Annual Report • Mar 31, 2011
Annual Report
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REPORT AND ACCOUNTS
2011
| CONTENTS | 1 | |
|---|---|---|
| M O |
||
| Page | U N T V |
|
| Financial Highlights | 2 | I E W |
| Chairman's Statement | 3 | E S |
| Review of Operations | 4 | T A |
| Directors and Advisers | 7 | T E |
| Report of the Directors | 8 | S |
| Statement of Directors' Responsibilities | 12 | P. L. C. |
| Corporate Governance | 13 | |
| Remuneration Report | 16 | |
| Consolidated Income Statement | 19 | |
| Consolidated Statement of Comprehensive Income | 20 | |
| Consolidated Statement of Financial Position | 21 | |
| Consolidated Statement of Changes in Equity | 22 | |
| Consolidated Cash Flow Statement | 23 | |
| Notes to the Consolidated Financial Statements | 24 | |
| Independent Auditors' Report to the Members of Mountview Estates P.L.C. | 44 | |
| Mountview Estates P.L.C. – parent company balance sheet prepared under UK GAAP | 46 | |
| Notes to the parent Company financial statements prepared under UK GAAP | 47 | |
| Independent Auditors' Report to the Members of Mountview Estates P.L.C. on the parent Company financial statements prepared under UK GAAP |
54 | |
| Table of Comparative Figures | 55 | |
| Notice of Meeting | 56 | |
| Shareholders' Information | 59 |
L. C.
| 2011 | 2010 | (Decrease) | |
|---|---|---|---|
| £ | £ | /Increase % |
|
| Turnover (millions) | 47.7 | 56.7 | (15.9) |
| Gross Profit (millions) | 29.1 | 34.5 | (15.7) |
| Profit Before Tax (millions) | 23.6 | 29.3 | (19.5) |
| Profit Before Tax excluding investment properties revaluation (millions) |
21.1 | 27.1 | (22.1) |
| Equity Holders' Funds (millions) | 214.9 | 203.1 | 5.8 |
| Earnings Per Share (pence) | 435.3 | 554.8 | (21.5) |
| Net Assets Per Share | 55.1 | 52.1 | 5.8 |
| Dividend Per Share (pence) | 165 | 165 | – |
The year ended 31 March 2011 has been a difficult one but the results are satisfactory and there has been good progress towards the changes that must be made for the future prosperity of the Company. The year ended 31 March 2010 saw a strong recovery from the disappointing results of the previous year but, as the realities of the country's economic situation became apparent under the new government, it has not been possible to maintain that recovery in its fullest form this year.
My suggestion at the interim stage that the second half of the Company's financial year might be as good as the first half happily proved to be accurate almost to the penny and the gross profit as a percentage of turnover has at least matched last year's performance. In the second half of this financial year the Company has made significant purchases and this trend has continued since 1 April 2011.
In a company as small as this each staff departure is a significant inconvenience but also a significant opportunity to make the changes that will enable the Company to progress towards a sound future. New recruitments have been made and further changes of personnel will be made as and when appropriate.
Following the acquisition of the Magdalen Park Estate portfolio at the end of January 2008 there was necessarily an emphasis on the repayment of debt and that has been achieved very successfully. Arguably that emphasis was overdone and the necessity for new purchases was overlooked. That necessity is being addressed but the level of indebtedness is being carefully monitored.
Economic conditions are not expected to be easy during the coming year although interest rates presently remain at historic lows. The Company is well placed to take advantage of good purchasing opportunities and I expect the Company's portfolio of properties to be significantly larger by the end of the year. The coming year is about building for and preparing for the future so that we are well placed to take advantage when the housing market improves.
My staff and colleagues have continued to work hard but unfortunately in the prevailing market conditions their efforts have not brought the same results and rewards as last year. Nevertheless it is possible to maintain the final dividend at last year's increased level.
The final dividend of 115 pence per share in respect of the year ended 31 March 2011 recommended by your Board is payable on 15 August 2011 to shareholders on the Register of Members as at 15 July 2011. This will make a total dividend for the year ended 31 March 2011 of 165 pence per share which is 2.6 times covered by the earnings per share.
D.M. SINCLAIR Chairman
14 July 2011
The Group's business model is simple. We are a property trading company buying tenanted properties at a discount to notional vacant possession value and selling them when they become vacant.
The Group trades in the following categories:
Regulated tenanted (residential) units
Ground rent units
Life tenancy units
A unit is a property, however large or small, whether freehold or leasehold, which is held subject to one tenancy.
| No of units | Cost £m |
|
|---|---|---|
| Regulated Tenancies | 2,250 | 231.3 |
| Ground Rents | 1,096 | 1.7 |
| Life Tenancies | 364 | 26.5 |
| Regulated £m |
Ground Rents Life Tenancies £m |
£m | Portfolio % |
|
|---|---|---|---|---|
| London (North) | 58.5 | 0.7 | 0.2 | 22.9 |
| London (South) | 79.0 | 0.8 | 3.3 | 32.0 |
| Kent, Surrey, Sussex, Dorset Hampshire, I.O.W |
22.6 | 0.04 | 6.1 | 11.1 |
| Herts, Essex, Beds, Bucks, Oxon, Camb, Norfolk, Suffolk, Berks, Middx, Northants |
42.1 | 0.1 | 6.6 | 18.8 |
| Remainder of England and Wales | 29.1 | 0.03 | 10.3 | 15.2 |
The Company's modus operandi is to buy tenanted residential property and sell it when it becomes vacant. Regulated investments which are characterised by early possession with rental returns below market value and high margin on sale are becoming increasingly short in supply. Life tenancy stock has nominal rental income, is bought at a greater discount to vacant possession value and has a higher margin on sale. In addition, the maintenance of the property is usually the responsibility of the life tenant.
During the financial year the Group has sold the following number of units:
| Sales Price (£) | No of units | Location |
|---|---|---|
| 3 million | 1 | London |
| 2 million+ | 2 | London |
| 500,000-1 million | 4 | London |
| below 500,000 | 147 | London and other |
| 154 |
The Majority of our residential properties subject to a regulated tenancy are concentrated in London and the South East.
Returns from the regulated portfolios are derived from a combination of below market rental income and trading profits on the sale of property, when the property falls vacant and the crystalisation of the reversionary gain.
The properties are generally unimproved and of low average values. Through active management we identify the opportunity to add value by refurbishing certain properties prior to their sale. We aim to refurbish properties at the upper end of the market.
| No of units |
Year ended 31.03.2011 Cost £'m |
|
|---|---|---|
| Regulated tenancies | 115 | 10.8 |
| Life tenancies Ground rents (or created) |
5 17 |
2.3 0.01 |
| 137 | 13.11 |
The above analysis does not include legal and commission expenses directly related to the acquisition of properties or any repairs of a capital nature.
The Group residential trading properties are carried in the balance sheet at the lower of cost and net realisable value. In assessing the net realisable value the Group compares the net sales proceeds which the Group expects on the sale of property with the vacant possession value.
The Company has benefited from good market conditions in certain areas. Over the past year we have achieved premium prices for properties, especially in sought-after areas such as Belsize Park and the West End of London.
Based on sales made during the financial year, the Directors do not consider that any stock write down is necessary in respect of its properties. Trading conditions in the early part of this financial year were not easy, but we achieved sales of £34 million (2010: £42 million) demonstrating the liquidity of the portfolio. The average sales price achieved was £222,110.
E S
The Company's rental income is derived from five different sources:
Where possible we still target those properties where the rent is capped and expenditure on improvements and the provision of missing amenities leads to substantial increases in rental income.
The operating contribution from the core business (comprising profits on sale of trading properties and rental income) is analysed in Note 4 on page 31.
The analysis of the investment portfolio as at 31 March 2011 is as follows:
| 2011 | 2010 | |
|---|---|---|
| Louise Goodwin Limited | 45 units | 50 units |
| A.L.G. Properties Limited | 10 units | 11 units |
All the properties are located in Belsize Park, London NW3.
Mountview Estates P.L.C. purchased the investment companies in 1999. They are the only significant departures from the Company's normal activities.
During the financial year, we disposed of 5 units for a total of £5.3 million in Louise Goodwin Ltd and 1 unit for £1.3 million in A.L.G. Properties Ltd (2010: disposed of three units for £1.9 million).
Where units become vacant we are prepared to refurbish the properties and sell them by private treaty to discerning purchasers who actively seek new homes in this prestigious area.
The properties comprised within the investment portfolio have been revalued externally for the purpose of these accounts. The value attributed to each individual property reflects the change in its condition where appropriate and any adjustment resulting from changes in market circumstances.
Details of the valuation of the investment portfolio are disclosed on page 36.
Since the end of the financial year we are continuing to sell properties and we are pleased with the results achieved. Given our refinancing and the reduction in long term borrowings, we believe that we are in a strong position to take advantage of any prime purchasing opportunities which may arise in the near future.
M O U N T V I E W E S T A T E S P.
L. C.
Joined the Company as Company Secretary in 1977, became a Director on 1 January 1982 and succeeded his late father as Chairman on 5 June 1990. Fellow of the Institute of Chartered Accountants in England and Wales.
Joined the Company in 1974 and became a Director on 1 January 1982.
Joined the Company in 1990 as an assistant to the late Frank Sinclair and became a Director on 1 September 1995. Resigned on 31 August 2010.
Joined the Company in 1996 and became Company Secretary. Became a Director on 1 April 2004. Fellow of the Association of Chartered Certified Accountants.
Joined the Company as a Non-Executive Director on 1 January 2007. Fellow of the Institute of Chartered Accountants in England and Wales. He has held senior financial roles in multinational companies.
Joined the Company as a Non-Executive Director on 1 January 2009. Fellow of the Royal Institution of Chartered Surveyors. Retired as a partner from Strutt and Parker Property Consultants and Estate Agents in April 2009 but remains as a consultant.
Joined the Company as a Non-Executive Director on 1 November 2010. Fellow of Institute of Chartered Accountants in England and Wales.
