Mountview Estates PLC Annual Report 2008

FY2008 Annual Report · Mountview Estates PLC

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MOUNTVIEW ESTATES P.L.C.

REPORT AND ACCOUNTS

2008

This document is important and requires your immediate attention.

If you are in any doubt as to any aspect of the proposals referred to in this document of the action you should
take, you should consult a stockbroker, solicitor, accountant or other appropriate independent professional
adviser authorised under the Financial Services and Markets Act 2000.

If you have sold or transferred all of your shares in Mountview Estates P.L.C., you should at once forward this
document and the accompanying Form of Proxy to the stockbroker, bank or other agent through whom the sale
or transfer was effected for transmission to the purchaser or transferee.

Notice of the Annual General Meeting of the Company to be held at the offices of Norton Rose LLP, 3 More
London Riverside, London SE1 2AQ is set out on pages 54 to 55 of this document. To be valid for use at the
Meeting, the enclosed Form of Proxy should be completed and returned, in accordance with the instructions
thereon, to Capita IRG plc (Proxies), PO Box 25, Beckenham, Kent BR3 4BR as soon as possible and, in any event,
so as to arrive no later than 48 hours before the time of the Meeting.

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CONTENTS

Financial Highlights

Chairman’s Statement

Review of Operations

Directors and Advisers

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

New Articles of Association

Notice of Meeting

Shareholders’ Information

Page

3-4

5-7

9-11

13-15

16-17

22-36

37-38

40-45

48-53

54-55

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FINANCIAL HIGHLIGHTS

Turnover (millions)

Gross Profit (millions)

Profit Before Tax (millions)

Profit Before Tax excluding investment
properties revaluation (millions)

Shareholders’ Funds (millions)

Earnings per share (pence)

Net assets per share

Dividend per share (pence)

2008

2007

54.3

36.0

29.5

27.7

187.7

530.1

48.2

155

68.2

43.1

50.2

36.0

172.9

899.2

44.3

150

Increase/
(Decrease)
%

(20.3)

(16.5)

(41.2)

(23.0)

8.5

(41.1)

8.8

3.3

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CHAIRMAN’S STATEMENT

The general downturn in the United Kingdom economy has been widely documented and has
impacted the residential property market in the last year. This has been evidenced in the results for
the year ended 31 March 2008. Although these are below the record levels of the previous year the
trading results for the year ended 31 March 2008 are nevertheless very sound.

My staff and colleagues have worked hard to produce what are good results for the year to 31 March
2008 and I am confident that they will rise to the challenge of the difficult times ahead. Indeed I look
forward to the Company not only weathering these difficult times but in due course producing
increased profits which will increase the rewards of its employees.

I have always emphasised the need to make the right purchases and the virtue of tight financial
control. As we suffer a very harsh climate for the residential property sector I believe that this
emphasis will be vindicated. Our purchasing performance during the year had been very strong
already when we completed the purchase of the Magdalen Park Estate in south west London for
over £43 million at the end of January 2008. These purchases have taken our borrowings to high
levels by our standards but our gearing remains low by most standards and our continuing financial
prudence will ensure that the Company enjoys the full benefit of these purchases and remains on a
sound financial footing.

The previous year’s profits were exceptional anyway but were made more so by the enormous
increase of more than £14 million in fair value of investments compared with less than £2 million in
the accounts for the year ended 31 March 2008. If the figures for the increase in fair value of
investments are removed the fall in trading profits is less than 23% whereas the profit before taxation
is shown as having fallen by over 40%.

The residential property market has become a very difficult environment in which to operate. The
auction houses are reporting lower success rates, estate agents are closing some of their branches,
mortgage finance is difficult to obtain and now there is the threat of higher interest rates. Despite
these problems we are effecting our sales successfully although the prices achieved may be a little
more modest than those we would have expected a year ago. We can only operate in the
marketplace as it exists but by doing so we can comply with our banking covenants and may well
be in position to take advantage of further good purchasing opportunities which occur.

Your Board is recommending an increased final dividend of 105 pence per share in respect of the
year ended 31 March 2008 despite the fall in profits. This dividend is payable on 18 August 2008
to shareholders on the Register of Members as at 18 July 2008. This will make a total dividend for
the year ended 31 March 2008 of 155 pence per share which is 3.4 times covered by the earnings
per share.

The Company’s existing Articles of Association were adopted some time ago and so do not take account
of various legal developments that have since come into force. The Directors therefore consider it
appropriate, in particular in light of the provisions of the Companies Act 2006 that have come into effect
(or are coming into effect) this year, to adopt new Articles of Association that reflect these legislative
changes and are also more in line with current corporate governance recommendations.

The principal differences between the existing Articles of Association and the new Articles of
Association are explained on pages 48 to 53 (inclusive), although there are also further
miscellaneous differences of a clarificatory, conforming, technical and/or drafting nature.

CHAIRMAN’S STATEMENT

A copy of the existing Articles of Association and the new Articles of Association will be available
for inspection from the date of this notice until the close of the Annual General Meeting at the
Company’s registered offices during normal business hours on any weekday (Saturdays, Sundays
and English public holidays excepted) and at the place of the Annual General Meeting for at least
15 minutes prior to, and during, the Annual General Meeting.

Your Board considers that the proposals described in this document are in the best interests of the
Company and its shareholders and therefore recommends that you should vote in favour of the
resolutions to be proposed at the AGM, notice of which is set out on pages 54 to 55 of this document.
The Directors intend to do so in respect of their own beneficial holdings.

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D.M. SINCLAIR
Chairman

16 July 2008

REVIEW OF OPERATIONS

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 2008

Rack Rents
Ground Rents
Life Tenancies

No of units

2,536
1,063
387

Cost
£m

245,319
1,067
24,975

Analysis of the Group Trading portfolio at the lower of cost and estimated net realisable value by
geographical location as at 31 March 2008

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Regulated 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

57.4

97.0

24.2

40.1

26.6

0.4

0.5

0.04

0.1

0.03

0.2

0.7

5.9

7.3

10.8

Portfolio
%

21.4

36.2

11.1

17.5

13.8

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.

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REVIEW OF OPERATIONS

1. RESIDENTIAL PROPERTIES (continued)

During the financial year the Group has sold the following number of units:

Sales Price (£)

1 million+
500,000-1 million
below 500,000

Analysis of acquisitions

Regulated tenancies
Life tenancies
Ground rents (or created)

No of units
Year ended
31.03.2008

1
6
189

196

No of
units

345
26
48

419

Location

London
London
London and other

Year ended
31.03.2008
Costs
£’000

90,438
2,620
120

93,178

The above analysis does not include legal and commission expenses directly related to the acquisition
of properties nor any repairs of a capital nature.

Acquisition of the residential property portfolio “Magdalen Park Estate”

The Company has been successful in its bid to acquire this mixed portfolio of residential properties
situated in Earlsfield in South West London. The portfolio comprises 128 buildings arranged to
provide 25 houses and 209 self-contained flats.

All 25 houses are subject to regulated tenancies.

The 209 flats consist of the following:

• 116 flats are long leaseholds
• 66 flats are subject to regulated tenancies
• 1 flat is subject to a life tenancy
• 14 flats are subject to assured shorthold tenancies
• 2 flats are subject to assured tenancies
• 10 flats are vacant

The portfolio currently generates gross rental income of about £880,000 per annum. The aggregate
consideration for this portfolio paid in January 2008 was 43.2 million.

The portfolio acquisition is consistent with the Company’s long-term strategy to generate shareholder
value by acquiring tenanted properties and selling them when they become vacant.

