More annual reports from Mountview Estates PLC:
2023 ReportM O U N T V I E W E S T A T E S P. L . C . A n n u a l R e p o r t a n d A c c o u n t s 2 0 2 2 Mountview Estates P.L.C. Annual Report and Accounts 2022 31066 5 July 2022 8:09 am proof 22 About Us Mountview Estates was established in 1937 as a small family business based in North London by two brothers, Frank and Irving Sinclair. Mountview Estates P.L.C. is a Property Trading Company. The Company owns and acquires tenanted residential property in England and Wales and sells such property when it becomes vacant. 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 Our Performance Revenue 0.5% £66.0m (2021: £65.7m) Shareholders’ Equity 0.4% £393.5m (2021: £394.9m) Gross Profit 5.3% £40.9m (2021: £43.2m) Earnings per Share 13% 689.5p (2021: 792.3p) Profit before Tax 8.4% £34.9m (2021: £38.1m) Profit before Tax *excluding Investment Properties Revaluation 6.3% £34.4m (2021: £36.7m) Net Assets per Share 0.4% £100.9 (2021: £101.3) Dividend per Share 76.5% 750p* (2021: 425p) * The total dividend payable for the year of 750p per share includes the special dividend of 275p per share paid as part of the interim dividend on 28 March 2022 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 250 pence per share are as follows: Ex dividend date Record date Payment date 7 July 2022 8 July 2022 15 August 2022 Contents STRATEGIC REPORT 01 Our Performance 02 Chairman’s Statement 04 Chief Executive’s Statement 05 Our purpose and how we operate 06 Where we Operate 06 Review of Operations 14 Section 172 Statement 16 TCFD Disclosures 18 Operational response to Covid-19 GOVERNANCE 20 Directors and Advisers 21 Directors’ Report 28 Statement of Directors’ Responsibilities 29 Corporate Governance 34 Report of the Nomination Committee 36 Report of the Audit and Risk Committee 40 Remuneration Report FINANCIAL STATEMENTS 54 Consolidated Statement of Comprehensive Income 55 Consolidated Statement of Financial Position 56 Consolidated Statement of Changes in Equity 57 Consolidated Cash Flow Statement 58 Notes to the Consolidated Financial 75 Statements Independent Auditors’ Report to the Members of Mountview Estates P.L.C. 80 Company Balance Sheet under UK GAAP 81 Company Statement of Changes in Equity under UK GAAP 82 Notes to the Financial Statements 88 under UK GAAP Independent Auditors’ Report to the Members of Mountview Estates P.L.C. on the Parent Company Financial Statements 92 Table of Comparative Figures 31066 5 July 2022 8:09 am proof 22 OTHER INFORMATION 93 Notice of Meeting 98 Shareholders’ Information 01 Mountview Estates P.L.C. Annual Report and Accounts 2022STRATEGIC REPORT Chairman’s Statement Dear Shareholder, INTRODUCTION After two years of Covid-19 the UK’s very successful vaccination programme finally saw a return to something more closely resembling life as we knew it as 2020 began. We have seen this in being able to welcome not just our teams back into the office, as a new work-life balance settles in, but also to welcome shareholders back to our Annual General Meeting (AGM) in 2021 – and we are looking forward to seeing even more this year. Against this backdrop Mountview has again delivered a robust financial performance, as we continue to execute our long-standing strategy focused on regulated tenancies. Throughout the pandemic Mountview demonstrated strong resilience by adapting working practices and respecting the wishes of our tenants and other stakeholders to accommodate Covid-19 concerns while still delivering positive sets of results since March 2020 – all without needing to consider any of the government support that was on offer. As I describe below and as we note elsewhere in this Annual Report, we are confident that we have emerged stronger and more nimble and anticipate continuing to deliver this success as we move forward. OPERATIONAL PERFORMANCE The role of serendipity in Mountview’s business which we have for a couple of years explained in our annual report, has rarely been more evident than in the current year. Revenues are marginally up year on year – though from fewer units sold, 135 compared with 158 in the prior financial year. So, average sales prices are up. However, gross margin is down as these fewer properties also represented on average more recent purchases which therefore carried a higher cost in our books. Covid-19 also continued to play a role in our operations as some tenants who were reluctant to allow strangers into their homes previously were more open following vaccination and so the backlog of maintenance that arose during Covid-19 has largely unwound – hence the increase of around £1M in operational costs. The final piece of the operational picture for the last year is that, while there was still an increase in the value of our investment properties, this was also £1M lower than in 2020/21 – primarily because many of these properties were flats without direct access to outside space – a factor that became more desirable during Covid-19 and was a driver of price rises elsewhere. On the purchase side, the tail end of Covid-19, and in particular the stamp duty holiday, attracted a different type of purchaser into the auction rooms who was willing to buy regulated tenancies at smaller discounts than we believed was reasonable. While it is likely that these purchases will realise the benefits that the purchasers were looking for, at the prices realised they did not fit our risk profile and we let them pass to avoid damaging future value for shareholders. The positive from this for shareholders is that, as purchasing activity slowed, we were sitting on larger cash reserves and, following discussion, decided to return this to our shareholders through the special dividend that we announced alongside our interim results. GOVERNANCE Corporate governance continues to evolve in the UK and this year saw the introduction of Task Force on Climate- related Financial Disclosures (TCFD) reporting (see page 16) and also the first year of transition to electronic tagging of these accounts. For both of these developments we have chosen to work with experienced consultants who work in each of these areas on a daily basis to provide the best of advice and ensure that our own staff remain free to serve our tenants and our other stakeholders. This is an evolution that is continuing, and we await further changes as the Financial Reporting Council is replaced with the establishment of a new regulator the Audit, Reporting and Governance Authority (ARGA) and the Department for Business, Energy & Industrial Strategy (BEIS) recommendations about restoring trust in audit and governance begin to be put in place. Through our network we are able not only to identify evolving requirements and market sentiment but also with our advisers, to discuss how and where they are likely to impact on Mountview and begin to prepare using a mix of both internal resources and external advisers to assist in formulating the necessary action plans. Further, as more fully described in the Remuneration Committee report, we decided to review the remuneration policy a year earlier than was required. The result is a rebalancing of executive remuneration that we believe more closely fits the risk profile of Mountview and the important work of both Duncan Sinclair and Marie Bray in guiding your Company day to day. 02 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 It remains to be seen how these changes translate into appetite and prices realised in the auction rooms on sale and purchase – but I can report that so far the prices being realised are holding up in the first months of the year, and also that we have been able to secure good purchases both at auction and through portfolios that come on the market from time to time. In this way, we are hopeful that we will be able to continue to realise good profits on vacant possession and also acquire new stock to sustain your business going forward. A.W. Powell Non-Executive Chairman 5 July 2022 PEOPLE As always, the success of the Company in the year is down to the skills, experience and dedication of our people who once again have adapted and innovated as Covid-19 restrictions eased and more normal patterns of living re- emerge. Our ‘new normal’ is stabilising with hybrid working now a feature and one welcomed by all as it permits a better – and this year self-directed rather than imposed - work- life balance. Once more, as last year, we anticipated that evolving economic conditions would affect our workforce and, as our Chief Executive, Duncan Sinclair, describes in more detail in his statement, again shared the results of our performance with the people who generated it by awarding larger than normal increases through higher salary or bonus awards to our staff. THE COMING YEAR While the worst ravages of Covid-19 are, we hope, retreating in our rear view mirror another world event, the war in Ukraine, has taken its place as a dominating external factor. As a Company we have contributed to the charities supporting Ukrainian refugees and will consider making further such payments in the coming months. We have already seen widespread inflation and, while interest rates were always expected to rise post pandemic, this effect is being reinforced and we do expect further rises later in the year. Economists’ views on where inflation and interest rates are going and how long lasting their effects will be vary across the board though we do anticipate that the era of rock bottom interest rates is behind us. The effect of this will be real and notional rises in the interest costs we are exposed to – and potentially at levels that would eat into the ongoing rental return – and thus into the overall lifetime return on a property-by-property basis. In this context we believe that our decision noted above to stick to our principles of risk management and not chase purchases at any price is proving a sound one that will protect shareholder value going forward. 31066 5 July 2022 8:09 am proof 22 03 Mountview Estates P.L.C. Annual Report and Accounts 2022STRATEGIC REPORT Chief Executive’s Statement At the A.G.M. on 10 August 2022 we recommend a final dividend of 250 pence per share subject to shareholder approval. This is an increase of 25 pence per share which represents an uplift of more than 11% on the final dividend of 225 pence per share paid last year. Whilst I am very happy to look after my shareholders in this manner I am very mindful to look after the Mountview staff who make all this possible. My greatest concern is for the most modestly paid but it is vital that the more highly paid are rewarded for their endeavours because it is their decisions which make the future prosperity of Mountview possible. In this light I trust that shareholders will support those resolutions that allow the potential to support the decision makers. Interest rates are expected to rise throughout the year and our low gearing will enable us to survive those rises better than most. Indeed the increase in the cost of money may reduce the competition for potential purchases. We understand that some purchasers may be prepared to pay a higher percentage of vacant possession value for some properties but we will not be prepared to compromise our principles. Margins may narrow but we will never pay prices that undermine the financial stability of the Company. The future of the Company is secure but it may require a little more patience than has been necessary in recent years. D.M. Sinclair Chief Executive Officer 5 July 2022 Dear Shareholder, After two years of Covid-19 constrained activity it is to be hoped that our lives may now resume more normal levels of activity. Most of those operating in the property industry found ways of circumventing the various difficulties presented by the last two years and may even have found methodology that serves them better. Our turnover for last year shows a modest increase but increases in the cost of the properties sold and the cost of maintenance where we had previously been unable to enter properties because of Covid-19 have been the main contributors to a thirteen per cent fall in Earnings per Share. Nevertheless none of this does anything to undermine the financial stability of the Company and your Board remain confident enough to recommend an increased final dividend of 250 pence per share. If shareholders approve the final dividend at the Annual General Meeting on 10 August 2022 (2022 AGM) it will be payable on 15 August 2022 to shareholders on the register at 8 July 2022. Mountview may be considered to have been merely in the right place at the right time these last two years but we are a small workforce who have worked hard, adapting as necessary, to stay in that right place. I thank my staff and colleagues for their hard work and loyalty and believe that the future prosperity of the Company should reward them and allow them to be protected from the ravages that the economy may inflict upon us. As we now embrace some of the post-Brexit benefits and the removal of Covid-19 constraints we now face the great economic ogre of inflation. Government and Bank of England policy has kept inflation at what has been regarded as the healthy level of about 2% for more than thirty years. We are now confronted by the prospect of double-digit inflation which will not be gone in the blink of an eye and may be with us for years rather than months. House price inflation may be considered to have been our friend and may continue to be so and with our long term financial prudence I consider the Company to be in a very sound financial position. We did not furlough any staff, we did not make any staff redundant and we did not receive any government funding to help us to survive the pandemic. As we now enter a period of what are expected to be difficult economic circumstances we may find opportunities of which we can take advantage, but my main concern is that we should look after all of our stakeholders. Our most important stakeholders are our shareholders and all of our executive staff. 04 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 Our purpose and how we operate Mountview’s core purpose is to acquire and maintain regulated tenancy residential property providing below market rent accommodation for our tenants until we get vacant possession when we sell such properties. In meeting this purpose, the Group has a long established strategy, business model and set of operating procedures. All these have been developed and refined by marrying the values of the founders and the knowledge and experience of our executives and staff with the evolving environment that we operate in. The strategy and business model are reviewed annually and discussed with major shareholders, the majority of whom have confirmed their support for the Company to continue to operate unchanged. Our key strengths that underpin our culture and support our continuing success are: • Our team’s experience and knowledge of their sector and the communities we operate in • A long-term view, underpinned by family values • A conservative approach to financing, and management • of our cost base Investing responsibly to maintain our existing assets and acquire new assets • Operating responsibly in the communities we serve This purpose and our values have served us well during the phases of the Covid-19 pandemic, its lockdowns and periods of relaxation of restrictions and finally the impact of the vaccination programme that led to lifting of restrictions. Throughout the pandemic, as we describe more fully in our notes on Covid-19 (page 18), the needs of different stakeholder groups were often conflicting forcing a re-think of how we work. Our responses drew on: • the long experience of our staff in both the Group and the markets aligned with • creativity, as we adapted our work to the changed • circumstance, followed by learning and continuous improvement as we implemented changed processes and • communications with affected stakeholder groups so that they understood what was being done and why. We are grateful to all our teams for the way that they continued our successful work while adapting to accommodate the safety concerns of our stakeholders and our tenants in particular. CORPORATE RESPONSIBILITY: The Group recognises that it has a role that extends beyond the direct legal and financial obligations that follow from carrying out its day to day operations for example into wider Environmental, Societal and Governance (ESG) areas that are of concern to the UK as a whole and where collective action is needed to address current and emerging issues. We note below and elsewhere in this report examples of how we view these responsibilities and the steps we have taken to build them into our day to day activities. GOVERNANCE: The Board has responsibility for overseeing the adoption of ESG considerations into our decision making and our day to day operations. For example, when making investment decisions environmental considerations and community impact form a part of the due diligence process. Similar considerations apply to routine operational questions that are delegated to our teams – including, when needed, an escalation process to have proposed courses of action considered by the executives or the Board. ESG matters identified or escalated, are reported by exception to the Board and considered during our discussion of risks facing the business. STAKEHOLDERS AND SOCIAL AND COMMUNITY ISSUES: Our section 172 Statement is set out on page 14, it describes how and where we engage with our wider stakeholder group and our impact on local communities – for example through seeking local contractors where possible to aid proximity between suppliers and tenants and retain the economic benefits within the local community. Our approach to employee engagement, training and diversity matters is set out in the Directors’ Report on page 25. Given the size of the Group and the nature of its business as a property trading company, the Group has developed informal approaches to social, human rights or community issues, that are based on our values and which are reflected in our staff manual and also our supplier code of conduct, but without being converted into formal umbrella policies. THE ENVIRONMENT: Similarly, for the environment, as explained more fully in our notes on TCFD (Page 16) and also on page 23, we are mindful of our impact on the climate and our contribution to the national initiatives for tackling climate change. Accordingly we adopt practices aimed at reducing our environmental impact and thus contributing to addressing climate change. We use sustainable energy suppliers where possible and promote the use of eco products and recycling in our operations. However, as our total carbon footprint is minute in a UK context (see our Carbon report on pages 23 and 24) we have not converted these principles into a formal policy. We keep this under review, including during discussion of risk at Board meetings, and should we conclude that, from either internal or external sources, formal policies are warranted we would develop and adopt them. 31066 5 July 2022 8:09 am proof 22 05 Mountview Estates P.L.C. Annual Report and Accounts 2022STRATEGIC REPORT Where we Operate KEY 35.0% London (North) 22.1% London (South) 20.3% South East Bedfordshire Berkshire Buckinghamshire Cambridgeshire Essex Hertfordshire Middlesex Norfolk Northamptonshire Oxfordshire Suffolk 13.6% South Dorset Hampshire Isle of Wight Kent Surrey Sussex 2.2% North Midlands Derbyshire Leicestershire Nottinghamshire 6.8% Remainder of England and Wales The figures on the map are calculated as a percentage of the total value of Inventories of Trading properties. 2.2% 6.8% 20.3% 35.0% 13.6% 22.1% Review of Operations The Group’s strategy and business model is simple. We are a property trading company that buys tenanted properties at a discount to estimated vacant possession value and then sells them when they become vacant. OUR PORTFOLIO Categories of property held as trading stock The Group trades in the following categories: • Regulated tenancy residential units • Assured tenancy residential units • Life tenancy residential units • Freehold and leasehold ground rent units A unit is a property, however large or small, whether freehold or leasehold, which is held subject to one tenancy. Revenue £66.0m Gross Profit £40.9m (2021: £65.7m) (2021: £43.2m) Analysis of the Group Trading portfolio by type as at 31 March 2022 Regulated, Assured Shorthold tenancies, & Other Assured tenancies Life tenancies Freehold & leasehold ground rents No. of units Cost £m 1,824 312.6 256 212 1,177 41.9 31.8 6.9 06 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 Analysis of the Group Trading portfolio at the lower of cost and estimated net realisable value by geographical location as at 31 March 2022 Regulated, Assured Shorthold tenancies, Assured tenancies & other £m Life tenancies £m Ground rents £m Portfolio % London (North) London (South) Bedfordshire, Berkshire, Buckinghamshire, Cambridgeshire, Essex, Hertfordshire, Middlesex, Norfolk, Northamptonshire, Oxfordshire, Suffolk Dorset, Hampshire, Isle of Wight, Kent, Surrey, Sussex Midlands, Derbyshire, Leicestershire, Nottinghamshire Remainder of England and Wales 131.24 71.12 74.39 48.11 8.22 21.42 0.55 15.08 5.14 5.32 0.52 5.21 5.76 0.85 0.23 0.07 – – 34.99 22.14 20.28 13.60 2.22 6.77 VACANT PROPERTIES The number of properties which were vacant and their status at the end of the financial year are set out below. Exchanged and due for completion Under offer Marketed by private treaty Marketed for rent Scheduled for Auction Not self contained/requiring remedial works Legal and insurance issues Properties to be inspected 31.03.22 31.03.21 22 8 14 1 9 12 10 – 76 13 17 12 2 6 10 11 2 73 SALES At Mountview, we have a relatively straightforward yet proven way of working: we buy tenanted residential properties and sell them when they become vacant. We buy both regulated tenancy and life tenancy properties. The former, which are characterised by rental returns below market value, are becoming increasingly short in supply. Since the Housing Act 1988 no new regulated tenancies have been created. 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 the Group. We carry out regular checks to ensure that all properties are maintained in good condition. During the financial year we achieved sales of £46.8 million (2021: £46.7 million), demonstrating the liquidity of the Portfolio. The average sales price achieved was £346,807 (2021: £291,706). The Group’s sales for financial years 2022 and 2021 are set out below Sales Gross sales of properties Cost of properties sold 2022 £m 46.82 19.28 2021 £m 46.67 17.81 07 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022STRATEGIC REPORT Review of Operations (Continued) Sales price range – 2022 1 million + 500,000 – 1 million below 500,000 Sales price range – 2021 1 million + 500,000 – 1 million below 500,000 No of units Sales price £m 1.3 12.0 33.5 1 18 116 No of units Sales price £m 1 15 144 1.5 11.1 34.1 Location London & South East London & South East London & others Location London & South East London & South East London & others Further information is provided in Note 4 to the Consolidated Financial Statements on page 64. 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 becomes 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 predominantly sold by private treaty. The Group’s trading properties are carried in the balance sheet at the lower of cost and net realisable value. Net realisable value is the estimated net proceeds of sale if the property, in its current condition, were to be vacant at the date of the balance sheet. ANALYSIS OF ACQUISITIONS The Group’s acquisitions for financial years 2022 and 2021 are set out below. The analysis does not include legal and commission expenses directly related to the acquisition of properties or any repairs of a capital nature. Year ended 31 March 2022 Regulated, ASTs, and other Assured tenancies Life tenancies Leasehold ground rents Ground rents created Total Not included in the above table: Assured tenancies created THE TABLE ABOVE INCLUDES THE FOLLOWING: Portfolios Wigsell Portfolio The portfolio comprises of 3 regulated assured tenancies and 6 freehold ground rent tenancies. Winchester Portfolio The portfolio comprises of 3 regulated tenancies and 2 assured shorthold tenancies. Cost £m 10.44 1.82 0.21 0.08 – 12.55 No. of units 38 7 1 7 11 64 11 No. of units Cost £m 12 5 1.60 1.48 08 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 Year ended 31 March 2021 Regulated, ASTs, and other Assured tenancies Life tenancies Leasehold ground rents Ground rents created Total Not included in the above table: Assured tenancies created THE TABLE ABOVE INCLUDES THE FOLLOWING: Portfolios Summer Portfolio The portfolio comprised 53 regulated tenancies. No. of units Cost £m 21.16 0.24 0.27 0.01 – 21.68 68 4 4 6 16 98 16 No. of units Cost £m 53 16.05 RENTAL INCOME The Company’s rental income is derived from five different sources: properties and also with the opportunity to purchase potentially discounted replacement properties both through auction and private tender. • 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, after discussing proposals with the tenant, installing services and amenities that have been lacking in the past can both improve conditions for our tenants and lead to an 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 64. SUMMARY PROSPECTS FOR THE GROUP This time last year we were still wrestling with the effects of Covid-19 – which hopefully has receded. New challenges, however, face us such as fallout from the war in Ukraine and the wider inflationary pressures and increases in interest rates bite. Just how they will affect the general housing market in the longer term is not clear. However as we have seen in harder times in the past, the houses that Mountview brings to auction are typically in high demand as they offer a lower priced entry to the housing market or, if sold to developers, leaves them with the opportunity for ‘developer profit’. We are hopeful therefore that Mountview will be well placed to weather any down turn in the housing market, should it occur through both continuing sales of attractive During 2021-22, the professional knowledge and skills of our compact team ensured that, as well as overseeing a healthy sales stream, we were able to purchase properties for a total of £12.55 million. Our strength is based on a tight focus on our core business of regulated tenancies together with a prudent operational approach. We have kept gearing low. Since the end of the financial year on 31 March 2022 we have continued to sell and purchase properties through auctions 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 future. INVESTMENT COMPANIES The analysis of the investment portfolio as at 31 March 2022 is as follows: Louise Goodwin Limited A.L.G. Properties Limited 2022 26 units 4 units 2021 27 units 4 units All of the properties are situated in Belsize Park, London NW3, one of the capital’s most prestigious locations. Louise Goodwin Limited and A.L.G. Properties Limited were purchased in 1999 when we took 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. 31066 5 July 2022 8:09 am proof 22 09 Mountview Estates P.L.C. Annual Report and Accounts 2022STRATEGIC REPORT Review of Operations (Continued) We will continue to maintain our strategy for the investment portfolio, deriving rental income in the short to medium term and capital through sales during favourable market conditions. As described in note 13 to the Accounts, during the year one investment property was sold for £620,000 (2021: nil). We are prepared to refurbish the properties and sell them by private treaty to purchasers who actively seek homes in this area. The valuation of the investment portfolio increased during the year by £444,000 (2021: increased £1,452,000). The properties 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 page 68. REVIEW OF BUSINESS AND PRINCIPAL RISKS Details of the Group’s performance during the year and expected future developments are contained in the Chief Executive’s and Chairman’s Statements as well as this Strategic Report. The Group has the following Financial Key Performance Indicators: FINANCIAL KEY PERFORMANCE INDICATORS REVENUE (£m) 0.5% 66.0 65.7 PROFIT BEFORE TAX (£m) 8.4% 34.9 38.1 INTEREST COVER IN RELATION TO PROFIT BEFORE INTEREST AND TAXATION 56.0 118.0 57.5 2022 2021 2022 2021 2022 2021 EARNINGS PER SHARE (Pence) 13.0% NET ASSETS PER SHARE (£) 0.4% GEARING RATIO (%) 792.3 689.5 100.9 101.3 5.1 4.5 2022 2021 2022 2021 2022 2021 DIVIDEND PER SHARE for year (Pence)* 76.5%** 750 425 2022 2021 Subject to the approval by shareholders of final dividend of 250 pence at the 2022 Annual General Meeting * ** The total dividend payable for the year of 750p per share includes the special dividend of 275p per share paid as part of the interim dividend on 28 March 2022 10 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 NON FINANCIAL METRICS: The Group’s drivers of their main source of revenues and profit arising in the current year – sales on vacant possession – are beyond the control of the Group as they are in turn driven by factors that are outside the Group’s control: the timing of vacant possession, the location and thus market price of properties disposed of, the original purchase date and price of the properties sold and the current market appetite for the properties that are sold. Consequently, in view of this and the stable and long standing nature of the Group’s business model and operating procedures, and the very close involvement of the Executive Directors in the day to day operations of the business, the Group has not developed and does not use non-financial indicators as the Directors believe that they would not add to the Group’s ability to manage the business day to day. The Board do receive regular updates from the Executive Directors and also from the heads of department who report on salient matters arising in their areas of responsibility and on their programme of upcoming routine and project work. These reports do not contain standard recurring statistics focusing instead on immediate matters for consideration that vary meeting to meeting. RISK REVIEW – PRINCIPAL RISKS AND UNCERTAINTIES In our recent annual reports we have considered the impact of Covid on our principal risks. So, in our 2020 Annual Report we specifically considered risk by risk the possible impact that Covid-19 could have on the business. Last year in our 2021 Annual Report we noted that for the most part these did not materialize and so we removed these risk by risk comments. Although we noted the exception was in relation to risk 7 – Operations and Property Maintenance where some tenants were reluctant to allow contractors or inspectors into their homes due to their personal circumstances. We respected these wishes so only essential work was carried out by contractors who abided by our Covid-19 secure regime. It increased the risk of maintenance backlog but this year we have seen a further decrease in this risk following the vaccination programme tenants were more ready to accept contractors into their houses and as a result we have caught up on the backlog that built up in the last two years meaning that this risk is now free of a Covid-19 influence. As a result for this year we have removed the specific references to Covid-19 from the commentary on the underlying risks. A fuller note of our approach to our work during the pandemic, including risk management, is contained in the separate note on our operational response to Covid-19 on page 18. This position will be kept under constant review. We have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance or solvency. The following list of risks does not comprise all of the risks the Company or Group may face, and they are not presented in order of importance. 1. TRADING STOCK – REGULATED TENANCIES RISK Reduced opportunity to replace asset sales of vacant properties due to the reducing number of regulated tenancies available for purchase. MITIGATION The Group has developed clear criteria that are applied when considering asset purchases. Using these, the Group has performed creditably in a difficult market replacing this class of assets in the year ended 31 March 2022, with good purchasing again during the year. The ‘Analysis of Acquisitions’ is on page 8. 2. MARKET RISK Weak macro-economic conditions triggered by external events including for example Brexit, Covid-19, the war in Ukraine and the cost of living crisis. MITIGATION The Group’s exposure is weighted towards the stronger London and South East markets and this geographical area has over the long term consistently been an above-average performer. 