Son of the late Frank Sinclair co-founder of the Company. Retired as Head of Correspondent Banking for National Bank of Canada but remains as an Advisor on International Banking.
Mrs. M.M. Bray FCCA Mountview House, 151 High Street, Southgate, London N14 6EW
HSBC Bank Plc, 60 Queen Victoria Street, London EC4N 4TR Barclays Bank Plc, One Churchill Place, London E14 5HP
BSG Valentine Lynton House, 7-12 Tavistock Square, London WC1 H9B
Capita Registrars The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU
Brewin Dolphin Securities Ltd 12 Smithfield Street, London EC1A 9BD
The Directors have pleasure in presenting to the Members their Seventy-Fourth Annual Report together with the Financial Statements for the year ended 31 March 2011.
The Results for the year are set out in the Income Statement on page 19.
The Directors recommend the payment of a final dividend of 115 pence per share. The dividend will be paid on 15 August 2011 subject to approval at the Annual General Meeting on 10 August 2011 to Shareholders on the register at the close of business on 15 July 2011.
The principal activities of the Company and its Subsidiary undertakings are as follows:
| Hurstway Investment Company Limited | Property Dealing |
|---|---|
| Louise Goodwin Limited | Property Investment |
| A.L.G. Properties Limited | Property Investment |
Details of the Group's performance during the year and expected future developments are contained in the Chairman's Statement and the Review of Operations on pages 4 to 6. In addition the Group has established the following Financial and Internal Performance Indicators:
| 2011 | 2010 | |
|---|---|---|
| growth % | growth % | |
| Turnover | (15.9) | 5.8 |
| Profit before tax excluding | ||
| investment properties revaluations | (22.1) | 66.3 |
| Earnings per share | (21.5) | 130.2 |
| Net assets per share | 5.8 | 8.3 |
The Directors consider that there are no significant non-financial indicators in existence.
| Internal Performance Measures | |||
|---|---|---|---|
| 2011 | 2010 | ||
| £'000 | £'000 | ||
| Administrative expenses as | |||
| percentage of revenue | 9.03% | 7.1% | |
| Administrative expenses per member of staff | 179 | 150 | |
| Profit before tax per member of staff | 982 | 1,100 |
In the current economic climate, the impact of the credit crunch has caused a slowdown in the rate of house price growth and a strong decline in the level of mortgage approvals.
M O U N T V I E W E S T A T E S P. L. C.
The key risks to the Group's business are:
The Company also demonstrated in the past that it is able to generate strong cash flows even in difficult market conditions.
● long term worldwide recession The shrinking of the UK economy combined with the worsening economic outlook and higher unemployment may affect the prices obtained from the sale of properties. Please see Note 3 to the Consolidated Financial Statements on pages 30 and 31.
In accordance with the Company's Articles of Association, Mrs. M.M. Bray and Mr. J.B. Fulton retire from the Board by rotation and being eligible, offer themselves for re-appointment. Resolutions for their re-appointment will be proposed at the Annual General Meeting.
The authorised share capital of the Company as at 31 March 2011 was £250,000 divided into 5,000,000 Ordinary Shares of 5 pence of which 3,899,014 were in issue (2010: 3,899,014).
The rights and obligations attaching to the Company's shares, as well as the powers of the Company's directors, are set out in the Company's Articles of Association, a copy of which can be viewed on the Company's website at www.mountviewplc.co.uk
The Company's Articles of Association can only be amended by special resolution of the shareholders.
The number of Ordinary Shares in the Company in which the Directors and their families were interested is as follows:
| 31 March 2011 Ordinary Shares of 5p each |
1 April 2010 |
|
|---|---|---|
| Mr. D.M. Sinclair including the following holding of Sinclair Estates Limited – 54,165 Mr. D.M. Sinclair is a Director of the above company |
535,883 | 535,883 |
| Mr. K. Langrish-Smith | 307,000 | 307,000 |
| Miss J.L. Murphy (resigned 31.08.2010) | 1,500 | 1,500 |
| Mrs. M.M. Bray | 12,302 | 12,302 |
| Mr. A. Sinclair (appointed 01.11.2010) | 119,724 | – |
All the above interests are beneficial.
There have been no changes in the interests of Directors in the share capital of the Company between 31 March 2011 and 11 July 2011.
As at 11 July 2011, the following disclosures of major holdings of voting rights have been made (and have not been amended or withdrawn) to the Company pursuant to the requirements of Disclosure and Transparency Rule 5:
| Ordinary Shares of 5p each |
% of Issued Share Capital |
|
|---|---|---|
| Mr. Phillip Wheater, Mrs. Daphne Sinclair and | ||
| Mr. Alistair Sinclair, Trustees of the Frank and | ||
| Daphne Sinclair Grandchildren Settlement* | 393,193 | 10.08 |
| Mr. Geoffrey Wilfred Bew Todd and Mr. Stephen | ||
| Robin Oldfield Trustees of W.D.I. Sinclair | ||
| Grandchildren Settlement* | 179,400 | 4.60 |
| Estate of Mrs. Doris Sinclair* | 118,100 | 3.03 |
| Mrs. M.A. Murphy** | 596,745 | 15.31 |
| Mrs. A. Williams** | 145,650 | 3.73 |
| Mrs. S. Simpkins** | 190,580 | 4.89 |
*denotes indirect holding
** denotes combined direct and indirect holding
Given the size of the Company and the nature of its business as a property trading company, the Company does not currently have any policies in place in relation to environmental, social or community issues.
The Company provides regular training for its employees relating to the software used in the business, in order to ensure the ongoing development of each employee's skills and knowledge. A great number of our employees have worked for the Company for many years and there is very little turnover of staff.
Certain banking agreements to which the Company is a party (described in Note 19 to the Consolidated Financial Statements) alter or terminate upon a change of control of the Company following a takeover bid.
There are no other significant agreements to which the Company is a party that take effect, alter or terminate upon a change of control of the Company following a takeover bid.
There are no contractual or other agreements or arrangements in place between the Company and third parties which, in the opinion of the Directors, are essential to the business of the Company.
There was no contract in existence during or at the end of the financial year in which a Director of the Company is, or was, materially interested, and which is or was significant in relation to the Company's business.
The Company purchases liability insurance covering the Directors and Officers of the Company and its Subsidiary undertakings.
The Company's Articles of Association at Article 163 permit the provision of indemnities to the Directors (at the discretion of the Board), which constitute qualifying third party indemnity and qualifying pension scheme indemnity provisions under the Companies Act 2006.
The Company's policy in respect of all its suppliers is to settle the terms of payment when agreeing the terms of each transaction. The Company also ensures that the suppliers are made aware of the terms of payment and abide by them.
Trade creditors existing at 31 March 2011 relating to purchases of property stock generally complete 28 days after exchange of contracts. Other trade creditors were settled, on average, 21 days after incurring the liability (2010: 21 days).
Financial risk management objectives and policies are set out in Note 3 to the Consolidated Financial Statements on pages 30 to 31. Details regarding the Company's use of financial instruments are set out in Note 21 to the Consolidated Financial Statements on pages 40 and 42.
The Company's Shareholders will be asked to approve the Remuneration Report contained in the Annual Report and Accounts at the Annual General Meeting to be held on 10 August 2011 and accordingly, a resolution will be proposed at the Annual General Meeting.
The Directors' statement on corporate governance is set out on pages 13 to 15.
The Group is committed to achieving a high standard of health and safety. The Group regularly reviews its health and safety policies and practices to ensure that appropriate standards are maintained. The gas supply and appliances within all of the Group's relevant residential properties are independently inspected under the Gas Safety (Installation and Use) Amended Regulations 1996 and certificates of compliance issued.
During the year the Group made charitable donations of £26,800 (2010: £24,500).
The main beneficiaries of such charitable donations are: Williow Foundation, Cancer Research UK and Cystic Fibrosis.
There were no political donations made during the year (2010: £nil).
The Directors continue to adopt the going concern basis in preparing the accounts.
The financial position of the Group including key financial ratios is set out in the Review of Business and Prospects.
The Group is historically profitable, has considerable liquidity and recently reviewed its long term borrowing facilities with the banks. As a result, the Directors believe the Group is very well placed to manage its business risks successfully and have a good expectation that both the Company and the Group have adequate resources to continue their operations. Further detailed information is set out on pages 28 and 39.
There are no material events that have occurred subsequent to the end of the financial year that require disclosure.
Messrs. BSG Valentine have indicated their willingness to continue in office and a resolution for the reappointment of BSG Valentine as auditors for the ensuing year will be proposed at the Annual General Meeting.
By Order of the Board M.M. BRAY Secretary 14 July 2011
M O U N T V I E W
E S T A T E S
The Directors are responsible for preparing the Annual Report and the Group financial statements in accordance with the applicable law and International Financial Reporting Standards as adopted by the European Union. In addition the Directors are responsible for preparing the Parent Company accounts in accordance with UK GAAP.
Company law requires the Directors to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss for that period. In preparing these financial statements, the Directors are required to:
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
In so far as the Directors are aware:
The Directors confirm to the best of their knowledge:
The Directors are responsible for the maintenance and integrity of the Group website www.mountviewplc.co.uk.
By Order of the Board M.M. BRAY Secretary 14 July 2011
The Financial Reporting Council (FRC) published a new version of the Combined Code in June 2008. This is applicable to the Company for the reporting year commencing 1 April 2010. The Board is satisfied that as a "small company" outside the FTSE 350 it would currently meet most of the requirements.
Mountview Estates P.L.C. is a family controlled Company. There is a concert party in existence, whose net aggregate shareholdings amount to approximately 53 percent of the issued share capital of the Company.
Throughout the year ended 31 March 2011 the Company has been in compliance with the Code provisions set out in Section 1 of the June 2008 FRC Combined Code on Corporate Governance with certain exceptions noted below:
● A2.1 requires justification for combining the posts of Chairman and Chief Executive Officer. There is no formal division of responsibilities but neither the Chairman nor any other member of the Board has unfettered powers of decision.
