More annual reports from Mountview Estates PLC:
2023 ReportMOUNTVIEW ESTATES P.L.C. REPORT AND ACCOUNTS 2007 1 M O U N T V I E W E S T A T E S P. L. C. CONTENTS Financial Highlights Chairman’s Statement Review of Operations Directors and Advisors Report of the Directors Statement of Directors’ Responsibilities Corporate Governance Remuneration Report Consolidated Income Statement Consolidated Balance Sheet Consolidated Statement of Changes in Equity Consolidated Cash Flow Statement Notes to the Consolidated Financial Statements Independent Auditors’ Report to the Members of Mountview Estates P.L.C. Mountview Estates P.L.C. – parent company balance sheet prepared under UK GAAP Notes to the parent company balance sheet prepared under UK GAAP Independent Auditors’ Report to the Members of Mountview Estates P.L.C. (Parent company prepared under UK GAAP) Table of Comparative Figures Notice of Meeting Shareholders’ Information Page 2 3 4-5 6 7-9 10 11-13 14-15 16 17 18 19 20-33 34-35 36 37-42 43 44 45 46 2 M O U N T V I E W E S T A T E S P. L. C. FINANCIAL HIGHLIGHTS Turnover (millions) Gross Profit (millions) Profit Before Tax (millions) Shareholders’ Funds (millions) Earnings per share (pence) Net assets per share Dividend per share (pence) 2007 £ 68.2 43.1 50.2 172.9 899.2 44.3 150 2006 £ 47.5 28.1 22.7 143.2 408.4 36.7 130 Increase % 43.4 53.4 121.1 21.0 120.1 20.7 15.4 3 M O U N T V I E W E S T A T E S P. L. C. CHAIRMAN’S STATEMENT Opposite are the financial highlights for the year ended 31 March 2007. It is always a pleasure to announce increased profits, particularly when those profits represent a new high for the Company. No sooner has such a record high been announced than it becomes regarded as the norm, but I do believe that these profits must be regarded as exceptional. That is not to say that we do not respect this new benchmark as the target to which we must aspire and we shall strive to match it and, indeed, exceed it in years to come. My loyal staff have accepted new and increased responsibilities which have been thrust upon them and have risen to these challenges admirably. So successful have they been that our second six months were even better than the first six months. I am happy not only to thank my staff and colleagues for all their hard work in difficult and changed circumstances but also to know that they are relishing the challenges ahead. I have often emphasised the need to make the right purchases for the future success of the Company. This does not become any easier but happily the number of purchases made in the year to 31 March 2007 exceeded the number for the previous year and this trend has continued as our new financial year gets under way. We have the necessary financial facilities in place and so we are ready to take advantage of the right purchasing opportunities. We have purchased more life tenancies during the year ended 31 March 2007 and will continue to pursue this source of trading stock. Whilst the income from these investments is negligible the discount to vacant possession value at which they can be bought is substantial at a time when the discount in respect of regulated tenancies is narrower than ever. We have continued our policy of maintaining our properties and making the necessary improvements to enhance rental income and thus ensuring that properties are in optimum condition at the point of sale. Whilst the strength of our sales figures during the last year rightly takes greater emphasis than anything else, the continuing security of our rental income covering so many of our costs is most welcome. I believe that this Company is in good shape to continue to deliver strong results but, if government and monetary policies are to have their intended effect, we must expect a quietening of the housing market. We continue to have in position firm financial and internal controls and we are well placed to deal with any challenges that may arise. I have previously reported the departure of Christopher Maunder Taylor as at 30 September 2006. There is no intention to appoint a Director in his place. I now report that Nigel Palmer left the Company as a Non-Executive Director as at 31 December 2006. He has been replaced as a Non- Executive Director by John Fulton. As a Chartered Accountant John is ideally suited to be Chairman of the Audit Committee and will stand for election at the Annual General Meeting on 15 August 2007. Your Board is recommending an increased final dividend of 100 pence per share in respect of the year ended 31 March 2007. This dividend is payable on 20 August 2007 to shareholders on the Register of Members as at 20 July 2007. This will make a total dividend for the year ended 31 March 2007 of 150 pence per share. D.M. SINCLAIR Chairman 18 July 2007 4 M O U N T V I E W E S T A T E S P. L. C. REVIEW OF OPERATIONS PROPERTY REVIEW 1. RESIDENTIAL PROPERTIES The Group’s business model is simple. We are a property trading company buying tenanted properties at a discount to notional vacant possession value and selling them when they become vacant. Categories of Property held as trading stock The Group trades in the following categories: Rack rent (tenanted residential) units Ground rent units Life tenancy units A unit is a property, however large or small, whether freehold or leasehold, which is held subject to one tenancy. Analysis of the Group Trading portfolio by type as at 31 March 2007 Rack Rents Ground Rents Life Tenancies No of units 2,348 1,043 372 Cost £m 160.80 0.97 22.1 Analysis of the Group Trading portfolio at the lower of cost and estimated net realisable value by geographical location as at 31 March 2007 Rack Rents Ground Rents Life Tenancies £m £m £m London (North) London (South) Kent, Surrey, Sussex, Dorset Hampshire, I.O.W Herts, Essex, Beds, Bucks, Oxon, Camb, Norfolk, Suffolk, Berks, Middx, Northants Remainder of England and Wales Acquisitions 49.1 44.2 21.3 28.9 17.3 0.4 0.4 0.04 0.1 0.03 0.2 0.5 5.1 7.1 9.2 Portfolio % 27.1 24.5 14.4 19.6 14.4 The Company’s modus operandi is to buy tenanted residential property and sell it when it becomes vacant. Regulated investments that are characterised by early possession with rental returns below market value and high margin on sale are becoming increasingly short in supply. The Group continues to place more emphasis on the acquisition of life tenancies. Although this type of trading stock has nominal rental income, the properties are bought at a greater discount to vacant possession value and have a higher margin on sale. In addition, the maintenance of the property is usually the responsibility of the life tenant. The Group has made a number of quality residential purchases during the year, however, the number of units sold exceeds the number of units purchased, mainly due to the competitive nature of the market. 5 M O U N T V I E W E S T A T E S P. L. C. REVIEW OF OPERATIONS During the financial year the Group has sold and purchased the following number of units: Rack Rents Ground Rents Life Tenancies Rental Income Sold 227 47 10 Purchased 132 17 (or created) 36 The Company’s rental income is derived from five different sources: • Regulated tenancies • Assured tenancies • Assured shorthold tenancies • Life tenancies • Ground rents More than ever we continue to target those properties where the rent is capped such that expenditure on improvements and the provision of missing amenities lead to substantial increases in rental income. 2. INVESTMENT PROPERTIES The analysis of the investment portfolio as at 31 March 2007 is as follows: Louise Goodwin Limited A.L.G. Properties Limited 54 units 11 units All the properties are located in Belsize Park, London NW3. During the financial year, we have disposed of one unit. Mountview Estates P.L.C. purchased the investment companies in 1999. They are the only significant departures from the Company’s normal activities, and it was believed that the rental income could be increased to such an extent that the long term holding of the properties could be justified. Outlook Over the past 12 months, as a result of market conditions, rental income has not risen in the way we had anticipated. There is, however, an active owner/occupier purchasing market of which we intend to take advantage by the sale of units that fall vacant. Valuation The properties comprised within the investment portfolio have been revalued externally for the purposes of these accounts. The value attributed to each individual property reflects the change in its condition where appropriate and the adjustment resulting from changes in market circumstances. Details of the valuation of the investment portfolio are disclosed on page 28. 6 M O U N T V I E W E S T A T E S P. L. C. DIRECTORS AND ADVISERS Executive Directors D.M. Sinclair FCA (Chairman) Joined the Company as Company Secretary in 1977, became a Director on 1 January 1982 and succeeded his late father as Chairman on 5 June 1990. Member of the Institute of Chartered Accountants in England and Wales. K. Langrish-Smith Joined the Company in 1974 and became a Director on 1 January 1982. Miss J.L. Murphy Joined the Company in 1990 as an assistant to the late Frank Sinclair and became a Director on 1 September 1995. Mrs. M.M. Bray FCCA Joined the Company in 1996 and became Company Secretary. Appointed an Executive Director on 1 April 2004. Member of the Association of Chartered Certified Accountants. C. Maunder Taylor FRICS Joined the Company as a Non-Executive Director in 1990 and became an Executive Director on 1 January 1992. Member of the Royal Institute of Chartered Surveyors. Resigned on 30 September 2006. Non-Executive Directors J.P. Hall Joined the Company as a Non-Executive Director on 1 December 2000. J.B. Fulton FCA Joined the Company as a Non-Executive Director on 1 January 2007. Member of the Institute of Chartered Accountants in England and Wales. N.S. Palmer Joined the Company as a Non-Executive Director on 1 December 2000. Resigned on 31 December 2006. Secretary and Registered Office Mrs. M.M. Bray FCCA Mountview House, 151 High Street, Southgate, London N14 6EW Bankers HSBC Bank Plc, 60 Queen Victoria Street, London EC4N 4TR Barclays Bank Plc, One Churchill Place, London E14 5HP Auditors BSG Valentine Lynton House, 7-12 Tavistock Square, London WC1H 9B Solicitors Norton Rose 3 More London Riverside, London SE1 2AQ Registrars and Transfer Office Capita Registrars Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TU Brokers Brewin Dolphin Securities Ltd 12 Smithfield Street, London EC1A 9BD 7 M O U N T V I E W E S T A T E S P. L. C. REPORT OF THE DIRECTORS The Directors have pleasure in presenting their Seventieth Annual Report to the Members together with the Financial Statements for the year ended 31 March 2007. 