Rental Income

The Company’s rental income is derived from five different sources:

• Regulated tenancies
• Assured tenancies
• Assured shorthold tenancies
• Life tenancies
• Ground rents

We continue to target those properties where the rent is capped such that expenditure on
improvements and the provision of missing amenities leads to substantial increases in rental income.

REVIEW OF OPERATIONS

2. INVESTMENT PROPERTIES

The analysis of the investment portfolio as at 31 March 2008 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.

There were no sales during this financial year.

Mountview Estates P.L.C. purchased the investment companies in 1999. They are the only significant
departures from the Company’s normal activities.

Outlook

As a result of market conditions, rental income has not risen in the way we had anticipated.
Consequently where units become vacant we are prepared to refurbish the properties and sell them
by private treaty to discerning purchasers who actively seek new homes in this prestigious area.

Valuation

The properties comprised within the investment portfolio have been revalued externally for the
purpose 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 30.

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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.

Non-Executive Directors

J.P. Hall
Joined the Company as a Non-Executive Director on 1 December 2000. He is Chairman of APCIMS
and a member of the Takeover Panel. He was a Chief Executive of Brewin Dolphin Holdings PLC
from 1987 to September 2007.

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. He has held senior financial roles in multinational
companies.

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 WC1 H9B

Solicitors
Norton Rose
3 More London Riverside, London SE1 2AQ

Registrars and Transfer Office
Capita Registrars
The Registry, 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 Seventy- First Annual Report to the Members together
with the Financial Statements for the year ended 31 March 2008.

RESULTS AND DIVIDENDS

The Results for the year are set out in the Income Statement on page 18.

The Directors recommend the payment of a final dividend of 105 pence per share. The
dividend will be paid on 18 August 2008 subject to approval at the A.G.M. on 13 August 2008
to Ordinary Shareholders on the register at the close of business on 18 July 2008.

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 5
to 7.
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

2008
growth %
(41.1)
3.3
8.8

2007
growth %
120.1
15.4
20.7

The Directors consider that there are no significant non-financial indicators in existence.

Administrative expenses as
percentage of revenue
Administrative expenses per member of staff
Profit before tax per member of staff

Internal Performance Measures

2008
£’000

7.8%
150
1,054

2007
£’000

6.6%
162
1,794

In the current economic climate, the impact of the credit crunch has caused a slowdown in the
rate of house price growth and a strong decline in levels of mortgage approvals.

Together with an increase in oil prices which in turn pushes up the cost of goods the prospect
of rising inflation and the Bank of England raising interest rates is very probable. The ability of
households to spend “surplus” income is going to be reduced by the increased mortgage and
household bills.

REPORT OF THE DIRECTORS

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REVIEW OF BUSINESS AND PROSPECTS (continued)

Risk review
The key risks to Mountview’s business are:
(cid:1) long-term downturn in the UK housing market

Our residential portfolio consists mainly of low value units spread over high demand areas
of London and the South East. The majority of our properties are of relatively low value,
which are still affordable even during a market slowdown. Our investment portfolio is
located in the highly desirable area of Belsize Park.

(cid:1) significant increase in interest rates

The Company has entered into an Interest Rate Swap Agreement, for a period of 5 years on
its £40 million loan in order to reduce its exposure to interest rate fluctuations.

(cid:1) a lack of availability of finance

We have spent over £93 million on new acquisitions this year. However we can reduce our
still modest level of gearing and improve liquidity by cutting back on purchases if necessary.

ROTATION OF DIRECTORS

In accordance with the Company’s Articles of Association, Mr. K. Langrish-Smith and
Miss. J.L Murphy 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.

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

31 March
2008

1 April
2007

Ordinary Shares of 5p each

534,883

227,250

221,155

1,500

10,187

2,000

1,100

10,187

2,000

All the above interests are beneficial except where otherwise stated.

Mr. K. Langrish-Smith has increased his beneficial holdings by 750 Ordinary Shares on
2 April 2008, and by 1,090 Ordinary Shares on 15 July 2008.

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

633,780

179,400
118,100
596,745
138,750
119,890

16.25

4.60
3.03
15.31
3.56
3.07

REPORT OF THE DIRECTORS

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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.

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 abide by them.

Trade creditors existing at 31 March 2008 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 (2007: 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 13 August 2008
and a resolution is drafted accordingly.

11.

CORPORATE GOVERNANCE

The Directors’ statement on corporate governance is set out on pages 13 to 15.

12. HEALTH AND SAFETY

The Group is committed to achieving a high standard of health and safety. The Group 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 £27,343 (2007: £25,835).
There were no political donations (2007: £nil).

14. GOING CONCERN BASIS

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

Messrs. BSG Valentine have indicated their willingness to continue in office and a resolution
for the reappointment of 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
16 July 2008

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
16 July 2008

CORPORATE GOVERNANCE

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The Financial Reporting Council (FRC) published a new version of the Combined Code in June 2006
following publication of the Higgs report earlier that year. This is applicable to the Company for the
reporting year commencing 1 April 2007. 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, Viewthorpe
(Holdings) 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 2008 the Company has been in compliance with the Code
provisions set out in Section 1 of the June 2006 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 has retired from the Board
of Brewin Dolphin Holdings PLC. 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 2008 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

Full Board

Audit Committee

Remuneration
Committee

Mr. D.M. Mr. K. Miss J.L. Mrs. M.M. Mr. J.P. Mr. J.B.
Sinclair Langrish- Murphy
Fulton
Smith

Bray

Hall

–

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.

CORPORATE GOVERNANCE

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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 10.

Going concern

The Board have a reasonable expectation that the Company have adequate resources to continue in
existence for the foreseeable future. For this reason the Group continue to adopt the going concern
basis in preparing the accounts.

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. J. Hall (non-executive Director), Mr. J.B. Fulton (non-
executive Director). The Committee, which is chaired by Mr. J. 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.

Mr D.M. Sinclair, the Chairman of the Company, is invited by the Remuneration Committee members
to attend one meeting or part of any meeting as and when appropriate.

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 16 to 17.

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. There were no meetings during the year.

Audit Committee

The Audit Committee comprises Mr. J. Hall (non-executive Director) and Mr. J.B. Fulton (non-
executive Director). The Committee, which is chaired by Mr. J.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.

This includes the approval of any non-audit service fees above a relatively normal level.

The Committee is satisfied that the taxation services provided by BSG Valentine is overseen by
partners and staff who are excluded from the audit procedure.

The Committee meets three times a year and 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.

CORPORATE GOVERNANCE

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Mr. J.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.

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.

Risk Management

Details of this are included in the Report of the Directors on page 10.

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 2007 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 a company car or a 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. This 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

350

300

250

200

150

100

0
2003

Mountview Estates

FTSE W UK Real Estate £ Price Index

2004

2005

2006

2007

2008

31 March

Source: Datastream

The graph looks at the value of £100 invested in Mountview Estates P.L.C. on 31 March each year
compared to the value of £100 invested in the FTSE All-Share Real Estate Index.

REMUNERATION REPORT

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Total
£000

530
250
351
367

24
24

1,546

Total
£000

636
360
463
475
87

24
6
18

AUDITED INFORMATION

2008
Executive
D.M. Sinclair
K. Langrish-Smith
Miss J.L. Murphy
Mrs M.M. Bray

Non-Executive
J.P. Hall
J.B. Fulton

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)

Salary
£000

Bonus
£000

Benefits
in kind
£000

Pensions
Contri-
butions
£000

243
148
176
191

24
24

806

240
80
150
165

–
–

635

33
15
15
–

–
–

14
7
10
11

–
–

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

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 16 July 2008.