Given the size of the Company, there is no formal nomination of a senior independent director.
As at the year ended 31 March 2011 the Board comprised the Chairman, Mr. D.M. Sinclair, two executive Directors and three non-executive Directors. All Directors have access to independent professional advice at the expense of the Company and to the services of the Company Secretary who is responsible to the Board for ensuring the correct procedures are followed.
In addition to ad-hoc meetings arranged to discuss particular transactions and events, the full Board meets at least four times a year and retains full and effective control over the Group's activities.
| Meetings | Mr. D.M. | Mr. K. | Miss J.L. Mrs. M.M. | Mr. A. | Mr. J.B. Mr. J.A.N. | ||
|---|---|---|---|---|---|---|---|
| Sinclair Langrish- Murphy Smith |
Bray | Sinclair | Fulton | Laing | |||
| Full Board | 4 | 4 | 1 | 4 | 1 | 4 | 3 |
| Audit Committee | 2 | – | – | 2 | 2 | 3 | 3 |
| Remuneration Committee |
1 | – | – | – | 2 | 2 | 2 |
| Nomination Committee |
1 | 1 | – | 1 | – | 1 | 1 |
Day to day management is delegated to the Executive Board which focuses on major transactions, business growth, strategy, cash management and control.
There is regular communication with the Non-Executive Directors in order to keep them informed on the Company's operations.
All members of the Board are subject to the re-election provisions of the Articles of Association which require them to offer themselves for re-election at least once every three years and, on appointment, at the first Annual General Meeting (AGM) after appointment. Details of those directors offering themselves for re-appointment are set out in the Directors' Report on page 9.
The Articles of Association of the Company contain the following provisions relating to the appointment and replacement of Directors:
M O U N T V I E W
E S T A T E S
After making diligent enquiries, including the review of future anticipated cash flows and compliance with banking covenants, the Directors have a reasonable expectation that the Group and Company have adequate resources to continue in existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the accounts.
The Board is of the opinion that the Directors' performance is continuously evaluated throughout the year.
Any areas of concern are addressed during our regular management or Board meetings. Each of the Directors is responsible for his/her self-appraisal process in respect of their individual performance during the year. This is in turn discussed with the members of the Remuneration Committee who also review the performance of the Board as a whole.
The Remuneration Committee comprises Mr. J.B. Fulton (non-executive Director), Mr. J.A.N. Laing (non-executive Director) and Mr. A.J. Sinclair (non-executive Director). The Committee, which is chaired by Mr. J.A.N. Laing, monitors, reviews and makes recommendations to the Board on all elements of the remuneration of the executive Directors. The Committee meets twice a year.
Mr D.M. Sinclair, the Chairman of the Company, is invited by the Remuneration Committee members to attend one meeting or part of any meeting as and when appropriate.
No Director is involved in deciding his/her own remuneration and the remuneration of the nonexecutive Directors is determined by the full Board.
The report of Directors' Remuneration is set out on pages 16 to 18.
The Nomination Committee is responsible for the selection and approval of appointments to the Board. Given the small size of the Company the Chairman of the Nomination Committee is Mr. D.M. Sinclair and all the Directors of the Company are members. There was one meeting during the year.
The Audit Committee comprises Mr. J.B. Fulton (non-executive Director), Mr. J.A.N. Laing (non-executive Director) and Mr. A.J. Sinclair (non-executive Director). The Committee, which is chaired by Mr. J.B. Fulton, has clear terms of reference agreed by the Board and is responsible for ensuring that the Group's system of financial control is adequate. It also keeps under review the cost effectiveness of the audit and the independence and objectivity of the auditors.
This includes the approval of any non-audit service fees above a relatively normal level.
The Committee is satisfied that the taxation services provided by BSG Valentine are overseen by partners and staff who are excluded from the audit procedure.
Mr D.M. Sinclair and Mrs M.M. Bray attended two of the meetings held by the Audit Committee.
The Committee meets three times a year and one of these meetings is with the external auditors without an executive director in attendance. The Chairman of the Audit Committee reports to the Board on matters discussed with external auditors. The Audit Committee monitors the integrity of the financial statements and reviews the interim and annual financial statements before submission to the Board. Further the Committee seeks to ensure that the external auditors are independent.
C.
Mr. J.B. Fulton is a Fellow of the Institute of Chartered Accountants in England and Wales.
The Audit Committee has satisfied itself that the Company complies with the principles set out in the Smith Report.
The Board as a whole acknowledges its responsibility for ensuring satisfactory dialogue with Shareholders and the Chairman is available to meet Shareholders on request to discuss specific concerns they may have. The Company principally communicates with and updates its Shareholders as to its progress by way of the Annual Report and Accounts and half yearly interim reports which are posted on the Company's website www.mountviewplc.co.uk. Investors may use the Company's Annual General Meeting to communicate with the Board. The entire Board will be available at the Annual General Meeting for Shareholders to ask questions. The Board including the non-executive Directors, is available throughout the year to listen to the views of Shareholders.
Details of the Company's risk management profile are included in paragraph 14 in the Report of the Directors on page 11 and in Note 3 to the Consolidated Financial Statements on pages 30 to 31.
An ongoing process for identifying, evaluating and managing the significant risks faced by the Group was in place throughout the period from 1 April 2010 to the date of approval of the Annual Report and Accounts. This process is regularly reviewed by the Board and accords with the Internal Control Guidance for Directors in the Combined Code.
The Directors are responsible for establishing and maintaining the Group's system of internal financial control. Internal control systems in any group are designed to meet the particular needs of that group and the risks to which it is exposed, and by their nature can provide reasonable but not absolute protection against material misstatement or loss. Due to its size, the Group does not have an internal audit function. The key procedures which the Directors have established with a view to providing effective internal financial control are as follows:
Identification of Business Risks – The Board is responsible for identifying the major business risks faced by the Group, such as fluctuations in interest rates, inflation rates, fluctuations in consumer spending, employment levels and for determining the appropriate course of action to manage those risks.
Management Structure – The Board has overall responsibility for the Group and there is a formal schedule of matters specifically reserved for decision by the Board.
Corporate Accounting – Responsibility levels are communicated throughout the Group as part of the corporate accounting procedures. These procedures set out authorisation levels, segregation of duties and other control procedures.
Quality and Integrity of Personnel – The integrity and competence of personnel is ensured through high recruitment standards and close Board supervision.
Monitoring – Internal financial control procedures are reviewed by the Board as a whole. These reviews embrace the provision of regular information to management, and monitoring of performance and key performance indicators.
By Order of the Board M.M. BRAY Secretary 14 July 2011
M O U N T V I E W
E S T A T E S
The Remuneration Committee, as constituted by the Board is responsible for the determination of the remuneration of the executive Directors of Mountview Estates P.L.C. The Board as a whole considers the remuneration of the non-executive Directors. External advisors were not used in the financial year under review.
The Group operates in a competitive environment. In forming its policy on remuneration the Group aims to set reward packages which enable the Group to attract, retain and motivate executives with the appropriate skills and experience.
The Remuneration Committee has developed the following specific remuneration package consisting of two elements.
Basic salaries and benefits in kind for each executive Director are reviewed on an annual basis by the Remuneration Committee, which takes into account individual responsibilities, experience and performance as well as competitive market practice. Benefits include the provision of a car, private medical health insurance and life insurance.
Directors have the choice of the use of a company car or a cash alternative.
All members of staff benefit from health and life insurances.
The Group does not operate any share option scheme.
Bonuses are recommended by the Committee and approved by the Board having regard to the performance of the Group and the executive Directors during the year. In assessing corporate performance the Remuneration Committee takes into account the Group's corporate performance within the property sector.
Each non-executive Director receives fees of £24,000 per annum. The non-executive Directors are not entitled to bonuses, benefits or pension contributions.
The Company contributes 5% of the total of the executive Directors' gross annual salaries and bonuses to a Stakeholder Pension Scheme. This scheme is available to all employees of the Company.
The graph below is prepared in accordance with The Directors' Remuneration Report Regulations 2002 and illustrates the Company's performance compared to a broad equity market index over the past five years. As the Company is a constituent of the FTSE All-Share Real Estate Index, that index is considered the most appropriate form of broad equity market index against which the Company's performance should be plotted. Performance is measured by Total Shareholder Return as represented by share price performance and dividend.
The graph looks at the value of £100 invested in Mountview Estates P.L.C. on 31 March each year compared to the value of £100 invested in the FTSE All-Share Real Estate Index.
Details of the Directors' service contracts and letters of appointment with the Company, and the unexpired terms thereunder are as follows:
| Contract date | Unexpired term | Notice period | |
|---|---|---|---|
| D.M. Sinclair | 8 August 2002 | No fixed term | 12 months |
| K. Langrish-Smith | 8 August 2002 | No fixed term | 12 months |
| M.M. Bray | 1 April 2004 | No fixed term | 12 months |
| J.B. Fulton | 1 January 2010 | 17 months | none |
| J.A.N. Laing | 1 January 2009 | 5 months | none |
| A.J. Sinclair | 1 November 2010 | 27 months | none |
The executive Directors are entitled to a compensation payment after a change in control of the Company. Such compensation payment (subject to deduction of income tax as required by law and any other sums owed by the executive Director to the Company) is equal to the executive Director's gross renumeration as reported in the Company's last audited accounts as announced to the London Stock Exchange.
Non-executive Directors are entitled to accrued fees only due to them as at the date of termination of their appointment.
