Mountview Estates PLC Annual Report 2012

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FY2012 Annual Report · Mountview Estates PLC

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7 th
Anniversary5

1937 – 2012

Mountview Estates P.L.C.
Annual report and accounts 2012

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Mountview Estates P.L.C.

Mountview House,
151 High Street,
Southgate,
London N14 6EW

Tel: +44 (0) 20 8920 5777
Fax: +44 (0) 20 8882 9981

www.mountviewplc.co.uk

Mountview Estates P.L.C. Annual report and accounts 2012

75th Anniversary

7 th
Anniversary5

Mountview Estates P.L.C.
was established in 1937 as a
small family business based in
North London by two brothers,
Frank and Irving Sinclair.
This year the Company celebrates the
75th Anniversary of its foundation.

1937 – 2012

Mountview Estates P.L.C. is a Residential Property
Trading Company. The Company owns
and acquires tenanted residential property
throughout the UK and sells such property
when it becomes vacant.

Contents
Business Review

01 Our Performance
02 Where we Operate
03 Chairman’s Statement
04 Review of Operations

Governance

10 Directors and Advisers
11 Directors’ Report
16 Statement of Directors’ Responsibilities
17 Corporate Governance
20 Remuneration Report

Financial Statements

23 Consolidated Income Statement
24 Consolidated Statement of Financial Position
25 Consolidated Statement of Changes in Equity
26 Consolidated Cash Flow Statement
27 Notes to the Consolidated Financial Statements
46 Independent Auditors’ Report to the Members

of Mountview Estates P.L.C.

48 Company Balance Sheet under UK GAAP
49 Notes to the Financial Statements

under UK GAAP

56 Independent Auditors’ Report to the Members
of Mountview Estates P.L.C. on the Parent
Company Financial Statements

58 Table of Comparative Figures

Other Information

59 Notice of Meeting
62 Shareholders’ Information
63 Shareholders’ Notes

Mountview Estates P.L.C. Annual report and accounts 2012

Our Performance

Mountview Estates P.L.C. advises
its shareholders that, following
the issue of the final results,
the relevant dates in respect
of the proposed final dividend
payment of 115p per share are
as follows:

Ex-dividend date 18 July 2012

Record date

20 July 2012

Payment date 20 August 2012

£42.9m

turnover (£m) -10.1%
(2011: £47.7m)

£27.2m

Gross profit (£m) -6.5%
(2011: £29.1m)

£22.8m

Profit before tax (£m) -3.4%
(2011: £23.6m)

£19.6m

Profit before tax excluding
investment properties revaluation
(£m) -7.1%
(2011: £21.1m)

£227.2m

equity holders’ funds (£m) +5.7%
(2011: £214.9m)

447.7p

earnings per share (pence) +2.8%
(2011: 435.3p)

58.3

165p

net assets per share +5.4%
(2011: 55.1)

Dividend per share (pence) no change
(2011: 165p)

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Mountview Estates P.L.C. Annual report and accounts 2012

Where we Operate

London (North)

London (South)

Portfolio percentage

22.63%

Portfolio percentage

28.52%

Derbyshire, Leicestershire and
Nottinghamshire

Portfolio percentage

5.54%

Remainder of England and Wales

Portfolio percentage

14.85%

Kent, Surrey, Sussex, Dorset,
Hampshire, I.O.W.

Bedfordshire, Berkshire, Essex,
Buckinghamshire, Cambridgeshire,
Hertfordshire, Oxfordshire, Norfolk,
Suffolk, Middlesex, Northamptonshire

Portfolio percentage

10.37%

Portfolio percentage

18.09%

Mountview Estates P.L.C. Annual report and accounts 2012

Chairman’s Statement

D. M. Sinclair FCA

introduction

results

As we celebrate our 75th
anniversary, I am pleased to
report that the last 12 months
have seen Mountview
continue to record good
financial performance, against
the backdrop of a very
challenging economic climate.

23.6

22.8

2011

2012

-3.4%

Profit before tax (£m)

214.9

227.2

+5.7%

2011

2012

Equity holders’ funds (£m)

165

2011

2012

Dividend per share (p)

Although turnover and profit before tax
declined compared to 2011, equity holders’
funds, earnings per share and net assets all
showed an improvement and we have
therefore been able to maintain dividends
at the same level as the previous year.

The final dividend of 115p per share in
respect of the year ended 31 March 2012
recommended by your Board is payable
on 20 August 2012 to shareholders on the
Register of Members as at 20 July 2012.
This will make a total dividend for the year
ended 31 March 2012 of 165p per share
which is 2.7 times covered by the earnings
per share.

building on 75 years of achievement

Our key strength is a sound business model
executed by a team of skilled professionals,
and this has again been at the heart of our
performance, just as it has since Mountview
Estates Ltd was incorporated on 21 May
1937. In those days, barely two and a half
years before the onset of the Second World
War, mere survival was an achievement, but
the Company gradually grew and has
indeed flourished since the millennium.

In 1960, the Company obtained a full quote
on the London Stock Exchange when
shares of five shillings nominal value were
sold for eleven shillings (25p and 55p
respectively). Subsequent split and scrip
issues mean that today’s shares have a
nominal value of 5p. In 1982, the Company
re-registered as Mountview Estates P.L.C.
and the 5p shares now change hands at
around £43.75.

These last 75 years have been characterised
by steady growth and solid achievement.
During the year under review, and despite
economic uncertainties, we have continued
to use our resources wisely investing in
properties where we see good value and
potential profits. We made a number of
such purchases during the year, investing
some £47 million in new properties,
complementing the geographical reach

of our portfolio as well as buying properties
in London locations which, for so long, has
been our core market.

I am proud of our track record and
privileged to work alongside a fine team
that shares my determination to continue to
maintain our momentum. We may not be
the most adventurous of listed companies,
but by means of our patient and
conservative policies we have been
consistently profitable and pay good
dividends. By any measure, a dividend
yield of 3.9% at the current share price
is an excellent performance in the
present economic climate.

I am concerned that our senior personnel
should be sufficiently incentivised to
continue producing good profits. Our
earnings per share have risen by nearly 3%
and it is important that the Company retains
excellent people. To that end we need to
pay attractive salaries to our executives
and thus in due course to facilitate the
recruitment of their successors.

looking ahead

The UK economy has faced many
challenges since 1937 and will doubtless
do so again in the future. Our Company has
ridden the peaks and troughs of the last 75
years, and overcome the barriers that have
from time to time threatened our progress.
Although we have increased our
borrowings to take advantage of
opportunities that have been presented
to us, they remain relatively low compared
to other companies and the Board is
comfortable with the current debt levels.
We consider we are well placed in the
current difficult environment to make
further advances when conditions improve.

D.m. sinclair
Chairman

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Mountview Estates P.L.C. Annual report and accounts 2012

Review of Operations

The Group’s business
model is simple. We are a
property trading company
that buys tenanted
properties at a discount to
notional vacant possession
value and then sells them
when they become vacant.

Our 75th Anniversary saw
another successful year,
as we again enhanced
the portfolio through a
number of strategic sales
and purchases.

our portfolio

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 2012

Regulated tenancies
Ground rents
Life tenancies

No of
units
2,591
1,109
351

Cost
£m
273.6
1.8
25.6

analysis of the Group trading portfolio at the lower of cost and estimated net
realisable value by geographical location as at 31 march 2012

London (North)
London (South)
Kent, Surrey, Sussex, Dorset
Hampshire, I.O.W
Bedfordshire, Berkshire, Essex,
Buckinghamshire, Cambridgeshire,
Hertfordshire, Oxfordshire, Norfolk, Suffolk,
Middlesex, Northamptonshire

Derbyshire, Leicestershire and
Nottinghamshire
Remainder of England and Wales

Regulated
£m
67.20
82.04

Ground
rents
£m
0.70
0.85

Life
tenancies
£m
0.20
2.95

Portfolio
%
22.63
28.52

25.29

0.03

5.90

10.37

48.01

0.10

6.34

18.09

15.44
35.68

0.10
0.0

1.14
9.10

5.54
14.85

Mountview Estates P.L.C. Annual report and accounts 2012

Review of Operations
continued

2,591 regulated

tenancies

Revenue

£42.9m

(2011: £47.7m)

Gross profit

£27.2m

(2011: £29.1m)

Analysis of value

133

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Value

£500k–£1m

<£500k

sales

At Mountview, we have a relatively
straightforward yet proven way of working:
we buy tenanted residential property and
sell it when it becomes vacant. We buy both
regulated tenancy and life tenancy property.
The former, which are characterised by rental
returns below market value balanced by
earlier settlement are becoming increasingly
short in supply. Due to the Housing Act 1988
no new such tenancies have been created
for over 20 years.