3. FINANCIAL RISK Reduced availability of financing options resulting in inability to meet business plans. MITIGATION The Group monitors its bank accounts and loans closely to maintain sufficient capacity. We review our loan facilities regularly. The Group is conservatively geared and operates well within financial covenants. Financial Key Performance indicators are on page 10. Details of the Group’s current facilities are set out in Note 18 on page 71. 31066 5 July 2022 8:09 am proof 22 11 Mountview Estates P.L.C. Annual Report and Accounts 2022STRATEGIC REPORT Review of Operations (Continued) 4. DIVIDENDS RISK The Group seeks to provide shareholders with good returns on their investment. This aim could be put at risk if the Group was unable to sustain the level of dividends for any reason. MITIGATION We carefully monitor our strategy and our results in order to identify any risk to dividend levels. The Group maintains a strong balance sheet. With appropriate banking facilities, we are able to maintain our trading stock by taking advantage of purchasing opportunities when they occur. 5. PEOPLE RISK Capacity to maintain strategy is compromised due to inability to attract and retain suitably experienced employees. MITIGATION Mountview employs a relatively small workforce which accommodates personal interaction at all levels. The Company has a stringent recruitment process to ensure we employ appropriately skilled staff. We carry out regular appraisals and offer employees opportunities for training and development courses. The Company has a good record of long-term service, a great number of our employees have worked for the group for over 10 years. Details of employees and diversity are set out in Notes 9 and 10 of the Directors’ Report on page 25. 6. REGULATORY RISK Risk of not meeting new or changed regulatory requirements and obligations that affect the Group’s business activities and could lead to fines or penalties. MITIGATION The Group engages in close working relationships with appropriate authorities and advisers to ensure it meets its obligations. 7. OPERATIONS AND PROPERTY MAINTENANCE RISK Legal action against the Group for failure to meet its obligations under property management and safety legislation. MITIGATION In addition to its own regular inspections, the Group engages professional external companies to undertake health and safety, gas and electrical checks, fire risk assessments, etc to ensure we meet our commitments as employers and landlords. Our staff receive regular training to ensure their skills are kept up to date. Our Compliance Officer monitors our performance against existing regulations and tracks and prepares for new requirements as they are published. 8. CLIMATE RISK The impact on the Group of climate related matters. For example, physical risks following changing weather patterns, including extreme weather events, that could lead to increased wear and tear or other property damage and transition risks, for example following regulatory changes. MITIGATION The regular inspections noted above provide the Group with opportunities to identify properties that may be at risk which would be considered for more frequent inspections. Due diligence for purchases aims to identify properties with higher than normal inherent risks for flooding or other water risks. We explain more fully on page 16 in our notes on TCFD how we approach and handle climate related risks. EMERGING RISK As well as monitoring the incidence of currently identified risks we also look for emerging trends in operations that could become active risks. In addition, we carry out horizon scanning through our network of stakeholders, notably our advisers, and also by reviewing published emerging risk reports. Where emergent risks arise and are concluded to be relevant to Mountview’s business then when considering which risks, including climate risks, to include in our framework we use the TRAP (Terminate; Reduce; Accept; Pass on) model to guide our approach. THE OVERALL RISK ENVIRONMENT Given Mountview’s business model and financial strength, while any risks materialising could well have a negative impact on short term performance, and lead to inconvenience, none are significant enough to threaten the continued existence of the Group. We are confident that we can meet our strategic and operational goals and in particular are in a strong position to take advantage of purchasing opportunities as they arise. Risks are considered 12 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 fall due over the three year period used for the assessments. The Directors consider the following factors to be key to this assessment: • The Group’s properties are attractive to a broad constituency of buyers and can be marketed through different channels if needed • The Group’s rental income is sufficient to cover expenses in the event of market illiquidity • The Group has strong reserves and low indebtedness, which would enable it to take profitable advantage of adverse market conditions • The Group maintains contingency and succession planning covering the unexpected absence of key members of staff. Given Mountview’s strong financial position each of the Directors considers that the Group is well positioned to take advantage of both favourable and adverse market conditions. The Group also has adequate banking facilities in place over a spread of maturities which could be renegotiated, augmented or replaced if necessary within the required timescales. to be broadly unchanged from 2021 with moderate assessments for both probability of occurrence and impact. These principal risks were part of the Group’s assessment of long term viability, details of which are set out in the viability statement on page 13. VIABILITY STATEMENT In accordance with the 2018 UK Corporate Governance Code (the Code) the Board has assessed the prospects of the Group over a longer period than the 12 months required by the ‘Going Concern’ provision. The Directors have assessed the viability of the Group over the three year period to 31 March 2025 and conducted this review taking account of the Group’s current financial position, longer term strategy, principal risks and future prospects and plans. A three year period is considered appropriate for the assessment as it corresponds with the Group’s internal planning period and, in addition the term of the debt facilities supports an assessment over this period. The strategy of the business is set at Group level and is reviewed throughout the year at Board meetings in the light of market conditions and investment opportunities. This strategy is based on a tight focus on our core business of regulated tenancies, together with a prudent approach to key financial ratios and funding requirements. The Board has developed a matrix of risks which it considers at each meeting. The principal operational risks faced by the Group and their mitigation are described on pages 11 and 12. The Group’s Financial Risk Management Objectives and Policies are shown in Note 3 on pages 63 and 64 Notes to the Consolidated Financial Statements. The consolidated risk register is maintained by the Audit and Risk Committee as described in the Report of the Audit and Risk Committee on page 37. In assessing viability, the Directors considered the principal risks (see pages 11 and 12) in severe but plausible scenarios up to and including double digit impacts on revenue streams, costs and interest, their potential impact and how to manage them. In the current year, and as further discussed in our TCFD disclosures (page 16), this analysis also included scenarios reflecting different impacts related to climate change including a heightened regulatory regime and a greater incidence of flooding or other extreme climate events. On the basis of this and other matters considered and reviewed by the Board during the year, the Board confirms that it has reasonable expectations that the Group will be able to continue in operation and meet its liabilities as they 31066 5 July 2022 8:09 am proof 22 13 Mountview Estates P.L.C. Annual Report and Accounts 2022STRATEGIC REPORT Review of Operations (Continued) SECTION 172 STATEMENT RELATIONS WITH SHAREHOLDERS AND OTHER STAKEHOLDERS The Board recognises that effective engagement with our stakeholders is a key part of our operations and meeting our strategy. Following the increased profile given to stakeholder engagement associated with the 2018 Code, and in support of the matters set out in Section 172(1) of the Companies Act 2006 we have reviewed our stakeholder groups and for each key stakeholder codified how we engage with them. This work has created a clear framework for the Board to work with when taking material decisions as it provides a checklist to ensure we identify and consider those who could be affected. The list below shows the key stakeholders identified and outlines the nature of our engagement with each of them. Intuitively the Board has for many years taken account of the various stakeholder groups when considering major decisions. The framework provides us with a tool to help ensure that in major decisions we do consider the relevant stakeholder groups, and has been used during the year, for example: • Acquisition of properties when offered portfolios and considering which properties we make an offer on; • Maintenance in deciding on the scope of works and the contractors to engage; • Other financial decisions for example those related to remuneration of all staff, dividends and banking facilities needed; and • Updating the Group’s stance on Covid-19 following the vaccination programme, including the impact on staff, tenants and other stakeholder groups as described on pages 18 and 19. The majority of decisions which involve stakeholders are operational in nature and are delegated down to the teams dealing with the individual stakeholder groups to ensure timely responses to questions or issues raised. As described elsewhere the Board gets regular updates from the heads of department both through the Executive Directors and in writing. In rare cases, for example if the needs of different stakeholder groups, including environmental considerations, are not aligned and time is not a critical factor, these decisions may be referred to the Executive Directors or the Board for consideration or endorsement of proposed action. The Board keeps our stakeholder framework under regular review and updates as we identify new groups or changes to the nature, scope or extent of engagement with existing groups. There was no change in our key stakeholders during the year. STAKEHOLDER GROUPS AND NATURE OF OUR ENGAGEMENT: Engagement with all stakeholder groups has evolved during the pandemic and with the vaccination programme heralding a ‘new normal’ despite continuing high rates of infection we are adopting the best practices that have also evolved combining traditional means such as face to face contact with technological means for remote contact to sustain the relationships in the manner most comfortable for our stakeholders. This evolution has also included new or adapted processes which have become effective operationally and, we believe, have a role to play absent the prior Covid-19 risks. Throughout, communications has been the watchword and have assisted in ensuring that stakeholder needs are properly understood and taken into account when making decisions. As noted in our commentary on Our purpose and how we operate on page 5 and also the section on our operational response to Covid-19 there were occasions where the needs of different groups conflicted and a decision was needed that would not fully satisfy all parties. In taking these decisions the overall safety of the groups affected has been the primary consideration in reaching our eventual course of action. 1. SHAREHOLDERS • In addition to reporting formal financial results twice a year, the AGM presentation and discussion and regulatory announcements throughout the year, the Chairman and other members of the Board hold ad hoc meetings or calls on request with shareholders. This includes annual discussions with the major shareholders to gather their views on the Company strategy and business model. Shareholders of all sizes contact us throughout the year by letter, phone or e-mail. We respond to questions on an individual basis or by regulatory announcements depending on the nature of questions asked. A summary of the matters covered in all contact with shareholders – which in 2021-22 reverted to a more conventional mix of face to face and electronic means – is given to the Board at the next available meeting after the discussion or contact. 2. EMPLOYEES • Section 9 in the Directors’ report explains the arrangements in place to enable the Company’s staff to engage with the Board. Given the size of the Company’s workforce, rather than adopting one of the methods of engagement in provision 5 of the 2018 Code, the Board reviewed and determined that the current arrangements are sufficient. 14 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 3. CONTRACTORS AND SUPPLIERS • All contractors are subject to thorough review by our property management team when first appointed and periodically thereafter. All contractors must sign up to our Contractor Code of Conduct. Similarly, all consultants or advisers are subject to review by the Board before appointment. Major appointments – such as the external auditors are subject to a formal tender process and annual appointment. Regular contact between the part of the business that engages the contractor/supplier means that we are able to provide and receive feedback to improve the level of service going forward. 4. FUNDERS – BANKS • The CFO holds regular meetings with our principal banks. At the time that facilities are renewed the CEO and CFO negotiate the new agreement. 5. CUSTOMERS – TENANTS AND BUYERS REGULATED TENANCIES • These tenants form the bulk of our ‘customers’. We engage with them periodically in relation to services in the properties, and when necessary to ensure our compliance with all obligations. As described in the section on our operational response to Covid-19 on page 18, contact with some of these tenants was modified during the pandemic to reflect and respect their individual wishes and circumstances. There remain some who are particularly vulnerable and we respect that but for others the vaccination programme has allowed a more normal level of contact to resume. OTHER TENANCIES • Day-to-day engagement with these tenants tends to be through the property management team in relation to maintenance or the renewals team when tenancies are up for renewal. The same considerations apply to this group as they do with the regulated tenants. BUYERS AT VACANT POSSESSION • These buyers tend to be one-off purchases so that we do not have on-going relationships with buyers. We maintain a close working relationship with the auction houses and estate agents through whom we sell properties. 6. CORPORATE REGULATORY BODIES • This group includes the Financial Reporting Council (FRC), the Financial Conduct Authority (FCA) and others who are responsible for developments relevant to our listing and reporting to our shareholders and others. Their role includes changes in law, accounting and auditing standards and any other relevant matters. We regularly review issuers’ websites to remain informed on changes to regulation; similarly our various external advisers also alert us to developments that they believe should be brought to our attention. These reviews will be followed by ad hoc contact as and when needed for clarification. Similarly, we also assist, when requested, in the periodic quality reviews carried out by the FRC and others. 7. OPERATIONAL REGULATORY BODIES • These bodies include the Gas Safe Register, the Health and Safety Executive, The Environment Agency and others. For all, in addition to responding to periodic updates, we monitor their websites to remain current on changes to regulation for their application to Mountview, followed by ad hoc contact as and when needed for clarification. We have appointed an external consultant to provide Mountview with its own Health and Safety policy which our contractors agree to abide by. This is monitored by the external consultant. 8. LOCAL GOVERNMENT • We liaise with various local Government bodies and review their websites on a need to know basis. Departments in local Government that we may contact on a property specific basis include Social Services & Environmental Health. We are currently using the Ministry of Housing, Communities & Local Government website in order to ensure compliance with Energy Performance Certificates. We also have regular contact with rent officers on matters concerning rent, property condition and maintenance and other matters that may arise on an ad hoc basis and periodic contact with local planning officers as and when works on properties, including trees with TPOs, need permission before work can start. 31066 5 July 2022 8:09 am proof 22 15 Mountview Estates P.L.C. Annual Report and Accounts 2022STRATEGIC REPORT Review of Operations (Continued) 9. PROFESSIONAL ADVISERS CORPORATE ADVISERS INCLUDING AUDITORS • We have long standing relationships with the advisers noted on page 20. We work with them on a combination of retainer or ad hoc basis as they assist when matters relevant to their area of expertise arise – including input to the Annual Report and Accounts and related market communications. Our engagement with the auditors is set out in the Report of the Audit and Risk on page 38. In addition we work with a range of other external specialists as needed. For example in the current year this has included working with Allsops on the valuation of investment properties (see Note 13 on page 68), EcoAct in relation to our Carbon reporting (see Note 7 on pages 23 to 24) Achill in relation to TCFD matters, Tax Systems in relation to our ESEF filing and publication and Winckworth Sherwood LLP on employment matters. OPERATIONAL ADVISERS • These advisers include the legal advisers that we work with, notably on property transactions, and auctioneers and agents who form an essential part of the sales process when properties become vacant 10. LOCAL COMMUNITIES • We engage early with local communities when maintenance work could affect them for example location of skips or disruption during works. Where possible when maintenance work is needed on our properties we employ well regarded locally based contractors who meet the criteria in our Contractor Code of Conduct. TASK FORCE ON CLIMATE RELATED FINANCIAL DISCLOSURES (TCFD) OVERVIEW: Mountview is committed to adopting the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). The TCFD aims to inform investors and other stakeholders on climate-related risks and opportunities that are relevant to our business. Below we have provided more detail on how, given our current context, as shown through our carbon footprint shown in our Streamlined Energy and Carbon Reporting disclosures (SECR) as computed by Eco Act (Page 23) and our current experience of low exposure to physical climate risks our wider exposure to and influence on climate are currently limited. Accordingly, we have considered our “comply or explain” obligation under the FCA’s Listing Rule 9.8.6R and confirm that we have made disclosures that we believe, in our context, are consistent with the spirit behind the TCFD Recommendations and Recommended Disclosures, but without creating structures and processes that for our context are not warranted. Specifically, in this context we believe that developing detailed plans and governance structures would be of limited value to the Group and to our stakeholders. We have identified and track the metrics described below which we believe cover the risks currently identified. As described below, we have established a Climate Working Group of Non-Executive Directors (NEDs) and managers with line responsibilities in climate matters to monitor our exposures and alert the Board should circumstances change and more formal structures be required – as will be found in companies with a much greater exposure to and impact on the environment than Mountview has. MOUNTVIEW’S CONTEXT FOR ADDRESSING CLIMATE MATTERS: As noted above, in considering Mountview’s approach to climate related risks the context of the business needs to be borne in mind. Specifically, this relates to the stability of the business given the long-standing strategy, business model and operational procedures. Further, as evidenced by our SECR reporting (page 23) our carbon footprint as computed for us by EcoAct is currently 68 tons. Notwithstanding that taken together these two factors might suggest that climate was not as significant a matter for Mountview as it would be for many others, we do take our role in climate change seriously so that climate risks form an integral part of our risk management framework and discussions at Audit and Risk Committee and Board meetings. Importantly, the Board has formally committed to meeting net zero before 2050 to align with the Paris Agreement objective of 1.5 degrees. 16 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 Our Climate Working Group (CWG) has been established to assist in our monitoring and management of climate- related risks and opportunities, together with input from our independent climate advisers. We are able to track emergent climate risks that manifest themselves through our business or risks that we are alerted to by our advisers, which are affecting others or may be coming onto the national agenda in the coming months. In this way, we believe that we have established protocols and practices that are consistent with both the aims of the TCFD and the context of our business as described above. The result is an approach that has the flexibility to be light touch for most of our work – but with the ability to move quickly and bring in the requisite skills through our network, should a climate issue emerge. For example, on the horizon is the expected tightening of the energy performance certificate (EPC) requirements where the detailed requirements remain subject to further consultation before becoming law. Thus the CWG has a current task to monitor the development of these requirements and prepare for the necessary operational and financial planning that will follow once the provisions are finalised. While climate is an important issue for us, given our context it is not currently a matter of sufficient significance to warrant the formation of a dedicated Board committee and is instead managed through our CWG incorporating normal functional roles. This is a matter that we keep under review and should circumstances change and greater prominence be warranted then we will revisit our approach. MOUNTVIEW’S WORK PROGRAMME: The Climate Working Group has identified actions for the coming year including: • As a part of our standing site inspection programme, exploring the exposure at a property level the flood or other risks faced by the 42 properties identified through the Environment Agency data • Exploring the operational and financial impact of the tighter EPC regulations for landlords on our property portfolio as the new regulations evolve. • Keeping under review the extent of our Scope 3 exposures as new sources are identified. Governance Describe the organisation’s governance around climate-related risks and opportunities including the board’s oversight of climate-related risks and opportunities and management’s role in assessing and managing climate-related risks and opportunities Strategy Ultimate responsibility for climate-related matters lies with Mountview’s Board, with the executives charged with overseeing the implementation by our functional teams of decisions taken. To assist in designing responses to climate matters Mountview has set up a Climate Working Group (CWG) comprising the Chairman, our independent NED and representatives of the Property management, Finance and IT functions and advised by our external consultants. This group reports quarterly to the Board highlighting matters to be considered when reviewing operational plans and budgets. The Audit and Risk Committee maintains the Group’s risk matrix, including our principal risks (see page 36 to 39). The Group’s Risk Matrix, which includes climate-related risks, is reviewed at each Audit and Risk Committee meeting and then at each Board meeting. Describe the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning where such information is material” including the climate- related risks and opportunities the organisation has identified over the short, medium and long term; the impact of climate-related risks and opportunities on the organisation’s business, strategy and financial planning and the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario Mountview’s strategy and business model are long-standing and stable and manifest themselves through the operational plans and procedures of the Group. Notwithstanding this stability the CWG has identified possible climate scenarios around increasing regulation e.g. related to the EPC requirements (a medium term Transition matter) and growing incidence of extreme weather events following temperature rises under a 2°C scenario, including flooding exposure (Physical risk matters across all horizons) and using them has identified properties at risk using externally sourced profiles. Based on this data, the CWG has identified the work programme noted above and has qualitatively assessed the exposure of the Group, where possible, should such events occur. In terms of the impact of these risks on the Group’s strategy and financial planning, the results of this analysis indicate that at present the Group would be able to accommodate the impact of these risks through normal operating procedures and budgets. As noted in our work programme we are monitoring the development of the EPC regulations-though the operational and financial impact will only be properly quantifiable once the final regulations, requirements, improvement options and exemptions have been published. No scenario has indicated the need to revisit our strategy and business model. 31066 5 July 2022 8:09 am proof 22 17 Mountview Estates P.L.C. Annual Report and Accounts 2022STRATEGIC REPORT Review of Operations (Continued) Risk Management Metrics and targets Describe how the organisation identifies, assesses and manages climate-related risk, including the organisation’s processes for identifying and assessing climate-related risks; the organisation’s processes for managing climate-related risks and how processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s overall risk management Identified climate risks are tracked regularly as described above. Other climate-related risks are identified as a part of our monitoring approach to emergent risks (see Page 12) which considers both a ‘bottom up’, property level incidents, and ‘top down’ horizon scanning, for new risks. In this we get input from our external consultants. Our overall approach to risk management, including management of climate change risk, is described on pages 10 to 13. Where emergent risks arise and are concluded to be relevant to Mountview’s business then when considering which risks, not just climate risks, to include in our framework we use the TRAP (Terminate: Reduce; Accept; Pass on) model to guide our approach. Describe the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material including the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process; the organisations Scope 1, Scope 2, and if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks and the targets used by the organisation to manage climate-related risks and opportunities and performance against targets The metrics we use to assess climate-related risks include: • Our SECR carbon reporting, including looking at trends in the results provided by EcoAct – see page 23 • Our EPC ratings 91.4% passed or with valid exemptions; 6.6% currently having remedial works carried out and 2% not yet assessed due to access issues (including Covid-19 related matters) • The number of properties flagged as ‘at risk’ based on Environment Agency data covering post codes at risk 42 in 2022 (2021: 42) • The incidence of maintenance triggered by extreme weather conditions. (An insignificant proportion of the overall maintenance expenditure in both 2021 and 2022) As described above, while climate-related matters are clearly a factor in our business, given the currently low significance of the potential impact under current regulations and the uncertainty around future EPC requirements, formal targets have not currently been set. This matter will be kept under review as the CWG’s work progresses. As noted on page 16 the Board have formally committed to meeting net zero before 2050 to align with the Paris agreement objective of 1.5 degrees and, in relation to our carbon emissions, are following best practice by reducing our emissions through positive action as far as possible. Once we have reached a level that, in conjunction with our advisers EcoAct is determined to be residual, at that point we will seek carbon offsetting to cover the last step in meeting the net zero target. OPERATIONAL RESPONSE TO COVID-19 The restrictions related to the Covid-19 pandemic were declared shortly before the Company’s 2019/2020 financial year-end and continued into the 2021/2022 financial year until the vaccination programme permitted a relaxation. Throughout the pandemic, serving and assisting our tenants, while also respecting the safety measures recommended by the Government, became our priority and led to the steps outlined below to minimise disruption as far as was possible. With the lifting of restrictions many of the modified working practices that were needed and embedded to establish effective working practices during the pandemic are being embraced as a part of our ‘new normal’. In addition, following the roll-out of the vaccination programme, many of our tenants, who were concerned about house visits in the early stages of the pandemic, have felt ready to welcome our staff and contractors and, as a result, the backlog of maintenance built up during the pandemic has now been cleared. 18 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 AUDIT: The audits since 2020 have all been affected, including the need to conduct at least some of the audit work remotely. As a result of the co-operation between our finance team and our external auditors we have not needed to amend the timetable for any of our audits during the pandemic. ANNUAL GENERAL MEETING: As shareholders will know, the arrangements for the 2020 AGM were modified and the meeting was held as a closed meeting with the minimum shareholder attendance to ensure it was quorate and only to conduct the formal business of the meeting. In 2021 we were able to welcome shareholders back to an in-person meeting, and look forward to welcoming even more shareholders to our 2022 AGM. The plans for the 2022 AGM are set out in the Notice of Meeting on page 93. Approved and agreed on behalf of the Board by: D.M. Sinclair Chief Executive Officer 5 July 2022 PERSONNEL: No staff were furloughed or laid off during the pandemic, nor did we access or participate in any of the Government support schemes. Further to meet the Government guidelines we: • identified staff in the high risk groups supporting them through the initial self-isolation and then as guidelines evolved • supported our staff working from home using technology to enable this • introduced safety measures including screens, PPE supplies, anti-viral products and providing covid test kits in the office. The safety measures remain in place to help support and sustain the peace of mind and safety of our staff and other stakeholders. PROPERTY INSPECTION AND MAINTENANCE: We secured our contractors confirmation that they would adhere to Government guidelines on safe working. As a result, property inspections and maintenance continued during the pandemic, but with limited access to carry out essential urgent maintenance where tenants had Covid safety concerns. Consequently this lead to a backlog of property and related maintenance during an extended period. However, through the efforts of staff, contractors and tenants we have been able to catch up and remedy this in 2021/2022, which has resulted in an increase in property expenses in the financial year 2021/2022. RENT: We worked with tenants experiencing hardship as a result of loss of income through Covid-19 and, on a case by case basis, established the facts, advised on the help and assistance available to them and, if necessary, agreed a payment plan to safeguard their tenancy. 