Mountview Estates PLC Annual Report 2007

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FY2007 Annual Report · Mountview Estates PLC

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MOUNTVIEW ESTATES P.L.C.

REPORT AND ACCOUNTS

2007

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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

4-5

7-9

11-13

14-15

20-33

34-35

37-42

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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

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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

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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

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

0.04

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.

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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.

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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

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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.

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.

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

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

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.

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REPORT OF THE DIRECTORS

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

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.

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

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.

DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE

The Company purchases liability insurance covering the Directors and Officers of the
Company and its Subsidiary undertakings.

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REPORT OF THE DIRECTORS

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

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

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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)

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

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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)

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

n/a

–

CORPORATE GOVERNANCE

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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

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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.

REMUNERATION REPORT

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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)

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

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

–
–

18
10
13
14
2

–
–

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

–
–

10
5
6
8
7

–
–

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

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

7
8

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)

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

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.

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

131,840

132,171

Profit for the year

Dividends

15,922

(4,913)

Balance at 31 March 2006

195

142,849

143,180

Changes in equity for
year ended 31 March 2007

Balance as at 1 April 2006

195

142,849

143,180

Profit for the year

Dividends

Balance at 31 March 2007

35,060

(5,303)

195

172,606

172,937

The notes on pages 20-33 are an integral part of these consolidated financial statements.

CONSOLIDATED CASH FLOW 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

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

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.

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

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.

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

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.

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

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.

FINANCIAL RISK MANAGEMENT

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.

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)

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%

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

(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

2006
£000

159
31

47
–
524

6,673

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

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

2006

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

FINANCE COSTS

Interest on bank overdrafts, and loans

INCOME FROM INVESTMENTS

Interest on bank deposits

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

2006
£000

3,299

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

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

Basic and Diluted Earnings per share

899.2p

408.4p

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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

315
45
(80)

280

94
45
(29)

110

221

170

41
2
–

34
2
–

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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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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

15,351

2,924

18,276

2006
£000

176,095

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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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)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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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.

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

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.

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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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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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

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(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.

INDEPENDENT AUDITORS’ REPORT

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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

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

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COMPANY BALANCE SHEET UNDER UK GAAP

As at
31.03.2007
£000

Notes

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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

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

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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

–

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.

NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP

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for the year ended 31 March 2007

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

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
–

32
18
–

315
45
(80)

280

94
45
(29)

110

221

170

41
2
–

34
2
–

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

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for the year ended 31 March 2007

INVESTMENTS

Principal Activity

Hurstway Investment Company Limited

Property Dealing

Louise Goodwin Limited

Property Investment

A.L.G. Properties Limited

Property Investment

STOCKS

Residential properties

DEBTORS: due within one year

Trade debtors
Prepayments and accrued income

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

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.

NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP

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for the year ended 31 March 2007

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:

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.

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 Group has also renegotiated its finance facility with HSBC Bank. The new £20
million revolving loan is not repayable in instalments.

(a)

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

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

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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

–
–
–

–

NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP

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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.

(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

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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

TABLE OF COMPARATIVE FIGURES

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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

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:

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.

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By Order of the Board
M. M. BRAY
Secretary

Mountview House
151 High Street
Southgate
London N14 6EW
20 July 2007

Notes:–

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.

SHAREHOLDERS’ INFORMATION

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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