max property group plc - company reporting · · 2017-07-27max property group plc is a jersey...

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Max Property Group Plc Annual Report 2013

22324-04 17 June 2013 3:00 PM Proof 5Slugline

Annual Reportfor the year ended 31 March 2013

Max P

rop

erty Gro

up P

lc Annual R

eport 2013

New reception at International House, St Katharine Docks


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Slugline

Max Property Group Plc is a Jersey resident real estate investment company. It has an experienced Board, chaired by Aubrey Adams, and is exclusively advised by Prestbury Investments LLP, which is owned and managed by a team led by Nick Leslau and Mike Brown.

The Company’s strategy is to exploit cyclical weakness in the UK real estate market through opportunistic investment and active management with a view to realising cash returns for shareholders over an investment cycle of approximately seven and a half years from its listing inMay 2009.

ContentsHighlights1 Highlights

Business Review2 Chairman’s Statement5 Report from the Property Advisor, Prestbury Investments LLP

Governance18 Board of Directors20 The Property Advisor21 Corporate Governance Report26 Directors’ Report

Group Financials29 Group Independent Auditors’ Report30 Group Income Statement31 Group Statement of Comprehensive Income32 Group Statement of Changes in Equity33 Group Balance Sheet34 Group Cash Flow Statement35 Notes to the financial statements

Company Financials62 Company Independent Auditors’ Report63 Company Balance Sheet64 Notes to the Company Balance Sheet

Company Information66 Property Portfolio assets held at 23 May 201372 Glossary73 Company Information74 Notice of Annual General Meeting

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Highlights

31 March 2013

31 March 2012

Change in12 months

since last year

Change in 46 months

since listing

Net assets £294.1m £285.9m up 2.9% up 39% EPRA net assets per share1 136.5p 133.4p up 2.3% up 42% EPRA earnings per share2 6.3p 6.4p down 1.6%

Highlights X EPRA NAV per share up 2.3% to 136.5p per share in the year to 31 March 2013 and up 42% since listing in May 2009

X Valuations flat over the last six months and down by 1% during the year; portfolio net initial yield 7.7% and equivalent yield 8.8%

X Purchase of High Holborn Estate in November 2012 for cash consideration of £45.3 million plus costs (c. £320 psf)

X London net asset value weighting now 49%

X Development commenced on 140,000 sq ft Commodity Quay at St Katharine Docks, for completion in Spring 2014

X Industrious vacancy rate reduced to 12.2% of ERV compared to 15.2% at 31 March 2012

X 12 sales in the year totalling £9.6 million at a 31% profit over acquisition cost and 31% over valuation

X 140 new lettings with a net rent roll of £4.0 million (Max share £3.2 million)

X Industrious debt maturity extended by two years: all on balance sheet facilities now mature in 2016 in line with other loans and anticipated liquidation

X Net loan to value ratio at 31% (32% including Hospitals joint venture) and gearing ratio3 46% (51% including Hospitals)

X EPRA EPS 6.3p (2012: 6.4p): Commodity Quay refurbishment has reduced EPS by 0.5p per share

X Uncommitted cash of c. £42 million

1 excluding fair values of financial instruments and deferred tax and including trading properties at fair value

2 excluding property revaluation movements, profits or losses on sales of properties, fair value movements on financial instruments and deferred tax

3 gearing ratio is calculated as net debt divided by equity attributable to shareholders


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Dear shareholder,Max is run to produce attractive returns for shareholders over the period from its listing in May 2009 until 2016, when it is anticipated that the business will be wound up and cash returned to shareholders. We are pleased to report our progress to date against this objective, for the period to 31 March 2013.

Results and financial positionEPRA net asset value per share at 136.5p increased by 2.3% over the year to 31 March 2013, and has increased by 42% in just under four years since listing. Having raised £211 million of net cash on listing, the Group has generated £89 million of net assets growth, 61% realised in cash terms. This performance reflects the net results of rental surpluses from the predominantly high yielding portfolio, together with realised surpluses on selective asset sales and unrealised valuation movements.

The growth in net asset value per share of 3.1p in the year breaks down to contributions from rental surpluses of 10.5p and surpluses on property sales of 0.4p totalling 10.9p of results before interest, tax and revaluations, net of 5.7p of net finance costs, 1.9p of falls in property valuations and Max’s 0.2p share of net loss from the Hospitals joint venture.

As we highlighted last year, we were anticipating a decline in EPRA earnings in the 2013 financial year as a result of the reduced contribution from St Katharine Docks as Commodity Quay became vacant ahead of its comprehensive refurbishment, necessitating the loss of some £1 million (approximately 0.5p per share) of rent from that property. Against that background, there has been a marginal decline in EPRA earnings per share in the year from 6.4p to 6.3p per share. The loss of rent at Commodity Quay has been offset by improved occupancy rates in the Industrious portfolio and also by the contribution from the High Holborn Estate, purchased for cash in November 2012.

Uncommitted cash at 31 March 2013 is £42 million, which is stated after an allowance for the costs of rolling refurbishment of High Holborn and the Group’s share of the costs of the Commodity Quay and other refurbishment projects at St Katharine Docks. This cash reserve does not take account of the significant cash flow from operations and cash surpluses from investment property sales, which will add to the available fire power for further acquisitions.

Our original intention was to have completed the investment phase of the Group’s lifecycle by mid 2014, and that remains the case. It has been ironic that in the last few years, despite such challenging economic conditions, opportunities to find suitable investments have been relatively limited, both through lack of liquidity and fierce competition from ‘forced buyers’ – buyers which have raised capital and need to deploy or lose it. We continue to evaluate acquisition opportunities with a view to deploying the remaining surplus cash.

“Max Property has had another good year of operational performance. The outlook for the property market in general is now improving after a year of values outside London continuing to drift downwards. Our portfolio is dominated by interesting assets in and around central London and high yielding industrial property, and I believe this will serve shareholders well for the remainder of Max’s life up to the liquidation anticipated in 2016.”

Chairman’s StatementAubrey Adams

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As we have noted in previous reports, Max’s strategy is to invest shareholders’ funds to produce attractive returns over the Group’s lifecycle, therefore cash has been deployed in the Group’s investment activities rather than paid out in the form of shareholder returns. The Board will continue to assess the appropriateness of paying dividends or making capital returns with a view to commencing returns of cash to shareholders, depending on circumstances and at the appropriate time. With an eye to the future, we have included within the resolutions to be tabled at the Annual General Meeting a resolution to grant the Board powers to buy in shares on certain terms. While there is no intention to buy in shares at the current time, this may be a suitable mechanism for shareholder returns in future, therefore we are seeking shareholder authority at this stage.

The Group’s net assets are now balanced broadly between central London offices (41% of net asset value) with interesting opportunities to exploit; the high yielding, well spread Industrious portfolio (33% of net asset value); and the London Pubs portfolio (8% of net asset value) with the balance of the Group’s net assets predominantly in cash. Continued investment in the major refurbishment projects and active asset management should continue to drive performance towards the ultimate objective of attractive cash returns for shareholders over the next few years.

OutlookThe outlook for property values is considerably better than a year ago. Rising yields have been the main driver for capital value falls, but as we have bid for properties in recent months we have seen plenty of evidence of yields stabilising. Cautious investors who have held cash to protect themselves against the economic uncertainty have been punished with a negative real return whilst the major stock markets around the world have rallied strongly, typically 20-50%, over the last year and rising to multi-year or in some cases all time highs. Meanwhile government and corporate bonds continue to offer yields at or close to historic lows in the main economies in the world. The search for yield has driven US-rated junk bonds to below 5% with yields on the lowest rated CCC bonds falling from over 10% to under 7% in the last year. In this context it makes little sense for property yields to continue to rise when real estate already offers such a high comparative yield premium to other asset classes.

Central London property has been untroubled by the general property market setback, seeing a continuation of strong overseas investor interest and healthy occupational demand. This does not seem to be changing for now. The challenge here has simply been to secure interesting deals that can capture future growth without gifting this performance to the vendor by overpaying when there is such keen competition. Regarding the rest of the market, its turning point has rested on when the huge gap between property yields in the provinces and London would eventually provide sufficient temptation to lure investors back. Two major obstacles stood in the way – weak occupational markets and an almost complete absence of debt. Whilst neither of these impediments has been removed completely there are definite signs of progress. The anaemic economic recovery has continued to hold back occupational demand but nonetheless Max has managed to continue to reduce its provincial vacancy rates. Credit conditions have also improved with more banks willing to offer loans on secondary property albeit limited to well capitalised sponsors with access to good management of assets. With 70% of central London sales going to overseas purchasers last year, domestic institutions are being priced out of the London market. Alternative assets offering long indexed income streams in sectors such as healthcare, leisure and education have been a beneficiary of the switch in institutional investment, but there are now signs of selective interest in industrial and office property, particularly in the South East and major provincial cities.


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Stock picking is pivotal in the provincial property markets. Not all assets will remain income producing and those capable of being relet may require considerable capital expenditure to generate net income lower than in the past. We are eschewing assets facing structural headwinds – secondary retail and any office location with imbedded oversupply or vulnerable to Government cutbacks. Industrial property is much more defensive in comparison. When we bought Industrious in October 2009 we inherited 1.3 million sq ft of vacant space yet 90% of this has been subsequently let or sold to owner occupiers without significant capital expenditure. If the search for yield finally rotates into the secondary property market – and it is noteworthy that there are very few high yielding sectors left around the world that remain untouched by the impact of QE – we believe that industrials will be the main beneficiary. Certainly buyers in a position to source debt and select the stock capable of generating sustainable cash flows should be well rewarded over the next few years.

We are pleased to have achieved the position where Max’s portfolio is dominated by interesting London assets and high yielding industrial assets. I believe that this will serve shareholders well for the remainder of Max’s life up to the liquidation anticipated in 2016.

Aubrey AdamsChairman23 May 2013

Chairman’s Statement continued

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Prestbury Investments LLP exclusively advises Max Property Group Plc and is pleased to report on the operations of the Group.

The portfolioThe portfolio combines exciting added value opportunities in London with a high yielding predominantly industrial portfolio spread throughout the UK, with small lot sizes and a broad spread of tenants.

Report from the Property Advisor, Prestbury Investments LLP

Portfolio valuation movementsChange

overone year

Changeover

six months

Changeovercost

ERV compared to 31 March

2012

St Katharine Docks (60% owned) 1.8% 1.6% 4.9% 5.3%High Holborn Estate n/a n/a (0.1)% n/aLondon Pubs 7.5% 4.4% 19.1% 0.4%Industrious (3.5)% (1.4)% 5.7% (5.6)%Provincial Offices (including Milton Keynes assets 83.3% owned) (5.2)% (0.8)% 41.2% (2.9)%Hospitals (45% owned) (4.9)% (5.3)% 4.8% 3.8%Nightclubs (0.7)% (1.2)% (9.0)% (4.0)%

(1.0)% (0.1)% 8.2% (2.1)%

Portfolio valuation yields at 31 March 2013

Net initial yield

Equivalent yield

Reversionary yield

Capital value psf

Weighted average unexpired lease

term

St Katharine Docks 5.2% 6.6% 9.3% £357 5.7 yearsHigh Holborn Estate 3.2% 6.7% 8.3% £323 1.4 yearsLondon Pubs 5.7% 7.4% 5.7% £392 32.9 yearsIndustrious 10.3% 10.6% 11.3% £31 3.8 yearsProvincial Offices 8.8% 10.2% 12.7% £69 3.5 yearsHospitals 7.4% 7.4% 7.8% n/a 22.1 yearsNightclubs 15.7% 17.7% 13.6% £33 21.8 years

7.7% 8.8% 9.8% 7.3 years

Portfolio breakdown at 31 March 2013Gross value(Max share)

£000Proportion of portfolio

EPRA NAV*£000

Proportion ofEPRA NAV

EPRAvacancy

rate+

St Katharine Docks 109,992 24% 68,208 23% 8.8%High Holborn Estate 47,700 10% 53,807 18% 22.1%Central London offices 157,692 34% 122,015 41% 12.9%London Pubs 45,385 10% 24,524 8% 0.0%Industrious 190,015 42% 99,434 33% 12.2%Provincial Offices 41,929 9% 12,943 4% 26.8%Hospitals 14,783 3% 1,061 1% 0.0%Nightclubs 7,575 2% 7,574 3% 7.5%Cash n/a n/a 32,731 10% n/a

457,379 100% 300,282 100% 13.0%

* including cash balances allocated for major refurbishment programmes+ excluding assets not available for letting


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Industrious (42% of gross assets, 33% of EPRA NAV)A portfolio of multi-let industrial estates bought out of receivership in October 2009 for £244.0 million (£31 psf capital value).

Activity X Vacancy rate by area reduced to 13.2% from 20.7% at acquisition and 15.1% in April 2012 X EPRA vacancy rate reduced to 12.2% from 15.2% in March 2012. An increasing amount of

voids is in lower value space X Vacancy rate has fallen in every reporting period since acquisition with over 900 lettings and

lease renewals over 4.2 million sq ft X 90% of the space vacant on acquisition has since been let or sold X Of the 805,000 sq ft of space currently vacant 152,000 sq ft (19%) is under offer X 117,000 sq ft is thought to be coming vacant up to the end of 2013 X Ten sales in the year totalling £7.4 million at an average 5.7% net initial yield and £1.9 million

(36%) profit over purchase price X Total sales since acquisition of £92.5 million at an average 7.7% net initial yield and £21.2

million (31%) profit over purchase price

Current portfolio X 71 properties X 863 tenancies X 6.1 million sq ft X Average unit size: 5,800 sq ft X 47% by value in the South East of England X Highly liquid: 77% of properties by number are lot sizes of £3 million or below X Weighted average unexpired lease term: 3.8 years X £21.2 million rent roll X Average contracted rent: £4.04 psf

The Industrious portfolio predominantly comprises smaller units that appeal to a wide variety of users and provide a range of exit options, from disposals of individual units to a whole portfolio sale. Martlesham Heath Business Park, Ipswich (504,000 sq ft) makes up over 10% of the portfolio by value and no other property makes up more than 6.5%.