31066 5 July 2022 8:09 am proof 22 19 Mountview Estates P.L.C. Annual Report and Accounts 2022STRATEGIC REPORT Directors and Advisers as at the date of this Annual Report and Accounts MR D.M. SINCLAIR FCA (CEO) 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. Retained the position of Chief Executive (‘CEO’) when the roles of Chairman and CEO were split into separate roles in 2013. Fellow of the Institute of Chartered Accountants in England and Wales. MRS M.M. BRAY FCCA (CFO) 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 MR A.W. POWELL FCA FIMC* (CHAIRMAN) Joined the Company as Non-Executive Director on 1 April 2018, assumed the role of Acting Chairman on 31 March 2019, and was confirmed as Chairman on 19 November 2019. Mr Powell is a fellow of the Institute of Chartered Accountants in England and Wales and a fellow of the Institute of Management Consultants. * Mr A.W. Powell was considered at the time of his appointment in 2018, and at the time of his appointment as Chairman in 2019, to be independent for the purposes of the UK Corporate Governance Code. MS M.L. ARCHIBALD MRICS* (CHAIR OF THE REMUNERATION COMMITTEE) Joined the Company as a Non-Executive Director on 1 July 2014. Member of the Royal Institution of Chartered Surveyors. She has held various roles with property advisers, including Jones Lang Lasalle, and now acts as an adviser to clients in a range of property sectors, including residential and commercial property. * Ms M.L. Archibald is considered to be independent for the purposes of the UK Corporate Governance Code. DR A.R. WILLIAMS Joined the Company as a Non-Executive Director on 1 December 2015. Dr Williams is a qualified member of the medical profession, and a member of the Sinclair concert party. He represents the interests of the family and private shareholders generally. SECRETARY AND REGISTERED OFFICE Mrs M.M. Bray FCCA Mountview House, 151 High Street, Southgate, London N14 6EW BANKERS HSBC Bank Plc 1-3 Bishopsgate, London EC2N 3AQ Barclays Bank PLC One Churchill Place, London E14 5HP AUDITORS BSG Valentine (UK) LLP Lynton House, 7–12 Tavistock Square, London WC1H 9BQ SOLICITORS Norton Rose Fulbright LLP 3 More London Riverside, London SE1 2AQ REGISTRARS AND TRANSFER OFFICE Link Group 10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL BROKERS Singer Capital Markets One Bartholomew Lane, London EC2N 2AX FINANCIAL ADVISERS SPARK Advisory Partners Limited 5 St John’s Lane, London EC1M 4BH 20 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 Directors’ Report The Directors (as listed on page 20) have pleasure in presenting to the Members their 85th Annual Report together with the Financial Statements for the year ended 31 March 2022. The Corporate Governance Statement on pages 29 to 33 forms part of this Directors’ Report and is incorporated into the Directors’ Report by reference. Additional information which is incorporated by reference into this Directors’ Report, including information required in accordance with the Companies Act 2006 can be found as follows: Disclosure Location Financial risk management objectives and policies Statement of Directors’ responsibilities Directors’ interests in share capital Compensation for loss of office arrangements. Notes to the financial statements, pages 63 and 64 page 28 Remuneration Report, page 53 Remuneration Report, page 48 For the purpose of LR 9.8.4R, the only information required to be disclosed can be found in the following locations: Disclosure Location Agreements with controlling shareholder Directors’ Report, Note 19, page 27 All other sub-sections of LR 9.8.4R are not applicable. 1. RESULTS AND DIVIDENDS The results for the year are set out in the Consolidated Statement of Comprehensive Income on page 54. The Directors recommend the payment of a final dividend of 250 pence per share. The dividend will be paid on 15 August 2022, subject to approval at the Annual General Meeting (AGM) on 10 August 2022, to shareholders on the register at the close of business on 8 July 2022. Details of the AGM, including the notice of AGM, are set out on pages 93 to 97. 2. ACTIVITIES The principal activities of the Company and its subsidiary undertakings are as follows: PARENT COMPANY Mountview Estates P.L.C. Property Trading Registered Office: Mountview House, 151 High Street, Southgate, London, N14 6EW Registered in England 328020 SUBSIDIARY UNDERTAKINGS (WHOLLY OWNED) Hurstway Investment Company Limited Property Trading Registered Office: Mountview House, 151 High Street, Southgate, London, N14 6EW Registered in England 344034 Louise Goodwin Limited Property Investment Registered Office: Mountview House, 151 High Street, Southgate, London, N14 6EW Registered in England 691455 A.L.G. Properties Limited Property Investment Registered Office: Mountview House, 151 High Street, Southgate, London, N14 6EW Registered in England 508842 3. BOARD OF DIRECTORS The names of the current Directors, along with their details, are set out on page 20 and are incorporated into this report by reference. 31066 5 July 2022 8:09 am proof 22 21 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Directors’ Report (Continued) 4. APPOINTMENT AND RETIREMENT OF DIRECTORS The appointment and retirement of Directors is governed by the Company’s Articles of Association, the Code, the Companies Act 2006 and related legislation. The Articles of Association 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 as 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 such Director holds office until the next AGM and may offer himself/herself for election • 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, as a Director in his or her place in accordance with the Articles of Association. In accordance with the Code all Directors will seek re-election at the 2022 AGM. The Nomination Committee report on pages 34 and 35 describes the process currently used for identifying and appointing new Directors to the Board. 5. SHARE CAPITAL The authorised share capital of the Company as at 31 March 2022 was £250,000 divided into 5,000,000 Ordinary Shares of 5p, of which 3,899,014 were in issue (2021: 3,899,014). As at 5 July 2022, there has been no change in the issued share capital. 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. There are no restrictions concerning the transfer of shares in the Company, no special rights with regard to control attached to the shares, no agreements between holders of shares regarding transfer known to the Company and no agreement which the Company is party to that affects its control following a takeover bid. Changes to the Company’s Articles of Association must be approved by shareholders in accordance with the Articles of Association and legislation in force from time to time. 6. NOTIFIABLE INTERESTS IN SHARE CAPITAL As at 5 July 2022, 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 Chapter 5 of Disclosure Guidance and Transparency Rules: Mr Phillip Wheater, Mr David Wright and Mr Alistair Sinclair, Trustees of the Frank and Daphne Sinclair Grandchildren Settlement* Mrs M.A. Murphy** including: • BBTJ 402,000 • ALFL Ltd 79,350 Mrs E. Langrish-Smith** Mrs A. Williams** Mrs S. Simkins** Talisman Dynamic Master Fund Ltd* * Denotes indirect holding. ** Denotes combined direct and indirect holding. 22 31066 5 July 2022 8:09 am proof 22 Ordinary Shares of 5p each % of Issued Share Capital 393,193 10.08 598,545 307,000 130,250 148,220 221,937 15.36 7.87 3.34 3.80 5.69 Mountview Estates P.L.C. Annual Report and Accounts 2022 7. STREAMLINED ENERGY AND CARBON REPORTING DISCLOSURES INTRODUCTION The directors of Mountview Estates P.L.C are required to report its energy consumption and greenhouse gas (GHG) emissions as part of its Annual Report and Accounts, in accordance with the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, also known as Streamlined Energy and Carbon Reporting (SECR). Mountview engaged EcoAct Ltd (EcoAct), formerly Carbon Clear Ltd, to calculate its energy consumption and carbon footprint for the reporting period of 1 April 2021 to 31 March 2022. EcoAct’s scope of work was to: • Define the reporting boundary and collect the required data; • Calculate Mountview’s energy consumption and carbon footprint; • Report the results. EcoAct is a world-leading carbon management consultancy with a proven track record of helping organisations to measure, reduce and offset their carbon emissions. EXECUTIVE SUMMARY Total gross GHG emissions in the reporting period were 67.5 tCO2e, which can be attributed as follows: • Direct Emissions (Scope 1) 32.4 tCO2e or 48% of the total • Indirect Emissions (Scope 2) 20.0 tCO2e or 30% of the total Indirect Other Emissions (Scope 3) 15.1 tCO2e or 22% of the total. • The results are presented below: Figure 1: Total Emissions Broken Down by Activity and Scope Type of Emissions Direct (Scope 1) Activity Natural Gas Company Vehicles Subtotal Indirect (Scope 2) Indirect (Scope 3) Electricity used in company hybrid vehicles Electricity Subtotal WTT and T&D (All Scopes) Subtotal TOTAL (tCO2e) tCO2e 12.9 19.5 32.4 0.8 19.2 20.0 15.1 15.1 67.5 % of Total 19% 29% 48% 1% 29% 30% 22% 22% 100% 1. 2. Under the Mandatory Greenhouse Gas Regulation, a company is required to report its scope 1 and 2 emissions. It is not mandatory to report scope 3 emissions. An operational control boundary was used to calculate Mountview’s carbon footprint. Figure 2: GHG Emissions (tCO2e) by Activity (2021-22) 19.2 20.3 15.1 12.9 Purchased Electricity Company Owned Vehicles WTT and T&D Natural Gas 31066 5 July 2022 8:09 am proof 22 23 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Directors’ Report (Continued) Figure 3: Emissions Intensity Metrics Figure 3 shows a year-on year comparison of emissions intensities using revenue and number of FTEs as normalisation factors: Intensity Metric Total Emissions (tCO2e) Revenue (£’mil) Number of employees (staff and directors) tCO2e per employee tCO2e per £’mil turnover 2021/22 67.5 66.0 29 2.3 1.02 2020/21 % Change 67.2 65.7 29 2.3 1.02 0.5% 0.5% 0.0% 0.0% 0.0% Total emissions normalised by the number of employees increased by 0.5%, whereas total emissions per million £ of turnover remained the same as last year. YEAR-ON-YEAR ANALYSIS Emissions produced by Mountview have increased by 0.5% compared to last year from, 67.2 tCO2e to 67.5 tCO2e. This can be attributed to a 32.9% increase in emissions from company owned vehicles due to increased mileage as we emerge from the Covid-19 pandemic. Scope 1 emissions have increased by 0.3%, from 32.3 to 32.4 tCO2e compared with the previous reporting year. This is due to: • Emissions from company vehicles have increased by 33.7%. This is due to increased mileage compared to the previous reporting period which was affected by restriction related to Covid-19 impacting business travel. Scope 2 emissions have decreased by 13.7% compared to the previous reporting year. This can be attributed to: • A 9% decrease in the emission factor for UK grid electricity. • The office electricity consumption (kWh) decreased by 6.7%; the estimated electricity consumption in managed communal areas increased by 5%. Since the numbers of managed communal areas increased from 24 to 27. It should be noted that the electricity consumption of the second floor decreased by 81% compared to the previous year due to accurate meter readings as opposed to estimated meter readings in the previous year. • A small percentage (4.1%) of Scope 2 emissions is attributed to the shift of company vehicles to plug-in hybrid vehicles that consume additional electricity. Emissions from electricity accounts for 29.6% of Mountview’s overall carbon footprint. In addition to its head office, Mountview are also responsible for electricity use in the communal areas of 27 managed blocks of flats. Emissions have been estimated for these flats using the following assumptions: • The Company pays an average £37 electricity charge per managed flat towards communal areas. • The Company covers communal area charges for 27 properties. • The average electricity standard rate is 18.3p/kWh. This is based on the average price of electricity purchased by non-domestic consumers in the UK with “very small” properties, for the last 3 quarters of 2021. REFERENCES The following sources have been used for the completion of this document: • • ‘UK Government GHG Conversion Factors for Company Reporting’ for 2021, released by Department for Business, Energy and Industrial Strategy and Department for Environmental Food and Rural Affairs, as found in https://www.gov.uk/government/publications/greenhouse-gas-reporting-conversion-factors-2021. ‘Prices of fuels purchased by non-domestic consumers in the UK’, Table 3.4.2, March 2022, Department for Business, Energy & Industrial Strategy, as found in https://www.gov.uk/government/statistical-data-sets/gas-and-electricity- prices-in-the-non-domestic-sector. 24 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 8. SUSTAINABILITY AND CLIMATE CHANGE As an asset owner and manager Mountview sits at the top of the investment chain and uses this position to influence those that we work with in relation to factors such as air pollution and energy uses. We do this in a number of ways including: • Using local contractors wherever possible to reduce travel needed and also retain the economic and social benefits of work done within local communities • Using sustainable source electricity suppliers • On expiry of leases, replacing cars leased by the Group with hybrid models • Converting lighting to ‘eco-lamps’ where possible • We have obtained an Energy Performance Certificate In addition, the executives have one on one meetings with staff annually to discuss performance, bonus and salary levels individually and in general. Matters raised during these discussions are reported to the Board and Remuneration Committee. In view of the size of the Group and the regular contact with all staff, more formal means of employee engagement are not considered appropriate at this time. This matter will be kept under regular review. This regular contact fosters an environment in which staff can air and discuss concerns. It is also the case that staff know that if there was any matter that they felt might be sensitive to raise within the operational side of the business that they can approach any of the Non-Executive Directors (NEDs) to discuss the matter. (E.P.C.), or have valid exemptions for 91.4% of properties in our portfolio with 6.6% awaiting re-test and 2.0% yet to review due to access issues. Following these reviews, we have undertaken, where necessary, loft insulation, cavity wall insulation, provision for storage heaters and dual plate power meters In this regard the Group has policies on whistleblowing and related policies on bribery, gifts, conflicts of interest and related matters that are included in the staff manual, explained to new staff on joining and are reviewed annually for continued suitability by the Audit and Risk Committee who report to the Board on this matter. In conjunction with our external advisers, we continue to monitor developments in relation to climate change. As noted in the Strategic Report, given the size of the Company and the current low impact on the environment as outlined above, the Company has informal rather than formal environmental policies. However this matter is kept under regular review including during consideration of risks as an agenda item at Board meetings and should the Board consider that due to external or internal developments that formulating formal policies would be beneficial then we would draft and adopt the relevant policies. 9. EMPLOYEES Notwithstanding that the Group’s strategy, business model and operations are long established with well developed underlying processes that reflect our business drivers, the performance of the business could not be sustained without a strong, skilled and knowledgeable workforce who enjoy their work at Mountview. This is manifested in one statistic in particular which is the average time in role of our staff – which currently stands at over 12 years. The Group has family roots and it is our belief that a similar feel remains today within what is a small and highly skilled workforce of 24 staff plus the Directors. This is an environment in which every member of staff meets and talks with one or both of the Executive Directors, if not on a daily basis then on a weekly basis – something that is continuing under the hybrid working practices that were developed during the pandemic, and these practices are set to continue. It is a standing item on the Board agenda to receive a report on and consider any reporting made under these provisions; during 2021-22 no incidents were reported. TRAINING: The Group provides regular training related to the use of computer software and for the general professional development of the staff concerned. For example we provide appropriate training when there are developments in relevant legislation, regulation or practice. We encourage all of our staff to continue their education and support staff following courses aimed at gaining professional qualifications. 10. DIVERSITY Mountview is committed to employing and retaining a skilled workforce with a diversity of qualifications and talents from a variety of backgrounds. Given the infrequency of recruitment Mountview does not have a formal diversity policy, instead having regard to evolving best practice at the time of an appointment. The Company is committed to equal opportunities for all and that recruitment and selection be strictly on the basis of merit and ability. As at 31 March 2022, the Group had one female Executive Director, Mrs Marie Bray, who has been on the Board since 2004, and one female Non-Executive Director, Ms Mhairi Archibald, who has been on the Board since July 2014. Female Board membership represented 40% of the Board. 31066 5 July 2022 8:09 am proof 22 25 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Directors’ Report (Continued) The Group has seven Senior Managers (who are not Directors), three of whom are female. Of the 24 employees and 5 directors in the Group, 11 are male and 18 are female. 11. SIGNIFICANT AGREEMENTS Certain banking agreements to which the Group is a party (described in Note 18 to the Consolidated Financial Statements) alter or terminate upon a change of control of the Group following a takeover bid. There are no other significant agreements to which the Group is a party that take effect, alter or terminate upon a change of control of the Group following a takeover bid. There are no contractual or other agreements or arrangements in place between the Group and third parties which, in the opinion of the Directors, are essential to the business of the Group. 12 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 Group’s business. 13. DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE The Company purchases liability insurance covering the Directors and Officers of the Company and its Subsidiary undertakings and this has been in place throughout the financial year under review. 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. 14. 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 obtained. Similarly there is a regular programme of electrical inspections. We are complying with fire and health and safety legislation. The Group satisfies its commitments in respect of any remedial work identified by these inspections. 15. GOING CONCERN BASIS The Directors continue to adopt the going concern basis in preparing the accounts. The financial position of the Group including key financial ratios is set out in the Review of Operations on page 10. The Group is historically profitable, has considerable liquidity and regularly reviews its long-term borrowing facilities with its lenders. 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 for the foreseeable future. The Group’s longer term Viability Statement is presented on page 13. 16. AUDITORS Messrs BSG Valentine (UK) LLP have indicated their willingness to continue in office and a resolution for the reappointment of BSG Valentine (UK) LLP as auditors for the ensuing year will be proposed at the AGM. 17. AUDITORS AND DISCLOSURE OF INFORMATION TO THE AUDITORS So far as each Director is aware, there is no relevant audit information of which the Company’s auditors are unaware. Each Director has taken the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company’s auditors are aware of that information. 26 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 18. CONCERT PARTY Mountview Estates PLC is a family controlled company. There is a concert party in existence whose net aggregate shareholdings amount to over 50% of the issued share capital of the Company. 19. RELATIONSHIP AGREEMENT In accordance with the FCA’s Listing Rules (the Listing Rules), the Company has entered into an agreement with the Sinclair family concert party, which, as it controls more than 30% of the Group’s total issued share capital, is deemed a controlling shareholder. The relationship agreement is intended to ensure the controlling shareholder complies with the independence provisions in Listing Rule 9.2.2AR. Under the terms of the relationship agreement, the Principal Concert Party Shareholder, Mr D.M. Sinclair (a member of the Sinclair family concert party), has agreed to procure the compliance of other individual members of the Sinclair family concert party who are treated as controlling shareholders with independence obligations contained in the relationship agreement. The Sinclair family concert party, as controlling shareholders of the Company have a combined aggregate holding of over 50% of the Company’s voting rights. The Board confirms that, since the entry into the relationship agreement as at 5 July 2022, being the latest practicable date prior to the publication of this annual report and accounts: • the Company has complied with the independence provisions included in the relationship agreement; • so far as the Company is aware, the independence provisions included in the relationship agreement have been complied with by the Sinclair family concert party and their associates; and • so far as the Company is aware, the procurement obligation included in the relationship agreement has been complied with by the Principal Concert Party Shareholder. 20. GENERAL MEETING At the AGM held on 11 August 2021, the resolutions concerning the re-election of both Mr A.W. Powell and Ms M. L. Archibald as Directors of the Company did not receive support of a majority of the independent shareholders who voted, which is a requirement of the Listing Rules where the Company has a controlling shareholder, and therefore Mr Powell and Ms Archibald stood for re-election at a general meeting held on 22 November 2021 (General Meeting). Both Mr Powell and Ms Archibald were re-elected at the General Meeting. Between the 2021 AGM and the General Meeting certain Board members contacted a number of major shareholders. All shareholders (including the Sinclair family concert party members) were entitled to vote on the resolutions to re-elect Mr Powell and Ms Archibald at the General Meeting. As reported through the regulatory announcement to the market, following the 2021 AGM the Company identified as far as possible those shareholders who did not support the various resolutions and attempted to engage with them to seek their views. Some shareholders did not wish to engage. The Company remains committed to shareholder engagement and we will continue to offer to meet with shareholders to take into account their concerns and considerations in the future. The Directors’ report was approved by the Board on 5 July 2022 and is signed on its behalf by: M.M. Bray Company Secretary 5 July 2022 31066 5 July 2022 8:09 am proof 22 27 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Statement of Directors’ Responsibilities The Directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the Group and Company 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 are required to prepare the Group financial statements in accordance with UK adopted international accounting standards and applicable UK law. The Directors have elected to prepare the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP) including FRS 102 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 Company and of their profit or loss for that period. In preparing these financial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; • • in respect of Group financial statements, state whether UK adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the Financial Statements; in respect of the Company financial statements state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in those statements; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and 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 enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Each of the Directors, (as set out on page 20) as at the date of this Report, confirms to the best of their knowledge that: • The Financial Statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Group and the Company. • The strategic report includes a fair review of the development and performance of the business and the position of the Group and the Company, together with a description of the principal risks and uncertainties that they face. • The annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group’s performance, business model and strategy. By Order of the Board M.M. Bray Company Secretary 5 July 2022 28 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 Corporate Governance Last year we described the steps we had taken for establishing and sustaining governance processes that reflected all of the prevailing UK Corporate Governance Code (the Code), the Group’s circumstances and structure and the constraints placed by Covid-19. We believe that the overlay of Covid-19 has strengthened our processes by testing them under ‘stress’ and also by opening up new ways of working that might otherwise not have been considered. Now that the vaccination programme is permitting a return to ‘normal’ we are seeking to adopt many of the modified processes whilst ensuring that they remain consistent with the Code. Nevertheless during the year, as explained in Our operational response to Covid-19 on page 18 Covid-19 has played a part in affecting how we have worked meaning that throughout this period the Board has: • operated as normal meeting both remotely and in person for Board and Committee meetings as well as having informal discussions between meetings retained close oversight of our operations and the continuing suitability of our strategy • • monitored our existing and emerging risks updating our risk matrix as needed to ensure we have good risk management and controls in place Throughout we believe that our purpose, culture and values have informed and supported the decisions that we have taken, supported by the commitment, experience and creativity of all at Mountview. In addition, effective engagement with our stakeholders, as described in our Section 172 statement on page 14 has underpinned our work during the year. Following Covid-19 our engagement with stakeholders now includes both traditional and recently developed electronic means. Contact with them, and other stakeholders, is key to understanding their views and receiving their feedback. As a result a considerable amount of Board time has been taken up with reporting back on contact with shareholders and other stakeholders and discussing and responding to points that they have raised. CORPORATE GOVERNANCE CODE COMPLIANCE STATEMENT In respect of the year ended 31 March 2022, the Company was subject to the Code, a copy of which can be found at www.frc.org.uk/corporate/ukcgcode.cfm. The Board confirms that the Company applied the principles and complied with the provisions of the Code, except as disclosed in this section. We remain committed to the benefits of a robust governance framework and believe that through our approach we are able to best safeguard the interests of, and deliver long term value to, our shareholders and other stakeholders. A key component of this approach is a strong focus on remaining up to date on current and emerging developments in our markets, legislation and regulation and the governance environment. This we achieve through a combination of reading, contact with our advisers and directors attending updates, including via webinars, and then sharing salient points raised with the rest of the Board for discussion during Board meetings. In addition, we have again worked closely with Prism Cosec our corporate governance consultants, and our other advisers to identify the best ways to build evolving practice into our approach. We are mindful that our structure, which has evolved through our history and is aligned with our culture and values, is not fully compliant with some of the provisions in the Code. Equally, we recognise the value of bringing different perspectives to bear on issues arising within the business in terms of both contribution to debate and risk management and mitigation. We manage this by involving our various advisers when matters relevant to their areas of expertise arise. In this way we are able to ensure that we get the necessary expert input when it is needed. Taking account of the Code in the context of our size, with 24 employees plus Directors, our shareholdings and the nature of our operations where we have a focused, stable and enduring strategy, and stable workforce and suppliers, we have looked at each of the principles and provisions of the Code to consider the spirit behind them as well as the actual wording used. Given this context where the Board and the Executives in particular are much closer to the employees and operations than is likely to be the case for many quoted companies, we have, as envisaged by the Code, adopted alternative solutions to provisions where we believe this to be appropriate. We are of the view that throughout we are operating within the spirit behind the principles of good corporate governance – in a manner that is appropriate to our business, our size and our economic footprint. In particular, as a small Board, we recognise that there are matters concerning the size and composition of the Board that fall into this category. The Board and also shareholders, when consulted, are at one with their view that new Board positions should be created only when there is a clear need and when the appointee will add capacity or skills that are needed by the business in order for it to continue to pursue its strategy. Below we note the areas where we believe we comply with the spirit of the Code but do not currently adhere completely to the detailed requirements. These matters are kept under constant review as a whole by the Board. Should there be a material change in the Company’s strategy, business model, structure or risk environment then these points would be re-visited and, after consulting with shareholders on proposals, we would make such changes as are appropriate given the changed circumstances. 