M O U N T V I E W
E S T A T E S
| 2011 | Salary £000 |
Bonus £000 |
Benefits in kind £000 |
Pensions Contri- butions £000 |
Total £000 |
|---|---|---|---|---|---|
| Executive | |||||
| D.M. Sinclair K. Langrish-Smith |
250 150 |
210 60 |
40 23 |
23 10 |
523 243 |
| Miss J.L. Murphy (Resigned 31.08.2010)* | 75 | – | 5 | 4 | 84 |
| Mrs M.M. Bray | 215 | 150 | – | 18 | 383 |
| Non-Executive | |||||
| J.B. Fulton | 24 | – | – | – | 24 |
| J.A.N. Laing | 24 | – | – | – | 24 |
| A.J. Sinclair (Appointed 1.11.2010) | 10 | – | – | – | 10 |
| 748 | 420 | 68 | 55 | 1,291 | |
| 2010 | Salary £000 |
Bonus £000 |
Benefits in kind £000 |
Pensions Contri- butions £000 |
Total £000 |
|---|---|---|---|---|---|
| Executive | |||||
| D.M. Sinclair | 250 | 240 | 38 | 24 | 552 |
| K. Langrish-Smith | 150 | 80 | 24 | 11 | 265 |
| Miss J.L. Murphy | 180 | 150 | 11 | 16 | 357 |
| Mrs M.M. Bray | 212 | 165 | – | 18 | 395 |
| Non-Executive | |||||
| J.P. Hall (retired August 2009) | 10 | – | – | – | 10 |
| J.B. Fulton | 24 | – | – | – | 24 |
| J.A.N. Laing | 24 | – | – | – | 24 |
| 850 | 635 | 73 | 69 | 1,627 | |
*Details of Miss J.L. Murphy's compensation are set out in Note 25 to the Consolidated Financial Statements on page 43.
Each of the executive Directors who served during the year has a service agreement, which can be terminated on one year's notice by either party.
An Ordinary Resolution to approve this report will be proposed at the Annual General Meeting of the Company.
This report was approved by the Board on 14 July 2011.
J.A.N. Laing Chairman of the Remuneration Committee
M O U N T V I E W E S T A T E S P.
L. C.
M O U N T V I E W
E S T A T E S
P. L. C.
for the year ended 31 March 2011
| Notes | Year ended 31.03.2011 £000 |
Year ended 31.03.2010 £000 |
|
|---|---|---|---|
| REVENUE | 4 | 47,655 | 56,697 |
| Cost of sales | 4 | (18,548) | (22,191) |
| GROSS PROFIT | 29,107 | 34,506 | |
| Administrative Expenses | (4,305) | (4,046) | |
| Operating profit before changes in fair value of investment properties |
24,802 | 30,460 | |
| Increase in fair value of investments | 2,454 | 2,142 | |
| PROFIT FROM OPERATIONS | 27,256 | 32,602 | |
| Change in fair value of derivatives Finance costs |
21 8 |
(292) (3,404) |
– (3,347) |
| PROFIT BEFORE TAXATION | 23,560 | 29,255 | |
| Taxation – current Taxation – deferred |
(7,425) 836 |
(7,969) 349 |
|
| Taxation | 10 | (6,589) | (7,620) |
| PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS |
16,971 | 21,635 | |
| Basic and diluted earnings per share (pence) | 12 | 435.3p | 554.8p |
M O U N T V I E W
E S T A T E S
P. L. C.
for the year ended 31 March 2011
| Year ended 31.03.2011 £000 |
Year ended 31.03.2010 £000 |
|
|---|---|---|
| Profit for the year | 16,971 | 21,635 |
| Net (expense) recognised directly in equity | – | (26) |
| Total recognised income | 16,971 | 21,609 |
| The total recognised income in the year is attributable to Equity shareholders of the parent |
16,971 | 21,609 |
| as at 31 March 2011 | ||
|---|---|---|
O U N T V I E W
E S T A T E S
P. L. C.
| ASSETS | Notes | As at 31.03.2011 £000 |
As at 31.03.2010 £000 |
|---|---|---|---|
| NON-CURRENT ASSETS Property, plant and equipment Investment properties |
13 14 |
2,461 30,314 |
2,422 32,872 |
| CURRENT ASSETS | 32,775 | 35,294 | |
| Inventories of trading properties Trade and other receivables Cash and cash equivalents |
16 17 |
259,462 1,192 116 |
256,964 1,197 443 |
| 260,770 | 258,604 | ||
| TOTAL ASSETS | 293,545 | 293,898 | |
| EQUITY AND LIABILITIES | |||
| Capital and reserves attributable to equity holders of the company Share capital Capital redemption reserve Capital reserve Other reserves Cash flow hedge reserve Retained earnings |
22 23 23 23 21 24 |
195 55 25 56 (2,340) 216,905 214,896 |
195 55 25 56 (3,640) 206,366 203,057 |
| NON-CURRENT LIABILITIES | |||
| Long-term borrowings Deferred tax |
19 20 |
50,000 7,321 |
65,000 8,157 |
| 57,321 | 73,157 | ||
| CURRENT LIABILITIES | |||
| Bank overdrafts and loans Trade and other payables Current tax payable Derivative financial instruments |
19 18 21 |
13,940 1,485 3,271 2,632 |
8,876 1,355 3,813 3,640 |
| 21,328 | 17,684 | ||
| TOTAL LIABILITIES | 78,649 | 90,841 | |
| TOTAL EQUITY AND LIABILITIES | 293,545 | 293,898 |
Approved by the Board on 14 July 2011.
M O U N T V I E W
E S T A T E S
P. L. C.
for the year ended 31 March 2011
| Notes | Share capital £000 |
Capital reserve £000 |
Capital redemp- tion reserve £000 |
Cash flow hedge reserve £000 |
Other reserves £000 |
Retained earnings £000 |
Total £000 |
|
|---|---|---|---|---|---|---|---|---|
| Changes in equity for year ended 31 March 2010 |
||||||||
| Balance as at 1 April 2009 | 195 | 25 | 55 | (3,614) | 56 | 190,773 | 187,490 | |
| Profit for the year | 21,635 | 21,635 | ||||||
| Movements in cash flow hedge |
21 | (26) | (26) | |||||
| Dividends | 11 | (6,042) | (6,042) | |||||
| Balance at 31 March 2010 |
24 | 195 | 25 | 55 | (3,640) | 56 | 206,366 | 203,057 |
| Changes in equity for year ended 31 March 2011 |
||||||||
| Balance as at 1 April 2010 | 195 | 25 | 55 | (3,640) | 56 | 206,366 | 203,057 | |
| Reduction in reserve | 21 | 1,300 | 1,300 | |||||
| Profit for the year | 16,971 | 16,971 | ||||||
| Dividends | 11 | (6,432) | (6,432) | |||||
| Balance at 31 March 2011 |
24 | 195 | 25 | 55 | (2,340) | 56 | 216,905 | 214,896 |
for the year ended 31 March 2011
| ۰. ۰, ۰. × |
|---|
M O U N T V I E W
E S T A T E S
P. L. C.
| Notes CASH FLOWS FROM OPERATING ACTIVITIES |
Year ended 31.03.2011 £000 |
Year ended 31.03.2010 £000 |
|---|---|---|
| Profit from operations | 27,256 | 32,602 |
| Adjustments for: Depreciation Loss on disposal of property, plant and equipment (Increase) in fair value of investment properties |
174 11 (2,454) |
156 5 (2,142) |
| Operating cash flows before movement in working capital |
24,987 | 30,621 |
| (Increase)/Decrease in inventories Decrease/(Increase) in receivables Increase/(Decrease) in payables |
(2,498) 5 125 |
11,841 (538) (822) |
| Cash generated from operations | 22,619 | 41,102 |
| Interest paid Income taxes paid |
(3,404) (8,027) |
(3,347) (6,410) |
| Net cash inflow from operating activities | 11,188 | 31,345 |
| Investing activities | ||
| Proceeds from disposal of investment properties Purchase of property, plant and equipment 13 Capital expenditure on investment properties 14 |
6,600 (309) (1,438) |
1,895 (11) (434) |
| Net cash inflow from investing activities | 4,853 | 1,450 |
| Cash flows from financing activities Repayment of borrowings Equity dividend paid |
(14,700) (6,432) |
(23,800) (6,042) |
| Net cash (outflow) from financing activities | (21,132) | (29,842) |
| Net (decrease)/increase in cash and cash equivalents |
(5,091) | 2,953 |
| Cash and cash equivalents at beginning of the period |
(8,258) | (11,211) |
| Cash and cash equivalents at end of year 19(a) |
(13,349) | (8,258) |
for the year ended 31 March 2011
Mountview Estates P.L.C. (the Company) and its Subsidiaries (the Group) is a property trading company with a portfolio in England and Wales.
The Company is a public limited liability company incorporated, domiciled and registered in England.
The address of its registered office is: 151 High Street, Southgate, London N14 6EW.
The Company website is: www.mountviewplc.co.uk
The Company has its premium listing on the London Stock Exchange.
These consolidated financial statements have been approved for issue by the Board of Directors on 14 July 2011.
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.
The Group's financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment properties, and in accordance with applicable International Financial Reporting Standards, (IFRS) as adopted by the EU.
The Company has elected to prepare its parent company financial statements in accordance with UK GAAP. These are presented on pages 46 to 53.
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies.
The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 2(s) "Estimates and Judgements".
The Group's financial statements incorporate the results of Mountview Estates P.L.C. and all of its Subsidiary undertakings made up to 31 March each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee enterprise so as to obtain benefits from its activities.
The Group exercises control through voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
On acquisition, the identifiable assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. The purchase method has been used in consolidating the subsidiary financial statements.
All significant inter company transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation within the consolidated accounts.
Consistent accounting policies have been used across the Group.
for the year ended 31 March 2011
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:
Above segments are UK based. More details are given in note 5.
The charge for current tax is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base used in the computation of taxable profit. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction, which affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in Subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the rates that are expected to apply when the asset or liability is settled. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Revenue includes proceeds of sales of properties, rents from properties, which are held as trading stock, investment and other sundry items of revenue before charging expenses.
Rental income is recognised over the rental period.
Sales of properties are recognised on legal completion as in the Directors' opinion this is the point at which the substantial risks and rewards of ownership have been transferred.
Dividend distribution to the Company's shareholders is recognised as an expense in the Group's financial statements in the period in which the dividends are approved.
