Mountview Estates PLC Annual Report 2009

FY2009 Annual Report · Mountview Estates PLC

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MOUNTVIEW ESTATES P.L.C.

REPORT AND ACCOUNTS

2009

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 or 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 56 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 Registrars (Proxies), The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU 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

Page

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

Consolidated Statement of Recognised Income and Expense

Notes to the Consolidated Financial Statements

Independent Auditors’ Report to the Members of Mountview Estates P.L.C.

Mountview Estates P.L.C. – parent company balance sheet prepared under UK GAAP

Notes to the parent company balance sheet prepared under UK GAAP

Independent Auditors’ Report to the Members of Mountview Estates P.L.C.
(Parent company prepared under UK GAAP)

Table of Comparative Figures

Notice of Meeting

Shareholders’ Information

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FINANCIAL HIGHLIGHTS

Turnover (millions)

Gross Profit (millions)

Profit Before Tax (millions)

Profit Before Tax excluding investment
properties revaluation (millions)

Equity Holders’ Funds (millions)

Earnings per share (pence)

Net assets per share

Dividend per share (pence)

2009
£

53.6

25.9

13.1

16.3

187.5

241.0

48.1

155

2008
£

54.3

36.0

29.5

27.7

187.7

530.1

48.2

155

(Decrease)
%

(1.2)

(28.0)

(55.6)

(41.2)

(0.1)

(54.5)

(0.2)

–

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CHAIRMAN’S STATEMENT

First the good news, this company is still making profits. Next more good news, this company is
proposing to maintain its dividends at the record levels reached last year. At the Annual General
Meeting on 12 August 2009, shareholder approval will be sought for a final dividend of 105 pence
per share.

In the worst financial climate in living memory, I consider the achievements highlighted in the first
paragraph to be true success and I congratulate all my staff and colleagues on their hard work which
has happily produced this level of success. Because of their continuing diligence I am confident that
I will again be able to report profits in twelve months’ time although we may yet see an even more
difficult economic climate. The financial highlights opposite show that despite the various
difficulties in the marketplace we have very nearly maintained the same level of turnover as in the
previous year. This has been achieved by selling about twenty five per cent more properties which
explains why the cost of sales has risen but nevertheless, in such difficult circumstances,
maintaining turnover is a considerable achievement.

In the fifteen months up to the end of June 2008 we had made very substantial purchases and our
borrowings had reached their highest level ever. In normal circumstances it would be necessary to
place an emphasis on the repayment of those borrowings but in present circumstances it is even
more vital. Although interest rates are presently extraordinarily low, in twelve months’ time I
believe they will be significantly higher and the reduction of our borrowings in the meantime will
be prudent. During the twelve months under review our long term borrowings have decreased by
£7 million and have continued to decrease since 31 March 2009 and must continue to decrease in the
coming months.

During recent months we have been introducing a new computer system from which we are already
gaining some benefits and this has helped to reduce the administrative costs of the company. As we
continue to integrate the new systems and take advantage of their full capabilities it should be
possible to contain costs further. Unfortunately a company such as this is ever further burdened by
the increasing bureaucracy which is inflicted upon us and this may sometimes obscure the greater
efficiency with which the core activities are being administered.

At the Annual General Meeting on 12 August 2009 John Hall will be retiring from the position
of Non-Executive Director which he has occupied with distinction since December 2000. He
was Chief Executive of Brewin Dolphin Holdings PLC from 1987 to September 2007 and
we have been fortunate to have the skill and advice of such an experienced man. He has seen
the company grow quite significantly and we are grateful for all his contributions during
this time.

As at 1 January 2009 we welcomed James Laing to the Board as a Non-Executive Director and he
will stand for election at the Annual General Meeting on 12 August 2009. He has been a Senior
Partner at Strutt & Parker for many years and as a Chartered Surveyor I am confident that he will
bring a wealth of relevant experience to the Board.

CHAIRMAN’S STATEMENT

The company continues on a sound financial basis with tight internal controls and although we may
yet experience greater economic perils I am confident that in the fullness of time we will reap the
benefits of the purchases made in recent years. My staff and colleagues are ready for the challenges
ahead and I look forward to the day when their efforts will again produce greater profits and when
they can enjoy the financial benefits of those profits and dividends can once again be increased.

The final dividend of 105 pence per share in respect of the year ended 31 March 2009 recommended
by your Board is payable on 17 August 2009 to shareholders on the Register of Members as at 17 July
2009. This will make a total dividend for the year ended 31 March 2009 of 155 pence per share which
is more than one and a half times covered by the earnings per share.

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D.M. SINCLAIR
Chairman

16 July 2009

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:

Regulated 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 2009

Regulated Tenancies
Ground Rents
Life Tenancies

No of units

2,411
1,076
377

Cost
£m

242.8
1.3
24.7

Analysis of the Group Trading portfolio at the lower of cost and estimated net realisable value by
geographical location as at 31 March 2009

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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

62.4

88.4

24.2

42.1

25.8

0.6

0.04

0.1

0.03

0.2

0.7

6.0

7.1

10.7

Portfolio
%

23.5

33.3

11.3

18.3

13.6

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. Life tenancy stock
has nominal rental income, is bought at a greater discount to vacant possession value and has 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 (£)

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

Analysis of acquisitions

Regulated tenancies
Life tenancies
Ground rents (or created)

No of units
Year ended
31.03.2009

1
6
237

244

No of
units

61
2
59

122

Location

London
London
London and other

Year ended
31.03.2009
Costs
£’000

15,147
277
272

15,696

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

“Magdalen Park Estate” – Portfolio

The Group residential trading properties are carried in the balance sheet at the lower of cost and net
realisable value. In assessing the net realisable value the Group compares the net sales proceeds
which the Group expects on sale of property with the vacant possession value. A net realisable value
provision of £3 million has been made at 30 September 2008 against this Portfolio to write down
properties expected to be sold ultimately at vacant possession value.