Life tenancy stock has nominal rental
income, is bought at a greater discount to
vacant possession value and has a higher
margin on sale. A key attraction of this sector
to Mountview is the fact that property
maintenance is usually the responsibility
of the life tenant and this leads to lower

ongoing costs to ourselves. We carry out
regular checks to ensure that all properties
are maintained in good condition.

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

Sales Price (£)
500,000–1 million
below 500,000

No of
units
4
133

137

Location
London
London and
other

Based on sales achieved during the financial
year, the Directors considered it prudent to
reverse the provision for the Magdalen
Portfolio by £1.2 million. Trading conditions in
the early part of this financial year were not
easy, but we achieved sales of £27.8 million
(2011: £34 million) demonstrating the liquidity
of the Portfolio. The average sales price
achieved was £203,000 (2011: £222,110).

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Mountview Estates P.L.C. Annual report and accounts 2012

Review of Operations
continued

1,109 ground

rents

1,109

Mountview Estates P.L.C. Annual report and accounts 2012

Review of Operations
continued

Analysis of acquisitions

£47.6m

1 Regulated tenancies
2 Life tenancies
3 Ground rents

(450)
(2)
(26)

the net sales proceeds which the Group
expects on the sale of property with the
vacant possession value.

During the year to 31 March 2012, the
Company benefited from good market
conditions in certain areas. The last 12
months have seen us achieve premium
prices for a number of properties, especially
in sought-after areas such as Belsize Park
and the West End of London.

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
where our team has identified opportunities
to make key improvements. For example,
a relatively modest investment can ensure
that a property benefits from services and
amenities that have been lacking in the
past. In many cases, this leads directly to
a substantial increase 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 34.

Purchases
The majority of our residential properties
that are 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 reversionary gain is
crystallised.

Most properties acquired are unimproved
and therefore of low average value.
One of the core Mountview capabilities is
to actively manage these properties: we
identify opportunities to add value by
carrying out refurbishments prior to their
sale. The greatest gains are available at the
upper end of the market and this is where
we concentrate our refurbishment activities.
These properties are sold by private treaty.

analysis of acquisitions

Regulated tenancies
Life tenancies
Ground rents
(or created)

Year ended
31.03.2012
Cost £m
47.20
0.40

0.01
47.61

No of
units
450
2

26
478

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

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Mountview Estates P.L.C. Annual report and accounts 2012

Review of Operations
continued

Louise Goodwin
Limited

38 units (2011: 45)

A.L.G Properties
Limited

5 units (2011: 10)

investment companies
The analysis of the investment portfolio as
at 31 March 2012 is as follows:

2011
Louise Goodwin Limited 38 units 45 units
A.L.G. Properties Limited 5 units 10 units

2012

All the properties are located in Belsize Park,
London NW3, one of the capital’s most
prestigious addresses.

The only significant departures from the
Company’s normal activities, these
investment companies were purchased
in 1999 when we seized the opportunity
to build a presence in one of the best
locations in London. Although rental returns
have proven to be less significant than we
anticipated, the investment portfolio has
nevertheless generated consistently strong
cash flow.

When the properties become vacant,
we refurbish and sell them. During the
financial year, we disposed of 7 units for
a total of £4.8 million in Louise Goodwin
Limited and 5 units for £4.09 million
in A.L.G. Properties Limited (2011: disposed
of 6 units for £6.6 million).

Outlook
We will continue to maintain our strategy
for the investment portfolio, deriving rental
income in the short to medium term and
capital through sales when 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 area.

As Belsize Park is an extremely desirable area
with high levels of demand the outlook
remains positive.

Valuation(s)
Valuations increased during the year by
some £3.2 million. 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 in Note 13 to the
Consolidated Financial Statement on
pages 38 to 39.

summary prospects for the Group

The professional knowledge and skills of our
compact team overcame difficult market
conditions during the year, ensuring that we
were able to purchase properties for a total
of £47 million.

Looking ahead, we believe that we will
identify similar opportunities in the coming
months. Our strength is based on a tight
focus on our core business of regulated
tenancies together with a prudent
approach. We have kept gearing low and
borrowing under control.

Since the end of the financial year we have
continued to sell and purchase properties
and we are pleased with the results
achieved. Given our financial strength
we believe that we are in a strong position
to take advantage of any prime purchasing
opportunities which may arise in the
near future.

Mountview Estates P.L.C. Annual report and accounts 2012

Review of Operations
continued

£8.9m

Louise Goodwin Limited
A.L.G Properties Limited

total
disposals

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Mountview Estates P.L.C. Annual report and accounts 2012

Directors and Advisers

secretary and registered office
Mrs. M.M. Bray FCCA

Mountview House, 151 High Street,
Southgate, London N14 6EW

bankers
HSBC Bank Plc, 60 Queen Victoria Street,
London EC4N 4TR

Barclays Bank Plc, One Churchill Place,
London E14 5HP

auditors
BSG Valentine
Lynton House, 7–12 Tavistock Square,
London WC1H 9BQ

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

financial advisers
SPARK Advisory Partners Limited
33 Glasshouse Street
London W1B 5DG

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.

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.B. Fulton is considered to be independent for the
purposes of the UK Corporate Governance Code 2010.

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.
Resigned on 31 March 2012.

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 Adviser on International Banking.

Mountview Estates P.L.C. Annual report and accounts 2012

Directors’ Report

The Directors have pleasure in presenting to the Members their Seventy-Fifth Annual Report together with the Financial Statements for the
year ended 31 March 2012.

1. results and dividends

The results for the year are set out in the Income Statement on page 23.

The Directors recommend the payment of a final dividend of 115p per share. The dividend will be paid on 20 August 2012, subject to
approval at the Annual General Meeting on 15 August 2012, to Shareholders on the register at the close of business on 20 July 2012.

2. activities

The principal activities of the Company and its subsidiary undertakings are as follows:

Parent company
Mountview Estates P.L.C.

subsidiary undertakings (wholly-owned)
Hurstway Investment Company Limited

Louise Goodwin Limited

A.L.G. Properties Limited

3. review of business and principal risks

Property Trading

Property Investment

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 2 to 9. In addition the Group has established the following Financial Key Performance Indicators:

financial Key Performance indicators

42.9

47.7

2012

2011
Turnover (£m)

-10.1%

447.7

435.3

2012

2011

+2.8%

Earnings per share (p)

19.6

21.1

2012

2011

-7.1%

Profit before tax excluding investment
properties revaluations (£m)

58.3

55.1

+5.4%

2012

2011
Net assets per share (£)

6.7

2012

2011
Interest cover in relation to
profit before interest and taxation

28.9

22.9

2012

2011

Gearing ratio (%)

non-financial

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

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Mountview Estates P.L.C. Annual report and accounts 2012

Directors’ Report
continued

3. review of business and principal risks continued

risk review
The key risks to the Group’s business are:

market and strategic risk
•

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.

•

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 32 and 33.

financial risk
• 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.

• 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.

other non-financial risks
The Directors consider that the following are potentially material non-financial risks.

Risks
Reputation

People related issues

Computer failure

Acquisitions

4. rotation of Directors

Impact
Destabilisation of the Company, adverse
effect on share price

Action taken to mitigate
Act honourably, communicate

Loss of key employees/
low morale/inadequate skills

Maintain market level remuneration packages,
training. Succession planning and recruitment

Loss of data

Low returns liquidity

External IT consultants, backup, off-site copies

Draw on wealth of experience to ensure
continued selective geographical spread of
desirable selective properties

In accordance with the Company’s Articles of Association, Mr. K. Langrish-Smith retires from the Board by rotation and being eligible, offer
himself for reappointment. Resolution for his reappointment will be proposed at the Annual General Meeting.