Region

31 March 2013valuation

£000Percentage

of total

Capitalvalue psf

£Area

(‘000 sq ft)Number ofproperties

Number ofunits

South East 88,740 47% 51 1,730 21 428Northern regions 64,445 34% 24 2,657 27 419Midlands 26,815 14% 23 1,162 16 139South West 5,160 3% 37 141 3 27Scotland 4,855 2% 12 404 4 32Total 190,015 100% 31 6,094 71 1,045

Report from the Property Advisor, Prestbury Investments LLP continued

Sterling Industrial Estate, Dagenham

Before refurbishment After refurbishment

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St Katharine Docks

Refurbished reception, International House New quayside café, International House

St Katharine Docks (24% of gross assets, 23% of EPRA NAV)St Katharine Docks was acquired in a 60% joint venture in August 2011 for £164.5 million (£330 psf capital value). Situated on the Thames adjacent to Tower Bridge and the Tower of London, it enjoys unparalleled views and includes central London’s only marina. The investment comprises 450,000 sq ft of offices, predominantly in three buildings, with 50,000 sq ft of waterside restaurants, bars and shops and the ten acre, 160 berth marina. The strategy is to create a premium office destination through repositioning the estate, attracting footloose central London occupiers to a beautiful location.

Phase 1:Refurbishment of International House entrance hall and nearly 40,000 sq ft of offices. Refurbishments are now complete and offices are let: 30,000 sq ft to IT training business QA at £37.50 psf and 8,000 sq ft to web content management company Sitecore at £39 psf, compared to average passing rent on acquisition of c. £30 psf in the property.

Phase 2:Ongoing rationalisation of smaller suites at International House to increase the net lettable area and introduce complementary uses at ground floor level. This involves the refurbishment of 30,000 sq ft of offices, half of which is under offer, and the creation of a 3,200 sq ft restaurant unit (pre-let to Côte Restaurant) and a 3,250 sq ft retail unit (pre-let subject to planning consent).

Phase 3:A £21 million comprehensive refurbishment of Commodity Quay. Planning consent has been obtained and development commenced, with completion planned for Spring 2014. The office net lettable area will be increased by 10% to 110,000 sq ft on the upper floors, with a 10,000 sq ft restaurant and 20,000 sq ft of leisure uses proposed for the ground floor and basement.

Current estate X 515,000 sq ft, of which 152,000 sq ft is under development X Weighted average unexpired lease term: 5.7 years X £8.8 million rent roll X Average contracted rent: £29.93 psf X EPRA vacancy rate: 8.8% X Vacancy rate including Commodity Quay (undergoing refurbishment): 36.3% of ERV

Area(sq ft)

Area (sq ft) in refurbishment

EPRA vacancy rate

International House 215,000 12,000 11.3%Commodity Quay 140,000 140,000 n/aDevon House 90,000 – –Ivory House and other 70,000 – 12.3%

515,000 152,000 8.8%


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Caroline House (left), High Holborn House (middle), Brownlow House (right)

High Holborn Estate (10% of gross assets, 18% of EPRA NAV)A freehold island site of just under one acre with frontages to High Holborn and Bedford Row, acquired in November 2012 for £47.7 million including costs (c. £320 psf capital value).

Nine buildings provide nearly 150,000 sq ft of unrefurbished space let to 50 tenants at low rental levels averaging just £15 psf at acquisition on short term leases. The low rental levels reflected the tenants’ lack of security of tenure resulting from the former landlord’s development break clauses.

The strategy is to upgrade the common parts, refurbish empty office suites, improve the tenant mix and increase passing rents and average lease lengths. A centrally heated suite was pre-let shortly after acquisition at £27.50 psf ahead of the common parts refurbishment and rents of over £30 psf will be targeted for comfort cooled suites. The current Midtown office vacancy rate is 4.1% and 63% of the take-up in Midtown in the first quarter of 2013 was in our target market of 1,000 to 3,000 sq ft suites.

A number of the smaller buildings fronting Bedford Row and Hand Court totalling 31,000 sq ft have potential for change of use to residential. The retail units fronting High Holborn (11,000 sq ft) have scope to be consolidated into larger units that enjoy stronger demand from higher quality operators.

Area(sq ft)

Total area(sq ft) Asset plan

High Holborn House 87,000 Rolling refurbishment Caroline House 19,000 Comprehensive refurbishmentBrownlow House 10,000 Rolling refurbishmentProperties fronting High Holborn 116,000Six properties fronting Bedford Row and Hand Court

31,000 Potential change of use to residential

147,000

The current rent roll is £1.8 million and the EPRA vacancy rate is 22.1%.

High Holborn Estate

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Famous Cock Tavern, Upper Street, Islington

London Pubs

Golden Heart, Commercial Street, London E1

London Pubs (10% of gross assets, 8% of EPRA NAV)29 freehold pubs with a total floor area of 150,000 sq ft, situated in high value residential areas in London, were acquired in January 2011 for £44.4 million (£300 psf capital value). The pubs are located in Marylebone, Notting Hill, Chelsea, Clerkenwell, Spitalfields, Southwark, Camden, Highgate, Islington, Barnes, Sheen, Chiswick, Battersea, Clapham, Balham, Tooting and Fulham.

At acquisition the net initial yield on the portfolio was 6.7%, which has subsequently risen to 7.2% on cost due to increases in rent roll. The independently assessed vacant possession value of the portfolio at the time of acquisition, subject to existing use as pubs, was approximately the same as the purchase price, and many of the properties are considered by the management team to have a higher alternative value for residential use in the event that they fell vacant and planning consent were secured.

Two of the pubs, in Chelsea and Balham, were sold in 2011 for a total of £6.4 million at net initial yields of 4.5% and 5.5% respectively, producing an aggregate profit of 21% over cost. During the year, the Notting Hill pub has unconditionally exchanged for sale, with completion due in November 2013, at a price of £1.5 million, reflecting a net initial yield of 4.4% and representing a profit of 37% over cost. Since the year end, two further pubs in Islington and Whitechapel have unconditionally exchanged for sale, with completion due in June 2013 at a price of £5.3 million reflecting a net initial yield of 4.9% and representing a profit of 42% over cost. Following these sales, the average lot size is £1.7 million at the most recent valuation.

The pubs are let on 35 year full repairing and insuring leases to Enterprise Inns Plc commencing in January 2011 at market rents well covered by trading profits and initially totalling £3.0 million per annum, with minimum 3% per annum and maximum 4% per annum RPI-linked uplifts occurring annually for the first five years and every five years thereafter. After all of the disposals mentioned above, the passing rent will be £2.5 million per annum.


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Provincial Offices (9% of gross assets, 4% of EPRA NAV)A portfolio of predominantly late 1980s air conditioned offices, purchased in February 2010 for £39.0 million (£50 psf capital value) from a property fund seeking liquidity to meet redemptions.

Activity X Vacancy rate by area reduced to 26% from 48% at acquisition and 28% in April 2012 X £32.0 million raised in May 2012 on a non-recourse financing of five properties with 18%

vacancy rate X Two properties sold since acquisition for £6.7 million at 43% over purchase price X Remaining uncharged assets are valued at £10.3 million (£47 psf) and have a 42% vacancy

rate. 96% of that vacant space is refurbished

Current portfolio X Nine properties (eight freeholds; one 102 year peppercorn leasehold) X 62% by value in the South East, 31% in Manchester, 7% in Bristol X 639,000 sq ft X Average lot size: £4.9 million X £4.3 million rent roll X Average contracted rent: £10.47 psf

Nightclubs (2% of gross assets, 3% of EPRA NAV)The Nightclubs portfolio was acquired in October 2010 for £9.8 million in a deal struck with a lender seeking an exit for a larger portfolio. At the time of acquisition, three of the 14 clubs were vacant and the net initial yield on acquisition was 14.9%. Two properties were sold in 2010 and 2011, and a third at Portsmouth was sold in the year for £0.7 million, which was in line with previous book value. Net income since acquisition, including sale proceeds, is £4.5 million, representing 46% of the original purchase price.

Nine of the nightclubs are let to Atmosphere Bars and Clubs Limited on 30 year full repairing and insuring leases from January 2010 with a tenant break option at year 25. Since the balance sheet date, Administrators have been appointed to Atmosphere but have yet to make clear their intentions for the properties. The valuation at 31 March 2013 of the assets affected was £6.8 million and the current gross rental income is £1.1 million. Of the total, one asset valued at £1.0 million and with £0.15 million of rent is fully sublet and so should not be affected by the Administration.

Provincial Offices

Silbury Court, Milton Keynes New Bond House, Bristol

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Hospitals (3% of gross assets, 1% of EPRA NAV)Four freehold private hospitals in Blackburn, Liverpool, Ayr and Stirling were acquired in a joint venture with Lloyds Banking Group in May 2010. Max invested a nominal sum in the joint venture to acquire a 45% interest and Lloyds injected the assets with associated debt funding.

The joint venture paid £31.6 million for the portfolio, fully debt financed on a non-recourse basis by Lloyds. Each hospital is let on full repairing and insuring terms to BMI Healthcare Limited, guaranteed by General Healthcare Group Limited, for a term of 25 years from May 2010 with a tenant option to renew for a further ten years. The initial rent was £2.3 million per annum with annual, upwards only uncapped RPI-linked rent reviews throughout the term. During the year, the second rent review resulted in a rental uplift of 3.0% to £2.6 million per annum. The third review is due in June 2013.

In May 2013 Lloyds disposed of its interest in the joint venture and the debt to a joint venture between Texas Pacific Group and Goldman Sachs.

Financial reviewBalance sheetMax remains focussed on creating growth in net asset value per share, the ultimate aim of the Board being to return cash to investors after realising value over the investment cycle. The Group’s progress is measured principally through its growth in EPRA NAV per share (excluding interests attributable to third party equity providers and stripping out the impact of hedging revaluations) over the period since listing. In just under four years from listing to 31 March 2013, Max has generated a 42% increase in EPRA NAV per share which is an increase of 40.4 pence per share.

The increase in EPRA net asset value over the year ended 31 March 2013 and since listing comprises:

NAV growth in year NAV growth since listing

£mPence per

share £mPence per

share

Net rental income 33.0 15.0 96.1 43.8Rent smoothing adjustments* (3.9) (1.8) (8.7) (4.0)Net rent excluding future rental uplifts 29.1 13.2 87.4 39.8Running costs (6.1) (2.7) (21.8) (10.0)Net finance costs (12.5) (5.7) (30.6) (13.9)Surpluses on property sales 0.9 0.4 23.6 10.7Tax – – (4.5) (2.1)Realised profit 11.4 5.2 54.1 24.5Share of Hospitals joint venture (0.5) (0.2) 1.0 0.6Property revaluation (4.2) (1.9) 33.8 15.3EPRA NAV uplift 6.7 3.1 88.9 40.4

* Accounting standards require lease incentives and fixed or guaranteed rental uplifts to be spread evenly over the term of the lease. The amounts described above as ‘rent smoothing adjustments’ represent the effect of spreading uplifts and incentives and relate principally to the leases on the London Pubs portfolio where there are 3% per annum minimum uplifts throughout the 35 year lease term.


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Given the Group’s strategy of returning cash to shareholders over the investment cycle, we focus in these reports not only on NAV growth, but on the extent to which that growth is realised. By ‘realised’, we refer to returns that are substantially cash returns, as opposed to valuation movements. We split out the elements considered realised and unrealised in the table above, and note that, for the period since listing, the realised NAV movements account for 61% of NAV growth.

The £1.0 million carrying value of the Hospitals joint venture at 31 March 2013 is stated after losses on hedging valuations and deferred tax of £0.1 million. These amounts are ignored in calculating the Group’s EPRA NAV therefore the joint venture’s contribution to EPRA NAV growth, including fee income, is a loss of £0.1 million in the year and a gain of £1.4 million since acquisition.

EPRA triple net asset value is the net asset value after deducting certain adjustments for the mark to market costs of debt and hedging instruments, and after deducting any inherent tax liabilities not provided for in the financial statements. As a Jersey resident group there is no tax liability on investment property sales other than those held in UK corporate structures. The Hospitals portfolio is the only portfolio held that way, therefore the only relevant tax adjustment is the Group’s 45% share of the inherent tax in the joint venture.

The Group’s EPRA triple net asset value is shown below.31 March 2013 31 March 2012

£mPence per

share £mPence per

share

EPRA NAV 300.3 136.5 293.5 133.4Fair value of hedging instruments, net of deferred tax (6.2) (2.8) (6.5) (2.9)Fair value of fixed rate debt (0.6) (0.3) – –Deferred tax on trading property valuation surplus – – (0.2) (0.1)Share of inherent capital gains tax in Hospitals joint venture – – (0.1) (0.1)EPRA triple net asset value 293.5 133.4 286.7 130.3

The accounting policies applied in arriving at the net assets are stated in note 2 to the financial statements, which highlights the key judgement areas in preparing these results. The more material areas include the property and derivatives valuations, where independent open market valuations are obtained. There have been no changes in accounting policies since listing.

Income statementWhile accounting standards require that the income statement includes 100% of all rents, running costs and interest, only reversing the amounts attributable to our joint venture partners as a single line described as “non-controlling interests”, we show below the income statement excluding from each line item the elements not attributable to Max shareholders.

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Profits net of joint venture partners’ interests

Year ended 31 March 2013 Year ended 31 March 2012

£mPence per

share £mPence per

share

Net rental income 33.0 15.0 29.9 13.6Loss on sale of trading properties – – (0.3) (0.1)Gross profit 33.0 15.0 29.6 13.5Administrative expenses (6.1) (2.7) (6.1) (2.8)Investment property revaluation (7.1) (3.3) (7.3) (3.3)Profit on sale of investment properties 0.9 0.4 0.4 0.2Other income 0.1 – 0.1 –Operating profit 20.8 9.4 16.7 7.6Share of (loss)/profit of joint venture (0.4) (0.2) 0.4 0.2Net finance costs (12.0) (5.4) (9.4) (4.3)Profit before tax 8.4 3.8 7.7 3.5Tax charge (0.1) – (0.9) (0.4)Profit for the year 8.3 3.8 6.8 3.1

Movements in the property revaluations shown in the income statement are described in the portfolio section of this report. The other key elements of the income statement are described below.

Net income from property activitiesRental surpluses and surpluses on sales have, in the period from listing to 31 March 2013, contributed 50.5p of the net 40.4p per share growth in that period, covering all running costs, interest and tax approximately twice.

Year ended 31 March 2013 Period since listing

Property rent and disposal surpluses £mPence

per share £mPence

per share

Gross rent 40.5 18.4 124.2 56.5Direct property costs (7.5) (3.4) (28.1) (12.7)Rental surplus 33.0 15.0 96.1 43.8Proceeds from sale of trading properties – – 28.8 13.1Cost of trading properties sold – – (22.8) (10.4)Result from trading property sales – – 6.0 2.7Proceeds from sale of investment properties 8.3 3.8 78.0 35.5Cost of investment properties sold (7.4) (3.4) (60.4) (27.5)Profit on sale of investment properties 0.9 0.4 17.6 8.0Property surplus reported in the income statement 33.9 15.4 119.7 54.5Rent smoothing adjustments classified within revaluation movements (3.9) (1.8) (8.7) (4.0)Realised property surpluses attributable to shareholders 30.0 13.6 111.0 50.5


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Provisions for rent, service charge and other billed amounts considered irrecoverable from tenants amounted to £0.2 million in the year compared to £0.8 million in the year to 31 March 2012. Rental bad debts were 0.4% of the rent billed compared to 1.3% in the year to 31 March 2012.

