MOUNTVIEW ESTATES P.L.C.
REPORT AND ACCOUNTS
2011
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CONTENTS
Page
Financial Highlights 2
Chairman’s Statement 3
Review of Operations 4
Directors and Advisers 7
Report of the Directors 8
Statement of Directors’ Responsibilities 12
Corporate Governance 13
Remuneration Report 16
Consolidated Income Statement 19
Consolidated Statement of Comprehensive Income 20
Consolidated Statement of Financial Position 21
Consolidated Statement of Changes in Equity 22
Consolidated Cash Flow Statement 23
Notes to the Consolidated Financial Statements 24
Independent Auditors’ Report to the Members of Mountview Estates P.L.C. 44
Mountview Estates P.L.C. – parent company balance sheet prepared under UK GAAP 46
Notes to the parent Company financial statements prepared under UK GAAP 47
Independent Auditors’ Report to the Members of Mountview Estates P.L.C. on the
parent Company financial statements prepared under UK GAAP 54
Table of Comparative Figures 55
Notice of Meeting 56
Shareholders’ Information 59
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FINANCIAL HIGHLIGHTS
2011 2010 (Decrease)
/Increase
£ £ %
Turnover (millions) 47.7 56.7 (15.9)
Gross Profit (millions) 29.1 34.5 (15.7)
Profit Before Tax (millions) 23.6 29.3 (19.5)
Profit Before Tax excluding investment
properties revaluation (millions) 21.1 27.1 (22.1)
Equity Holders’ Funds (millions) 214.9 203.1 5.8
Earnings Per Share (pence) 435.3 554.8 (21.5)
Net Assets Per Share 55.1 52.1 5.8
Dividend Per Share (pence) 165 165 –
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CHAIRMAN’S STATEMENT
The year ended 31 March 2011 has been a difficult one but the results are satisfactory and there has
been good progress towards the changes that must be made for the future prosperity of the Company.
The year ended 31 March 2010 saw a strong recovery from the disappointing results of the previous
year but, as the realities of the country’s economic situation became apparent under the new
government, it has not been possible to maintain that recovery in its fullest form this year.
My suggestion at the interim stage that the second half of the Company’s financial year might be as
good as the first half happily proved to be accurate almost to the penny and the gross profit as a
percentage of turnover has at least matched last year’s performance. In the second half of this financial
year the Company has made significant purchases and this trend has continued since 1 April 2011.
In a company as small as this each staff departure is a significant inconvenience but also a
significant opportunity to make the changes that will enable the Company to progress towards a
sound future. New recruitments have been made and further changes of personnel will be made
as and when appropriate.
Following the acquisition of the Magdalen Park Estate portfolio at the end of January 2008 there was
necessarily an emphasis on the repayment of debt and that has been achieved very successfully.
Arguably that emphasis was overdone and the necessity for new purchases was overlooked. That
necessity is being addressed but the level of indebtedness is being carefully monitored.
Economic conditions are not expected to be easy during the coming year although interest rates
presently remain at historic lows. The Company is well placed to take advantage of good purchasing
opportunities and I expect the Company’s portfolio of properties to be significantly larger by the end
of the year. The coming year is about building for and preparing for the future so that we are well
placed to take advantage when the housing market improves.
My staff and colleagues have continued to work hard but unfortunately in the prevailing market
conditions their efforts have not brought the same results and rewards as last year. Nevertheless it is
possible to maintain the final dividend at last year’s increased level.
The final dividend of 115 pence per share in respect of the year ended 31 March 2011 recommended
by your Board is payable on 15 August 2011 to shareholders on the Register of Members as at 15 July
2011. This will make a total dividend for the year ended 31 March 2011 of 165 pence per share which
is 2.6 times covered by the earnings per share.
D.M. SINCLAIR
Chairman
14 July 2011
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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 2011
No of units Cost
£m
Regulated Tenancies 2,250 231.3
Ground Rents 1,096 1.7
Life Tenancies 364 26.5
Analysis of the Group Trading portfolio at the lower of cost and estimated net realisable value by
geographical location as at 31 March 2011
Regulated Ground Rents Life Tenancies Portfolio
£m £m £m %
London (North) 58.5 0.7 0.2 22.9
London (South) 79.0 0.8 3.3 32.0
Kent, Surrey, Sussex, Dorset
Hampshire, I.O.W 22.6 0.04 6.1 11.1
Herts, Essex, Beds, Bucks,
Oxon, Camb, Norfolk, Suffolk,
Berks, Middx, Northants 42.1 0.1 6.6 18.8
Remainder of England and Wales 29.1 0.03 10.3 15.2
The Company’s modus operandi is to buy tenanted residential property and sell it when it becomes
vacant. Regulated investments which 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 (£) No of units Location
3 million 1 London
2 million+ 2 London
500,000-1 million 4 London
below 500,000 147 London and other
154
The Majority of our residential properties subject to a regulated tenancy are concentrated in London
and the South East.
Returns from the regulated portfolios are derived from a combination of below market rental income
and trading profits on the sale of property, when the property falls vacant and the crystalisation of the
reversionary gain.
The properties are generally unimproved and of low average values. Through active management we
identify the opportunity to add value by refurbishing certain properties prior to their sale. We aim to
refurbish properties at the upper end of the market.
Analysis of acquisitions
Year ended
No of 31.03.2011
units Cost
£’m
Regulated tenancies 115 10.8
Life tenancies 5 2.3
Ground rents (or created) 17 0.01
137 13.11
The above analysis does not include legal and commission expenses directly related to the acquisition
of properties or any repairs of a capital nature.
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 the sale of property with the vacant possession value.
The Company has benefited from good market conditions in certain areas. Over the past year we have
achieved premium prices for properties, especially in sought-after areas such as Belsize Park and the
West End of London.
Based on sales made during the financial year, the Directors do not consider that any stock write down
is necessary in respect of its properties. Trading conditions in the early part of this financial year were
not easy, but we achieved sales of £34 million (2010: £42 million) demonstrating the liquidity of the
portfolio. The average sales price achieved was £222,110.
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REVIEW OF OPERATIONS
1. RESIDENTIAL PROPERTIES (continued)
Rental Income
The Company’s rental income is derived from five different sources:
• Regulated tenancies
• Assured tenancies
• Assured shorthold tenancies
• Life tenancies
• Ground rents
Where possible we still target those properties where the rent is capped and expenditure on
improvements and the provision of missing amenities leads to substantial increases in rental income.
The operating contribution from the core business (comprising profits on sale of trading properties and
rental income) is analysed in Note 4 on page 31.
2. INVESTMENT PROPERTIES
The analysis of the investment portfolio as at 31 March 2011 is as follows:
2011 2010
Louise Goodwin Limited 45 units 50 units
A.L.G. Properties Limited 10 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 5 units for a total of £5.3 million in Louise Goodwin Ltd and
1 unit for £1.3 million in A.L.G. Properties Ltd (2010: disposed of three units for £1.9 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 any adjustment resulting from changes in market circumstances.
Details of the valuation of the investment portfolio are disclosed on page 36.
SUMMARY
Prospects for the Group
Since the end of the financial year we are continuing to sell properties and we are pleased with the
results achieved. Given our refinancing and the reduction in long term borrowings, we believe that
we are in a strong position to take advantage of any prime purchasing opportunities which may arise
in the near future.
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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. Fellow 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. Resigned on 31 August 2010.
Mrs. M.M. Bray FCCA
Joined the Company in 1996 and became Company Secretary. Became a Director on 1 April 2004. Fellow
of the Association of Chartered Certified Accountants.
Non-Executive Directors
J.B. Fulton FCA
Joined the Company as a Non-Executive Director on 1 January 2007. Fellow 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. Fellow 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.
A.J. Sinclair FCA
Joined the Company as a Non-Executive Director on 1 November 2010. Fellow of Institute of Chartered
Accountants in England and Wales.
Son of the late Frank Sinclair co-founder of the Company. Retired as Head of Correspondent Banking
for National Bank of Canada but remains as an Advisor on International Banking.
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 to the Members their Seventy-Fourth Annual Report together
with the Financial Statements for the year ended 31 March 2011.
1. 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 115 pence per share. The dividend
will be paid on 15 August 2011 subject to approval at the Annual General Meeting on 10 August
2011 to Shareholders on the register at the close of business on 15 July 2011.
2. ACTIVITIES
The principal activities of the Company and its Subsidiary undertakings are as follows:
Parent Company
Mountview Estates P.L.C. Property Dealing
Subsidiary undertakings (wholly owned)
Hurstway Investment Company Limited Property Dealing
Louise Goodwin Limited Property Investment
A.L.G. Properties Limited Property Investment
3. REVIEW OF BUSINESS AND PROSPECTS
Details of the Group’s performance during the year and expected future developments
are contained in the Chairman’s Statement and the Review of Operations on pages 4
to 6.