31066 5 July 2022 8:09 am proof 22 29 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Corporate Governance (Continued) INDEPENDENT NON-EXECUTIVE DIRECTORS (NEDS): (SECTION 2 PROVISION 11) The number of independent NEDs (excluding the Chairman) is currently less than at least half the Board as required by the Code. This is a matter which the Board and the NEDs have reviewed in the context of the skills and experience needed either directly on the Board or indirectly through advisers and concluded that given the size of the Company and the stable nature of its strategy, business model and operations, the current composition, with one independent NED and three NEDs (including the Chairman) in total supported by external advisers, remains appropriate. APPOINTMENT OF A SENIOR INDEPENDENT DIRECTOR (SID): (SECTION 2 PROVISION 12) Excluding the Chairman, the Company has one independent NED and the Board has concluded that it is too small to merit the appointment of a SID. Should this change and the Board and shareholders consider that the needs of the business warrant widening the NED pool to a level that creates a clear SID role then we would appoint one. COMPOSITION OF COMMITTEES IN GENERAL: (SECTION 3 PROVISION 17; SECTION 4 PROVISION 24; AND SECTION 5 PROVISION 32) The Board is small and therefore the composition of each of the Committees is limited by the available pool of Directors. As noted above, should it be concluded that appointing further independent NEDs was appropriate and would bring value, then composition of the Committees would be reviewed. BOARD EVALUATION AND DIVERSITY: (SECTION 3 PROVISIONS 21 AND 23) The Directors consider that the small size of the Group and the Board does not warrant a formal performance evaluation process. However, performance of the Directors is evaluated on an ongoing basis by the Board. In addition, there is no formal policy on diversity and inclusion, again because of the size of the Company, although the Company is committed to equal opportunities for all and that recruitment and selection be strictly on the basis of merit and ability. Both these matters are continually kept under review. ROLE CONCURRENCE – AUDIT COMMITTEE: (SECTION 4 PROVISION 24) The Chairman of the Board is also the Chairman of the Audit and Risk Committee. The Board consists of 60% accountants and the Board has determined that there is no need to appoint a further NED with financial experience. The Board, and separately the NEDs, have considered the Chairman’s role on the Audit and Risk Committee and are firmly of the view that this combined role continues to be in the best interests of the Company for the time being. This situation continues to be reviewed on a regular basis. INTERNAL AUDIT FUNCTION (SECTION 4 PRINCIPLE M AND PROVISIONS 25 AND 26) At present the size of the business does not warrant a full time internal audit function. As discussed in the Report of the Audit and Risk Committee this is kept under constant review and options for cover are reviewed annually in light of the size and complexity of the business. REMUNERATION OF THE CHAIRMAN: (SECTION 5 PROVISION 33) The remuneration of the Chairman is not set by the Remuneration Committee. Instead, in line with the principle of no one being involved in setting their own remuneration, the Chairman’s remuneration, and that of the other NEDs is reviewed by the Executive Directors who make a recommendation to the Board as a whole for final approval, within the limits set by the Company’s Articles. IN THIS REPORT In the following pages we describe our governance approach under the headings: • Board leadership and Group Purpose (page 31) • Division of Responsibilities (page 32) • Composition, Succession and Evaluation – the report of the Nomination Committee (pages 34 and 35) • Audit, Risk and Internal Control – the report of the Audit and Risk Committee (pages 36 to 39) • Remuneration – the report of the Remuneration Committee (pages 40 to 53) By Order of the Board 30 M.M. Bray Company Secretary 5 July 2022 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 BOARD LEADERSHIP AND GROUP PURPOSE The role of the Board is to provide leadership to the Group, ensuring that the necessary financial and human resources are in place to enable the Group to meet its strategy and objectives. In addition, the Board ensures that there are appropriate financial and business systems and controls in place to safeguard shareholders’ interests and maintain an appropriate and effective governance framework. In making decisions throughout the year, the Board is strongly aware of its responsibilities to the Company’s shareholders as well as other stakeholders including managing possible conflicts of interest between different stakeholder groups. SETTING OUR STRATEGY Group strategy is proposed by the Executive Directors and that strategy is rigorously discussed, debated and agreed by the Board. The NEDs work with the Executive Directors to deliver on the agreed strategy. The Directors constantly seek feedback from any source or stakeholder on how well the current operations are working to meet the strategy as the working environment evolves. Information received is analysed for new and emerging risks and opportunities that may have implications for the strategy and operations, and the risks monitored. UNDERSTANDING STAKEHOLDER NEEDS The Board is mindful of its responsibilities towards all stakeholders and engagement with them as described elsewhere in this Annual Report, including: • our purpose and wider responsibilities (page 5) • engagement with our employees (page 14) • engagement with stakeholder groups (pages 14 to 16) Understanding and taking into account the short and long term interests of stakeholders when making decisions is central to how the Company operates, recognising that these interests will vary by issue and that trade-offs will often be needed as noted in our Section 172 statement (page 14) and our operational response to Covid-19 (page 18). THE WORK OF THE BOARD The Board meets formally at least four times a year, with ad hoc meetings to discuss particular transactions and events called as and when required. All Directors are expected to attend all meetings of the Board, and any committees they are members of, and devote sufficient time to the Company’s affairs to fulfil their duties as Directors. During the year most Board and committee meetings were held by conference call due to the Covid-19 pandemic. The Board operates in accordance with the Company’s Articles of Association and there is a Schedule of Matters Reserved for Board Decision which includes approval of strategy, budgets, financial reports, public announcements, significant acquisitions of property, major capital expenditure, funding and dividend policy. In addition the Board reviews and approves matters related to the operation of the Board and its committees, and, where material, any new or significantly amended operational or staff policies. Routine operational questions are delegated to the relevant team. However, when needed, there is an escalation process to have a proposed course of action considered by the Executive Directors or the Board. The Company Secretary sends out the agenda and supporting information to all members of the Board in advance of Board meetings. At each meeting the Executive Directors provide an operational update, noting any issues arising and upcoming sales or purchases in the pipeline. The Board receives, by rotation or exception, reports from the heads of department again noting any issues arising. The risk matrix, updated for any new information or emerging risks, is reviewed as are any potential conflicts of interest. Any meetings or other contact with shareholders or other key stakeholders are reported back and, where necessary, responses discussed and agreed. The information supplied to the Board and its committees is kept under review to ensure it is fit for purpose, and that it enables sound decision-making. All Directors have access to independent professional advice at the expense of the Group and to the services of the Company Secretary who is responsible to the Board for ensuring the correct procedures are followed, as well as providing corporate governance updates and guidance. The Directors consider that the small size of the Board does not warrant a formal performance evaluation process. However, performance of the Directors is evaluated on an ongoing basis by the Board. This is a matter continually under review. 31066 5 July 2022 8:09 am proof 22 31 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Corporate Governance (Continued) Attendance at and number of Board and committee meetings is set out below: Meetings Full Board Audit and Risk Committee Remuneration Committee Nomination Committee Mr A.W. Powell Mr D.M. Sinclair1 Mrs M.M. Bray1 Ms M.L. Archibald Dr A.R. Williams 6 5 6 2 6 4 2 2 6 4 2 2 6 5 6 2 6 5 6 2 1. Mr D.M. Sinclair and Mrs M.M. Bray were invited to attend 4 Audit and Risk Committee Meetings and 2 Remuneration Committee Meetings In accordance with the Code, all members of the Board offer themselves for re-election each year as described in the notice for the upcoming 2022 AGM and as set out in the Directors’ Report on page 22 and in the Notice of Meeting on page 94. DIVISION OF RESPONSIBILITIES The Code requires that there should be a clear division of responsibilities between the roles of CEO and Chairman, both roles being separate and distinct. The Chairman is responsible for leading the Board and ensuring its effectiveness, including the Board’s decision making process, building a constructive relationship between Executive and Non-Executive Directors, and, for fostering open debate with an appropriate balance of challenge and support. The CEO is responsible for leading the development and execution of long term strategies of the business and has specific responsibilities in relation to all matters to do with property purchase and sale. THE EXECUTIVE DIRECTORS Day-to-day management is delegated to the Executive Directors with focus on major transactions, business growth, strategy, cash management and control. There is regular communication with the NEDs in order to keep them informed about the Group’s operations. This is done via a schedule of regular Board meetings throughout the year supplemented by ad hoc meetings as needed to address specific matters arising. The Group has seven Senior Managers reporting to the Executive Directors. There are six core departments – Accounts, Property Management, Property Trading, Rent, IT and Administration – with staff reporting either to the Property Managers and/or directly to the Executive Directors. THE NON-EXECUTIVE DIRECTORS The role of the NEDs, as described in their letters of appointment, is to bring independent and objective judgement and scrutiny to all matters before the Board and its committees. During the appointment process steps are taken to confirm that they will have the time needed to meet their responsibilities to the Group. Throughout the year the NEDs hold meetings periodically without the Executive Directors including meetings to discuss remuneration of the Executive Directors and to meet with the external auditor to discuss the audit of the Annual Report and Accounts. The Code requires at least half the Board, excluding the Chairman, should be independent NEDs. For the purpose of the code, on appointment as a NED and on appointment as Chairman, Mr A.W. Powell was considered to be independent and Ms M.L. Archibald is deemed to be an independent NED. Dr A.R. Williams is a NED but he is not considered to be independent for the purposes of the Code. At present the Board does not intend to appoint any Director to fulfil the role of SID, given the limited size of the Board, but may decide to do so in the future. OUR GOVERNANCE FRAMEWORK The Directors recognise their accountability as a Board to the shareholders for the effective stewardship of the Group and its strategy, operations, governance and control. In this the Board are supported by three committees whose roles and current composition are: 32 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 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 identify, evaluate and manage risks faced by the Group and meet the particular needs of the Group and the risks to which it is exposed. By their nature such systems can provide reasonable but not absolute protection against material misstatement or loss. As noted on page 38, the Group does not have a dedicated 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, as well as emerging risks, faced by the Group. The principal risks and uncertainties faced by the Group are set out in the Review of Operations on pages 11 to 13 together with mitigating factors for each risk. Management structure – The Board has overall responsibility for the Group and, as described on page 31, there is a formal schedule of matters specifically reserved for decision by the Board. Corporate accounting – Responsibility levels are communicated throughout the Group as part of the corporate accounting procedures. These procedures set out authorisation levels, segregation of duties and other control procedures. Quality and integrity of personnel – The integrity and competence of personnel is ensured through high recruitment standards, the regular day to day contact between the Executive Directors and staff, and close Board supervision. Monitoring – Internal financial control procedures are monitored and 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. The Board is satisfied that the control procedures are adequate to provide accurate information and safeguard the assets of the Group. THE NOMINATION COMMITTEE This Committee is responsible for reviewing the balance of experience, skills and knowledge on the Board, for succession planning and recommending any appointments to strengthen the Board’s expertise and for managing any re-appointments as needed. Due to the small size of the Board all members of the Board are members of the Nomination Committee. THE AUDIT AND RISK COMMITTEE This Committee is responsible for monitoring Mountview’s accounting policies and processes, audit arrangements and for reviewing the risk management framework. It is also responsible for the clarity and completeness of the Company’s disclosure to shareholders. The Committee is comprised of all the NEDs, including the Chairman. THE REMUNERATION COMMITTEE The Committee is comprised of all the NEDs, including the Chairman, and is responsible for both setting remuneration policy and for the implementation of that policy as regards the Executive Directors. NED remuneration is proposed by the Executive Directors and determined by the Board. Further detail on the Terms of Reference of these Committees can be found on the Company’s website (www.mountviewplc.co.uk). Reports of their activities follow later in this Annual Report and Accounts on pages 34 to 53. RISK MANAGEMENT AND INTERNAL FINANCIAL CONTROL The Board has overall responsibility for risk management and the Audit and Risk Committee is specifically charged with the governance of the risk management, internal control and audit processes. The Board has carried out a robust assessment of the principal risks, as well as considering emerging risks faced by the Group which are set out on pages 11 and 12 and more detail on the function of the Audit and Risk Committee is set out on pages 36 to 39. Details of the Company’s financial risk management objectives and policies are included in Note 3 to the Consolidated Financial Statements on pages 63 and 64. An ongoing process for identifying, evaluating and managing the significant operational risks faced by the Group was in place throughout the period from 1 April 2021 to the date of approval of the Annual Report and Accounts. The effectiveness of this process is reviewed annually by the Board. 31066 5 July 2022 8:09 am proof 22 33 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Report of the Nomination Committee MEETINGS Committee Member Mr D.M. Sinclair – Chair Mrs M.M. Bray Ms M.L. Archibald Mr A.W. Powell Dr A.R. Williams Meetings Attended Meetings eligible to Attend 2 2 2 2 2 2 2 2 2 2 All the Directors of the Company are members of the Nomination Committee. Dear Shareholder, I am pleased to present the Nomination Committee report which sets out its role and activities during the year. HOW THE NOMINATION COMMITTEE OPERATES The Board considers that given its size, it would be unnecessarily burdensome to establish a separate Nomination Committee that did not include the entire Board and believes that this enables all Directors to be kept fully informed of any issues that arise. The committee and the Board recognise that this means that of the five members only one is an independent NED which is not in accordance with Provision 17 of the Code (see Corporate Governance Report page 30) but consider, that this is an appropriate and pragmatic alternative approach given the size of the Board. The Nomination Committee met twice during the year ended 31 March 2022, supplemented by informal meetings and discussions. Only the members of the Nomination Committee have the right to attend meetings, but we may invite other Executives or advisers to attend all or part of any meeting as appropriate. ROLE OF THE NOMINATION COMMITTEE The main roles and responsibilities of the Nomination Committee are set out in its terms of reference, which are reviewed annually and are available on the Group’s website. These responsibilities include assisting the Board in discharging its responsibilities relating to the composition and make-up of the Board and its committees, succession planning, the endorsement of Directors for re-election at the AGM and, when needed, the appointment of additional Directors. The Board believes in the benefit of having a broad range of skills and backgrounds and the need to have a balance of experience, independence, diversity - including gender, and knowledge of the Group and its Board of Directors. These matters are taken into account during recruitment but ultimately we look to appoint the best candidate for the role on the basis of their merit and ability taking into account the needs of the Group, including the skills needed to support delivery of the Group’s strategic objectives and to ensure the effective functioning of the Board now and in the future. 34 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 PROCESS FOR BOARD APPOINTMENTS PROCESS FOR BOARD APPOINTMENTS No new appointments to the Board were made during 2021/22. The Nomination Committee has a formal appointment process in place that embraces the principles described above and would be used should the need for a new appointment be identified. The key steps in the process are: • The Nomination Committee considers the skills and experience that it believes are needed for the Group to function effectively, taking account of the skills of the existing Board members and those of external advisers that the Board needs to draw on from time to time. • Where a particular skill set is believed to be in continuous demand then the Nomination Committee will evaluate the balance of the skills currently on the Board in order to identify a specification of the personal attributes, skills and capabilities and experience needed, including, but not limited to, the skill set that prompted this evaluation. • Should it be appropriate to filling the vacancy to look for an external candidate, then an independent external search consultant will be appointed, the needs of the appointment and the recruitment process discussed and agreed. • The process, including interviews and evaluation will be followed in conjunction with the external consultant. • The conclusion of the process would be a recommendation to the Board. DIVERSITY As at 31 March 2022, the Group had one female Executive Director, Mrs Marie Bray, who has been on the Board since 2004, and one female Non-Executive Director, Ms Mhairi Archibald, who has been on the Board since July 2014. Female Board membership represented 40% of the Board. The Group has 7 Senior Managers (who are not Directors), 3 of whom are female. Of our 24 employees and 5 Directors, 11 are male and 18 are female. Given the size of the Company and the Board and the infrequency of appointments, the Company has no formal policy on diversity or inclusion for either the Board or other members of staff, although the Board keeps this under review. The Company is committed to equal opportunities for all and recruitment and selection of new Directors is strictly on the basis of merit and ability. ACTIVITIES OF THE COMMITTEE The Nomination Committee, and related Board discussions, covered the following matters: • • • • the composition of the Board and the Board’s committees the balance of skills, experience and knowledge required by the Board and its committees and the business as a whole the re-election of all the Directors at the AGM in 2022, taking into account their contribution and time commitments the review of the Group’s approach to and provisions for succession planning, taking account of the length of service of each director, developing staff, diversity and gender balance and Board evaluation. These matters are discussed in the Directors’ Report and the Corporate Governance Report. As a result of their work, the Nomination Committee is satisfied that the Board has the necessary experience, knowledge and skills to lead the Group and deliver on its strategy. The Group have also developed succession planning arrangements to cover for both the short term absence of a Director, or the situation where we are seeking a new Director – when the process outlined above would be followed. BOARD AND COMMITTEE EVALUATION The Directors consider that the small size of the Group and Board does not warrant a formal performance evaluation process. However, performance of the Directors is evaluated on an ongoing basis by the Board. This is a matter continually under review. D.M. Sinclair Chairman of the Nomination Committee 5 July 2022 31066 5 July 2022 8:09 am proof 22 35 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Report of the Audit and Risk Committee MEETINGS Committee Member Mr A.W. Powell - Chair Ms M.L. Archibald Dr A.R. Williams Non Member Mr D.M. Sinclair1 Mrs M.M. Bray1 Meetings Attended Meetings eligible to Attend 5 5 5 4 4 5 5 5 4 4 1. Mr D.M. Sinclair and Mrs M.M. Bray were invited to attend 4 Audit and Risk Committee meetings. Dear Shareholder, I am pleased to present the Audit and Risk Committee Report for the year ended 31 March 2022. The Board considers that I have recent and relevant financial experience as recommended under provision 24 of the Code as it applies to the Company for the financial year under review. In line with the Code, the Audit and Risk Committee (the Committee) as a whole is deemed to have competence relevant to the sector in which the Company operates. The Committee and the Board recognises that, given the size and composition of the Board, only one NED is independent. Also as Chairman of the Board I have a dual role. It has been determined that while it is not in accordance with Provision 24 of the code (see Corporate Governance Report on page 30) this is a pragmatic alternative approach given the size of the board. The Committee plays a vital role in ensuring that the interests of the shareholders are protected and in assisting the Board in discharging its responsibilities by challenging the integrity of the financial statements, in reviewing the effectiveness of the internal controls systems within the Group and in considering the scope of the annual audit and the nature and extent of any permitted non-audit work that may be undertaken by the external auditor. This report details the activities of the Committee that were undertaken during the year to 31 March 2022. ROLE OF THE AUDIT AND RISK COMMITTEE The Committee’s principal roles and responsibilities, as set out in its terms of reference (which can be found on the Group’s website at www.mountviewplc.co.uk), include: • monitoring the integrity of the Group’s financial statements; • reviewing the tone and content of the Interim Report, the Annual Report and Accounts and any associated regulatory news announcements; • reviewing the Group’s internal financial controls and risk management systems; • assessing the performance and independence of the external auditor, including the application of our policy on non- audit services; • selecting the external auditor and making appropriate recommendations through the Board to permit shareholder consideration at the Annual General Meeting; • assessing the effectiveness of the external audit process; • acting as a conduit between the Board and the external auditor; • considering the need for an internal audit function; • reviewing any incidents of whistleblowing occurring within the Group and ensuring adequate review and investigation; and • reporting to the Board on how it has discharged its responsibilities. 36 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 ACTIVITIES OF THE COMMITTEE During the year the Committee met on five occasions, including meetings prior to the issue of the preliminary and interim results to review audit planning and conduct and then audit recommendations, where appropriate, and consider any significant issues arising from the audit and review process. At a meeting in March 2022 the Committee agreed the external audit terms of engagement and the auditor’s scope, proposed approach and fees for the annual audit for the financial year 1 April 2021 to 31 March 2022. Outside of the formal meeting programme, as Committee chairman I stay in contact with key individuals involved in the Company’s governance, including the Chief Executive Officer (CEO), the Chief Financial Officer (CFO), the external audit lead partner and other external advisers. The Committee is satisfied that controls over accuracy and consistency of information presented in the Annual Report and Accounts are robust and has confirmed to the Board that it believes this Annual Report and Accounts are fair, balanced and understandable. In addition as they covered topics relevant to corporate reporting, the Committee participated in the tendering processes carried out to appoint advisers to assist in our TCFD disclosures (Achill were the successful consultancy) and our ESEF tagging and reporting (Tax Systems were the successful consultancy). KEY AREAS FORMALLY DISCUSSED AND REVIEWED Principal Responsibilities of the Committee REPORTING AND EXTERNAL AUDIT • Monitoring the integrity of the Company’s financial statements and all formal announcements relating to the Company’s financial performance, reviewing financial reporting judgements contained within them • Making recommendations to the Board regarding approval of the external auditor’s remuneration, terms of engagement, monitoring independence, objectivity and effectiveness VALUATIONS • Monitoring and reviewing the valuation process for the investment properties • Valuer competence and effectiveness RISK AND INTERNAL CONTROL • Reviewing the principal risks and uncertainties as well as emerging risks, including those that could affect solvency or liquidity, future performance and its business model • Reviewing the risk management disclosures on our approach to risk in the Annual Report and Accounts OTHER • Reviewing the committee’s Terms of Reference and monitoring its execution • Considering the impact of hybrid working on the system of internal controls Key areas formally discussed and reviewed by the Committee during the year • Results, commentary and announcements • Key accounting policy judgements, including valuations • Impact of future financial reporting standards • Going concern and long term viability • External auditor effectiveness • External auditor management letter, containing observations arising from the annual audit leading to recommendations for financial reporting improvement • External auditor’s remuneration and audit tender frequency (last tendered in 2017) • Annual report on the effectiveness of the valuer which considers the quality of the valuation process and judgement • Challenge the Executives in respect of both the independent external valuations and Directors’ valuations across the entire property portfolio • Maintenance of the Risk Register including identifying and then making a robust assessment of the principal risks facing the Group • Horizon scanning for emerging risks • Review of risk disclosures as part of review of accounts • Reviewed and confirmed the Terms of Reference; execution and effectiveness monitored through a progress table and externally sourced questionnaires. • Reviewed the impact on controls of staff working from home, including IT • Considering compliance with legal requirements, accounting standards, controls over remote access. the Listing Rules and Disclosure Guidance and Transparency Rules • Reviewed processes for monitoring new relevant regulation, notably for • Reviewing the whistle-blowing policy and operation and related policies TCFD and ESEF including discussion with external advisers including the anti-bribery and gift policy • Considering the need for an internal audit function • Reviewing the effectiveness of internal controls • Review of whistle-blowing arrangements as set out in the staff manual. Confirmation from the CFO that there have been none during the year • Reviewed the need for an internal audit function • Reviewed reports by the Executive Directors, senior managers, including IT, and the external auditors on the operation of controls 31066 5 July 2022 8:09 am proof 22 37 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Report of the Audit and Risk Committee (Continued) EXTERNAL AUDIT Audit tenure: – Following best practice and in accordance with its Terms of Reference, the Committee annually reviews the audit requirements of the Company and suitability of the auditor. BSG Valentine (UK) LLP has been the Group’s auditor since 2007 and was re-appointed following a formal tender process in 2017. Current UK regulations require rotation of the lead audit partner every five years, a formal tender of the audit every ten years and a change of auditor every twenty years. As in 2021 the 2022 Audit Report will be signed off by Gary Allen; this will be his third year as Senior Statutory Auditor. Objectivity and independence: – These aspects are critical to the integrity of the Group’s audit. Prior to the planning meeting the Committee reviewed the auditor’s own policies and procedures concerning objectivity and independence, including reviewing their Transparency Report found on their website. We also confirmed that the auditor’s evaluation and remuneration processes did not contain incentives for cross-selling. Planning and contact: – Prior to the audit the Committee, together with the Executive Directors, met with the external auditor BSG Valentine to review their proposals for the audit and agreed their terms of engagement, their proposed approach and their fees for the audit. The Committee is confident that appropriate plans were put in place to carry out an effective and high quality audit. BSG Valentine re-confirmed to the Committee during the meeting that they maintained appropriate internal safeguards to ensure their independence and objectivity. Effectiveness of the external audit process: – The Committee appraised BSG Valentine’s performance and independence by ensuring there is a comprehensive engagement letter in place, assessing their audit plan, including the quality and consistency of their team and then assessing the quality of their reports. The Chairman was in contact with the audit team, during the audit to discuss progress and any issues arising from the audit. In addition, we received feedback from Mountview’s finance team who noted that BSG Valentine were professional and constructive while maintaining their independence and robustness when carrying out their work. At the conclusion of their work the Committee met with the external auditor without the Executive Directors present to discuss their audit findings, including recommendations for financial reporting improvement and their management letter containing observations arising from the annual audit. The discussion also covered the application of materiality and adjusted and unadjusted audit differences. No such differences were identified during the current or prior year’s audit. Re-appointment: – Based on their review the Committee believes BSG Valentine remains effective in its role and, BSG Valentine having indicated their willingness to be reappointed as the Group’s external auditor, the Committee has recommended to the Board that they be appointed for another year. A resolution to this effect will be proposed at the AGM. Non-audit services: – The Group’s policy requires that all non-audit fee work that falls within the category of allowed services under the applicable Ethical Standards is reported to the Committee. The Committee can confirm that this policy was adhered to and that no such services were provided by BSG Valentine during the year. Accordingly the Committee has concluded that the auditor’s objectivity and independence were safeguarded. The fees paid to BSG Valentine are shown in Note 6 to the Accounts. INTERNAL AUDIT The need for a dedicated internal audit function was reviewed by the Committee during the year and was not felt to be necessary given the size and relatively simple structure of the Group and its operations, the close day to day involvement of the Executive Directors and the internal control procedures in place. This is kept under regular review. The Committee has the power to commission assurance work from time to time as it sees fit. 38 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 VIABILITY STATEMENT AND GOING CONCERN The Committee provides advice to the Board on the form and basis underlying both the going concern and the longer- term viability statement, including the potential impact of climate, inflation and interest rate changes. The Committee are satisfied that while these remain relevant factors that, at the date of signing this report, a reverse scenario with the potential to seriously damage the validity of either statement is unlikely. Therefore