Mr J.A.N. Laing who has served as a Non-Executive Director since January 2009 resigned from the Board on 31 March 2012.

The Board would like to thank James for his contribution to the Company over the last three years. We are saddened to learn he has died
recently from an illness which he fought with dignity.

5. share capital

The authorised share capital of the Company as at 31 March 2012 was £250,000 divided into 5,000,000 Ordinary Shares of 5p of which
3,899,014 were in issue (2011: 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.

Mountview Estates P.L.C. Annual report and accounts 2012

Directors’ Report
continued

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:

Ordinary Shares of 5p each

Mr. D.M. Sinclair including the following holding of Sinclair Estates Limited – 54,165
Mr. D.M. Sinclair is a Director of the above company
Mr. K. Langrish-Smith
Mrs. M.M. Bray
Mr. A. Sinclair

All the above interests are beneficial.

31 March
2012

1 April
2011

538,383
307,000
12,302
119,724

535,883
307,000
12,302
119,724

There has been no changes in the interest of the Directors in the share capital of the Company between 31 March 2012 and 11 July 2012.

7. notifiable interests in share capital

As at 11 July 2012, 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:

Mr. Phillip Wheater, Mrs. Daphne Sinclair and Mr. Alistair Sinclair, Trustees of the Frank and
Daphne Sinclair Grandchildren Settlement*
Mr. Geoffrey Wilfred Bew Todd and Ms. Helen Clark Trustees of W.D.I. Sinclair Grandchildren Settlement*
Doris Sinclair Will Trust *
Mrs. M.A. Murphy**
Mrs. A. Williams**
Mrs. S. Simkins**

*denotes indirect holding
** denotes combined direct and indirect holding

8. environmental matters and social/community issues

Ordinary Shares
of 5p each

% of Issued
Share Capital

393,193
179,400
118,100
596,745
145,650
190,580

10.08
4.60
3.03
15.31
3.73
4.89

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 relating to the use of computer software and the general professional development of the staff
concerned. A great number of our employees have worked for the Company for many years and there is very little turnover of staff.

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Mountview Estates P.L.C. Annual report and accounts 2012

Directors’ Report
continued

10. significant agreements

Certain banking agreements to which the Company is a party (described in Note 18 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.

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 2012 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 (2011: 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 32 to 33. Details
regarding the Company’s use of financial instruments are set out in Note 20 to the Consolidated Financial Statements on pages 42 and 43.

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 15 August 2012 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 17 to 19.

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.

Mountview Estates P.L.C. Annual report and accounts 2012

Directors’ Report
continued

18. Donations

During the year the Group made charitable donations of £48,350 (2011: £26.800).

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 (2011: £nil).

19. Going concern basis

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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 page 31.

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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
Company Secretary

19 July 2012

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Mountview Estates P.L.C. Annual report and accounts 2012

Statement of Directors’
Responsibilities

The Directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the financial statements
in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the
Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and
the Parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that
period. In preparing these financial statements, the Directors are required to:

•

select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

•

state whether IFRSs as adopted by the European Union and applicable UK Accounting Standards have been followed, subject to any
material departures disclosed and explained in the Group and Parent Company financial statements respectively; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in

business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions
and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that
the financial statements and the Directors’ remuneration report 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.

Each of the Directors, whose names and functions are listed on page 10 confirm that, to the best of their knowledge:

•

the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and
fair view of the assets, liabilities, financial position and profit of the Group;

the business review on pages 2 to 41 includes a fair review of the development and performance of the business and the position of the
Group, together with a description of the principal risks and uncertainties that it faces;

so far as the Directors are aware, there is no relevant audit information of which the Company’s auditors are unaware; and

the Directors have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit
information and to establish that the Company’s auditors are aware of that information.

The maintenance and integrity of the Mountview Estates P.L.C. website is the responsibility of the Directors; the work carried out by the
auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may
have occurred to the financial statements since they were initially presented on the website.

By Order of the Board

m.m. braY
Company Secretary

19 July 2012

Mountview Estates P.L.C. Annual report and accounts 2012

Corporate Governance

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% of the issued share capital of the Company.

The Company has applied the principles and provisions set out in the UK Corporate Governance Code, including both the main principles
and the supporting principles throughout the accounting period except as detailed under Corporate Governance.

The UK Corporate Governance Code requires that there should be a clear division of responsibilities at the head of the Company between
the running of the Board and the executives responsibility for running the Company’s business. In addition, the UK Corporate Governance
Code requires (for smaller Companies) these to be at least two independent Non-Executive Directors between Board members and that the
Company should have at least three Non-Executive Directors. In this regard the Board has carefully considered the division of the
responsibilities of the Chairman and Chief Executive (this dual role is not compliant with the UK Corporate Governance Code), together with
the number of independent Non-Executive Directors and has concluded, given the size of the Company and Group, that the present
arrangements are appropriate.

Each Board member has responsibility to ensure that the Group’s strategies lead to increased shareholder value.

the board
As at the year ended 31 March 2012 the Board comprised the Chairman, Mr. D.M. Sinclair, two Executive Directors and three Non-Executive
Directors (of which one is considered to be independent for the purpose of the UK Corporate Governance Code). All Directors have access
to independent professional advice at the expense of the Company and to the services of the Company Secretary who is responsible to the
Board for ensuring the correct procedures are followed.

In addition to ad-hoc meetings arranged to discuss particular transactions and events, the full Board meets at least four times a year and
retains full and effective control over the Group’s activities.

Meetings
Full Board
Audit Committee
Remuneration Committee
Nomination Committee

Mr. D.M.
Sinclair
6
1
1
–

Mr. K. Langrish
-Smith
6
–
–
–

Mrs. M. M
Bray
6
1
–
–

Mr. A.
Sinclair
6
2
3
–

Mr. J.B.
Fulton
6
2
3
–

Mr. J.A.N.
Laing
6
2
3
–

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 reappointment are set out in the Directors’ Report on page 12.

The Articles of Association of the Company contain the following provisions relating to the appointment and replacement of Directors:

• 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 or her period of office, but without prejudice to any claim for damages which
he or she 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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Mountview Estates P.L.C. Annual report and accounts 2012

Corporate Governance
continued

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 performance of the Board, its Committees and individual Directors are not subject to specific evaluation. The Directors consider that the
small size of the Group and Board does not warrant a formal evaluation process. Based on the close working relationships of Board and the
Committees, the Directors are satisfied with both the performance of the Board and its Committees. In making decisions throughout the
year, the Board is strongly aware of its responsibilities to the Company’s Shareholders.

Any areas of concern are addressed during regular management or Board meetings.

remuneration committee
The Remuneration Committee comprises Mr. J.B. Fulton (Non-Executive Director), Mr. A.J. Sinclair (Non-Executive Director) and
Mr.J.A.N. Laing (resigned on 31 March 2012). The Committee, which is chaired by Mr. J.B. Fulton, 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 20 to 22.

nomination committee
The Nomination Committee is responsible for the selection and approval of appointments to the Board. Given the small size of the
Company the Chairman of the Nomination Committee is Mr. D. M. Sinclair and all the Directors of the Company are members.
There were no meetings during the year.

audit committee
The Audit Committee comprises Mr. J. B. Fulton (Non-Executive Director), Mr. A. J. Sinclair (Non-Executive Director) and Mr. J.A.N. Laing
(resigned on 31 March 2012). 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 one 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.

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.

Mountview Estates P.L.C. Annual report and accounts 2012

Corporate Governance
continued

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 9 in the Report of the Directors on page 14 and in Note 3 to
the Consolidated Financial Statements on pages 32 to 33.

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 2011 to the date of approval of the Annual Report and Accounts. This process is reviewed annually by the Board.

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.

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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.

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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
Company Secretary

19 July 2012

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Mountview Estates P.L.C. Annual report and accounts 2012

Remuneration Report

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 advisers
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 reviewed the remuneration policy for the financial year and for the financial year ahead, and has
developed the following specific remuneration package consisting of two elements.

• 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 and other similar sized companies.

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.