1. RESULTS AND DIVIDENDS The Results for the year are set out in the Income Statement on page 16. The Directors recommend the payment of a final dividend of 100 pence per share. The dividend will be paid on 20 August 2007 subject to approval at the A.G.M. on 15 August 2007 to Ordinary Shareholders on the register at the close of business on 20 July 2007. 2. ACTIVITIES The principal activities of the Company and its Subsidiary undertakings are as follows: Parent Company Mountview Estates P.L.C. Property Dealing Subsidiary undertakings (wholly owned) Hurstway Investment Company Limited Louise Goodwin Limited A.L.G. Properties Limited Property Dealing Property Investment Property Investment 3. REVIEW OF BUSINESS AND PROSPECTS Details of the Group’s performance during the year and expected future developments are contained in the Chairman’s Statement and the Review of Operations on pages 4 to 5. In addition the Group has established the following Financial and Internal Performance Indicators: Earnings per share Dividend Net assets per share Financial Key Performance Indicators 2007 growth % 120.1 15.4 20.7 2006 growth % (8.3) 3.2 6.4 The Directors do not consider that any non-financial indicators are in existence. Revenue per member of staff Administrative expenses as percentage of revenue Profit before tax per member of staff 4. ROTATION OF DIRECTORS Internal Performance Measures 2007 £’000 2,434 6.6% 1,794 2006 £’000 1,581 6.4% 755 In accordance with the Company’s Articles of Association, Mr. D.M.Sinclair and Mrs. M.M.Bray retire from the Board by rotation and being eligible, offer themselves for re-appointment. Resolutions for their re-appointment will be proposed at the Annual General Meeting. 8 M O U N T V I E W E S T A T E S P. L. C. REPORT OF THE DIRECTORS 5. DIRECTORS’ INTERESTS IN SHARE CAPITAL The number of Ordinary Shares in the Company in which the Directors and their families were interested is as follows: Mr. D.M. Sinclair including the following holding Sinclair Estates Limited – 54,165 beneficial Mr. D.M. Sinclair is a Director of the above company Mr. K. Langrish-Smith Miss J.L. Murphy Mrs. M. M. Bray Mr. J.P. Hall Mr. C. Maunder Taylor (Resigned 30.09.2007) All the above interests are beneficial except where otherwise stated. 31 March 2007 1 April 2006 Ordinary Shares of 5p each 534,883 534,883 221,155 221,500 1,100 10,187 2,000 1,090 1,100 10,187 2,000 800 Mr. K. Langrish-Smith has increased his beneficial holdings by 1,755 Ordinary Shares within 1 month of the Notice of Meeting. 6. SUBSTANTIAL INTERESTS IN SHARE CAPITAL As at the date of this Report notices have been received of the following substantial interests in the capital of the Company: Ordinary Shares of 5p each % of Issued Share Capital Mr. Phillip Trevor Wheater FDSGS Acct and Mrs. Daphne Sinclair and Mr. Alistair James Sinclair Mr. Richard Michael Moyse and Mr. Stephen Robin Oldfield Trustees of W.D.I. Sinclair Grandchildren Settlement Estate of Mrs. Doris Sinclair Mrs. M. A. Murphy Mrs. S.M. Simkins Mrs. A. Williams Viewthorpe Limited 633,780 179,400 118,100 625,823 168,150 119,890 134,419 16.25 4.60 3.03 16.05 4.35 3.07 3.44 7. DIRECTORS’ INTERESTS IN CONTRACTS There was no Contract in existence during or at the end of the financial year in which a Director of the Company is, or was, materially interested, and which is or was significant in relation to the Company’s business. 8. DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE The Company purchases liability insurance covering the Directors and Officers of the Company and its Subsidiary undertakings. 9 M O U N T V I E W E S T A T E S P. L. C. REPORT OF THE DIRECTORS 9. POLICY ON THE PAYMENT OF CREDITORS The Company’s policy in respect of all its suppliers is to settle the terms of payment when agreeing the terms of each transaction. The Company also ensures that the suppliers are made aware of the terms of payment and abides by them. Trade creditors existing at 31 March 2007 relating to purchases of property stock generally complete 28 days after exchange of contracts. Other trade creditors were settled, on average, 14 days after incurring the liability (2006: 14 days). 10. REMUNERATION POLICY The Company’s Shareholders will be asked to approve the Remuneration Report contained in the Annual Report and Accounts at the Annual General Meeting to be held on 15 August 2007 and a resolution is drafted accordingly. 11. CORPORATE GOVERNANCE The Directors’ statement on corporate governance is set out on pages 11 to 13. 12. HEALTH AND SAFETY The Group is committed to achieving a high standard of health and safety. The Group operates and regularly reviews its health and safety policies and practices to ensure that appropriate standards are maintained. 13. DONATIONS During the year the Group made charitable donations of £25,835 (2006: £29,515). There were no political donations (2006: £nil). 14. GOING CONCERN The Directors continue to adopt the going concern basis in preparing the accounts. They are of the opinion that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. 15. AUDITORS BSG Valentine were appointed on 11 October 2006 to fill a vacancy in accordance with section 388(1) of the Companies Act 1985.A resolution to re-appoint BSG Valentine as auditors for the ensuing year will be proposed at the Annual General Meeting in accordance with section 385 of the Companies Act 1985. By Order of the Board M. M. BRAY Secretary Mountview House 151 High Street Southgate London N14 6EW 18 July 2007 10 STATEMENT OF DIRECTORS’ RESPONSIBILITIES M O U N T V I E W E S T A T E S P. L. C. The Directors are responsible for preparing the Annual Report and the Group financial statements in accordance with the applicable law and International Financial Reporting Standards as adopted by the European Union, in addition the Directors are responsible for preparing the Parent Company accounts in accordance with UK GAAP. Company law requires the Directors to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss for that period. In preparing these financial statements, the Directors are required to: select suitable accounting policies and then apply them consistently; (cid:1) (cid:1) make judgements and estimates that are reasonable and prudent; (cid:1) (cid:1) state whether Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In so far as the Directors are aware: (cid:1) (cid:1) there is no relevant audit information of which the Company’s auditors are unaware; and the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. By Order of the Board M. M. BRAY Secretary Mountview House 151 High Street Southgate London N14 6EW 18 July 2007 CORPORATE GOVERNANCE 11 M O U N T V I E W E S T A T E S P. L. C. The Financial Reporting Council (FRC) published a new version of the Combined Code in July 2003 following publication of the Higgs report earlier that year. This is applicable to the Company for the reporting year commencing 1 April 2004. The Board is satisfied that as a “small company” outside the FTSE 350 it would currently meet most of the requirements. Mountview Estates P.L.C. is a family controlled Company. There is a concert party in existence, of which members of the Sinclair family, Sinclair Estates Limited, Viewthorpe Limited, directors of the Company and various long standing supporters of the Company are currently members. As a result of a reorganisation of certain of the Sinclair family’s interests which took place in April 2005, shares in the Company which had previously been held by certain former members of the concert party are no longer being treated as held by the concert party. Due to this reorganisation and the addition also of certain other shareholdings, the net aggregate shareholdings of the concert party now amount to approximately 53 percent of the issued share capital of the company. Throughout the year ended 31 March 2007 the Company has been in compliance with the Code provisions set out in Section 1 of the July 2003 FRC Combined Code on Corporate Governance with certain exceptions noted below: (cid:1) (cid:1) A2.1 requires justification for combining the posts of Chairman and Chief Executive Officer. There is no formal division of responsibilities but neither the Chairman nor any other member of the Board has unfettered powers of decision. As it is a small Company, there is no formal nomination of a senior independent director. A3.2 The majority of non-executive Directors should be independent of management and free from any business or other relationship, which could materially interfere with the exercise of their independent judgement. Mr. J.P.Hall, a non-executive Director, is the Chief Executive of Brewin Dolphin Holdings PLC but has no influence or part in the corporate advice received by the Company. Mr.J.P.Hall’s detachment from the day-to-day issues raised within the Company during the year, together with the presence of the second non-executive Director Mr. J.B. Fulton provide sufficiently strong and experienced balance with the executive members of the Board for a Company of this size. In view of this we continue to believe that both our non-executive Directors are independent. The Board As at the year ended 31 March 2007 the Board comprised the Chairman, Mr. D. M. Sinclair, three executive Directors and two non-executive Directors. All Directors have access to independent professional advice at the expense of the Company and to the services of the Company Secretary who is responsible to the Board for ensuring the correct procedures are followed. In addition to ad-hoc meetings arranged to discuss particular transactions and events, the full Board meets at least four times a year and retains full and effective control over the Group’s activities. Meetings Mr. D.M. Mr. K. Miss J.L. Mrs. M.M. Mr. C. Mr. J.P. Mr. J.B. Mr. N.S. Sinclair Langrish- Murphy Palmer (Resigned Smith 31 Dec. 2006) Bray Maunder Hall Taylor (Resigned 30 Sept. 2006) Fulton Full Board Audit Committee Remuneration Committee Nomination Committee 4 3 1 1 4 n/a 4 n/a 4 3 2 n/a n/a n/a n/a n/a 1 1 1 – 4 3 2 1 2 1 1 – 2 3 1 1 12 CORPORATE GOVERNANCE M O U N T V I E W E S T A T E S P. L. C. Day to day