The Group’s largest rent is payable by Enterprise Inns Plc with £2.8 million passing rent per annum, c. 7% of the total passing rent as at 31 March 2013. Enterprise Inns is the UK’s largest tenanted pub company, owning approximately 6,000 pubs which it values at £4.2 billion. In its most recent interim results announcement in May 2013, it reported EBITDA of £153 million and profit before tax of £55 million for the six months ended 31 March 2013 before exceptional items. We consider Enterprise Inns to be a sufficiently strong covenant to comfortably service their lease liabilities which relate to a profitable part of their portfolio in desirable locations, but it is still worth noting that the acquisition cost of the London Pubs portfolio was substantially underpinned by its vacant possession value.

All other tenants each account for less than 5% of total passing rent, and all but ten of those also represent less than 1% of total passing rent. This, together with the fact that the portfolio comprises over 1,000 tenants, provides a low concentration of tenant risk.

Running costsAs an externally managed business, the majority of the Group’s overhead is borne by the Property Advisor, so as a result the Group’s running costs principally comprise the management fee which amounted to £5.8 million in the year (2012: £5.4 million). Of that total, £0.7 million (2012: £0.4 million) was borne by the non-controlling interests therefore Max investors’ share of the manager’s fee is £5.1 million (2012: £5.0 million).

The other principal component of the total £6.1 million (2012: £6.1 million) running costs attributable to shareholders is £0.8 million (2012: £0.8 million) of corporate costs, which are the costs necessarily incurred as a result of the Company being listed, such as stock exchange fees and Non-Executive Directors’ fees. Other than the Prestbury fee, which is linked to movements in the value of shareholders’ equity, costs attributable to Max shareholders have remained relatively stable since the prior year.

FinancingThe financing strategy laid down by the Board is to use non-recourse leverage with a view to enhancing equity returns while maintaining prudent levels of interest cover and protecting shareholders’ funds. The Board’s intention is to ensure that:

X interest rate risk is hedged such that the maximum interest cost on any loan is fixed or capped over the term of the loan;

X maturity profiles are managed to reduce refinancing risk; and X interest cover is considered having regard to both upside and downside scenarios.

This approach has been consistently applied in the period since listing.

Of the seven portfolios owned by the Group at the balance sheet date, five – the Industrious, St Katharine Docks, Provincial Offices, Hospitals and London Pubs portfolios – are partly debt financed. £66.1 million of property assets and £38.6 million of cash at 31 March 2013 is uncharged and therefore beyond the reach of any lender. All facilities are financed on a strictly non-recourse basis and with no cross default provisions between subgroups.

The Provincial Offices facility is fixed rate debt. On the remaining floating rate facilities, interest rate risk is managed through a combination of interest rate caps and swaps, with 99% to 100% of the loan hedged in each of the debt facilities for no longer than the term of the relevant loan.

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The Group’s share of gross and net debt for the directly owned portfolios is as follows:

Industrious£m

St KatharineDocks

£m

ProvincialOffices

£m

LondonPubs

£m

Unsecured assets

£mTotal

£m

Gross debt 92.5 52.0 31.4 22.0 – 197.9Secured cash (6.2) (11.0) (1.7) (0.9) – (19.8)Free cash (1.2) (1.7) – (0.2) (38.6) (41.7)Net debt 85.1 39.3 29.7 20.9 (38.6) 136.4

Property value at 31 March 2013 188.2 110.0 32.9 46.9 66.1 444.1

Gross LTV 49.1% 47.3% 95.4% 46.9% 44.6%Net LTV 45.2% 35.7%* 90.3% 44.6% 30.7%

Maturity date August2016

August2016

September 2016

January2016

* St Katharine Docks secured cash includes cash set aside to fund the major capital expenditure programme. Assuming that the cash is set aside to complete the capital projects and not to reduce debt, net LTV is 43.9% or 40.5% if capex is completed and valued at cost.

The debt facilities include financial and other covenants, and all covenants have been complied with at all times throughout the year. The key covenants in each facility are loan to value and interest cover tests. These are monitored throughout the year by the management team and the Board and there have been no defaults or potential defaults in any facility.

As at the most recent test dates at the end of April 2013, the valuations would need to fall by 11% before a loan to value covenant breach would occur on the Industrious portfolio, by 32% to breach the covenant on St Katharine Docks, and by 33% to breach the covenant on the London Pubs. There is no LTV covenant on the Provincial Offices debt.

Interest cover is tested on the basis of projections of rent (taking into account only contracted rent), property running and void costs, and interest costs. The risk on the net rental line is managed through active asset management and strong credit control, and the risk on the interest line by interest rate hedging in order to fix or cap the maximum level of interest cost payable. When most recently tested in April 2013 there was 32% headroom on the Industrious interest cover test, 32% on St Katharine Docks, and 20% on the London Pubs. There is no interest cover threshold on the Provincial Offices loan, though the Group’s ability to withdraw cash from the relevant subgroup is restricted if net rental income falls below £3.4 million per annum. It is currently £3.6 million per annum.

Medium term interest rates remain at historically low levels, meaning that the strategy of managing a portion of the interest rate risk by way of interest rate caps has proved useful in enabling Max to take advantage of these low rates while still capping the potential rates payable at an affordable level in the event that rates rise. The potential maximum rates payable and the average rates payable during the 2013 financial year for each on balance sheet facility are:

Hedgingmethod

Average rate paid

Maximum rate payable

Industrious Swap & cap 5.3% 6.4%St Katharine Docks Swap 4.6% 4.6%Provincial Offices Fixed rate 9.0% 9.0%London Pubs Cap 3.1% 5.9%Weighted average 5.3% 6.0%


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The Hospitals portfolio is held in a joint venture where Max has a 45% economic interest. The non-recourse debt is held within the joint venture company where Max’s capital at risk in that transaction is limited to the equity in the joint venture which at 31 March 2013 was £1.0 million. The risk of interest rate movements is managed by an interest rate swap which hedges 99% of the debt for the term of the loan and fixes the total cost at 5.5% per annum. Max’s share of the Hospitals joint venture gross debt is £12.9 million, net debt £12.5 million and property value £14.8 million. As at the most recent test date at the end of April 2013, the valuation would need to fall by 16% to breach the LTV covenant and rent to fall by 15% to breach the ICR covenant on this debt. The loan matures in May 2015.

The Group’s gearing ratio (net debt to equity) at 31 March 2013 is 46.4% excluding the Hospitals joint venture and 50.6% including the joint venture. The Group has unsecured cash and property assets amounting to £104.7 million at their 31 March 2013 valuations.

During the year, the term of the Industrious loan and the associated hedging was extended by two years to August 2016 to bring its maturity date into line with other facilities and the expected life of the Company. The weighted average term to maturity of the Group’s debt is 3.3 years with the first debt maturity being the London Pubs facility in January 2016.

TaxUK income tax is payable at 20% of net rental surpluses after deduction of costs (principally financing costs and costs of holding vacant property) and deductions for capital allowances. No tax is payable in Jersey on the interest or dividend income of Jersey incorporated and tax resident companies nor on investment property capital gains. The tax charge for the period represents an effective underlying tax rate of 6.0% (2012: 7.4%) on profits excluding property revaluations, derivative revaluations and joint venture contribution.

Cash flowThe movements in cash over the year and in the period since listing may be summarised as:

Cash flows in year ended

31 March 2013£m

Cash flows in 46 months since listing

£m

Cash from operations 22.1 102.4Property acquisitions net of debt finance (12.2) (238.4)Net cash from investment and trading property sales 1.2 36.5Net interest payable (12.2) (26.9)Capital expenditure (11.2) (17.5)Benefit of Provincial Offices escrow account 0.1 5.5Purchase of interest rate cap – (2.6)Net funds raised on listing – 211.4Cash flow in the period (12.2) 70.4Cash at the start of the period 82.6 –Cash at the end of the period 70.4 70.4

Group£m

Max share£m

Free cash 43.2 41.7Cash secured under banking facilities 27.2 19.8Cash at the end of the period 70.4 61.5


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The most significant capital project is the refurbishment of Commodity Quay at St Katharine Docks, where the 140,000 sq ft building has been stripped out and is undergoing a major internal refurbishment and reglazing. The works are expected to complete in Spring 2014. As at the balance sheet date Max’s share of the remaining anticipated capital expenditure for that project through to its completion is £10.2 million.

Refurbishment plans for the High Holborn Estate are still being refined but the capital expenditure is expected to be in the order of £5 million over the next two to three years on a rolling refurbishment programme, improving common parts and refurbishing office space.

Capital expenditure requirements in the rest of the portfolio are relatively modest and expected to remain broadly in line with levels of past expenditure. Excluding the major projects, routine capital expenditure has averaged around £3.1 million over the last three years.

Mike BrownChief ExecutivePrestbury Investments LLP23 May 2013


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Board of Directors

Aubrey Adams

Aubrey AdamsNon-Executive Chairman; Chairman of the Nominations CommitteeAubrey Adams, 63, FRICS, is a Non-Executive Director of British Land Plc and is Chairman of the Board of Trustees of Wigmore Hall. He is Head of Property within Royal Bank of Scotland’s Global Restructuring Group. Aubrey was, until May 2008, Chief Executive Officer of Savills Plc where he spent 18 years. He was formerly Senior Non-Executive Director of Associated British Ports Holdings Limited (1996 to 2006). He worked for PricewaterhouseCoopers in the Audit and Management Consultancy divisions from 1970 to 1979. A Fellow of the Institute of Chartered Accountants in England and Wales, he holds a Masters degree from the University of Cambridge.

Mike Brown

Mike BrownNon-Executive DirectorMike Brown, 52, BSc (Land Man) MRICS, is a Chartered Surveyor with 30 years’ experience who was a Director of Helical Bar Plc from April 1998, and was its Deputy Chief Executive from 1 August 2007 until July 2009. Mike was responsible for all of Helical Bar’s investment and trading activities during this time. From 1992 to 1997 he was a Director of Threadneedle Property Fund Managers, running its then largest fund. He was a Board member of the Investment Property Forum from 2002 until 2009. Mike is Chief Executive of Prestbury Investments LLP.

Keith Hamill

Keith HamillIndependent Non-Executive Director; Chairman of the Audit CommitteeKeith Hamill OBE, 60, FCA is currently Chairman of Horsforth Holdings Limited and Gladedale Limited and a Non-Executive Director of easyJet plc and Samsonite International SA. He was a partner in Price Waterhouse, Group Finance Director of WH Smith and Forte, Finance Director of United Distillers and Director of Financial Control of Guinness. He has been Chairman of a number of listed and private companies, including Tullett Prebon, Travelodge, Go, Collins Stewart, Heath Lambert and Moss Bros and a Non-Executive Director of a number of listed companies including Electrocomponents, Tempus Group, TDG and Cadmus Communications Corp. He was also Pro Chancellor of the University of Nottingham, a member of the Urgent Issues Task Force of the UK Accounting Standards Board and Chairman of the CBI Financial Reporting Panel.

Freddie Cohen

Freddie CohenIndependent Non-Executive Director; member of the Remuneration and Nominations CommitteesFreddie Cohen, 55, is a former Senator in the States of Jersey having served from 2005 to 2011. He was Minister for Planning and Environment 2005-2011 and Assistant Chief Minister with Responsibility for UK and International Relations 2010-2011. He is a former Vice Chairman of Jersey Heritage Trust. He ran a private residential and commercial property development and investment company.

Freddie Cohen

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Nick Leslau

Nick LeslauNon-Executive DirectorNick Leslau, 53, BSc (Hons) Est Man, FRICS, is a Chartered Surveyor who filled the role of Chief Executive of Burford Holdings plc for approximately ten years until his resignation from the Board of Burford in 1997. He became Non-Executive Chairman of Prestbury Group Plc in December 1997 and was appointed its Group Chairman and Chief Executive in January 1998. Nick has been Chairman and Chief Executive of Prestbury Investment Holdings Limited since it commenced business in October 2000. He has sat on many quoted and unquoted company boards and is a Member of the Bank of England Property Forum. Nick is the Chairman of Prestbury Investments LLP.

Alex Ohlsson

Alex OhlssonIndependent Non-Executive Director; Chairman of the Remuneration Committee; member of the Audit CommitteeAlex Ohlsson, 43, Solicitor and Advocate of the Royal Court of Jersey, is the Managing Partner of Carey Olsen, the Channel Islands based firm of solicitors. Alex joined Olsen, Backhurst & Dorey (now Carey Olsen) in 1991 and qualified as a Jersey Solicitor in 1994. The following year, he became an Advocate of the Royal Court of Jersey and a Partner of Carey Olsen. He specialises in finance and corporate law. He is an advisory board member of Jersey Finance Limited, Independent Chairman of the States of Jersey Audit Committee as well as being a member of the Financial and Commercial Law Sub-Committee of the Jersey Law Society. He is a Non-Executive Director of Structured Finance Management Limited, Abbey National International Limited and of various companies within the Somerston group of companies.

John Stephen

John StephenSenior Independent Non-Executive Director; member of the Remuneration CommitteeJohn Stephen, 63, is a Fellow of the Royal Institution of Chartered Surveyors and former Chairman of the English business of real estate advisers, Jones Lang LaSalle. He is a Trustee of the Portman Estate, a Director of the Colville Estate and of Evans Property Group, and an adviser to Exemplar properties and Bonhams fine art auctioneers and valuers. He is a school governor and a property advisor to the Duchy of Cornwall.

David Waters

David WatersIndependent Non-Executive Director; member of the Audit and Nominations CommitteesDavid Waters, 63, FCA is a UK qualified Chartered Accountant who trained in London before moving to South Africa in 1971. During his time in South Africa, David established the insolvency and liquidation department of Dekker Nash in Cape Town (later to become Coopers & Lybrand) before becoming a Partner, and then National Partner, in Coopers & Lybrand South Africa. In 1986 David joined Ernst & Young (Jersey) becoming Senior Partner in 1998. From 1998 until 2000 David was Managing Director of Ernst & Young Trust Co (Jersey) and in 2000 joined the Royal Bank of Canada as Managing Director of British Isles Trust Business, a role he fulfilled until 2003 before taking up a consultancy role with Royal Bank of Canada until 2005. David currently sits on the boards of several companies as a Non-Executive Director including UBS Wealth Management Global Property Fund Limited and Episode Incorporated.