In addition the Group has established the following Financial and Internal
Performance Indicators:
Financial Key Performance Indicators
2011 2010
growth % growth %
Turnover (15.9) 5.8
Profit before tax excluding
investment properties revaluations (22.1) 66.3
Earnings per share (21.5) 130.2
Net assets per share 5.8 8.3
The Directors consider that there are no significant non-financial indicators in existence.
Internal Performance Measures
2011 2010
£’000 £’000
Administrative expenses as
percentage of revenue 9.03% 7.1%
Administrative expenses per member of staff 179 150
Profit before tax per member of staff 982 1,100
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 the level of mortgage approvals.
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REPORT OF THE DIRECTORS
3. REVIEW OF BUSINESS AND PROSPECTS (continued)
Risk review
The key risks to the Group’s business are:
(cid:2) 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:2) significant fluctuations in interest rates
The Company has entered into an Interest Rate Swap Agreement from 2008, for a period of
5 years on £40 million of its loan in order to reduce its exposure to interest rate fluctuations.
(cid:2) a lack of availability of finance
The Company has negotiated its long-term loan facilities with Barclays Bank until November
2014 and HSBC Bank until January 2015.
The Company also demonstrated in the past that it is able to generate strong cash flows even
in difficult market conditions.
(cid:2) long term worldwide recession
The shrinking of the UK economy combined with the worsening economic outlook and higher
unemployment may affect the prices obtained from the sale of properties. Please see Note 3 to
the Consolidated Financial Statements on pages 30 and 31.
4. 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.
5. SHARE CAPITAL
The authorised share capital of the Company as at 31 March 2011 was £250,000 divided into
5,000,000 Ordinary Shares of 5 pence of which 3,899,014 were in issue (2010: 3,899,014).
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.
6. 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:
31 March 1 April
2011 2010
Ordinary Shares of 5p each
Mr. D.M. Sinclair including the following holding of 535,883 535,883
Sinclair Estates Limited – 54,165
Mr. D.M. Sinclair is a Director of the above company
Mr. K. Langrish-Smith 307,000 307,000
Miss J.L. Murphy (resigned 31.08.2010) 1,500 1,500
Mrs. M.M. Bray 12,302 12,302
Mr. A. Sinclair (appointed 01.11.2010) 119,724 –
All the above interests are beneficial.
There have been no changes in the interests of Directors in the share capital of the Company
between 31 March 2011 and 11 July 2011.
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REPORT OF THE DIRECTORS
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7. NOTIFIABLE INTERESTS IN SHARE CAPITAL
As at 11 July 2011, 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 Issued
of 5p each Share Capital
Mr. Phillip Wheater, Mrs. Daphne Sinclair and
Mr. Alistair Sinclair, Trustees of the Frank and
Daphne Sinclair Grandchildren Settlement* 393,193 10.08
Mr. Geoffrey Wilfred Bew Todd and Mr. Stephen
Robin Oldfield Trustees of W.D.I. Sinclair
Grandchildren Settlement* 179,400 4.60
Estate of Mrs. Doris Sinclair* 118,100 3.03
Mrs. M.A. Murphy** 596,745 15.31
Mrs. A. Williams** 145,650 3.73
Mrs. S. Simpkins** 190,580 4.89
*denotes indirect holding
** denotes combined direct and indirect holding
8. 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.
9. EMPLOYEES
The Company provides regular training for its employees relating to the software used in the
business, in order to ensure the ongoing development of each employee’s skills and knowledge.
A great number of our employees have worked for the Company for many years and there is
very little turnover of staff.
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.
12. DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE
The Company purchases liability insurance covering the Directors and Officers of the Company
and its Subsidiary undertakings.
The Company’s Articles of Association at Article 163 permit the provision of indemnities to the
Directors (at the discretion of the Board), which constitute qualifying third party indemnity and
qualifying pension scheme indemnity provisions under the Companies Act 2006.
REPORT OF THE DIRECTORS
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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 2011 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 (2010: 21 days).
14. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Financial risk management objectives and policies are set out in Note 3 to the Consolidated
Financial Statements on pages 30 to 31. Details regarding the Company’s use of financial
instruments are set out in Note 21 to the Consolidated Financial Statements on pages 40 and 42.
15. 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 10 August 2011
and accordingly, a resolution will be proposed at the Annual General Meeting.
16. CORPORATE GOVERNANCE
The Directors’ statement on corporate governance is set out on pages 13 to 15.
17. 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. The gas supply and appliances within all of the Group’s relevant residential
properties are independently inspected under the Gas Safety (Installation and Use) Amended
Regulations 1996 and certificates of compliance issued.
18. DONATIONS
During the year the Group made charitable donations of £26,800 (2010: £24,500).
The main beneficiaries of such charitable donations are: Williow Foundation, Cancer Research
UK and Cystic Fibrosis.
There were no political donations made during the year (2010: £nil).
19. GOING CONCERN BASIS
The Directors continue to adopt the going concern basis in preparing the accounts.
The financial position of the Group including key financial ratios is set out in the Review of
Business and Prospects.
The Group is historically profitable, has considerable liquidity and recently reviewed its long
term borrowing facilities with the banks. As a result, the Directors believe the Group is very well
placed to manage its business risks successfully and have a good expectation that both the
Company and the Group have adequate resources to continue their operations. Further detailed
information is set out on pages 28 and 39.
20. POST BALANCE SHEET EVENTS
There are no material events that have occurred subsequent to the end of the financial year
that require disclosure.
21. 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
14 July 2011
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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:2)
(cid:2) make judgements and estimates that are reasonable and prudent;
(cid:2)
(cid:2)
state that the financial statements comply with IFRS’s as adopted by the European Union;
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 2006 and, as regards the Group financial
statements, Article 4 of the IAS Regulation. 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:2)
(cid:2)
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:2)
(cid:2)
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 subsidiary
undertakings included in the consolidation taken as a whole, together with a description of the
principal risks and uncertainties the Group faces.
The Directors are responsible for the maintenance and integrity of the Group website
www.mountviewplc.co.uk.
By Order of the Board
M.M. BRAY
Secretary
14 July 2011
CORPORATE GOVERNANCE
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The Financial Reporting Council (FRC) published a new version of the Combined Code in June 2008.
This is applicable to the Company for the reporting year commencing 1 April 2010. 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, whose net
aggregate shareholdings amount to approximately 53 percent of the issued share capital of the Company.
Throughout the year ended 31 March 2011 the Company has been in compliance with the Code
provisions set out in Section 1 of the June 2008 FRC Combined Code on Corporate Governance with
certain exceptions noted below:
(cid:2)
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.
The Board
As at the year ended 31 March 2011 the Board comprised the Chairman, Mr. D.M. Sinclair, two
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 Mr. D.M. Mr. K. Miss J.L. Mrs. M.M. Mr. A. Mr. J.B. Mr. J.A.N.
Sinclair Langrish- Murphy Bray Sinclair Fulton Laing
Smith
Full Board 4 4 1 4 1 4 3
Audit Committee 2 – – 2 2 3 3
Remuneration
Committee 1 – – – 2 2 2
Nomination
Committee 1 1 – 1 – 1 1
Day to day management is delegated to the Executive Board which focuses on major transactions,
business growth, strategy, cash management and control.
There is regular communication with the Non-Executive Directors in order to keep them informed on
the Company’s operations.
All members of the Board are subject to the re-election provisions of the Articles of Association 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 9.
The Articles of Association of the Company contain the following provisions relating to the
appointment and replacement of Directors:
(cid:2)
(cid:2)
(cid:2)
(cid:2)
The Company may, by ordinary resolution, appoint a person who is willing to act to be a Director,
either to fill a vacancy or as an addition to the existing Board.
The Board has the power to appoint any person who is willing to act as a Director, either to fill a
vacancy or as an addition to the existing Board. Any Director appointed by the Board is required
to retire at the first AGM of the Company following his or her appointment.
The total number of Directors (other than any alternate Directors) must not be more than 12 or
less than two.
In addition to any power to remove a Director conferred by Section 168 of the Companies Act
2006, the Company may, by ordinary resolution remove any Director before the expiration of his
period of office, but without prejudice to any claim for damages which he may have for breach
of any contract of service between him or her and the Company. The Company may then appoint
another person who is willing to act, to be a Director in his or her place in accordance with the
Articles of Association.
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CORPORATE GOVERNANCE
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Going concern
After making diligent enquiries, including the review of future anticipated cash flows and compliance
with banking covenants, the Directors have a reasonable expectation that the Group and Company
have adequate resources to continue in existence for the foreseeable future. For this reason they
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.B. Fulton (non-executive Director), Mr. J.A.N. Laing
(non-executive Director) and Mr. A.J. Sinclair (non-executive Director). The Committee, which is
chaired by Mr. J.A.N. Laing, monitors, reviews and makes recommendations to the Board on all
elements of the remuneration of the executive Directors. The Committee meets twice a year.