management is delegated to the Executive Board which focuses on major transactions, business growth, strategy, cash management and control. There is regular communication with the Non-Executive Directors in order to keep them informed on the Company’s operations. All members of the Board are subject to the re-election provisions of the Articles which require them to offer themselves for re-election at least once every three years and, on appointment, at the first Annual General Meeting (AGM) after appointment. Details of those directors offering themselves for re-appointment are set out in the Directors’ Report on Page 7. Directors – performance evaluation The Board is of the opinion that the Directors’ performance is continuously evaluated throughout the year. Any areas of concern are addressed during our regular management or Board meetings. Each of the Directors is responsible for his/her self-appraisal process in respect of their individual performance during the year. This is in turn discussed with the members of the Remuneration Committee who also review the performance of the Board as a whole. Remuneration Committee The Remuneration Committee comprises Mr. John Hall (non-executive Director), Mr. John B. Fulton (non-executive Director) and Mr.D.M.Sinclair (Chairman). The Committee, which is chaired by Mr. John Hall, monitors, reviews and makes recommendations to the Board on all elements of the remuneration of the executive Directors. The Committee meets twice a year. No Director is involved in deciding his/her own remuneration and the remuneration of the non- executive Directors is determined by the full Board. The report of Directors’ Remuneration is set out on Pages 14 to 15. Nomination Committee The Nomination Committee is responsible for the selection and approval of appointments to the Board. Given the small size of the Company the Chairman of the Nomination Committee is Mr. D.M. Sinclair and all the Directors of the Company are members. The Committee has approved the nomination of Mr John B. Fulton as the new non-executive Director and Chairman of the Audit Committee. Audit Committee The Audit Committee comprises Mr. John Hall (non-executive Director) and Mr. John B. Fulton (non- executive Director). The Committee, which is chaired by Mr. John B. Fulton, has clear terms of reference agreed by the Board and is responsible for ensuring that the Group’s system of financial control is adequate. It also keeps under review the cost effectiveness of the audit and the independence and objectivity of the auditors. The Committee has made recommendation and presided over the review of Grant Thornton UK LLP as the Company’s Auditors. Mr D.M. Sinclair and Mrs M.M. Bray participated alongside the Audit Committee members during the meetings at which resignation of Grant Thornton LLP was accepted and BSG Valentine were selected as the new auditors for the current financial year. The Committee meets a minimum of three times a year and at least one of these meetings is with the external auditors without an executive director in attendance. The Chairman of the Audit Committee reports to the Board on matters discussed with external auditors. The Audit Committee monitors the integrity of the financial statements and reviews the interim and annual financial statements before submission to the Board. Further the Committee seeks to ensure that the external auditors are independent. Mr. John B. Fulton is a member of Institute of Chartered Accountants in England and Wales. The Audit Committee has satisfied itself that the Company complies with the principles set out in the Smith Report. CORPORATE GOVERNANCE 13 M O U N T V I E W E S T A T E S P. L. C. Communications with Shareholders The Company communicates with its shareholders by way of the annual reports and accounts and half yearly interim reports. Investors may use the Company’s Annual General Meeting to communicate with the Board. The Board including the non-executive Directors is available throughout the year to listen to the views of Shareholders. Internal Financial Control An ongoing process for identifying, evaluating and managing the significant risks faced by the Group was in place throughout the period from 1 April 2006 to the date of approval of the Annual Report and Accounts. This process is regularly reviewed by the Board and accords with the Internal Control Guidance for Directors in the Combined Code. The Directors are responsible for establishing and maintaining the Group’s system of internal financial control. Internal control systems in any group are designed to meet the particular needs of that group and the risks to which it is exposed, and by their nature can provide reasonable but not absolute protection against material misstatement or loss. Due to its size, the Group does not have an internal audit function. The key procedures which the Directors have established with a view to providing effective internal financial control are as follows: Identification of Business Risks – The Board is responsible for identifying the major business risks faced by the Group, such as fluctuations in interest rates, inflation rates, fluctuations in consumer spending, employment levels and for determining the appropriate course of action to manage those risks. Management Structure – The Board has overall responsibility for the Group and there is a formal schedule of matters specifically reserved for decision by the Board. Corporate Accounting – Responsibility levels are communicated throughout the Group as part of the corporate accounting procedures. These procedures set out authorisation levels, segregation of duties and other control procedures. Quality and Integrity of Personnel – The integrity and competence of personnel is ensured through high recruitment standards and close Board supervision. Monitoring – Internal financial control procedures are reviewed by the Board as a whole. These reviews embrace the provision of regular information to management, and monitoring of performance and key performance indicators. 14 REMUNERATION REPORT M O U N T V I E W E S T A T E S P. L. C. UNAUDITED INFORMATION Remuneration Committee The Remuneration Committee, as constituted by the Board is responsible for the determination of the remuneration of the executive Directors of Mountview Estates P.L.C. The Board as a whole considers the remuneration of the non-executive Directors. External advisors were not used in the year under review. The composition of the Committee has not altered during the year. Remuneration Policy The Group operates in a competitive environment. In forming its policy on remuneration the Group aims to set reward packages which enable the Group to attract, retain and motivate executives with the appropriate skills and experience. The Remuneration Committee has developed the following specific remuneration package consisting of two elements. (cid:1) (cid:1) Basic salary and benefits – the fixed part of the package Annual discretionary bonuses Basic salaries and benefits in kind for each executive Director are reviewed on an annual basis by the Remuneration Committee, which takes into account individual responsibilities, experience and performance as well as competitive market practice. Benefits include the provision of a car and private medical health insurance. Directors have the choice of the use of the company car or the cash alternative. The Group does not operate any share option scheme. Bonuses are recommended by the Committee and approved by the Board having regard to the performance of the Group and the executive Directors during the year. In assessing corporate performance the Remuneration Committee takes into account the Group’s corporate performance within the property sector. Non-Executive Directors Each non-executive Director receives fees of £24,000 per annum. The non-executive Directors are not entitled to bonuses, benefits or pension contributions. Pensions The Company contributes 3% of the total of the executive Directors’ gross annual salaries and bonuses to a Stakeholder Pension Scheme. The above scheme is available to all employees of the Company. Performance Graph The graph below is prepared in accordance with The Directors’ Remuneration Report Regulations 2002 and illustrates the Company’s performance compared to a broad equity market index over the past five years. As the Company is a constituent of the FTSE All-Share Real Estate Index, that index is considered the most appropriate form of broad equity market index against which the Company’s performance should be plotted. Performance is measured by Total Shareholder Return as represented by share price performance and dividend. Total Shareholder Return £ 260 240 220 200 180 160 140 120 100 80 60 FTSE All-Share Real Estate Index Mountview Estates P.L.C. 2002 2003 2004 2005 2006 2007 31 March Source: Datastream The graph looks at the value of £100 invested in Mountview Estates PLC on 31 March each year compared to the value of £100 invested in the FTSE All-Share Real Estate Index. AUDITED INFORMATION 2007 Executive D. M. Sinclair K. Langrish-Smith Miss J. L. Murphy Mrs M. M. Bray C. Maunder Taylor (Resigned 30.09.2006) Non-Executive J.P. Hall J.B. Fulton (Appointed on 01.01.2007) N.S. Palmer (Resigned 31.12.2006) REMUNERATION REPORT 15 Salary £000 Bonus £000 Benefits in kind £000 Pensions Contri- butions £000 215 135 161 161 79 24 6 18 375 200 275 300 – – – 799 1,150 28 15 14 – 6 – – 63 18 10 13 14 2 – – 57 2,069 M O U N T V I E W E S T A T E S P. L. C. Total £000 636 360 463 475 87 24 6 18 2006 Executive D. M. Sinclair K. Langrish-Smith Miss J. L. Murphy Mrs M. M. Bray C. Maunder Taylor Non-Executive J.P. Hall N.S. Palmer Salary £000 Bonus £000 Benefits in kind £000 Pensions Contri- butions £000 200 120 150 150 150 24 24 818 120 45 60 105 70 – – 400 26 14 12 – 11 – – 63 10 5 6 8 7 – – 36 Total £000 356 184 228 263 238 24 24 1,317 Service Contracts Each of the executive Directors who served during the year has a service agreement, which can be terminated on one year’s notice by either party. Approval An Ordinary Resolution to approve this report will be proposed at the Annual General Meeting of the Company. This report was approved by the Board on 18 July 2007. John Hall Chairman of the Remuneration Committee 16 CONSOLIDATED INCOME STATEMENT M O U N T V I E W E S T A T E S P. L. C. for the year ended 31 March 2007 Year ended 31.03.2007 £000 Notes Year ended 31.03.2006 £000 