The Directors are of the opinion that the property market as at 31 March 2009 has improved to an
extent that in their opinion it is not necessary to make further write downs in respect of this estate.

We have significantly reduced acquisitions in the latter part of the year.

Based on sales made during the financial year, the Directors do not consider that any stock write
down is necessary in respect of the other properties.

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 2009 is as follows:

Louise Goodwin Limited
A.L.G. Properties Limited

53 units
11 units

All the properties are located in Belsize Park, London NW3.

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

During the financial year, we disposed of one unit for £1.05 million.

Outlook

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 35.

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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. Became a 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 the Chief Executive of Brewin Dolphin
Holdings PLC from 1987 to September 2007. Mr. J.P. Hall is to retire from the Board at the Annual
General Meeting 2009.

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.

J.A.N. Laing FRICS
Joined the Company as a Non-Executive Director on 1 January 2009. Member of the Royal
Institution of Chartered Surveyors. Retired as a partner from Strutt and Parker Property Consultants
and Estate Agents in April 2009 but remains as a consultant.

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 LLP
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-Second Annual Report to the Members
together with the Financial Statements for the year ended 31 March 2009.

RESULTS AND DIVIDENDS

The Results for the year are set out in the Income Statement on page 19.

The Directors recommend the payment of a final dividend of 105 pence per share. The
dividend will be paid on 17 August 2009 subject to approval at the A.G.M. on 12 August 2009
to Shareholders on the register at the close of business on 17 July 2009.

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:

Turnover
Profit before tax excluding
investment properties revaluations
Earning per share
Net assets per share

Financial Key Performance Indicators

2009
growth %
(1.2)

(41.2)
(54.5)
(0.2)

2008
growth %
(20.3)

(23.0)
(41.1)
8.8

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

2009
£’000

7.0%
140
484

2008
£’000

7.8%
150
1,054

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.

REPORT OF THE DIRECTORS

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REVIEW OF BUSINESS AND PROSPECTS (continued)

Risk review
The key risks to the Group’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 fluctuations in interest rates

The Company has entered into an Interest Rate Swap Agreement, for a period of 5 years in
2008 on its £40 million loan in order to reduce its exposure to interest rate fluctuations.

(cid:1) a lack of availability of finance

We are reducing our still modest level of gearing and improving liquidity by cutting back on
purchases and repaying loans.
(cid:1) long term worldwide recession

The shrinking of UK economy combined with worsening economic outlook and higher
unemployment will affect the prices obtained from the sale of properties.

ROTATION OF DIRECTORS

In accordance with the Company’s Articles of Association, Mrs. M.M. Bray and Mr. J.B. Fulton
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.

SHARE CAPITAL

The authorised share capital of the Company as at 31 March 2009 was £250,000 divided into
5,000,000 Ordinary Shares of 5 pence of which 3,899,014 were in issue.

The rights and obligations attaching to the Company’s shares, as well as the powers of the
Company’s directors, are set out in the Company’s Articles of Association, a copy of which
can be viewed on the Company’s website at www.mountviewplc.co.uk

The Company’s Articles of Association can only be amended by special resolution of
the shareholders.

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 of
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

All the above interests are beneficial except where otherwise stated.

31 March
2009

1 April
2008

Ordinary Shares of 5p each

535,883

534,883

304,225

227,250

1,500

11,477

2,000

1,500

10,187

2,000

REPORT OF THE DIRECTORS

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There have been the following changes in the interests of Directors in the share capital of the
Company between 31 March 2009 and 12 July 2009:

Mr. K. Langrish-Smith has increased his beneficial holdings by 400 Ordinary Shares on 6 April
2009. Mrs. E. Langrish-Smith (wife of the director) has increased her beneficial shareholdings
by 375 Ordinary Shares on 6 April 2009.

NOTIFIABLE INTERESTS IN SHARE CAPITAL

As at 12 July 2009, the following disclosures of major holdings of voting rights have been made
(and have not been amended or withdrawn) to the Company pursuant to the requirements of
Disclosure and Transparency Rule 5:

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. A. Williams
Mrs. S. Simpkins

633,780

179,400
118,100
596,745
145,450
138,750

16.25

4.60
3.03
15.31
3.73
3.56

ENVIRONMENTAL MATTERS AND SOCIAL/COMMUNITY ISSUES

Given the size of the Company and the nature of its business as a property trading company,
the Company does not currently have any policies in place in relation to environmental, social
or community issues.

EMPLOYEES

The Company provides regular training for its employees relating to the software used in the
day to day running of the business, in order to ensure the ongoing development of each
employee’s skills and knowledge.

10.

SIGNIFICANT AGREEMENTS

Certain banking agreements to which the Company is a party (described in Note 19 to the
Consolidated Financial Statements) alter or terminate upon a change of control of the
Company following a takeover bid.

There are no other significant agreements to which the Company is a party that take effect, alter
or terminate upon a change of control of the Company following a takeover bid.

There are no contractual or other agreements or arrangements in place between the Company
and third parties which, in the opinion of the Directors, are essential to the business of the
Company.

11. 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.

REPORT OF THE DIRECTORS

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12. DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE

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

13.

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 2009 relating to purchases of property stock generally
complete 28 days after exchange of contracts. Other trade creditors were settled, on average,
21 days after incurring the liability (2008: 14 days).

14.

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 12 August 2009
and a resolution is drafted accordingly.

15.

CORPORATE GOVERNANCE

The Directors’ statement on corporate governance is set out on pages 14 to 16.

16. 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.

17. DONATIONS

During the year the Group made charitable donations of £19,065 (2008: £27,343).
There were no political donations (2008: £nil).

18. 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.

19.

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.

By Order of the Board
M.M. BRAY
Secretary

Mountview House
151 High Street
Southgate
London N14 6EW
16 July 2009

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.