Mr D.M. Sinclair, the Chairman of the Company, is invited by the Remuneration Committee members
to attend one meeting or part of any meeting as and when appropriate.
No Director is involved in deciding his/her own remuneration and the remuneration of the non-
executive Directors is determined by the full Board.
The report of Directors’ Remuneration is set out on pages 16 to 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.B. Fulton (non-executive Director), Mr. J.A.N. Laing
(non-executive Director) and Mr. A.J. Sinclair (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 are 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 Fellow of the 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 Board as a whole acknowledges its responsibility for ensuring satisfactory dialogue with
Shareholders and the Chairman is available to meet Shareholders on request to discuss specific
concerns they may have. The Company principally communicates with and updates its Shareholders
as to its progress by way of the Annual Report and Accounts and half yearly interim reports which are
posted on the Company’s website www.mountviewplc.co.uk. Investors may use the Company’s
Annual General Meeting to communicate with the Board. The entire Board will be available at the
Annual General Meeting for Shareholders to ask questions. The Board including the non-executive
Directors, is available throughout the year to listen to the views of Shareholders.
Risk Management
Details of the Company’s risk management profile are included in paragraph 14 in the Report of the
Directors on page 11 and in Note 3 to the Consolidated Financial Statements on pages 30 to 31.
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 2010 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.
By Order of the Board
M.M. BRAY
Secretary
14 July 2011
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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
financial year under review.
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:2)
(cid:2)
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, private
medical health insurance and life insurance.
Directors have the choice of the use of a company car or a cash alternative.
All members of staff benefit from health and life insurances.
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 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.
REMUNERATION REPORT
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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.
Single Sum Total Return, Tax Default in GBP 100, invested
FTSE All Share R/E MST SVS £ – Total Return Index
Mountview Estates – Total Return Index
180
160
140
120
100
80
60
40
20
0
2006
2007
2008
2009
2010
2011
1826 Days From 31/03/2006 To 31/03/2011
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.
Details of the Directors’ service contracts and letters of appointment with the Company, and the
unexpired terms thereunder are as follows:
Contract date Unexpired term Notice period
D.M. Sinclair 8 August 2002 No fixed term 12 months
K. Langrish-Smith 8 August 2002 No fixed term 12 months
M.M. Bray 1 April 2004 No fixed term 12 months
J.B. Fulton 1 January 2010 17 months none
J.A.N. Laing 1 January 2009 5 months none
A.J. Sinclair 1 November 2010 27 months none
The executive Directors are entitled to a compensation payment after a change in control of
the Company. Such compensation payment (subject to deduction of income tax as required by law and
any other sums owed by the executive Director to the Company) is equal to the executive Director’s
gross renumeration as reported in the Company’s last audited accounts as announced to the London
Stock Exchange.
Non-executive Directors are entitled to accrued fees only due to them as at the date of termination of
their appointment.
18
REMUNERATION REPORT
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AUDITED INFORMATION
Pensions
Benefits Contri-
Salary Bonus in kind butions Total
2011 £000 £000 £000 £000 £000
Executive
D.M. Sinclair 250 210 40 23 523
K. Langrish-Smith 150 60 23 10 243
Miss J.L. Murphy (Resigned 31.08.2010)* 75 – 5 4 84
Mrs M.M. Bray 215 150 – 18 383
Non-Executive
J.B. Fulton 24 – – – 24
J.A.N. Laing 24 – – – 24
A.J. Sinclair (Appointed 1.11.2010) 10 – – – 10
748 420 68 55 1,291
Pensions
Benefits Contri-
Salary Bonus in kind butions Total
2010 £000 £000 £000 £000 £000
Executive
D.M. Sinclair 250 240 38 24 552
K. Langrish-Smith 150 80 24 11 265
Miss J.L. Murphy 180 150 11 16 357
Mrs M.M. Bray 212 165 – 18 395
Non-Executive
J.P. Hall (retired August 2009) 10 – – – 10
J.B. Fulton 24 – – – 24
J.A.N. Laing 24 – – – 24
850 635 73 69 1,627
(cid:2)
(cid:2)
The Committee this year considered the information provided by IDS and other public
information for their Executive Compensation Review.
The Committee had regard to the personal bonus paid in previous years as a percentage of
profit before tax.
*Details of Miss J.L. Murphy’s compensation are set out in Note 25 to the Consolidated Financial
Statements on page 43.
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 14 July 2011.
J.A.N. Laing
Chairman of the Remuneration Committee
CONSOLIDATED INCOME STATEMENT
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for the year ended 31 March 2011
Year Year
ended ended
31.03.2011 31.03.2010
Notes £000 £000
REVENUE 4 47,655 56,697
Cost of sales 4 (18,548) (22,191)
GROSS PROFIT 29,107 34,506
Administrative Expenses (4,305) (4,046)
Operating profit before changes in fair value
of investment properties 24,802 30,460
Increase in fair value of investments 2,454 2,142
PROFIT FROM OPERATIONS 27,256 32,602
Change in fair value of derivatives 21 (292) –
Finance costs 8 (3,404) (3,347)
PROFIT BEFORE TAXATION 23,560 29,255
Taxation – current (7,425) (7,969)
Taxation – deferred 836 349
Taxation 10 (6,589) (7,620)
PROFIT ATTRIBUTABLE TO
EQUITY SHAREHOLDERS 16,971 21,635
Basic and diluted earnings per share (pence) 12 435.3p 554.8p
The notes on pages 24-43 are an integral part of these consolidated financial statements.
20
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2011
Year Year
ended ended
31.03.2011 31.03.2010
£000 £000
Profit for the year 16,971 21,635
Net (expense) recognised directly in equity – (26)
Total recognised income 16,971 21,609
The total recognised income
in the year is attributable to
Equity shareholders of the parent 16,971 21,609
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The notes on pages 24-43 are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
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Company number: 328020
as at 31 March 2011
As at As at
31.03.2011 31.03.2010
Notes £000 £000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 13 2,461 2,422
Investment properties 14 30,314 32,872
32,775 35,294
CURRENT ASSETS
Inventories of trading properties 16 259,462 256,964
Trade and other receivables 17 1,192 1,197
Cash and cash equivalents 116 443
260,770 258,604
TOTAL ASSETS 293,545 293,898
EQUITY AND LIABILITIES
Capital and reserves attributable to
equity holders of the company
Share capital 22 195 195
Capital redemption reserve 23 55 55
Capital reserve 23 25 25
Other reserves 23 56 56
Cash flow hedge reserve 21 (2,340) (3,640)
Retained earnings 24 216,905 206,366
214,896 203,057
NON-CURRENT LIABILITIES
Long-term borrowings 19 50,000 65,000
Deferred tax 20 7,321 8,157
57,321 73,157
CURRENT LIABILITIES
Bank overdrafts and loans 19 13,940 8,876
Trade and other payables 18 1,485 1,355
Current tax payable 3,271 3,813
Derivative financial instruments 21 2,632 3,640
21,328 17,684
TOTAL LIABILITIES 78,649 90,841
TOTAL EQUITY AND LIABILITIES 293,545 293,898
Approved by the Board on 14 July 2011.
D. M. SINCLAIR Chairman K. LANGRISH-SMITH Director
The notes on pages 24-43 are an integral part of these consolidated financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
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for the year ended 31 March 2011
Capital Cash
redemp- flow
Share Capital tion hedge Other Retained
capital reserve reserve reserve reserves earnings Total
Notes £000 £000 £000 £000 £000 £000 £000
Changes in equity
for year ended
31 March 2010
Balance as at 1 April 2009 195 25 55 (3,614) 56 190,773 187,490
Profit for the year 21,635 21,635
Movements in
cash flow hedge 21 (26) (26)
Dividends 11 (6,042) (6,042)
Balance at
31 March 2010 24 195 25 55 (3,640) 56 206,366 203,057
Changes in equity
for year ended
31 March 2011
Balance as at 1 April 2010 195 25 55 (3,640) 56 206,366 203,057
Reduction in reserve 21 1,300 1,300
Profit for the year 16,971 16,971
Dividends 11 (6,432) (6,432)
Balance at
31 March 2011 24 195 25 55 (2,340) 56 216,905 214,896
The notes on pages 24-43 are an integral part of these consolidated financial statements.