REVENUE Cost of sales GROSS PROFIT Administrative Expenses Gain on sale of investment properties Operating profit before changes in fair value of investment properties Increase in fair value of investments PROFIT FROM OPERATIONS Finance costs Income from investments PROFIT BEFORE TAXATION Taxation – current Taxation – deferred Taxation PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS 4 4 7 8 9 68,168 (25,076) 43,092 (4,526) – 38,566 14,224 52,790 (2,583) 20 50,227 (11,029) (4,138) (15,167) 35,060 Basic and diluted earnings per share (pence) 11 899.2 47,456 (19,402) 28,054 (3,058) 599 25,595 337 25,932 (3,299) 27 22,660 (7,266) 528 (6,738) 15,922 408.4 The notes on pages 20-33 are an integral part of these consolidated financial statements. CONSOLIDATED BALANCE SHEET 17 M O U N T V I E W E S T A T E S P. L. C. as at 31 March 2007 As at 31.03.2007 £000 Notes As at 31.03.2006 £000 12 13 15 16 21 22 22 22 23 18 19 17 18 2,607 34,080 36,687 183,889 1,061 646 185,596 222,283 195 55 25 56 172,606 172,937 29,644 9,194 38,838 2,952 1,030 6,526 10,508 49,346 2,735 20,780 23,515 176,095 651 2,338 179,084 202,599 195 55 25 56 142,849 143,180 29,716 5,056 34,772 1,420 20,149 3,078 24,647 59,419 ASSETS NON-CURRENT ASSETS Property, plant and equipment Investment properties CURRENT ASSETS Inventories of trading properties Trade and other receivables Cash and cash equivalents TOTAL ASSETS EQUITY AND LIABILITIES Capital and reserves attributable to equity holders of the company Share capital Capital redemption reserve Capital reserve Other reserves Retained earnings NON-CURRENT LIABILITIES Long-term borrowings Deferred tax CURRENT LIABILITIES Trade and other payables Bank overdrafts and loans Current tax payable TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES 222,283 202,599 Approved by the Board on 18 July 2007. D. M. SINCLAIR Chairman K. LANGRISH-SMITH Director The notes on pages 20-33 are an integral part of these consolidated financial statements. 18 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY M O U N T V I E W E S T A T E S P. L. C. for the year ended 31 March 2007 Share capital £000 Capital Capital redemption reserves reserves £000 £000 Notes Other reserves £000 Retained earnings £000 Total £000 Changes in equity for year ended 31 March 2006 Balance as at 1 April 2005 195 25 55 56 131,840 132,171 Profit for the year Dividends 15,922 15,922 (4,913) (4,913) Balance at 31 March 2006 195 25 55 56 142,849 143,180 Changes in equity for year ended 31 March 2007 Balance as at 1 April 2006 195 25 55 56 142,849 143,180 Profit for the year Dividends Balance at 31 March 2007 10 23 35,060 35,060 (5,303) (5,303) 195 25 55 56 172,606 172,937 The notes on pages 20-33 are an integral part of these consolidated financial statements. CONSOLIDATED CASH FLOW STATEMENT 19 M O U N T V I E W E S T A T E S P. L. C. for the year ended 31 March 2007 Year ended 31.03.2007 £000 Notes Year ended 31.03.2006 £000 CASH FLOWS FROM OPERATING ACTIVITIES Profit from operations 52,790 25,932 Adjustments for: Depreciation Loss on disposal of property, plant and equipment Increase in fair value of investment properties Gain on sale of investment properties Operating cash flows before movement in working capital (Increase) in inventories (Increase) in receivables Increase in payables Cash generated from operations Interest paid Income taxes paid Net cash from operating activities Investing activities Interest received Proceeds from sale of investment properties Proceeds from disposals of property, plant and equipment Purchase of property, plant and equipment Purchase of investment properties 12 13 Net cash from investing activities Cash flows from financing activities Repayment of borrowings Dividends paid Net cash used from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of year 18 146 45 (14,224) – 38,757 (7,794) (410) 1,532 32,085 (2,583) (7,581) 21,921 20 925 41 (69) (35) 882 (1,268) (5,303) (6,571) 16,232 (15,586) 646 159 30 (337) (599) 25,185 (1,320) (331) 317 23,851 (3,299) (7,343) 13,209 27 3,122 61 (165) (498) 2,547 (12,711) (4,913) (17,624) (1,868) (13,718) (15,586) The notes on pages 20-33 are an integral part of these consolidated financial statements. 20 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS M O U N T V I E W E S T A T E S P. L. C. for the year ended 31 March 2007 1. GENERAL INFORMATION Mountview Estates P.L.C. (the Company) and its Subsidiaries (the Group) is a property trading company with a portfolio in England and Wales. The Company is a public limited liability company, incorporated, domiciled and registered in England. The address of its registered office is: 151 High Street, Southgate, London N14 6EW. The Company has its primary listing on the London Stock Exchange. These consolidated financial statements have been approved for issue by the Board of Directors on 18 July 2007. 2. ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) (b) (c) (d) Basis of Preparation The Accounts have been prepared under the historical cost convention, as modified by the revaluation of investment properties, and in accordance with applicable International Financial Reporting Standards as adopted by the EU. Basis of Consolidation The Group’s financial statements incorporate the results of Mountview Estates P.L.C. and all of its Subsidiary undertakings made up to 31 March each year. Control is achieved where the company has the power to govern the financial and operating policies of an investee enterprise so as to obtain benefits from its activities. The Group exercise control through voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. On acquisition, the identifiable assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. The purchase method has been used in consolidating the subsidiary financial statements. All significant inter company transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation within the consolidated accounts. Consistent accounting policies have been used across the Group. Segment reporting A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. Investment Properties Properties that are held for long term rentals or for the capital appreciation are classified as investment properties. Investment properties initially are measured at cost, including related transaction costs, thereafter are stated at their fair value at balance sheet. Expenditure is charged to the asset’s carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.All other repairs and maintenance costs are charged to the income statement. Gains or losses arising from changes in the fair value of investment properties are recorded in the income statement. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 21 M O U N T V I E W E S T A T E S P. L. C. for the year ended 31 March 2007 (e) Income Tax The charge for current tax 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 enacted by the balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base used in the computation of taxable profit. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction, which affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in Subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is calculated at the rates that are expected to apply when the asset or liability is settled. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Provisions Provisions for legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Revenue Revenue includes proceeds of sales of properties, rents from properties, which are held as trading stock, investment and other sundry items of revenue before charging expenses. Rental income is recognised over the rental period. Sales of properties are recognised on legal completion as in the Directors’ opinion this is the point at which the substantial risks and rewards of ownership have been transferred. (f) (g) (h) Dividend distribution Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in which the dividends are approved. (i) Interest Expense Interest expense for borrowings are recognised within “finance costs “ in the income statement using the effective interest rate method. The effective interest method is a method of calculating the financial liability and of allocating the interest expense over the relevant period. 22 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS M O U N T V I E W E S T A T E S P. L. C. for the year ended 31 March 2007 (j) Property, Plant and Equipment Property, plant and equipment are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the item. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset using the straight-line method as follows: Freehold property Fixtures and fittings and office equipment Computer equipment Motor Vehicles – reducing balance method – – – – 2% 20% 25% 20% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each financial year. An asset’s carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. (k) Impairment of Assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Any impairment is recognised in the Income Statement in the year in which it occurs. (l) Estimates and Judgements Investment Properties In considering the values attributable to the investment portfolio, the following factors are taken into consideration: • sales of properties within the Group’s portfolio during the preceding 12 months • sales of properties in the same district whenever the information is available • published market research concerning the performance of the property market in this region and district • factors affecting individual properties and units in relation to value, and factors in the district which might affect the values of individual properties and units Carrying value of trading stock The average length of time a unit of stock is held by the Group is 15 years and historically, the value of properties has increased steadily due to favourable market condition. In addition it is the Company’s policy to ensure that each unit of stock is kept in a good state of repair, in order that the value of trading stock will be maintained. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 23 for the year ended 31 March 2007 (m) (n) (o) (p) (r) Inventories These comprise residential properties all of which are held for resale, and are valued at the lower of cost and estimated net realisable value. Cost to the Group includes legal fees and commission charges incurred during acquisition together with improvement costs. Net realisable value is the net sale proceeds which the Group expects on sale of a property in its current condition. The analysis of the Group trading portfolio as at 31 March 2007 is on page 4. Pension Costs The Group operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the Group. The annual contributions payable are charged to the Income Statement. The Group has no further payment obligations once the contributions have been paid. Financial Instruments Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group has become a party to the contractual provisions of the instrument. Trade receivables and trade payables are measured at their net realisable value. Bank Borrowings Loans are recorded at fair value at initial recognition and thereafter at amortised costs under the effective interest method. Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. M O U N T V I E W E S T A T E S P. L. C. 3. FINANCIAL RISK MANAGEMENT 1. Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including price risk and cash flow risk) credit risk and liquidity risk. The financial risks relate to the following financial instruments: trade receivables, cash and cash equivalents, trade and other payables and borrowings. (a) Market risk Price risk – the Group is exposed to property price and property rental risk. Cash flow and fair value interest rate risk – as the Group has no significant interest bearing assets, its income and operating cash flows are substantially independent of changes in market interest rates. Long Term Borrowings – borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group’s cash flow and fair value interest rate risk is periodically monitored by the Group’s management. The Group has not adopted any form of interest costs hedging against any potential future changes in interest rate. The Board is confident that based on the historical performance of the Group, the finance costs are sufficiently covered by profits from operations. (b) Credit risk Exposure to credit risk and interest risk arises in normal course of the Group’s business. The Group has no significant concentration of credit risk. Credit risk arises from cash and cash equivalents as well as credit exposures with respect to rental customers, including outstanding receivables. The Directors are of the opinion that credit risk is minimal due to the low level of trade receivables relative to the Balance Sheet totals. The receivables are reviewed on a regular basis to ensure that they are recoverable. 24 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS M O U N T V I E W E S T A T E S P. L. C. for the year ended 31 March 2007 (c) 2. Liquidity risk The Group’s liquidity position is monitored daily by management and is reviewed quarterly by the Board of Directors. A summary table with maturity of financial liabilities are presented in the note 18. Capital risk management The Group’s objective when managing capital is to safeguard the Group’s ability to continue as a going concern. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total debt and equity. Total borrowings Less cash and cash equivalents Net debt Total equity Total debt plus equity Gearing ratio 2007 £000 33,626 (646) 32,980 172,937 205,917 16% 4. SEGMENTAL INFORMATION The revenue and cost of sales of the Group are analysed as follows: Revenue Gross sales of properties Gross rental income Cost of Sales Cost of properties sold Property expenses Gross Profit Sales of properties Net rental income 2007 £000 56,163 12,005 68,168 19,590 5,486 25,076 36,573 6,519 43,092 2006 £000 51,285 (2,338) 48,947 143,180 192,127 25% 2006 £000 35,667 11,789 47,456 14,286 5,116 19,402 21,381 6,673 28,054 A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. The Group monitors its operations in the above segments. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 25 5. (a) PROFIT FROM OPERATIONS The operating profit is stated after charging: Depreciation of tangible fixed assets Loss on disposal of fixed assets Auditors’ remuneration – as auditors – for other services operating expenses for investment properties And after crediting: – net rental income – administrative charges to related companies (Note 24) for the year ended 31 March 2007 2007 £000 146 45 41 9 287 6,519 66 2006 £000 159 31 47 – 524 6,673 66 M O U N T V I E W E S T A T E S P. L. C. (b) PROFIT ON DISPOSAL OF INVESTMENT PROPERTIES IN SUBSIDIARIES – 599 6. STAFF COSTS (including Directors) Wages and salaries Social security costs Pension costs Directors’ Remuneration Total Directors’ Remuneration including salary, bonuses, benefits in kind and pensions contributions amounted to: 2007 £000 2,917 382 78 3,377 2007 £000 2,069 2006 £000 1,935 228 58 2,221 2006 £000 1,317 The details of Directors’ Remuneration are shown in the audited section of the Remuneration Report on page 14. The Company contributes 3% of the total annual gross salaries and bonuses of each employee to a Stakeholder Pension Scheme. The average weekly number of employees during the year was as follows: Office and management 2007 28 2006 30 26 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS M O U N T V I E W E S T A T E S P. L. C. for the year ended 31 March 2007 7. FINANCE COSTS Interest on bank overdrafts, and loans 8. INCOME FROM INVESTMENTS Interest on bank deposits 9. INCOME TAX EXPENSE (a) Analysis of charge in the year Current tax: UK Corporation Tax 30% (2006: 30%) Deferred tax: Current year 30% (2006: 30%) 2007 £000 2,583 2007 £000 20 2007 £000 2006 £000 3,299 2006 £000 27 2006 £000 11,029 7,266 4,138 (528) Taxation attributable to the Company and its Subsidiaries 15,167 6,738 (b) Factors affecting income tax expense The charge for the year can be reconciled to the profit per the income statement as follows: Profit on ordinary activities before taxation 50,227 22,660 Profit on ordinary activities multiplied by rate of tax (30%) Expenses not deductible for tax Income not liable to tax Depreciation in excess of capital allowances Taxation on capital gains Marginal relief Revaluation surplus in subsidiaries not taxed Deferred tax Sundry adjusting items 15,067 57 – 18 176 (7) (4,277) 4,118 15 Taxation attributable to the Company and its Subsidiaries 15,167 6,797 44 (179) (14) 700 – (101) (518) 9 6,738 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 27 for the year ended 31 March 2007 10. DIVIDENDS On 21 August 2006 a dividend of 86 per share (2005: 82p per share) was paid to the shareholders. On 26 March 2007 a dividend of 50p per share (2006: 44p per share) was paid to the shareholders. This resulted in total dividends paid in the year of £5.303 million (2006: £4.913 million). In respect of the current year, the Directors propose that a final dividend of 100p per share will be paid to the shareholders on 20 August 2007. This dividend is subject to approval by the shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed final dividend for 2007 is payable to all shareholders on the Register of Members on 20 July 2007. The total estimated final dividend to be paid is £3.899 million. 11. EARNINGS PER SHARE The calculations of earnings per share are based on the following profits and number of shares. Net profit for financial year (basic and fully diluted) 35,060 15,922 2007 £000 2006 £000 Weighted average number of ordinary shares for basic and fully diluted earnings per share 3,899,014 3,899,014 Basic and Diluted Earnings per share 899.2p 408.4p M O U N T V I E W E S T A T E S P. L. C. The Company has no dilutive potential ordinary shares. 12. PROPERTY, PLANT AND EQUIPMENT COST At 1 April 2006 Additions Disposals At 31 March 2007 DEPRECIATION At 1 April 2006 Charge for the year On disposals At 31 March 2007 NET BOOK VALUE At 31 March 2006 At 31 March 2007 Freehold Fixtures Property & Fittings £000 £000 Motor Computer Vehicles Equipment £ 000 £000 2,671 – – 2,671 277 53 – 330 2,394 2,341 215 22 – 237 102 46 148 113 89 315 45 (80) 280 94 45 (29) 110 221 170 41 2 – 43 34 2 – 36 7 7 Total £000 3,242 69 (80) 3,231 507 146 (29) 624 2,735 2,607 Property, Plant and Equipment are located within United Kingdom. 28 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS M O U N T V I E W E S T A T E S P. L. C. for the year ended 31 March 2007 13. INVESTMENT PROPERTIES Fair Value at 1 April Additions Disposals Increase in Fair Value during the year At 31 March 2007 £000 20,780 35 (959) 14,224 34,080 2006 £000 22,468 498 (2,523) 337 20,780 The Group’s investment properties were valued on a Market Value basis as at 31 March 2007 by an External Valuer, Mr. Martin Angel FRICS of Allsop LLP. The valuations were in accordance with the requirement of the RICS Appraisal and Valuations Standards and FRS15. This valuation of each investment property was on the basis of Market Value, assuming that the property would be sold subject to any existing leases and tenancies, but otherwise, with vacant possession. On this basis, the aggregate Market Value of the Company’s interest in its investment properties was £34.08 million (thirty four million and eighty thousand pounds) (freehold £33.81 million, long leasehold £270,000). The Valuer’s opinion of the Market Value was primarily derived using comparable recent market transactions on arms-length terms. As at 31 March 2007, if the investment properties had not been revalued, the historical cost of those properties would have been £623,505 (2006: £866,798). There were no unprovided contractual obligations for future repairs and maintenance. 14. INVESTMENTS Fixed Asset Investments These represent the cost of shares in the following wholly owned Subsidiary undertakings, which are incorporated and operate in England and Wales. Their results are consolidated in the accounts of the Group, for the period during which they are Subsidiary undertakings. Principal Activity Hurstway Investment Company Limited Property Dealing Louise Goodwin Limited Property Investment A.L.G. Properties Limited Property Investment 15. INVENTORIES Residential properties 2007 £000 183,889 Cost 2006 2007 £000 1 15,351 2,924 18,276 2006 £000 176,095 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 29 M O U N T V I E W E S T A T E S P. L. C. 16. TRADE AND OTHER RECEIVABLES Trade receivables Prepayments and accrued income for the year ended 31 March 2007 2007 £000 658 403 1,061 2006 £000 526 125 651 The Directors consider that the carrying amount of trade and other receivables approximates their fair value. 