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The Company is advised on an exclusive basis by Prestbury Investments LLP (‘Prestbury’). Prestbury is 50% owned by Nick Leslau and 25% by Mike Brown and is operated by Nick Leslau, Mike Brown, Sandy Gumm, Tim Evans, and Ben Walford, a team of property and finance professionals who between them have extensive experience in UK real estate over more than 30 years. They have a track record of having successfully created value for shareholders through previous economic cycles, including significant market out-performance during the recession of the early 1990s.

Nick Leslau’s and Mike Brown’s biographies are presented on pages 18 and 19.

Tim EvansTim Evans, 43, MA Hons (Cantab), MRICS, is a Chartered Surveyor of 20 years’ experience. Tim joined Prestbury Investment Holdings Limited as a Senior Surveyor in June 2002 and became Property Director in June 2005. Prior to joining Prestbury, Tim held positions with Jones Lang LaSalle, Hill Samuel Asset Management and MEPC plc. Tim is the Property Director of Prestbury.

Sandy GummSandy Gumm, 46, BEc, CA (Australia), is an Australian-qualified Chartered Accountant. She trained at KPMG in Sydney and worked for nine years at KPMG in Sydney and London before becoming Group Financial Controller of Burford Holdings plc in December 1995. She was appointed Finance Director of Prestbury Group Plc in December 1997. She was Finance Director of Prestbury Investment Holdings Limited when it commenced business in October 2000. Sandy is the Chief Operating Officer of Prestbury.

Ben WalfordBen Walford, 34, BSc (Hons) Est Man, MRICS, is a Chartered Surveyor of nine years’ experience. Ben joined Prestbury Investment Holdings Limited as a Trainee Surveyor in May 2002 and has risen to become a Prestbury partner in 2011. Ben has a wealth of experience in property investment, refurbishment and design.

Tim, Sandy, Ben, Nick and Mike work closely with a 19-strong team of property, finance and administrative staff.

The Property AdvisorThe Property Advisor

Tim Evans, Sandy Gumm, Ben Walford, Nick Leslau and Mike Brown of Prestbury Investments LLP

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Corporate Governance Report

Corporate Governance CodeAs the Company is quoted on AIM and CISX, it is not required to comply with the UK Corporate Governance Code (the ‘Code’) and there is no formal corporate governance regime in Jersey with which it is required to comply. However, the Directors place a great deal of importance on ensuring that high standards of corporate governance are maintained and, as set out in more detail below, consider that they comply with the Code to the extent appropriate.

The Code sets out five main principles from which the guidance is derived: leadership, effectiveness, accountability, remuneration and relations with shareholders. The Board has considered each of these principles as far as they are relevant to the Company, as explained below.

LeadershipThe Board of the Company is responsible for strategic decisions and oversight of those responsible for implementing the Board’s decisions, including the Property Advisor.

Meetings of the Board are held at least four times each year to consider strategy and to monitor the performance of the Group. Additional meetings are held as required to consider the business of the Group.

Whilst the Board has delegated certain responsibilities to Prestbury as Property Advisor, these are subject always to overall supervision and direction by the Board and to the Board’s review of the Property Advisor’s effectiveness. Matters reserved for the Board and excluded from the Property Advisor’s remit include:

X any asset acquisition or disposals where the Group proposes to invest or has invested £5 million or more;

X any financing or refinancing opportunity in respect of an investment where the Group proposes to invest or has invested £5 million or more;

X any transaction involving structural or financial terms which are unusual in the context of transactions of that type and/or are likely to have a material effect on the risk profile of the Group regardless of its size; and

X any transaction with a party connected with Prestbury;

in each case treating a series of connected transactions as one transaction. In addition, any transaction regardless of size which would be considered unusual in the context of transactions of that type or that is likely to have a material effect on the risk profile of the Group is a matter for the Board.

Under the terms of the Investment Advisory Agreement between the Company and Prestbury, the Board has chosen to delegate responsibilities to Prestbury where a transaction falls outside the reserved matters listed above.

The Board has put in place a corporate governance structure to ensure that each transaction is approved at a Board meeting attended by an appropriate number of Directors, a majority of whom will be independent of Prestbury. The number of Directors required to approve a transaction increases depending on the value of the proposed investment. The Board reviews the corporate governance structure for approving transactions on a regular basis to ensure that it is both effective from a corporate governance perspective and workable in practice.

During the period from the date of publication of the previous Annual Report, four quarterly Board meetings have been held. Two were attended by the entire Board. One was attended by all Directors other than Mike Brown and one by all Directors other than Alex Ohlsson. During this period the Board also held one additional meeting which, according to the Company’s Articles, did not require full Board attendance. The meeting was quorate, therefore the Directors do not consider that publication of the attendance of individual Directors for the meetings is particularly meaningful.


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The roles and committee membership of the members of the Board are set out on pages 18 and 19.

Directors’ and Officers’ Liability Insurance cover of £5 million is maintained by the Company.

The Code requires that the roles of Chairman and Chief Executive are clearly distinguished. As the Company is externally managed this is not strictly applicable, but as the Company has an experienced Non-Executive Chairman, Aubrey Adams, with the external management team fulfilling the Executive roles, this distinction between Non-Executive Directors and the management function is clear within the Company. There is no one individual with unfettered powers of decision making.

The Code requires the Chairman of the Company to have been Independent within the meaning of the Code at the time of appointment, and Aubrey Adams, the Company’s Chairman since listing, was Independent at that time.

The Board includes a Senior Independent Non-Executive Director, John Stephen, who is available to shareholders if and when required.

The Code requires that the Chairman should hold meetings at which the Executives are not present and that the Non-Executives should meet at least annually at a meeting chaired by the Senior Independent Non-Executive Director to assess the performance of the Chairman. As a company outside the FTSE 350, the Board does not consider this to be appropriate in all circumstances, however Non-Executive Directors do on occasion meet without the management team present, for instance when discussing the annual and interim results with the Auditors.

All Board decisions are minuted, along with key points from discussions and concerns raised prior to decisions being made.

EffectivenessThe Board has considered the independence in character and judgement of each of its members, bearing in mind relationships and circumstances which may have a bearing on a Director’s independence. As noted above, as Chairman, Aubrey Adams is automatically not considered to be Independent for the purposes of the Code, however he was considered Independent at the time of his appointment. Keith Hamill, Alex Ohlsson, John Stephen, David Waters and Freddie Cohen are all considered Independent within the terms of the Code. Nick Leslau and Mike Brown are not considered to be Independent because they are partners in Prestbury, the Group’s Property Advisor. No Board meeting is quorate unless Directors independent of Prestbury represent a majority of those present.

The Code requires that at least half the Board, excluding the Chairman, should be Independent and accordingly, the Company complies with the provisions of the Code and exceeds the requirement for smaller companies which is that at least two Board members should be Independent.

The Board has established a Nominations Committee comprising three Non-Executive Directors. The Chairman of the Nominations Committee is Aubrey Adams and its other members are Freddie Cohen and David Waters. All three members of the committee are independent of the Property Advisor and two of the three members are considered Independent within the terms of the Code, Aubrey Adams not being considered Independent by virtue of being Chairman of the Company. The Company considers that it complies with the Code recommendations regarding the composition of the Nominations Committee, having regard to the size of the Company.

Corporate Governance Report continued

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The terms of reference of the Nominations Committee are set out in writing and meet the requirements of the Code. The committee’s mandate includes regularly reviewing the structure, size and composition of the Board, giving consideration to succession planning and having regard to the needs of the business. In the event that appointments are to be made, the committee is required to identify and nominate candidates for the approval of the Board, first considering the balance of skills, experience, knowledge and diversity required. The committee meets at least annually. The committee chairman is responsible for reporting to the Board, including reporting on the performance of the Non-Executive Directors and the Property Advisor, and considering whether they are each devoting sufficient time to the Company. Given the size of the Company, the Board does not consider it appropriate to include a report from the Nominations Committee in these financial statements.

According to the written terms of appointment, each Director’s service contract is terminable on three months’ notice, or in the case of serious breach, without notice and without entitlement to compensation for loss of office. Under the terms of the Company’s Articles, one-third of Directors retire and offer themselves for re-election annually, and the maximum term served before retirement for potential re-election is four years. The Code indicates that appointments for terms in excess of six years should be subject to rigorous review, but the intention of the Board is that the Company will operate for a limited period and it is considered appropriate to maintain continuity over what is expected to be a period of some seven and a half years.

All material changes in any Director’s commitments outside the Company have been and are required to be disclosed prior to the acceptance of any such appointment, and appointments are disclosed in the Directors’ biographies on pages 18 and 19.

New Directors receive an induction on joining the Company. Training and development needs of Directors are monitored on an informal basis by the Board. The Board and the Audit, Nominations and Remuneration Committees (the “Committees”) have access to independent professional advice should they consider it necessary. The Company Secretary is available to the Board and the Committees and the Company Secretary’s appointment or removal is a matter for the Board as a whole to decide on.

The Board assesses its performance regularly, principally by evaluating its conduct in carrying out its stated objectives and in the Company’s progress against its stated aims, and by taking account of independent feedback provided by shareholders through the Company’s brokers.

The Board considers that information sufficient to enable shareholders to make an informed decision on the reappointment of Directors proposed for re-election is included within the Annual Report.

AccountabilityThe Code requires the Directors and the Auditors to set out their respective responsibilities, and these are explained in the Directors’ Report on page 27 and the Auditors’ Report on page 29. The Board’s explanation of how the Company aims to generate and preserve value over the longer term and its objectives in delivering value are included in the Chairman’s Statement and the Board’s consideration of the appropriateness of the going concern assumption is included in note 2 to the financial statements.

The Board is responsible for the internal controls operating within the Group. These include financial controls, operational and compliance controls and risk management systems which are documented in a Board memorandum. The Board reviews the systems and controls that are in place and operated by it and under its mandate by the Group’s Property Advisor and Company Secretary. As with any risk management system, the Group’s internal control framework is designed to manage risk but cannot give absolute assurance that there will never be any material misstatement or loss.


24

The Audit Committee assists the Board in discharging its responsibilities with regard to corporate governance, financial reporting, external audits and controls, including, amongst other things, reviewing the Company’s annual financial statements, reviewing and monitoring the extent of any non-audit services undertaken by external Auditors, advising on the appointment of external Auditors and reviewing the effectiveness of the Company’s internal controls and risk management systems. The ultimate responsibility for reviewing and approving the Annual Report and accounts and the half yearly reports rests with the Board.

The Audit Committee comprises three independent Non-Executive Directors. The membership of the Company’s Audit Committee comprises Keith Hamill, Alex Ohlsson and David Waters. The committee is chaired by Keith Hamill, who is considered by the Directors to have recent and relevant financial experience. The Company, therefore, considers that it complies with the Code’s recommendations regarding the composition of the Audit Committee having regard to a company of its size.

The Audit Committee’s terms of reference are set out in writing and meet the Code’s requirements. The terms of reference of the Audit Committee are summarised on the Company’s website. Given the size of the Company, the Board does not consider it appropriate to include a separate report on how the committee discharges its responsibilities.

The Code requires audit committees to have arrangements in place for staff to raise concerns about possible financial reporting or other improprieties. As the Company itself has no staff, this provision is not directly relevant to the Company, however, the Company’s Operating and Financial Controls Guidelines include guidance for the Property Advisor in reporting any such impropriety to the Board or the Audit Committee as appropriate.

The Board has considered the appropriateness of establishing an internal audit function and, having regard to the relatively simple nature of the Group’s operations and the likely cost of an internal audit function, has concluded that it is not appropriate to the Group at this stage.

The Audit Committee meets formally at least twice every year and otherwise as required, and meets with the Company’s external Auditors at least once each year. The Audit Committee has primary responsibility for making recommendations to the Board of who should hold the post of Auditor and their terms of appointment.

The Audit Committee is responsible for ensuring that the Auditors are sufficiently independent of the Company and its management. Where the Auditors undertake non-audit work, the Committee considers whether that work would be detrimental to the independence of the Auditors. The Auditors have conducted no non-audit work during the current or previous financial years.

RemunerationThe Company’s Remuneration Committee has been established in compliance with the requirements of the Code. It comprises three independent Non-Executive Directors: Alex Ohlsson (Chairman of the committee), Freddie Cohen and John Stephen.

The Board has established written terms of reference for the Remuneration Committee. These principally include: determining and agreeing with the Board the framework for any changes to the Investment Advisory Agreement between the Company and the Property Advisor; determining policy having regard to relevant legal and regulatory requirements including the provisions of the Code; keeping in mind the objective of ensuring that members of the Company’s management are provided with appropriate incentives to encourage enhanced performance; and ensuring that reliable and up to date information is obtained about remuneration in comparable companies. As an externally managed company with an entirely Non-Executive Board, it is considered appropriate to reserve the consideration of remuneration of Directors as a matter for the Board as a whole. The committee meets at least annually and its Chairman reports to the Board. Given the size and nature of the Company, the Board does not consider it appropriate for the Remuneration Committee to provide a separate report in the financial statements.

Corporate Governance Report continued

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The Board annually considers the performance of all Directors and the appropriateness of their level of remuneration, having regard to the time commitment and responsibilities involved. The assessment of the performance of the Chairman is determined by the other Directors. The terms of the remuneration of the Property Advisor are subject to a contract that has been in place since the Company’s listing and a summary of the terms of that agreement are available on the Company’s website.

The Board takes all reasonable steps to ensure compliance by the Directors with the provisions of the Code where appropriate. The Board also aims to ensure compliance by the Directors with the provisions of the AIM Rules and the CISX Listing Rules relating to dealings in securities of the Company and has adopted a share dealing code for this purpose. Further, the Board has taken steps to ensure that partners and staff of the Group’s Property Advisor also comply with the terms of the share dealing code.

Shareholder relationsThe Company reports to investors at least twice each year in its Interim and Annual Reports. Further, the Company makes announcements as appropriate, where any price sensitive information requires disclosure, to the London and Channel Islands Stock Exchanges, and on the Company’s website. Any material presentations to investors or other interested groups are also made available on the Company’s website.

In order to assist in communications with the Company’s shareholders and to ensure compliance with the AIM rules, Oriel Securities Limited has been appointed as the Company’s Nominated Advisor and Broker. Where there has been contact with shareholders, feedback (which is independent if possible) is presented directly to the Board to ensure that the Board is aware of any issues raised by investors.