Interest expense for borrowings are recognised within "finance costs" in the income statement using the effective interest rate method. The effective interest method is a method of calculating the financial liability and of allocating the interest expense over the relevant period.
M O U N T V I E W
E S T A T E S
for the year ended 31 March 2011
Property, plant and equipment are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the item. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset using the straight-line method as follows:
| 2% |
|---|
| 20% |
| 25% |
| 20% |
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each financial year. An asset's carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Any impairment is recognised in the Income Statement in the year in which it occurs.
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.
for the year ended 31 March 2011
These comprise residential properties all of which are held for resale, and are shown in the financial statements at the lower of cost and estimated net realisable value. Cost includes legal fees and commission charges incurred during acquisition together with improvement costs. Net realisable value is the net sale proceeds which the Group expects on sale of a property in its current condition with vacant possession. Where residential properties are sold tenanted, net realised value is the current market value net of associated selling costs. There were no such sales during the financial year. The analysis of the Group revenue as at 31 March 2011 is on page 31.
The Group operates a stakeholder contribution pension scheme for employees. The annual contributions payable are charged to the Income Statement. The Group has no further payment obligations once the contributions have been paid.
Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group has become a party to the contractual provisions of the instrument. Trade and other receivables and trade and other payables and cash and cash equivalents are measured at their net realisable value.
Loans are recorded at fair value at initial recognition and thereafter at amortised costs under the effective interest method.
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.
Assets held under hire purchase agreements are capitalised and disclosed under tangible fixed assets at their fair value. The capital element of the future payments is treated as a liability and the interest is charged to the profit and loss account on a straight line basis.
The Group uses derivative instruments to help manage its interest rate risk. In accordance with its treasury policy, the Group does not hold or issue derivatives for trading purposes.
The derivatives are recognised initially at fair value. Subsequently, the gain or loss on remeasurement to fair value is recognised immediately in the income statement, unless the derivatives qualify for cash flow hedge accounting in which case any gain or loss is taken to equity in a cash flow hedge reserve.
In order to qualify for hedge accounting, the Group is required to document in advance the relationship between the item being hedged and the hedging instrument. The Group is also required to demonstrate that the hedge will be highly effective on an ongoing basis. The effectiveness testing is reperformed at each period end to ensure that the hedge remains highly effective.
In previous years the Directors decided to hedge account in relation to an Interest Rate Swap. During the year ended 31 March 2011 the Directors decided to revoke the decision to hedge account. See Note 21 for further details.
for the year ended 31 March 2011
Changes to accounting policies since the last period
The Group has considered or applied the following significant standards for the period commencing 1 April 2010. There has been no significant impact to the financial information as a result of applying these standards for the first time.
Certain new standards and interpretations have been published that are mandatory for the Group's accounting periods beginning on or after 1 April 2011 or later periods and which the entity has not yet adopted. Except where stated none of these standards are expected to have a significant impact on recognition or measurement of the Group's assets or liabilities.
The Parent Company and subsidiaries have not adopted IFRS in their individual accounts.
The Directors are required to make an assessment of the Group's ability to continue to trade as a going concern. Because of the difficult market conditions prevailing this assessment has been subject to more uncertainties than are usual.
The two main considerations were as follows:
The Group has successfully renegotiated its £20 million revolving loan facility with HSBC Bank. The new termination date of this facility is January 2015.
The Group has successfully renegotiated its £75 million revolving loan facility with Barclays Bank. The new termination date of this facility is November 2014.
The core facility has two covenants, both unchanged by the new facilities, covering loan to value ("LTV") ratio and interest cover. The Group has remained well within both of these covenants during the year.
On the basis of the above, the directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
for the year ended 31 March 2011
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.
In considering the values attributable to the investment portfolio, the following factors are taken into consideration:
The valuation of the portfolios were made in accordance with the requirements of the RICS Valuation Standards Manual, Sixth Edition and International Valuation Standard 40.
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.
The Board estimate that inventory of £12.3 million will be settled within the next 12 months, with the remaining inventory value expected to be settled in more than 12 months. This estimation is based on the average cost of sales of inventory over the last 3 year period. Mountview's business, historic and current has involved the purchase for sale of residential properties subject to regulated tenancies, such properties being sold when vacant possession is obtained.
Regulated tenancies by their nature are not for any specific period of time and in most cases they do not become vacant until the death of the tenant.
It is difficult to predict with any certainty the time at which Mountview's inventory properties might become vacant.
for the year ended 31 March 2011
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.
The Group is exposed to market risk through interest rates and availability of credit.
– 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.
– borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group's cash flow and fair value interest rate risk is constantly monitored by the Group's management. The Group uses derivative instruments to help manage its interest rate risk.
The Board is confident that based on the historical performance of the Group, the finance costs are sufficiently covered by profits from operations.
As at 31 March 2011 we had decreased our long term borrowings by £15 million to £50 million (2010: £65 million).
The Group has two covenants covering loan to value ratio and interest cover. These covenants were complied with during the financial year and we are confident to meet them at the interim stage.
Exposure to credit risk and interest risk arises in normal course of the Group's business.
The Group has no significant concentration of credit risk. Credit risk arises from cash and cash equivalents as well as credit exposures with respect to rental customers, including outstanding receivables. The Directors are of the opinion that credit risk is minimal due to the low level of trade receivables relative to the Balance Sheet totals. Regulated tenants are incentivised through the benefit of their tenancy agreement to avoid default on their rent.
Lifetime tenancies are generally at low or zero rent and hence suffer minimal credit risk.
The Group's liquidity position is monitored daily by management and is reviewed quarterly by the Board of Directors. The Group ensures that it maintains sufficient cash for operational requirements at all times. The nature of its business is very cash generative from its gross rents and sales of trading properties.
In adverse trading conditions, new acquisitions can be minimised, and as a consequence reduce the gearing level and improve the liquidity. A summary table with maturity of financial liabilities is presented in Note 19.
for the year ended 31 March 2011
The Group's objective when managing capital is to safeguard the Group's ability to continue as a going concern. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total debt and equity.
| 2011 £000 |
2010 £000 |
|
|---|---|---|
| Total borrowings | 63,940 | 73,876 |
| Less cash and cash equivalents | (116) | (443) |
| Net borrowings | 63,824 | 73,433 |
| Total equity | 214,896 | 203,057 |
| Total borrowings plus equity | 278,720 | 276,490 |
| Gearing ratio | 22.9% | 27% |
All revenue arises in the United Kingdom.
| 2011 | 2010 | |
|---|---|---|
| £000 | £000 | |
| Revenue | ||
| Gross sales of properties | 34,205 | 42,927 |
| Gross rental income | 13,450 | 13,770 |
| 47,655 | 56,697 | |
| Cost of Sales | ||
| Cost of properties sold | 13,180 | 17,547 |
| Property expenses | 5,368 | 4,644 |
| 18,548 | 22,191 | |
| Gross Profit | ||
| Sales of properties | 21,025 | 25,380 |
| Net rental income | 8,082 | 9,126 |
| 29,107 | 34,506 | |
M O U N T V I E W
E S T A T E S
M O U N T V I E W
E S T A T E S
P. L. C.
for the year ended 31 March 2011
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:
| Property £'000 |
2011 Property Trading Investment £'000 |
Group £'000 |
Property £'000 |
2010 Property Trading Investment £'000 |
Group £'000 |
|
|---|---|---|---|---|---|---|
| Revenue | 47,107 | 548 | 47,655 | 55,992 | 705 | 56,697 |
| Operating profit before changes in fair value of investment properties |
24,955 | (153) | 24,802 | 30,116 | 344 | 30,460 |
| Finance costs | (3,404) | (3,404) | (3,347) | (3,347) | ||
| Profit after tax | 16,971 | 21,635 | ||||
| Assets | 263,065 | 30,480 | 293,545 | 260,866 | 33,023 | 293,889 |
| Liabilities | 68,013 | 46 | 68,059 | 78,804 | 67 | 78,871 |
| Fixed assets capital expenditure |
182 | 1,563 | 1,745 | – | 434 | 434 |
| Depreciation | 136 | 38 | 174 | 144 | 12 | 156 |
Head office costs have been allocated and included within the Group's two operating segments. The Group's two main business segments operate within the United Kingdom.
| 2011 | 2010 | |
|---|---|---|
| £000 | £000 | |
| The operating profit is stated after charging: | ||
| Depreciation of tangible fixed assets | 174 | 156 |
| Loss on disposal of fixed assets | 11 | – |
| Auditors' remuneration | ||
| – the audit of the parent company and | ||
| consolidated financial statements | 38 | 36 |
| – the audit of the company's subsidiaries | ||
| pursuant to legislation | 12 | 12 |
| – tax compliance work | 9 | 9 |
| operating expenses for investment properties | 701 | 298 |
| And after crediting: | ||
| – net rental income | 8,082 | 9,126 |
| – administrative charges to related | ||
| companies (Note 25) | 35 | 30 |
E S T A T E S
P. L. C.
| for the year ended 31 March 2011 | ||||
|---|---|---|---|---|
| -- | -- | -- | ---------------------------------- | -- |
| 2011 | 2010 | |
|---|---|---|
| £000 | £000 | |
| Wages and salaries | 2,078 | 2,373 |
| Social security costs | 225 | 288 |
| Pension costs | 87 | 98 |
| 2,390 | 2,759 | |
| 2011 | 2010 | |
| Directors' Remuneration | £000 | £000 |
| Total Directors' Remuneration including salary, bonuses, benefits in kind and |
||
| pension contributions amounted to: | 1,291 | 1,627 |
The details of Directors' Remuneration are shown in the audited section of the Remuneration Report on page 18.
The Company contributes 3% of the total annual gross salaries and bonuses of each employee to a Stakeholder Pension Scheme.