John Hall
Chairman of the Remuneration Committee

CONSOLIDATED INCOME STATEMENT

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T
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S

P.
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for the year ended 31 March 2008

Year
ended
31.03.2008
£000

Notes

Year
ended
31.03.2007
£000

REVENUE

Cost of sales

GROSS PROFIT

Administrative Expenses

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

8
9

54,338

(18,347)

35,991

(4,207)

31,784

1,784

33,568

(4,043)
4

29,529

(8,358)
(503)

(8,861)

20,668

Basic and diluted earnings per share (pence)

530.1

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

899.2

The notes on pages 22-36 are an integral part of these consolidated financial statements.

CONSOLIDATED BALANCE SHEET

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E
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A
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E
S

P.
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as at 31 March 2008

As at
31.03.2008
£000

Notes

As at
31.03.2007
£000

13
14

16
17

22
23
23
23
24

19
20

18
19

2,719
36,203

38,922

271,361
1,118
802

273,281

312,203

195
55
25
56
187,426

187,757

95,000
9,697

104,697

3,081
12,685
3,983

19,749

124,446

312,203

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

222,283

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

Approved by the Board on 16 July 2008.

D. M. SINCLAIR Chairman

K. LANGRISH-SMITH Director

The notes on pages 22-36 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

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for the year ended 31 March 2008

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 2007

Balance as at 1 April 2006

195

142,849

143,180

Profit for the year

Dividends

Balance at 31 March 2007

Changes in equity for
year ended 31 March 2008

35,060

(5,303)

195

172,606

172,937

Balance as at 1 April 2007

195

172,606

172,937

Profit for the year

Dividends

Balance at 31 March 2008

20,668

(5,848)

195

187,426

187,757

The notes on pages 22-36 are an integral part of these consolidated financial statements.

CONSOLIDATED CASH FLOW STATEMENT

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W

E
S
T
A
T
E
S

P.
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for the year ended 31 March 2008

Year
ended
31.03.2008
£000

Notes

Year
ended
31.03.2007
£000

CASH FLOWS FROM OPERATING
ACTIVITIES

Profit from operations

33,568

52,790

Adjustments for:
Depreciation
Loss on disposal of property, plant and equipment
Increase in fair value 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 (outflow)/inflow from operating activities

Investing activities

Interest received
Proceeds from disposal of investment properties
Proceeds from disposal of property,
plant and equipment
Purchase of property, plant and equipment
Capital expenditure on investment properties

13
14

Net cash (outflow)/inflow from investing activities

Cash flows from financing activities
Increase in borrowings
Repayment of borrowings
Equity dividend paid

Net cash inflow/(outflow) from financing activities

Net (decrease)/increase in cash
and cash equivalents

Cash and cash equivalents at beginning of the period

Cash and cash equivalents at end of year

190
21
(1,784)

31,995
(87,472)
(57)
128

(55,406)
(4,043)
(10,901)

(70,350)

4
–

60
(382)
(339)

(657)

67,411
–
(5,848)

61,563

(9,444)

646

(8,798)

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

The notes on pages 22-36 are an integral part of these consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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for the year ended 31 March 2008

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 16 July 2008.

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 exercises 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,
and thereafter are stated at their fair value in the 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

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T
A
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E
S

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for the year ended 31 March 2008

(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

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O
U
N
T
V
I
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W

E
S
T
A
T
E
S

P.
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C.

for the year ended 31 March 2008

ACCOUNTING POLICIES (continued)

(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:

(cid:1)

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
conditions. 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.

(m)

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 2008 is on page 26.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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O
U
N
T
V
I
E
W

E
S
T
A
T
E
S

P.
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C.

for the year ended 31 March 2008

(n)

(o)

(p)

(r)

(s)

Pension Costs
The Group operates a stakeholder contribution pension scheme for employees. 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 and
other receivables and trade and other payables and cash and cash equivalents 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.

Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and
qualify as cash flow hedges is recognised in equity. The gain or loss relating to the
ineffective portion is recognised immediately in the income statement within “other
gains/(losses) – net”. Amounts accumulated in equity are recycled in the income
statement in the periods when the hedged items affects profit or loss (for example when
the forecast sale that is hedged takes place).

The gain or loss relating to the effective portion of interest rate swaps hedging variable
rate borrowings is recognised in the income statement within “finance costs”.

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 uses derivative instruments to help manage its
interest rate risk.

The Board is confident that based on the historical performance of the Group, the finance
costs are sufficiently covered by profits from operations.

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 2008

FINANCIAL RISK MANAGEMENT (continued)

(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.

(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 19.

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 borrowings

Total equity

Total borrowings plus equity

Gearing ratio

2008
£000

107,685

(802)

106,883

187,757

294,640

36%

2007
£000

33,626

(646)

32,980

172,937

205,917

16%

The uplift in the gearing ratio during 2008 resulted primarily from the increase in borrowings.

ANALYSIS OF REVENUE AND COST OF SALES

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

2008
£000

41,755
12,583

54,338

12,117
6,230

18,347

29,638
6,353

35,991

2007
£000

56,163
12,005

68,168

19,590
5,486

25,076

36,573
6,519

43,092

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended 31 March 2008

SEGMENTAL INFORMATION

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 following segments:

2008
Property
Property
Trading Investment
£’000

£’000

2007
Property
Property
Trading Investment
£’000

£’000

Group
£’000

Revenue

53,548

790

54,338

67,372

796

68,168

Operating profit

31,382

2,186

33,568

38,127

14,663

52,790

Finance costs

PBT

Tax

PAT

(4,039)

29,529

(8,861)

20,668

(2,563)

50,227

(15,167)

35,060

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S
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A
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E
S

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Assets

275,822

36,381

312,203

188,023

34,260

222,283

Liabilities

114,671

9,775

124,446

39,920

9,426

49,346

Fixed assets
capital expenditure

382

339

721

104

The Group’s two main business segments operate within the United Kingdom.

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 25)

2008
£000

190
21

45
9
386

6,353

2007
£000

146
45

41
9
287

6,519

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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S
T
A
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E
S

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L.
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for the year ended 31 March 2008

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:

2008
£000

2,461
312
73

2,846

2008
£000

1,546

2007
£000

2,917
382
78

3,377

2007
£000

2,069

The details of Directors’ Remuneration are shown in the audited section of the Remuneration
Report on page 17.

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

FINANCE COSTS

Interest on bank overdrafts, and loans

INCOME FROM INVESTMENTS

Interest on bank deposits

2008

2008
£000

4,043

2008
£000

2007

2007
£000

2,583

2007
£000

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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10.

INCOME TAX EXPENSE

(a) Analysis of charge in the year

Current tax:
UK Corporation Tax 30%
(2007: 30%)

Deferred tax:
Current year 30% (2007: 30%)

for the year ended 31 March 2008

2008
£000

2007
£000

8,358

11,029

503

4,138

Taxation attributable to the Company and
its Subsidiaries

8,861

15,167

(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

29,529

50,227

Profit on ordinary activities multiplied
by rate of tax (30%)
Expenses not deductible for tax
Depreciation in excess of capital allowances
Taxation on capital gains
Marginal relief
Revaluation surplus in subsidiaries not taxed
Deferred tax
Sundry adjusting items

8,859
20
7
–
–
(535)
503
7

Taxation attributable to the Company and its Subsidiaries

8,861

15,067
57
18
176
(7)
(4,277)
4,118
15

15,167

11. DIVIDENDS

On 20 August 2007 a dividend of 100p per share (2006: 86p per share) was paid to the
shareholders. On 31 March 2008 a dividend of 50p per share (2007: 50p per share) was paid
to the shareholders. This resulted in total dividends paid in the year of £5.848 million
(2007: £5.303 million).