The Company’s shareholder profile and any material changes in shareholdings are reviewed by the Board at least four times per year and more often as appropriate.

All members of the Board are available to meet with investors as and when required. In practice, members of the Property Advisor’s team generally meet with investors but the Board considers that the provision of independent feedback to the Board ensures that the whole Board remains well informed of investors’ views.

Board members, including members of the Audit, Nominations and Remuneration Committees, and representatives of the Property Advisor are available to meet with investors and to answer any questions at the Company’s Annual General Meeting. The contents and timing of distribution of the notice of meeting and proxy voting forms comply with the provisions of the Code.

Going concernThe Board routinely monitors the Group’s ability to continue as a going concern. Included within the information presented at quarterly Board meetings is a summary of the Group’s liquidity position and the financial strength of its counterparties, together with the monitoring of forward-looking information relating to the Group’s performance and the likelihood of continuing compliance with any debt covenants.

The Directors are satisfied that the Group and Company are able to continue in business for the foreseeable future and therefore have adopted the going concern basis in the preparation of these financial statements.


26

Directors’ Report

The Directors present their report together with the audited financial statements for the year ended 31 March 2013.

Principal activities and business reviewThe principal activity of the Group is property investment.

Detailed reviews of the Group’s operations and future prospects are contained in the Chairman’s Statement and the Report from the Property Advisor on pages 5 to 16, which should be read in conjunction with this report.

Results and dividendsThe Group reported profits for the year of £9.4 million (2012: £10.1 million) of which £8.3 million (2012: £6.8 million) is attributable to shareholders of the Company.

The Company’s dividend policy is based on the Board’s present intention to apply shareholders’ funds principally towards investment at this stage of the Company’s investment cycle, rather than in the support of regular dividend payments. Profits and capital realised in the course of the Group’s operations may be reinvested throughout the first four years of the life of the Company (to May 2013), after which capital (but not profits) may be reinvested for the year following that, after which no new investments may be made and existing assets will be managed and realised, subject to prevailing market conditions, over the investment cycle. Accordingly, the Directors do not recommend the payment of a dividend for the year.

Financial risk management objectives and policiesThe management of risk is integral to the Board’s approach to its property investment activities. The Group’s financial risk management objectives and policies are described in more detail in note 15(d).

DirectorsThe Directors of the Company who held office at the date of this report are shown on pages 18 and 19. All Directors served throughout the year and are Non-Executive.

In accordance with the Articles of Association, one-third of the Directors (excluding any whose appointment has yet to be approved by shareholders) or, if their number is not a multiple of three, the number nearest to but not exceeding one third, will retire and may offer themselves for re-election. Consequently, at this year’s Annual General Meeting Nick Leslau and Alex Ohlsson offer themselves for re-election.

The interests of the Directors and their families in the ordinary shares of the Company are as follows:

31 March 2013

31 March 2012

Aubrey Adams 100,000 100,000Mike Brown 5,000,000 5,000,000Freddie Cohen 20,000 20,000Keith Hamill 40,000 40,000Nick Leslau 20,000,000 20,000,000Alex Ohlsson 150,000 150,000John Stephen 40,000 40,000David Waters 25,000 25,000

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The interests disclosed above include both direct and indirect interests in shares. There has been no change in the beneficial and non-beneficial shareholdings of the Directors between 31 March 2013 and the date of this report.

Directors’ fees are paid to all Directors other than Nick Leslau and Mike Brown, and the fees paid to Directors in the year are disclosed in note 4 to the financial statements.

The Company maintains £5 million of Directors’ and Officers’ Liability insurance for the benefit of its Directors, which was in place during the financial year and which continues in effect at the date of this report.

Statement of Directors’ responsibilitiesThe Directors are responsible for preparing the Annual Report and the financial statements in accordance with the Companies (Jersey) Law 1991 and International Financial Reporting Standards (‘IFRS’).

Company law requires the Directors to prepare financial statements for each financial period. Under that law the Directors have elected to prepare the Group financial statements in accordance with IFRS as adopted by the European Union and the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market and with the rules of the Channel Islands Stock Exchange.

In preparing these financial statements, the Directors are required to: X select suitable accounting policies and then apply them consistently; X make judgements and accounting estimates that are reasonable and prudent; X state whether applicable accounting standards have been followed, subject to any material

departures disclosed and explained in the financial statements; and X prepare the financial statements on the going concern basis unless it is inappropriate to

presume that the Company and Group will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the requirements of the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Company is required to make the Annual Report and financial statements available on a website. Financial statements are published on the Company’s website in accordance with legislation in Jersey governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.


28

Substantial shareholdingsAs at 29 April 2013 the Directors have been notified that the following shareholders have a disclosable interest of 3% or more in the ordinary shares of the Company.

Number of shares

% interest

OZ UK Real Estate Securities Limited 35,000,000 15.9%Fidelity Investments Limited 25,439,077 11.6%PIHL Equity LLP* 20,000,000 9.1%Aviva Plc and subsidiaries 16,079,791 7.3%F&C Asset Management 13,863,799 6.3%Oceana Investment Partners 13,493,055 6.1%Milton Asset Management 9,335,000 4.2%Dominic Silvester 8,334,232 3.8%Thames River Capital 7,934,587 3.6%BlackRock Inc 7,318,665 3.3%

* PIHL Equity LLP is a partnership in which Nick Leslau has a material interest, and he is deemed to be interested in all 20,000,000 shares held by PIHL Equity LLP

SuppliersThe Group aims to settle supplier accounts in accordance with their individual terms of business. The number of creditor days outstanding for the Group as at 31 March 2013 was 21 days (2012: 26 days).

Charitable and political contributionsThe Group made no charitable or political contributions in the current or prior year.

Disclosure of information to AuditorsAll of the Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Auditors for the purposes of their audit and to establish that the Auditors are aware of that information. The Directors are not aware of any relevant audit information of which the Auditors are unaware.

AuditorsA resolution to reappoint BDO LLP as Auditors to the Company will be proposed at the Annual General Meeting.

Signed on behalf of the Board on 23 May 2013.

Aubrey AdamsChairman

David WatersDirector

Directors’ Report continued

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Independent Auditors’ Report to the Members of Max Property Group PlcWe have audited the consolidated financial statements of Max Property Group Plc for the year ended 31 March 2013, which comprise the Group Income Statement, the Group Statement of Comprehensive Income, the Group Statement of Changes in Equity, the Group Balance Sheet, the Group Cash Flow Statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company’s members, as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an Auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and AuditorsAs explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the 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.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statementsIn our opinion:

X the financial statements give a true and fair view of the state of the Group’s affairs as at 31 March 2013 and of the Group’s profit for the year then ended;

X the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and

X the financial statements have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:

X proper accounting records have not been kept, or proper returns adequate for our audit have not been received from branches not visited by us: or

X the financial statements are not in agreement with the accounting records and returns; or X we have not received all the information and explanations we require for our audit.

Russell FieldFor and on behalf of BDO LLPChartered AccountantsGatwickUnited Kingdom23 May 2013

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Group Independent Auditors’ Report


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Note

Year to31 March

2013£000

Year to 31 March

2012£000

Gross rental income 45,093 42,235Proceeds from sales of trading property – 750

45,093 42,985Property outgoings 10 (8,977) (9,793)Cost of sales of trading property – (1,031)

(8,977) (10,824)Net rental income 36,116 32,442Loss on sale of trading property – (281)

Gross profit 36,116 32,161Administrative expenses:General administrative expenses (6,170) (5,819)Corporate costs (757) (755)

Total administrative expenses (6,927) (6,574)Investment property revaluation 10 (6,356) (5,016)Profit on sale of investment properties 947 355Other income 108 106Operating profit 4 23,888 21,032Share of (loss)/profit of joint venture 11 (443) 373Finance income 6 215 365Finance costs 6 (14,224) (10,837)Profit before tax 9,436 10,933Tax charge 7 (67) (881)Profit for the year 9,369 10,052Profit for the year attributable to:Owners of the parent 8,269 6,829Non-controlling interests 8 1,100 3,223

9,369 10,052

Earnings per sharePence per

sharePence per

share

Basic and diluted 9 3.8p 3.1p

All amounts relate to continuing activities.

The notes on pages 35 to 61 form part of the Group financial statements.

Group Income Statement

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Note

Year to31 March

2013£000

Year to 31 March

2012£000

Profit for the year 9,369 10,052Market value adjustment of interest rate derivatives in effective hedges 15b (119) (3,794)Amortisation of interest rate derivatives, transferred to income statement (284) (258)Tax effect of interest rate derivative market value adjustment 7 79 805Share of market value adjustment of interest rate derivatives in effective hedges in joint venture, net of deferred tax 11 159 (178)Total comprehensive income for the year, net of tax 9,204 6,627

Total comprehensive income for the year, net of tax, attributable to:Owners of the parent 8,172 4,429Non-controlling interests 1,032 2,198

9,204 6,627


Group Statement of Comprehensive Income


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Stated capital

£000

Hedging reserve

£000

Retained earnings

£000

Equity attributable

to owners of the

parent £000

Non-controlling

interests£000

Total£000

At 31 March 2012 211,367 (4,752) 79,304 285,919 39,346 325,265Profit for the year – – 8,269 8,269 1,100 9,369Market value adjustment of interest rate derivatives – (296) – (296) (107) (403)Tax effect of interest rate derivative market value adjustment – 40 – 40 39 79Share of market value adjustment of interest rate derivatives in joint venture, net of deferred tax – 159 – 159 – 159Total comprehensive income for the year, net of tax – (97) 8,269 8,172 1,032 9,204Equity contribution from non-controlling investor – – – – 5,800 5,800Distributions paid to non-controlling investors – – – – (15) (15)At 31 March 2013 211,367 (4,849) 87,573 294,091 46,163 340,254

Stated capital

£000

Hedging reserve

£000

Retained earnings

£000

Equity attributable

to owners of the

parent £000

Non-controlling

interests£000

Total£000

At 31 March 2011 211,367 (2,352) 72,475 281,490 1,735 283,225Profit for the year – – 6,829 6,829 3,223 10,052Market value adjustment of interest rate derivatives – (2,793) – (2,793) (1,259) (4,052)Tax effect of interest rate derivative market value adjustment – 571 – 571 234 805Share of market value adjustment of interest rate derivatives in joint venture, net of deferred tax – (178) – (178) – (178)Total comprehensive income for the year, net of tax – (2,400) 6,829 4,429 2,198 6,627Equity contribution from non-controlling investor – – – – 35,440 35,440Distributions paid to non-controlling investors – – – – (27) (27)At 31 March 2012 211,367 (4,752) 79,304 285,919 39,346 325,265


Group Statement of Changes in Equity

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Note

31 March 2013£000

31 March 2012£000

Non-current assets:Investment properties 10 509,864 464,125Investment in joint venture 11 971 1,255Interest rate derivatives at market value 15b 1,425 900Deferred tax asset 7 881 1,102

513,141 467,382Current assets:Trading property – 864Trade and other receivables 12 17,512 11,258Cash and cash equivalents 13 70,386 82,631

87,898 94,753Total assets 601,039 562,135Current liabilities:Trade and other payables 14 (20,705) (19,089)Tax payable (280) (1,106)Interest rate derivatives at market value 15b (2,384) (2,578)

(23,369) (22,773)Non-current liabilities:Borrowings 15a (229,000) (206,983)Interest rate derivatives at market value 15b (6,764) (5,462)Obligations under finance leases 16 (1,652) (1,652)

(237,416) (214,097)Total liabilities (260,785) (236,870)Net assets 340,254 325,265

Equity attributable to owners of the parent:Stated capital 17 211,367 211,367Hedging reserve (4,849) (4,752)Retained earnings 87,573 79,304

294,091 285,919Non-controlling interests 8 46,163 39,346Total equity 340,254 325,265

Pence pershare

Pence pershare

Basic and diluted NAV per share 19 133.7p 130.0pEPRA NAV per share 19 136.5p 133.4p


The Group financial statements were approved and authorised for issue by the Board of Directors on 23 May 2013 and were signed on its behalf by:



Group Balance Sheet


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Note

Year to31 March

2013£000

Year to 31 March

2012£000

Cash flows from operating activities:Profit before tax 9,436 10,933Adjustments for non-cash items: Investment property revaluation 10 6,356 5,016 Profit on sale of investment properties (947) (355) Share of loss/(profit) of joint venture 11 443 (373)Net finance costs 6 14,009 10,472Cash flows from operating activities before changes in working capital 29,297 25,693Change in trade and other receivables (6,035) 4,484Change in trade and other payables (233) 3,388Change in trading properties – 1,229Tax paid (898) (1,449)Cash flows from operating activities 22,131 33,345Investing activities:Investment property acquisitions (47,488) (164,173)Capital expenditure on investment properties (11,165) (2,912)Recoveries from escrow account 41 2,709Proceeds from sales of investment properties 8,251 11,953Cash received from short-term deposit – 6,695Interest received 215 416Cash flows from investing activities (50,146) (145,312)Financing activities:Loans drawn down 32,000 86,652Loan arrangement fees paid (2,540) (1,559)Loans repaid (7,102) (5,207)Interest paid (12,373) (8,335)Distributions to non-controlling investors 8 (15) (27)Capital contribution from non-controlling investors 8 5,800 35,440Cash flows from financing activities 15,770 106,964Net decrease in cash and cash equivalents (12,245) (5,003)Cash and cash equivalents at the start of the year 82,631 87,634Cash and cash equivalents at the end of the year 70,386 82,631


Group Cash Flow Statement

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Notes to the financial statements

1. General information about the GroupMax Property Group Plc was listed on AIM and CISX on 27 May 2009. It is a closed-ended real estate investment company incorporated in Jersey. The address of the registered office is shown on page 73. The nature of the Group’s operations and its principal activities are set out in the Chairman’s Statement on pages 2 to 4 and the Report from the Property Advisor on pages 5 to 17.

The financial information set out in this report covers the year to 31 March 2013 with comparative amounts relating to the year to 31 March 2012.

This financial report includes the results and net assets of the Company and its subsidiaries, together referred to as the Group, along with the Group’s interest in the results and net assets of its joint venture.

Further general information about the Group can be found on its website www.maxpropertygroup.com.

2. Accounting policiesa) Statement of complianceThe consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (‘IFRS’) adopted for use in the European Union and therefore comply with Article 4 of the EU IAS Regulation.

b) Basis of preparationThe Group and Company financial statements are presented in pounds sterling.

The Board has, at the time of preparing the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future and therefore continue to adopt the going concern basis of accounting in preparing the financial statements. Further details are given in the Corporate Governance Report on page 25.

i) Estimates and judgementsThe financial statements are prepared on the historical cost basis except that investment properties and derivative financial instruments are stated at fair value. The accounting policies have been applied consistently in all material respects.