CONSOLIDATED CASH FLOW STATEMENT
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for the year ended 31 March 2011
Year Year
ended ended
31.03.2011 31.03.2010
Notes £000 £000
CASH FLOWS FROM OPERATING
ACTIVITIES
Profit from operations 27,256 32,602
Adjustments for:
Depreciation 174 156
Loss on disposal of property, plant and equipment 11 5
(Increase) in fair value of investment properties (2,454) (2,142)
Operating cash flows before movement
in working capital 24,987 30,621
(Increase)/Decrease in inventories (2,498) 11,841
Decrease/(Increase) in receivables 5 (538)
Increase/(Decrease) in payables 125 (822)
Cash generated from operations 22,619 41,102
Interest paid (3,404) (3,347)
Income taxes paid (8,027) (6,410)
Net cash inflow from operating activities 11,188 31,345
Investing activities
Proceeds from disposal of investment properties 6,600 1,895
Purchase of property, plant and equipment 13 (309) (11)
Capital expenditure on investment properties 14 (1,438) (434)
Net cash inflow from investing activities 4,853 1,450
Cash flows from financing activities
Repayment of borrowings (14,700) (23,800)
Equity dividend paid (6,432) (6,042)
Net cash (outflow) from financing activities (21,132) (29,842)
Net (decrease)/increase in cash
and cash equivalents (5,091) 2,953
Cash and cash equivalents at
beginning of the period (8,258) (11,211)
Cash and cash equivalents at end of year 19(a) (13,349) (8,258)
The notes on pages 24-43 are an integral part of these consolidated financial statements.
24
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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1. GENERAL INFORMATION
Mountview Estates P.L.C. (the Company) and its Subsidiaries (the Group) is a property trading
company with a portfolio in England and Wales.
The Company is a public limited liability company incorporated, domiciled and registered
in England.
The address of its registered office is: 151 High Street, Southgate, London N14 6EW.
The Company website is: www.mountviewplc.co.uk
The Company has its premium listing on the London Stock Exchange.
These consolidated financial statements have been approved for issue by the Board of Directors
on 14 July 2011.
2. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
(a)
Basis of Preparation
The Group’s financial statements 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, (IFRS) as adopted by the EU.
The Company has elected to prepare its parent company financial statements in
accordance with UK GAAP. These are presented on pages 46 to 53.
The preparation of financial statements in conformity with IFRS requires management
to make judgements, estimates and assumptions that affect the application of accounting
policies.
The areas involving a higher degree of judgement or complexity or areas where
assumptions and estimates are significant to the consolidated financial statements are
disclosed in note 2(s) “Estimates and Judgements”.
(b)
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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for the year ended 31 March 2011
2. ACCOUNTING POLICIES (continued)
(c)
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.
The Group has identified two such segments as follows:
• core portfolio
• residential investments
Above segments are UK based. More details are given in note 5.
(d)
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.
(e)
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)
Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as an expense in the
Group’s financial statements in the period in which the dividends are approved.
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.
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2. ACCOUNTING POLICIES (continued)
(h)
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 – 2%
Fixtures and fittings and office equipment – 20%
Computer equipment – 25%
Motor Vehicles – reducing balance method – 20%
(i)
(j)
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.
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.
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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2. ACCOUNTING POLICIES (continued)
for the year ended 31 March 2011
(k)
(l)
(m)
(n)
(o)
Inventories – trading properties
These comprise residential properties all of which are held for resale, and are shown in
the financial statements at the lower of cost and estimated net realisable value. Cost
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 with vacant possession. Where residential
properties are sold tenanted, net realised value is the current market value net of
associated selling costs. There were no such sales during the financial year. The analysis
of the Group revenue as at 31 March 2011 is on page 31.
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.
(p) Hire purchase agreements
Assets held under hire purchase agreements are capitalised and disclosed under tangible
fixed assets at their fair value. The capital element of the future payments is treated as a
liability and the interest is charged to the profit and loss account on a straight line basis.
(q) 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.
In previous years the Directors decided to hedge account in relation to an Interest Rate
Swap. During the year ended 31 March 2011 the Directors decided to revoke the decision
to hedge account. See Note 21 for further details.
28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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for the year ended 31 March 2011
2. ACCOUNTING POLICIES (continued)
(r)
New and Revised International Financial Reporting Standards
Changes to accounting policies since the last period
The Group has considered or applied the following significant standards for the period
commencing 1 April 2010. There has been no significant impact to the financial
information as a result of applying these standards for the first time.
• IFRS 1 (amended)/IAS 27 (amended) – Cost of an investment in a Subsidiary,
Jointly Controlled Entity or Associate
• IFRS 3 (revised 2008) – Business combinations
Certain new standards and interpretations have been published that are mandatory for
the Group’s accounting periods beginning on or after 1 April 2011 or later periods and
which the entity has not yet adopted. Except where stated none of these standards are
expected to have a significant impact on recognition or measurement of the Group’s
assets or liabilities.
• IAS 24 (revision) – Related Party disclosure
• IFRS 19 – Financial Instruments
• Improvements to IFRS (May 2010)
• IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
The Parent Company and subsidiaries have not adopted IFRS in their individual accounts.
(s)
Critical Accounting Judgements and Key Areas of Estimation Uncertainty
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 than are usual.
The two main considerations were as follows:
1. Refinancing of banking facilities
The Group has successfully renegotiated its £20 million revolving loan facility with
HSBC Bank. The new termination date of this facility is January 2015.
The Group has successfully renegotiated its £75 million revolving loan facility with
Barclays Bank. The new termination date of this facility is November 2014.
2. Covenant compliance
The core facility has two covenants, both unchanged by the new facilities, covering
loan to value (“LTV”) ratio and interest cover. The Group has remained well within
both of these covenants during the year.
On the basis of the above, the directors have a reasonable expectation that the Group
and the Company have adequate resources to continue in operational existence for
the foreseeable future.
Accordingly, they continue to adopt the going concern basis in preparing the financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
29
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2. ACCOUNTING POLICIES (continued)
(s)
Critical Accounting Judgements and Key Areas of Estimation Uncertainty (continued)
for the year ended 31 March 2011
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 rental 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.
The valuation of the portfolios were made in accordance with the requirements of
the RICS Valuation Standards Manual, Sixth Edition and International Valuation
Standard 40.
Carrying value of trading stock
The Group’s residential trading stock is carried in the balance sheet at the lower of cost
and net realisable value.
As the Group’s business model is to sell trading stock on vacancy, net realisable
value is the net sales proceeds which the Group expects on sale of a property with
vacant possession.
Inventory expected to be settled in more than 12 months
The Board estimate that inventory of £12.3 million will be settled within the next
12 months, with the remaining inventory value expected to be settled in more than
12 months. This estimation is based on the average cost of sales of inventory over the
last 3 year period. Mountview’s business, historic and current has involved the purchase
for sale of residential properties subject to regulated tenancies, such properties being
sold when vacant possession is obtained.
Regulated tenancies by their nature are not for any specific period of time and in most
cases they do not become vacant until the death of the tenant.
It is difficult to predict with any certainty the time at which Mountview’s inventory
properties might become vacant.
30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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for the year ended 31 March 2011
3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
1.
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including price
risk and cash flow risk) credit risk and liquidity risk. The Group’s policies on financial
risk management are to minimise the risk of adverse effect on performance and to ensure
the ability of the Group to continue as a going concern.
The financial risks relate to the following financial instruments: trade receivables, cash
and cash equivalents, trade and other payables and borrowings.
(a) Market risk
The Group is exposed to market risk through interest rates and availability of credit.
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 constantly 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.
As at 31 March 2011 we had decreased our long term borrowings by £15 million to
£50 million (2010: £65 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 the interim stage.
(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.
Regulated tenants are incentivised through the benefit of their tenancy agreement to
avoid default on their rent.
Lifetime tenancies are generally at low or zero rent and hence suffer minimal credit risk.
(c)
Liquidity risk
The Group’s liquidity position is monitored daily by management and is reviewed
quarterly by the Board of Directors. The Group ensures that it maintains sufficient cash
for operational requirements at all times. The nature of its business is very cash generative
from its gross rents and sales of trading properties.
In adverse trading conditions, new acquisitions can be minimised, and as a consequence
reduce the gearing level and improve the liquidity. A summary table with maturity of
financial liabilities is presented in Note 19.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31
3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
for the year ended 31 March 2011
2.
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.
2011 2010
£000 £000
Total borrowings 63,940 73,876
Less cash and cash equivalents (116) (443)
Net borrowings 63,824 73,433
Total equity 214,896 203,057
Total borrowings plus equity 278,720 276,490
Gearing ratio 22.9% 27%
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4. ANALYSIS OF REVENUE AND COST OF SALES
All revenue arises in the United Kingdom.
1.
2.
Rental income from tenancies of occupied properties. The income is recognised on an
accruals basis.
Sale of stock properties. This is recognised on the date of legal completion.