In respect of the current year, the Directors propose that a final dividend of 105p per share will
be paid to the shareholders on 18 August 2008. 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 2008 is payable to all shareholders on the Register of Members
on 18 July 2008. The total estimated final dividend to be paid is £4.093 million.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended 31 March 2008

12.

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)

20,668

35,060

2008
£000

2007
£000

Weighted average number of ordinary shares
for basic and fully diluted earnings per share

3,899,014

Basic and Diluted Earnings per share

530.1p

899.2p

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The Company has no dilutive potential ordinary shares.

13.

PROPERTY, PLANT AND EQUIPMENT

COST
At 1 April 2007
Additions
Disposals

At 31 March 2008

DEPRECIATION
At 1 April 2007
Charge for the year
On disposals

At 31 March 2008

NET BOOK VALUE
At 31 March 2007

At 31 March 2008

Freehold
Fixtures
Property & Fittings
£000

£000

Motor Computer
Vehicles Equipment
£ 000

£000

2,671
–
–

2,671

330
53
–

383

2,341

2,288

237
35
–

272

148
41
–

189

280
217
(150)

347

110
61
(70)

101

170

246

43
130
–

173

36
35
–

102

Total
£000

3,231
382
(150)

3,463

624
190
(70)

744

2,607

2,719

Property, Plant and Equipment are located within United Kingdom.

14.

INVESTMENT PROPERTIES

Fair Value at 1 April
Additions
Disposals
Increase in Fair Value during the year

At 31 March

2008
£000

34,080
339
–
1,784

36,203

2007
£000

20,780
35
(959)
14,224

34,080

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended 31 March 2008

Louise Goodwin Limited
The Company’s investment properties were valued on a Fair Value basis as at 31 March 2008
by an External Valuer, Mr Martin Angel FRICS of Allsop LLP. The valuations were in
accordance with the requirements of the RICS Valuation Standards and IAS 40. The valuation
of each investment property was on the basis of Fair 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 Fair Value of the Company’s interests in its investment properties was
£30,172,000 (thirty million, one hundred and seventy two thousand pounds), (freehold
£29,891,000, long leasehold £281,000). The Valuer’s opinion of Fair Value was primarily derived
using comparable recent market transactions on arm’s-length terms.

ALG Properties Limited
The Company’s investment properties were valued on a Fair Value basis as at 31 March 2008
by an External Valuer, Mr Martin Angel FRICS of Allsop LLP. The valuations were in
accordance with the requirements of the RICS Valuation Standards and IAS 40. The valuation
of each investment property was on the basis of Fair 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 Fair Value of the Company’s interests in its investment properties was
£6,031,000 (six million and thirty one thousand pounds), (freehold £6,031,000, long leasehold
£nil). The Valuer’s opinion of Fair Value was primarily derived using comparable recent
market transactions on arm’s-length terms.

All additions relate to subsequent expenditure on existing properties.

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15.

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

A.L.G. Properties Limited

Property Investment

16.

INVENTORIES

Residential properties

17.

TRADE AND OTHER RECEIVABLES

Trade receivables
Prepayments and accrued income

2008
£000

271,361

2008
£000

504
614

1,118

Cost
2007
2008
£000

15,351

2,924

18,276

2007
£000

183,889

2007
£000

658
403

1,061

The Directors consider that the carrying amount of trade and other receivables approximates
their fair value.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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for the year ended 31 March 2008

18.

TRADE AND OTHER PAYABLES

Trade creditors
Other taxes and social security costs
Other creditors

2008
£000

854
191
2,036

3,081

2007
£000

502
181
2,269

2,952

The Directors consider that the carrying amount of trade and other payables approximates
their fair value.

19.

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

2008
£000

9,600
95,000
3,085

107,685

2008
£000

(9,600)
802

(8,798)

Maturity profile of financial liabilities at 31 March 2008 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

2008
£000

12,685
–
–
–
95,000
–

107,685

12,685

95,000

2007
£000

–
28,984
1,690

30,674

2007
£000

–
646

646

2007
£000

1,030
–
660
–
28,984
–

30,674

1,030

29,644

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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The average interest rates paid were as follows:

Bank overdrafts
Bank loans
Other loans

for the year ended 31 March 2008

2008

6.74%
6.80%
6.04%

2007

6.06%
5.94%
5.31%

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 2008 is £75 million. This is a five year revolving
loan and the termination date of this facility is November 2013. The rate of interest
payable on the loan is 0.9% 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 a £20 million revolving loan with HSBC Bank. The loan is not repayable
in instalments.

(a)

The loan outstanding at 31 March 2008 is £20 million. This is a five year revolving
loan and the termination date of this facility is September 2013. The rate of interest
payable on the loan is 1.05% 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 £3.08 million (2007: £1.030 million) are repayable within one
year, and loans of £0 (2007: £660,000) are repayable in the second to third year inclusive.
Interest payable on these loans is at 0.5% above Barclays Bank Plc base rate.

20. DEFERRED TAX

Analysis for financial reporting purposes

Deferred tax liabilities

Net position at 31 March

2008
£000

9,697

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

2008
£000

9,194
503

9,697

2007
£000

9,194

2007
£000

5,056
4,138

9,194

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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S
T
A
T
E
S

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for the year ended 31 March 2008

20. DEFERRED TAX (continued)

The following are in deferred tax liabilities recognised by the Group and movements thereon
during the period.

At 1 April
Charge to income for the year

At 31 March

21.

FINANCIAL INSTRUMENTS

Fair value of financial assets

Revaluation of properties
2007
2008
£000
£000

9,194
503

9,697

5,056
4,138

9,194

The Group’s financial assets at the year end consist of trade receivables and cash at bank and
in hand of £802,000 (2007: £645,600)

The Directors consider that the carrying amount of cash at bank and in hand approximates
their fair value.

The trade receivables amounted to £1.118 million (2007: £1.061 million).

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

2008
£000

9,600
95,000
3,085

107,685

2007
£000

–
28,984
1,690

30,674

Interest charged in the income statement for the above borrowings amounted to £4.043 million
(2007: £2,583 million).

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 19.

Derivative financial instruments

During the year the Company entered into an Interest Rate Swap agreement. The agreement
did not require an initial net investment, and the fair value of the contract is zero. No exchange
of principal took place. Therefore the fair values of the fixed and floating legs are equal and
opposite with the result that the fair value of the swap on the initial recognition is nil.

The notional principal amount of the interest rate swap agreement at the year end is £40m. The
agreement matures in 2013, and interest payments are made/received quarterly.

The Company pays a fixed rate on the notional amount of 4.98% per annum. The Company
receives a floating rate on the notional amount in accordance with 3 month LIBOR.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

22.

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

23. OTHER RESERVES

Capital redemption reserve
Capital reserve
Other reserves

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T
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I
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W

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S
T
A
T
E
S

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for the year ended 31 March 2008

2008
£000

250

195

2008
£000

55
25
56

136

2007
£000

250

195

2007
£000

55
25
56

136

Capital redemption reserve relates to buy-back of the Company’s own shares.

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 2008 stood at £56,000 (2007: £56,000).