The preparation of financial statements requires the Board to make judgements, estimates and assumptions that may affect the application of accounting policies and the reported amounts of assets and liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Any estimates and assumptions are based on experience and any other factors that are believed to be relevant under the circumstances and which the Board considers reasonable. Actual outcomes may differ from these estimates.

Any revisions to accounting estimates will be recognised in the period in which the estimate is revised if the revision affects only that period. If the revision affects both current and future periods, the change will be recognised over those periods.

Certain accounting policies which have a significant bearing on the reported financial condition and results of the Group require subjective or complex judgements. The principal such areas of judgement are:

X property valuation, where the opinion of independent, external valuers is obtained every six months;

X the value of derivative financial instruments used to hedge interest rate exposures, where the valuations adopted are independently assessed every six months on the basis of market rates as at the balance sheet date; and

X the likelihood of payments being made or received under the Group’s carried interest arrangements, where the position is monitored by the Board through consideration of relevant external data.


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2. Accounting policies continuedThe Group’s accounting policies for these matters where outcomes are more reliant on judgement, together with other policies material to the Group, are set out below.

ii) Adoption of new and revised standardsNo new standards or interpretations issued by the International Accounting Standards Board (‘IASB’) or the IFRS Interpretations Committee (‘IFRIC’) have led to any material changes in the Group’s accounting policies or disclosures during the year.

iii) Standards and interpretations in issue not yet adoptedThe IASB and IFRIC have issued or amended the following standards and interpretations that are mandatory for later accounting periods, and which are relevant to the Group and have not been adopted early. These are:

Effective date(periods commencing)

IFRS 9 Financial instruments 1 January 2015IFRS 10/IAS 27 Consolidated financial statements 1 January 2014IFRS 11/IAS 28 Joint arrangements 1 January 2014IFRS 12 Disclosures of interests in other entities 1 January 2014IFRS 13 Fair value measurement 1 January 2014

The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group’s financial statements in the period of initial application, other than on presentation and disclosure.

The Group has provided certain information required by IFRS 12 in relation to its St Katharine Docks subsidiaries in note 8 as the Directors consider this to be meaningful to users of the financial statements.

The IASB has also issued or revised IFRS 1, IFRS 7, IAS 1, IAS 19, IAS 32 and IFRIC 20 but these changes either have no impact or are not expected to have a material effect on the operations of the Group.

c) Basis of consolidationi) SubsidiariesThe consolidated financial statements include the financial statements of subsidiaries, prepared to 31 March each year under the same accounting policies as the Group as a whole, using the acquisition method. All intra-group balances, income and expenses are eliminated on consolidation.

Subsidiaries are those entities controlled by the Group. When the Group has the power to govern the financial and operating policies of an entity to gain benefits from its activities, it has control within the meaning of this policy.

Non-controlling interests represent the portion of profits or losses and net assets not held by the Group. They are included in full in the relevant income statement, statement of comprehensive income and balance sheet captions, then presented separately in the Income Statement and Statement of Comprehensive Income, and within equity in the Consolidated Balance Sheet, to clarify the relevant share of earnings and net assets attributable to shareholders and non-controlling interests respectively.

Notes to the financial statements continued

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2. Accounting policies continuedii) Business combinationsUnder the acquisition method, an acquisition is recognised at the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. Acquisition costs incurred prior to the revision of IFRS 3 were included as part of the cost of the acquisition; acquisition costs incurred since the revision of IFRS 3 in the year ended 31 March 2011 are expensed. In the consolidated balance sheet, the identifiable net assets, liabilities and contingent liabilities of any target entity are also recognised initially at fair value as at the acquisition date. The results of subsidiaries are included in the consolidated financial statements from the date control commences until the date that it ceases.

Where properties are acquired through corporate acquisitions and there are no significant assets or liabilities other than those directly relating to property, an acquisition is treated as an asset acquisition and fair value accounting at the date of acquisition will not apply. In other cases, the acquisition method will be used.

iii) Joint venturesA joint venture is an entity over which the Group has joint control, established by contractual agreement. Joint ventures are accounted for under the equity method, whereby the consolidated financial statements incorporate the Group’s share of net assets and results. The results are after tax and include revaluation movements on investment properties and interest rate derivatives. The results of joint ventures are included on the basis of accounting policies consistent with those of the Group.

Joint ventures are reviewed to determine whether any impairment loss should be recognised at the end of the reporting period.

iv) Goodwill and discounts on acquisitionIn the event that there is an excess of the purchase price of any business acquired over the fair value of the business acquired – that is, its identifiable assets, liabilities and contingent liabilities purchased and any resulting deferred tax thereon – the excess is recognised as goodwill.

Any goodwill is recognised as an asset and will be reviewed by the Board for impairment at least annually. Any impairment is recognised immediately in the income statement and will not be subsequently reversed. A discount on acquisition arises where there is an excess of the fair value of the business acquired over the purchase price. Any discount arising is credited to the income statement in the period of acquisition.

d) Property portfolioi) Investment propertiesInvestment properties are properties owned or held leasehold by the Group which are held for capital appreciation, rental income or both. They are initially recorded at cost (or fair value where acquired as part of a business combination) and subsequently valued at each balance sheet date at fair market value on an open market basis as determined by professionally qualified independent external valuers.

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

Depreciation is not provided in respect of investment properties.

Acquisitions and disposals of investment properties are recognised on unconditional exchange of contracts where it is reasonable to assume at the balance sheet date that completion of the acquisition or disposal will occur. Gains on disposal are determined as the difference between net disposal proceeds and the carrying value of the asset in the previous audited balance sheet adjusted for any subsequent capital expenditure or capital receipts.


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2. Accounting policies continuedii) Trading propertiesTrading properties are initially recognised at cost and subsequently at the lower of cost and net realisable value.

iii) Occupational leasesThe Board exercises judgement in considering the potential transfer of the risks and rewards of ownership in accordance with IAS 17 for all properties leased to tenants and determines whether such leases are operating leases. A lease is classified as a finance lease if substantially all of the risks and rewards of ownership transfer to the lessee. If the Group substantially retains those risks, a lease is classified as an operating lease.

iv) HeadleasesWhere an investment property is held under a headlease, the headlease is initially recognised as an asset at cost plus the present value of minimum ground rent payments. The corresponding rental liability to the head leaseholder is included in the balance sheet as a finance lease obligation.

v) Net rental incomeRevenue comprises rental income exclusive of VAT. Rental income is recognised in the income statement on an accruals basis. Contingent income, such as rent reviews and indexation are recorded in the income statement in the periods in which they are earned. Specifically:

X rent reviews are recognised when formally agreed; X any rental income from fixed and minimum guaranteed rent reviews is recognised on a

straight-line basis over the shorter of the term to lease expiry or to the first tenant break option;

X rent free periods, other lease incentives and any costs associated with entering into occupational leases are allocated evenly over the period from the date of lease commencement to the first break option or, in the unusual event that the probability that the break option will be exercised is considered sufficiently low, over the lease term; and

X in the event that any premium is received on a lease surrender, the profit, net of any payments for dilapidations and non-recoverable outgoings, is reflected in the income statement in the period in which the surrender becomes legally binding.

Where this income or these costs are recognised in advance of the related cash flows, an adjustment is made to ensure that the carrying value of the relevant property including accrued rent does not exceed the external valuation.

Property operating costs, including any property operating expenditure not recovered from tenants, for example through service charges, are expensed through the income statement on an accruals basis.

e) Financial assets and liabilitiesFinancial assets and liabilities are recognised when the relevant group entity becomes a party to the contractual terms of the instrument. Unless otherwise indicated, the carrying amounts of financial assets and liabilities are a reasonable estimate of their fair values.

i) Trade and other receivablesTrade and other receivables are recognised initially at their fair value and subsequently at their amortised cost. If there is objective evidence that the recoverability of the asset is at risk, appropriate allowances for any estimated irrecoverable amounts are recognised in the income statement.

ii) Trade and other payablesTrade and other payables are recognised initially at their fair value and subsequently at their amortised cost.


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2. Accounting policies continuediii) Cash and cash equivalentsCash and cash equivalents comprise cash in hand, deposits held at call with banks and financial institutions and other short-term highly-liquid investments with original maturities of three months or less.

iv) Other financial assetsOther financial assets comprise deposits held with banks and other financial institutions where the original term to maturity was more than three months.

v) Equity instrumentsEquity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

vi) Borrowings and finance chargesBorrowings are initially recognised at their fair value, net of any transaction costs directly attributable to their issue. Subsequently, loans are carried at their amortised carrying value using the ‘effective interest method’, which spreads the interest expense over the period to maturity at a constant rate on the balance of the liability carried in the balance sheet for the relevant period.

vii) Derivative financial instrumentsThe Group uses derivative financial instruments to hedge its exposure to cash flow interest rate risks. Derivatives are initially recognised at fair value on the date on which the derivative contract is entered into and are subsequently measured at fair value.

Derivatives are classified either as derivatives in effective hedges or held for trading. It is anticipated that, generally, hedging arrangements will be ‘highly effective’ within the meaning of IAS 39 and that the criteria necessary for applying hedge accounting will be met. Hedges are assessed on an ongoing basis to ensure they continue to be effective.

The gain or loss on the revaluation of the portion of an instrument that qualifies as an effective hedge of cash flow interest rate risk is recognised directly in other comprehensive income. The gain or loss on the revaluation of derivative financial instruments which are classified as held for trading because they are not effective hedges is recognised in the income statement.

Only the intrinsic value of a cap is designated as a hedging instrument, with changes in the time value taken directly to the income statement.

f) ProvisionsA provision is recognised when a legal or constructive obligation exists as a result of an event that has occurred prior to the balance sheet date and where it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions will be measured at the Directors’ best estimate of the expenditure required to settle that obligation as at the balance sheet date, and will be discounted to present value if the effect is material.

g) DistributionsDistributions relating to equity shares are recognised when they become legally payable.

h) Management fees and incentive arrangement paymentsManagement fees and incentive arrangement payments are recognised in the income statement in the period to which they relate. Incentive fees earned that are more likely than not to become payable will be provided for in the financial statements and balances will be discounted to reflect the deferred payment.


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2. Accounting policies continuedi) TaxTax is included in the income statement except to the extent that it relates to income or expense items recognised directly in equity, in which case the related tax will be recognised in equity.

Current tax is the expected tax payable on taxable income for the reporting period, using tax rates enacted or substantively enacted at the balance sheet date, together with any adjustment in respect of previous periods. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes.

The tax effect of the following differences is not provided for: X the initial recognition of goodwill; X goodwill for which amortisation is not tax deductible; X the initial recognition of an asset or liability in a transaction which is not a business

combination and at the time of the transaction affects neither accounting or taxable profit; and X investments in subsidiaries, associates and jointly controlled entities where the Group is able

to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.

3. Operating segmentsIFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are reviewed by the chief operating decision maker to make decisions about resources to be allocated between segments and assess their performance. The Group’s chief operating decision maker is considered to be the Board.

The Group owns a number of property portfolios. Although these are described individually elsewhere in this Annual Report, they are not separately managed and the Board receives quarterly management accounts prepared on a basis which aggregates the performance of all the portfolios and focuses on total returns on shareholders’ equity. The Board has therefore concluded that in the period from incorporation to 31 March 2013 the Group has operated in and was managed as one business segment, being property investment. All revenue arises from the Group’s property activities, with all properties located in the United Kingdom. No single tenant represented 10% or more of the Group’s revenues in either the current or the prior year.

4. Operating profitOperating profit is stated after charging:

Year to 31 March

2013£000

Year to31 March

2012£000

Directors’ fees 228 228Auditors’ remuneration for the audit of the Group and Company financial statements 117 125

The Auditors received no payments in either the current or the prior year in relation to non-audit services.


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4. Operating profit continuedThe Group had no employees in either the current or the prior year. Directors’ fees payable in the year were as follows:

Year to 31 March

2013£000

Year to31 March

2012£000

Aubrey Adams 70 70Mike Brown – –Freddie Cohen 30 30Keith Hamill 30 30Nick Leslau – –Alex Ohlsson 38 38John Stephen 30 30David Waters 30 30Total charged to the income statement 228 228

5. Operating leasesAs a commercial property investor, the Group enters into operating leases on its real estate assets. Leases are for fixed terms, typically between five and 15 years but potentially up to 35 years depending on the type of property. They include terms that reflect market conditions at the time of letting including landlord and/or tenant break options before expiry and periodic rent reviews, the vast majority of which are upwards only open market reviews.

Future minimum rents receivable under non-cancellable operating leases are set out in the table below, calculated on the assumption that any tenant with a break option does exercise that option.

31 March 2013£000

31 March 2012 £000

Minimum rents receivable:Within one year 35,974 34,884In two to five years 96,064 99,354In more than five years 204,050 214,758

336,088 348,996

6. Finance income and costsYear to

31 March 2013 £000

Year to31 March

2012 £000

Recognised in the income statement:Finance incomeInterest on cash deposits 215 365Finance costsInterest on secured debt (12,269) (8,757)Amortisation of loan issue costs (1,096) (739)Other finance costs (493) (145)Market value adjustment of interest rate derivatives in ineffective hedges (note 15b) (464) (1,267)Amortisation of interest rate derivatives, transferred from the hedging reserve 284 258Finance lease interest (186) (187)Total finance costs (14,224) (10,837)Net finance costs recognised in the income statement (14,009) (10,472)


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6. Finance income and costs continuedYear to

31 March 2013 £000

Year to31 March

2012£000

Recognised in other comprehensive income:Market value adjustment of interest rate derivatives in effective hedges (note 15b) (119) (3,794)Amortisation of interest rate derivatives, transferred to the income statement (284) (258)Net finance costs recognised in other comprehensive income (403) (4,052)

Net finance costs analysed by the categories of financial asset and liability shown in note 15c are as follows:

Year to 31 March

2013 £000

Year to31 March

2012£000

Loans and receivables 215 365Financial assets held for trading (88) (880)Derivatives in effective hedges (92) (129)Financial liabilities measured at amortised cost (14,044) (9,828)Net finance costs recognised in the income statement (14,009) (10,472)

Further information about the hedging instruments, including details of their valuation at the balance sheet date, is included in note 15b.