2011 2010
£000 £000
Revenue
Gross sales of properties 34,205 42,927
Gross rental income 13,450 13,770
47,655 56,697
Cost of Sales
Cost of properties sold 13,180 17,547
Property expenses 5,368 4,644
18,548 22,191
Gross Profit
Sales of properties 21,025 25,380
Net rental income 8,082 9,126
29,107 34,506
32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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for the year ended 31 March 2011
5. 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:
2011 2010
Property Property Property Property
Trading Investment Group Trading Investment Group
£’000 £’000 £’000 £’000 £’000 £’000
Revenue 47,107 548 47,655 55,992 705 56,697
Operating profit
before changes
in fair value of
investment
properties 24,955 (153) 24,802 30,116 344 30,460
Finance costs (3,404) (3,404) (3,347) (3,347)
Profit after tax 16,971 21,635
Assets 263,065 30,480 293,545 260,866 33,023 293,889
Liabilities 68,013 46 68,059 78,804 67 78,871
Fixed assets
capital expenditure 182 1,563 1,745 – 434 434
Depreciation 136 38 174 144 12 156
Head office costs have been allocated and included within the Group’s two operating segments.
The Group’s two main business segments operate within the United Kingdom.
6. PROFIT FROM OPERATIONS
2011 2010
£000 £000
The operating profit is stated after charging:
Depreciation of tangible fixed assets 174 156
Loss on disposal of fixed assets 11 –
Auditors’ remuneration
– the audit of the parent company and
consolidated financial statements 38 36
– the audit of the company’s subsidiaries
pursuant to legislation 12 12
– tax compliance work 9 9
operating expenses for investment properties 701 298
And after crediting:
– net rental income 8,082 9,126
– administrative charges to related
companies (Note 25) 35 30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
33
for the year ended 31 March 2011
7. STAFF COSTS (including Directors)
2011 2010
£000 £000
Wages and salaries 2,078 2,373
Social security costs 225 288
Pension costs 87 98
2,390 2,759
2011 2010
Directors’ Remuneration £000 £000
Total Directors’ Remuneration including
salary, bonuses, benefits in kind and
pension contributions amounted to: 1,291 1,627
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 monthly number of employees during the year was as follows:
2011 2010
Office and management 24 27
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8. FINANCE COSTS
2011 2010
£000 £000
Interest on bank overdrafts, and loans 3,404 3,347
9. INCOME FROM INVESTMENTS
2011 2010
£000 £000
Interest on bank deposits – –
34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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for the year ended 31 March 2011
10. INCOME TAX EXPENSE
2011 2010
£000 £000
(a) Analysis of charge in the year
Current tax:
UK Corporation Tax 28% (2010: 28%) 7,425 7,969
Deferred tax:
Current year 28% (2010: 28%) (836) (349)
Taxation attributable to the Company and
its Subsidiaries 6,589 7,620
(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 23,560 29,255
Profit on ordinary activities multiplied
by rate of tax 28% (2010: 28%) 6,596 8,191
Expenses not deductible for tax 164 58
Income not taxable (41) –
Depreciation in excess of capital allowances (210) 24
Taxation on capital gains 1,428 309
Marginal relief – (5)
Revaluation surplus in subsidiaries not taxed (688) (599)
Deferred tax (836) (349)
Under provision in prior years (12) –
Sundry adjusting items – (9)
Taxation attributable to the Company and its Subsidiaries 6,589 7,620
11. DIVIDENDS
On 16 August 2010 a dividend of 115p per share (2009: 105p per share) was paid to the
shareholders. On 29 March 2011 a dividend of 50p per share (2010: 50p per share) was paid
to the shareholders. This resulted in total dividends paid in the year of £6.43 million
(2010: £6.43 million).
In respect of the current year, the Directors propose that a final dividend of 115p per share will
be paid to the shareholders on 15 August. 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 2011 is payable to all shareholders on the Register of Members
on 15 July 2011. The total estimated final dividend to be paid is £4.48 million.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
35
for the year ended 31 March 2011
12. EARNINGS PER SHARE
2011 2010
£000 £000
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) 16,971 21,635
Weighted average number of ordinary shares
for basic and fully diluted earnings per share 3,899,014 3,899,014
Basic and Diluted Earnings per share 435.3p 554.8p
The Company has no dilutive potential ordinary shares.
13. PROPERTY, PLANT AND EQUIPMENT
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Freehold Fixtures Motor Computer
Property & Fittings Vehicles Equipment Total
£000 £000 £000 £ 000 £000
COST
At 1 April 2010 2,671 82 353 131 3,237
Additions – 132 156 21 309
Disposals – (6) (194) – (200)
At 31 March 2011 2,671 208 315 152 3,346
DEPRECIATION
At 1 April 2010 489 46 181 99 815
Charge for the year 53 44 40 37 174
On disposals – (6) (98) – (104)
At 31 March 2011 542 84 123 136 885
NET BOOK VALUE
At 31 March 2010 2,182 36 172 32 2,422
At 31 March 2011 2,129 124 192 16 2,461
Property, Plant and Equipment are located within United Kingdom.
Hire Purchase Agreement
Included within the net book value of £2,461,000 is £34,970 relating to assets held under hire
purchase agreement. The depreciation charged to the financial statements in the year in respect
of such assets amounted to £9,420 (2010: £nil).
36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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for the year ended 31 March 2011
13. PROPERTY, PLANT AND EQUIPMENT (continued)
Freehold Fixtures Motor Computer
Property & Fittings Vehicles Equipment Total
£000 £000 £000 £ 000 £000
COST
At 1 April 2009 2,671 289 353 173 3,486
Additions – 11 – – 11
Disposals – (218) – (42) (260)
At 31 March 2010 2,671 82 353 131 3,237
DEPRECIATION
At 1 April 2009 436 237 138 108 919
Charge for the year 53 27 43 33 156
On disposals – (218) – (42) (260)
At 31 March 2010 489 46 181 99 815
NET BOOK VALUE
At 31 March 2009 2,235 52 215 65 2,567
At 31 March 2010 2,182 36 172 32 2,422
Property, Plant and Equipment are located within United Kingdom.
14. INVESTMENT PROPERTIES
2011 2010
£000 £000
Fair Value at 1 April 2010 (2009) 32,872 32,195
Additions:
Subsequent expenditure 1,438 434
Disposals (6,450) (1,899)
Increase in Fair Value during the year 2,454 2,142
At 31 March 2011 (2010) 30,314 32,872
Louise Goodwin Limited and ALG Properties Limited
The Companies’ investment properties were valued on a Fair Value basis as at 31 March 2011 by
External Valuers, Mr F. Hill MRICS and Mr J.A. Rollings MRICS of Castles Surveyors Limited.
The valuations were in accordance with the requirements of the RICS Valuation Standards Manual,
Sixth Edition (The Red Book) and International Accounting Standard 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
£24,474,000 (twenty four million, four hundred and seventy four thousand pounds).
ALG Properties Limited
£5,840,000 (five million, eight hundred and forty thousand pounds).
Information relating to the basis of valuation of investment properties and the judgements and
assumption adopted by management is set out in note 2(u) “Estimates and Judgements”.
A revaluation surplus of £2.454 million has arisen on valuation of investment properties to fair
value as at 31 March 2011 (2010: surplus of £2.142 million) and this has been taken to the
income statement.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
37
for the year ended 31 March 2011
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 Cost
2010
2011
£000
Hurstway Investment Company Limited Property Dealing 1
Louise Goodwin Limited Property Investment 15,351
A.L.G. Properties Limited Property Investment 2,924
18,276
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16. INVENTORIES
2011 2010
£000 £000
Residential properties 259,462 256,964
17. TRADE AND OTHER RECEIVABLES
2011 2010
£000 £000
Trade receivables 218 131
Prepayments and accrued income 974 1,066
1,192 1,197
The Directors consider that the carrying amount of trade and other receivables approximates
their fair value.
There are no bad or doubtful debts at the year end. There are no material debts past due, and
there are no financial assets that are impaired.
18. TRADE AND OTHER PAYABLES
2011 2010
£000 £000
Trade creditors 535 855
Other taxes and social security costs 144 142
Other creditors 806 358
1,485 1,355
The Directors consider that the carrying amount of trade and other payables approximates their
fair value.
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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18(a) COMMITMENTS UNDER HIRE PURCHASE AGREEMENT
Future commitments under hire purchase agreements are as follows:
2011 2010
£000 £000
Amounts payable within 1 year 35 –
19. BANK OVERDRAFTS AND LOANS
2011 2010
£000 £000
Bank overdrafts 13,465 8,701
Bank loans 50,000 65,000
Other loans 475 175
63,940 73,876
(a) Cash and cash equivalents
2011 2010
£000 £000
Bank overdrafts (13,465) (8,701)
Cash 116 443
Cash and cash equivalents as at 31 March (13,349) (8,258)
Maturity profile of financial liabilities at 31 March 2011 was as follows:
2011 2010
£000 £000
Amounts repayable:
In one year or less 13,940 8,876
Between one and two years – –
Between two and five years 50,000 65,000
63,940 73,876
Less: amount due for settlement within 12 months
(shown under current liabilities) (13,940) (8,876)
Amount due for settlement after 12 months 50,000 65,000
The average interest rates paid were as follows:
2011 2010
Bank overdrafts and Money Market Loan 4.91% 2.12%
Bank loans 3.62% 3.97%
Other loans 1.00% 1.00%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
39
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19. BANK OVERDRAFTS AND LOANS (continued)
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.
for the year ended 31 March 2011
1.