24.

RETAINED EARNINGS

Balance at 1 April 2007

Dividends paid
Net profit for the year

Balance at 31 March 2008

£000

172,606

(5,848)
20,668

187,426

Of retained earnings £1.784 million represents revaluation of investment properties and is
not distributable.

25.

RELATED PARTY TRANSACTIONS

1. The total compensation paid to the ex-Executive Director is as follows:

Salary and bonus
Termination benefit
Post employment benefits

2008
£000

–
–
–

–

2007
£000

255
30
9

294

The amount of £255,000 consists of one year contractual salary of £165,000 and £90,000 in lieu
of any bonus he might have been entitled to.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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for the year ended 31 March 2008

25.

RELATED PARTY TRANSACTIONS (continued)

(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 £46,186 (2007: £49,817) were charged for these services.

The same services were also provided to Viewthorpe Limited, fees of £15,649
(2007: £15,851) 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 other loans repayable in less than one year and on demand is a loan
from Sinclair Estates Limited. The balance outstanding at the balance sheet date was
£1,450,000 (2007: £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 £36,849
(2007: £18,791).

(c) Included within other loans repayable in less than one year and on demand is a loan
from Ossian Investors Limited. The balance outstanding at the balance sheet date was
£110,000 (2007: £160,000). 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 £9,498
(2007: £5,685).

(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
£1,350,000 (2007: £855,000). 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 £85,786
(2007: £58,499).

(e) 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 (2007: £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 £10,600 (2007: £9,302).

(f) All of the above loans are unsecured.

(g) 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 2008 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 22-36. 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 2008 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,
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 2006 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

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to the Members of Mountview Estates P.L.C.

OPINION

In our opinion:

(cid:1)

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 2008 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 2008.

BSG Valentine
Registered Auditors
Chartered Accountants
London
16 July 2008

COMPANY BALANCE SHEET UNDER UK GAAP

As at
31.03.2008
£000

Notes

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

3
4

5
6

9
10
10
10
11

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A
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S

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as at 31 March 2008

As at
31.03.2007
£000

2,565
18,276

20,841

173,156
997
301

174,454

(9,485)

164,969

2,672
18,276

20,948

258,212
1,024
685

259,921

(19,168)

240,753

261,701

185,810

(114,074)

147,627

195
55
25
39
147,313

147,627

(48,970)

136,840

195
55
25
39
136,526

136,840

Approved by the Board on 16 July 2008.

D.M. SINCLAIR Chairman

K. LANGRISH-SMITH Director

NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP

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for the year ended 31 March 2008

ACCOUNTING POLICIES

(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 2008 is on page 5.

(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:

(cid:1) 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;

(cid:1) deferred tax assets are recognised only to the 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

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:

for the year ended 31 March 2008

2008
£000

2,461
312
73

2,846

2008
£000

1,546

2007
£000

2,917
382
78

3,377

2007
£000

2,069

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The details of Directors’ Remuneration are shown in the audited section of the Remuneration
Report on page 16.

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

2008

2007

COST
At 1 April 2007
Additions
Disposals

At 31 March 2008

DEPRECIATION
At 1 April 2006
Charge for the year
On disposals

At 31 March 2008

NET BOOK VALUE
At 31 March 2007

At 31 March 2008

Freehold
Fixtures
Property & Fittings
£000

£000

Motor Computer
Vehicles Equipment
£ 000

£000

2,671
–
–

2,671

330
53
–

383

2,341

2,288

97
1
–

50
12
–

280
217
(150)

347

110
61
(70)

101

170

246

43
130
–

173

36
35
–

102

Total
£000

3,091
348
(150)

3,289

526
161
(70)

617

2,565

2,672

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 2008

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

2008
£000

258,212

2008
£000

440
584

1,024

2008
£000

9,600
812
3,490
191
1,990
3,085

19,168

Cost
2007
2008
£000

15,351

2,924

18,276

2007
£000

173,156

2007
£000

621
376

997

2007
£000

–
393
5,633
181
2,248
1,030

9,485

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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CREDITORS: Amounts falling due after more than one year

for the year ended 31 March 2008

Bank loans
Amounts owed to Subsidiary undertakings
Other loans

2008
£000

95,000
19,074
–

114,074

2007
£000

28,984
19,326
660

48,970

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 2008 was as follows:

Less: amount due for settlement within 12 months
(shown under current liabilities)

Amount due for settlement after 12 months

2008
£000

12,685
–
–
–
95,000
19,074

126,759

12,685

114,074

2007
£000

1,030
–
660
–
28,984
19,326

50,000

1,030

48,970

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 a £20 million revolving loan with HSBC Bank. The 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 £3.08 million (2007: £1.03 million) are repayable within one
year, and loans of £0 (2007: £660,000) 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

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for the year ended 31 March 2008

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

2008
£000

250

195

2008
£000

55
25
39

119

2007
£000

250

195

2007
£000

55
25
39

119

Capital redemption reserve relates to buy-back of the Company’s own shares.

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 2008 stood at £39,000 (2007: £39,000).

11.

PROFIT AND LOSS ACCOUNT

Balance at 1 April
Retained profit for the financial year

Balance at 31 March

2008
£000

136,526
10,787

147,313

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

2008
£000

–
–
–

–

2007
£000

119,958
16,568

136,526

2007
£000

255
30
9

294

The amount of £255,000 consists of one year contractual salary of £165,000 and £90,000 in lieu
of any bonus he might have been entitled to.

NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP

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for the year ended 31 March 2008

The same services were also provided to Viewthorpe Limited, fees of £15,649
(2007: £15,851) 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) All of the above loans are unsecured.

(g) 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 2008 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 2008.

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 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 2008;

• 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 2008

BSG Valentine
Registered Auditors
Chartered Accountants
London

16 July 2008

TABLE OF COMPARATIVE FIGURES

as at 31 March 2008

UK GAAP UK GAAP
2004
£000

2003
£000

IFRS
2005
£000

IFRS
2006
£000

IFRS
2007
£000

IFRS
2008
£000

Revenue

45,997

55,087

48,778

47,456

68,168

54,338

Profit before taxation

23,603

28,593

24,848

22,660

50,227

29,529

Taxation

7,878

8,584

7,482

6,738

15,167

8,861

Profit after taxation

15,725

20,009

17,366

15,922

35,060

20,668

Dividend in relation
to the year

3,587

4,757

4,913

5,069

5,848

6.042*

Earnings per share

403.3p

513.2p

445.4p

408.4p

899.2p

530.1p

Rate of dividend

92p

122p

126p

130p

150p

155p

*The £6.042 million dividend in relation to 2008 is made up of the interim dividend of £1.949 million
and the final dividend of £4.093 million, which will be paid on 18 August 2008, subject to approval at
the AGM on 13 August 2008.

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Summary of the principal differences between the existing Articles of Association and the new
Articles of Association proposed to be adopted pursuant to Resolution 7.

Electronic communications

Since the adoption of the existing Articles of Association, new legislation (including certain provisions
of the Companies Act 2006) has come into force to establish a legislative regime for the use of
electronic communications. As a result of these changes in the law, companies are now able (subject
to certain provisos) to offer their shareholders the opportunity to elect to receive certain shareholder
communications in electronic form (including via the company’s website) rather than hard copy.

The current intention of the Directors is to continue to communicate with shareholders in hard copy
form, however the new Articles of Association contain provisions permitting electronic
communications in order to provide flexibility going forward in the event that the Directors consider
this to be appropriate in the future.