The Group’s sensitivity to changes in interest rates, calculated on the basis of a 1% increase in LIBOR such that LIBOR is not more than 3.0%, was as follows:

Year to 31 March

2013 £000

Year to31 March

2012£000

Effect on profit before tax (142) 148Effect on other comprehensive income 184 331Effect on equity 42 479

Figures will differ once LIBOR exceeds 3.0% as that is the lowest strike rate of the interest rate caps held by the Group. Any increase in LIBOR above 3.5% will have no effect on financing costs, as the maximum average rate payable of 6.0% will have been reached.

The average interest rate payable by the Group on its secured loans for the year, including all lender’s margins but excluding amortised finance costs, was 5.3% (2012: 4.8%). The maximum rate payable in the year, had market rates exceeded the various fixed and capped rates protected by hedging transactions, would have been 6.0% (2012: 5.8%).


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7. TaxationThe tax charge for the year recognised in the income statement was as follows:

Year to 31 March

2013 £000

Year to31 March

2012£000

Current tax charge – current year 987 814Current tax credit – adjustments in respect of prior years (1,220) (274)Deferred tax charge 300 341Tax charge 67 881

The tax charge for the year varies from the standard rate of income tax in the UK of 20%. The differences are explained below:

Year to 31 March

2013 £000

Year to31 March

2012£000

Profit before tax 9,436 10,933

Profit before tax at the standard rate of income tax in the UK of 20% 1,887 2,187Adjustments in respect of prior years (1,220) (274)Adjusted for the effects of: Revaluations not subject to tax 1,271 1,003 Income and property disposal profits not subject to tax (2,730) (2,860) Share of (loss)/profit of joint venture shown after tax 89 (75) Expenses not deductible for tax 610 893 Tax losses not yet utilised 160 6 Other items – 1Tax charge 67 881

The movement on the deferred tax asset was as follows:Year to

31 March 2013 £000

Year to31 March

2012£000

At the start of the year 1,102 639Tax on recognition of fixed and minimum guaranteed rent reviews, charged to the income statement (314) (352)Tax on market value adjustment of interest rate derivatives, credited to the income statement 14 10Tax on market value adjustment of interest rate derivatives, credited to other comprehensive income 79 805At the end of the year 881 1,102


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7. Taxation continuedTax status of the Company and its subsidiariesAny Group undertakings earning income are either tax resident in Jersey or are tax transparent entities owned by Jersey resident entities. Jersey has a corporate income tax rate of zero, so the Company and its subsidiaries are not subject to tax in Jersey on their income or gains. The Company is not subject to UK corporation tax on any dividend or interest income it receives.

The Group’s real estate assets are located in the United Kingdom and the net rental income earned, less deductible costs including void property costs and interest, is subject to UK income tax currently at a rate applicable to Group undertakings of 20%. The joint venture investment is held in two UK companies which were subject to UK corporation tax on profits at 24% for the year (2012: 26%).

8. Non-controlling interestsThe non-controlling interests represent a 16.7% investment by a third party in four properties in Milton Keynes within the Provincial Offices portfolio and a 40% investment by another third party in St Katharine Docks.

Year to 31 March

2013 £000

Year to31 March

2012£000

At the start of the year 39,346 1,735Capital invested by third party in St Katharine Docks 5,800 35,440Share of profit for the year 1,100 3,223Share of other comprehensive income for the year (68) (1,025)Dividends paid to non-controlling interests (15) (27)At the end of the year 46,163 39,346

The non-controlling investor in St Katharine Docks holds a 40% interest in subsidiary undertakings MPG St Katharine GP Limited, MPG St Katharine Limited Partnership and SKD Marina Limited. The principal place of business of these entities, which between them own the real estate and marina investments at St Katharine Docks, is the United Kingdom. As St Katharine Docks is such a material investment, we include below summarised financial information in relation to that investment. Comparative figures relate to the period from 8 August 2011, which was the date of completion of the acquisition.


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8. Non-controlling interests continued

Investment in St Katharine Docks

Year to 31 March 2013 Period to 31 March 2012

Max60% share

£000

Non-controlling

interest’s40% share

£000Total£000

Max60% share

£000

Non-controlling


£000Total£000

At the start of the period 56,132 37,422 93,554 – – –Equity and loan capital injected 8,700 5,800 14,500 53,160 35,440 88,600Share of profit recognised in the income statement 1,860 1,240 3,100 4,483 2,989 7,472Share of other comprehensive income (128) (86) (214) (1,511) (1,007) (2,518)At the end of the period 66,564 44,376 110,940 56,132 37,422 93,554

Investment in St Katharine Docks –balance sheet

31 March 2013 31 March 2012

Max60% share

£000

Non-controlling


£000Total£000

Max60% share

£000

Non-controlling


£000Total£000

Investment properties 109,217 72,811 182,028 102,190 68,126 170,316Cash and cash equivalents 1,819 1,212 3,031 2,275 1,516 3,791Cash and cash equivalents held as security for bank debt 11,041 7,361 18,402 8,085 5,390 13,475Other current assets 198 132 330 524 352 876Current liabilities (2,623) (1,749) (4,372) (3,793) (2,529) (6,322)Secured non-recourse bank debt (51,992) (34,661) (86,653) (51,992) (34,661) (86,653)Other non-current liabilities (1,096) (730) (1,826) (1,157) (772) (1,929)Net assets 66,564 44,376 110,940 56,132 37,422 93,554

Investment in St Katharine Docks –income statement


Max60% share

£000

Non-controlling


£000Total£000

Max60% share

£000

Non-controlling


£000Total£000

Rental income 6,633 4,422 11,055 5,486 3,658 9,144Property outgoings (2,041) (1,360) (3,401) (1,794) (1,196) (2,990)Administrative expenses (1,174) (785) (1,959) (661) (440) (1,101)Net finance costs (2,618) (1,745) (4,363) (1,709) (1,140) (2,849)Investment property revaluation 1,256 838 2,094 3,077 2,051 5,128Market value adjustment of interest rate derivatives (192) (128) (320) 132 88 220Tax charge (4) (2) (6) (48) (32) (80)Profit for the period 1,860 1,240 3,100 4,483 2,989 7,472


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8. Non-controlling interests continued

Investment in St Katharine Docks –other comprehensive income


Max60% share

£000

Non-controlling


£000Total£000

Max60% share

£000

Non-controlling


£000Total£000

Market value adjustment of interest rate derivatives (160) (107) (267) (1,888) (1,259) (3,147)Tax effect of interest rate derivative market value adjustment 32 21 53 377 252 629Other comprehensive income for the period (128) (86) (214) (1,511) (1,007) (2,518)

9. Earnings per shareEarnings per share is calculated as profits attributable to shareholders of the Company for each year divided by 220,000,002 shares in issue. There are no share options or other equity instruments in issue and therefore no adjustments to be made for dilutive or potentially dilutive equity arrangements.

The European Public Real Estate Association (‘EPRA’) publishes guidelines for calculating adjusted earnings designed to represent core operational activities. The adjusted EPRA earnings per share calculation is as follows, with all figures shown net of any non-controlling interests:

Year to 31 March 2013 Year to 31 March 2012

£000Pence

per share £000Pence

per share

Basic earnings attributable to shareholders 8,269 3.8 6,829 3.1Adjusted for:Investment property revaluation 7,085 3.2 7,230 3.3Profit on sale of investment properties (947) (0.5) (355) (0.2)Market value adjustment of interest rate derivatives, net of tax (464) (0.2) 15 –Market value adjustment of interest rate derivatives within joint venture, net of tax (11) – 32 –Loss on sale of trading property – – 281 0.2Property acquisition costs recognised in the income statement – – 51 –EPRA earnings 13,932 6.3 14,083 6.4


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10. Investment properties

Freehold£000

Long leasehold

£000

Short leasehold

£000Total£000

Carrying value at 31 March 2011 236,762 78,171 1,170 316,103Acquisition of St Katharine Docks 162,216 2,272 – 164,488SDLT recovery on London Pubs portfolio (301) – – (301)Capital expenditure net of dilapidation receipts 1,944 932 50 2,926Recoveries from escrow account (2,581) (128) – (2,709)Disposals (10,766) (600) – (11,366)Revaluation movement (545) (4,379) (92) (5,016)Carrying value as at 31 March 2012 386,729 76,268 1,128 464,125Acquisition of High Holborn Estate 47,724 – – 47,724Transfer from trading property 864 – – 864SDLT recovery on Provincial Offices portfolio (200) (36) – (236)Capital expenditure net of dilapidation receipts 11,113 (78) 57 11,092Recoveries from escrow account (41) – – (41)Disposals (6,424) (884) – (7,308)Revaluation movement (3,316) (2,891) (149) (6,356)Carrying value as at 31 March 2013 436,449 72,379 1,036 509,864

The following table reconciles the carrying values of the investment properties to their independent valuation:

Freehold£000

Long leasehold

£000

Short leasehold

£000Total£000

Carrying value as at 31 March 2012 386,729 76,268 1,128 464,125Headlease liabilities (note 16) – (1,634) (18) (1,652)Rent free periods and fixed or guaranteed rent reviews (note 12) 3,908 596 67 4,571Capitalised letting fees (note 12) 333 225 13 571Portfolio valuation as at 31 March 2012 390,970 75,455 1,190 467,615Carrying value as at 31 March 2013 436,449 72,379 1,036 509,864Headlease liabilities (note 16) – (1,634) (18) (1,652)Rent free periods and fixed or guaranteed rent reviews (note 12) 7,162 1,169 76 8,407Capitalised letting fees (note 12) 934 266 6 1,206Portfolio valuation as at 31 March 2013 444,545 72,180 1,100 517,825


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10. Investment properties continuedRevaluation movements comprise:

Year to31 March

2013£000

Year to 31 March

2012£000

Property revaluation (1,974) (1,440)Movement in rent free periods, fixed or guaranteed rent reviews and capitalised letting fees (4,382) (3,576)Investment property revaluation in the income statement (6,356) (5,016)Investment property revaluation attributable to non-controlling interests (729) (2,214)Investment property revaluation attributable to owners of the parent (7,085) (7,230)

The properties were valued as at 31 March 2013 by CBRE Limited, Commercial Real Estate Advisors, in their capacity as external valuers. The valuation was prepared on a fixed fee basis, independent of the portfolio value. The valuation was undertaken in accordance with the RICS Valuation – Professional Standards (2012) on the basis of Market Value, supported by reference to market evidence of transaction prices for similar properties. Market Value represents the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

The historic cost of the Group’s investment properties as at 31 March 2013 was £480.3 million (2012: £428.2 million). During the year, the Group’s sole remaining trading property was reclassified as an investment property.

Property outgoings were split as follows:Year to

31 March 2013£000

Year to 31 March

2012£000

Property outgoings arising from investment properties that generated rental income in the year 8,317 9,608Property outgoings arising from investment properties that did not generate rental income in the year 660 185Total property outgoings 8,977 9,793

11. Investment in joint ventureThe joint venture investment represents the Group’s 45% economic interest (50% voting interest) in MPG Hospital Holdings Limited, a company incorporated in England & Wales and operating in the United Kingdom. The movement in the investment in joint venture during the year was as follows:

Year to31 March

2013£000

Year to 31 March

2012£000

At the start of the year 1,255 1,060Share of (loss)/profit recognised in the income statement (443) 373Share of other comprehensive income 159 (178)At the end of the year 971 1,255


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11. Investment in joint venture continuedThe net assets and results of the joint venture for the year were as follows:

31 March 2013£000

31 March 2012£000

Investment properties 32,850 34,560Other non-current assets 1,350 1,037Cash and cash equivalents 121 258Cash and cash equivalents held as security for bank debt 642 623Net current liabilities (1,553) (1,672)Secured non-recourse bank debt (30,272) (30,893)Other non-current liabilities (981) (1,126)Net assets 2,157 2,787Group share of net assets 971 1,255

Year to31 March

2013£000

Year to 31 March

2012£000

Rental income 2,550 2,493Property outgoings (6) (6)Administrative and other expenses (166) (181)Net finance costs (1,764) (1,793)Investment property revaluation (1,710) 460Market value adjustment of interest rate derivatives 16 (43)Tax credit/(charge) 95 (101)(Loss)/profit for the year (985) 829Group share of (loss)/profit for the year (443) 373

Year to31 March

2013£000

Year to 31 March

2012£000

Market value adjustment of interest rate derivatives 470 (541)Tax effect of interest rate derivative market value adjustment (116) 145Other comprehensive income for the year 354 (396)Group share of other comprehensive income for the year 159 (178)

The joint venture owns four private hospitals in Blackburn, Liverpool, Ayr and Stirling, all held on long leases with annual upward only RPI-linked uplifts throughout the term, with an aggregate current rent of £2.6 million (2012: £2.5 million) per annum. Throughout the period of ownership, the joint venture has been funded with non-recourse debt, which at 31 March 2013 totalled £30.3 million (2012: £30.9 million).

The properties were independently valued at £32.9 million (2012: £34.6 million) by CBRE Limited, Commercial Real Estate Advisors, in their capacity as external valuers. The valuation was prepared on a fixed fee basis, independent of the portfolio value. The valuation was undertaken in accordance with the RICS Valuation – Professional Standards (2012) on the basis of Market Value, supported by reference to market evidence of transaction prices for similar properties.

Administrative expenses include £0.1 million (2012: £0.1 million) of management fees paid to the Property Advisor, which results in a corresponding reduction of fees paid to the Property Advisor by the Group under the Investment Advisory Agreement.

The Group has no capital commitments or contingent liabilities in relation to the joint venture, and the joint venture itself has no capital commitments or contingent liabilities.


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12. Trade and other receivables31 March

2013£000

31 March 2012£000

Net trade receivables 3,328 3,244Investment property disposal proceeds receivable 1,763 1,847VAT receivable 408 –Tax recoverable 305 –Interest receivable 1 1Rent free periods and fixed or guaranteed rent reviews – investment properties 8,407 4,571Rent free periods and fixed or guaranteed rent reviews – trading property – 88Capitalised letting fees – investment properties 1,206 571Capitalised letting fees – trading property – 26Prepayments and accrued income 1,713 885Other receivables 381 25

17,512 11,258

£0.8 million (2012: £1.0 million) of rent free periods and fixed or guaranteed rent reviews are due within one year, with the remainder due in more than one year. £0.3 million (2012: £0.1 million) of capitalised letting fees are due within one year, with the remainder due in more than one year.

The Group’s net trade receivables comprise amounts payable by tenants of the Group’s investment properties. The ageing of net trade receivables was as follows:

31 March 2013£000

31 March 2012£000

Less than 30 days 2,540 2,71330 to 60 days 180 2160 to 120 days 407 193Over 120 days 201 317

3,328 3,244

The Group holds collateral of £2.7 million (2012: £2.4 million) in the form of rent deposits received from tenants. The average age of net trade receivables is 16 days (2012: 11 days).