The average monthly number of employees during the year was as follows:
| 2011 | 2010 | ||
|---|---|---|---|
| Office and management | 24 | 27 | |
| 8. | FINANCE COSTS | 2011 £000 |
2010 £000 |
| Interest on bank overdrafts, and loans | 3,404 | 3,347 | |
| 9. | INCOME FROM INVESTMENTS | 2011 £000 |
2010 £000 |
| Interest on bank deposits | – | – |
for the year ended 31 March 2011
| 10. | INCOME TAX EXPENSE | 2011 | 2010 |
|---|---|---|---|
| £000 | £000 | ||
| (a) Analysis of charge in the year | |||
| Current tax: | |||
| UK Corporation Tax 28% (2010: 28%) | 7,425 | 7,969 | |
| Deferred tax: | |||
| Current year 28% (2010: 28%) | (836) | (349) | |
| Taxation attributable to the Company and | |||
| its Subsidiaries | 6,589 | 7,620 | |
| (b) Factors affecting income tax expense | |||
| The charge for the year can be reconciled to the profit per the income statement as follows: |
|||
| Profit on ordinary activities before taxation | 23,560 | 29,255 | |
| Profit on ordinary activities multiplied | |||
| by rate of tax 28% (2010: 28%) | 6,596 | 8,191 | |
| Expenses not deductible for tax | 164 | 58 | |
| Income not taxable | (41) | – | |
| Depreciation in excess of capital allowances | (210) | 24 | |
| Taxation on capital gains | 1,428 | 309 | |
| Marginal relief | – | (5) | |
| Revaluation surplus in subsidiaries not taxed | (688) | (599) | |
| Deferred tax Under provision in prior years |
(836) (12) |
(349) – |
|
| Sundry adjusting items | – | (9) | |
| Taxation attributable to the Company and its Subsidiaries | 6,589 | 7,620 |
On 16 August 2010 a dividend of 115p per share (2009: 105p per share) was paid to the shareholders. On 29 March 2011 a dividend of 50p per share (2010: 50p per share) was paid to the shareholders. This resulted in total dividends paid in the year of £6.43 million (2010: £6.43 million).
In respect of the current year, the Directors propose that a final dividend of 115p per share will be paid to the shareholders on 15 August. This dividend is subject to approval by the shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.
The proposed final dividend for 2011 is payable to all shareholders on the Register of Members on 15 July 2011. The total estimated final dividend to be paid is £4.48 million.
for the year ended 31 March 2011
| The calculations of earnings per share are based on the following profits and number of shares. |
2011 £000 |
2010 £000 |
|
|---|---|---|---|
| Net profit for financial year (basic and fully diluted) | 16,971 | 21,635 | |
| Weighted average number of ordinary shares for basic and fully diluted earnings per share |
3,899,014 | 3,899,014 | |
| Basic and Diluted Earnings per share | 435.3p | 554.8p |
The Company has no dilutive potential ordinary shares.
| Freehold Property £000 |
Fixtures & Fittings £000 |
Motor Vehicles Equipment £000 |
Computer £ 000 |
Total £000 |
|
|---|---|---|---|---|---|
| COST | |||||
| At 1 April 2010 | 2,671 | 82 | 353 | 131 | 3,237 |
| Additions | – | 132 | 156 | 21 | 309 |
| Disposals | – | (6) | (194) | – | (200) |
| At 31 March 2011 | 2,671 | 208 | 315 | 152 | 3,346 |
| DEPRECIATION | |||||
| At 1 April 2010 | 489 | 46 | 181 | 99 | 815 |
| Charge for the year | 53 | 44 | 40 | 37 | 174 |
| On disposals | – | (6) | (98) | – | (104) |
| At 31 March 2011 | 542 | 84 | 123 | 136 | 885 |
| NET BOOK VALUE | |||||
| At 31 March 2010 | 2,182 | 36 | 172 | 32 | 2,422 |
| At 31 March 2011 | 2,129 | 124 | 192 | 16 | 2,461 |
Property, Plant and Equipment are located within United Kingdom.
Included within the net book value of £2,461,000 is £34,970 relating to assets held under hire purchase agreement. The depreciation charged to the financial statements in the year in respect of such assets amounted to £9,420 (2010: £nil).
M O U N T V I E W
E S T A T E S
O U N T V I E W
E S T A T E S
P. L. C. for the year ended 31 March 2011
| Freehold Property £000 |
Fixtures & Fittings £000 |
Motor £000 |
Computer Vehicles Equipment £ 000 |
Total £000 |
|
|---|---|---|---|---|---|
| COST | |||||
| At 1 April 2009 | 2,671 | 289 | 353 | 173 | 3,486 |
| Additions | – | 11 | – | – | 11 |
| Disposals | – | (218) | – | (42) | (260) |
| At 31 March 2010 | 2,671 | 82 | 353 | 131 | 3,237 |
| DEPRECIATION | |||||
| At 1 April 2009 | 436 | 237 | 138 | 108 | 919 |
| Charge for the year | 53 | 27 | 43 | 33 | 156 |
| On disposals | – | (218) | – | (42) | (260) |
| At 31 March 2010 | 489 | 46 | 181 | 99 | 815 |
| NET BOOK VALUE | |||||
| At 31 March 2009 | 2,235 | 52 | 215 | 65 | 2,567 |
| At 31 March 2010 | 2,182 | 36 | 172 | 32 | 2,422 |
Property, Plant and Equipment are located within United Kingdom.
| 2011 £000 |
2010 £000 |
|
|---|---|---|
| Fair Value at 1 April 2010 (2009) Additions: |
32,872 | 32,195 |
| Subsequent expenditure | 1,438 | 434 |
| Disposals | (6,450) | (1,899) |
| Increase in Fair Value during the year | 2,454 | 2,142 |
| At 31 March 2011 (2010) | 30,314 | 32,872 |
The Companies' investment properties were valued on a Fair Value basis as at 31 March 2011 by External Valuers, Mr F. Hill MRICS and Mr J.A. Rollings MRICS of Castles Surveyors Limited. The valuations were in accordance with the requirements of the RICS Valuation Standards Manual, Sixth Edition (The Red Book) and International Accounting Standard 40. The valuation of each investment property assumed that the property would be sold subject to any existing leases, regulated and assured tenancies, but otherwise, with vacant possession. On this basis, the aggregate Fair Value of the Company's interests in its investment properties was:
Louise Goodwin Limited
£24,474,000 (twenty four million, four hundred and seventy four thousand pounds).
£5,840,000 (five million, eight hundred and forty thousand pounds).
Information relating to the basis of valuation of investment properties and the judgements and assumption adopted by management is set out in note 2(u) "Estimates and Judgements".
A revaluation surplus of £2.454 million has arisen on valuation of investment properties to fair value as at 31 March 2011 (2010: surplus of £2.142 million) and this has been taken to the income statement.
for the year ended 31 March 2011
These represent the cost of shares in the following wholly owned Subsidiary undertakings, which are incorporated and operate in England and Wales. Their results are consolidated in the accounts of the Group, for the period during which they are Subsidiary undertakings.
| Principal Activity | Cost 2010 2011 £000 |
||
|---|---|---|---|
| Hurstway Investment Company Limited | Property Dealing | 1 | |
| Louise Goodwin Limited | Property Investment | 15,351 | |
| A.L.G. Properties Limited | Property Investment | 2,924 | |
| 18,276 | |||
| 16. | INVENTORIES | 2011 £000 |
2010 £000 |
| Residential properties | 259,462 | 256,964 | |
| 17. | TRADE AND OTHER RECEIVABLES | 2011 £000 |
2010 £000 |
| Trade receivables Prepayments and accrued income |
218 974 |
131 1,066 |
|
| 1,192 | 1,197 |
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
There are no bad or doubtful debts at the year end. There are no material debts past due, and there are no financial assets that are impaired.
| 2011 £000 |
2010 £000 |
|
|---|---|---|
| Trade creditors | 535 | 855 |
| Other taxes and social security costs | 144 | 142 |
| Other creditors | 806 | 358 |
| 1,485 | 1,355 | |
The Directors consider that the carrying amount of trade and other payables approximates their fair value.
M O U N T
V I E W E S T A T E S P.
L. C.
P. L. C.
for the year ended 31 March 2011
Less: amount due for settlement within 12 months
The average interest rates paid were as follows:
Future commitments under hire purchase agreements are as follows:
| 2011 £000 |
2010 £000 |
||
|---|---|---|---|
| Amounts payable within 1 year | 35 | – | |
| 19. | BANK OVERDRAFTS AND LOANS | ||
| 2011 £000 |
2010 £000 |
||
| Bank overdrafts Bank loans Other loans |
13,465 50,000 475 |
8,701 65,000 175 |
|
| 63,940 | 73,876 | ||
| (a) Cash and cash equivalents | 2011 £000 |
2010 £000 |
|
| Bank overdrafts Cash |
(13,465) 116 |
(8,701) 443 |
|
| Cash and cash equivalents as at 31 March | (13,349) | (8,258) | |
| Maturity profile of financial liabilities at 31 March 2011 was as follows: | |||
| 2011 £000 |
2010 £000 |
||
| Amounts repayable: In one year or less Between one and two years |
13,940 – |
8,876 – |
|
| Between two and five years | 50,000 | 65,000 | |
| 63,940 | 73,876 |
(shown under current liabilities) (13,940) (8,876)
Amount due for settlement after 12 months 50,000 65,000
2011 2010
Bank overdrafts and Money Market Loan 4.91% 2.12% Bank loans 3.62% 3.97% Other loans 1.00% 1.00%
for the year ended 31 March 2011
The Directors consider that the carrying amount of bank overdrafts and loans approximates their fair value.
The other principal features of the Group's borrowings are as follows.
Headroom of this facility at 31 March 2011 amounted to £1.9 million (2010: £16.9 million).