In any event you should note that, following adoption of the new Articles of Association, the
Company cannot begin to communicate with shareholders by electronic means unless and until
shareholders have given individual consent. Notwithstanding any future decision of the Company to
take advantage of the electronic communications regime, a shareholder may still if he or she so wishes
continue to receive all communications in hard copy form. Moreover, a shareholder may, in relation
to a particular communication, request a hard copy or, at any time, revoke his or her general
agreement to receive documentation in electronic form by delivering written notice of such revocation
to the Company.

The Directors have chosen not to include provisions in the new Articles of Association to reflect the
ability of companies to communicate with shareholders via a website as they do not consider this to
be an ability that the Company would want to take advantage of in the foreseeable future.

Shares in uncertificated form

Since the existing Articles of Association were adopted, the Uncertificated Securities Regulations 2001
(the Regulations) have come into force. These Regulations replaced the Uncertificated Securities
Regulations 1995, which established the legal framework for the CREST settlement system. The
Regulations allow shares in companies to be issued, held, registered, converted to, transferred or
otherwise dealt with in uncertificated form and allow shares to be converted from uncertificated form
to certificated form in accordance with the Regulations and practices instituted by the operator of the
relevant system.

The fact that the existing Articles of Association do not contain provisions in relation to uncertificated
shares does not prevent the Company’s shares being dealt with through CREST pursuant to the
Regulations, however the new Articles of Association contain specific provisions in this regard
intended to reflect the legislation described above and to clarify how certificated and uncertificated
shares may be dealt with in certain circumstances.

Treasury Shares

By virtue of the Company (Acquisition of Own Shares) (Treasury Shares) Regulations 2003 (which
came into force on 1 December 2003), listed UK public companies which buy back their own shares
are now permitted, subject to certain restrictions, to hold up to 10 per cent. of their issued shares in
treasury rather than cancelling them as previously required. Such treasury shares may be later resold
for cash, transferred for the purposes of or pursuant to an employee share scheme, or cancelled. As
with the issue of new shares, sales of treasury shares for cash are subject to shareholders’ statutory
pre-emption rights contained in the Companies Act 1985 except in so far as such rights are waived by
shareholders. While any shares are held in treasury, voting rights are suspended, dividends are not
paid and companies cannot take advantage of statutory pre-emption rights in respect of the shares
(other than in connection with a bonus issue of fully paid shares).

NEW ARTICLES OF ASSOCIATION

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The new Articles of Association contain provisions reflecting the Company’s ability to hold treasury
shares. These provisions will be of no consequence unless and until such time as the Company
decides to hold shares in treasury.

Disclosure of interests in shares

The new Articles of Association contain more detailed and up-to-date provisions in relation to the
Company’s ability to issue a notice to a shareholder (or any other person appearing to be interested
in shares held by a shareholder) pursuant to section 793 of the Companies Act 2006 requiring such
person to provide information about his or her interests in the Company’s shares.

In particular, under the new Articles of Association, the Directors are able to refuse to register the
transfer of any shares in respect of which a notice has not been complied with provided that the
default shares represent 0.25 per cent. of the issued shares of that class unless: (i) the shareholder itself
is not in default in supplying the relevant information; and (ii) the shareholder can prove to the
satisfaction of the Directors that no person is in default as regards supplying such information is
interested in any of the shares the subject of the transfer.

This additional restriction reflects the sanctions permitted under Listing Rule 9.3.9(3)R, and the
Directors therefore consider it appropriate that this should be reflected in the Company’s Articles
of Association.

Likewise, under the existing Articles of Association, the minimum period which shareholders must
be granted to comply with a notice requiring disclosure of interests in shares is 14 days if the shares
represent 0.25 per cent. of the issued share capital of that class and 28 days in all other cases. This
distinction is not drawn under the relevant provisions of the Companies Act 2006 or under the Listing
Rules and the new Articles of Association therefore only refer to a 14 day period in compliance with
Listing Rule 9.3.9(1).

Stock and unclassified shares

The existing Articles of Association contain certain provisions dealing with stock and unclassified
shares. These provisions are not included in the new Articles of Association as they are not relevant
in light of the Company’s current share capital.

Extinction of claims

The new Articles of Association provide (for the avoidance of doubt) that forfeiture of a share will
involve the extinction of all interests in, and all claims and demands against the Company in respect
of, the share concerned.

Right to refuse registration

In accordance with the requirements of the Listing Rules, the new Articles of Association prevent
the Directors from refusing (on the basis that the shares are partly paid) to register transfers or
renunciations of partly paid shares which are admitted to trading on the London Stock Exchange
in circumstances where this would prevent dealing in such shares taking place on an open and
proper basis.

Convening of, and proceedings at, shareholder meetings

The new Articles of Association contain provisions in relation to the convening of general meetings
and the length of notice required to conform to the relevant provisions of the Companies Act 2006. In
particular, under the new Articles of Association a general meeting (other than the Company’s AGM)
to consider a special resolution can be convened on 14 days’ notice whereas 21 days’ notice is required
under the existing Articles of Association (and was previously required under the Companies Act
1985). The new Articles of Association also include specific provision for the Chairman to invite any
person to attend and speak at a shareholder meeting (notwithstanding that they may not be a
shareholder or Director) where he considers this will assist in the deliberations of the meeting.

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The new Articles of Association also include provisions that allow a general meeting or annual
general meeting to be held at multiple venues (which may be a useful provision for meetings where
a large number of shareholders are expected) and to allow for meetings to be postponed if the
Directors consider it is impractical or unreasonable for any reason to hold a meeting on the date or at
the time specified in the notice calling the meeting (this would apply where it is necessary to postpone
a shareholder meeting due to unforeseen circumstances such as a terrorist threat or bomb damage to
the proposed venue). In addition the new Articles of Association specify the Chairman’s powers to
take action or give directions to promote the orderly conduct of shareholder meetings.

The existing Articles of Association contain a provision to the effect that any two members of the
Company may convene a general meeting in circumstances where there are insufficient Directors in
the UK to do so. This provision is not reflected in the new Articles of Association as the Directors do
not consider it to be in line with current market practice, and given the minimal likelihood of such a
situation arising in practice.

The existing Articles of Association also set out the process for members of the Company to
requisition a general meeting. The ability of members to requisition a general meeting, and the
process for so doing, is governed by the Companies Acts, and the Directors do not therefore consider
it appropriate to include specific provisions in the new Articles of Association dealing with this.

Ordinary and special business

The existing Articles of Association contain provisions in relation to business to be conducted at
shareholder meetings which distinguish between ordinary and special business. This distinction is
not required under the provisions of the Companies Act 1985 or the Companies Act 2006 and is not
therefore included in the new Articles of Association.

Voting at general meetings

Under the Companies Act 2006, proxies are entitled to vote on a show of hands whereas under the
existing Articles of Association, they are only entitled to vote on a poll. The time limits for the
appointment or termination of a proxy appointment have also been altered by the Companies Act
2006 so that the Articles of Association cannot provide that they should be received more than
48 hours before the meeting or, in the case of a poll taken more than 48 hours after the meeting, more
than 24 hours before the time for taking of a poll, with weekends and bank holidays being permitted
to be excluded for this purpose. Multiple proxies may be appointed provided that each proxy is
appointed to exercise the rights attached to a different share or shares held by the relevant shareholder.

The new Articles of Association reflect all of these provisions, other than the ability to exclude
weekends and bank holidays when calculating the deadline for submission of proxies. The new
Articles of Association also allow for electronic appointment of proxies.