17. TRADE AND OTHER PAYABLES Trade creditors Other taxes and social security costs Other creditors 2007 £000 502 181 2,269 2,952 2006 £000 372 269 779 1,420 The Directors consider that the carrying amount of trade and other payables approximates their fair value. 18. BANK OVERDRAFTS AND LOANS Bank overdrafts Bank loans Other loans (a) Cash and cash equivalents Bank overdrafts Cash Cash and cash equivalents as at 31 March 2007 £000 – 28,984 1,690 30,674 2007 £000 – 646 646 2006 £000 17,924 28,216 3,725 49,865 2006 £000 (17,924) 2,338 (15,586) 30 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS M O U N T V I E W E S T A T E S P. L. C. for the year ended 31 March 2007 Maturity profile of financial liabilities at 31 March 2007 was as follows: Amounts repayable: In one year or less In more than one year but no more than two years In more than two years but no more than three years In more than three years but no more than four years In more than four years but not more than five years In more than five years Less: amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months The average interest rates paid were as follows: Bank overdrafts Bank loans Other loans 2007 £000 1,030 – 660 – 28,984 – 30,674 1,030 29,644 2007 6.06% 5.94% 5.31% 2006 £000 20,149 – – – 29,716 – 49,865 20,149 29,716 2006 6.59% 5.74% 5.34% The Directors consider that the carrying amount of bank overdrafts and loans approximates their fair value. The other principal features of the Group’s borrowings are as follows. 1. 2. 3. 4. The bank overdrafts are repayable on demand. The bank overdrafts are secured by a Letter of Negative Pledge by Mountview Estates P.L.C. The Group has renegotiated the terms of its existing revolving loan with Barclays Bank. (a) The loan outstanding at 31 March 2007 is £15 million. This is a five year revolving facility, which the parent company can draw down up to £50 million. The termination date of the facility is 30 November 2011. The rate of interest payable on the loan is 1.10% above Libor. The loan is secured by a cross guarantee between Mountview Estates P.L.C. and its Subsidiaries. The loan is not repayable by instalments. The Group has also renegotiated its finance facility with HSBC Bank. The new £20 million revolving loan is not repayable in instalments. (a) The loan outstanding at 31 March 2007 is £15 million. This is a five year revolving loan which the parent company can draw down up to £20 million. The termination date of the facility is 12 September 2011. The rate of interest payable on the loan is 1.15% over LIBOR. The loan is secured by Letter of Negative Pledge. Other loans consist of loans from connected persons, and companies of which Mr. D.M. Sinclair is a Director. Loans of £1.030 million (2006: £2.23 million) are repayable within one year, and loans of £660,000 (2006: £1.5 million) are repayable in the second to third year inclusive. Interest payable on these loans is at 0.5% above Barclays Bank Plc base rate. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 for the year ended 31 March 2007 19. DEFERRED TAX Analysis for financial reporting purposes Deferred tax liabilities Deferred tax assets Net position at 31 March 2007 £000 9,194 – 9,194 The movement for the year in the Group’s net deferred tax position was as follows. At 1 April Charge to income for the year At 31 March 2007 £000 5,056 4,138 9,194 2006 £000 5,056 – 5,056 2006 £000 5,584 (528) 5,056 The following are in deferred tax liabilities recognised by the Group and movements thereon during the period. M O U N T V I E W E S T A T E S P. L. C. At 1 April 2006 Charge to income for the year At 31 March 2007 20. FINANCIAL INSTRUMENTS Fair value of financial assets Revaluation of properties 2006 2007 £000 £000 5,056 4,138 9,194 5,584 (528) 5,056 The Group’s financial assets at the year end consist of trade receivables and cash at bank and in hand of £645,600 (2006: £2,338,396) The Directors consider that the carrying amount of cash at bank and in hand approximates their fair value. The trade receivables amounted to £1.061 million (2006: £651,000) The Directors consider that the carrying amount of trade receivables approximates their fair value. Fair value of borrowings Bank overdrafts Secured bank loans Unsecured loans 2007 £000 – 28,984 1,690 30,674 2006 £000 17,924 28,216 3,725 49,865 The Directors consider that the carrying amount of borrowings approximates their fair value. The details of the terms of the borrowings together with the average interest rates can be seen in Note 18. 32 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS M O U N T V I E W E S T A T E S P. L. C. for the year ended 31 March 2007 21. CALLED UP SHARE CAPITAL Authorised: 5,000,000 ordinary shares of 5p each Allotted, issued and fully paid: 3,899,014 ordinary shares of 5p each 22. OTHER RESERVES Capital redemption reserve Capital reserve Other reserves 2007 £000 250 195 2007 £000 55 25 56 136 2006 £000 250 195 2006 £000 55 25 56 136 The Group does not maintain insurance cover against other risks except where several properties are located in close physical vicinity. A reserve is maintained to deal with such non- insured risks and at 31 March 2007 stood at £56,000 (2006: £56,000). 23. RETAINED EARNINGS Balance at 1 April 2006 Dividends paid Net profit for the year Balance at 31 March 2007 £000 142,849 (5,303) 35,060 172,606 Of retained earnings £14.224 million represents revaluation of investment properties and is not distributable. 24. RELATED PARTY TRANSACTIONS 1. The total compensation paid to the ex-Executive Director is as follows: Salary and bonus Termination benefit Post employment benefits 2007 £000 255 30 9 294 2006 £000 – – – – NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 33 M O U N T V I E W E S T A T E S P. L. C. 2. (a) Mountview Estates P.L.C. provides general management and administration services to Ossian Investors Limited and Sinclair Estates Limited, companies of which Mr. D.M. Sinclair is a Director. Fees of £49,817 (2006: £48,738) were charged for these services. for the year ended 31 March 2007 The same services were also provided to Viewthorpe Limited, fees of £15,851 (2006: £17,222) were charged for these services. All directors of Viewthorpe Limited are significant shareholders of the Company, one director of Viewthorpe Limited is also the wife of a Director of the Company. (b) Included within long-term borrowings is a loan from Sinclair Estates Limited. The balance outstanding at the balance sheet date was £500,000 (2006: £1,500,000). Interest was payable on the loan at a rate of 0.5 percent above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £18,791 (2006: £37,722). (c) Included within long-term borrowings is a loan from Ossian Investors Limited. The balance outstanding at the balance sheet date was £160,000 (2006: £nil). Interest was payable on the loan at a rate of 0.5 percent above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £5,685 (2006: £4,835). (d) Included within other loans repayable in less than one year and on demand is a loan from Viewthorpe Limited. The balance outstanding at the balance sheet date was £855,000 (2006: £600,000). Interest was payable on the loan at a rate of 0.5 percent above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £58,499 (2006: £35,365). (e) The loan of £500,000 as at 31 March 2006 from Mrs. P.E. Cullen, a shareholder of the Company and a director of Sinclair Estates Limited was repaid during the year. Interest was payable on the loan at a rate of 0.5 percent above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £35,506 (2006: £24,719). (g) Included within other loans, repayable in less than one year and on demand is a loan from Mrs. D. Sinclair, a shareholder of the Company. The balance outstanding at the balance sheet date was £175,000 (2006: £175,000). Interest was payable on the loan at a rate of 0.5 percent above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £9,302 (2006: £9,338). (h) The loan of £ 300,000 as at 31 March 2006 from Mr. K. Langrish-Smith, a Director of the Company was repaid during the year. Interest was payable on the loan at a rate of 0.5 percent above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £13,158 (2006: £14,865). (i) The loan of £600,000 as at 31 March 2006 from Mrs. E. Langrish-Smith, the wife of a Director of the Company was repaid during the year. Interest was payable on the loan at a rate of 0.5 percent above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £26,139 (2006: £28,594). (j) All of the above loans are unsecured. (k) Transactions between the Group and its Subsidiaries, which are related parties, have been eliminated on consolidation and have not been disclosed in this note. 34 INDEPENDENT AUDITORS’ REPORT M O U N T V I E W E S T A T E S P. L. C. to the Members of Mountview Estates P.L.C. We have audited the Group financial statements of Mountview Estates P.L.C. for the year ended 31 March 2007 which comprise the principal accounting policies, the Group income statement, the Group balance sheet, the Group cash flow statement, the Group statement of changes in shareholders equity and notes on pages 20-33. These Group financial statements have been prepared under the accounting policies set out therein. We have reported separately on the parent company financial statements of Mountview Estates P.L.C. for the year ended 31 March 2007 and the information in the Directors’ Remuneration Report that is described as having been audited. This report is made solely to the Company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS The Directors’ responsibilities for preparing the Annual Report and the Group financial statements in accordance with United Kingdom law and International Financial Reporting Standards (IFRSs) as adopted by the European Union, are set out in the Statement of Directors’ Responsibilities. Our responsibility is to audit the Group financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the Group financial statements give a true and fair view, and whether the Group financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation and whether the information given in the Directors’ Report is consistent with the financial statements. We also report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors’ remuneration and other transactions is not disclosed. We review whether the Corporate Governance Statement reflects the Company’s compliance with the nine provisions of the 2003 FRC Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to consider whether the Boards statement on internal control covers all risks and controls, or form an opinion on the effectiveness of the Group’s corporate governance procedures or its risk and control procedures. We read other information contained in the Annual Report and consider whether it is consistent with the audited Group financial statements. The other information comprises only the Directors’ Report, the Chairman’s Statement, the unaudited part of the Remuneration Report, the Operational Review and the Corporate Governance Statement. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the Group financial statements. Our responsibilities do not extend to any other information. BASIS OF OPINION We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the Group financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the Group financial statements, and of whether the accounting policies are appropriate to the Group’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Group financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the Group financial statements. INDEPENDENT AUDITORS’ REPORT 35 OPINION In our opinion: • • • the Group financial statements give a true and fair view, in accordance with IFRS as adopted by the European Union, of the state of the Group’s affairs as at 31 March 2007 and of its profit for the year then ended; the Group financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation; and the information given in the Directors’ Report is consistent with the financial statements for the year ended 31 March 2007. BSG Valentine Registered Auditors Chartered Accountants London 18 July 2007 M O U N T V I E W E S T A T E S P. L. C. 36 COMPANY BALANCE SHEET UNDER UK GAAP As at 31.03.2007 £000 Notes M O U N T V I E W E S T A T E S P. L. C. as at 31 March 2007 FIXED ASSETS Tangible assets Investments CURRENT ASSETS Stocks Debtors Cash at bank and in hand CREDITORS: Amounts falling due within one year NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES CREDITORS: Amounts falling due after more than one year CAPITAL AND RESERVES Called up share capital Capital redemption reserve Capital reserve Other reserves Profit and Loss Account As at 31.03.2006 £000 2,672 18,276 20,948 167,709 595 2,203 170,507 (23,890) 146,617 2,565 18,276 20,841 173,156 997 301 174,454 (9,485) 164,969 185,810 167,565 (48,970) 136,840 195 55 25 39 136,526 136,840 (47,293) 120,272 195 55 25 39 119,958 120,272 3 4 5 6 7 8 9 10 10 10 11 Approved by the Board on 18 July 2007. D. M. SINCLAIR Chairman K. LANGRISH-SMITH Director NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP 37 M O U N T V I E W E S T A T E S P. L. C. 1. ACCOUNTING POLICIES for the year ended 31 March 2007 (a) (b) (c) (d) (e) (f) (g) Basis of Accounting The Accounts have been prepared under the historical cost convention, and in accordance with applicable Accounting Standards. Investments Fixed assets investments in Subsidiary undertakings are stated at costs less any provision for impairment. Taxation Corporation tax payable is provided on taxable profits at the current rate. Turnover Turnover includes proceeds of sales of properties, rents from properties which are held as trading stock, or investment and any other sundry items of revenue before charging expenses. Sales of properties are recognised on completion. Depreciation Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset using the straight-line method as follows: Freehold property Fixtures and fittings and office equipment Computer equipment Motor Vehicles – reducing balance method – – – – 2% 20% 25% 20% Impairment of Fixed Assets Fixed Assets are subject to review for impairment in accordance with FRS11 “Impairment of Fixed Assets and Goodwill“. Any impairment is recognised in the Profit and Loss Account in the year in which it occurs. Stocks These comprise residential properties all of which are held for resale, and are valued at the lower of cost and estimated net realisable value. Cost to the Group includes legal fees and commission charges incurred during acquisition together with improvement costs. Net realisable value is the net sale proceeds which the Group expects on sale of a property in its current condition. The analysis of the Group trading portfolio as at 31 March 2007 is on page 4. (h) Deferred tax Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or right to pay less or to receive more, tax, with the following exceptions: • provision is made for tax on gains arising from the revaluations (and similar fair value adjustments) of fixed assets, and gains on disposal of fixed assets that have been rolled over into replacement assets, only to the extent that, at balance sheet date, there is binding agreement to dispose of these assets concerned. However, no provision is made where, on the basis of all available evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over into replacement assets and charged to tax only where the replacement assets are sold; • deferred tax assets are recognised only to extent that the directors consider that it is more likely that not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. 38 NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP M O U N T V I E W E S T A T E S P. L. C. for the year ended 31 March 2007 2. STAFF COSTS (including Directors) Wages and salaries Social security costs Pension costs DIRECTORS’ REMUNERATION Total Directors’ Remuneration including salary, bonuses, benefits in kind and pensions contributions amounted to: 2007 £000 2,917 382 78 3,377 2007 £000 2,069 2006 £000 1935 228 58 2,221 2006 £000 1,317 The details of Directors’ Remuneration are shown in the audited section of the Remuneration Report on page 15. The Company contributes 3% of the total annual gross salaries and bonuses of each employee to a Stakeholder Pension Scheme. The average weekly number of employees during the year was as follows: Office and management 3. TANGIBLE ASSETS 2007 28 2006 30 COST At 1 April 2006 Additions Disposals At 31 March 2007 DEPRECIATION At 1 April 2006 Charge for the year On disposals At 31 March 2007 NET BOOK VALUE At 31 March 2006 At 31 March 2007 Freehold Fixtures Property & Fittings £000 £000 Motor Computer Vehicles Equipment £ 000 £000 2,671 – – 2,671 277 53 – 330 2,394 2,341 82 15 – 97 32 18 – 50 50 47 315 45 (80) 280 94 45 (29) 110 221 170 41 2 – 43 34 2 – 36 7 7 Total £000 3,109 62 (80) 3,091 437 118 (29) 526 2,672 2,565 All tangible assets of the Company are located within the United Kingdom. NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP 39 M O U N T V I E W E S T A T E S P. L. C. for the year ended 31 March 2007 4. INVESTMENTS Fixed Asset Investments These represent the cost of shares in the following wholly owned Subsidiary undertakings, which are incorporated and operate in England and Wales. Their results are consolidated in the accounts of the Group, for the period during which they are Subsidiary undertakings. Principal Activity Hurstway Investment Company Limited Property Dealing Louise Goodwin Limited Property Investment A.L.G. Properties Limited Property Investment 5. STOCKS Residential properties 6. DEBTORS: due within one year Trade debtors Prepayments and accrued income 7. CREDITORS: Amounts falling due within one year Bank loans and overdrafts Trade creditors Corporation Tax Other taxes and social security costs Other creditors Other loans 2007 £000 173,156 2007 £000 621 376 997 2007 £000 – 393 5,633 181 2,248 1,030 9,485 Cost 2006 2007 £000 1 15,351 2,924 18,276 2006 £000 167,709 2006 £000 475 120 595 2006 £000 17,924 345 2,398 269 729 2,225 23,890 Other loans consist of loans from connected persons. Interest payable on these loans was at 0.5% above Barclays Bank Plc Base rate. 40 NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP M O U N T V I E W E S T A T E S P. L. C. for the year ended 31 March 2007 8. CREDITORS: Amounts falling due after more than one year Bank loans and overdrafts Amounts owed to Subsidiary undertakings Other loans 2007 £000 28,984 19,326 660 48,970 2006 £000 28,216 17,577 1,500 47,293 Other loans consist of loans from companies of which Mr D.M.Sinclair is a Director. Interest payable on these loans was at 0.5% above Barclays Bank base rate. Maturity profile of financial liabilities at 31 March 2007 was as follows: Amounts repayable: In one year or less In more than one year but no more than two years In more than two years but no more than three years In more than three years but no more than four years In more than four years but not more than five years In more than five years Less: amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months 2007 £000 1,030 – 660 – 28,984 19,326 50,000 1,030 48,970 2006 £000 20,149 – – 29,716 17,577 67,442 20,149 47,293 The Directors consider that the carrying amount of bank overdrafts and loans approximates their fair value. The other principal features of the group’s borrowings are as follows. 1. 2. 3. 4. The bank overdrafts are repayable on demand. The bank overdrafts are secured by a Letter of Negative Pledge by Mountview Estates P.L.C. The Group has renegotiated the terms of its existing revolving loan with Barclays Bank. (a) The loan outstanding at 31 March 2007 is £15 million. This is a five year revolving facility, which the parent company can draw down up to £50 million. The termination date of the facility is 30 November 2011. The rate of interest payable on the loan is 1.10% above Libor. The loan is secured by a cross guarantee between Mountview Estates P.L.C. and its Subsidiaries. The loan is not repayable by instalments. The Group has also renegotiated its finance facility with HSBC Bank. The new £20 million revolving loan is not repayable in instalments. (a) The loan outstanding at 31 March 2007 is £15 million. This is a five year revolving loan which the parent company can draw down up to £20 million. The termination date of the facility is 12 September 2011. The rate of interest payable on the loan is 1.15% over LIBOR. The loan is secured by Letter of Negative Pledge. Other loans consist of loans from connected persons, and companies of which Mr. D.M. Sinclair is a Director. Loans of £1.030 million (2006: £2.23 million) are repayable within one year, and loans of £660,000 (2006: £1.5 million) are repayable in the second to third year inclusive. Interest payable on these loans is at 0.5% above Barclays Bank Plc base rate. NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP 41 9. CALLED UP SHARE CAPITAL Authorised: 5,000,000 ordinary shares of 5p each Allotted, issued and fully paid: 3,899,014 ordinary shares of 5p each 10. OTHER RESERVES Capital redemption reserve Capital reserve Other reserves Balance at 31 March for the year ended 31 March 2007 2007 £000 250 195 2007 £000 55 25 39 119 2006 £000 250 195 2006 £000 55 25 39 119 M O U N T V I E W E S T A T E S P. L. C. The Group does not maintain insurance cover against other risks except where several properties are located in close physical vicinity. A reserve is maintained to deal with such non- insured risks and at 31 March 2007 stood at £39,000 (2006: £39,000). 