Mountview Estates P.L.C. Annual report and accounts 2012

Remuneration Report
continued

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.

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Mountview Estates – Total Return Index

FTSE All Share R/E IVST SVS £ – Total Return Index

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2007

2008

2009

2010

2011

2012

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:

D. M. Sinclair
K. Langrish-Smith
M. M. Bray
J. B. Fulton
J. A.Laing (resigned 31.03.2012)
A. J. Sinclair

Contract date
8 August 2002
8 August 2002
1 April 2004
1 January 2010
1 January 2009
1 November 2010

Unexpired term
No fixed term
No fixed term
No fixed term
5 months
none
16 months

Notice period
12 months
12 months
12 months
none
none
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 remuneration 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.

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140

120

100

Mountview Estates P.L.C. Annual report and accounts 2012

Remuneration Report
continued

auDiteD information

2012
Executive
D. M. Sinclair
K. Langrish-Smith
Mrs M.M. Bray

Non-Executive
J. B. Fulton
J. A.N. Laing (resigned 31.03.12)
A. J. Sinclair

2011
Executive
D. M. Sinclair
K. Langrish-Smith
Mrs M. M. Bray
Miss J. L. Murphy (resigned 31.08.10)

Non-Executive
J. B. Fulton
J. A.N. Laing
A. J. Sinclair

Total
£000

520
224
373

24
24
24
1,189

Total
£000

523
243
383
84

24
24
10
1,291

Salary
£000

Bonus
£000

Benefits
in kind
£000

Pensions
contributions
£000

275
150
235

24
24
24
732

160
40
120

–
–
–
320

63
24
–

–
–
–
87

22
10
18

–
–
–
50

Salary
£000

Bonus
£000

Benefits
in kind
£000

Pensions
contributions
£000

250
150
215
75

24
24
10
748

210
60
150
–

–
–
–
420

40
23
–
5

–
–
–
68

23
10
18
4

–
–
–
55

• 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.

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 19 July 2012.

J. b. fulton
Chairman of the Remuneration Committee

Mountview Estates P.L.C. Annual report and accounts 2012

Consolidated Income Statement

for the year ended 31 March 2012

Revenue

Cost of sales

Gross profit

Administrative expenses

Gain on sale of investment properties

Operating profit before changes in fair value of investment properties

Increase in fair value of investment properties

Profit from operations

Change in fair value of derivatives
Net finance costs

Profit before taxation

Taxation – current
Taxation – deferred

Taxation

Profit attributable to equity Shareholders

Basic and diluted earnings per share (pence)

Year ended
31.03.2012
£000

Year ended
31.03.2011
£000

42,931

47,655

(15,741)

(18,548)

27,190

29,107

(3,773)

(4,454)

484

23,901

3,208

27,109

(271)
(4,033)

149

24,802

2,454

27,256

(292)
(3,404)

22,805

23,560

(6,648)
1,298

(5,350)

17,455

447.7p

(7,425)
836

(6,589)

16,971

435.3p

Notes

20
8

The notes on pages 27 to 45 are an integral part of these consolidated financial statements.

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Mountview Estates P.L.C. Annual report and accounts 2012

Consolidated Statement of
Financial Position

for the year ended 31 March 2012

As at
31.03.2012
£000

As at
31.03.2011
£000

Notes

12
13

15
16

21
22
22
22
20
23

18
19

18
17

2,441
26,537
28,978

301,072
1,371
987
303,430
332,408

195
55
25
56
(1,040)
227,928
227,219

90,000
6,023
96,023

3,364
1,385
2,814
1,603
9,166
105,189
332,408

2,461
30,314
32,775

259,462
1,192
116
260,770
293,545

195
55
25
56
(2,340)
216,905
214,896

50,000
7,321
57,321

13,940
1,485
3,271
2,632
21,328
78,649
293,545

Assets
Non-current assets
Property, plant and equipment
Investment properties

Current assets
Inventories of trading properties
Trade and other receivables
Cash at bank

Total assets
Equity and liabilities
Capital and reserves attributable to equity holders of the Company
Share capital
Capital redemption reserve
Capital reserve
Other reserves
Cash flow hedge reserve
Retained earnings

Non-current liabilities
Long-term borrowings
Deferred tax

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

Total liabilities
Total equity and liabilities

Approved by the Board on 19 July 2012.

D.m. sinclair
Chairman

K. lanGrish-smith
Director

The notes on pages 27 to 45 are an integral part of these consolidated financial statements.

Mountview Estates P.L.C. Annual report and accounts 2012

Consolidated Statement of
Changes in Equity

for the year ended 31 March 2012

Changes in equity for year
ended 31 March 2011
Balance as at 1 April 2010
Reduction in reserve
Profit for the year
Dividends
Balance at 31 March 2011

Changes in equity for year
ended 31 March 2012
Balance as at 1 April 2011
Reduction in reserve
Profit for the year
Dividends
Balance at 31 March 2012

Share
capital
£000

Capital
reserve
£000

Capital
redemption
reserve
£000

Cash flow
hedge
reserve
£000

Notes

Other
reserves
£000

Retained
earnings
£000

Total
£000

195

(3,640)
1,300

206,366

195

(2,340)

16,971
(6,432)
216,905

(2,340)
1,300

216,905

195

(1,040)

17,455
(6,432)
227,928

203,057
1,300
16,971
(6,432)
214,896

214,896
1,300
17,455
(6,432)
227,219

10
22

The notes on pages 27 to 45 are an integral part of these consolidated financial statements.

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Mountview Estates P.L.C. Annual report and accounts 2012

Consolidated Cash Flow Statement

for the year ended 31 March 2012

Cash flows from operating activities
Profit from operations
Adjustment for:
Depreciation
Loss on disposal of property, plant and equipment
Gain on disposal of investment properties
(Increase) in fair value of investment properties
Operating cash flows before movement in working capital
(Increase) in inventories
(Increase)/decrease in receivables
(Decrease)/increase in payables
Cash generated from operations
Interest paid
Income taxes paid
Net cash (outflow)/inflow from operating activities
Investing activities
Proceeds from disposal of investment properties
Capital expenditure on investment properties
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Net cash inflow from investing activities
Cash flows from financing activities
Increase in borrowings
Repayment of borrowings
Equity dividend paid
Net cash inflow/(outflow) from financing activities
Net increase/(decrease ) in cash and cash equivalents
Opening cash and cash equivalents
Cash and cash equivalents at end of year

Year ended
31.03.2012
£000

Year ended
31.03.2011
£000

Notes

27,109

27,256

166
10
(484)
(3,208)
23,593
(41,610)
(179)
(100)
(18,296)
(4,033)
(7,106)
(29,435)

8,895
(1,426)
(160)
4
7,313

40,000
(200)
(6,432)
33,368
11,246
(13,349)
(2,103)

174
11
–
(2,454)
24,987
(2,498)
5
125
22,619
(3,404)
(8,027)
11,188

6,600
(1,438)
(309)
–
4,853

–
(14,700)
(6,432)
(21,132)
(5,091)
(8,258)
(13,349)

13
13
12

18(a)

The notes on pages 27 to 45 are an integral part of these consolidated financial statements.

Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated
Financial Statements

for the year ended 31 March 2012

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 19 July 2012.

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 48 to 55.

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.

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Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

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) 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.

(g) 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.

Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

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
Fixtures and fittings and office equipment
Computer equipment
Motor vehicles – reducing balance method

–
–
–
–

2%
20%
25%
20%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each financial year. An asset’s carrying
amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.

(i) 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.

(j) 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.

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Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

2. accounting policies (continued)

(k) 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 2012 is on page 34.

(l) 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.

(m) 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.

(n) bank borrowings
Loans are recorded at fair value at initial recognition and thereafter at amortised costs under the effective interest method.

(o) 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) leasing
Rentals payable under operating leases are charged to profit and loss on a straight- line basis over the term of the relevant lease.

(r) 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.

The Group has not hedge accounted during the year.

Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

2. accounting policies (continued)

(s) new and revised international financial reporting standards
New and amended standards adopted by the Group
None of the new standards, interpretations and amendments, effective for the first time from 1 January 2011, have had a material effect on
the financial statements of the Group or the Company.