The Directors confirm to the best of their knowledge:

(cid:1)

the consolidated financial statements, which have been prepared in accordance with United
Kingdom law and the International Financial Reporting Standards (IFRSs) and in accordance
with rule 4.1.12(3)(a) of the Disclosure and Transparency Rules, have been prepared in
accordance with the applicable set of accounting standards and give a true and fair view of the
assets, liabilities and financial position and profit or loss of the Group and the undertakings
included in the consolidation taken as a whole; and
the Management Report represented by the Directors’ Report has been prepared in accordance
with rule 4.1.12(3)(b) of the Disclosure and Transparency Rules, and includes a fair review of the
development and performance of the business and the position of the Group and the
undertakings included in the consolidation taken as a whole, together with a description of the
principal risks and uncertainties the Group faces.

By Order of the Board
M.M. BRAY
Secretary

Mountview House
151 High Street
Southgate
London N14 6EW
16 July 2009

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 2008. 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 (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 2009 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.

Given the size of the 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 and a former Chief
Executive of Brewin Dolphin Holdings PLC is to retire from the Board at this year’s AGM.

In view of this we continue to believe that all our non-executive Directors are independent.

The Board

As at the year ended 31 March 2009 the Board comprised the Chairman, Mr. D.M. Sinclair, three
executive Directors and three 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

Nomination
Committee

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

Fulton

Laing

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 is confident 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) and Mr. J.A.N. Laing (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 17 to 18.

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 was one meeting during the year.

Audit Committee

The Audit Committee comprises Mr. J. Hall (non-executive Director), Mr. J.B. Fulton (non-executive
Director) and Mr. J.A.N. Laing (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.

Mr D.M. Sinclair and Mrs M.M. Bray attended two of the meetings held by the Audit Committee.

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 Note 3 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 2008 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. Mr J.A.N. Laing (non-Executive Director) joined the Remuneration Committee as from
1 January 2009.

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 from 1 July 2008 5% 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

240
220
200
180
160
140
120
100
80
60
40

FTSE W UK Real Estate £ – Total Return Index

Mountview Estates – Total Return Index

2004

2005

2006

2007

2008

2009

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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AUDITED INFORMATION

2009
Executive
D.M. Sinclair
K. Langrish-Smith
Miss J.L. Murphy
Mrs M.M. Bray

Non-Executive
J.P. Hall
J.B. Fulton
J.A.N. Laing

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

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

Salary
£000

Bonus
£000

Benefits
in kind
£000

Pensions
Contri-
butions
£000

250
150
180
200

24
24
6

834

200
65
120
135

–
–
–

520

39
24
13
–

–
–
–

21
10
14
15

–
–
–

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

–
–

Total
£000

510
249
327
350

24
24
6

1,490

Total
£000

530
250
351
367

24
24

1,546

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 2009.

John Hall
Chairman of the Remuneration Committee

CONSOLIDATED INCOME STATEMENT

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for the year ended 31 March 2009

Year
ended
31.03.2009
£000

Notes

Year
ended
31.03.2008
£000

REVENUE

Cost of sales

GROSS PROFIT

Administrative Expenses

Operating profit before changes in fair value
of investment properties

(Decrease)/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

Basic and diluted earnings per share (pence)

53,599

(27,657)

25,942

(3,767)

22,175

(3,210)

18,965

(5,906)
3

13,062

(4,864)
1,191

(3,673)

9,389

241.0

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

530.1

The notes on pages 24-41 are an integral part of these consolidated financial statements.

CONSOLIDATED BALANCE SHEET

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as at 31 March 2009

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
Cash flow hedge reserve
Retained earnings

NON-CURRENT LIABILITIES

Long-term borrowings
Deferred tax

CURRENT LIABILITIES

Bank overdrafts and loans
Trade and other payables
Current tax payable
Derivative financial instruments

TOTAL LIABILITIES

TOTAL EQUITY AND LIABILITIES

Approved by the Board on 16 July 2009.

As at
31.03.2009
£000

Notes

As at
31.03.2008
£000

13
14

16
17

22
23
23
23
21
24

19
20

19
18

2,567
32,195

34,762

268,806
660
840

270,306

305,068

195
55
25
56
(3,614)
190,773

187,490

88,000
8,506

96,506

13,026
2,055
2,377
3,614

21,072

117,578

305,068

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

12,685
3,081
3,983
–

19,749

124,446

312,203

D. M. SINCLAIR Chairman

K. LANGRISH-SMITH Director

The notes on pages 24-41 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2009

Share
capital
£000

Capital
reserve
£000

Notes

Capital
redemp-
tion
reserve
£000

Cash
flow
hedge
reserve
£000

Other Retained
earnings
£000

reserves
£000

Total
£000

Changes in equity
for year ended
31 March 2008

Balance as at
1 April 2007

Profit for the year

Dividends

195

–

172,606

172,937

20,668

(5,848)

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195

–

187,426

187,757

Balance at
31 March 2008

Changes in equity
for year ended
31 March 2009

Balance as at 1 April 2008

195

–

187,426

187,757

Profit for the year

Cash flow hedge

Dividends

Balance at
31 March 2009

9,389

(3,614)

(6,042)

195

(3,614)

190,773

187,490

The fair value movements on those derivative financial investments qualifying for hedge accounting
under IAS39 are taken to this reserve.

The notes on pages 24-41 are an integral part of these consolidated financial statements.

CONSOLIDATED CASH FLOW STATEMENT

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for the year ended 31 March 2009

Year
ended
31.03.2009
£000

Notes

Year
ended
31.03.2008
£000

CASH FLOWS FROM OPERATING
ACTIVITIES

Profit from operations

18,965

33,568

Adjustments for:
Depreciation
Loss on disposal of property, plant and equipment
Decrease/(Increase) in fair value of
investment properties

Operating cash flows before movement
in working capital

Decrease/(Increase) in inventories
Decrease/(Increase) in receivables
(Decrease)/Increase in payables

Cash generated from operations

Interest paid
Income taxes paid

Net cash inflow/(outflow) 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 inflow/(outflow) from investing activities

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

Net cash (outflow)/inflow 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

192
145

3,210

22,512

2,555
459
(1,053)

24,473

(5,906)
(6,443)

12,124

3
1,005

15
(58)
(350)

615

–
(9,110)
(6,042)

(15,152)

(2,413)

(8,798)

(11,211)

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)

The notes on pages 24-41 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

Profit for the year

Net (expense) recognised directly in equity

Notes

Total recognised income

The total recognised income
in the year is attributable to:
Equity shareholders of the parent

for the year ended 31 March 2009

Year
ended
31.03.2009
£000

9,389

(3,614)

5,775

Year
ended
31.03.2008
£000

20,668

–

20,668

5,775

20,668

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The notes on pages 24-41 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 2009

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 Companys’ website is: www.mountviewplc.co.uk

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 2009.