11. PROFIT AND LOSS ACCOUNT Balance at 1 April Retained profit for the financial year Balance at 31 March 2007 £000 119,958 16,568 136,526 12. RELATED PARTY TRANSACTIONS 1. The total compensation paid to the ex-Executive Director is as follows: Salary and bonus Termination benefit Post employment benefits 2007 £000 255 30 9 294 2006 £000 111,214 8,744 119,958 2006 £000 – – – – 42 NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP M O U N T V I E W E S T A T E S P. L. C. for the year ended 31 March 2007 2. (a) Mountview Estates P.L.C. provides general management and administration services to Ossian Investors Limited and Sinclair Estates Limited, companies of which Mr. D.M. Sinclair is a Director. Fees of £49,817 (2006: £48,738) were charged for these services. The same services were also provided to Viewthorpe Limited, fees of £15,851 (2006: £17,222) were charged for these services. All directors of Viewthorpe Limited are significant shareholders of the Company, one director of Viewthorpe Limited is also the wife of a Director of the Company. (b) Included within long-term borrowings is a loan from Sinclair Estates Limited. The balance outstanding at the balance sheet date was £500,000 (2006: £1,500,000). Interest was payable on the loan at a rate of 0.5 percent above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £18,791 (2006: £37,722). (c) Included within long-term borrowings is a loan from Ossian Investors Limited. The balance outstanding at the balance sheet date was £160,000 (2006: £nil). Interest was payable on the loan at a rate of 0.5 percent above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £5,685 (2006: £4,835). (d) Included within other loans repayable in less than one year and on demand is a loan from Viewthorpe Limited. The balance outstanding at the balance sheet date was £855,000 (2006: £600,000). Interest was payable on the loan at a rate of 0.5 percent above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £58,499 (2006: £35,365). (e) The loan of £500,000 as at 31 March 2006 from Mrs. P.E. Cullen, a shareholder of the Company and a director of Sinclair Estates Limited was repaid during the year. Interest was payable on the loan at a rate of 0.5 percent above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £35,506 (2006: £24,719). (f) Included within other loans, repayable in less than one year and on demand is a loan from Mrs. D. Sinclair, a shareholder of the Company. The balance outstanding at the balance sheet date was £175,000 (2006: £175,000). Interest was payable on the loan at a rate of 0.5 percent above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £9,302 (2006: £9,338). (g) The loan of £ 300,000 as at 31 March 2006 from Mr. K. Langrish-Smith, a Director of the Company was repaid during the year. Interest was payable on the loan at a rate of 0.5 percent above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £13,158 (2006: £14,865). (h) The loan of £600,000 as at 31 March 2006 from Mrs. E. Langrish-Smith, the wife of a Director of the Company was repaid during the year. Interest was payable on the loan at a rate of 0.5 percent above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £26,139 (2006: £28,594). (i) All of the above loans are unsecured. (j) Transactions between the Group and its Subsidiaries, which are related parties, have been eliminated on consolidation and have not been disclosed in this note. INDEPENDENT AUDITORS’ REPORT 43 M O U N T V I E W E S T A T E S P. L. C. to the Members of Mountview Estates P.L.C. We have audited the parent Company financial statements of Mountview Estates P.L.C. for the year ended 31 March 2007 which comprise the principal accounting policies, the balance sheet and notes from 1 to 12.These parent Company financial statements have been prepared under the accounting policies set out therein. We have also audited the information in the Directors’ Remuneration Report that is described as having been audited. We have reported separately on the Group’s financial statements of Mountview Estates P.L.C. for the year ended 31 March 2007. This report is made solely to the Company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS The Directors’ responsibilities for preparing the Annual Report, the Directors’ Remuneration Report and the parent Company financial statements in accordance with United Kingdom law and Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of Directors’ Responsibilities. Our responsibility is to audit the parent Company financial statements and the part of Directors’ Remuneration Report to be audited in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the parent Company financial statements give a true and fair view, and whether the parent Company financial statements and the part of the Directors’ Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation and whether the information given in the Directors’ Report is consistent with the financial statements. We also report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors’ remuneration and other transactions is not disclosed. We read other information contained in the Annual Report and consider whether it is consistent with the audited parent Company financial statements. The other information comprises only the Directors’ Report, the Chairman’s Statement, the unaudited part of the Remuneration Report, the Operational Review and the Corporate Governance Statement. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the Group financial statements. Our responsibilities do not extend to any other information. BASIS OF AUDIT OPINION We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the Group financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the Group financial statements, and of whether the accounting policies are appropriate to the Group’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the parent Company and the part of the Directors’ Remuneration Report to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the parent Company financial statements and the part of the Directors’ Remuneration Report to be audited. OPINION In our opinion: • The parent Company financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice of the state of the Company’s affairs as at 31 March 2007; • the parent Company financial statements and the part of the Directors’ Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985; and • the information given in the Directors’ Report is consistent with the financial statements for the year ended 31 March 2007 BSG Valentine Registered Auditors Chartered Accountants London 18 July 2007 44 TABLE OF COMPARATIVE FIGURES M O U N T V I E W E S T A T E S P. L. C. as at 31 March 2007 UK GAAP UK GAAP UK GAAP 2004 £000 2003 £000 2002 £000 IFRS 2005 £000 IFRS 2006 £000 IFRS 2007 £000 Revenue 40,289 45,997 55,087 48,778 47,456 68,168 Profit before taxation 20,075 23,603 28,593 24,848 22,660 50,227 Taxation 6,013 7,878 8,584 7,482 6,738 15,167 Profit after taxation 14,062 15,725 20,009 17,366 15,922 35,060 Dividend in relation to the year 3,275 3,587 4,757 4,913 5,069 5,848* Earnings per share 325.1p 403.3p 513.2p 445.4p 408.4p 899.2p Rate of dividend 84p 92p 122p 126p 130p 150p *The £5.848 million dividend in relation to 2007 is made up of the interim dividend of £1.949 million and the final dividend of £3.899 million, which will be paid on 20 August 2007, subject to approval at the AGM on 15 August 2007. NOTICE OF MEETING 45 Notice is hereby given that the Seventieth Annual General Meeting of the Members of Mountview Estates P.L.C. will be held at the Kenilworth Hotel, Great Russell Street, London WC1B 3LB on Wednesday 15 August 2007 at 11.30 a.m., for the following purposes: 1. 2. 3. 4. 5. 6. 7. To receive and consider the Reports of the Directors and the Auditors and the audited Statements of Accounts for the year ended 31 March 2007. To declare a dividend of 100p per share payable on 20 August 2007 to Shareholders on the register at 20 July 2007. To re-appoint Mr. D.M. Sinclair as a Director of the Company. To re-appoint Mrs. M.M. Bray as a Director of the Company. To elect Mr. J.B. Fulton as a Director of the Company. To approve the Directors’ Remuneration Report set out in the Annual Report and Accounts for the year ended 31 March 2007. To re-appoint Messrs BSG Valentine as Auditors of the Company and to authorise the Directors to determine the Auditors’ remuneration for the ensuing year. M O U N T V I E W E S T A T E S P. L. C. By Order of the Board M. M. BRAY Secretary Mountview House 151 High Street Southgate London N14 6EW 20 July 2007 Notes:– 1. 2. 3. A Member who is entitled to attend and vote at the Meeting is entitled to appoint a Proxy to attend and, on a poll, vote instead of him/her. A Proxy need not also be a Member of the Company. A form of Proxy is enclosed with this Report and Accounts and should be completed in accordance with the instructions contained therein. Copies of the Directors’ service contracts are available for inspection at the registered office at Mountview House, 151 High Street, Southgate, London N14 6EW during normal business hours on weekdays from the date of this notice until the conclusion of the Meeting. The register of Directors’ interests kept by the Company under the Companies Act 1985 Section 325 will be available for inspection at the Meeting. 46 SHAREHOLDERS’ INFORMATION M O U N T V I E W E S T A T E S P. L. C. FINANCIAL CALENDAR 2007 Final dividend record date 20 July Annual Report Posted to Shareholders 20 July Annual General Meeting Final dividend payment Interim Results 15 August 20 August 29 November SHAREHOLDERS’ ENQUIRIES All administrative enquiries relating to shareholdings should be addressed to the Company’s registrars: Capita Registrars Bourne House 34 Beckenham Road Beckenham Kent BR3 4TU
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