,332,000(2012: £1,160,000), if approved at the AGM. In accordance with IFRS, it has not been included asa liability in the financial statements.

46




A-184


The calculation of earnings per ordinary share is based on the profit after tax attributable to equityshareholders of £6,211,000 (2012 – £5,647,000) and on the number of shares in issue being theweighted average number of shares in issue during the period of 90,223,107 (2012 – 100,847,230).The diluted earnings per share calculation is based on profit for the year of £6,211,000 (2012 –£5,647,000) and on 90,245,450 (2012 – 100,848,260) ordinary shares. The diluted ordinary sharesare calculated as follows:

2013 2012 No. No.

Basic weighted average number of shares 90,223,107 100,847,230

Diluting potential ordinary shares:Employee share options 22,343 1,030 ––––––––––––– –––––––––––––

Total diluted 90,245,450 100,848,260 ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––


Group & Company Premises Office Furniture Lease Equipment & Fittings Total £’000 £’000 £’000 £’000

Cost

At 1 October 2011 156 61 95 312Additions 1 – – 1 –––––––––– –––––––––– –––––––––– ––––––––––


Additions – 2 – 2 –––––––––– –––––––––– –––––––––– ––––––––––

At 30 September 2013 157 63 95 315 –––––––––– –––––––––– –––––––––– ––––––––––


At 1 October 2011 31 39 34 104Provided during the year 27 11 18 56 –––––––––– –––––––––– –––––––––– ––––––––––


Provided during the year 27 12 19 58 –––––––––– –––––––––– –––––––––– ––––––––––

At 30 September 2013 85 62 71 218 –––––––––– –––––––––– –––––––––– ––––––––––

Net book value at

30 September 2013 72 1 24 97 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––


–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––

47




A-185


Group Reverse Long Lease Freehold Leasehold Premiums Total £’000 £’000 £’000 £’000

Valuation at 1 October 2011 96,886 41,809 455 139,150Additions 39,937 20 290 40,247Disposals (3,616) – – (3,616)Reverse lease premium



Additions 1,015 7 305 1,327Disposals (4,950) (8,105) – (13,055)Reverse lease premium

amortisation – – (164) (164)Movement on revaluation 232 430 – 662 –––––––––– –––––––––– –––––––––– ––––––––––


–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––


The properties were valued by Jones Lang LaSalle, independent valuers not connected with theGroup, at 30 September 2013 at market value in accordance with the Practice Statements containedin the RICS Appraisal and Valuation Standards published by the Royal Institution of CharteredSurveyors which conform to international valuation standards. The valuations are arrived at byreference to market evidence of transaction prices and completed lettings for similar properties. Theproperties have been valued individually and not as part of a portfolio and no allowance has beenmade for expenses of realisation or for any tax which might arise.They assume a willing buyer and awilling seller in an arm’s length transaction. The valuations reflect usual deductions in respect ofpurchaser’s costs and SDLT as applicable at the valuation date. The independent valuer makesvarious assumptions including future rental income, anticipated void cost, the appropriate discountrate or yield.

The Group has pledged £91,305,000 (2012 – £102,550,000) of investment property to secureLloyds Banking Group debt facilities, £30,575,000 (2012 – £31,805,000) to secure Royal Bank ofScotland debt facilities and £42,875,000 (2012 – £42,360,000) to secure Barclays Bank PLC debtfacilities. Further details of these facilities are provided in note 29.

48




A-186

12. Investment properties (continued)


(Loss)/gain on sale of investment properties

30 Sep 13 30 Sep 12 £’000 £’000

Gross proceeds on sales of investment properties 12,890 4,126Costs of sales (142) (79) ––––––––––––– –––––––––––––

Net proceeds on sales of investment properties 12,748 4,047Book value (13,055) (3,616) ––––––––––––– –––––––––––––

(Loss)/gain on sale (307) 431 ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Sensitivity Analysis

Movement in equivalent yield

If the equivalent yield compresses by 0.5% to 8.49% then the portfolio valuation increases byapproximately 6.3%. It reduces by approximately 5.7% if the equivalent yield increases by 0.5% to9.49%.