2.
3.
4.
5.
6.
The Group has reduced its short term borrowing facilities from £22 million to £12 million
with Barclays Bank. This facility expires at September 2011 and the rate of interest payable
is:
• 1.5% over LIBOR on £7 million
• 1.7% over Base rate on £5 million.
Headroom of this facility at 31 March 2011 amounted to £1.9 million (2010: £16.9 million).
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. This is a
5 year revolving loan and the termination date of this facility is November 2014. The rate
of interest payable on the loan is 1.8% 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. Headroom of this facility at 31 March 2011 amounted to
£45 million (2010: £30 million).
The Group has successfully renegotiated its £10 million short-term borrowing facilities
with HSBC Bank. This facility expires at August 2011 and the rate of interest payable is
2.25% over Base rate. Headroom of this facility at 31 March 2011 amounted to £6.6 million
(2010: 6.3 million).
The Group has a £20 million long-term borrowing facility with HSBC Bank. This is a 5
year revolving loan and the termination date of this facility is January 2015. The rate of
interest payable on the loan is 2.5% above LIBOR. The loan is secured by Letter of
Negative Pledge. The loan is not repayable by instalments. Headroom of this facility at
31 March 2011 amounted to £nil (2010: £nil).
Other loans consist of loans from connected persons, and companies of which Mr. D.M.
Sinclair is a Director. Loans of £475,000 (2010: £175,000) are repayable within one year.
Interest payable on these loans is at 0.5% above Barclays Bank Plc base rate.
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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20. DEFERRED TAX
Analysis for financial reporting purposes
2011 2010
£000 £000
Deferred tax liabilities 7,321 8,157
Net position at 31 March 7,321 8,157
The movement for the year in the Group’s net deferred tax position was as follows.
2011 2010
£000 £000
At 1 April 8,157 8,506
(Credit) to income for the year (836) (349)
At 31 March 7,321 8,157
The following are in deferred tax liabilities recognised by the Group and movements thereon
during the period.
Revaluation of properties
2011 2010
£000 £000
At 1 April 8,157 8,506
(Credit) to income for the year (836) (349)
At 31 March 7,321 8,157
21. FINANCIAL INSTRUMENTS
Fair value of financial assets
The Group’s financial assets at the year end consist of trade receivables and cash at bank and in
hand of £1.3 million (2010: £1.6 million)
The Directors consider that the carrying amount of cash at bank and in hand approximates their
fair value.
The trade receivables amounted to £1.2 million (2010: £1.2 million).
The Directors consider that the carrying amount of trade receivables approximates their
fair value.
Fair value of borrowings
2011 2010
£000 £000
Bank overdrafts 13,465 8,701
Secured bank loans 50,000 65,000
Unsecured loans 475 175
63,940 73,876
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
41
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21. FINANCIAL INSTRUMENTS (continued)
for the year ended 31 March 2011
Interest charged in the income statement for the above borrowings amounted to £3.4 million
(2010: £3.3 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 2011 it is estimated that general increase of 1 point in interest rates would
decrease the Group’s profit before tax by approximately £100,000 (2010: £250,000).
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 2011 the fixed interest rate was 4.98% (31 March 2010: 4.98%).
As at 31 March 2011 the fair value of the interest rate swap represents a liability of £2.6 million
(2010: £3.6 million). During the year ended 31 March 2011 the Directors decided to revoke the
decision to hedge account. The balance on the cash flow hedge reserve will be released to
the income statement on straight line basis over the remaining term of the interest rate
swap agreement.
In the Income Statement there is a charge of £292,000 relating to “change in fair value
of derivatives”.
This figure is the net effect of:
• A reduction (credit) in the fair value of a financial instrument by £1.008 million – 2011
£2.632 million (2010: £3.640 million).
• Debit of £1.3 million which relates to the change in value of the cash flow hedge reserve
which is being written off on straight line basis over remaining term of the agreement.
The interest rate swap was valued by Barclays Capital.
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.
Trade and other payables due within 12 months equal their carrying balances as the impact of
discounting is not significant.
Less than Between
1 year 1 & 5 years Total
At 31 March 2011 £000 £ 000 £000
Interest bearing loans and borrowings 14,175 61,550 75,725
Cash flow hedge 2,632 – 2,632
Trade and other payables 1,485 – 1,485
Less than Between
1 year 1 & 5 years Total
At 31 March 2010 £000 £ 000 £000
Interest bearing loans and borrowings 9,155 81,058 90,213
Cash flow hedges 3,640 – 3,640
Trade and other payables 1,355 – 1,355
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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21. FINANCIAL INSTRUMENTS (continued)
Reconciliation of maturity analysis
Less than Between
1 year 1 & 5 years Total
At 31 March 2011 £000 £ 000 £000
Interest bearing loans and borrowings
per accounts 13,940 50,000 63,940
Interest 235 11,550 11,785
Financial liability cash flows as above 14,175 61,550 75,725
Less than Between
1 year 1 & 5 years Total
At 31 March 2010 £000 £ 000 £000
Interest bearing loans and borrowings
per accounts 8,876 65,000 73,876
Interest 279 16,058 16,337
Financial liability cash flows as above 9,155 81,058 90,213
22. CALLED UP SHARE CAPITAL
2011 2010
£000 £000
Authorised:
5,000,000 ordinary shares of 5p each 250 250
Allotted, issued and fully paid:
3,899,014 ordinary shares of 5p each 195 195
23. OTHER RESERVES
2011 2010
£000 £000
Capital redemption reserve 55 55
Capital reserve 25 25
Other reserves 56 56
136 136
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 2011 stood at £56,000 (2010: £56,000).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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for the year ended 31 March 2011
24. RETAINED EARNINGS
£000
Balance at 1 April 2010 206,366
Net profit for the year 16,971
Dividends paid (6,432)
Balance at 31 March 2011 216,905
25. RELATED PARTY TRANSACTIONS
1. During the financial year there were no key management personnel emoluments, other
than remuneration.
2.(a) Mountview Estates P.L.C. provides general management and administration services to
Ossian Investors Limited and Sinclair Estates Limited, companies of which Mr. D.M.
Sinclair is a Director. Fees of £35,189 (2010: £30,237) were charged for these services.
(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 £125,000 (2010: £nil). Interest was payable on the loan at a rate of 0.5 percent above
Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £980
(2010: £240).
(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 £175,000 (2010: £nil). Interest was payable on the loan at a rate of 0.5 percent
above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to
£1,258 (2010: £540).
(d) 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 (2010: £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 £1,750 (2010: £1,615).
(e) All of the above loans are unsecured.
(f) Transactions between the Group and its Subsidiaries, which are related parties, have been
eliminated on consolidation and have not been disclosed in this note.
3. Compensation paid to the ex-Executive Director
2011 2010
£000 £000
Salary and bonus 292 –
Termination benefit 30 –
Post employment benefit 41 –
Miss J.L. Murphy resigned as an Executive Director on 31 August 2010. Pursuant to the
terms of compromise agreement between Miss J.L. Murphy and the Company relating to
her resignation as a Director the Company has made an aggregate payment to Miss J.L.
Murphy of £363,645.
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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 2011, which comprise the consolidated income statement, the consolidated statement of
comprehensive income, the consolidated statement of financial position, the consolidated statement
of changes in equity, the statement of consolidated cash flows and the related Notes 1 to 25. The
financial reporting framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (‘IFRS’) as adopted by the European Union.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As explained more fully in the statement of Directors’ Responsibilities set out in the Directors’ Report,
the Directors are responsible for the preparation of the Group financial statements and for being
satisfied that they give a true and fair view. Our responsibility is to audit the Group financial statements
in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Company’s members as a
body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We
do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS
An audit involves obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material misstatement,
whether caused by fraud or error. This includes an assessment of: whether the accounting policies are
appropriate to the Group’s circumstances and have been consistently applied and adequately disclosed;
the reasonableness of significant accounting estimates made by the Directors; and the overall
presentation of the financial statements.
OPINION ON FINANCIAL STATEMENTS
In our opinion the Group financial statements:
(cid:2)
(cid:2)
(cid:2)
give a true and fair view of the state of the Group’s affairs as at 31 March 2011 and of its profit
and cash flows for the year then ended;
have been properly prepared in accordance with IFRS as adopted by the European Union; and
have been prepared in accordance with the requirements of the Companies Act 2006 and Article
4 of the IAS Regulation.
OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion:
(cid:2)
(cid:2)
the information given in the Directors’ Report for the financial year for which the Group financial
statements are prepared is consistent with the Group financial statements.
the information given in the corporate governance statement on pages 13-15 with respect to
internal control and risk management systems and about share capital structures is consistent
with the financial statements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
We have nothing to report in respect of the following: Under the Companies Act 2006 we are required
to report to you if, in our opinion:
(cid:2)
(cid:2)
(cid:2)
certain disclosures of Directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit;
a corporate governance statement has been prepared by the parent company.