the Committee concluded that it remains appropriate for the financial statements to be prepared on a going concern basis and recommended the viability statement to the Board. The Company’s going concern statement can be found on page 26. The viability statement can be found on page 13. SIGNIFICANT ISSUES CONSIDERED IN RELATION TO THE FINANCIAL STATEMENTS Significant issues and accounting judgements are identified by the finance team and the external audit process and are considered and reviewed by the Committee. The significant issues considered by the Committee in respect of the year ended 31 March 2022 are set out in the table below: Issues Climate related risks Valuation of investment property portfolio Net realisable value of the trading property portfolio How the issues were addressed Following the implementation of the TCFD reporting requirements, the Committee in conjunction with our Climate Working Group (see TCFD disclosures page 16) explored scenarios that could lead to enhanced exposure to the Company from the impact of both transition and physical risks. This work included exploring whether the effect of the impact of such risks could lead to a material impact on the accounts that met the criteria for being considered a liability, or contingent liability. As a result of the work the Committee and the Climate Working Group considered that at this point the exposures were all at a level that could be readily met within current operating budgets and equally did not meet the recognition criteria. As a result the Committee concluded that currently no adjustment to the accounts for climate related matters was needed, though equally recognized that changes in legislation or a rapidly worsening climate – notably warming might change this picture. This matter is therefore being kept under regular review by both the Committee and the Climate Working Group. Finally, as noted above, the Committee considered the impact of climate on the going concern and viability statements. The Committee discussed the valuation with the valuers independently of management. This provided the opportunity for the valuers to explain the process they follow to value the portfolio and for the Committee to challenge the key assumptions. On the basis of this discussion the Committee concluded that the valuations were independent and an appropriate basis for the year-end financial accounts. The Committee’s consideration of this aspect focused on the more recent purchases which have the greatest risk and included reviewing the processes used by the property team to assess values and hence consider the need for a provision. On the basis of these discussions the Committee was satisfied that the valuation was in line with the accounting policy for trading properties, and there was no need for any provision. The Committee also considered a number of other judgements made by management, none of which were material in the context of the Group’s results or net assets. KEY ISSUES FOR 2022/23 The Committee is always looking at ways to strengthen its support around governance to ensure that the Company’s communications and processes are in line with good practice in this area. For 2022/23 this will continue to include monitoring evolving best practice under the Code and other regulations. In particular for 2022/23 this will include the changes in the Listing Rules to accommodate reporting on diversity and any changes to the regulatory environment following the Government’s response to the BEIS consultation on Restoring trust in audit and corporate governance – whether this be through the Code, primary or secondary legislation or through any oversight body (for example the Audit, Reporting and Governance Authority (ARGA), the new regulator to replace the FRC). A.W. Powell Chairman of the Audit and Risk Committee 5 July 2022 31066 5 July 2022 8:09 am proof 22 39 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Remuneration Report MEETINGS Committee Member Ms M.L. Archibald – Chair Mr A.W. Powell Dr A.R. Williams Non Member Mr D.M. Sinclair1 Mrs M.M. Bray1 Meetings Attended Meetings eligible to Attend 6 6 6 2 2 6 6 6 2 2 1. Mr D.M. Sinclair and Mrs M.M. Bray were invited to attend part of 2 Remuneration Committee meetings and were not present for discussion concerning the process of determining their awards or the amount of those awards. Dear Shareholder, On behalf of the Remuneration Committee and the Board, I am pleased to introduce our 2022 Remuneration Report for which we are seeking your support at our AGM on 10 August 2022. ROLE OF THE REMUNERATION COMMITTEE The goal of the Remuneration Committee is to independently formulate and apply remuneration bases that align the interests of our Executive Directors with those of our shareholders, and are fair and transparent in execution, as well as being in accordance with the approved remuneration policy. The role of the Remuneration Committee is set out in our terms of reference which can be found on the Company’s website at www.mountviewplc.co.uk. The Remuneration Committee has reviewed these terms of reference and confirmed that they remain appropriate. ACTIVITIES OF THE COMMITTEE The Remuneration Policy applying to this report was approved by a majority vote in favour of the policy at the AGM held on 12 August 2020 and effective from that date. The main work of the Remuneration Committee in the current year has been: • The application of this policy in the determination of the Executive Directors’ awards in the context of the ongoing circumstances presented by the Covid-19 pandemic but in recognition that working life is now returning to pre pandemic normal with minor modifications, and • The review of the remuneration policy – as described below and in the following report. REVIEW OF THE REMUNERATION POLICY Notwithstanding that the current remuneration policy is due to expire during 2023, following our observations during the pandemic and also in response to comments from shareholders, the Remuneration Committee concluded that it would be appropriate to re-balance the total remuneration between salary and short term incentive (STI) and also to reconsider the CFO remuneration as a percentage of the CEO’s. This is described more fully in the main body of this report. Accordingly the Remuneration Committee decided to carry out a full review of the remuneration policy, and will be asking shareholders to approve the new remuneration policy, incorporating the rebalancing, at the AGM on 10 August 2022. Our review was carried out in conjunction with FIT Remuneration Consultants LLP (FIT) and is described in more detail in the main body of the report. FIT, who were appointed by the Remuneration Committee, provide no other services to the Group and has no other connection with the Company or any of its directors. During the initial discussions prior to engaging FIT, the Remuneration Committee satisfied itself that FIT demonstrated the necessary depth of knowledge for the agreed role and objectivity in providing answers to questions posed during that discussion. FIT’s role was to help design the process to be followed and to provide expert input and comment on the areas that needed consideration in the policy and the wider Remuneration Report. They also reviewed the final draft of the Remuneration Report prior to publication. The total fees paid to FIT for the financial year for their assistance were £9,810 plus VAT. 40 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 EXECUTIVE DIRECTORS’ AWARDS The Remuneration Committee maintain the view that companies which have been regarded as within the peer group over the last few years were in real estate sub-sectors that were being severely impacted by Covid-19, reducing their comparability and usefulness. The Remuneration Committee did take note of data from this group but again we have placed less weight on it than in prior years, applying our own discretion when reaching decisions. During the financial year a supreme effort was made by Mountview’s teams in recovering day to day business to include all functions of the business, of note being the ability to revert to a normal level of inspections, repair and maintenance programmes to properties and be able to pursue rent arrears with the legislative backing that was stalled during the pandemic. The Mountview (excluding the Executive Directors) staff were awarded salary increases of approximately 10% in recognition of their further adaptation to the standing down of pandemic related limitations midway through the 2021/2022 year. Each changing phase of the pandemic, presented new sets of challenges to not just the staff, but also to the Executive Directors who led the process, including taking decisions on when to relax and when to tighten processes for the protection of staff and other stakeholders. Their diligence and decision taking and the skills and dedication of our staff has ensured that despite the challenges faced Mountview was able to continue to operate smoothly throughout the year. In reviewing the bonus figures for the year, the Remuneration Committee has adopted the approach used in prior years of taking into account the financial metrics of the Group (primarily profit before tax), non-financial factors and, where relevant, peer group and market benchmarks and trends. Specifically when looking at the performance of the Executive Directors we have been mindful of both their contribution to ensuring that operations and the various transitions we have faced during the year ran smoothly, and also the drivers behind the fall in profits during the year. We have referred in prior years, and elsewhere in this Annual Report and Accounts, to the role of chance and external factors outside the role or control of the Executive Directors when it comes to the cost of properties sold and thus gross margin, but in the current year there were also two additional factors. The first was that we took account of the effect of managing the catch-up of the maintenance backlog that arose during the pre-vaccine phase of Covid-19 (£1M) and also the role of the revaluation change as computed by Allsops which was also £1M down on 2021, and is something that is outside the control of the Executive Directors. Using our discretion when taking these factors into account as part of our consideration of the financial metrics the Remuneration Committee, agreed to hold the total of salary and short term incentive steady year on year. Applying these principles to the year under review the bonus awards for the CEO and CFO were set at £479,000 and £330,000 respectively. The Remuneration Committee has also agreed to an increase in Executive Director salaries but as in previous years this percentage increase, based on the rebalanced packages, is lower than the increase for Mountview’s staff. REGULATORY CHANGES In carrying out their work during the year, the Remuneration Committee’s members have continued to have regard to the changing regulatory environment around remuneration. In our Remuneration Report in 2021 in light of our recognition of the Code and legislation aimed at greater transparency and disclosure of remuneration practices, we again include presentation of the table showing the percentage change in remuneration of Directors and employees. We are grateful to our Executive Directors and their continuing efforts to deliver the best results to shareholders and other stakeholders in line with the Company’s strategy. I am also thankful for the valuable contributions of my fellow Remuneration Committee members throughout the year. M.L. Archibald Chairman, Remuneration Committee 5 July 2022 31066 5 July 2022 8:09 am proof 22 41 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Remuneration Report (Continued) REMUNERATION POLICY REVIEW OBJECTIVES OF THE REVIEW Whilst the Remuneration Committee considered that the existing remuneration policy has served the Company and its shareholders well, the Remuneration Committee has taken the opportunity to consider carefully the appropriate structure of the components of the remuneration packages of our Executive Directors, and the total remuneration levels in the context of the nature of operations and risks faced by the Group. In addition to the Remuneration Committee’s own deliberations, recent feedback and comments received from advisers and shareholders have informed the process. In the conduct of the review process and the updated policy we have sought to reflect the characteristics outlined in Provision 40 of the Code as follows: Clarity – we sought to engage with major shareholders during the review. The new policy with reasons for changes adopted and suggestions not taken up have been discussed with our shareholders and directors. Simplicity – as discussed further below, we have retained the simplicity of the current policy avoiding artificial or immaterial metrics. Risk –the risk environment of the Group was at the heart of our review which was aimed at ensuring that the policy reflected but did not add to that environment as could be the case with, for example, misaligned metrics that could encourage inappropriate risk taking. Predictability – the Short-Term Incentive (STI) arrangements lead to a predictable range of outcomes. Proportionality – the policy is designed to lead to awards that blend the objectivity of financial metrics and subjectivity involved in assessing non-financial performance. Alignment to culture – the principles of rewarding individual performance and thus contribution to Group results are reflected in remuneration structures throughout the Group. OVERVIEW OF THE REVIEW The Executive Directors have led the Company as it has delivered very good results despite the adversity faced, including almost two years of Covid-19 lockdown and the change from office based working to home based and hybrid working. These results continue to flow through to dividends to the benefit of all shareholders. These results have been delivered by applying a long standing strategy and stable business model and operations that reflect this strategy. The maturity of these aspects of the business mean that, in the Remuneration Committee’s view, the inherent risk of the operations is lower than it has been in the past and lower than for many other quoted companies. The Remuneration Committee’s main conclusion from reviewing the current structure was that it would be appropriate to alter the components and balance of the Executive Directors’ remuneration packages to better reflect this risk profile – and notably to adjust the weighting of remuneration from bonus to salary whilst broadly maintaining the level of total remuneration. Further the Committee also reviewed the relative balance of CEO to CFO remuneration with reference to similar situations where the CFO handled multiple responsibilities. The resulting proposals are described in more detail below. In developing the proposals set out in this report, the Remuneration Committee, informed by detailed consultation with, and research by, FIT and in their role as our employment lawyers responsible for our employment agreements, review of proposals by Winckworth Sherwood LLP, and through consultation with the Concert Party and other major shareholders looked at the mix between fixed (salary) and variable (STI) remuneration and also at the relative balance of remuneration between the Executive Directors. While employees were not specifically consulted as a part of the review, the Remuneration Committee did take into account the general pay and conditions that apply to the staff which are determined by the Executive Directors with whom they work closely on a day to day basis. Following discussion and the research and feedback from advisors and shareholders, the Remuneration Committee considered that the remuneration packages awarded to our Executive Directors should be rebalanced as follows: 1. The mix of salary and other fixed remuneration to variable remuneration could be shifted from the current split of 55% fixed and 45% variable to a level in the region of 75% fixed: 25% variable. 42 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 2. Based on research by FIT, it is apparent that in line with other Chief Financial Officers in the FTSE where they have responsibilities in addition to the finance function the CFO’s relative remuneration level has fallen behind these peers. The findings showed that for this peer group, particularly where there were multiple responsibilities rather than just a doubling up of responsibilities, the balance of CFO to CEO remuneration was close to 80%. Given that, in addition to her role as Chief Financial Officer, Marie Bray is also the Group’s Company Secretary, and, in addition, she has aspects to her responsibilities that elsewhere would be within the remit of a Chief Operating Officer, the Remuneration Committee concluded that Marie Bray’s total remuneration award, which is currently approximately 71.5% of Chief Executive Officer Duncan Sinclair’s total remuneration award, should be increased to 80% of Duncan Sinclair’s total remuneration award to reflect this peer group. REBALANCED REMUNERATION PACKAGES As a result of the consultation and analysis carried out, the Remuneration Committee is proposing to rebalance the remuneration packages of the executives as follows: D.M. Sinclair M.M. Bray PROPOSED POLICY CHANGES 2021/22 Actuals £000 Bonus £000 Benefits £000 £27 £0 £479 £330 Salary £000 £591 £450 2021/22 Rebalanced £000 Total £000 £1,097 £780 Salary £000 £800 £650 Benefits £000 £27 £0 Bonus £000 £270 £225 Total £000 £1,097 £875 As a result of the consultation and analysis carried out, the Remuneration Committee is also proposing a number of policy changes: • those relating to the components of Executive and Non-Executive Directors’ remuneration are noted in the tables below - for example altering the maximum percentage of base salary that may be awarded as bonus to retain the total remuneration at broadly the levels shown in the rebalanced figures noted above, and • other changes following our review to clarify the position on aspects that are typically found in remuneration policies but which in the past the Remuneration Committee has considered were not relevant to the Company’s current circumstances – notably in relation to malus and clawback and post-employment shareholding requirements In addition, where needed, minor editorial changes have been made without altering the substance of the previous policy. The Remuneration Committee continues to believe that due to the nature and stability of the Group’s business the situations in which these latter aspects of the policy may be applicable are likely to be remote. Nonetheless for the avoidance of doubt, and to reflect the growing expectations around clarity on these matters and market good practice the Remuneration Committee has included its position on these matters in the policy. The Remuneration Committee is now seeking the wider shareholder approval of the proposed new structure within the policy at the AGM on 10 August 2022. KEY PRINCIPLES OF REMUNERATION POLICY The Company’s Remuneration Policy continues to be designed to attract, motivate and retain the right talent for our business in order that it can continue to deliver excellent returns for shareholders. As noted above the Remuneration Committee believes that the weighting of components making up the total remuneration should be amended, and that within this new mix that there should be a clear link between the Group’s financial results and the short-term incentive element of the remuneration of Executive Directors. In order to achieve this, the remuneration policy provides for the Executive Directors’ total remuneration to comprise the following elements: base salary, a short-term incentive award, pension and benefits. All elements are considered annually by the Remuneration Committee, most notably its review focuses on base salary and the short-term incentive award. Base salary is reviewed with regard to seniority, inflationary increases, personal performance, changes in responsibilities, market themes and peer group; whereas the short-term incentive award is reviewed and aligned to: 1. the Group’s financial metrics (primarily profit before tax); 31066 5 July 2022 8:09 am proof 22 43 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Remuneration Report (Continued) 2. the Executive Director’s personal contribution; and 3. non-financial corporate goals to build for long term sustainable success, including management development, succession planning and the maintenance of a robust business infrastructure. At the same time the Remuneration Committee takes account of the pay and conditions for our staff and reviews market comparators to ensure that reward is appropriate. The Remuneration Committee considers the relative performance of the Group’s results in relation to its peers in determining where appropriate benchmarks should be set (i.e. upper quartile, median or lower quartile). The Remuneration Committee then considers these factors in the context of historical and current performance when applying its judgement and discretion in the process for determining awards. Given that the Executive Directors (particularly the Chief Executive Officer) have significant personal holdings of the Company’s shares that were not acquired through a share based incentive scheme, the Remuneration Committee does not consider that a long-term incentive share scheme (LTI) or other similar share schemes are appropriate and that no post- employment holding period is required in respect of these holdings. Similarly, the Remuneration Committee considers that in view of these factors and the experience and long service of the Executive Directors, that the additional protections typically provided by malus and clawback provisions are unlikely to be required at this time. Nevertheless, to reflect market practice the Remuneration Committee has developed specific terms to cover these points and included them in the revised policy (see below). The use of an LTI, a post-employment holding period and clawback provisions will be further reviewed if other Executive Director appointments are made in the future. The Executive Directors do not receive a pension, but the Remuneration Policy still provides the ability to provide for a pension contribution in the event that new appointments are made in the future. Pension contributions are made on behalf of other employees working at the Company. USE OF METRICS WHEN CONSIDERING THE SHORT TERM INCENTIVE As noted elsewhere in this Annual Report and Accounts, the Group’s main drivers of their principal source of revenues and profit arising in the current year – sales on vacant possession – are beyond the control of the Group or the Executive Directors. The timing of vacant possession, the location and thus market price of properties disposed of, the original purchase date of the properties sold and the appetite for the properties that are sold are all factors beyond the Group’s control. It is also the case that at a transaction level, the net proceeds are a function of the historic and current astuteness, judgement and experience brought to bear when purchasing properties, setting reserve prices and the pricing of those sales being made by private treaty – all of which are ongoing activities firmly in the remit of the Executive Directors and their teams. The Remuneration Committee considered that, while firmly of the view that there should be a clear link between the Group’s financial results and the short term incentive element of the remuneration of the Executive Directors, the use of metrics that attempted to link Executive Director’s performance with the current year’s profits would be unreliable and, at best, be artificial and, at worst, be misleading. Consequently, the Remuneration Committee concluded that the current approach continued to be appropriate. MALUS AND CLAWBACK PROVISIONS Malus and clawback provisions operate in respect of the annual bonus to protect shareholder interests and reduce the risk of inappropriate risk taking. Events or actions that could trigger the activation of malus and clawback provisions would be: • material misstatement of audited financial results; • an error in calculating a performance condition; • risk management failure; • any circumstances justifying summary dismissal from office or employment with the Group (including but not limited to dishonesty, fraud or breach of trust); • significant reputational damage; • corporate failure or insolvency. 44 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 SHAREHOLDING REQUIREMENT AND POST EMPLOYMENT HOLDING PERIOD The Company has no shareholding requirement for Executive Directors in view of their current substantial personal holdings, although the Remuneration Committee reserves the right to introduce such a requirement should new Executive Directors be appointed in the future. Similarly, given that the shareholdings of the current Executive Directors have been acquired other than as a result of share-based incentive schemes the Remuneration Committee does not believe that any post employment holding period is appropriate in relation to these shares. However, should such a share based incentive scheme be introduced for current or new Executive Directors then the Remuneration Committee reserves the right to review this policy in relation to shares acquired through share based incentive schemes and to apply a post employment holding period, should it consider it appropriate to do so, based on a review of prevailing practice at that time. DISCRETION The Remuneration Committee considers annually both salary and the STI awards which operate in accordance with the policy tables on pages 45 and 46. Consistent with market practice, the Remuneration Committee retains discretion over a number of areas relating to the operation and administration of these awards. This includes the ability within the policy to: • adjust targets and/or set different measures or weightings for the applicable awards, if the Committee determines that either for the current year external developments support modification of the terms or determines that the original conditions are no longer appropriate or do not fulfil their initial purpose for the longer term. In either case such changes would be explained in the directors’ remuneration report and, if appropriate, be discussed with our major shareholders • adjust the outcomes under the plan to ensure these are aligned to and are reflective of the underlying business aims and performance of the Group, or in response to external factors that affect the Group’s performance in a manner consistent with other listed companies. In particular, in relation to the STI awards the areas of discretion include, but are not limited to, determining the participation of new Executive Directors, the award levels, setting or amending performance measures and targets, treatment of awards on a change of control, treatment of awards for leavers and adjusting awards (e.g. as a result of a change in capital structure). REMUNERATION POLICY DETAIL TABLES The tables below summarise the main elements of the remuneration packages of the Executive Directors, the key features of each element, their purpose and linkage to strategy. EXECUTIVE DIRECTORS Component BASE SALARY Purpose and link to strategy Operation Opportunity Performance metrics Proposed new policy Changes from old policy To provide a competitive level of non-variable remuneration and major element of total remuneration aligned to the Company’s peer group and reflective of the seniority of the post, the experience of the Executive and the known and expected contribution to the Group’s strategy. Base salaries are reviewed each year with regard to the seniority of the individual, changes to responsibilities, performance, peer group developments and inflationary increases taking into account the Consumer Prices Index, published annual remuneration surveys and the average change in workforce salaries, excluding promotion, merit or similar components of workforce rises, if this is lower than the published inflation indices. While all the factors above are taken into account, the percentage annual increase will normally not exceed the small cap upper quartile figure increase for executives as reported annually by FIT or other reputable provider of survey data. Base salaries are fixed for each financial year and effective from 1 April each year. None Explains that the salary element provides a more significant part of total remuneration. Places a cap on the maximum annual increases while retaining the potential for lower rates should external indicators suggest this was appropriate. Unchanged Unchanged 31066 5 July 2022 8:09 am proof 22 45 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Remuneration Report (Continued) Component PENSION Purpose and link to strategy Operation Opportunity Performance metrics BENEFITS Purpose and link to strategy Operation Opportunity Performance metrics SHORT TERM INCENTIVE Purpose and link to strategy Operation Opportunity Proposed new policy Changes from old policy To attract and retain high quality Executives by providing income in retirement. The Company would offer contributions to an approved defined contribution pension scheme. The current Executive Directors do not receive contributions under a pension scheme. Contributions would be made at the rate applied to workforce pensions and be based on base salary only. Contributions may be made at a higher rate through salary sacrifice. None To aid the recruitment and retention of high quality Executives. The Company provides private medical insurance, sick pay and life assurance. Other non-pensionable benefits may be provided if the Remuneration Committee considers it appropriate. The Remuneration Committee reserves the discretion to introduce new benefits where it concludes that it is appropriate to do so, having regard to the particular circumstances and to market practice. The benefits are fixed in relation to the Executive’s base salary. The Remuneration Committee reviews the appropriateness of these benefits. The value of benefits may vary from year to year depending on the cost to the Company from third-party providers. None Incentive awards are to be aligned with Group financial performance and reward personal contribution to results. Awards are reviewed each year with regard to the individual’s performance and their contribution to the Group’s performance, financial results and peer group comparators. Any award under this scheme will be set at a level that aligns the short- term incentive award with the Group’s financial performance, while also reflecting non-financial contributions and remaining comparable with our peer group. The maximum percentage of base salary payable for an award under this scheme is 100%. Unchanged Clarifies that the current Executive Directors do not receive a pension contribution. Unchanged Unchanged Unchanged Introduces the flexibility to add further benefits in line with altered circumstances, or market practice. Otherwise unchanged. Unchanged Unchanged Unchanged Unchanged Maximum reduced from 150% to 100% so that in financial terms the maximum is essentially unchanged from the prior policy Unchanged Performance metrics The Remuneration Committee considers financial metrics (currently primarily profit before tax), other non-financial achievements and corresponding movements within the peer group over the course of the financial year under review. 