Movement in ERV

If ERV’s increase by 5% then the portfolio valuation increases by approximately 4% whilst falling byapproximately 3.9% if ERV’s decrease by 5%.

Voids

If the void periods assumed in the valuation are decreased by 6 months then the portfolio valuationwould increase by approximately 1.9%. If void periods increase by 6 months then the portfoliovaluation would decrease by approximately 1%.

Material Contractual Obligation

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

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13. Investments

Joint Ventures

30 Sep 13 30 Sep 12 £’000 £’000

At 1 October 2012 5,523 5,466Share of profit retained by joint ventures 38 24Investment in joint venture 426 33 ––––––––––––– –––––––––––––

At 30 September 2013 5,987 5,523 ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––


Loans to Joint Ventures

30 Sep 13 30 Sep 12 £’000 £’000

Conygar Stena Line Limited 6,557 5,652CM Sheffield Limited 2 2 ––––––––––––– –––––––––––––

6,559 5,654 ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

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



Assets

Current assets 6,019 5,538 ––––––––––––– –––––––––––––


Current liabilities (32) (15) ––––––––––––– –––––––––––––

(32) (15) ––––––––––––– –––––––––––––

Net Assets 5,987 5,523 ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Operating profit 38 24Finance income – – ––––––––––––– –––––––––––––

Profit before tax 38 24Tax – – ––––––––––––– –––––––––––––

Profit after tax 38 24 ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––


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Subsidiaries

Group Company 30 Sep 13 30 Sep 12 30 Sep 13 30 Sep 12 £’000 £’000 £’000 £’000At 1 October 2012 and

30 September 2013 – – 3,218 3,218 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––



Conygar Holdings Ltd Holding Company England 100%Martello Quays Limited Property trading and development England 100%Conygar Wales PLC Holding Company England 60%*Conygar Bedford Square Ltd Property trading and development England 100%*Conygar Properties Ltd Property trading and development England 100%*Conygar Developments Ltd Property trading and development England 100%*Conygar Strand Ltd Property trading and development England 100%*Conygar Hanover Street Ltd Property investment England 100%*The Advantage Property Property investment Guernsey 100%*Income Trust Ltd TAPP Property Ltd Property investment Guernsey 100%*TOPP Holdings Ltd Property investment Guernsey 100%*TAPP Maidenhead Ltd Property investment Guernsey 100%*TOPP Bletchley Ltd Property investment Guernsey 100%*TOPP Property Ltd Property investment Guernsey 100%*Conygar Stena Line Ltd Property trading and development England 50%*CM Sheffield Ltd Property trading and development England 50%*Conygar Haverfordwest Ltd Property trading and development England 100%*Conygar Advantage Ltd Holding company Guernsey 100%*Conygar Stafford Ltd Property investment England 100%*Conygar Dundee Ltd Property investment England 100%*Conygar St Helens Ltd Property investment England 100%*Conygar Sunley Ltd Property investment England 100%*Lamont Property Acquisition Property investment Jersey 100%*(Jersey) I Ltd Lamont Property Acquisition Property investment Jersey 100%*(Jersey) II Ltd Lamont Property Acquisition Property investment Jersey 100%*(Jersey ) III Ltd Lamont Property Acquisition Property investment Jersey 100%*(Jersey) IV Ltd Lamont Property Acquisition Property investment Jersey 100%*(Jersey) V Ltd Lamont Property Acquisition Property investment Jersey 100%*(Jersey) VII Ltd

* Indirectly owned

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A-189

15. Goodwill

Group 30 Sep 13 30 Sep 12 £’000 £’000

At 1 October 2012 and 30 September 2013 3,173 3,173 –––––––––– –––––––––– –––––––––– ––––––––––

The goodwill arose upon the acquisition of the non-controlling interests in Martello Quays Limitedand represents the excess of the consideration over the fair value of the identifiable net assetsacquired. The goodwill has been wholly allocated to the development project within Martello QuaysLimited, which is considered to represent a single income and cash generating unit. Managementanalysis indicates that the net present value of the project exceeds its carrying value and therefore noimpairment is appropriate.