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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for the year ended 31 March 2009

ACCOUNTING POLICIES (continued)

(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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for the year ended 31 March 2009

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)

Investment Property
Property that is held for long-term rental yields or for capital appreciation or both, and
that is not occupied by the companies in the consolidated Group, is classified as
investment property.

Investment property is measured initially at its cost including related transaction costs.

After initial recognition, investment property is carried at fair value. Fair value is based
on active market prices adjusted, if necessary, for any difference in the nature, location
or condition of the specified asset. If this information is not available the Group uses
alternative valuation methods such as recent prices or less active markets or discounted
cash flow projections.

Subsequent expenditure is included in the carrying amount of the property 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 during the financial period in which they
are incurred.

Gains or losses arising from changes in the fair value of the Group’s investment
properties are included in the income statement of the period in which they arise.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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ACCOUNTING POLICIES (continued)

for the year ended 31 March 2009

(m)

(n)

(o)

(p)

(r)

Inventories
These comprise residential properties all of which are held for resale, and are valued at
the lower of cost and estimated net realisable value. Cost to the Group includes legal fees
and commission charges incurred during acquisition together with improvement costs.
Net realisable value is the net sale proceeds which the Group expects on sale of a
property in its current condition. A net realisable value provision of £3 million has been
made at 30 September 2008 against the Magdalen Park Estate portfolio to write down
properties expected to be sold ultimately at vacant possession value. The analysis of the
Group trading portfolio as at 31 March 2009 is on page 30.

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.

(s)

Derivatives

The Group uses derivative instruments to help manage its interest rate risk. In
accordance with its treasury policy, the Group does not hold or issue derivatives for
trading purposes.

The derivatives are recognised initially at fair value. Subsequently, the gain or loss on
remeasurement to fair value is recognised immediately in the income statement, unless
the derivatives qualify for cash flow hedge accounting in which case any gain or loss is
taken to equity in a cash flow hedge reserve.

In order to qualify for hedge accounting, the Group is required to document in advance
the relationship between the item being hedged and the hedging instrument. The Group
is also required to demonstrate that the hedge will be highly effective on an ongoing
basis. The effectiveness testing is reperformed at each period end to ensure that the
hedge remains highly effective.

(t)

Impact of standards and interpretations in issue but not yet effective

At the date of authorisation of these financial statements there are a number of
standards, amendments and interpretations to existing standards that have been
published but which are not yet effective and which have not been early adopted by the
Group. These are as follows:

• IFRS 8 ‘Operating Segments’ (effective from 1 January 2009). IFRS 8 amends the
current segmental reporting requirements of IAS 14 and aligns segment reporting
with the requirements of the US standard SFAS 131. It requires a ‘management
approach’ to be adopted so that segment information is presented on the same basis
as that used for internal reporting purposes. This standard will apply to the Group
from 1 April 2009 and is expected to impact upon the Group by requiring additional
disclosures in the annual financial statements;

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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E
S
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A
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E
S

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for the year ended 31 March 2009

ACCOUNTING POLICIES (continued)

(t)

Impact of standards and interpretations in issue but not yet effective (continued)

• Amendments to IFRS 3 ‘Business Combinations’ (effective from 1 July 2009) and
IAS 27 ‘Consolidated and Separate Financial Statements’ (effective from 1 January
2009). The amendment to both of these standards is still subject to endorsement by
the European Union. Some of the key changes are: i) the requirement to measure all
consideration at fair value at acquisition date, with any subsequent changes
(e.g. contingent consideration) remeasured at fair value through income, ii) the
expensing of all transaction costs; and iii) stepped acquisitions to be accounted for
as a disposal of existing interests and an acquisition of an enlarged interest, giving
rise to potential profits or losses on disposal of the existing interest.

(u)

Estimates and Judgements

Going concern
The Directors are required to make an assessment of the Group’s ability to continue to
trade as a going concern. Because of the difficult market conditions prevailing this
assessment has been subject to more uncertainties that are usual. The Directors have
given this matter due consideration and have concluded that it is appropriate to prepare
the Group financial statements on a going concern basis.
Further, the Directors are confident that the Group has adequate resources to continue
in existence for the foreseeable future.

Distinction between investment and trading property
The Group considers the intention at the outset when each property is acquired in
order to classify the property as either an investment or a trading property. Where the
intention is to either trade the property or where the property is held for immediate
sale upon receiving vacant possession within the ordinary course of business, the
property is classified as trading property. Where the intention is to hold the property
for its long-term retail yield and/or capital appreciation, the property is classified as
an investment property.

Investment properties
In considering the values attributable to the investment portfolio, the following factors
are taken into consideration:
• sales of properties within the Group’s portfolio during the preceding 12 months
• sales of properties in the same district whenever the information is available
• published market research concerning the performance of the property market in

this region and district

• factors affecting individual properties and units in relation to value, and factors in

the district which might affect the values of individual properties and units.

Carrying value of trading stock
The average length of time a unit of stock is held by the Group is 15 years and
historically, the value of properties has increased steadily due to favourable market
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.

As the Group’s business model is to sell trading stock on recovery net realisable
value is the net sales proceeds which the Group expects on the sale of a property with
vacant possession.