Standards, interpretations and amendments to published standards that are not yet effective
Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group or
Company’s accounting period beginning on or after 1 January 2012 or later periods and have not been early adopted. It is anticipated that
these new standards, interpretations and amendments currently in issue at the time of preparing the financial statements (April 2012) will
have a material affect on the consolidated financial statement of the Group, however the extent of this has not yet been assessed.

• IFRS 9 – Financial instruments* (effective 1 January 2015)

• IFRS 10 – Consolidated Financial Statements* (effective 1 January 2013)

• IFRS 13 – Fair Value Measurement* (effective 1 January 2013)

• IRS 19 – Employee Benefits* (effective 1 January 2013)

• Presentation of items of Other Comprehensive Income – amendment to IRS1 (effective 1 July 2012)

*Not yet endorsed by the EU

The Parent Company and subsidiaries have not adopted IFRS in their individual accounts.

(t) 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.

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Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

2. accounting policies (continued)

(s) critical accounting judgements and key areas of estimation uncertainty (continued)
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 three 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.

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.

Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

3. financial risk management objectives and policies (continued)

(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.

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 majority of financial liabilities is presented in Note 18.

(d) Capital risk management
The Group’s objective when managing capital is to safeguard the Group’s ability to continue as a going concern. The Group monitors capital
on the basis of the gearing ratio. This ratio is calculated as net debt divided by total debt and equity.

Total borrowings
Less cash
Net borrowings
Total equity
Total borrowings plus equity
Gearing ratio

2012
£000
93,364
(987)
92,377
227,219
319,596
28.9 %

2011
£000
63,940
(116)
63,824
214,896
278,720
22.9%

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Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

4. analysis of revenue and cost of sales

All revenue arises in the United Kingdom.

1. Rental income from tenancies of occupied properties. The income is recognised on an accruals basis.

2. Sale of stock properties. This is recognised on the date of legal completion.

Revenue
Gross sales of properties
Gross rental income

Cost of sales
Cost of properties sold
Property expenses

Gross profit
Sales of properties
Net rental income

2012
£000

2011
£000

27,800
15,131
42,931

9,251
6,490
15,741

18,549
8,641
27,190

34,205
13,450
47,655

13,180
5,368
18,548

21,025
8,082
29,107

Cost of properties sold includes £1.2 million credit in respect of the reversed provision for the Magdalen Portfolio.

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:

Revenue

Operating profit before changes in fair
value of investment properties
Finance costs
Profit after tax
Assets
Liabilities
Fixed assets
Capital expenditure
Depreciation

Property
trading
£000
42,488

23,666
(4,033)

303,321
104,779

160
125

Property
investment
£000
443

235

29,087
410

1,426
41

2012

Group
£000
42,931

23,901
(4,033)
17,455
332,408
105,189

1,586
166

Property
trading
£000
47,107

24,955
(3,404)

263,065
68,013

182
136

Property
investment
£000
548

(153)

30,480
46

1,563
38

2011

Group
£000
47,655

24,802
(3,404)
16,971
293,545
68,059

1,745
174

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.

Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

6. Profit from operations

The operating profit is stated after charging:
Depreciation of tangible fixed assets
Loss on disposal of fixed assets
Auditors’ remuneration
– the audit of the Parent Company and Consolidated Financial Statements
– the audit of the Company’s subsidiaries pursuant to legislation
– tax compliance work
Operating expenses for investment properties
And after crediting:
– net rental income
– administrative charges to related companies (Note 25)

2012
£000

166
10

38
12
9
454

2011
£000

174
11

38
12
9
701

8,641
37

8,082
35

The details of Directors’ remuneration are shown in the audited section of the Remuneration Report on page 22.

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:

Office and management

7. staff costs (including Directors)

Wages and salaries
Social security costs
Pension costs

Directors’ remuneration

Total Directors’ Remuneration including salary, bonuses, benefits in kind and pensions
contributions amounted to:

8. finance costs

Interest on bank overdrafts, and loans

2012
24

2011
24

2012
£000
1,865
234
85
2,184

2011
£000
2,078
225
87
2,390

1,189

1,291

2012
£000
4,033

2011
£000
3,404

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Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

9. income tax expense

(a) Analysis of charge in the year

Current tax:
UK Corporation Tax 26% (2011: 28%)

Deferred tax:
Current year 26% (2011: 28%)
Taxation attributable to the Company and its subsidiaries

(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
Profit on ordinary activities multiplied by rate of tax 26% (2011: 28%)
Expenses not deductible for tax
Income not taxable
Depreciation in excess of capital allowances
Taxation on capital gains
Revaluation surplus in subsidiaries not taxed
Deferred tax
Under provision in prior years
Taxation attributable to the Company and its subsidiaries

2012
£000

2011
£000

6,648

7,425

(1,298)
5,350

(836)
6,589

22,805
5,930
110
(126)
(10)
1,574
(830)
(1,298)
–
5,350

23,560
6,596
164
(41)
(21)
1,428
(688)
(836)
(12)
6,589

10. Dividends

On 15 August 2011 a dividend of 115p per share (2010: 105p per share) was paid to the Shareholders. On 26 March 2012 a dividend
of 50p per share (2011: 50p per share) was paid to the Shareholders. This resulted in total dividends paid in the year of £6.43 million
(2011: £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 20 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 2012 is payable to all Shareholders on the Register of Members on 20 July 2012. The total estimated final
dividend to be paid is £4.48 million.

Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

11. earnings per share

The calculations of earnings per share are based on the following profits and number of shares.
Net profit for financial year (basic and fully diluted)
Weighted average number of Ordinary Shares for basic and fully diluted earnings per share
Basic and diluted earnings per share

The Company has no dilutive potential Ordinary Shares.

12. Property, plant and equipment

2012
£000

2011
£000

17,455
3,899,014
447.7p

16,971
3,899,014
435.3p

Cost
At 1 April 2011
Additions
Disposals
At 31 March 2012

Depreciation
At 1 April 2011
Charge for the year
On disposals
At 31 March 2012
Net book value
At 31 March 2011
At 31 March 2012

Freehold
property
£000

Fixtures
and fittings
£000

Motor
vehicles
£000

Computer
equipment
£000

2,671
–
–
2,671

542
53
–
595

2,129
2,076

208
160
(35)
333

84
73
(35)
122

124
211

315
–
(44)
271

123
35
(30)
128

192
143

152
–
(131)
21

136
5
(131)
10

16
11

Total
£000

3,346
160
(210)
3,296

885
166
(196)
855

2,461
2,441

Property, plant and equipment are located within United Kingdom.

hire purchase agreement
Included within the net book value of £2,441,000 is £28,660 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 £7,540 (2011: £9,420).

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Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

12. Property, plant and equipment (continued)

Freehold
property
£000

Fixtures
and fittings
£000

Motor
vehicles
£000

Computer
equipment
£000

Cost
At 1 April 2010
Additions
Disposals
At 31 March 2011
Depreciation
At 1 April 2010
Charge for the year
On disposals
At 31 March 2011
Net book value
At 31 March 2010
At 31 March 2011

Property, plant and equipment are located within United Kingdom.

13. investment properties

Fair value at 1 April 2012/(2011)
Subsequent expenditure
Disposals
Increase in Fair Value during the year
At 31 March 2012/(2011)

2,671

–
2,671

489
53
–
542

2,235
2,129

82
132
(6)
208

46
44
(6)
84

52
124

353
156
(194)
315

181
40
(98)
123

215
192

131
21
–
152

99
37
–
136

65
16

2012
£000
30,314
1,426
(8,411)
3,208
26,537

Total
£000

3,237
309
(200)
3,346

815
174
(104)
885

2,567
2,461

2011
£000
32,872
1,438
(6,450)
2,454
30,314

The sales of investments properties are not included in the Group Revenue.
During the financial year we disposed of 12 units for a total of £8.89 million.
The difference between the sales price £8.89 million (2011: £6.60 million) and the market fair value £8.41 million (2011: £6.45 million) of
£484,000 (2011: £149,000) is shown in the Consolidated Income Statement as a separate item.