IFRS requires management to undertake an annual test for impairment of indefinite lived assets, suchas goodwill, and to test for impairment if events or changes in circumstances indicate that the carryingamount of an asset may not be recoverable. Impairment testing is an area involving managementjudgement, requiring assessment as to whether the carrying value of the assets can be supported bythe net present value of future cash flows derived from such assets using cash flow projections whichhave been discounted at an appropriate rate. In calculating the net present value of the future cashflows, certain assumptions are required to be made in respect of highly uncertain matters includingmanagement’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 areused in the value in use calculations. Five years is considered to be the optimum period for ameaningful forecast and takes into account available sources of both internal and externalinformation. The Group’s review includes the key assumptions related to sensitivity in the cash flowprojections.

The impairment review is based upon value in use calculations. The period of review is five years andit 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 marketutilising both internal and external sources of information and evidence.

– Budgeted capital expenditure

The cash flow forecasts for capital expenditure are based upon past experience and estimatesprovided 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 yeargovernment bonds adjusted for a risk premium to reflect the systematic risk of the project, likelycost of funding and underlying uncertainties.

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15. Goodwill (continued)

Sensitivity to changes in assumptions

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


30 Sep 13 30 Sep 12 £’000 £’000

At 1 October 2012 1,257 1,802Additions – –Disposals (1,257) –Loss on fair value revaluation – (545) –––––––––– ––––––––––

At 30 September 2013 – 1,257 –––––––––– –––––––––– –––––––––– ––––––––––



Properties held for resale or development 23,080 22,106 6,060 5,649 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––



Trade receivables 1,217 1,155 – –Provision for doubtful debts (125) (127) – – –––––––––– –––––––––– –––––––––– ––––––––––

1,092 1,028 – –Amounts owed by group undertakings – – 119,832 105,789Other receivables 74 74 256 318Prepayments and accrued income 3,166 2,661 118 149 –––––––––– –––––––––– –––––––––– ––––––––––

4,332 3,763 120,206 106,256 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––


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Amounts owed to group undertakings – – 529 528Social security and payroll taxes 53 46 53 46Trade payables 1,665 1,559 179 620Accruals and deferred income 3,793 4,807 187 229 –––––––––– –––––––––– –––––––––– ––––––––––

5,511 6,412 948 1,423 –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––


20. Bank loans


Bank loans 70,512 80,925 – –Debt issue costs (1,156) (1,183) – – –––––––––– –––––––––– –––––––––– ––––––––––

69,356 79,742 – – –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––




Preference shares – – – – –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––

As part of the offer for The Advantage Property Income Trust Limited, the Company issued62,979,750 convertible preference shares of £0.01 each, of which none (2012: none) wereoutstanding at the year end. The preference shares were convertible at any point into ordinary sharesat the option of the preference shareholder. The conversion rate was one ordinary share forfive preference shares. Any preference shares not converted were redeemed for £0.25 each on31 December 2011.

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

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30 Sep 13 30 Sep 12 £’000 £’000

At 30 September 2012 – 7,376Conversions to ordinary shares in the period at carrying value – (31)Notional interest charge – 114Redemption – (7,459) ––––––––––––– –––––––––––––

At 30 September 2013 – – ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

22. Share capital


30 Sep 13 30 Sep 12 £ £

140,000,000 (2012– 140,000,000) Ordinary shares of £0.05 each 7,000,000 7,000,000150,000,000 (2012– 150,000,000) Preference shares of £0.01 each 1,500,000 1,500,000 ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––



30 Sep 13 30 Sep 12 No £’000 No £’000

Ordinary shares of £0.05 each 98,489,123 4,925 113,489,123 5,675 –––––––––––––– –––––––––––– –––––––––––––– –––––––––––– –––––––––––––– –––––––––––– –––––––––––––– ––––––––––––


30 Sep 13 30 Sep 12 No £’000 No £’000

Preference shares of £0.01 each (Note 21) – – – – –––––––––––––– –––––––––––– ––––––––––––– –––––––––––– –––––––––––––– –––––––––––– ––––––––––––– ––––––––––––

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


Price £ No. £’000

At 30 September 2011 123,362,223 6,169Share issue – 14 November 2011 1.100 12,000 1Share issue – 30 November 2011 1.100 5,900 –Share issue – 19 December 2011 1.100 7,000 –Share issue – 30 December 2011 1.100 2,000 –Cancellation of

treasury shares – 12 January 2012 0.05 (9,900,000) (495) ––––––––––––––– –––––––––––––––