Amendments to resolutions

The new Articles of Association contain provisions reflecting the circumstances in which amendments
can and cannot be made to resolutions that have been proposed in a notice of shareholder meeting.
These reflect the position at law and have been included in the new Articles of Association for
clarificatory purposes.

Written resolutions

The existing Articles of Association enable members of the Company to act by written resolution.
Under the Companies Act 2006, public companies can no longer pass written resolutions. These
provisions are not therefore included in the new Articles of Association.

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Directors’ fees

The new Articles of Association include a higher cap on the maximum aggregate annual sum which
may be paid as fees to non-executive directors without recourse to shareholders. The cap included in
the new Articles of Association is £100,000. This is a maximum upper limit, and is not the actual
aggregate of fees currently paid to the Company’s non-executive directors.The increase provides
headroom for any future appointments or increases which may be required in the future.

Appointment and retirement of Directors

The new Articles of Association specifically provide that a resolution for the appointment of two or
more persons as Directors by a single resolution shall be void unless an ordinary resolution that it
shall be so proposed has been first agreed to by the meeting. This reflects the position both at law and
as a matter of best practice.

The new Articles of Association reflect provision A.7.1 of the Combined Code which provides that all
Directors should be subject to re-election at intervals of three years. This is in line with best practice
and good corporate governance.

The new Articles of Association also contain a provision requiring any non-executive Director (other
than the Chairman) who has been with the Company for a continuous period of nine years or more
to submit himself or herself for re-election on an annual basis. This reflects provision A.7.2 of the
Combined Code and is in line with best practice and good corporate governance.

Conduct of Board meetings

Under the existing Articles of Association, if a Director is abroad he can request that notice of Board
meetings is sent to him at a specified address and if he does not do so he is not entitled to receive
notice while he is away.

The new Articles of Association do not contain this provision, as modern communications mean that
there may be no particular obstacle to giving notice to a Director who is abroad. Instead they contain
a more general provision that a Director is treated as having waived his entitlement to notice unless
he supplies the Company with the information necessary to ensure that he receives notice of a
meeting before it takes place.

The new Articles of Association also contain more extensive provisions allowing the Directors to
participate in Board meetings by electronic communications, videoconference or other means to
reflect the wider range of means of communication that have become available since the adoption of
the existing Articles of Association.

In addition, the new Articles of Association contain more detailed provisions regulating the ability of
the Directors to delegate their powers to committees and the proceedings of any committees to which
such powers may be delegated. They also allow the Directors to delegate their powers to an
individual as well as to a committee.

Conflicts of interest

The Companies Act 2006 sets out Directors’ general duties which largely codify the existing law but
with some changes. Under the Companies Act 2006, from 1 October 2008 a Director must avoid a
situation where he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict
with the Company’s interests. The requirement is very broad and could apply, for example, if a
Director becomes a Director of another company or a trustee of another organisation. The Companies
Act 2006 allows Directors of public companies to authorise conflicts and potential conflicts, where
appropriate, where the Articles of Association contain a provision to this effect. The Companies Act
2006 also allows the Articles of Association to contain other provisions for dealing with Directors’
conflicts of interest to avoid a breach of duty.

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The new Articles of Association give the Directors authority to approve such situations as well as
including other provisions for dealing with conflicts of interest that are similar to those contained in
the existing Articles of Association.

There are safeguards which will apply when Directors decide whether to authorise a conflict or
potential conflict. First, only Directors who have no interest in the matter being considered will be
able to take the relevant decision, and secondly, in taking the decision the Directors must act in a way
they consider, in good faith, will be most likely to promote the Company’s success. The Directors will
be able to impose limits or conditions when giving authorisation if they think this is appropriate.

The new Articles of Association also contain provisions relating to confidential information,
attendance at board meetings and availability of board papers to prevent a Director being in breach
of duty if a conflict of interest or potential conflict of interest arises. These provisions will only
apply where the position giving rise to the potential conflict has previously been authorised by
the Directors.

The provisions in the new Articles of Association relating to conflicts of interest will also apply to
alternate Directors.

Payment of dividends

The existing Articles of Association allow the Company to pay dividends by cheque or warrant. The
new Articles of Association contain provisions allowing for payment of dividends, interest and other
sums to be made by other methods including (for example) direct debit, bank transfer or through the
CREST system.

Payment of scrip dividends

The new Articles of Association contain provisions allowing the Company to pay scrip dividends.

Uncashed dividends

The new Articles of Association provide that if dividends or sums payable in respect of a share or
shares are left uncashed on two consecutive occasions or (following one occasion) reasonable
enquiries have failed to establish a new address to be used for the purpose the Company shall not be
obliged to send any dividends or other moneys payable in respect of the relevant share or shares until
the relevant member notifies the Company of an address to be used for the purpose.

Untraced members

Under the existing Articles of Association, the Company is entitled to sell the shares of a member if:
(i) during a period of 12 years at least three dividends have been payable and all dividend warrants
and cheques in respect of the relevant shares have remained uncashed, and no dividend has been
claimed in respect of the relevant shares; (ii) the Company (following that 12 year period) publishes
advertisements in two daily newspapers with a national circulation giving notice of its intention to
sell such shares; and (iii) after a period of three months following publication of such advertisements
the Company shall has not received any indication of the whereabouts of the relevant member.

Under the new Articles of Association, the requirement is for one such advertisement to be published
in a national newspaper in the UK and one to be published in a newspaper circulating in the area of
the address on the register or other last known address of the relevant member.

The new Articles of Association also provide that, where the Company is entitled to sell relevant
shares following the expiry of the periods referred to above and the publication of the appropriate
advertisements, it may also sell any additional shares that have been issued in respect of the shares
held at the beginning of (or issued during) the relevant period. This would mean, for example, that if
the untraced shareholder had been issued with shares as part of a bonus issue during the 12 year
period, the Company would be entitled to sell those bonus shares as well as the shares in respect of
which they were issued, notwithstanding that the bonus shares had not been held for the whole of
the relevant period.

NEW ARTICLES OF ASSOCIATION

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The proceeds of sale in respect of any such shares shall be held by the Company in a separate account
and the Company shall be deemed to be a debtor to the relevant member in respect of such moneys.
Moneys carried to such an account may be employed in the business of the Company or invested in
such investments as the Board may think fit. No interest shall be payable in respect of such moneys
and the Company shall not be obliged to account for money earned on them.

Service of notice on members

The new Articles of Association contain provisions relating to situations where the Company has
attempted to send notices or documents to shareholders (in hard copy or electronically) and such
delivery has failed. Under the relevant provisions, if there have been two consecutive failures in
relation to electronic communications the Company shall thereafter send notices or documents to the
relevant member by post. If there have been three consecutive failures in relation to documents or
notices sent through the post then such member shall not be entitled to receive notice or other
documents until they have supplied a new address for service to the Company.

Directors’ Indemnities

The Companies Act 2006 has in some areas widened the scope of the powers of a company to
indemnify directors and to fund expenditure incurred in connection with certain actions against
directors. In particular, a company that is a trustee of an occupational pension scheme can now
indemnify a director against liability incurred in connection with the company’s activities as trustee
of the scheme. In addition, the existing exemption allowing a company to provide money for the
purpose of funding a director’s defence in court proceedings now expressly covers regulatory
proceedings and applies to associated companies.

The new Articles of Association permit the Company to indemnify its existing and former directors
and officers (and directors and officers of its associated companies) to the extent permitted by the
Companies Acts. For the avoidance of doubt, the indemnification provisions under the new Articles
of Association do not extend to auditors of the Company.