E S T A T E S
for the year ended 31 March 2011
| 2011 £000 |
2010 £000 |
|
|---|---|---|
| Deferred tax liabilities | 7,321 | 8,157 |
| Net position at 31 March | 7,321 | 8,157 |
The movement for the year in the Group's net deferred tax position was as follows.
| 2011 £000 |
2010 £000 |
|
|---|---|---|
| At 1 April (Credit) to income for the year |
8,157 (836) |
8,506 (349) |
| At 31 March | 7,321 | 8,157 |
The following are in deferred tax liabilities recognised by the Group and movements thereon during the period.
| Revaluation of properties | ||
|---|---|---|
| 2011 | 2010 | |
| £000 | £000 | |
| At 1 April | 8,157 | 8,506 |
| (Credit) to income for the year | (836) | (349) |
| At 31 March | 7,321 | 8,157 |
The Group's financial assets at the year end consist of trade receivables and cash at bank and in hand of £1.3 million (2010: £1.6 million)
The Directors consider that the carrying amount of cash at bank and in hand approximates their fair value.
The trade receivables amounted to £1.2 million (2010: £1.2 million).
The Directors consider that the carrying amount of trade receivables approximates their fair value.
| 2011 | 2010 | |
|---|---|---|
| £000 | £000 | |
| Bank overdrafts | 13,465 | 8,701 |
| Secured bank loans | 50,000 | 65,000 |
| Unsecured loans | 475 | 175 |
| 63,940 | 73,876 | |
C.
for the year ended 31 March 2011
Interest charged in the income statement for the above borrowings amounted to £3.4 million (2010: £3.3 million).
The Directors consider that the carrying amount of borrowings approximates their fair value. The details of the terms of the borrowings together with the average interest rates can be seen in Note 19.
As at 31 March 2011 it is estimated that general increase of 1 point in interest rates would decrease the Group's profit before tax by approximately £100,000 (2010: £250,000).
The Group has entered into an Interest Rate Swap Agreement in January 2008 in order to help manage its interest rate risk.
The interest rate swap matures in March 2013 and is based on £40 million non-amortising notional amount. As at 31 March 2011 the fixed interest rate was 4.98% (31 March 2010: 4.98%).
As at 31 March 2011 the fair value of the interest rate swap represents a liability of £2.6 million (2010: £3.6 million). During the year ended 31 March 2011 the Directors decided to revoke the decision to hedge account. The balance on the cash flow hedge reserve will be released to the income statement on straight line basis over the remaining term of the interest rate swap agreement.
In the Income Statement there is a charge of £292,000 relating to "change in fair value of derivatives".
This figure is the net effect of:
The interest rate swap was valued by Barclays Capital.
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 2011 | Less than £000 |
Between 1 year 1 & 5 years £ 000 |
Total £000 |
|---|---|---|---|
| Interest bearing loans and borrowings Cash flow hedge Trade and other payables |
14,175 2,632 1,485 |
61,550 – – |
75,725 2,632 1,485 |
| At 31 March 2010 | Less than £000 |
Between 1 year 1 & 5 years £ 000 |
Total £000 |
| Interest bearing loans and borrowings | 9,155 | 81,058 | 90,213 |
I E W
E S T A T E S
for the year ended 31 March 2011
Reconciliation of maturity analysis
| At 31 March 2011 | Less than £000 |
Between 1 year 1 & 5 years £ 000 |
Total £000 |
|---|---|---|---|
| Interest bearing loans and borrowings | |||
| per accounts | 13,940 | 50,000 | 63,940 |
| Interest | 235 | 11,550 | 11,785 |
| Financial liability cash flows as above | 14,175 | 61,550 | 75,725 |
| At 31 March 2010 | Less than £000 |
Between 1 year 1 & 5 years £ 000 |
Total £000 |
|---|---|---|---|
| Interest bearing loans and borrowings | |||
| per accounts | 8,876 | 65,000 | 73,876 |
| Interest | 279 | 16,058 | 16,337 |
| Financial liability cash flows as above | 9,155 | 81,058 | 90,213 |
| 2011 £000 |
2010 £000 |
||
|---|---|---|---|
| Authorised: 5,000,000 ordinary shares of 5p each |
250 | 250 | |
| Allotted, issued and fully paid: 3,899,014 ordinary shares of 5p each |
195 | 195 | |
| 23. | OTHER RESERVES | 2011 £000 |
2010 £000 |
| Capital redemption reserve Capital reserve Other reserves |
55 25 56 |
55 25 56 |
|
| 136 | 136 |
Capital redemption reserve relates to buy-back of the Company's own shares.
The Group does not maintain insurance cover against other risks except where several properties are located in close physical vicinity. A reserve is maintained to deal with such non-insured risks and at 31 March 2011 stood at £56,000 (2010: £56,000).
for the year ended 31 March 2011
| £000 | |
|---|---|
| Balance at 1 April 2010 | 206,366 |
| Net profit for the year Dividends paid |
16,971 (6,432) |
| Balance at 31 March 2011 | 216,905 |
| 2011 £000 |
2010 £000 |
|
|---|---|---|
| Salary and bonus | 292 | – |
| Termination benefit | 30 | – |
| Post employment benefit | 41 | – |
Miss J.L. Murphy resigned as an Executive Director on 31 August 2010. Pursuant to the terms of compromise agreement between Miss J.L. Murphy and the Company relating to her resignation as a Director the Company has made an aggregate payment to Miss J.L. Murphy of £363,645.
M O U N T V I E W
E S T A T E S
to the Members of Mountview Estates P.L.C.
We have audited the Group financial statements of Mountview Estates P.L.C. for the year ended 31 March 2011, which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the statement of consolidated cash flows and the related Notes 1 to 25. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards ('IFRS') as adopted by the European Union.
As explained more fully in the statement of Directors' Responsibilities set out in the Directors' Report, the Directors are responsible for the preparation of the Group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the Group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.
In our opinion the Group financial statements:
In our opinion:
We have nothing to report in respect of the following: Under the Companies Act 2006 we are required to report to you if, in our opinion:
Under the Listing Rules we are required to review:
to the Members of Mountview Estates P.L.C.
We have reported separately on the parent Company financial statements of Mountview Estates P.L.C. for the year ended 31 March 2011 and on the information in the Report of the Remuneration Committee and Directors' Remuneration Report that is described as having been audited.
Norman Strong (Senior StatutoryAuditor) for and on behalf of BSG Valentine Chartered Accountants and Statutory Auditors London
14 July 2011
as at 31 March 2011
| FIXED ASSETS | Notes | As at 31.03.2011 £000 |
As at 31.03.2010 £000 |
|---|---|---|---|
| Tangible assets Investments |
3 4 |
2,343 18,276 |
2,392 18,276 |
| 20,619 | 20,668 | ||
| CURRENT ASSETS | |||
| Stocks Debtors Cash at bank and in hand |
5 6 |
243,990 1,140 86 |
243,860 1,124 319 |
| 245,216 | 245,303 | ||
| CREDITORS: Amounts falling due within one year |
7 | (20,364) | (17,101) |
| NET CURRENT ASSETS | 224,852 | 228,202 | |
| TOTAL ASSETS LESS CURRENT LIABILITIES |
245,471 | 248,870 | |
| CREDITORS: Amounts falling due after more than one year |
8 | (77,847) | (90,200) |
| 167,624 | 158,670 | ||
| CAPITAL AND RESERVES | |||
| Called up share capital Capital redemption reserve Capital reserve Other reserves Cash flow hedge reserve Profit and Loss Account |
9 10 10 10 11 12 |
195 55 25 39 (2,340) 169,650 |
195 55 25 39 (3,640) 161,996 |
| 167,624 | 158,670 |
Approved by the Board on 14 July 2011.
D.M. SINCLAIR Chairman K. LANGRISH-SMITH Director
for the year ended 31 March 2011
The Accounts have been prepared under the historical cost convention, and in accordance with applicable Accounting Standards.
Fixed assets investments in Subsidiary undertakings are stated at costs less any provision for impairment.
Corporation tax payable is provided on taxable profits at the current rate.
Turnover includes proceeds of sales of properties, rents from properties which are held as trading stock, or investment and any other sundry items of revenue before charging expenses. Sales of properties are recognised on completion.
Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset using the straight-line method as follows:
| Freehold property | – | 2% |
|---|---|---|
| Fixtures and fittings and office equipment | – | 20% |
| Computer equipment | – | 25% |
| Motor Vehicles – reducing balance method | – | 20% |
Fixed Assets are subject to review for impairment in accordance with FRS11 "Impairment of Fixed Assets and Goodwill". Any impairment is recognised in the Profit and Loss Account in the year in which it occurs.
These comprise residential properties all of which are held for resale, and are valued at the lower of cost and estimated net realisable value. Cost to the Group includes legal fees and commission charges incurred during acquisition together with improvement costs. Net realisable value is the net sale proceeds which the Group expects on sale of a property with vacant possession in its current condition. The analysis of the Group revenue as at 31 March 2011 is on page 31.
Assets held under hire purchase agreements are capitalised and disclosed under tangible fixed assets at their fair value. The capital element of the future payments is treated as a liability and the interest is charged to the profit and loss account on a straight line basis.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or right to pay less or to receive more, tax, with the following exceptions:
for the year ended 31 March 2011
| 2011 | 2010 | |
|---|---|---|
| £000 | £000 | |
| Wages and salaries | 2,078 | 2,373 |
| Social security costs | 225 | 288 |
| Pension costs | 87 | 98 |
| 2,390 | 2,759 | |
| DIRECTORS' REMUNERATION | ||
| 2011 £000 |
2010 £000 |
|
| Total Directors' Remuneration including salary, bonuses, benefits in kind and |
||
| pensions contributions amounted to: | 1,291 | 1,627 |
The details of Directors' Remuneration are shown in the audited section of the Remuneration Report on page 18.
The Company contributes 3% of the total annual gross salaries and bonuses of each employee to a Stakeholder Pension Scheme.