Under the Listing Rules we are required to review:
(cid:2)
(cid:2)
the Directors’ statement in relation to going concern; and
the part of the Corporate Governance report relating to the Company’s compliance with the nine
provisions of the June 2008 Combined Code specified for our review.
INDEPENDENT AUDITORS’ REPORT
45
to the Members of Mountview Estates P.L.C.
OTHER MATTERS
We have reported separately on the parent Company financial statements of Mountview Estates P.L.C.
for the year ended 31 March 2011 and on the information in the Report of the Remuneration Committee
and Directors’ Remuneration Report that is described as having been audited.
Norman Strong (Senior StatutoryAuditor)
for and on behalf of BSG Valentine
Chartered Accountants and Statutory Auditors
London
14 July 2011
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COMPANY BALANCE SHEET UNDER UK GAAP
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as at 31 March 2011
As at As at
31.03.2011 31.03.2010
Notes £000 £000
FIXED ASSETS
Tangible assets 3 2,343 2,392
Investments 4 18,276 18,276
20,619 20,668
CURRENT ASSETS
Stocks 5 243,990 243,860
Debtors 6 1,140 1,124
Cash at bank and in hand 86 319
245,216 245,303
CREDITORS: Amounts falling
due within one year 7 (20,364) (17,101)
NET CURRENT ASSETS 224,852 228,202
TOTAL ASSETS LESS CURRENT
LIABILITIES 245,471 248,870
CREDITORS: Amounts falling due
after more than one year 8 (77,847) (90,200)
167,624 158,670
CAPITAL AND RESERVES
Called up share capital 9 195 195
Capital redemption reserve 10 55 55
Capital reserve 10 25 25
Other reserves 10 39 39
Cash flow hedge reserve 11 (2,340) (3,640)
Profit and Loss Account 12 169,650 161,996
167,624 158,670
Approved by the Board on 14 July 2011.
D.M. SINCLAIR Chairman K. LANGRISH-SMITH Director
NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP
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1. ACCOUNTING POLICIES
for the year ended 31 March 2011
(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 – 2%
Fixtures and fittings and office equipment – 20%
Computer equipment – 25%
Motor Vehicles – reducing balance method – 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
with vacant possession in its current condition. The analysis of the Group revenue as at
31 March 2011 is on page 31.
(h) Hire purchase agreements
Assets held under hire purchase agreements are capitalised and disclosed under tangible
fixed assets at their fair value. The capital element of the future payments is treated as a
liability and the interest is charged to the profit and loss account on a straight line basis.
(i)
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:2) 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:2) deferred tax assets are recognised only to the extent that the directors consider that it
is more likely than not that there will be suitable taxable profits from which the future
reversal of the underlying timing differences can be deducted.
48
NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP
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2. STAFF COSTS (including Directors)
2011 2010
£000 £000
Wages and salaries 2,078 2,373
Social security costs 225 288
Pension costs 87 98
2,390 2,759
DIRECTORS’ REMUNERATION
2011 2010
£000 £000
Total Directors’ Remuneration including
salary, bonuses, benefits in kind and
pensions contributions amounted to: 1,291 1,627
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 monthly number of employees during the year was as follows:
2011 2010
Office and management 24 27
3. TANGIBLE ASSETS
Freehold Fixtures Motor Computer
Property & Fittings Vehicles Equipment Total
£000 £000 £000 £ 000 £000
COST
At 1 April 2010 2,671 23 353 131 3,178
Additions – 5 156 21 182
Disposals – (6) (194) – (200)
At 31 March 2011 2,671 22 315 152 3,160
DEPRECIATION
At 1 April 2010 489 17 181 99 786
Charge for the year 53 5 40 37 135
On disposals – (6) (98) – (104)
At 31 March 2011 542 16 123 136 817
NET BOOK VALUE
At 31 March 2010 2,182 6 172 32 2,392
At 31 March 2011 2,129 6 192 16 2,343
NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP
49
for the year ended 31 March 2011
3. TANGIBLE ASSETS (continued)
Hire Purchase Agreement
Included within the net book value of £2,405,000 is £34,970 relating to assets held under hire
purchase agreement. The depreciation charged to the financial statements in the year in respect
of such assets amounted to £9,420 (2010: £nil).
All tangible assets of the Company are located within the United Kingdom.
4. INVESTMENTS
Fixed Asset Investments
These represent the cost of shares in the following wholly owned Subsidiary undertakings,
which are incorporated and operate in England and Wales. Their results are consolidated in the
accounts of the Group, for the period during which they are Subsidiary undertakings.
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Cost
2010
2011
£000
Hurstway Investment Company Limited 1
Louise Goodwin Limited 15,351
A.L.G. Properties Limited 2,924
18,276
The Company owns 100% of the ordinary share capital of the following companies:
Subsidiary Undertaking Country of Principal
Incorporation Activity
Hurstway Investment Company Limited UK Property Dealing
Louise Goodwin Limited UK Property Investment
A.L.G. Properties Limited UK Property Investment
5. STOCKS
2011 2010
£000 £000
Residential properties 243,990 243,860
6. DEBTORS: due within one year
2011 2010
£000 £000
Trade debtors 203 93
Prepayments and accrued income 937 1,031
1,140 1,124
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NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP
for the year ended 31 March 2011
7. CREDITORS: Amounts falling due within one year
2011 2010
£000 £000
Bank loans and overdrafts 13,465 8,701
Trade creditors 316 497
Corporation Tax 2,364 3,295
Other taxes and social security costs 143 127
Other creditors 969 666
Other loans 475 175
Derivative financial instruments 2,632 3,640
20,364 17,101
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Other loans consist of loans from connected persons. Interest payable on these loans was at 0.5%
above Barclays Bank Plc Base rate.
7(a) COMMITMENTS UNDER HIRE PURCHASE AGREEMENT
Future commitments under hire purchase agreements are as follows:
2011 2010
£000 £000
Amounts payable within 1 year 35 –
8. CREDITORS: Amounts falling due after more than one year
2011 2010
£000 £000
Bank loans 50,000 65,000
Amounts owed to Subsidiary undertakings 27,847 25,200
Other loans – –
77,847 90,200
Maturity profile of financial liabilities at 31 March 2011 was as follows:
2011 2010
£000 £000
Amounts repayable:
In one year or less 13,940 8,876
Between one and two years – –
Between two and five years 50,000 65,000
More than five years 27,847 25,200
91,787 99,076
Less: amount due for settlement within 12 months
(shown under current liabilities) (13,940) (8,876)
Amount due for settlement after 12 months 77,847 90,200
NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP
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8. CREDITORS: Amounts falling due after more than one year (continued)
for the year ended 31 March 2011
The Directors consider that the carrying amount of bank overdrafts and loans approximates
their fair value.
The other principal features of the Group’s borrowings are as follows.
1. The Group has reduced its short term borrowing facilities from £22 million to £12 million
with Barclays Bank. This facility expires at September 2010 and the rate of interest
payable is:
• 1.5% over LIBOR or £7 million
• 1.7% over Base rate or £5 million.
Headroom of this facility at 31 March 2011 amounted to £1.9 million (2010: £16.9 million).
2. The Group has a £75 million long-term borrowing facility with Barclays Bank. This is a 5
year revolving loan and the termination date of this facility is November 2014. The rate
of interest payable on the loan is 1.8% 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. Headroom of this facility at 31 March 2011 amounted to £45
million (2010: £30 million).
3. The Group has successfully renegotiated its £10 million short-term borrowing facilities
with HSBC Bank. This facility expires at August 2011 and the rate of interest payable is
2.25% over Base rate. Headroom of this facility at 31 March 2011 amounted to £6.6 million
(2010: £6.3 million).
4. The Group has a £20 million long-term borrowing facility with HSBC Bank. This is a 5
year revolving loan and the termination date of this facility is January 2015. The rate of
interest payable on the loan is 2.5% above LIBOR. The loan is secured by Letter of
Negative Pledge. The loan is not repayable by instalments. Headroom of this facility at
31 March 2011 amounted to £nil (2010: £nil).
5. Other loans consist of loans from connected persons, and companies of which Mr. D.M.
Sinclair is a Director. Loans of £475,000 (2010: £175,000) are repayable within one year.
Interest payable on these loans is at 0.5% above Barclays Bank Plc base rate.
9. CALLED UP SHARE CAPITAL
2011 2010
£000 £000
Authorised:
5,000,000 ordinary shares of 5p each 250 250
Allotted, issued and fully paid:
3,899,014 ordinary shares of 5p each 195 195
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10. OTHER RESERVES
2011 2010
£000 £000
Capital redemption reserve 55 55
Capital reserve 25 25
Other reserves 39 39
Balance at 31 March 119 119
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 2011 stood at £39,000 (2010: £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 interest rate swap matures in March 2013 and is based on £40 million non-amortising
notional amount. As at 31 March 2011 the fixed interest rate was 4.98% (March 2010: 4.88%).