Provisions for employees on cessation or transfer of undertaking

The Companies Act 2006 provides that the powers of the directors to make provision for a person
employed or formerly employed by the Company in connection with the cessation or transfer to any
person of the whole or part of the undertaking of the Company, may be exercised by the Directors or
by the company in general meeting. However, if the power is to be exercised by the Directors, the
Articles of Association must include a provision to this effect. The New Articles of Association
provide that the Directors may exercise this power.

Execution of documents

The new Articles of Association contain more up-to-date provisions in relation to the Company’s
ability to execute documents and, in particular, reflect the ability of companies (under the Companies
Act 2006) to execute deeds by the signature of a single Director, provided that signature is
appropriately witnessed.

General

The new Articles of Association include other more minor differences which reflect changes made by
the Companies Act 2006, are intended to promote clarity in relation to certain provisions or which are
of a drafting, technical or conforming nature. In particular, the new Articles of Association use clearer
and more up-to-date language than the existing Articles of Association.

NOTICE OF MEETING

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Notice is hereby given that the Seventy-First Annual General Meeting of the Members of Mountview
Estates P.L.C. (incorporated in England and Wales with registered number 00328020) will be held at the
offices of Norton Rose LLP, 3 More London Riverside, London SE1 2AQ on 13 August 2008 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 2008.

To declare a dividend of 105p per share payable on 18 August 2008 to Shareholders on the
register at 18 July 2008.

To re-appoint Mr. K. Langrish-Smith as a Director of the Company.

To re-appoint Miss J.L. Murphy 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 2008.

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.

To consider and, if thought fit, pass the following Special Resolution:

That the proposed new form of Articles of Association produced to the Meeting and initialled
by the Chairman thereof for the purposes of identification be and are hereby approved and
adopted as the Articles of Association of the Company in substitution for and to the exclusion
of the Company’s existing Articles of Association as from the end of this Meeting.

By Order of the Board
M.M. BRAY
Secretary

Mountview House
151 High Street
Southgate
London N14 6EW
18 July 2008

NOTICE OF MEETING

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Notes:–

A Member who is entitled to attend and vote at the Meeting is entitled to appoint one or more proxies to attend,
speak and vote instead of him/her. A proxy need not also be a Member of the Company. If a Member appoints more
than one proxy to attend the Meeting, each proxy must be appointed to exercise the rights attached to a different
share or shares held by the Member. If a Member wishes to appoint more than one proxy and so requires additional
forms of Proxy, the Member should contact Capita Registrars (Proxies), The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4TU.

A form of Proxy is enclosed with this Report and Accounts and should be completed in accordance with the
instructions contained therein. Completion and return of the form of Proxy will not prevent a Member from
attending the Meeting and voting in person. To be effective, the form of Proxy and any power of attorney or other
authority under which it is signed (or a notarially certified copy of such authority) must be deposited at the office
of the Company’s Registrars, Capita Registrars (Proxies), The Registry, 34 Beckenham Road, Beckenham, Kent
BR3 4TU, not later than 48 hours before the time of the Meeting.

Any person receiving a copy of this Notice as a person nominated by a Member to enjoy information rights under
section 146 of the Companies Act 2006 (a “Nominated Person”) should note that the provisions in Notes 1 and 2
above concerning the appointment of a proxy or proxies to attend the Meeting in place of a Member, do not apply
to a Nominated Person as only shareholders have the right to appoint a proxy. However, a Nominated Person may
have a right under an agreement between the Nominated Person and the Member by whom he or she was
nominated to be appointed, or to have someone else appointed, as a proxy for the Meeting. If a Nominated Person
has no such proxy appointment right or does not wish to exercise it, he/she may have a right under such an
agreement to give instructions to the Member as to the exercise of voting rights at the Meeting.

Nominated persons should also remember that their main point of contact in terms of their investment in the
Company remains the Member who nominated the Nominated Person to enjoy information rights (or, perhaps the
custodian or broker who administers the investment on their behalf). Nominated Persons should continue to
contact that Member, custodian or broker (and not the Company) regarding any changes or queries relating to the
Nominated Person’s personal details and interest in the Company (including any administrative matter). The only
exception to this is where the Company expressly requests a response from a Nominated Person.

Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, entitlement to attend and vote at the
Meeting and the number of votes which may be cast thereat will be determined by reference to the register of
members of the Company as at 11.30 a.m. on the day which is two days before the day of the Meeting or adjourned
Meeting. Changes to entries on the register of members after that time shall be disregarded in determining the
rights of any person to attend and vote at the Meeting.

In order to facilitate voting by corporate representatives at the Meeting, arrangements will be put in place at the
Meeting so that (i) if a corporate shareholder has appointed the Chairman of the Meeting as its corporate
representative with instructions to vote on a poll in accordance with the directions of all of the other corporate
representatives for that shareholder at the Meeting, then on a poll those corporate representatives will give voting
directions to the Chairman and the Chairman will vote (or withhold a vote) as corporate representative in
accordance with those directions; and (ii) if more than one corporate representative for the same corporate
shareholder attends the Meeting but the corporate shareholder has not appointed the Chairman of the Meeting as
its corporate representative, a designated corporate representative will be nominated, from those corporate
representatives who attend, who will vote on a poll and the other corporate representatives will give voting
directions to that designated corporate representative. Corporate shareholders are referred to the guidance issued
by the Institute of Chartered Secretaries and Administrators on proxies and corporate representatives
(www.icsa.org.uk) for further details of this procedure. The guidance includes a sample form of representation
letter if the Chairman is being appointed as described in (i) above.

If the Chairman, as a result of any proxy appointments, is given discretion as to how the votes the subject of those
proxies are cast and the voting rights in respect of those discretionary proxies, when added to the interests in the
Company’s securities already held by the Chairman, result in the Chairman holding such number of voting rights
that he has a notifiable obligation under the Disclosure and Transparency Rules, the Chairman will make the
necessary notifications to the Company and the Financial Services Authority. As a result, any Member holding 3%
or more of the voting rights in the Company who grants the Chairman a discretionary proxy in respect of some or
all of those voting rights and so would otherwise have a notification obligation under the Disclosure and
Transparency Rules, need not make a separate notification to the Company and the Financial Services Authority.

As at 17 July 2008, being the last business day prior to the printing of this Notice, the Company’s issued capital
consisted of 3,899,014 Ordinary Shares carrying one vote each. Therefore, the total voting rights in the Company as
at 17 July 2008 are 3,899,014.

Copies of the Directors’ service contracts and a copy of the proposed new Articles of Association of the Company
together with a copy of the existing Articles of Association are available for inspection at the registered office at
Mountview House, 151 High Street, Southgate, London N14 6EW during normal business hours on weekdays
(Saturdays, Sundays and English public holidays excepted) from the date of this notice until the conclusion of the
Meeting and will also be available for inspection on the date and at the place of the Meeting from 15 minutes prior
to the commencement of the Meeting until the conclusion of the Meeting.

SHAREHOLDERS’ INFORMATION

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FINANCIAL CALENDAR 2008

Final dividend record date

18 July

Annual Report Posted to Shareholders

18 July

Annual General Meeting

Final dividend payment

Interim Results

13 August

18 August

27 November

Copies of this statement are being sent to shareholders. Copies may be obtained
from the Company’s registered office:

Mountview House
151 High Street
Southgate
London N14 6EW

All administrative enquiries relating to shareholdings should be addressed to the
Company’s Registrars:

Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire HD8 0GA