The realised gains on sales are transferred to Reserves in the Group accounts.

louise Goodwin limited and alG Properties limited
The companies’ freehold and long leasehold properties were valued on 31 March 2012 by an external valuer Martin Angel, FRICS of Allsop
LLP. The valuations are in accordance with the requirements of the RICS Valuation – Professional Standards – Global and UK Edition, 2012.
The properties are all held for investment and Market Values are on the basis that the properties would be sold subject to any existing leases
and tenancies. The valuer’s opinion of Market Value was primarily derived using comparable recent market transactions on arm’s-length
terms.
Martin Angel has resumed valuing the properties for accounts purposes this year having last valued them in March 2009. Allsop LLP has
undertaken work for Mountview Estates P.L.C. for in excess of 20 years including acquisitions, disposals and valuations.
In relation to Allsop LLP’s preceding financial year, the proportion of the total fees payable by Mountview Estates P.L.C. to the total fee
income of Allsop LLP was less than 5% which is regarded by the RICS as negligible.

Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

13. investment properties (continued)

The aggregate Fair Value of the Company’s interests in its investment portfolios was:

louise Goodwin limited

£23,893,000 (twenty-three million, eight hundred and ninety-three thousand pounds), split as follows:

• Freehold: £23,583,000 (twenty-three million, five hundred and eighty-three thousand pounds).

• Long Leasehold: £310,000 (three hundred and ten thousand pounds).

alG Properties limited

£2,644,000 (two million, six hundred and forty-four 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 £3.208 million has arisen on valuation of investment properties to Market Value as at 31 March 2012 (2011: surplus
of £2.454 million) and this has been taken to the income statement.

The Directors are of the opinion that the fair value equates to the Market Value.

14. investments

fixed asset investments
These represent the cost of shares in the following wholly-owned subsidiary undertakings, which are incorporated and operate in England
and Wales. Their results are consolidated in the accounts of the Group, for the period during which they are subsidiary undertakings.

Hurstway Investment Company Limited
Louise Goodwin Limited
A.L.G. Properties Limited

Principal activity
Property trading
Property investment
Property investment

15. inventories

Residential properties

16. trade and other receivables

Trade receivables
Prepayments and accrued income

Cost
2011
2012
£000
1
15,351
2,924
18,276

2012
£000
301,072

2011
£000
259,462

2012
£000
378
993
1,371

2011
£000
218
974
1,192

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.

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Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

17. trade and other payables

Trade creditors
Other taxes and social security costs
Other creditors

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

17(a) commitments under hire purchase agreement

Future commitments under hire purchase agreements are as follows:

Amounts payable within 1 year

18. bank overdrafts and loans

Bank overdrafts
Bank loans
Other loans

18(a) cash and cash equivalents

Bank overdrafts
Cash
Cash and cash equivalents as at 31 March

Maturity profile of financial liabilities at 31 March 2012 was as follows:

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

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

The average interest rates paid were as follows:

Bank overdrafts and money market loan
Bank loans
Other loans

2012
£000
383
143
859
1,385

2011
£000
535
144
806
1,485

2012
£000
28

2011
£000
35

2012
£000
3,089
90,000
275
93,364

2012
£000
(3,089)
986
(2,103)

2011
£000
13,465
50,000
475
63,940

2011
£000
(13,465)
116
(13,349)

2012
£000

2011
£000

3,364
–
90,000
93,364
(3,364)
90,000

2012
2.51%
4.40%
1.0.%

13,940
–
50,000
63,940
(13,940)
50,000

2011
3.62%
4.91%
1.0%

Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

18(a) cash and cash equivalents (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.

1. The Group has short term borrowing facilities of £15 million with Barclays Bank. This facility expires at November 2012 and the rate of

interest payable is:

• 1.9% over LIBOR on £7 million
• 2.1% over Base rate on £8 million.
Headroom of this facility at 31 March 2012 amounted to £11.9 million (2011: £16.9 million).
2. The Group has a £75 million long-term borrowing facility with Barclays Bank. This is a five year revolving loan and the termination date of
this facility is November 2014. The rate of interest payable on the loan is 1.90% 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 2012
amounted to £15 million (2011: £45 million).

3. The Group has successfully renegotiated its £10 million short-term borrowing facilities with HSBC Bank. This is a new three year revolving
loan facility and the termination date of this facility is December 2014. The rate of interest payable is 2.5% above LIBOR. Headroom of this
facility at 31 March 2012 amounted to £783,000 (2011: 6.6 million). The loan is secured by letter of Negative Pledge. The loan is not
repayable by instalments.

4. The Group has a £20 million long-term borrowing facility with HSBC Bank. This is a five 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 2012 amounted to £nil (2011: £nil).

5. Other loans consist of loans from connected persons, and companies of which Mr. D.M. Sinclair is a Director. Loans of £275,000
(2011: £475,000) are repayable within one year. Interest payable on these loans is at 0.5% above Barclays Bank Plc base rate.

19. Deferred tax

Analysis for financial reporting purposes

Deferred tax liabilities
Net position at 31 March

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

At 1 April

(Credit) to income for the year

At 31 March

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

revaluation of properties

At 1 April
(Credit) to income for the year
At 31 March

2012
£000
6,023
6,023

2012
£000
7,321
(1,298)
6,023

2011
£000
7,321
7,321

2011
£000
8,157
(836)
7,321

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Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

20. 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 £1.5 million (2011: £1.3 million)

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

The trade receivables amounted to £1.3 million (2011: £1.2 million).

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

fair value of borrowings

Bank overdrafts

Secured bank loans

Unsecured loans

2012
£000
3,089
90,000
275
93,364

2011
£000
13,465
50,000
475
63,940

Interest charged in the Income Statement for the above borrowings amounted to £4.03 million (2011: £3.4 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 2012 it is estimated that general increase of 1 point in interest rates would decrease the Group’s profit before tax by
approximately £500,000 (2011: £100,000).

Derivative financial instruments
The Group 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 2012 the fixed
interest rate was 4.98% (31 March 2011: 4.98%).

As at 31 March 2012 the fair value of the interest rate swap represents a liability of £1.6 million (2011: £2.6 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 £271,000 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 £1.029 million = £2,632 million (2011) – £1,603 million (2012).

• 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.

Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

20. financial instruments (continued)

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.

At 31 March 2012
Interest bearing loans and borrowings
Cash flow hedge
Trade and other payables

At 31 March 2011
Interest bearing loans and borrowings
Cash flow hedges
Trade and other payables

reconciliation of maturity analysis

At 31 March 2012
Interest bearing loans and borrowings per accounts
Interest
Financial liability cash flows as above

At 31 March 2011
Interest bearing loans and borrowings per accounts
Interest
Financial liability cash flows as above

Less than
1 year
£000
3,559
1,603
1,385

Less than
1 year
£000
14,175
2,632
1,485

Less than
1 year
£000
3,364
195
3,559

Less than
1 year
£000
13,940
235
14,175

Between
1 and 5 years
£000
102,121
–
–

Between
1 and 5 years
£000
61,550
–
–

Between
1 and 5 years
£000
90,000
12,121
102,121

Between
1 and 5 years
£000
50,000
11,550
61,550

Total
£000
105,680
1,603
1,385

Total
£000
75,725
2,632
1,485

Total
£000
93,364
12,316
105,680

Total
£000
63,940
11,785
75,725

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Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

21. called up share capital

Authorised:
5,000,000 Ordinary Shares of 5p each
Allotted, issued and fully paid:
3,899,014 Ordinary Shares of 5p each

22. other reserves

Capital redemption reserve
Capital reserve
Other reserves

2011
£000

250

195

2011
£000
55
25
56
136

2012
£000

250

195

2012
£000
55
25
56
136

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

The Group does not maintain insurance cover against other risks except where several properties are located in close physical vicinity.
A reserve is maintained to deal with such non-insured risks and at 31 March 2012 stood at £56,000 (2011: £56,000).

23. retained earnings

Balance at 1 April 2011
Net profit for the year
Dividends paid
Balance at 31 March 2012

£000
216,905
17,455
(6,432)
227,928

Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2012

24. 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 £37,325 (2011: £35,189) 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 £100,000 (2011: £125,000). Interest was payable on the loan at a rate of 0.5 % above
Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £780 (2011: £980).