A net realisable value provision of £3 million has been made at 30 September 2008
against the ‘Magdalen Park Estate’ portfolio to allow for some further decline in
property prices. This is based on our review of recent sales and information concerning
the performance of the property market in this district.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

M
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S

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FINANCIAL RISK MANAGEMENT

for the year ended 31 March 2009

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.

During the year we decreased our long term borrowings by £7 million to £88 million
(2008: £90 million).

The Group has two covenants covering loan to value ratio and interest cover. These
covenants were complied with during the financial year and we are confident to meet
them at 30 September 2009.

(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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

M
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T
V
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W

E
S
T
A
T
E
S

P.
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C.

for the year ended 31 March 2009

FINANCIAL RISK MANAGEMENT (continued)

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

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

2009
£000

101,026

(840)

100,186

187,490

287,767

35%

2009
£000

39,372
14,227

53,599

22,344
5,313

27,657

17,028
8,914

25,942

2008
£000

107,685

(802)

106,883

187,757

294,640

36%

2008
£000

41,755
12,583

54,338

12,117
6,230

18,347

29,638
6,353

35,991

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 2009

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:

2009
Property
Property
Trading Investment
£’000

£’000

2008
Property
Property
Trading Investment
£’000

£’000

Group
£’000

Revenue

52,829

770

53,599

53,548

790

54,338

Operating profit
before changes
in fair value of
investment
properties

21,859

316

22,175

31,382

402

31,784

Finance costs

(5,903)

(4,039)

Profit after tax

9,389

(4,039)

20,668

Assets

272,725

32,343

305,068

275,822

36,381

312,203

Liabilities

106,636

106,695

110,711

110,766

Fixed assets
capital expenditure

Depreciation

164

350

408

192

382

159

339

721

190

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

– the audit of the parent company and

consolidated financial statements

– the audit of the company’s subsidiaries

pursuant to legislation

– for other services

operating expenses for investment properties

And after crediting:

– net rental income
– administrative charges to related

companies (Note 25)

2009
£000

192
2

12
9
283

8,914

2008
£000

190
21

12
9
386

6,353

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

M
O
U
N
T
V
I
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W

E
S
T
A
T
E
S

P.
L.
C.

for the year ended 31 March 2009

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:

2009
£000

2,171
272
85

2,528

2009
£000

1,490

2008
£000

2,461
312
73

2,846

2008
£000

1,546

The details of Directors’ Remuneration are shown in the audited section of the Remuneration
Report on page 18.

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

2009

2009
£000

5,906

2009
£000

2008

2008
£000

4,043

2008
£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 28%
(2008: 30%)

Deferred tax:
Current year 28% (2008: 30%)

for the year ended 31 March 2009

2009
£000

2008
£000

4,864

8,358

(1,191)

503

Taxation attributable to the Company and
its Subsidiaries

3,673

8,861

(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

13,062

29,529

Profit on ordinary activities multiplied
by rate of tax 28% (2008: 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

3,657
73
31
189
(5)
899
(1,191)
20

Taxation attributable to the Company and its Subsidiaries

3,673

8,859
20
7
–
–
(535)
503
7

8,861

11. DIVIDENDS

On 18 August 2008 a dividend of 105p per share (2007: 100p per share) was paid to the
shareholders. On 30 March 2009 a dividend of 50p per share (2008: 50p per share) was paid
to the shareholders. This resulted in total dividends paid in the year of £6.042 million
(2008: £5.848 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 17 August 2009. 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 2009 is payable to all shareholders on the Register of Members
on 17 July 2009. The total estimated final dividend to be paid is £6.042 million.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended 31 March 2009

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)

9,389

20,668

2009
£000

2008
£000

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

3,899,014

Basic and Diluted Earnings per share

241.0p

530.1p

M
O
U
N
T
V
I
E
W

E
S
T
A
T
E
S

P.
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C.

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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

13.

PROPERTY, PLANT AND EQUIPMENT (continued)

for the year ended 31 March 2009

COST
At 1 April 2008
Additions
Disposals

At 31 March 2009

DEPRECIATION
At 1 April 2008
Charge for the year
On disposals

At 31 March 2009

NET BOOK VALUE
At 31 March 2008

At 31 March 2009

Freehold
Fixtures
Property & Fittings
£000

£000

Motor Computer
Vehicles Equipment
£ 000

£000

2,671
–
–

2,671

383
53
–

436

2,288

2,235

272
17
–

289

189
48
–

237

347
41
(35)

353

101
54
(17)

138

246

215

173
–
–

173

71
37
–

108

102

Total
£000

3,463
58
(35)

3,486

744
192
(17)

919

2,719

2,567

M
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E
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E
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Property, Plant and Equipment are located within United Kingdom.

14.

INVESTMENT PROPERTIES

Fair Value at 1 April 2008 (2007)
Additions:
Subsequent expenditure
Disposals
(Decrease)/Increase in Fair Value during the year

At 31 March

2009
£000

36,203

350
(1,148)
(3,210)

32,195

2008
£000

34,080

339
–
1,784

36,203

Louise Goodwin Limited and ALG Properties Limited
The Companies’ investment properties were valued on a Fair Value basis as at 31 March 2009 by
External Valuers, Mr S.W. Philp FRICS and Mr J.A. Rollings MRICS of Castles Surveyors Limited.
The valuations were in accordance with the requirements of the RICS Valuation Standards and
IAS 40. The valuation of each investment property assumed that the property would be sold
subject to any existing leases, regulated and assured tenancies, but otherwise, with vacant
possession. On this basis, the aggregate Fair Value of the Company’s interests in its investment
properties was:

Louise Goodwin Limited
£26,350,000 (twenty six million, three hundred and fifty thousand pounds)

ALGL Properties Limited
£5,845,000 (five million, eight hundred and forty five thousand pounds)

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 2009

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

2009
£000

268,806

2009
£000

283
377

660

Cost
2008
2009
£000

15,351

2,924

18,276

2008
£000

271,361

2008
£000

504
614

1,118

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

18.