12. PROFIT AND LOSS ACCOUNT
2011 2010
£000 £000
Balance at 1 April 161,996 151,072
Net profit for the year 14,086 16,966
Dividends paid (6,432) (6,042)
Balance at 31 March 169,650 161,996
13. RELATED PARTY TRANSACTIONS
1. During the financial year there were no key management personnel emoluments, other
than remuneration.
2.(a) Mountview Estates P.L.C. provides general management and administration services to
Ossian Investors Limited and Sinclair Estates Limited, companies of which Mr. D.M.
Sinclair is a Director. Fees of £35,819 (2010: £30,237) were charged for these services.
(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
£125,000 (2010: £nil). Interest was payable on the loan at a rate of 0.5 percent above
Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to
£980 (2010: £240).
(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 £175,000 (2010: £nil). Interest was payable on the loan at a rate of 0.5 percent above
Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to
£1,258 (2010: £540).
NOTES TO THE FINANCIAL STATEMENTS UNDER UK GAAP
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13. RELATED PARTY TRANSACTIONS (continued)
for the year ended 31 March 2011
(d) 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 (2010: £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 £1,750 (2010: £1,615).
(e) All of the above loans are unsecured.
(f) Transactions between the Group and its Subsidiaries, which are related parties, have been
eliminated on consolidation and have not been disclosed in this note.
3. Compensation paid to the ex-Executive Director
2011 2010
£000 £000
Salary and bonus 292 –
Termination benefit 30 –
Post employment benefit 41 –
Miss J.L. Murphy resigned as an Executive Director on 31 August 2010. Pursuant to the
terms of compromise agreement between Miss J.L. Murphy and the Company relating to
her resignation as a Director the Company has made an aggregate payment to Miss J.L.
Murphy of £363,645.
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to the Members of Mountview Estates P.L.C. on the parent Company financial statements
We have audited the parent Company financial statements of Mountview Estates P.L.C. for the year ended
31 March 2011 which comprise the parent Company balance sheet and the related notes 1 to 13. The financial
reporting framework that has been applied in their preparation is applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As explained more fully in the statement of Directors’ responsibilities set out in the Directors’ Report, the
Directors are responsible for the preparation of the parent Company financial statements and for being satisfied
that they give a true and fair view. Our responsibility is to audit the parent Company financial statements in
accordance with applicable law and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. This
report, including the opinions, has been prepared for and only for the company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any other purpose or to any other person to whom this
report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to
give reasonable assurance that the financial statements are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the parent
Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of
significant accounting estimates made by the directors; and the overall presentation of the financial statements.
OPINION ON FINANCIAL STATEMENTS
In our opinion the parent Company financial statements:
• Give a true and fair view of the state of the Company’s affairs as at 31 March 2011 and of its profit for the
year when ended;
• Have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
• Have been prepared in accordance with the requirements of the Companies Act 2006.
OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion:
• The part of the report of the Remuneration Committee and Directors’ Remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006; and
• The information given in the Directors’ Report for the financial year for which the parent Company financial
statements are prepared is consistent with the parent Company financial statements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
• Adequate accounting records have not been kept by the parent Company, or returns adequate for our audit
have not been received from branches not visited by us; or
• The parent Company financial statements and the part of the Directors’ Remuneration Report to be audited
are not in agreement with the accounting records and returns; or
• Certain disclosures of Directors’ Remuneration specified by law are not made; or
• We have not received all the information and explanations we require for our audit.
OTHER MATTER
We have reported separately on the Group financial statements of Mountview Estates P.L.C. for the year
ended 31 March 2011.
Norman Strong (Senior Statutory Auditor)
for and on behalf of BSG Valentine
Chartered Accountants and Statutory Auditors
London
14 July 2011
TABLE OF COMPARATIVE FIGURES
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as at 31 March 2011
IFRS IFRS IFRS IFRS IFRS IFRS
2006 2007 2008 2009 2010 2011
£000 £000 £000 £000 £000 £000
Revenue 47,456 68,168 54,338 53,599 56,697 47,655
Profit before taxation 22,660 50,227 29,529 13,062 29,255 23,560
Taxation 6,738 15,167 8,861 3,673 7,620 6,589
Profit after taxation 15,922 35,060 20,668 9,389 21,635 16,971
Dividend in relation
to the year 5,069 5,848 6.042 6.042 6,432 6,432*
Earnings per share 408.4p 899.2p 530.1p 241.0p 554.8p 453.3
Rate of dividend 130p 150p 155p 155p 165p 165p
*The £6.43 million dividend in relation to 2011 is made up of the interim dividend of £1.95 million and
the final dividend of £4.48 million, which will be paid on 15 August 2011, subject to approval at the
AGM on 10 August 2011.
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Notice is hereby given that the Seventy-Fourth 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 10 August 2011 at 11.30 a.m.
for the following purposes:
As ordinary business:
1. 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 2011.
2. To declare a final dividend of 115p per share payable on 15 August 2011 to Shareholders on
the register at 15 July 2011.
3. To re-appoint Mrs M.M. Bray as a Director of the Company.
4. To re-appoint Mr. J. Fulton as a Director of the Company.
5. To elect Mr. A.J. Sinclair as a Director of the Company.
6. To approve the Directors’ Remuneration Report set out in the Annual Report and Accounts for
the year ended 31 March 2011.
7. 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.
8. To authorise the Directors to determine the Auditors’ remuneration for the ensuing year.
By Order of the Board
M.M. BRAY
Secretary
Mountview House
151 High Street
Southgate
London N14 6EW
14 July 2011
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Notes:–
1. 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 (PXS), The Registry, 34 Beckenham Road, Beckenham,
Kent BR3 4TU.
2. 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 (PXS), The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, not
later than 48 hours before the time of the Meeting or any adjournment thereof. Amended instructions must also be
received by the Company’s Registrars by the deadline for receipt of Forms of Proxy.
3. 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.
4. 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.
5. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 (as amended) and for the purposes of
Section 360B of the Companies Act 2006, 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 (the ”Specified Time”) or adjourned Meeting. If the
Meeting is adjourned to a time not more than 48 hours after the Specified Time, that time will also apply for the
purpose of determining the entitlement of Members to attend and vote and for the purpose of determining the
number of votes they may cast at the adjourned Meeting. Changes to entries on the register of members after the
relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the Meeting.
6. Any corporation which is a Member can appoint one or more corporate representatives who may exercise on its
behalf all of its powers as a Member, provided that, if it is appointing more than one corporate representative, it
does not do so in relation to the same shares. It is therefore no longer necessary to nominate a designated
corporate representative.
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7. 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.
8. Under section 527 of the Companies Act 2006, Members meeting the threshold requirements set out in that section
have the right to require the Company to publish on a website a statement setting out any matter relating to:
(a) the audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that are to be
laid before the meeting; or
(b) any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting
at which annual accounts and reports were laid in accordance with section 437 of the Companies Act 2006.
The Company may not require the members requesting any such website publication to pay its expenses in
complying with sections 527 or 528 Companies Act 2006. Where the Company is required to place a statement on a
website under section 527 Companies Act 2006, it must forward the statement to the Company’s auditor not later
than the time when it makes the statement available on the website. The business which may be dealt with at the
meeting includes any statement that the Company has been required under section 527 Companies Act 2006 to
publish on a website.
9. Any Member attending the Meeting has the right to ask questions. The Company must cause to be answered any
question relating to the business being dealt with at the Meeting put by a Member attending the Meeting. However,
Members should note that no answer need be given in the following circumstances:
(a) if to do so would interfere unduly with the preparation of the Meeting or would involve a disclosure of
confidential information;
(b) if the answer has already been given on a website in the form of an answer to a question; or
(c) if it is undesirable in the interests in the Company or the good order of the meeting that the question be answered.
10. This Notice, together with information about the total numbers of shares in the Company in respect of which
Members are entitled to exercise voting rights at the Meeting as at 12 July 2011 being the last business day prior to
the printing of this Notice and, if applicable, any members’ statements, members’ resolutions or members’ matters
of business received by the Company after the date of this Notice, will be available on the Company’s website
www.mountviewplc.co.uk.
11. Any electronic address provided either in this Notice or in any related documents (including the Form of Proxy)
may not be used to communicate with the Company for any purposes other than those expressly stated.
12. As at 12 July 2011, 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 12 July 2011 are 3,899,014.
13. Copies of the Directors’ service contracts and letters of appointment with the Company 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 2011
Final dividend record date 15 July
Annual Report Posted to Shareholders 15 July
Annual General Meeting 10 August
Final dividend payment 15 August
Interim Results 30 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
1829- 07/2011. Produced by