(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 £nil (2011: £nil). Interest was payable on the loan at a rate of 0.5 % above Barclays Bank Plc
base rate. Interest paid in the year on this loan amounted to £744 (2011: £1,258).

(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 (2011: £175,000). Interest was payable on the loan at a rate
of 0.5 % above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £1,750 (2011: £1,750).

(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:

Salary and bonus

Termination benefit

Post-employment benefit

2012
£000
–
–
–

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.

25. operating lease commitments

The future aggregate minimum lease payments payable by the group under non-cancellable operating leases are as follows:

Operating lease payments due:

Not later than one year
Later than one year and not later than five years
Later than five years

2012
£000

–
10
–
10

2011
£000
292
30
41

2011
£000

–
–
–
–

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Mountview Estates P.L.C. Annual report and accounts 2012

Independent Auditors’ Report

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 2012, which comprise the
Consolidated Income Statement, 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 Director’s 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.
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the
audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications
for our report.

opinion on financial statements

In our opinion the Group financial statements:

• give a true and fair view of the state of the Group’s affairs as at 31 March 2012 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.

separate opinion in relation to ifrs as issued by the iasb

As explained in Note 2 to the Consolidated Financial Statements, the Group in addition to complying with its legal obligation to apply IFRSs
as adopted by the European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB). In our opinion
the Consolidated Financial Statements comply with IFRSs as issued by IASB.

opinion on other matter prescribed by the companies act 2006

In our opinion:

•

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 17 to 19 with respect to internal control and risk management
systems and about share capital structures is consistent with the financial statements.

Mountview Estates P.L.C. Annual report and accounts 2012

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

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:

• adequate accounting records have not been kept by the Parent Company: or

• The Parent Company Financial Statements and the part of the Director’s Remuneration Report to be audited are not in agreement

with 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;

Under the Listing Rules we are required to review:

•

the Directors’ statement in relation to going concern; and

the part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the UK Corporate
Governance Code specified for our review.

• certain elements of the Report to the shareholders by the Board on Directors’ Remuneration

other matters

We have reported separately on the Parent Company financial statements of Mountview Estates P.L.C. for the year ended 31 March 2012
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 Statutory Auditor)
for and on behalf of BSG Valentine

Chartered Accountants and Statutory Auditors
London, United Kingdom

19 July 2012

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Mountview Estates P.L.C. Annual report and accounts 2012

Company Balance Sheet
under UK gAAP

as at 31 March 2012

As at
31.03.2012
£000

As at
31.03.2011
£000

Notes

3
4

5
6

9
10
10
10
11
12

2,346
18,276
20,622

285,868
1,278
899
288,045
(8,651)
279,394
300,016
(93,461)
206,555

195
55
25
39
(1,040)
207,281
206,555

2,343
18,276
20,619

243,990
1,140
86
245,216
(20,364)
224,852
245,471
(77,847)
167,624

195
55
25
39
(2,340)
169,650
167,624

Fixed assets
Tangible assets
Investments

Current assets
Stocks
Debtors
Cash at bank and in hand

Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year

Capital and reserves
Called up share capital
Capital redemption reserve
Capital reserve
Other reserves
Cash flow hedge reserve
Profit and loss account

Approved by the Board on 19 July 2012.

D.m. sinclair
Chairman

K. lanGrish-smith
Director

Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Financial Statements
under UK gAAP

for the year ended 31 March 2012

1. accounting policies

(a) basis of accounting
The Accounts have been prepared under the historical cost convention, and in accordance with applicable Accounting Standards.

(b) investments
Fixed assets investments in subsidiary undertakings are stated at cost less any provision for impairment.

(d) 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.

(e) Depreciation
Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset
using the straight-line method as follows:

Freehold property
Fixtures and fittings and office equipment
Computer equipment
Motor Vehicles – reducing balance method

–
–
–
–

2%
20%
25%
20%

(f) 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.

(g) 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 2012 is on page 34.

(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) leasing
Rentals payable under operating leases are charged to profit and loss on a straight-line basis over the term of the relevant lease.

(j) Deferred tax
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where
transactions or events have occurred at that date that will result in an obligation to pay more, or right to pay less or to receive more, tax, with
the following exceptions:

• provision is made for tax on gains arising from the revaluations (and similar fair value adjustments) of fixed assets, and gains on disposal

of fixed assets that have been rolled over into replacement assets, only to the extent that, at balance sheet date, there is binding
agreement to dispose of these assets concerned. However, no provision is made where, on the basis of all available evidence at the
balance sheet date, it is more likely than not that the taxable gain will be rolled over into replacement assets and charged to tax only
where the replacement assets are sold;

• deferred tax assets are recognised only to 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.

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Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Financial Statements under UK gAAP continued
for the year ended 31 March 2012

2. staff costs (including Directors)

Wages and salaries
Social security costs
Pension costs

Directors’ remuneration

Total Directors’ remuneration including salary, bonuses, benefits in kind
and pensions contributions amounted to:

2012
£000
1,865
234
85
2,184

2012
£000

2011
£000
2,078
225
87
2,390

2011
£000

1,189

1,291

The details of Directors’ remuneration are shown in the audited section of the Remuneration Report on page 22.

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:

Office and management

3. tangible assets

Cost
At 1 April 2011
Additions
Disposals
At 31 March 2012
Depreciation
At 1 April 2011
Charge for the year
On disposals
At 31 March 2012
Net book value
At 31 March 2011
At 31 March 2012

2012
£000
24

2011
£000
27

Freehold
property
£000

Fixtures
and fittings
£000

Motor
vehicles
£000

Computer
equipment
£000

2,671
–
–
2,671

542
53
–
595

2,129
2,076

22
141
–
163

16
31
–
47

6
116

315
–
(44)
271

123
35
(30)
128

192
143

152
–
(131)
21

136
5
(131)
10

16
11

Total
£000

3,160
141
(175)
3,126

817
124
(161)
780

2,343
2,346

hire Purchase agreement
Included within the net book value of £2,346,000 is £28,660 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 £7,540 (2011: £9,420).

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

Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Financial Statements under UK gAAP continued
for the year ended 31 March 2012

4. investments

Hurstway Investment Company Limited
Louise Goodwin Limited
A.L.G. Properties Limited

The Company owns 100% of the Ordinary Share capital of the following companies:

Subsidiary undertaking

Country of incorporation

Hurstway Investment Company Limited

Louise Goodwin Limited

A.L.G. Properties Limited

5. stocks

Residential properties

6. Debtors: due within one year

Trade debtors

Prepayments and accrued income

7. creditors: amounts falling due within one year

Bank loans and overdrafts
Trade creditors
Corporation Tax
Other taxes and social security costs
Other creditors
Other loans
Derivative financial instruments

2012
£000
1
15,351
2,924
18,276

2011
£000
1
15,351
2,924
18,276

Principal activity
Property trading
Property investment
Property investment

2012
£000
285,868

2011
£000
243,990

2012
£000
362
916
1,278

2012
£000
3,089
339
2,342
154
849
275
1,603
8,651

2011
£000
203
937
1,140

2011
£000
13,465
316
2,364
143
969
475
2,632
20,364

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

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Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Financial Statements under UK gAAP continued
for the year ended 31 March 2012

7.(a) commitments under hire purchase agreement

Future commitments under hire purchase agreements are as follows:

Amounts payable within one year

8. creditors: amounts falling due after more than one year

Bank loans
Amounts owed to subsidiary undertakings
Other loans

Maturity profile of financial liabilities at 31 March 2012 was as follows:

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

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

The Directors consider that the carrying amount of bank overdrafts and loans approximates their fair value.

2012
£000
28

2012
£000
90,000
3,461
–
93,461

2011
£000
35

2011
£000
50,000
27,847
–
77,847

2012
£000

2011
£000

3,364
–
90,000
3,461
96,825
(3,364)
93,461

13,940
–
50,000
27,847
91,787
(13,940)
77,847

Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Financial Statements under UK gAAP continued
for the year ended 31 March 2012

8. creditors: amounts falling due after more than one year (continued)

The other principal features of the Group’s borrowings are as follows.