TRADE AND OTHER PAYABLES

Trade creditors
Other taxes and social security costs
Other creditors

2009
£000

949
145
961

2,055

2008
£000

854
191
2,036

3,081

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

for the year ended 31 March 2009

2009
£000

12,051
88,000
975

2008
£000

9,600
95,000
3,085

101,026

107,685

2009
£000

(12,051)
840

(11,211)

M
O
U
N
T
V
I
E
W

E
S
T
A
T
E
S

P.
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2008
£000

(9,600)
802

(8,798)

2008
£000

12,685
–
95,000

107,685

12,685

95,000

2008

6.74%
6.80%
6.04%

Maturity profile of financial liabilities at 31 March 2009 was as follows:

Amounts repayable:
In one year or less
Between one and two years
Between two and five years

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

Amount due for settlement after 12 months

The average interest rates paid were as follows:

Bank overdrafts
Bank loans
Other loans

2009
£000

13,026
–
88,000

101,026

13,026

88,000

2009

5.04%
5.07%
4.11%

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 a £75 million long term borrowing facility with Barclays Bank. The
amount outstanding at 31 March 2009 is £68 million. This is a revolving loan and the
termination date of this facility is November 2012. 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.

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 2009

19.

BANK OVERDRAFTS AND LOANS (continued)

The Group has a £20 million long term borrowing facility with HSBC Bank. The amount
outstanding at 31 March 2009 is £20 million. This is a revolving loan and the termination
date of this facility is September 2011. The rate of interest payable on the loan is 1.05%
above 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 £975,000 (2008: £3.08 million) are repayable within one year.
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

2009
£000

8,506

The movement for the year in the Group’s net deferred tax position was as follows.

At 1 April
(Credit)/charge to income for the year

At 31 March

2009
£000

9,697
(1,191)

8,506

2008
£000

9,697

2008
£000

9,194
503

9,697

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

At 1 April
(Credit)/charge to income for the year

At 31 March

21.

FINANCIAL INSTRUMENTS

Fair value of financial assets

Revaluation of properties
2008
2009
£000
£000

9,697
(1,191)

8,506

9,194
503

9,697

The Group’s financial assets at the year end consist of trade receivables and cash at bank and
in hand of £1.5 million (2008: £1.920 million)

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

The trade receivables amounted to £660,000 (2008: £1.118 million).

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

M
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T
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I
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W

E
S
T
A
T
E
S

P.
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21.

FINANCIAL INSTRUMENTS (continued)

Fair value of borrowings

Bank overdrafts
Secured bank loans
Unsecured loans

for the year ended 31 March 2009

2009
£000

12,051
88,000
975

2008
£000

9,600
95,000
3,085

101,026

107,685

Interest charged in the income statement for the above borrowings amounted to £5.906 million
(2008: £4.043 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.

As at 31 March 2009 it is estimated that general increase of 1 point in interest rates would
decrease the Group’s profit before tax by approximately £480,000 (2008: £550,000).

Derivative financial instruments

The Group has entered into an Interest Rate Swap Agreement in January 2008 in order to help
manage its interest rate risk.

The interest rate swap matures in March 2013 and is based on £40 million non-amortising
notional amount. As at 31 March 2009 the fixed interest rate was 4.98% (31 March 2008: 4.98%).

The financial derivative was valued by an external consultant, using discounted cash flow
model and quoted market information.

As at 31 March 2009 the market value of derivatives under IAS 39 is a charge of £3.6 million
(2008: charge £139,000).

In accordance with IAS 39 when the cash flow hedges have been viewed as being effective, any
gains or losses have been taken through the cash flow hedge reserve.

Undiscounted maturity profile of financial liabilities

The following table analyses the Group’s financial liabilities and derivative financial liabilities
at the balance sheet date into relevant maturity groupings based on the remaining period to the
contractual maturity date. The amounts disclosed in the table are the contractual undiscounted
cash flows. As the amounts included in the table are the contractual undiscounted cash flows,
these amounts will not always equal the amounts disclosed on the balance sheet for
borrowings, derivative financial instruments, and trade and other payables. A reconciliation to
the balance sheet amounts is given on page 44.

Trade and other payables due within 12 months equal their carrying balances as the impact of
discounting is not significant.

At 31 March 2009

Less than

Between

Between
1 year 1 & 2 years 2 & 5years
£ 000
£000

£000

Interest bearing loans and borrowings
Cash flow hedges
Trade and other payables

13,903
3,614
2,055

–
–
–

103,684
–
–

At 31 March 2008

Less than

Between

Between
1 year 1 & 2 years 2 & 5years
£ 000
£000

£000

Interest bearing loans and borrowings
Cash flow hedges
Trade and other payables

13,323
–
3,081

–
–
–

123,825
–
–

Total
£000

117,587
3,614
2,055

Total
£000

137,148
–
3,081

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

M
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U
N
T
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I
E
W

E
S
T
A
T
E
S

P.
L.
C.

for the year ended 31 March 2009

21.

FINANCIAL INSTRUMENTS (continued)

Reconciliation of maturity analysis

At 31 March 2009

Interest bearing loans and borrowings
per accounts
Interest

Financial liability cash flows as above

At 31 March 2008

Interest bearing loans and borrowings
per accounts
Interest

Financial liability cash flows as above

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

Less than

Between

Between
1 year 1 & 2 years 2 & 5years
£ 000
£000

£000

Total
£000

13,026
877

13,903

–
–

–

88,000
15,684

101,026
16,561

103,684

117,587

Less than

Between

Between
1 year 1 & 2 years 2 & 5years
£ 000
£000

£000

Total
£000

12,685
638

13,323

–
–

–

95,000
28,825

107,685
29,463

123,825

137,148

2009
£000

250

195

2009
£000

55
25
56

136

2008
£000

250

195

2008
£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 2009 stood at £56,000 (2008: £56,000).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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24.

RETAINED EARNINGS

Balance at 1 April 2008

Net profit for the year
Dividends paid

Balance at 31 March 2009

25.