At 30 September 2012 113,489,123 5,675

Cancellation of treasury shares – 25 January 2013 (15,000,000) (750) ––––––––––––––– –––––––––––––––

98,489,123 4,925 ––––––––––––––– ––––––––––––––– ––––––––––––––– –––––––––––––––

Share Premium

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

23. Treasury shares

In December 2010, the Group began a share buyback programme and during the year ended30 September 2013 purchased 4,009,838 (2012 – 9,320,000) shares on the open market at a cost of£3,882,229 (2012 – £8,464,000). As can be seen in note 22 above, on 25 January 2013, 15,000,000ordinary shares of 5 pence each were transferred out of treasury and cancelled. The remaining9,667,819 (2012 – 20,567,981) shares bought back were held in treasury as at 30 September 2013.



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



Group and Company 30 Sep 13 30 Sep 12 Provided Not Provided Provided Not Provided £’000 £’000 £’000 £’000

Share based payments – 2 – 2Losses – 1,464 – 1,464 –––––––– –––––––– –––––––– ––––––––

– 1,466 – 1,466 –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––


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A-194

26. Commitments

Group as lessee:


30 Sep 13 30 Sep 12 £’000 £’000

Within one year 126 126In the second to fifth years inclusive 216 342 ––––––––– –––––––––

342 468 ––––––––– ––––––––– ––––––––– –––––––––

Group as lessor:


30 Sep 13 30 Sep 12 £’000 £’000

Less than one year 13,457 14,488Between one and five years 33,841 40,513Over five years 18,726 20,067 ––––––––– –––––––––

66,024 75,068 ––––––––– ––––––––– ––––––––– –––––––––


The Company has made advances to the following subsidiaries in order to provide both long termand additional working capital funding. All amounts are repayable upon demand, are non-interestbearing, with the exception of loans to Conygar Holdings Limited and Conygar HaverfordwestLimited, and will be repaid from the trading activities of those subsidiaries. No provisions have beenmade against the outstanding amounts.

30 Sep 13 30 Sep 12 £’000 £’000Subsidiaries

Conygar Bedford Square Limited (447) (447)Conygar Strand Limited (52) (52)Martello Quays Limited 1,802 1,381Conygar Holdings Limited 88,104 88,806Conygar Haverfordwest Limited 23,444 15,285Conygar Wales PLC (30) (29)Conygar Advantage Limited 13 10 ––––––––– –––––––––

112,834 104,954 ––––––––– ––––––––– ––––––––– –––––––––

30 Sep 13 30 Sep 12 £’000 £’000Joint Ventures

Conygar Stena Line Limited 6,557 5,652C M Sheffield Limited 2 2 ––––––––– –––––––––

6,559 5,654 ––––––––– ––––––––– ––––––––– –––––––––

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27. Related party transactions (continued)


30 Sep 13 30 Sep 12 £’000 £’000

Secured interest bearing loan 3,537 2,632Unsecured non-interest bearing shareholder loan 3,020 3,020 ––––––––– –––––––––

6,557 5,652 ––––––––– ––––––––– ––––––––– –––––––––

During the year, the Company received a management fee from Conygar Stena Line Limited of£50,000 (2012 – £50,000) in respect of management services and intercompany interest of £905,924which is the total interest due to date on the secured interest bearing loan.

The outstanding balance of £2,153,000 of the non interest bearing loan of £5,500,000 the Companyissued to The Advantage Property Income Trust Limited in 2010 was repaid last year. Theoutstanding loan balance from The Advantage Property Income Trust Limited to the Company was£4,510,516 at 30 September 2013 (2012 – £5,347,000).

During the year, the Company received £nil (2012: £nil) of dividend income from Conygar HoldingsLimited but received intercompany interest of £5,304,000.

The Company also received interest from Conygar Haverfordwest Limited of £7,990,000 which isthe total interest due on the loan since August 2010.

28. Profit of parent company

As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the Companyis not presented as part of these financial statements. The parent company’s profit for the yearamounts to £11,569,000 (2012 – loss of £2,464,000).