46 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 NON-EXECUTIVE DIRECTORS The policy on Non-Executive Directors’ fees is set out below: Component FEES Purpose and link to strategy Operation Opportunity Performance metrics Proposed new policy Changes from old policy Non-Executive Directors receive a fee to cover their time and expenses in attending Board, Committee and any other meetings that they are required to attend over the year. Non-Executive Directors may receive additional fees and expenses for attending meetings not otherwise in the ordinary course of their duties, or where additional effort is needed above that required by the terms of their appointment. Fees are reviewed periodically by the Board with reference to the expected time commitment and market level for such services Non-Executive Directors are not entitled to any other incentives or benefits beyond their fees and reimbursement for travel and related business expenses reasonably incurred in performing their duties. The aggregate fees and any benefits of the Chairman and Non-Executive Directors will not exceed the limit from time to time prescribed within the Company’s Articles of Association for such fees, currently £250,000 p.a. in aggregate. Any increases in fee levels made will be appropriately disclosed in the Annual Report. None Unchanged Unchanged Unchanged Unchanged APPROACH TO RECRUITMENT REMUNERATION When setting the remuneration package for a new Executive Director, the Remuneration Committee will apply the same principles and policy as set out above. Depending on individual circumstances, the Remuneration Committee will consider providing pension contributions and other long-term incentives appropriate to the individual and their responsibilities. Base salary will be set at a level appropriate to the role and experience of the Executive Director being appointed. This may include agreement on future increases up to a market rate, in line with increasing experience and responsibilities, subject to good performance, where it is considered appropriate by the Remuneration Committee. In relation to external appointments, the Remuneration Committee may structure a remuneration package that it considers appropriate to recognise awards or benefits that may or will be forfeited on resignation from a previous position, taking into account timing and valuation – and any other matters it considers relevant. The policy is that the maximum payment under any such arrangement (which may be in addition to the normal variable remuneration) should be no more than the Remuneration Committee considers is required to provide reasonable compensation to the incoming Executive Director. In the case of an employee who is promoted to the position of Executive Director, it is the Company’s policy to honour pre- existing award commitments (including awards, incentives, benefits and contractual arrangements) in accordance with their terms to the extent that such pre-existing commitments are permitted by the Code. Where any recruitment involves the agreed relocation of the individual, the Company may offer additional benefits and meet some or all associated costs for periods that would be agreed by the Remuneration Committee on a case by case basis. Where an individual is appointed as a result of an acquisition, merger or other corporate event, the Company will honour any legacy terms and conditions to the extent that such legacy terms are permitted by the Code. Non-Executive Directors appointments will be made based on a Non-Executive Director agreement. Non-Executive Directors’ fees, including those of the Chairman, will be set at a competitive market level, reflecting the experience of the individual and the responsibility and time commitment of the role. In all cases the Remuneration Committee will bear in mind the best interests of the Company. 31066 5 July 2022 8:09 am proof 22 47 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Remuneration Report (Continued) DETAILS OF DIRECTORS’ SERVICE CONTRACTS EXECUTIVE DIRECTORS Mr D.M. Sinclair Mrs M.M. Bray Contract Date 8 August 2002 1 April 2004 Unexpired Term Notice Period No fixed term No fixed term 12 months 12 months The Executive Directors’ service contracts contain provisions relating to matters such as salary, salary continuance in the event of illness, holidays, life and medical insurance, etc. The Executive Directors’ service contracts can be terminated on 12 months’ notice by either party. The Executive Directors are entitled to a compensation payment upon a change of control of the Company. Such compensation payment (subject to the deduction of income and other taxes required by law and any other sums owed by the Executive Director to the Company) is equal to the Executive Director’s annual gross remuneration as reported in the Company’s last audited accounts. The Executive Directors’ contracts make no other provision for termination payments other than for salary and benefits in lieu of notice. Executive Directors are entitled to reasonable out of pocket expenses when on Company business. NON-EXECUTIVE DIRECTORS Ms M.L. Archibald Dr A.R. Williams Mr A.W. Powell Contract Date 1 July 2020 1 December 2021 1 April 2021 Unexpired Term Notice Period 12 months 29 months 21 months 1 month 1 month 1 month Non-Executive Directors are only entitled to accrued fees due to them at the date of termination of their appointment and, where appropriate, a payment in lieu of their contractual notice period. OTHER MATTERS The Remuneration Committee may make non-substantial amendments to the policy set out above. In making its decisions, the Remuneration Committee shall take into account the conditions of the Group as a whole and proposals as regards the general staff. Lastly, the Remuneration Committee considers the views of investor bodies and shareholders. The Company seeks an ongoing dialogue with shareholders on all matters of strategic importance – including remuneration. POLICY REGARDING EXTERNAL APPOINTMENTS Executive Directors are not actively encouraged to hold external directorships. Duncan Sinclair is a director of Sinclair Estates Ltd. and Ossian Investors Ltd, companies which hold property assets in run-off. He is also a Trustee of The Sinclair Charity and a Director of Sinclair Events Ltd. Non-Executive Directors are appointed because of their skills and experience and it is accepted that they have other commitments beyond Mountview. The Chairman keeps the availability of Non-Executive Directors under review to ensure that they have the capacity to support the Company as required. 48 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 ILLUSTRATION OF POSSIBLE OUTCOME IN CEO AND CFO REMUNERATION £000s Base Salary Fixed Benefits Variable At expectation* Minimum** Maximum*** CEO CFO CEO CFO CEO CFO 830 (73.0%) 675 (74.26%) 830 (96.85%) 675 (100.0%) 830 (49.2%) 675 (50.0%) 27 (2.37%) 280 (24.63%) 234 (25.74%) 27 (3.15%) 27 (1.6%) 675 (50.0%) 830 (49.2%) Total 1,137 909 857 675 1,687 1,350 * As noted earlier in the remuneration report, formal targets are not used in determining the short-term incentive awards, with the award being based on year on year relative financial and non-financial performance and the Executive Director’s personal contribution which includes a mix of objective and subjective measures. For the purposes of the ‘At expectation’ illustration we have assumed that the Short Term Incentive award would represent the same proportion of the base salary as in 2021/22 using the rebalanced figures shown on page 43. ** Minimum is based on fixed remuneration consisting of projected annual salary for 2022/23 with fixed benefits but assuming no Short-Term Incentive award. *** Maximum is based on fixed remuneration consisting of projected annual salary for 2022/23 with fixed benefits with the maximum Short-Term Incentive award opportunity of 100% of base salary. APPLICATION OF THE REMUNERATION POLICY The Remuneration Committee starts its process by reviewing the market benchmarks for remuneration amongst the Group’s peer group, with particular focus on any movements in salaries for the current year and recent Group performance. The Remuneration Committee would then determine the appropriate level of base salary for the Executive Directors with reference to these results, and as described above also considering relative performance against the peer group and other market metrics where relevant. As the peer group population is recognised as becoming less reliable, the Remuneration Committee has incorporated discretion to a greater degree in this financial year. The Remuneration Committee sets the Executive Directors’ Short-Term Incentive award at a level to reflect the Group’s financial performance while remaining comparable with our peer group. The award is referenced to the financial metrics of the Group (primarily profit before tax) and also takes account of such other factors as the Remuneration Committee sees fit such as • Any other non-financial factors to be considered; • The total remuneration of other peer group companies and movement in market benchmarks. 31066 5 July 2022 8:09 am proof 22 49 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Remuneration Report (Continued) ANNUAL REMUNERATION REPORT (AUDITED INFORMATION) DIRECTORS’ TOTAL REMUNERATION SINGLE FIGURE TABLE 2022 Executive D.M. Sinclair M.M. Bray Non-Executive4 A.W. Powell M.L. Archibald Dr A.R. Williams Salary £000 Benefits in kind1 £000 Total Fixed Remuneration2 £000 Bonus3 £000 591 450 102 40 40 1,223 27 – – – – 27 618 450 102 40 40 1,250 479 330 – – – 809 Total £000 1,097 780 102 40 40 2,059 1. 2. 3. 4. The Benefits in kind are as set out in the policy table. The current Executive Directors do not receive a pension contribution thus the Total Fixed remuneration comprises salary and benefits. The approach used for the bonus awards is described in the ‘Role of the Remuneration Committee’ note on page 41. The Company does not operate a LTI scheme, and thus the bonus figures are the Total Variable Remuneration Commensurate with his role as Chairman Tony Powell’s salary was increased to £102k p.a. from 1 April 2021. The salary of both M.L. Archibald and Dr A.R. Williams was increased to £40k p.a. from 1 April 2021 2021 Executive D.M. Sinclair M.M. Bray Non-Executive A.W. Powell M.L. Archibald Dr A.R. Williams Salary £000 Benefits in kind1 £000 Total Fixed2 Remuneration £000 Bonus3 £000 573 435 99 39 39 1,185 25 – – – – 25 598 435 99 39 39 1,210 497 345 – – – 842 Total £000 1,095 780 99 39 39 2,052 1. 2. 3. The Benefits in kind are as set out in the policy table. The current Executive Directors do not receive a pension contribution thus the Total Fixed remuneration comprises salary and benefits. The approach used for the bonus awards is described in the ‘Role of the Remuneration Committee’ note on page 41. The Company does not operate a LTI scheme, and thus the bonus figures are the Total Variable Remuneration. UNAUDITED INFORMATION CEO SINGLE FIGURE 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 D.M. Sinclair D.M. Sinclair D.M. Sinclair D.M. Sinclair D.M. Sinclair D.M. Sinclair D.M. Sinclair D.M. Sinclair D.M. Sinclair D.M. Sinclair Bonus as % of maximum bonus * 54.00% 57.82% 53.69% 52.96% 56.70% 68.67% 88.18% 55.56% 53.33% 53.33% CEO single figure of total remuneration £000 1,097 1,095 1,027 975 977 1,038 943 778 659 662 * Prior to 2017 the Remuneration Policy did not have a maximum for STI – so the bonus as a percentage of maximum is not formally computable. However, for the purposes of comparison we have computed these percentages for earlier years as if the post 2020 policy applied. 50 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 CFO SINGLE FIGURE 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 M.M. Bray M.M. Bray M.M. Bray M.M. Bray M.M. Bray M.M. Bray M.M. Bray M.M. Bray M.M. Bray M.M. Bray Bonus as % of maximum bonus * 48.89% 52.87% 48.77% 48.09% 51.62% 63.11% 80.70% 52.83% 48.00% 48.00% CFO single figure of total remuneration £000 780 780 729 692 692 730 661 546 473 473 * Prior to 2017 the remuneration policy did not have a maximum for STI – so the bonus as a percentage of maximum is not formally computable. However, for the purposes of comparison we have computed these percentages for earlier years as if the post 2020 policy applied. PERCENTAGE CHANGE IN REMUNERATION OF DIRECTORS AND EMPLOYEES The percentage change in remuneration between 2020 and 2022 for the Directors and for all employees, excluding the Directors, in the Group was: Executive Directors D.M. Sinclair M.M. Bray Non-Executive Directors A.W. Powell M.L. Archibald Dr A.R. Williams Employee population 2021-22 Base Salary Taxable Benefits Annual Bonus 3.14% 3.45% 3.03% 2.56% 2.56% 9.58% 8.00% N/A N/A N/A N/A -16.75%* -3.62% -4.35% N/A N/A N/A -1.97% Base Salary 3.24% 3.33% 0.00% 0.00% 0.00% 4.02% 2020-21 Taxable Benefits 0.00% N/A N/A N/A N/A -1.98%* Annual Bonus 11.19% 12.01% N/A N/A N/A 32.75% * The 2021/22 staff taxable benefits have reduced as, when the recent car leases ended, a change has been made from conventional cars to hybrid cars. This switch attracts a lower taxable benefit leading to a reduction in car benefits of 20.00% (2021 - -2.6%), other staff benefits reduced by 8% (2021 – increase of 0.6%). PERFORMANCE GRAPH The graph illustrates the Company’s performance compared to a broad equity market index over the past ten years. As the Company is a constituent of the FTSE 350 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. The graph looks at the value of £100 invested in Mountview Estates P.L.C. compared to the value of £100 invested in the FTSE All-Share Index and the FTSE 350 Real Estate Index on 31 March each year. 31066 5 July 2022 8:09 am proof 22 51 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Remuneration Report (Continued) 10 YEAR TSR RETURN – ANNUAL CHART 450 400 350 300 250 200 150 100 50 0 31/03/2012 31/03/2013 31/03/2014 31/03/2015 31/03/2016 31/03/2017 31/03/2018 31/03/2019 31/03/2020 31/03/2021 31/03/2022 Mountview Estates – Total Return Index FTSE 350 SS Real Estate £ – Total Return Index FTSE All Share Index – Total Return Index RELATIVE IMPORTANCE OF SPEND ON PAY The difference in actual expenditure between 2021/22 and 2020/21 on remuneration for all employees in comparison to profit after tax and distributions to shareholders by way of dividend is set out in the tabular graphs below: PROFIT AFTER TAX (£M) 4.01 DIVIDEND (£M)* 12.68 TOTAL EMPLOYEE PAY 0.13M 30.89 26.88 28.27 15.59 4.56 4.43 2022 2021 2022 2021 2022 2021 * The £28.27 million dividend in relation to 2022 includes £10.72 million as a special dividend paid on 28 March 2022 STATEMENT OF IMPLEMENTATION OF REMUNERATION POLICY IN THE CURRENT FINANCIAL YEAR Executive Directors: Following consultation with our advisers on the current trends in the market in relation to executive salary awards, with effect from 1 April 2022 the basic salary of the CEO will be increased to £830k p.a. and the CFO to £675k p.a. Non-Executive Directors: The Board considered the fees payable to the Non-Executive Directors and approved increases from £102k to £105k for the Chairman and from £40k to £41k for other Non-Executive Directors representing a 3% increase year on year. 52 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 DETAILS OF THE REMUNERATION COMMITTEE During 2021/2022 the Remuneration Committee comprised three NEDs, including the Chairman who was independent on appointment, and one independent NED. The Remuneration Committee and the Board recognize that this is not in accordance with Provision 32 of the Code (see Corporate Governance Report page 30) however, given the size and composition of the Board, believe that this alternative approach to the membership of the Remuneration Committee is pragmatic. STATEMENT OF VOTING AT GENERAL MEETING At the Annual General Meetings held on 11 August 2021 and 12 August 2020, the Directors’ Remuneration Report and the Directors’ Remuneration Policy received the following votes based on proxy forms from shareholders. Resolution Annual report on Remuneration (2021 AGM) Remuneration Policy (2020 AGM) Number of shares 2,133,588 2,130,737 Voting for % Number of shares Voting against % Total votes cast Votes withheld 69.45 69.43 938,689 938,149 30.55 30.57 3,072,277 3.068,886 63 0 As reported in a regulatory announcement on 11 February 2022: Following the 2021 AGM in August the Company identified as far as possible those shareholders who did not support the various resolutions and attempted to engage with them to seek their views. Some shareholders did not wish to engage. The Company remains committed to shareholder engagement and will continue to offer to meet with shareholders to take into account their concerns and considerations in the future. 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 D.M. Sinclair including: • beneficial holding of Sinclair Estates Limited of 54,165. (Mr Sinclair is a Director of Sinclair Estates Limited.) • non-beneficial holding of The Sinclair Charity of 58,117 (Mr Sinclair is a trustee of The Sinclair Charity.) M.M. Bray ML. Archibald Dr A.R. Williams 31 March 2022 31 March 2021 596,500 12,302 100 61,810 596,500 12,302 100 62,312 * As noted on page 44 the Company does not operate any LTI or similar share schemes. All the above interests are beneficial unless otherwise stated. There were no other changes in shareholdings during the year and no changes between 31 March 2022 and the date of this report. Ms. M.L. Archibald Chairman of the Remuneration Committee On behalf of the Board 5 July 2022 31066 5 July 2022 8:09 am proof 22 53 Mountview Estates P.L.C. Annual Report and Accounts 2022GOVERNANCE Consolidated Statement of Comprehensive Income for the year ended 31 March 2022 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 Net finance costs Profit before taxation Taxation – current Taxation – deferred Taxation Profit attributable to equity shareholders and total comprehensive income Basic and diluted earnings per share (pence) All the activities of the Group are classed as continuing. Year ended 31 March 2022 £000 66,010 (25,144) 40,866 (6,197) 53 34,722 444 35,166 (298) 34,868 (6,637) (1,349) (7,986) 26,882 689.5p Year ended 31 March 2021 £000 65,730 (22,508) 43,222 (5,865) – 37,357 1,452 38,809 (675) 38,134 (6,966) (275) (7,241) 30,893 792.3p Notes 4 4 13 13 8 9 19 9 11 The Notes on pages 58 to 74 are an integral part of these consolidated financial statements. 54 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 Consolidated Statement of Financial Position for the year ended 31 March 2022 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 reserve Capital redemption reserve Other reserves Retained earnings Non-current liabilities Long-term borrowings Deferred tax Current liabilities Bank overdrafts and short-term loans Trade and other payables Current tax payable Total liabilities Total equity and liabilities Approved by the Board on 5 July 2022. D.M. Sinclair Chief Executive M.M. Bray Director Company no: 00328020 As at 31 March 2022 £000 As at 31 March 2021 £000 Notes 12 13 15 16 18 21 22 22 22 23 18 19 18 17 1,546 25,451 26,997 393,275 1,326 643 395,244 422,241 195 25 55 56 393,155 393,486 19,200 5,700 24,900 — 1,470 2,385 3,855 28,755 422,241 1,606 25,574 27,180 398,166 1,417 597 400,180 427,360 195 25 55 56 394,540 394,871 20,600 4,351 24,951 1,280 2,142 4,116 7,538 32,489 427,360 The Notes on pages 58 to 74 are an integral part of these consolidated financial statements. 31066 5 July 2022 8:09 am proof 22 55 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Consolidated Statement of Changes in Equity for the year ended 31 March 2022 Changes in equity for year ended 31 March 2021 Balance as at 1 April 2020 Profit for the year Dividends Balance at 31 March 2021 Changes in equity for year ended 31 March 2022 Balance as at 1 April 2021 Profit for the year Dividends Balance at 31 March 2022 Notes Share capital £000 195 10 23 10 23 195 195 195 Capital reserve £000 Capital redemption reserve £000 Other reserves £000 25 25 25 25 55 55 55 55 56 56 56 56 Retained earnings £000 379,243 30,893 (15,596) 394,540 Total £000 379,574 30,893 (15,596) 394,871 394,540 26,882 (28,267) 393,155 394,871 26,882 (28,267) 393,486 The Notes on pages 58 to 74 are an integral part of these consolidated financial statements 56 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 Consolidated Cash Flow Statement for the year ended 31 March 2022 Cash flows from operating activities Profit from operations Adjustment for: Depreciation (Gain) on disposal of investment properties (Increase) in fair value of investment properties Operating cash flows before movement in working capital Decrease /(Increase) in inventories Decrease in receivables (Decrease) in payables Cash generated from operations Interest paid Income tax Net cash inflow from operating activities Investing activities Proceeds from disposal of investment properties Net cash inflow from investing activities Cash flows from financing activities (Repayment) of borrowings Equity dividend paid Net cash (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 March 2022 £000 Year ended 31 March 2021 £000 Notes 35,166 38,809 12 13 13 16 17 8 13 18 60 (53) (444) 34,729 4,891 91 (672) 39,039 (298) (8,368) 30,373 620 620 (2,349) (28,267) (30,616) 377 266 643 64 – (1,452) 37,421 (6,097) 2,259 (2,688) 30,895 (675) (6,300) 23,920 – – (10,116) (15,596) (25,712) (1,792) 2,058 266 The Notes on pages 58 to 74 are an integral part of these consolidated financial statements. 31066 5 July 2022 8:09 am proof 22 57 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Notes to the Consolidated Financial Statements for the year ended 31 March 2022 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 5 July 2022. 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 financial statements were prepared under the historical cost convention, as modified by the revaluation of investment properties. The Group financial statements were prepared in accordance with UK adopted international accounting standards. The Company has elected to prepare its Parent Company financial statements in accordance with UK GAAP. These are presented on pages 80 to 87. The preparation of financial statements in conformity with UK adopted international accounting standards 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(R) ‘Critical Accounting Judgements and Key Areas of Estimation Uncertainty’. (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. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. Control is recognised when the Group is exposed to, or has rights to, variable returns from its investment in the entity and has the ability to affect these returns through its power over the relevant activities of the entity. 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. 58 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 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: • Property Trading • Property Investment The segments are UK based. More details are given in Note 5 on page 65. (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 using the tax rates and laws that have been enacted or substantively enacted by the reporting date 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 from sales of properties, rental income from properties held as trading stock, investment and other sundry items of revenue before charging expenses. Rental income is recognised on a straight-line and accruals basis over the rental period. Sales of properties are recognised on legal completion as in the Directors’ opinion this is the point at which control passes to the buyer. (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 is 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. 31066 5 July 2022 8:09 am proof 22 59 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Notes to the Consolidated Financial Statements (Continued) for the year ended 31 March 2022 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 costs are charged to the income statement during the financial period in which they are incurred. Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset using the straight-line method as follows: Freehold property – 2% per annum Fixtures and fittings and office equipment – 20% per annum Computer equipment – 25% per annum 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 the 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 the 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. (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. The analysis of the Group revenue as at 31 March 2022 is on page 64. 60 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 2. ACCOUNTING POLICIES CONTINUED (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, trade and other payables, and cash and cash equivalents are measured at amortised cost. (N) BANK BORROWINGS Loans are recorded at fair value at initial recognition and thereafter at amortised cost 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) LEASING Group as lessor The Group’s non-cancellable operating leases relate to regulated tenancies under which tenants have the right to remain in a property for the remainder of their lives. It is therefore not possible to estimate timing of future minimum payments in respect of these regulated tenancies, hence these are not separately disclosed in the financial statements. Group as lessee Rentals payable under leases for assets considered to be of low value are charged to the Consolidated Statement of Comprehensive Income on a straight-line basis over the term of the lease. (Q) ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Standards, interpretation and amendments effective in the current financial year have not had a material impact on the Group financial statements. Standards, interpretations and amendments issued but not yet effective are not expected to have a material impact on the Group financial statements. (R) 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. The two main considerations were as follows: 1. Refinancing of banking facilities The Group has a £20 million (2021: £20 million) revolving loan facility with HSBC Bank. The termination date of this facility is November 2023. The Group has re-negotiated a £60 million (2021: £60 million) revolving loan facility with Barclays Bank. The termination date of this facility is March 2027. 31066 5 July 2022 8:09 am proof 22 61 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Notes to the Consolidated Financial Statements (Continued) for the year ended 31 March 2022 2. ACCOUNTING POLICIES CONTINUED 2. Covenant compliance The core facility has two covenants, Consolidated Gross Borrowings as a percentage of Consolidated Net Tangible Assets, and the ratio of Consolidated PBIT to Consolidated Gross Financing Costs. 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. 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 was made in accordance with the requirements of the RICS Valuation – Global Standards 2022. 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. Given that by applying our buying criteria all stock is purchased at a discount to the value with vacant possession the Directors consider the risk of impairment to be low and accordingly the Group has no NRV provision. Inventory expected to be settled in more than 12 months The Board estimates that inventory of £18.3 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, both 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. 62 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES 1. FINANCIAL RISK FACTORS The Group’s activities expose it to a variety of financial risks: market risk (including price risk and cash flow risk), credit risk and liquidity risk. The Group’s policies on financial risk management are to minimise the risk of adverse effect on performance and to ensure the ability of the Group to continue as a going concern. The financial risks relate to the following financial instruments: trade receivables, cash and cash equivalents, trade and other payables and borrowings. (A) MARKET RISK The Group is exposed to market risk through interest rates and availability of credit. Price risk • The Group is exposed to property price and property rental risk. Cash flow and fair value interest rate risk • As the Group has no significant interest bearing assets, its income and operating cash flows are substantially independent of changes in market interest rates. Long-term borrowings • Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group’s cash flow and fair value interest rate risk is constantly monitored by the Group’s management. The Board is confident that based on the historical performance of the Group, the finance costs are sufficiently covered by the rental income. The Group has two covenants covering Consolidated Gross Borrowings as a percentage of Consolidated Net Tangible Assets, and the ratio of Consolidated PBIT to Consolidated Gross Financing Costs. These covenants were complied with during the financial year. (B) CREDIT RISK Exposure to credit risk and interest risk arises in the 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 will reduce the gearing level and improve the liquidity. A summary table with the majority of financial liabilities is presented in Note 18. 31066 5 July 2022 8:09 am proof 22 63 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Notes to the Consolidated Financial Statements (Continued) for the year ended 31 March 2022 3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONTINUED (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 Net borrowings plus equity Gearing ratio 2022 £000 19,200 (643) 18,557 393,486 412,043 4.5% 2021 £000 21,880 (597) 21,283 394,871 416,154 5.1% 4. ANALYSIS OF REVENUE AND COST OF SALES All revenue arises in England and Wales. 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 2022 £000 46,819 19,191 66,010 19,281 5,863 25,144 27,538 13,328 40,866 2021 £000 46,672 19,058 65,730 17,807 4,701 22,508 28,865 14,357 43,222 Sales of properties included in the Market Valuation undertaken by Allsop LLP as at 30 September 2014. (See Note 15 on page 70.) Value of the Properties included in the Market Valuation as at 30 September 2014 and sold during the year ended 31 March 2022 Properties purchased since 30 September 2014 and sold during the year ended 31 March 2022 Gross sales of properties Allsop Valuation £000 Sales Price £000 22,275 – – 36,812 10,007 46,819 The Market Values were on the basis that properties would be sold subject to any then existing leases and tenancies. 64 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 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/(loss) after tax Assets Liabilities Fixed assets Capital expenditure Depreciation Property trading £000 65,476 34,379 (298) 27,609 396,523 23,012 – 60 2022 Property investment £000 534 343 – (727) 25,718 5,743 – – Group £000 66,010 34,722 (298) 26,882 422,241 28,755 Property trading £000 65,216 36,997 (675) 29,425 401,526 28,087 – 60 – 60 2021 Property investment £000 514 360 – 1,468 25,834 4,402 – 4 Group £000 65,730 37,357 (675) 30,893 427,360 32,489 – 64 Revenue of the property investment segment is derived entirely from rental income. Head office costs have been allocated and included within the Group’s two operating segments. The Group’s two main business segments operate within England and Wales. 6. PROFIT FROM OPERATIONS The operating profit is stated after taking into account: Depreciation of tangible fixed assets Gain on disposal of investment property Auditors’ remuneration – the audit of the Parent Company and Consolidated Financial Statements – the audit of the Company’s subsidiaries pursuant to legislation Operating expenses for investment properties And after crediting: – net rental income – administrative charges to related companies (Note 24) The average monthly number of employees during the year was as follows: Office and management 2022 £000 2021 £000 60 53 53 15 16 64 – 50 15 11 13,328 28 14,357 35 2022 29 2021 29 31066 5 July 2022 8:09 am proof 22 65 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Notes to the Consolidated Financial Statements (Continued) for the year ended 31 March 2022 7. STAFF COSTS (INCLUDING DIRECTORS) Wages and salaries Social security costs Pension costs Directors’ remuneration 2022 £000 3,983 516 57 4,556 2021 £000 3,888 491 54 4,433 Total Directors’ remuneration including salary, bonuses and benefits in kind amounted to: 2,059 2,052 The details of Directors’ remuneration are shown in the audited section of the Remuneration Report on page 50. The Company contributes 3% of the total annual gross salaries and bonuses of each employee, excluding Directors, to a Stakeholder Pension Scheme. 8. FINANCE COSTS Interest on bank overdrafts and loans 9. INCOME TAX EXPENSE (a) Analysis of charge in the year Current tax: UK Corporation Tax 19% (2021: 19%) Deferred tax: Current year 25% (2021: 19%) 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 tax19% (2021: 19%) Expenses not deductible for tax Depreciation in excess of capital allowances Increase in deferred tax due to increase in tax rate Taxation attributable to the Company and its subsidiaries 2022 £000 298 2022 £000 6,637 1,349 7,986 34,868 6,624 (5) (1) 1,368 7,986 2021 £000 675 2021 £000 6,966 275 7,241 38,134 7,245 (3) (1) – 7,241 The UK budget announcement on 3 March 2021 included an increase in the UK’s main corporation tax rate to 25%, which is now substantively enacted. The deferred tax liability has been calculated at this rate, resulting in an additional charge, due to the change in tax rate, of £1.368m. 10. DIVIDENDS On 16 August 2021, a dividend of 225p per share (2020: 200p per share) was paid to the shareholders. On 28 March 2022 a dividend of 500p per share (2021: 200p per share) which included a special dividend of 275p per share was paid to the shareholders. This resulted in total dividends paid in the year of £28.27 million (2021: £15.6 million). In respect of the current year, the Directors propose that a final dividend of 250p per share will be paid to the shareholders on 15 August 2022. 