RELATED PARTY TRANSACTIONS

for the year ended 31 March 2009

£000

187,426

9,389
(6,042)

190,773

(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 £45,130 (2008: £46,186) were charged for these services.

The same services were also provided to Viewthorpe Limited, fees of £18,136 (2008: £15,649)
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 £700,000 (2008: £1,450,000). 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
£22,605 (2008: £36,849).

(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
£100,000 (2008: £110,000). 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 £5,466
(2008: £9,498).

(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
£nil (2008: £1,350,000). 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
£71,456 (2008: £85,786).

(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 (2008: £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 £8,256 (2008: £10,600).

(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 2009 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 24-41. 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 2009 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 Regulations 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

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 2009 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 2009.

BSG Valentine
Registered Auditors
Chartered Accountants
London
16 July 2009

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COMPANY BALANCE SHEET UNDER UK GAAP

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as at 31 March 2009

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
Cash flow hedge reserve
Profit and Loss Account

As at
31.03.2009
£000

Notes

As at
31.03.2008
£000

3
4

5
6

9
10
10
10
11
12

2,534
18,276

20,810

255,554
573
706

256,833

(20,650)

236,183

2,672
18,276

20,948

258,212
1,024
685

259,921

(19,168)

240,753

256,993

261,701

(109,221)

147,772

(114,074)

147,627

195
55
25
39
(3,614)
151,072

147,772

195
55
25
39
–
147,313

147,627

Approved by the Board on 16 July 2009.

D.M. SINCLAIR Chairman

K. LANGRISH-SMITH Director

NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP

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ACCOUNTING POLICIES

for the year ended 31 March 2009

(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 2009 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

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for the year ended 31 March 2009

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:

2009
£000

2,171
272
85

2,528

2009
£000

1,490

2008
£000

2,461
312
73

2,846

2008
£000

1,546

The details of Directors’ Remuneration are shown in the audited section of the Remuneration
Report on page 18.

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

2009

2008

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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TANGIBLE ASSETS (continued)

for the year ended 31 March 2009

COST
At 1 April 2008
Additions
Disposals

At 31 March 2009

DEPRECIATION
At 1 April 2008
Charge for the year
On disposals

At 31 March 2009

NET BOOK VALUE
At 31 March 2008

At 31 March 2009

Freehold
Fixtures
Property & Fittings
£000

£000

Motor Computer
Vehicles Equipment
£ 000

£000

2,671
–
–

2,671

383
53
–

436

2,288

2,235

98
3
–

101

62
20
–

347
41
(35)

353

101
54
(17)

138

246

215

173
–
–

173

71
37
–

108

102

Total
£000

3,289
44
(35)

3,298

617
164
(17)

764

2,672

2,534

All tangible assets of the Company are located within the United Kingdom.

INVESTMENTS

Hurstway Investment Company Limited

Louise Goodwin Limited

A.L.G. Properties Limited

Cost
2008
2009
£000

15,351

2,924

18,276

The Company owns 100% of the ordinary share capital of the following companies:

Subsidiary Undertaking

Country of
Incorporation

Principal
Activity

Hurstway Investment Company Limited

Louise Goodwin Limited

A.L.G. Properties Limited

Property Dealing

Property Investment

NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP

for the year ended 31 March 2009

STOCKS

Residential properties

DEBTORS: due within one year

Trade debtors
Prepayments and accrued income

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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
Derivative financial instruments

2009
£000

255,554

2009
£000

217
356

573

2009
£000

12,051
949
2,025
145
891
975
3,614

20,650

2008
£000

258,212

2008
£000

440
584

1,024

2008
£000

9,600
812
3,490
191
1,990
3,085
–

19,168

Other loans consist of loans from connected persons. Interest payable on these loans was at
0.5% above Barclays Bank Plc Base rate.

CREDITORS: Amounts falling due after more than one year

Bank loans
Amounts owed to Subsidiary undertakings
Other loans

2009
£000

88,000
21,221
–

109,221

2008
£000

95,000
19,074
–

114,074

NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP

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CREDITORS: Amounts falling due after more than one year (continued)

Maturity profile of financial liabilities at 31 March 2009 was as follows:

for the year ended 31 March 2009

Amounts repayable:
In one year or less
Between one and two years
Between two and five years
More than five years

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

Amount due for settlement after 12 months

2009
£000

13,026
–
88,000
21,221

122,247

13,026

109,221

2008
£000

12,685
–
95,000
19,074

126,759

12,685

114,074

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 a £75 million long term borrowing facility with Barclays Bank. The loan
outstanding at 31 March 2009 is £68 million. This is a revolving loan and the termination
date of this facility is November 2012. 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 long term borrowing facility with HSBC Bank. The loan is
not repayable by instalments. The loan outstanding at 31 March 2009 is £20 million. This
is a revolving loan and the termination date of this facility is September 2011. The rate of
interest payable on the loan is 1.05% above 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 £975,000 (2008: £3.08 million) are repayable within one
year. Interest payable on these loans is at 0.5% above Barclays Bank Plc base rate.

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

2009
£000

250

195

2008
£000

250

195

NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP

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for the year ended 31 March 2009

10. OTHER RESERVES

Capital redemption reserve
Capital reserve
Other reserves

Balance at 31 March

2009
£000

55
25
39

119

2008
£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 2009 stood at £39,000 (2008: £39,000).

11. DERIVATIVE FINANCIAL INSTRUMENTS

The Company entered into an Interest Rate Swap Agreement in January 2008 in order to help
manage its interest rate risk.

The financial derivative was valued by an external consultant, using discounted cash flow
model and quoted market information.

12.

PROFIT AND LOSS ACCOUNT

Balance at 1 April

Net profit for the year
Dividends paid

Balance at 31 March

13.