Treasury Policies


The Group finances its activities with a combination of bank loans, cash and short term deposits.Other financial assets and liabilities, such as trade receivables and trade payables, arise directly fromthe Group’s operations. The Group may also enter into derivative transactions to manage the interestrate risk arising from the Group’s operations and its sources of finance. The main risks associated withthe Group’s financial assets and liabilities are set out below, together with the policies currentlyapplied by the board for their management. Derivative instruments may be used to change theeconomic characteristics of financial instruments in accordance with the Group’s treasury policies.Interest rate swaps and interest rate caps amount to an economic hedge of £71.4 million (2012:£65.8 million) of the total loan drawdowns of £70.5 million (2012: £80.9 million) for cashflows to20 August 2016, but no hedge accounting is used.

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

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Market Risk



Interest Rate Risk



At 30 September 2013, after taking into account interest rate swaps and caps, 100% (2012: 100%)of the Group’s bank borrowings were at a fixed rate of interest.


Interest Rate Maturity 30 Sep 13 30 Sep 12 £’000 £’000

Lloyds Banking Group (1) LIBOR +2% 2 – 5 years 41,058 49,387Capita (2) 5.24% Less than 1 year – 11,538Barclays (3) LIBOR +3.5% 2 – 5 years 19,212 20,000Royal Bank of Scotland (4) LIBOR +3.5% 2 – 5 years 10,242 – ––––––––– –––––––––

70,512 80,925 ––––––––– ––––––––– ––––––––– –––––––––

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

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


(4) Senior bank facility repayable 3 April 2016.

Financial Assets


30 Sep 13 30 Sep 12 £’000 £’000


31,629 31,515 ––––––––– ––––––––– ––––––––– –––––––––

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A-197



30 Sep 13 30 Sep 12 £’000 £’000


14,164 21,403 ––––––––– ––––––––– ––––––––– –––––––––


Credit Risk


Tenant rent payments are monitored regularly and appropriate action is taken to recover monies owedor if necessary to terminate the lease. Deferred consideration terms are only agreed withcounterparties approved by the board or where some additional security is available, and there werenone as at 30 September 2013 (2012 – £nil).

The Group policy has been to invest funds and enter into derivative transactions with a broad rangeof institutions having investment grade low risk credit ratings and a strong or superior ability to repayshort term debt obligations. The unprecedented credit and banking market disruption of the last threeyears has had a significant impact upon the ability to rely upon either credit ratings or the ability offinancial institutions to honour their commitments and the widespread nature of the financial crisishas introduced considerable uncertainty into the process. As at 30 September 2013, the Group hada single balance of £92,000 (2012 – £125,000) where the counter-party had failed to honour a noticedeposit and a full impairment provision has been recorded against the balance.


Liquidity Risk

The Group’s objective is to maintain a balance between continuity of funding and flexibility throughthe use of bank loans secured on the Group’s properties. The Group is exposed to liquidity risk shouldit 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 ofthis can be mitigated.

Loans

As at 30 September 2013, TAPP Property Limited maintained a facility with the Lloyds BankingGroup of up to £78,000,000 (2012: £78,000,000) under which £41,058,000 (2012: £49,387,000)had been drawn down. This facility is repayable on or before 27 January 2015 and is secured by fixedand floating charges over the assets of the TAPP Property Limited group and the Lamont companies.The facility is subject to a maximum loan to value covenant of 70% and an interest cover ratiocovenant of 150%. Due to this loan to value covenant, the maximum loan available at the year endwas £63,700,000 and so the Group could draw down approximately £20,000,000.

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

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A-198


As at 30 September 2013, TOPP Property Limited and TOPP Bletchley Limited maintained a facilitywith the Royal Bank of Scotland PLC of up to £10,242,000 (2012: £nil) of which £10,242,000(2012: £nil) had been drawn down. This facility is repayable on or before 3 April 2016 and is securedby fixed and floating charges over the assets of the TOPP Property Limited group. The facility issubject to a maximum loan to value covenant of 55%, interest cover ratio covenant of 225% and adebt to rent cover ratio covenant of 7:1. The facility is subject to quarterly repayments of £75,000.