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 2022 is payable to all shareholders on the Register of Members on 8 July 2022. The total estimated final dividend to be paid is £9.75million. 66 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 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 2022 £000 2021 £000 26,882 3,899,014 689.5p 30,893 3,899,014 792.3p Cost At 1 April 2021 Additions Disposals At 31 March 2022 Depreciation At 1 April 2021 Charge for the year On disposals At 31 March 2022 Net book value At 31 March 2021 At 31 March 2022 Property, plant and equipment are located within England and Wales. Cost At 1 April 2020 Additions Disposals At 31 March 2021 Depreciation At 1 April 2020 Charge for the year On disposals At 31 March 2021 Net book value At 31 March 2020 At 31 March 2021 Property, plant and equipment are located within England and Wales. Freehold property £000 Fixtures and fittings £000 Computer equipment £000 2,671 – – 2,671 1,072 53 – 1,125 1,599 1,546 41 – – 41 41 – – 41 – – 24 – – 24 17 7 – 24 7 – Freehold property £000 Fixtures and fittings £000 Computer equipment £000 2,671 – – 2,671 1,019 53 – 1,072, 1,652 1,599 41 – – 41 41 – – 41 – – 24 – – 24 6 11 – 17 18 – Total £000 2,736 – – 2,736 1,130 60 – 1,190 1,606 1,546 Total £000 2,736 – – 2,736 1,066 64 – 1,130 1,670 1,606 31066 5 July 2022 8:09 am proof 22 67 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Notes to the Consolidated Financial Statements (Continued) for the year ended 31 March 2022 13. INVESTMENT PROPERTIES Fair value at 1 April 2021/(2020) Subsequent expenditure Disposals Increase in fair value during the year At 31 March 2022/(2021) 2022 £000 25,574 – (567) 444 25,451 2021 £000 24,122 – – 1,452 25,574 The sales of investment properties are not included in the Group Revenue. During the financial year there was one property disposal (2021: £nil). In 2022 the difference between the sales price of £620,000 and the market fair value of £567,000, resulted in a gain of £53,000. This is shown as a separate line item in the Consolidated Statement of Comprehensive Income for the year ended 31 March 2022. The investment properties represent less than 5% of the Group’s portfolio. LOUISE GOODWIN LIMITED AND A.L.G. PROPERTIES LIMITED The companies’ freehold properties were valued at 31 March 2022 by an external valuer Jeremy Mayhew-Sanders MRICS of Allsop LLP. The valuations are done in accordance with the requirements of the RICS Valuation-Global Standards 2022. These 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 derived using comparable recent market transactions on arm’s length terms. This is the sixth year in which Mr Mayhew-Sanders has valued the properties for accounts purposes but the tenth consecutive year in which Allsop LLP has undertaken the work. Allsop LLP has undertaken work for Mountview Estates P.L.C. for longer than 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. 68 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 13. INVESTMENT PROPERTIES CONTINUED The aggregate Market Value of the Group’s interests in its investment portfolios was: LOUISE GOODWIN LIMITED • Freehold: £22,032,000 (Twenty two million and thirty two thousand pounds). A.L.G. PROPERTIES LIMITED • Freehold: £3,419,000 (Three million, four hundred and nineteen 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(R) “Critical accounting judgements and key areas of estimation uncertainty”. A revaluation of £444,000 has arisen on valuation of investment properties to Market Value as at 31 March 2022 (2021: increase of £1,452,000). This is shown as a separate line item in the Consolidated Statement of Comprehensive Income. The Directors are of the opinion that the Fair Value equates to the Market Value. Investment properties are the only assets of the Group measured at fair value. They are categorised as Level 3 within the fair value hierarchy of IFRS13. 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 Registered Office: Mountview House, 151 High Street, Southgate, London, N14 6EW Registered in England 344034 Louise Goodwin Limited Registered Office: Mountview House, 151 High Street, Southgate, London, N14 6EW Registered in England 691455 A.L.G. Properties Limited Registered Office: Mountview House, 151 High Street, Southgate, London, N14 6EW Registered in England 508842 Principal activity Property Trading Property Investment Property Investment Cost 2021 2022 £000 1 15,351 2,924 18,276 31066 5 July 2022 8:09 am proof 22 69 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Notes to the Consolidated Financial Statements (Continued) for the year ended 31 March 2022 15. INVENTORIES OF TRADING PROPERTIES Residential properties 2022 £000 393,275 2021 £000 398,166 The Company’s freehold and long leasehold interests in its portfolio of properties held as Trading Stock were valued on 30 September 2014 at £665,866,266 (Six hundred and sixty-five million, eight hundred and sixty-six thousand, two hundred and sixty-six pounds) by an External Valuer, Martin Angel FRICS of Allsop LLP. The Trading Stock is carried in the Accounts at the lower of cost and net realisable value and such is the discipline we exercise when purchasing a property that, when influenced by the effects of property price inflation over an extended period of years, the valuation showed a spectacular increase. The individual values were not finely accurate, even though we have no reason to doubt the overall total of the valuation. Thus the valuation is not a useful tool for running the business because we are always going to await vacant possession, and no perceived uplift in value can justify selling a tenanted property. The nature of our business and the rules and conventions under which we operate place no obligation upon us to value our trading stock at any given time and therefore the valuation has not been updated since. 16. TRADE AND OTHER RECEIVABLES Trade receivables Prepayments and accrued income 2022 £000 205 1,121 1,326 2021 £000 111 1,306 1,417 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. 17. TRADE AND OTHER PAYABLES Trade creditors Other taxes and social security costs Other creditors 2022 £000 1,065 244 161 1,470 The Directors consider that the carrying amount of trade and other payables approximates their fair value. 18. BANK OVERDRAFTS, LOANS AND CASH Bank overdrafts Bank loans Other loans CASH AND CASH EQUIVALENTS Bank overdrafts Cash Cash and cash equivalents as at 31 March 70 31066 5 July 2022 8:09 am proof 22 2022 £000 — 19,200 — 19,200 2022 £000 — 643 643 2021 £000 1,672 284 186 2,142 2021 £000 331 20,600 949 21,880 2021 £000 (331) 597 266 Mountview Estates P.L.C. Annual Report and Accounts 2022 18. BANK OVERDRAFTS, LOANS AND CASH CONTINUED Maturity profile of financial liabilities at 31 March 2022 was as follows: Amounts repayable: In one year or less Between one and five years Less: amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months The average interest rates paid were as follows: Bank overdrafts Bank loans Other loans 2022 £000 – 19,200 19,200 – 19,200 2022 % 1.79 2.17 0.50 2021 £000 1,280 20,600 21,880 (1,280) 20,600 2021 % 1.70 2.07 0.50 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 a short-term borrowing facility of £10 million (2021: £10 million) with Barclays Bank. This is due for review in November 2022 and the rate of interest payable is: • 1.6% over base rate on overdraft • Headroom of this facility at 31 March 2022 amounted to £10 million (2021: £9.7 million). 2. The Group has re-negotiated £60 million (2021: £60 million) long-term revolving loan facility with Barclays Bank with a termination date of March 2027. The rate of interest is 1.9% above SONIA. 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 under this facility at 31 March 2022 amounted to £58 million (2021: £57 million). 3. The Group has a £20 million long-term revolving loan facility with HSBC Bank. The termination date for this facility is November 2023. The rate of interest payable on the loan is 2.1% above SONIA. The loan includes a Negative Pledge. The loan is not repayable by instalments. As at 31 March 2022 headroom under this facility amounted to £2.8 million (2021: £2.4 million). 4. Other loans consisted of loans from connected persons, and companies of which Mr D.M. Sinclair is a Director. The balance outstanding as at 31 March 2022 was £NIL (2021: £949,017). • Interest payable on these loans was at 0.5%. 31066 5 July 2022 8:09 am proof 22 71 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Notes to the Consolidated Financial Statements (Continued) for the year ended 31 March 2022 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 Debit to income for the year At 31 March 2022 £000 5,700 5,700 2022 £000 4,351 1,349 5,700 The following are in deferred tax liabilities recognised by the Group and movements thereon during the period: REVALUATION OF PROPERTIES At 1 April Debit/(Credit) to income for the year At 31 March 20. FINANCIAL INSTRUMENTS FAIR VALUE OF FINANCIAL ASSETS 2022 £000 4,351 1,349 5,700 2021 £000 4,351 4,351 2021 £000 4,076 275 4,351 2021 £000 4,076 275 4,351 The Group’s financial assets at the year end, which are measured at amortised cost, consist of cash at bank and in hand of £0.64 million (2021: £0.60 million) and trade receivables. The Directors consider that the carrying amount of cash at bank and in hand approximates their fair value. The trade receivables amounted to £0.21 million (2021: £0.11 million). The Directors consider that the carrying amount of trade receivables approximates their fair value. FAIR VALUE OF BORROWINGS Short-term loans Secured bank loans 2022 £000 — 19,200 19,200 2021 £000 1,280 20,600 21,880 Interest charged in the Statement of Comprehensive Income for the above borrowings amounted to £0.30 million (2021: £0.68 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 18. As at 31 March 2022 it is estimated that a general increase of 1 point in interest rates would decrease the Group’s profit before tax by approximately £192,000 (2021: £218,800). 72 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 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 2022 Interest-bearing loans and borrowings Trade and other payables At 31 March 2021 Interest-bearing loans and borrowings Trade and other payables The Group’s financial liabilities are measured at amortised cost. RECONCILIATION OF MATURITY ANALYSIS At 31 March 2022 Interest bearing loans and borrowings per accounts Interest Financial liability cash flows At 31 March 2021 Interest bearing loans and borrowings per accounts Interest Financial liability cash flows 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 Less than 1 year £000 – 1,470 Between 1 and 5 years £000 19,200 – Less than 1 year £000 Between 1 and 5 years £000 1,280 2,142 20,600 – Less than 1 year £000 – 539 539 Between 1 and 5 years £000 19,200 842 20,042 Less than 1 year £000 Between 1 and 5 years £000 1,280 442 1,722 20,600 697 21,297 Over 5 years £000 – – Over 5 years £000 – – Over 5 years £000 – – – Over 5 years £000 – – – 2022 £000 250 195 Total £000 19,200 1,470 Total £000 21,880 2,142 Total £000 19,200 1,381 20,581 Total £000 21,880 1,139 23,019 2021 £000 250 195 31066 5 July 2022 8:09 am proof 22 73 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Notes to the Consolidated Financial Statements (Continued) for the year ended 31 March 2022 22. OTHER RESERVES Capital reserve Capital redemption reserve Other reserves 2022 £000 25 55 56 136 2021 £000 25 55 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 2022 stood at £56,000 (2021: £56,000). 23. RETAINED EARNINGS Balance at 1 April 2021 Net profit for the year Dividends paid Balance at 31 March 2022 £000 394,540 26,882 (28,267) 393,155 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 £27,762 (2021: £34,800) were charged for these services. (b) Included within other loans repayable in less than one year and on demand was a loan from Sinclair Estates Limited. The balance outstanding at the balance sheet date was £NIL (2021: £537,444). Interest was payable on the loan at 0.5%. Interest paid in the year on this loan amounted to £5,714 (2021: £2,960). (c) Included within other loans repayable in less than one year and on demand was a loan from Ossian Investors Limited. The balance outstanding at the balance sheet date was £NIL (2021: £411,573). Interest was payable on the loan at 0.5%. Interest paid in the year on this loan amounted to £1,634 (2021: £1,210). (d) All of the above loans are unsecured. (e) Transactions between the Group and its subsidiaries, which are related parties, have been eliminated on consolidation and have not been disclosed in this note. (f) The only key management are the Directors. (g) As at 31 March 2022 the Group owed Mr D.M. Sinclair £9,788 (2021: £51,244) in relation to an informal loan. 25. LEASE COMMITMENTS The future aggregate minimum lease payments payable by the Group under non-cancellable leases are as follows: Lease payments due: Not later than one year Later than one year and not later than five years 2022 £000 40 23 63 2021 £000 61 63 124 74 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 Independent Auditor’s Report to the members of Mountview Estates P.L.C. year ended 31 March 2022 OPINION We have audited the Group Financial Statements of Mountview Estates P.L.C. for the year ended 31 March 2022 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards. 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 2022 and of its profit for the year then ended; • have been properly prepared in accordance with UK adopted international accounting standards; and • have been prepared in accordance with the requirements of the Companies Act 2006. BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Group Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. CONCLUSIONS RELATING TO GOING CONCERN In auditing the Group Financial Statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the director’s assessment of the Group’s ability to continue to adopt the going concern basis of accounting included: • reviewing the headroom between the Group’s regular income and its fixed cost base; • consideration of the liquidity of the Group’s assets; • • reviewing post year end property sales; reviewing the Group’s available bank facilities and compliance with covenants; and • consideration of mitigating actions available to management should cash inflows be less than forecast. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In relation to the Group’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. OUR APPROACH TO THE AUDIT Our audit involved obtaining an understanding of the Group and its environment, including its control environment, internal control systems and applicable laws and regulations. This formed the basis for our assessment of the risk of material misstatement at the Group level. The Group reports its operating results and financial position along two business lines, being UK residential trading properties and investment properties. The Group comprises the Parent Company and three subsidiaries. We performed full scope audits of each entity using levels of materiality applicable to each entity, which were lower than Group materiality. At the Group level we also tested the consolidation process. There were no significant changes to our audit approach. 31066 5 July 2022 8:09 am proof 22 75 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Independent Auditor’s Report (Continued) to the members of Mountview Estates P.L.C. year ended 31 March 2022 During our audit we tested and examined information, using sampling and other techniques, to the extent we considered necessary to provide a reasonable basis for us to draw conclusions. We reviewed the Group’s internal controls and obtained our audit evidence largely through substantive procedures. KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Group Financial Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the Group Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. • Revenue recognition – refer to page 59 for the Group’s accounting policy in respect of revenue recognition. Under International Standard on Auditing (ISA) (UK) 240 there is a presumption that there is a risk of fraud in revenue recognition. Revenue is also one of the Group’s key performance indicators. We therefore identified revenue recognition as a significant risk. Revenue was audited in each component to specific performance materiality levels, which were lower than group performance materiality. We verified the occurrence of property sales by selecting an appropriate sample of those sales during the year and verifying to both completion statements and bank transactions. We reviewed other supporting documents to confirm the validity of each completion statement sampled. We also reconciled property stock movements and performed appropriate cut off procedures to ensure that sales were complete and recorded in the correct accounting period. We tested rental income for completeness by sampling from property stock, reviewing the underlying rental agreement and tracing to recorded rental income. Based on our audit testing we did not identify any material instances of revenue not being recognised in accordance with the Group’s accounting policy. • Carrying value of property inventory – refer to page 60 for the Group’s accounting policy in respect of the value of property inventory Property inventory is the Group’s most significant asset and is carried at the lower of cost and net realisable value (“NRV”). NRV is based on vacant possession and is subject to change, largely based on movements in the property market. We therefore determined the valuation of inventory to be a significant risk. Property inventory was audited at component performance materiality levels, which were lower than group performance materiality. We reviewed sales of all properties sold during the year and for a suitable period after the year end to ensure that there was no evidence of properties being sold for less than cost that might indicate potential impairment. We reviewed property purchases during the year to confirm that, in accordance with the Group’s operating model, these were purchased at a discount to market value with vacant possession. We also looked at movements in the UK House Price Index for property inventory locations to identify any indicator of potential impairment. We used this risk assessment to select an appropriate sample of individual properties for testing. For the selected sample we estimated market value with vacant possession based on publicly available price information and by discussing valuations with Group management. We then compared the result with the property cost as recorded in the Group’s records. Based on our audit testing we found the carrying value of inventory to be acceptable. • Valuation of investment properties – refer to page 60 for the Group’s accounting policy in respect of the value of investment properties Whilst we assessed the expected movement in the valuation of investment properties to be immaterial to the Group, we assessed the valuation of investment properties to be a significant risk as these are material to the Group balance sheet and are subject to judgement and estimation in arriving at fair value. Investment property valuation was audited at component performance materiality levels, which were lower than group performance materiality. The investment properties are valued annually by a suitably independent and qualified valuer as disclosed in note 13 to the financial statements. We reviewed the terms of engagement of the valuer, the valuation assumptions and the valuation workings. We also discussed the methodology used with the valuer and compared the revaluation with our expectation based on market data. Based on our audit testing we consider the valuation of investment property to be acceptable. 76 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 OUR APPLICATION OF MATERIALITY We determined overall materiality for the Group to be £4.2 million, which is approximately 1% of gross assets. We concluded that determining materiality based on gross assets was consistent with industry peers and appropriately reflects the nature of the business. We calculated performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality level for the financial statements as a whole. We determined performance materiality to be £3.4m, which was set at 80% of overall materiality. Performance materiality was determined based on our risk assessment, the low level of errors found in prior years, and taking into account the overall control environment and the number and complexity of components in the group. Lower levels of performance materiality were set for each entity within the Group based on the risks assessed within each entity. In addition, we applied a lower materiality of £1.6m to specific income statement items, being net trading profits on the sale of properties, rental income, rental expenses, administrative expenses and finance charges, and £159k for Directors’ transactions. We believe misstatement of these specific income statement items and directors’ transactions of a lesser amount than materiality for the financial statements as a whole could reasonably be expected to influence the Company’s members’ assessment of the financial performance of the Group. We agreed with the Audit and Risk Committee that we would report to them corrected and uncorrected differences in excess of 5% of the materiality level, as well as differences below that threshold that in our view warranted reporting on qualitative grounds. OTHER INFORMATION The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006 In our opinion, based on the work undertaken in the course of the audit: • • the information given in the Strategic Report and the Directors’ Report for the financial year for which the Group Financial Statements are prepared is consistent with the Financial Statements; and the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION In the light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report. We have nothing to report in respect of the following matters in relation to which 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. 31066 5 July 2022 8:09 am proof 22 77 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Independent Auditor’s Report (Continued) to the members of Mountview Estates P.L.C. year ended 31 March 2022 CORPORATE GOVERNANCE STATEMENT The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Statement specified for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit: • Directors’ statement with regards the appropriateness of adopting the going concern basis accounting and any material uncertainties identified set out on page 26; • Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate set out on page 13; • Directors’ statement on whether it has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as set out on page 13; • Directors’ statement on fair, balanced and understandable set out on page 28; • Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 33; • The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 33; and • The section describing the work of the audit committee set out on page 37 RESPONSIBILITIES OF DIRECTORS As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the Group Financial Statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of Group Financial Statements that are free from material misstatement, whether due to fraud or error. In preparing the Group Financial Statements, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE GROUP FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the Group Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group Financial Statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: EXTENT TO WHICH THE AUDIT WAS CONSIDERED CAPABLE OF DETECTING IRREGULARITIES, INCLUDING FRAUD We identified and assessed the risks of material misstatement in respect of irregularities, including fraud and non- compliance with laws and regulations. Our procedures included enquiry of management and the Audit and Risk Committee, together with a review of supporting documentation such as board minutes and audit committee meeting minutes. We contacted the Group’s legal advisers and reviewed legal expenses. We also performed analytical review procedures to identify any unusual relationships that may indicate a material misstatement, and additionally tested the appropriateness of journals to address the risk of fraud through management override of controls. We also performed appropriate testing 78 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 in respect of the risk of fraud in revenue recognition as described above under key audit matters. Additionally, the risk of management bias in the valuation of property inventory and investment property, was covered by our testing on each of these areas as described above under key audit matters. Relevant laws and regulations, together with potential fraud risks, were communicated to the audit engagement team at the planning stage to ensure they remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. The risk of not detecting a material misstatement resulting from fraud or other irregularities is higher than for one resulting from error, as they may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control and may involve any area of law and regulation not just those directly affecting the financial statements. A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. OTHER MATTERS WHICH WE ARE REQUIRED TO ADDRESS Following the recommendation of the Audit and Risk Committee, we were appointed by the Directors on 21 March 2022. The period of total uninterrupted engagement is 16 years for the year ended 31 March 2022. The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or to the Parent Company and we remain independent of the Group and the Parent Company in conducting our audit. Our audit opinion is consistent with the additional report to the Audit and Risk Committee. We have reported separately on the Parent Company Financial Statements of Mountview Estates P.L.C. for the year ended 31 March 2022. The opinion in that report is unmodified. THE PURPOSE OF OUR AUDIT WORK AND TO WHOM WE OWE OUR RESPONSIBILITIES This report is made solely to the company’s members, as a body, in accordance with chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Gary Allen FCA (Senior Statutory Auditor) For and on behalf of BSG Valentine (UK) LLP Chartered Accountants & Statutory Auditor Lynton House 7 - 12 Tavistock Square London WC1H 9BQ 5 July 2022 31066 5 July 2022 8:09 am proof 22 79 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Company Balance Sheet under UK GAAP for the year ended 31 March 2022 Fixed assets Tangible assets Investments Current assets Stocks Debtors Cash at bank and in hand Creditors: amounts falling due within one year Net current assets Total assets less current liabilities Creditors: amounts falling due after more than one year Capital and reserves Called up share capital Capital redemption reserve Capital reserve Other reserves Profit and loss account The Company’s profit for the year was £25.7m (2021: £27.8m) Approved by the Board on 5 July 2022. D.M. Sinclair Chief Executive M.M. Bray Director Company no: 00328020 31 March 2022 £000 31 March 2021 £000 Notes 4 5 6 7 8 9 10 11 11 11 12 1,546 18,276 19,822 364,769 1,093 499 366,361 (23,936) 342,425 362,247 (19,200) 343,047 195 55 25 39 342,733 343,047 1,606 18,276 19,882 369,227 1,209 470 370,906 (24,617) 346,289 366,171 (20,600) 345,571 195 55 25 39 345,257 345,571 The Notes on pages 82 to 87 are an integral part of the Parent Company financial statements. 80 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 Company Statement of Changes in Equity under UK GAAP for the year ended 31 March 2022 Changes in equity for year ended 31 March 2021 Balance as at 1 April 2020 Profit for the year Dividends Balance at 31 March 2021 Changes in equity for year ended 31 March 2022 Balance as at 1 April 2021 Profit for the year Dividends Balance at 31 March 2022 Share capital £000 195 195 195 195 Capital reserve £000 Capital redemption reserve £000 Other reserves £000 25 25 25 25 55 55 55 55 39 39 39 39 Retained earnings £000 333,084 27,769 (15,596) 345,257 Total £000 333,398 27,769 (15,596) 345,571 345,257 25,743 (28,267) 342,733 345,571 25,743 (28,267) 343,047 The Notes on pages 82 to 87 are an integral part of the Parent Company financial statements. 31066 5 July 2022 8:09 am proof 22 81 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Notes to the Financial Statements under UK GAAP for the year ended 31 March 2022 1. STATEMENT OF COMPLIANCE These financial statements have been prepared in compliance with FRS 102, ‘The Financial Reporting Standard applicable in the UK and the Republic of Ireland’. 2. ACCOUNTING POLICIES BASIS OF PREPARATION The financial statements have been prepared on the historical cost basis. The financial statements are prepared in sterling, which is the functional currency of the entity. The Company has taken advantage of the exemption in section 408 of the Companies Act from disclosing its individual profit and loss account. As permitted by FRS 102 the Company has taken advantage of the disclosure exemptions available under that standard in relation to financial instruments and presentation of a cash flow statement and related party transactions with other wholly- owned members of the Group. Where required, equivalent disclosures are given in the Group accounts of Mountview Estates plc. REVENUE RECOGNITION 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. Rental income is recognised on a straight-line and accruals basis over the rental period. Sales of properties are recognised on completion. INCOME TAX The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference. LEASING Company as lessor The Company’s non-cancellable operating leases relate to regulated tenancies under which tenants have the right to remain in a property for the remainder of their lives. It is therefore not possible to estimate timing of future minimum payments in respect of these regulated tenancies, hence these are not separately disclosed in the financial statements. Company as lessee Rentals payable under operating leases are recognised as an expense on a straight-line basis over the term of the lease. TANGIBLE ASSETS Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. 82 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 2. ACCOUNTING POLICIES CONTINUED DEPRECIATION Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset using the straight-line method as follows: Freehold property Fixtures and fittings Computer equipment INVESTMENTS – 2% per annum – 20% per annum – 25% per annum Fixed asset investments are initially recorded at cost, and subsequently stated at cost less any accumulated impairment losses. IMPAIRMENT OF FIXED ASSETS A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash- generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. FINANCIAL INSTRUMENTS Financial assets and financial liabilities are recognised in the Company’s balance sheet when the Company has become a party to the contractual provisions of the instrument. Trade and other receivables, trade and other payables, loans and cash and cash equivalents are measured at amortised cost. 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 Company includes legal fees and commission charges incurred during acquisition together with improvement costs. Net realisable value is the net sale proceeds which the Company expects on sale of the property with vacant possession in its current condition. PENSION COSTS Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund. CRITICAL ACCOUNTING JUDGEMENTS AND KEY AREAS OF ESTIMATION UNCERTAINTY Going concern The Directors are required to make an assessment of the Company’s ability to continue to trade as a going concern. The two main considerations were as follows: 1. Refinancing of banking facilities The Company has re-negotiated a £60 million (2021: £60 million) revolving loan facility with Barclays Bank. The termination date of this facility is March 2027. The Company has a £20 million (2021: £20 million) revolving loan facility with HSBC Bank with a termination date of November 2023. 