The average monthly number of employees during the year was as follows:
| 2011 | 2010 | |
|---|---|---|
| Office and management | 24 | 27 |
| Freehold Property £000 |
Fixtures & Fittings £000 |
Motor Vehicles Equipment £000 |
Computer £ 000 |
Total £000 |
|
|---|---|---|---|---|---|
| COST | |||||
| At 1 April 2010 | 2,671 | 23 | 353 | 131 | 3,178 |
| Additions | – | 5 | 156 | 21 | 182 |
| Disposals | – | (6) | (194) | – | (200) |
| At 31 March 2011 | 2,671 | 22 | 315 | 152 | 3,160 |
| DEPRECIATION | |||||
| At 1 April 2010 | 489 | 17 | 181 | 99 | 786 |
| Charge for the year | 53 | 5 | 40 | 37 | 135 |
| On disposals | – | (6) | (98) | – | (104) |
| At 31 March 2011 | 542 | 16 | 123 | 136 | 817 |
| NET BOOK VALUE | |||||
| At 31 March 2010 | 2,182 | 6 | 172 | 32 | 2,392 |
| At 31 March 2011 | 2,129 | 6 | 192 | 16 | 2,343 |
for the year ended 31 March 2011
Included within the net book value of £2,405,000 is £34,970 relating to assets held under hire purchase agreement. The depreciation charged to the financial statements in the year in respect of such assets amounted to £9,420 (2010: £nil).
All tangible assets of the Company are located within the United Kingdom.
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.
| Cost 2010 2011 £000 |
|---|
| 1 |
| 15,351 |
| 2,924 |
| 18,276 |
The Company owns 100% of the ordinary share capital of the following companies:
| Subsidiary Undertaking | Country of Incorporation |
Principal Activity |
|
|---|---|---|---|
| Hurstway Investment Company Limited | UK | Property Dealing | |
| Louise Goodwin Limited | UK | Property Investment | |
| A.L.G. Properties Limited | UK | Property Investment | |
| 5. | STOCKS | 2011 £000 |
2010 £000 |
| Residential properties | 243,990 | 243,860 | |
| 6. | DEBTORS: due within one year | 2011 £000 |
2010 £000 |
| Trade debtors | 203 | 93 | |
| Prepayments and accrued income | 937 | 1,031 | |
| 1,140 | 1,124 | ||
T V I E W
E S T A T E S
P. L. C.
for the year ended 31 March 2011
| 2011 £000 |
2010 £000 |
|
|---|---|---|
| Bank loans and overdrafts | 13,465 | 8,701 |
| Trade creditors | 316 | 497 |
| Corporation Tax | 2,364 | 3,295 |
| Other taxes and social security costs | 143 | 127 |
| Other creditors | 969 | 666 |
| Other loans | 475 | 175 |
| Derivative financial instruments | 2,632 | 3,640 |
| 20,364 | 17,101 | |
Other loans consist of loans from connected persons. Interest payable on these loans was at 0.5% above Barclays Bank Plc Base rate.
Future commitments under hire purchase agreements are as follows:
| 2011 £000 |
2010 £000 |
|
|---|---|---|
| Amounts payable within 1 year | 35 | – |
| 2011 £000 |
2010 £000 |
|
|---|---|---|
| Bank loans Amounts owed to Subsidiary undertakings Other loans |
50,000 27,847 – |
65,000 25,200 – |
| 77,847 | 90,200 |
Maturity profile of financial liabilities at 31 March 2011 was as follows:
| 2011 £000 |
2010 £000 |
|
|---|---|---|
| Amounts repayable: | ||
| In one year or less | 13,940 | 8,876 |
| Between one and two years | – | – |
| Between two and five years | 50,000 | 65,000 |
| More than five years | 27,847 | 25,200 |
| 91,787 | 99,076 | |
| Less: amount due for settlement within 12 months | ||
| (shown under current liabilities) | (13,940) | (8,876) |
| Amount due for settlement after 12 months | 77,847 | 90,200 |
for the year ended 31 March 2011
The Directors consider that the carrying amount of bank overdrafts and loans approximates their fair value.
The other principal features of the Group's borrowings are as follows.
Headroom of this facility at 31 March 2011 amounted to £1.9 million (2010: £16.9 million).
| 2011 £000 |
2010 £000 |
|
|---|---|---|
| Authorised: 5,000,000 ordinary shares of 5p each |
250 | 250 |
| Allotted, issued and fully paid: 3,899,014 ordinary shares of 5p each |
195 | 195 |
for the year ended 31 March 2011
| 2011 £000 |
2010 £000 |
|
|---|---|---|
| Capital redemption reserve | 55 | 55 |
| Capital reserve Other reserves |
25 39 |
25 39 |
| Balance at 31 March | 119 | 119 |
Capital redemption reserve relates to buy-back of the Company's own shares.
The Group does not maintain insurance cover against other risks except where several properties are located in close physical vicinity. A reserve is maintained to deal with such non-insured risks and at 31 March 2011 stood at £39,000 (2010: £39,000).
The Company entered into an Interest Rate Swap Agreement in January 2008 in order to help manage its interest rate risk.
The interest rate swap matures in March 2013 and is based on £40 million non-amortising notional amount. As at 31 March 2011 the fixed interest rate was 4.98% (March 2010: 4.88%).
| 2011 £000 |
2010 £000 |
|
|---|---|---|
| Balance at 1 April | 161,996 | 151,072 |
| Net profit for the year Dividends paid |
14,086 (6,432) |
16,966 (6,042) |
| Balance at 31 March | 169,650 | 161,996 |
for the year ended 31 March 2011
| 2011 | 2010 | |
|---|---|---|
| £000 | £000 | |
| Salary and bonus | 292 | – |
| Termination benefit | 30 | – |
| Post employment benefit | 41 | – |
Miss J.L. Murphy resigned as an Executive Director on 31 August 2010. Pursuant to the terms of compromise agreement between Miss J.L. Murphy and the Company relating to her resignation as a Director the Company has made an aggregate payment to Miss J.L. Murphy of £363,645.
to the Members of Mountview Estates P.L.C. on the parent Company financial statements
We have audited the parent Company financial statements of Mountview Estates P.L.C. for the year ended 31 March 2011 which comprise the parent Company balance sheet and the related notes 1 to 13. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
As explained more fully in the statement of Directors' responsibilities set out in the Directors' Report, the Directors are responsible for the preparation of the parent Company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the parent Company financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the parent Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.
In our opinion the parent Company financial statements:
In our opinion:
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
We have reported separately on the Group financial statements of Mountview Estates P.L.C. for the year ended 31 March 2011.
Norman Strong (Senior Statutory Auditor) for and on behalf of BSG Valentine Chartered Accountants and Statutory Auditors London 14 July 2011
M O U N T V I E W E S T A T E S P. L. C.
| TABLE OF COMPARATIVE FIGURES | 55 | ||||||
|---|---|---|---|---|---|---|---|
| as at 31 March 2011 | M O |
||||||
| IFRS 2006 £000 |
IFRS 2007 £000 |
IFRS 2008 £000 |
IFRS 2009 £000 |
IFRS 2010 £000 |
IFRS 2011 £000 |
U N T V I |
|
| Revenue | 47,456 | 68,168 | 54,338 | 53,599 | 56,697 | 47,655 | E W |
| Profit before taxation | 22,660 | 50,227 | 29,529 | 13,062 | 29,255 | 23,560 | E S |
| Taxation | 6,738 | 15,167 | 8,861 | 3,673 | 7,620 | 6,589 | T A |
| Profit after taxation | 15,922 | 35,060 | 20,668 | 9,389 | 21,635 | 16,971 | T E S |
| Dividend in relation to the year |
5,069 | 5,848 | 6.042 | 6.042 | 6,432 | 6,432* | P. L. |
| Earnings per share | 408.4p | 899.2p | 530.1p | 241.0p | 554.8p | 453.3 | C. |
| Rate of dividend | 130p | 150p | 155p | 155p | 165p | 165p |
*The £6.43 million dividend in relation to 2011 is made up of the interim dividend of £1.95 million and the final dividend of £4.48 million, which will be paid on 15 August 2011, subject to approval at the AGM on 10 August 2011.
Notice is hereby given that the Seventy-Fourth Annual General Meeting of the Members of Mountview Estates P.L.C. (incorporated in England and Wales with registered number 00328020) will be held at the offices of Norton Rose LLP, 3 More London Riverside, London SE1 2AQ on 10 August 2011 at 11.30 a.m. for the following purposes:
As ordinary business:
By Order of the Board M.M. BRAY Secretary
Mountview House 151 High Street Southgate London N14 6EW 14 July 2011
Notes:–
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.
If the Chairman, as a result of any proxy appointments, is given discretion as to how the votes the subject of those proxies are cast and the voting rights in respect of those discretionary proxies, when added to the interests in the Company's securities already held by the Chairman, result in the Chairman holding such number of voting rights that he has a notifiable obligation under the Disclosure and Transparency Rules, the Chairman will make the necessary notifications to the Company and the Financial Services Authority. As a result, any Member holding 3% or more of the voting rights in the Company who grants the Chairman a discretionary proxy in respect of some or all of those voting rights and so would otherwise have a notification obligation under the Disclosure and Transparency Rules, need not make a separate notification to the Company and the Financial Services Authority.
The Company may not require the members requesting any such website publication to pay its expenses in complying with sections 527 or 528 Companies Act 2006. Where the Company is required to place a statement on a website under section 527 Companies Act 2006, it must forward the statement to the Company's auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the meeting includes any statement that the Company has been required under section 527 Companies Act 2006 to publish on a website.
M O U N T V I E W E S T A T E S P. L. C.
| Final dividend record date | 15 July |
|---|---|
| Annual Report Posted to Shareholders | 15 July |
| Annual General Meeting | 10 August |
| Final dividend payment | 15 August |
| Interim Results | 30 November |
Copies of this statement are being sent to shareholders. Copies may be obtained from the Company's registered office:
Mountview House 151 High Street Southgate London N14 6EW
All administrative enquiries relating to shareholdings should be addressed to the Company's Registrars:
Capita Registrars Northern House Woodsome Park Fenay Bridge Huddersfield West Yorkshire HD8 0GA M O U N T V I E W
E S T A T E S
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