As at 30 September 2013, Conygar Dundee Limited, Conygar Hanover Street Limited, ConygarStafford Limited and Conygar St Helens Limited jointly maintained a facility with Barclays BankPLC of up to £19,212,000 (2012: £20,000,000) of which £19,212,000 (2012: £20,000,000) hadbeen drawn down. This facility is repayable on or before 20 August 2016 and is secured by fixed andfloating charges over the assets of Conygar Dundee Limited, Conygar Hanover Street Limited,Conygar Stafford Limited and Conygar St Helens Limited. The facility is subject to a maximum loanto value covenant of 56% (2012: 58%) and an interest cover ratio covenant of 225%. The loan isamortised by 1% of the outstanding loan amount per quarter, if the loan to value is greater than 40%.

Price Risk




While the Group does not have a formally approved gearing ratio, the objective above is activelymanaged through the direct linkage of borrowings to specific property. The Group seeks to ensurethat secured borrowing does not exceed 70% of the current market value of such property.




Cash 31,629 31,515 31,629 31,515Trading investments – 1,257 – 1,257Loans to joint ventures 6,559 5,564 6,559 5,564


Floating rate borrowings 70,512 69,387 70,512 69,387Fixed rate borrowings – 11,538 – 11,424Interest rate swaps 230 939 230 939Preference share liability – – – –

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Cash 14,164 21,403 14,164 21,403Loans to joint ventures 6,559 5,564 6,559 5,564


Preference share liability – – – –


Market Market Value at Value at Protected 30 Sep 13 30 Sep 12 rate % Expiry £’000 £’000£13.3 million (2012: £21.8 million) swap 1.33 (2012: 1.33) Feb 2015 (128) (393)£12.7 million (2012: £12.7 million) swap 1.33 (2012: 1.33) Feb 2015 (121) (229)£15.3 million (2012: £15.3 million) swap 0.99 (2012: 0.99) Feb 2015 (75) (153)£15.2 million (2012: £16 million) swap 1.055 (2012: 1.055) Aug 2016 (32) (199)£4 million (2012: £4 million) cap 1.00 (2012: 1.00) Aug 2016 41 35£10.9 million (2012: £nil) cap 0.75 (2012: n/a) April 2016 85 – –––––––––– ––––––––––

(230) (939) –––––––––– –––––––––– –––––––––– ––––––––––



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A-200

Property Address

Total Area (sq ft)

Industrial

Aberdeen


Blantyre

Unit B Watt Place, Hamilton International Technology Park, Blantyre 34,338

Brighouse


Clevedon


Hemel Hempstead

3 Cherry Trees Lane –

Kettering


Livingston


Livingston


Milton Keynes


Runcorn


Stafford

Elster Metering, Tollgate Business Park 55,181

Stratford Upon Avon


Uddingston


Witham


Worcester


Leisure

Dundee


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A-201

Total Area (sq ft)

Offices

Ashby de la Zouch

Ashby Park, Ashby de la Zouch 138,342

Birmingham

Norfolk House, Birmingham 114,841

Dundee

Compass House, Dundee 30,342

Farnborough


Fleet


Fleet


Leeds


Lincoln

Witham Park House, Lincoln 105,345

Livingston


Livingston


Maidenhead


Northampton

Charles House, Northampton 28,213

Reading


Swindon


Warrington


Warrington


Welwyn Garden City

Units 3–6 Silver Court, Watchmead 29,756

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A-202

Total Area (sq ft)

Retail

Ayr

156 and 158 – 160 High Street 8,601

Ayr

52/56 Newmarket Street 10,717

Bletchley


Felixstowe


Hinckley


Horsham

7 West Street 4,929

Rugeley


St Helens

1 Cotham Street, St Helens 41,619

Wolverhampton

Network House, Wolverhampton 33,127

Retail Warehouse

Birmingham


Coventry

Halfords, 36 Foleshill Road 14,888

––––––––––––––––

Total Area 1,928,262 –––––––––––––––– ––––––––––––––––

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AIM The AIM market of the London Stock Exchange PLC







NAV Net asset value






UK United Kingdom









66


GLOSSARY OF TERMS


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