31066 5 July 2022 8:09 am proof 22 83 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Notes to the Financial Statements under UK GAAP (Continued) for the year ended 31 March 2022 2. ACCOUNTING POLICIES CONTINUED 2. Covenant compliance The core facility has two covenants, Consolidated Gross Borrowing as a percentage of Consolidated Net Tangible Assets, and the ratio of Consolidated PBIT to Gross Financing Costs. The Company has remained well within both of these covenants during the year. On this basis, the Directors have a reasonable expectation that the Company has 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. Carrying value of trading stock The Company’s residential trading stock is carried in the balance sheet at the lower of cost and net realisable value. As the Company’s business model is to sell trading stock on vacancy, net realisable value is the net sales proceeds which the Company expects on sale of a property with vacant possession. Given that by applying our buying criteria all stock is purchased at a discount to the value with vacant possession the Directors consider the risk of impairment to be low and accordingly the Company has no NRV provision. Inventory expected to be settled in more than 12 months The Board estimates that inventory of £18.3 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. STAFF COSTS (INCLUDING DIRECTORS) Wages and salaries Social security costs Pension costs Directors’ Remuneration Total Directors’ remuneration including salary and bonuses and benefits in kind amounted to: 2022 £000 3,983 516 57 4,556 2022 £000 2,059 2021 £000 3,888 491 54 4,433 2021 £000 2,052 The details of Directors’ remuneration are shown in the audited section of the Remuneration Report on page 50. The Company contributes 3% of the total annual gross salaries and bonuses of each employee, excluding Directors, to a Stakeholder Pension Scheme. The average monthly number of employees during the year was as follows: Office and management 2022 29 2021 29 84 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 4. TANGIBLE ASSETS Cost At 1 April 2021 Additions Disposals At 31 March 2022 Depreciation At 1 April 2021 Charge for the year On disposals At 31 March 2022 Net book value At 31 March 2021 At 31 March 2021 All tangible assets of the Company are located within England and Wales. 5. INVESTMENTS Cost At 1 April 2021 and 31 March 2022 Impairment At 1 April 2021 and 31 March 2022 Carrying amount At 31 March 2022 The Company owns 100% of the Ordinary Share capital of the following companies: Freehold property £000 Computer equipment £000 2,671 – – 2,671 1,072 53 – 1,125 1,599 1,546 24 – – 24 17 7 – 24 7 – Total £000 2,695 – – 2,695 1,089 60 – 1,149 1,606 1,546 Shares in Group undertakings £000 18,276 – 18,276 Subsidiary undertaking Hurstway Investment Company Limited Registered Office: Mountview House, 151 High Street, Southgate, London, N14 6EW Louise Goodwin Limited Registered Office: Mountview House, 151 High Street, Southgate, London, N14 6EW A.L.G. Properties Limited Registered Office: Mountview House, 151 High Street, Southgate, London, N14 6EW 6. STOCKS Residential properties 7. DEBTORS: DUE WITHIN ONE YEAR Trade debtors Prepayments and accrued income Country of incorporation Principal activity England, UK No: 344034 England, UK No: 691455 England, UK No: 508842 Property Trading Property Investment Property Investment 2022 £000 364,769 2021 £000 369,227 2022 £000 204 889 1,093 2021 £000 110 1,099 1,209 85 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Notes to the Financial Statements under UK GAAP (Continued) for the year ended 31 March 2022 8. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Bank overdraft Amounts owed to Group undertakings Accruals and deferred income Corporation Tax Other taxes and social security costs Other creditors Other loans 2022 £000 – 20,164 1,017 2,350 244 161 – 23,936 Other loans consist of loans from connected persons. Interest payable on these loans was at 0.5%. 9. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Bank loans 2022 £000 19,200 19,200 2021 £000 331 17,306 1,626 3,935 284 186 949 24,617 2021 £000 20,600 20,600 The Directors consider that the carrying amount of bank overdrafts and loans approximates their fair value. The other principal features of the Company’s borrowings are as follows. 1. The Company has a short-term borrowing facility of £10 million (2021: £10 million) with Barclays Bank. This is due for review in November 2022 and the rate of interest payable is: • 1.6% over base rate on overdraft. Headroom of this facility at 31 March 2022 amounted to £10 million (2021: £9.7 million). 2. The Group has re-negotiated £60 million (2021 £60 million) long term revolving loan facility with Barclays Bank with a termination date of March 2027. The rate of interest is 1.9% above SONIA. 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 under this facility at 31 March 2022 amounted to £58 million (2021 £57 million). 3. The Company has a £20 million (2021: £20 million) long-term revolving loan facility with HSBC Bank. The termination date for this facility is November 2023. The rate of interest payable on the loan is 2.1% above SONIA. The loan includes a Negative Pledge. The loan is not repayable by instalments. As at 31 March 2022 headroom under this facility amounted to £2.8 million (2021: £2.4 million). 4. Other loans consisted of loans from connected persons, and companies of which Mr D.M. Sinclair is a Director. The balance outstanding as at 31 March 2022 was £NIL (2021: £949,017). Interest payable on these loans was at 0.5%. 10. 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 2022 £000 250 195 2021 £000 250 195 86 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 11. OTHER RESERVES Capital redemption reserve Capital reserve Other reserves Balance at 31 March 2022 £000 55 25 39 119 2021 £000 55 25 39 119 Capital redemption reserve relates to buy-back of the Company’s own shares. The Company 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 2022 stood at £39,000 (2021: £39,000). 12. RETAINED EARNINGS Balance at 1 April Net profit for the year Dividends paid Balance at 31 March 2022 £000 345,257 25,743 (28,267) 342,733 2021 £000 333,084 27,769 (15,596) 345,257 13. RELATED PARTY TRANSACTIONS During the financial year there were no key management personnel emoluments, other than remuneration. (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 £27,762 (2021: £34,800) were charged for these services. (b) Included within other loans repayable in less than one year and on demand was a loan from Sinclair Estates Limited. The balance outstanding at the balance sheet date was £NIL (2021: £537,444). Interest was payable on the loan at 0.5%. Interest paid in the year on this loan amounted to £5,714 (2021: £2,960). (c) Included within other loans repayable in less than one year and on demand was a loan from Ossian Investors Limited. The balance outstanding at the balance sheet date was £NIL (2021: £411,573). Interest was payable on the loan at 0.5%. Interest paid in the year on this loan amounted to £1,634 (2021: £1,210). (d) All of the above loans are unsecured. (e) Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and have not been disclosed in this note. (f) The only key management are the Directors. (g) As at 31 March 2022 the Company owed Mr D.M. Sinclair £9,788 (2021: £51,244) in relation to an informal loan. 14. LEASE COMMITMENTS At 31 March 2022 the Company had aggregate annual commitments under non-cancellable operating leases as follows. Operating lease payments due: Not later than one year Later than one year and not later than five years 31066 5 July 2022 8:09 am proof 22 2022 £000 40 23 63 2021 £000 61 63 124 87 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Independent Auditor’s Report to the members of Mountview Estates P.L.C. year ended 31 March 2022 OPINION We have audited the Parent Company Financial Statements of Mountview Estates P.L.C. for the year ended 31 March 2022 which comprise the Company Balance Sheet, Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In our opinion the Parent Company Financial Statements: • give a true and fair view of the state of the Parent Company’s affairs as at 31 March 2022; • 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. BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Parent Company financial statements section of our report. We are independent of the Parent Company in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. CONCLUSIONS RELATING TO GOING CONCERN In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the director’s assessment of the Parent Company’s ability to continue to adopt the going concern basis of accounting included: • reviewing the headroom between the Parent Company’s regular income and its fixed cost base; • consideration of the liquidity of the Parent Company’s assets; • • reviewing post year end property sales; reviewing the Parent Company’s available bank facilities and compliance with covenants; and • consideration of mitigating actions available to management should cash inflows be less than forecast. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Parent Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In relation to the Parent Company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. OUR APPROACH TO THE AUDIT Our audit involved obtaining an understanding of the Parent Company and its environment, including its control environment, internal control systems and applicable laws and regulations. This formed the basis for our assessment of the risk of material misstatement. We performed a full scope audit of the Parent Company. There were no significant changes in our audit approach. During our audit we tested and examined information, using sampling and other techniques, to the extent we considered necessary to provide a reasonable basis for us to draw conclusions. We reviewed the Parent Company’s internal controls and obtained our audit evidence largely through substantive procedures. 88 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Parent Financial Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the Parent Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The key audit matters relating to both the Parent Company and the Group were revenue recognition and valuation of trading properties. An explanation of these matters and how these were addressed during our audit can be found in our audit report on the Group Financial Statements on page 76. We identified one key audit matter that related solely to the Parent Company, which was the recoverability of investments in subsidiaries. Investments in subsidiaries are stated at cost as described in the Parent Company’s accounting policies on page 83. The cost of investment should be supported by the underlying value of the subsidiaries. We tested this by a review of the subsidiaries’ year-end financial statements. We used their net assets as an approximation of recoverable value and compared these to the cost of investment in the Parent Company. Based on our audit testing we are satisfied with the recoverability of investments in subsidiaries. OUR APPLICATION OF MATERIALITY We determined overall materiality for the Parent Company to be £3.9 million, which is approximately 1% of gross assets. We concluded that determining materiality based on gross assets was consistent with industry peers and appropriately reflects the nature of the business. We calculated performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality level for the financial statements as a whole. We determined performance materiality to be £3.1m, which was set at 80% of overall materiality. Performance materiality was determined based on our risk assessment, taking into account the overall control environment, the low level of errors found in prior years and the complexity of the Parent Company’s operations. In addition, we applied a lower materiality of £1.6m to specific income statement items, being net trading profits, rental income, rental expenses, administrative expenses and finance charges, and £159k for directors’ transactions. We believe misstatement of these specific income statement items and directors’ transactions of a lesser amount than materiality for the financial statements as a whole could reasonably be expected to influence the company’s members’ assessment of the financial performance of the Parent Company. We agreed with the Audit and Risk Committee that we would report to them corrected and uncorrected differences in excess of 5% of the materiality level, as well as differences below that threshold that in our view warranted reporting on qualitative grounds. OTHER INFORMATION The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 31066 5 July 2022 8:09 am proof 22 89 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Independent Auditor’s Report (Continued) to the members of Mountview Estates P.L.C. year ended 31 March 2022 OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006 In our opinion the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. In our opinion, based on the work undertaken in the course of the audit: • the information given in the Strategic Report and the Directors’ Report for the financial year for which the Parent Company Financial Statements are prepared is consistent with the Financial Statements; and • the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report. We have nothing to report in respect of the following matters in relation to which 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. RESPONSIBILITIES OF DIRECTORS As explained more fully in the Directors’ Responsibilities Statement, 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, and for such internal control as the Directors determine is necessary to enable the preparation of Parent Company Financial Statements that are free from material misstatement, whether due to fraud or error. In preparing the Parent Company Financial Statements, the Directors are responsible for assessing the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Parent Company or to cease operations, or have no realistic alternative but to do so. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE PARENT COMPANY FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the Parent Company Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Parent Company Financial Statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: 90 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 EXTENT TO WHICH THE AUDIT WAS CONSIDERED CAPABLE OF DETECTING IRREGULARITIES, INCLUDING FRAUD We identified and assessed the risks of material misstatement in respect of irregularities, including fraud and non- compliance with laws and regulations. Our procedures included enquiry of management and the Audit and Risk Committee, together with a review of supporting documentation such as board minutes and audit committee meeting minutes. We contacted the Company’s legal advisers and reviewed legal expenses. We also performed analytical review procedures to identify any unusual relationships that may indicate a material misstatement, and additionally tested the appropriateness of journals to address the risk of fraud through management override of controls. We also performed appropriate testing in respect of the risk of fraud in revenue recognition, and in respect of the risk of management bias in the valuation of property inventory, as described in the Group audit report under key audit matters on page 76. Relevant laws and regulations, together with potential fraud risks, were communicated to the audit engagement team at the planning stage to ensure they remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. The risk of not detecting a material misstatement resulting from fraud or other irregularities is higher than for one resulting from error, as they may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control and may involve any area of law and regulation not just those directly affecting the financial statements. A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. OTHER MATTERS WHICH WE ARE REQUIRED TO ADDRESS Following the recommendation of the Audit and Risk Committee, we were appointed by the Directors on 21 March 2022. The period of total uninterrupted engagement is 16 years for the year ended 31 March 2022. The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Parent Company and its controlled undertakings and we remain independent of the Parent Company and its controlled undertakings in conducting our audit. Our audit opinion is consistent with the additional report to the Audit and Risk Committee. We have reported separately on the Group Financial Statements of Mountview Estates P.L.C. for the year ended 31 March 2022. That report includes details of the group key audit matters. The opinion in that report is unmodified. THE PURPOSE OF OUR AUDIT WORK AND TO WHOM WE OWE OUR RESPONSIBILITIES This report is made solely to the company’s members, as a body, in accordance with chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Gary Allen FCA (Senior Statutory Auditor) For and on behalf of BSG Valentine (UK) LLP Chartered Accountants & Statutory Auditor Lynton House 7 - 12 Tavistock Square London WC1H 9BQ 5 July 2022 31066 5 July 2022 8:09 am proof 22 91 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Table of Comparative Figures (unaudited) for the year ended 31 March 2022 IFRS 2016 £000 79,765 48,388 9,676 38,712 992.9p 300p 3.31 11,698 3,631 1,604 IFRS 2017 £000 78,232 44,986 8,761 36,225 929.1p 300p 3.17 11,698 3,747 1,768 IFRS 2018 £000 70,272 36,905 7,024 29,881 766.4p 400p 1.92 15,596 3,743 1,669 IFRS 2019 £000 65,428 34,567 6,559 28,008 718.3p 400p 1.75 15,596 3,928 1,667 IFRS 2020 £000 64,873 34,941 6,645 28,296 725.7p 400p 1.81 15,596 4,093 1,756 As at 31 March 2022 IFRS 2022 £000 66,010 34,868 7,986 26,882 689.5p 750p 0.92 29,242* 4,556 1,877 IFRS 2021 £000 65,730 38,134 7,241 30,893 792.3p 425p 1.86 16,571 4,433 1,875 31.04% 32.03% 24.00% 25.19% 26.24% 26.76% 15.58% 44.18% 47.18% 44.59% 42.44% 42.90% 42.30% 41.20% 13.71% 15.11% 10.70% 10.69% 11.26% 11.32% 6.42% 3.31% 3.93% 4.52% 4.82% 5.03% 4.92% 5.39% 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 a percentage of dividend Cost of Executive Directors’ remuneration as a percentage of total remuneration Cost of Executive Directors’ remuneration as a percentage of dividend Executive Directors’ remuneration as a percentage of profit before taxation * The £29.2 million dividend in relation to 2022 is made up of the interim dividend of £19.5 million (comprising an £8.8 million interim dividend and a £10.7 million special dividend) and the final dividend of £9.7 million, which will be paid on 15 August 2022, subject to approval at the AGM on 10 August 2022. 92 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 Notice of Meeting ATTENDANCE AT THE MEETING We are keen to welcome shareholders in person to our 2022 Annual General Meeting (2022 AGM). At present, it is possible under Covid-19 guidance to welcome shareholders to attend the 2022 AGM in person. Those attending the AGM will be required to follow any specific health and safety measures in place at the venue of the 2022 AGM on 10 August 2022. Failure to follow these requirements may result in a delay in entering the meeting. Any specific measures in place will be published prior to the meeting on the Company’s website: www.mountviewplc.co.uk The safety and security of shareholders, directors, employees and those involved in running the meeting is very important to us. Therefore, please do not attend in person if you know you have been in contact with a confirmed Covid-19 case in the last five days, have symptoms of, or have tested positive for Covid-19 yourself. All resolutions for the consideration at the 2022 AGM will be voted on a poll, rather than a show of hands, and all valid proxy votes cast will count towards the poll votes. The results will be announced via a regulatory announcement and will be posted on the Company’s website as soon as practicable after the 2022 AGM. Shareholders are encouraged to vote in advance by appointing a proxy, regardless of whether or not they intend to attend the 2022 AGM in person, see details below for appointing a proxy. APPOINTING A PROXY Shareholders can vote ahead of the 2022 AGM by appointing a proxy to vote on the resolutions set out in the Notice of Annual General Meeting (see page 94) and should do so as soon as possible, and in any event by 11.00 am on 8 August 2022. All shareholders are encouraged to appoint the chairman of the meeting as their proxy even if they intend to attend in person at the 2022 AGM. This is to ensure that your vote is counted even if you (or any other proxy you might otherwise appoint) are not able to attend in person on the day of the 2022 AGM. Shareholders can vote ahead of the 2022 AGM, either by completing and returning a Proxy Form or by appointing a proxy electronically via our registrar’s website by visiting www.signalshares.com. Shareholders will need their Investor Code which is located on their share certificate or on a recent dividend confirmation. Full instructions are given on the website. The completion and submission of a form of proxy will not prevent you from attending and voting in person at the 2022 AGM, subject to prevailing Government guidance and to the restrictions set out in the notice of the 2022 AGM and as notified on the Company’s website. The Board considers that the resolutions set out in the notice of the 2022 AGM are in the best interests of the Company and its shareholders as a whole and unanimously recommends shareholders to vote in favour of them as the Directors intend to do so in respect of their own beneficial shareholdings. 31066 5 July 2022 8:09 am proof 22 93 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Notice of Meeting (Continued) NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the 85th Annual General Meeting of the Members of Mountview Estates P.L.C. (incorporated in England and Wales with registered number 00328020) (the Company) will be held at the offices of Norton Rose Fulbright LLP, 3 More London Riverside, London SE1 2AQ on 10 August 2022 at 11.00 am. Shareholders will be asked to consider and, if thought fit, pass the following resolutions, which will be proposed as ordinary resolutions. 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 2022. 2. To declare a final dividend of 250 pence per share payable on 15 August 2022 to shareholders on the register at 8 July 2022. 3. To re-elect Mrs M.M. Bray as a Director of the Company. 4. To re-elect Mr D.M. Sinclair as a Director of the Company. 5. To re-elect Ms M.L. Archibald as a Director of the Company, provided that resolution 12 is passed. 6. To re-elect Mr A.W. Powell as a Director of the Company, provided that resolution 13 is passed. 7. To re-elect Dr A.R. Williams as a Director of the Company. 8. To approve the Directors’ Remuneration Report (other than the part containing the Directors’ Remuneration Policy) in the Annual Report and Accounts for the year ended 31 March 2022. 9. To approve the Directors’ Remuneration Policy set out on pages 43 to 49 of the Directors’ Remuneration Report which is contained in the Annual Report and Accounts for the year ended 31 March 2022, such policy to take effect from the conclusion of the Annual General Meeting. 10. To elect Messrs BSG Valentine (UK) LLP as Auditors of the Company to hold office from the conclusion of the Annual General Meeting to the conclusion of the next meeting at which the Company’s Annual Report and Accounts are laid before the meeting. 11. To authorise the Directors to determine the Auditors’ remuneration for the ensuing year. In accordance with Listing Rule 9.2.2ER notice is also hereby given for the independent shareholders of the Company only: 12. To re-elect Ms M.L. Archibald as a Director of the Company, provided that resolution 5 is passed. 13. To re-elect Mr A.W. Powell as a Director of the Company, provided that resolution 6 is passed. By Order of the Board M.M. Bray Company Secretary Mountview House 151 High Street Southgate London N14 6EW 5 July 2022 94 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 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 Link Group PSX1, Central Square, 29 Wellington Street, Leeds, LS1 4DL. 2. A Form of Proxy is enclosed with this Annual Reports and Accounts and Notice of the 2022 AGM and should be completed in accordance with the instructions contained therein. 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, Link Group PSX1, Central Square, 29 Wellington Street, Leeds, LS1 4DL, by 11.00 am on 8 August 2022 or in the case of any adjournment of the meeting, not later than 48 hours before the time of such adjourned meeting. Amended instructions must also be received by the Company’s Registrars by the deadline for receipt of Forms of Proxy. 3. You may also submit your voting instructions electronically via our registrar’s website. Please go to www.signalshares.com and enter Mountview Estates P.L.C. If you have not already registered for Signal Shares you will need to enter your Investor Code which can be found on your share certificate. Once registered you will be able to vote immediately by selecting ‘Proxy Voting’ from the menu. In order to be a valid proxy appointment, the member’s electronic message confirming the details of the appointment completed in accordance with those instructions must be transmitted so as to be received no later than 11.00 am on 8 August 2022. The proxy appointment will not be accepted if found to contain a computer virus. 4. 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 11.00 am on 8 August 2022 or in the case of any adjournment of the meeting, not later than 48 hours before the time of such adjourned meeting. 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 (as amended). In any case your proxy instruction must be received by the Company’s Registrars, Link Group PSX1, Central Square, 29 Wellington Street, Leeds, LS1 4DL by 11.00 am on 8 August 2022 or not later than 48 hours before the time of any adjourned meeting. 5. 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 Members 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. 31066 5 July 2022 8:09 am proof 22 95 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Notice of Meeting (Continued) 6. 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 close of business on 8 August 2022 (the ”Specified Time”) or 48 hours (excluding any day or part of any day that is not a working day) before the date of any 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. 7. 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. 8. 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 Guidance and Transparency Rules, the Chairman will make the necessary notifications to the Company and the Financial Conduct 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 Guidance and Transparency Rules, need not make a separate notification to the Company and the Financial Conduct Authority. 9. 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, 5 July 2022, 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. 10. 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 Auditors’ 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 Auditors 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. 11. Any Member attending the meeting has the right to ask questions. The Company must cause to be answered any question relating to the business being dealt with at the meeting put by a member attending the meeting. However, Members should note that no answer need be given in the following circumstances: (a) if to do so would interfere unduly with the preparation of the meeting or would involve a disclosure of confidential information; (b) if the answer has already been given on a website in the form of an answer to a question; or (c) if it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. Members can also send to the Company any questions in relation to the business of the meeting in advance by email to reception@mountviewplc.co.uk or by writing to the Company Secretary, Mountview House, 151 High Street, Southgate, London N14 6EW. Please submit questions as soon as possible and in any event no later than 29 July 2022. Responses to relevant questions submitted by 29 July 2022 will be provided, by way of a written Q&A, grouped into themes, posted on the Company’s website as soon as practicable in advance of the meeting, and no 96 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 later than 5 August 2022. Some, but not all, questions may receive individual responses. For questions received after 29 July 2022, the Directors will endeavour to provide answers as soon as practicable but responses may be provided after 5 August 2022. Responses will not be provided to questions which do not relate to the business of the meeting or that the Directors determine require disclosure of confidential or commercially sensitive information or are already answered on the website or are already addressed elsewhere including in the annual report and accounts. The Company reserves the right to answer questions only from Members or those legally permitted to raise questions at the meeting. 12. 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. 13. As at, 5 July 2022, 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, 5 July 2022, are 3,899,014. 14. 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 and at the place of meeting from 15 minutes before the meeting until it ends. 15. Your personal data includes all data provided by you, or on your behalf, which relates to you as a shareholder, including your name and contact details, the votes you cast and your Shareholder Reference Number (attributed to you by the Company). The Company determines the purposes for which and the manner in which your personal data is to be processed. The Company and any third party to which it discloses the data (including the Company’s registrar) may process your personal data for the purposes of compiling and updating the Company’s records, fulfilling its legal obligations and processing the shareholder rights you exercise. A copy of the Company’s privacy policy can be found online at: https://mountviewplc.co.uk/privacy.html 16. Explanatory note for resolutions 5, 6, 12 and 13: Changes to the Financial Conduct Authority’s Listing Rules (LR) in 2014 introduced new voting requirements for the election of independent Directors in listed companies with a controlling shareholder (a shareholder who exercises 30% or more of the votes). Under the rules, the election or re-election of any Director whom the Company has determined to be independent under the UK Corporate Governance Code must be approved by the shareholders as a whole, and separately by all shareholders excluding the Sinclair family concert party which is collectively deemed to be a controlling shareholder (the Independent Shareholders). Therefore at this year’s meeting there will be two votes each in relation to the re-election of the Non-Executive Director, Ms. M.L. Archibald and the re-election of the Non-Executive Director, Mr. A. W. Powell, one vote by the shareholders as a whole and another vote by the Independent Shareholders. If a vote to re-elect a Non-Executive Director is not passed by the Independent Shareholders, the Company may propose a further resolution to re-elect the relevant Director between 90 and 120 days from the date of the original vote. This further resolution in respect of each Non-Executive Director must be passed by a majority of the shareholders as a whole only, and there is no requirement for an additional vote by the Independent Shareholders. LR 9.2.2DG allows any Non-Executive Director who is not re-elected by the Independent Shareholders to remain in office until the further resolution has been voted on. 31066 5 July 2022 8:09 am proof 22 97 Mountview Estates P.L.C. Annual Report and Accounts 2022FINANCIAL STATEMENTS Shareholder Information FINANCIAL CALENDAR 2022 Final dividend record date Annual Report posted to Shareholders Annual General Meeting Final dividend payment Interim results 8 July 8 July 10 August 15 August 24 November Copies of this statement are being sent to Shareholders. Copies may be obtained from the Company’s registered office: Mountview House 151 High Street, Southgate, London, N14 6EW All administrative enquiries relating to shareholdings should be addressed to the Company’s Registrars: Link Group 10th Floor, Central Square, 29 Wellington Street, Leeds, LS1 4DL 98 31066 5 July 2022 8:09 am proof 22 Mountview Estates P.L.C. Annual Report and Accounts 2022 31066 5 July 2022 8:09 am proof 19 99 Mountview Estates P.L.C. Annual Report and Accounts 2022 M O U N T V I E W E S T A T E S P. L . C . A n n u a l R e p o r t a n d A c c o u n t s 2 0 2 2 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 31066 5 July 2022 8:09 am proof 22
Continue reading text version or see original annual report in PDF format above