RELATED PARTY TRANSACTIONS

2009
£000

147,313

9,801
(6,042)

151,072

2008
£000

136,526

16,635
(5,848)

147,313

The same services were also provided to Viewthorpe Limited, fees of £18,136 (2008: £15,649)
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
£700,000 (2008: £1,450,000). 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
£22,605 (2008: £36,849).

NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP

13.

RELATED PARTY TRANSACTIONS (continued)

for the year ended 31 March 2009

(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 £100,000 (2008: £110,000). 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
£5,466 (2008: £9,498).

(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.

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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 2009 which comprise the principal accounting policies, the balance sheet and notes from 1 to 13. 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 2009.

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 2009;

• 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 2009

BSG Valentine
Registered Auditors
Chartered Accountants
London

16 July 2009

TABLE OF COMPARATIVE FIGURES

as at 31 March 2009

UK GAAP
2004
£000

IFRS
2005
£000

IFRS
2006
£000

IFRS
2007
£000

IFRS
2008
£000

IFRS
2009
£000

Revenue

55,087

48,778

47,456

68,168

54,338

53,599

Profit before taxation

28,593

24,848

22,660

50,227

29,529

13,062

Taxation

8,584

7,482

6,738

15,167

8,861

Profit after taxation

20,009

17,366

15,922

35,060

20,668

3,673

9,389

Dividend in relation
to the year

4,757

4,913

5,069

5,848

6.042

6.042*

Earnings per share

513.2p

445.4p

408.4p

899.2p

530.1p

241.0p

Rate of dividend

122p

126p

130p

150p

155p

*The £6.042 million dividend in relation to 2009 is made up of the interim dividend of £1.949 million
and the final dividend of £4.093 million, which will be paid on 17 August 2009, subject to approval at
the AGM on 12 August 2009.

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NOTICE OF MEETING

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Notice is hereby given that the Seventy-Second 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 12 August 2009 at 11.30a.m.,
for the following purposes:

To receive and consider the Reports of the Directors and the Auditors and the audited
Statements of Accounts of the Company for the year ended 31 March 2009.

To declare a final dividend of 105p per share payable on 17 August 2009 to Shareholders on
the register at 17 July 2009.

To re-appoint Mrs. M.M. Bray as a Director of the Company.

To re-appoint Mr. J.B. Fulton as a Director of the Company.

To appoint Mr. J.A.N. Laing 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 2009.

To re-appoint Messrs BSG Valentine as Auditors of the Company to hold office from the
conclusion of the Meeting to the conclusion of the next meeting at which the accounts are laid
before the meeting.

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 with effect from 00.01a.m. on 1 October 2009:

(i)

(ii)

the Articles of Association of the Company be amended by deleting all the provisions of
the Company’s Memorandum of Association which, by virtue of section 28 Companies
Act 2006, are to be treated as provisions of the Company’s Articles of Association; and

the Articles of Association of the Company produced to the meeting and initialled by
the Chairman of the meeting for the purpose of identification be adopted as the Articles
of Association of the Company in substitution for, and to the exclusion of, the existing
Articles of Association.

By Order of the Board
M.M. BRAY
Secretary

Mountview House
151 High Street
Southgate
London N14 6EW
17 July 2009

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 or any adjournment thereof.

To appoint a proxy or to give or amend an instruction to a previously appointed proxy via the CREST system, the
CREST message must be received by the issuer’s agent RA10 by no later than 48 hours before the time of the
Meeting or any adjournment thereof. For this purpose, the time of receipt will be taken to be the time (as
determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer’s
agent is able to retrieve the message. After this time any change of instructions to a proxy appointed through CREST
should be communicated to the proxy by other means. CREST Personal Members or other CREST sponsored
members, and those CREST Members who have appointed voting service provider(s) should contact their CREST
sponsor or voting service provider(s) for assistance with appointing proxies via CREST. For further information on
CREST procedures, limitations and system timings please refer to the CREST Manual. We may treat as invalid a
proxy appointment sent by CREST in the circumstances set out in Regulation 35(5) (a) of the Uncertificated
Securities Regulations 2001. In any case your proxy instruction must be received by the company’s registrars no
later than 48 hours before the time of the Meeting or any adjournment thereof.

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.

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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 16 July 2009, 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 16 July 2009 are 3,899,014.

Resolution 9, which will be proposed as a special resolution, seeks to delete the provisions of the Company’s
Memorandum of Association and to amend the Company’s existing Articles of Association to remove all references
therein to authorised share capital.

Since the adoption of the existing Articles of Association at the 2008 AGM, further provisions of the Companies Act
2006 (CA 2006) will come into force in October 2009. The Company intends to make further changes to the Articles
of Association in 2010 to reflect these provisions following the proposed implementation of the Shareholder Rights
Directive on 3 August 2009.

However, as a result of the changes in law, the requirement for the Company to have provisions in its
Memorandum of Association setting out the objects of the Company will be abolished from 1 October 2009 and
from this date any existing provisions in the Company’s Memorandum of Association will be deemed to be
contained in the Company’s Articles of Association. Whilst provisions in the existing Memorandum of
Association (including the objects clause and authorised share capital statement) will, by virtue of the Companies
Act 2006 (Commencement No., 8, Transitional Provisions and Savings) Order 2008, be deemed to be part of the
Company’s Articles of Association, these provisions can be removed by special resolution. The removal of these
provisions would enable the Company to take advantage of the abolition of the requirements for companies to
have an objects clause and an authorised share capital. This would also mean that all the provisions of the
Articles of Association are contained in one document. The Company therefore asks shareholders to consent to
the deletion of the provisions of the Company’s Memorandum of Association and to the adoption of the new
Articles of Association by special resolution.

Directors will still be limited as to the number of shares they can allot at any time by virtue of the fact that allotment
authority continues to be required under the CA 2006. As such, the allotment of shares by the Board will remain
subject to the Board obtaining the requisite authority from shareholders prior to such allotment.

10.

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 2009

Final dividend record date

17 July

Annual Report Posted to Shareholders

17 July

Annual General Meeting

Final dividend payment

Interim Results

12 August

17 August

26 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