1. The Group has short term borrowing facilities of £15 million with Barclays Bank. This facility expires at November 2012 and the rate

of interest payable is:

• 1.9% over LIBOR on £7 million

• 2.1% over Base rate on £8 million.

Headroom of this facility at 31 March 2012 amounted to £11.9 million (2011: £16.9 million).

2. The Group has a £75 million long-term borrowing facility with Barclays Bank. This is a five year revolving loan and the termination date
of this facility is November 2014. The rate of interest payable on the loan is 1.9% above LIBOR. The loan is secured by a cross guarantee
between Mountview Estates P.L.C. and its subsidiaries. The loan is not repayable by instalments. Headroom of this facility at 31 March 2012
amounted to £15 million (2011: £45 million).

3. The Group has successfully renegotiated its £10 million short-term borrowing facilities with HSBC Bank. This is a new short term three year
revolving loan facility and the termination date of this facility is December 2014. 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
2012 amounted to £783,000 (2011: £6.6 million).

4. The Group has a £20 million long-term borrowing facility with HSBC Bank. This is a five year revolving loan and the termination date of this

9. called up share capital

Authorised:
5,000,000 Ordinary Shares of 5p each
Allotted, issued and fully paid:
3,899,014 Ordinary Shares of 5p each

10. other reserves

Capital redemption reserve
Capital reserve
Other reserves
Balance at 31 March

2012
£000

250

195

2012
£000
55
25
39
119

2011
£000

250

195

2011
£000
55
25
39
119

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

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Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Financial Statements under UK gAAP continued
for the year ended 31 March 2012

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 2012 the fixed
interest rate was 4.98% (March 2011: 4.98%).

12. Profit and loss account

Balance at 1 April

Net profit for the year (including dividends received)

Dividends paid

Balance at 31 March

2012
£000
169,650
44,063
(6,432)
207,281

2011
£000
161,996
14,086
(6,432)
169,650

Dividends from investments
During the year the Company received dividends totalling £30,765 million from subsidiary companies. This transaction does not appear in
the Group accounts as it is eliminated on consolidation.

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 £37,325 (2011: £35,819) 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 £100,000 (2011: £125,000). Interest was payable on the loan at a rate of 0.5% above
Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £780 (2011: £980).

(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 £nil (2011: £nil). Interest was payable on the loan at a rate of 0.5% above Barclays Bank Plc
base rate. Interest paid in the year on this loan amounted to £744 (2011: £1,258).

(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 (2011: £175,000). Interest was payable on the loan
at a rate of 0.5% above Barclays Bank Plc base rate. Interest paid in the year on this loan amounted to £1,750 (2011: £1,750).

(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.

Mountview Estates P.L.C. Annual report and accounts 2012

Notes to the Financial Statements under UK gAAP continued
for the year ended 31 March 2012

13. related party transactions (continued)

3. Compensation paid to the ex-Executive Director:

Salary and bonus
Termination benefit
Post-employment benefit

2012
£000
–
–
–

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.

14. operating lease commitments

The future aggregate minimum lease payments payable by the Group under non-cancellable operating leases are as follows:

Operating lease payments due:

Not later than one year
Later than one year and not later than five years
Later than five years

2012
£000

–
10
–
10

2011
£000
292
30
41

2011
£000

–
–
–
–

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Mountview Estates P.L.C. Annual report and accounts 2012

Independent Auditors’ Report

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 2012 which comprise the
Parent Company balance sheet and the related notes 1 to 14 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, 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

In addition we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited
financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

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 2012 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.

Mountview Estates P.L.C. Annual report and accounts 2012

Independent Auditors’ Report
to the Members of Mountview Estates P.L.C. on 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 2012.

Norman Strong (Senior Statutory Auditor)
for and on behalf of BSG Valentine

Chartered Accountants and Statutory Auditors
London

19 July 2012

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Mountview Estates P.L.C. Annual report and accounts 2012

Table of Comparative Figures

Revenue

Profit before taxation

Taxation

Profit after taxation

Earnings per share

Rate of dividend

Cover

Cost of dividend

Total remuneration (including Directors)

Executive Directors’ remuneration

Total remuneration (including Directors)
as percentage of dividend

Cost of Executive Directors remuneration
as percentage of total remuneration

Cost of Executive Directors’ remuneration
as percentage of dividend

IFRS
2007
£000

68,168

50,227

15,167

35,060

899.2p

150p

5.99

5,848

3,377

2,021

57.75

59.85

34.5

IFRS
2008
£000

54,338

29,529

8,861

20,668

530.1p

155p

3.42

6,042

2,846

1,498

47.10

52.64

24.7

IFRS
2009
£000

53,599

13,062

3,673

9,389

241.0p

155p

1.55

6,042

2,528

1,436

41.84

56.80

23.7

IFRS
2010
£000

56,697

29,255

7,620

21,635

554.8p

165p

3.36

6,432

2,759

1,569

42.89

56.87

24.3

as at 31 March 2012

IFRS
2012
£000

42,931

22,805

5,350

17,455

447.7

165p

2.71

6,432*

2,184

1,117

33.95

51.14

17.3

IFRS
2011
£000

47,655

23,560

6,589

16,971

435.3

165p

2.64

6,432

2,390

1,233

37.15

51.59

19.1

* The £6.43 million dividend in relation to 2012 is made up of the interim dividend of £1.95 million and the final dividend of £4.48 million, which will
be paid on 20 August 2012, subject to approval at the AGM on 15 August 2012.

Mountview Estates P.L.C. Annual report and accounts 2012

Notice of Meeting

Notice is hereby given that the Seventy-Fifth 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 15 August 2012 at 11.30 a.m. for the following purposes:

As ordinary business:

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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 2012.

2. To declare a final dividend of 115p per share payable on 20 August 2012 to Shareholders on the register at 20 July 2012.

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

4. To approve the Directors’ Remuneration Report set out in the Annual Report and Accounts for the year ended 31 March 2012.

5. 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.

6. To authorise the Directors to determine the Auditors’ remuneration for the ensuing year.

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By Order of the Board

M.M. BRAY
Company Secretary

Mountview House
151 High Street
Southgate
London N14 6EW

19 July 2012

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Mountview Estates P.L.C. Annual report and accounts 2012

Notice of Meeting continued

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 6.00 pm on 13 August 2012 (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.

Mountview Estates P.L.C. Annual report and accounts 2012

Notice of Meeting continued

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.

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

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 19 July 2012 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 19 July 2012, 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 19 July 2012 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.

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Mountview Estates P.L.C. Annual report and accounts 2012

Shareholders’ Information

Financial calendar 2012

Final dividend record date
Annual Report posted to Shareholders
Annual General Meeting
Final dividend payment
Interim results

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
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU

20 July
20 July
15 August
20 August
29 November

Mountview Estates P.L.C. Annual report and accounts 2012

Shareholders’ Notes

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Mountview Estates P.L.C. Annual report and accounts 2012

Shareholders’ Notes continued

Mountview Estates P.L.C. Annual report and accounts 2012

75th Anniversary

7 th
Anniversary5

1937 – 2012

Mountview Estates P.L.C. is a Residential Property
Trading Company. The Company owns
and acquires tenanted residential property
throughout the UK and sells such property
when it becomes vacant.

Contents
Business Review

01 Our Performance
02 Where we Operate
03 Chairman’s Statement
04 Review of Operations

Governance

10 Directors and Advisers
11 Directors’ Report
16 Statement of Directors’ Responsibilities
17 Corporate Governance
20 Remuneration Report

Financial Statements

of Mountview Estates P.L.C.

48 Company Balance Sheet under UK GAAP
49 Notes to the Financial Statements

under UK GAAP

56 Independent Auditors’ Report to the Members
of Mountview Estates P.L.C. on the Parent
Company Financial Statements

58 Table of Comparative Figures

Other Information

59 Notice of Meeting
62 Shareholders’ Information
63 Shareholders’ Notes

7 th
Anniversary5

1937 – 2012

Mountview Estates P.L.C.
Annual report and accounts 2012

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Mountview Estates P.L.C.

Mountview House,
151 High Street,
Southgate,
London N14 6EW

Tel: +44 (0) 20 8920 5777
Fax: +44 (0) 20 8882 9981