The movement in the provision for doubtful debts was as follows:Year to

31 March 2013£000

Year to 31 March

2012£000

At the start of the year 1,123 986Amounts written off as uncollectable (723) (976)Amounts recovered (518) (548)New amounts provided for 734 1,661At the end of the year 616 1,123


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13. Cash and cash equivalents31 March

2013£000

31 March 2012£000

Cash and cash equivalents 43,201 63,977Cash and cash equivalents secured under lending facilities 27,186 18,654

70,386 82,631

£9.0 million (2012: £7.4 million) of the Group’s cash and cash equivalents balance is attributable to non-controlling interests.

14. Trade and other payables31 March

2013£000

31 March 2012£000

Trade payables 3,575 2,437Rent received in advance 9,029 8,728Other taxes and social security 1,917 1,783Other amounts payable 1,926 2,689Accruals and deferred income 4,258 3,452

20,705 19,089

All amounts above are due within one year and none incur interest.

15. Financial assets and liabilitiesa) Non-current financial liabilities

31 March 2013£000

31 March 2012£000

Secured loans 233,104 209,504Unamortised finance costs (4,104) (2,521)

229,000 206,983Obligations under finance leases (note 16) 1,652 1,652Interest rate derivatives at market value 6,764 5,462

237,416 214,097

There is no difference between the book value and fair value of the non-current financial liabilities shown above, with the exception of one fixed rate secured loan which had a book value of £32.0 million (2012: £nil) and a fair value of £32.6 million (2012: £nil).


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15. Financial assets and liabilities continuedThe Group’s principal borrowing arrangements are as follows:

Industrious St Katharine DocksProvincial

Offices London Pubs facility

Lender HypothekenbankFrankfurt AG/

Abbey NationalTreasury

Services Plc

Hypothekenbank Frankfurt AG

LongbowInvestment

No.2 Sàrl

HypothekenbankFrankfurt AG

Recourse beyond ring- fenced sub-group

None None None None

Drawdown date October 2009 August 2011 May/June 2012

January 2011

Initial drawdown £127.7 million £86.7 million £32.0 million £25.5 millionBalance at 31 March 2013 £92.5 million £86.7 million £32.0 million £22.0 millionValue of secured properties at 31 March 2013

£188.2 million £183.3 million £33.6 million £46.9 million

Gross LTV ratio at 31 March 2013

49.1% 47.3% 95.4% 46.9%

Net LTV ratio at 31 March 2013

45.2% 35.7% 90.3% 44.6%

Current repayment terms Interest only Interest only Interest only Interest onlyRepayment date August

2016August

2016September

2016January

2016

The terms of the loans may, in the event of a covenant default, restrict the ability of certain subsidiaries to transfer funds outside the relevant security group. There have been no defaults or other breaches of financial covenants under any of the loans during the current or the prior year, or in the period since the balance sheet date.

The Group had no undrawn committed borrowing facilities at 31 March 2013 or 31 March 2012.

b) Derivative financial instrumentsThe following derivative financial instruments were in place as at each balance sheet date:

Principal amount Fair value

Expiry

31 March 2013£000

31 March 2012£000

31 March 2013£000

31 March 2012£000

2.6% swap August 2016 63,755 – (4,259) –3% cap August 2016 32,843 – 43 –4% swap August 2014 – 64,242 – (4,359)4% cap August 2014 56,750 56,750 – 222.3% amortising swap August 2016 86,000 86,000 (4,889) (3,681)2.3% receivers swaption August 2016 86,000 86,000 1,376 7543.5% cap March 2015 25,500 25,500 2 323.5% cap held for future transactions March 2015 74,500 74,500 4 92

(7,723) (7,140)


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15. Financial assets and liabilities continuedThe interest rate protection relates in the main to specific ring-fenced financing structures as follows:

X a 2.6% interest rate swap and 3% interest rate cap hedge the interest rate liabilities on the Industrious portfolio loan, maturing in August 2016;

X a further 4% interest rate cap provides additional hedging headroom on the Industrious portfolio loan, maturing in August 2014;

X a cap at 3.5% hedges the interest rate liabilities on the London Pubs portfolio loan, maturing in March 2015; and

X a 2.3% interest rate swap and swaption hedge the interest rate liabilities on the St Katharine Docks loan, maturing in August 2016.

In addition, a Group company holds the benefit of a 3.5% cap on £74.5 million notional principal, maturing in March 2015, for potential use in financing future acquisitions. Accounting standards require this to be classified as ‘held for trading’ in note 15c below.

The profiles of the notional swapped and capped amounts have been estimated to match the expected loan profiles reasonably closely. Since the loan profiles cannot be predicted with certainty, the swap and cap profiles are monitored regularly and adjusted as necessary.

Movements in the valuation of derivative financial instruments in the year were as follows:

Year to31 March

2013£000

Year to 31 March

2012£000

At the start of the year (7,140) (2,079)Charged to the income statement (note 6) (464) (1,267)Charged directly to the hedging reserve (note 6) (119) (3,794)At the end of the year (7,723) (7,140)

Derivative financial instruments are categorised as follows:31 March

2013£000

31 March 2012£000

Financial assets within one year – – in more than one year 1,425 900Financial liabilities within one year (2,384) (2,578) in more than one year (6,764) (5,462)

(7,723) (7,140)

The derivative contracts have been valued by reference to interbank bid market rates as at the close of business on 28 March 2013 by JC Rathbone Associates Limited, and include the full LIBOR basis spread. All derivative financial instruments are classified as ‘level 2’ as defined in IFRS 7 as their fair value measurements are those derived from inputs other than quoted prices in active markets for identical assets and liabilities, but that are observable either directly or indirectly.

The market values of hedging instruments change constantly with interest rate fluctuations, but the cash flow exposure of the Group to movements in interest rates is protected by way of its effective hedges. These valuation movements do not necessarily reflect the cost or gain to the Group of cancelling its interest rate protection, which is generally a marginally higher cost or smaller gain than a market valuation.


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15. Financial assets and liabilities continuedc) Categories of financial instruments

31 March 2013£000

31 March 2012£000

Financial assetsLoans and receivables: Cash and cash equivalents (note 13) 70,386 82,631 Trade receivables (note 12) 3,328 3,244 Investment property disposal proceeds receivable (note 12) 1,763 1,847 Interest receivable (note 12) 1 1Financial assets held for trading: Interest rate cap (note 15b) 4 92Derivatives in effective hedges: Interest rate cap and swaption 1,421 808

76,903 88,623Financial liabilitiesFinancial liabilities at amortised cost: Trade payables (note 14) (3,575) (2,437) Accrued interest (2,497) (1,781) Borrowings (note 15a) (229,000) (206,983) Obligations under finance leases (note 16) (1,652) (1,652)Derivatives in effective hedges: Interest rate swaps and caps (9,148) (8,040)

(245,872) (220,893)

All financial assets and liabilities are measured at amortised cost except for derivative financial instruments which are measured at fair value.

d) Financial risk managementThrough the Group’s operations and use of debt financing it is exposed to certain risks. The Group’s financial risk management objectives are to minimise the effect of these risks by using derivative financial instruments, particularly to manage exposure to fluctuations in interest rates. Such instruments are not employed for speculative purposes. The use of any derivatives is approved by the Board, which provides guidelines on acceptable levels of interest rate risk, credit risk and liquidity risk.

The exposure to each risk considered potentially material to the Group, how it arises and the policy for managing it is summarised below.

i) Credit riskCredit risk is the risk of financial loss to the Group if a counterparty fails to meet its contractual obligations. The relevant counterparties are in the main tenants in respect of amounts receivable under operating leases and banks acting either as hedging counterparties or as recipients of the Group’s cash deposits.

The Group places cash deposits for a range of maturities with a panel of reputable Board approved institutions. As at the year end, there were ten (2012: 11) approved banks on the panel and deposits are spread across the banks according to guidelines that are regularly reassessed by the Board, and across maturities that are considered appropriate to the Group’s needs. The credit ratings of the institutions are monitored by the Board at least quarterly with changes made as necessary to manage risk. The Board weighs up counterparty risk and maturity profiles, having regard to credit ratings and other financial information, and aims to avoid inappropriate concentration of risk.


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15. Financial assets and liabilities continuedRigorous credit control procedures are applied to facilitate the recovery of trade receivables. Recovery details and statistics are benchmarked in Board reports to identify any ongoing trends or problems. The credit risk of trade receivables is assessed on a case by case basis and where the likelihood of recovery is considered low, provisions are made.

The credit risk relating to counterparties transacting with the Group for property acquisitions and disposals is managed through appropriate due diligence and contractual protection in the relevant agreements.

ii) Liquidity riskLiquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.

Before entering into any debt instrument, the Board assesses the resources that are expected to be available to the Group to meet the liabilities when they fall due. These assessments are made on the basis of both conservative and ‘downside’ scenarios. The Group prepares budgets and working capital forecasts which are reviewed by the Board at least quarterly to assess ongoing cash requirements and compliance with loan covenants. The Board also keeps under review the maturity profile of the Group’s cash deposits in order to have reasonable assurance that cash will be available for the settlement of liabilities when they fall due and entering into future transactions as required.

The following table shows the maturity analysis for financial assets and liabilities and, where applicable, their effective interest rates. The table has been drawn up based on the undiscounted cash flows of financial liabilities, including future interest payments, based on the earliest date on which the Group can be required to pay.

31 March 2013Effective

interest rate

Less than one year

£000

Betweenone and two

years£000

Betweentwo and five

years£000

More than five years

£000Total£000

Financial assetsTrade receivables 3,328 – – – 3,328Investment property disposal proceeds receivable 1,763 – – – 1,763Interest receivable 1 – – – 1Cash and cash equivalents 0.2% 70,386 – – – 70,386Derivative financial instruments – 5 1,420 – 1,425

75,478 5 1,420 – 76,903Financial liabilitiesTrade payables (3,575) – – – (3,575)Accrued interest (2,497) – – – (2,497)Borrowings 5.3% (9,578) (9,661) (247,738) – (266,977)Derivative financial instruments (2,384) (2,836) (3,928) – (9,148)Obligations under finance leases (187) (187) (561) (16,080) (17,015)

(18,221) (12,684) (252,227) (16,080) (299,212)


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15. Financial assets and liabilities continued

31 March 2012Effective

interest rate

Less than one year

£000

Betweenone and two

years£000

Betweentwo and five

years£000

More than five years

£000Total£000

Financial assetsTrade receivables 3,244 – – – 3,244Investment property disposal proceeds receivable 1,847 – – – 1,847Interest receivable 1 – – – 1Cash and cash equivalents 0.4% 82,631 – – – 82,631Derivative financial instruments – 16 884 – 900

87,723 16 884 – 88,623Financial liabilitiesTrade payables (2,437) – – – (2,437)Accrued interest (1,781) – – – (1,781)Borrowings 4.8% (1,609) (1,789) (213,326) – (216,724)Derivative financial instruments (2,578) (2,964) (2,498) – (8,040)Obligations under finance leases (187) (187) (561) (16,267) (17,202)

(8,592) (4,940) (216,385) (16,267) (246,184)

iii) Market risk – interest rate riskMarket risk arises from the Group’s use of debt financing. It is the risk that the future cash flows of a financial instrument will fluctuate because of changes in interest rates.

The Group is exposed to cash flow interest rate risk from its variable rate borrowings. The Group uses interest rate hedging products such as swaps and caps in order to mitigate this risk.

The Group’s outstanding derivative financial instruments are described in note 15b and the Group’s sensitivity to changes in interest rates is disclosed in note 6.

iv) Capital risk managementThe Group’s capital comprises equity attributable to shareholders of the Company (stated capital, retained earnings and the hedging reserve) and debt, which includes the borrowings disclosed in note 15a and cash and cash equivalents. The Group’s primary objective when monitoring capital is to safeguard the entity’s ability to continue as a going concern, while ensuring that it remains within its banking covenants so as to safeguard secured assets and avoid financial penalties. Borrowings are secured on specific property portfolios and are non-recourse to the Group as a whole.


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15. Financial assets and liabilities continuedIn order to maintain or adjust the capital structure, the Group keeps under review the amount of any dividends or capital returns to be paid to shareholders, and monitors the extent to which the issue of new shares or the realisation of assets may be required.

The Group is not subject to any externally imposed capital requirements.

Details of the significant accounting policies adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in the accounting policies in note 2.

16. Obligations under finance leasesFinance lease obligations in respect of fixed rents payable on long leasehold properties are as follows:

31 March 2013£000

31 March 2012£000

Minimum lease paymentsLess than one year 187 187Between one and two years 187 187Between two and five years 561 561More than five years 16,080 16,267

17,015 17,202Less future finance charges (15,363) (15,550)Present value of lease obligations 1,652 1,652

The earliest expiry date of any of the lease obligations is in more than five years, as at both 31 March 2013 and 31 March 2012.

17. Stated capitalThe Company has an unlimited authorised share capital of no par value. The issued and fully paid up share capital comprises:

31 March 2013

Number

31 March 2012

Number

Ordinary shares of no par value issued at £1 each 220,000,002 220,000,002

The stated capital reserve is made up as follows:31 March

2013£000

31 March 2012£000

Issued and fully paid up ordinary shares 220,000 220,000Share issue costs (8,633) (8,633)

211,367 211,367


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18. ReservesThe Group statement of changes in equity is shown on page 32.

The nature and purpose of each reserve within equity is as follows:

Stated capital represents the excess of cash received from the issue of shares over their nominal value (which is zero), net of issue costs.

Hedging reserve represents gains and losses arising on the effective portion of hedging instruments carried at fair value, net of any deferred tax.

Retained earnings represents the cumulative profits and losses recognised in the Group statement of comprehensive income.

19. Net asset value per shareNet asset value per share is calculated as the net assets of the Group attributable to shareholders at each balance sheet date, divided by the number of shares in issue at that date.

There are no share options or other equity instruments in issue and therefore no adjustments to be made for dilutive or potentially dilutive equity arrangements.

The European Public Real Estate Association (‘EPRA’) has issued guidelines aimed at providing a measure of net asset value (‘NAV’) on the basis of long term fair values. The EPRA measure excludes items that are considered to have no impact in the long term, such as the fair value of derivative instruments and deferred tax balances. The Group’s EPRA NAV is calculated as follows, with all figures shown net of any non-controlling interests:

31 March 2013 31 March 2012

£000Pence

per share £000Pence

per share

Basic NAV 294,091 133.7 285,919 130.0Adjustments:Fair value of financial instruments 7,366 3.4 7,542 3.4Deferred tax (1,265) (0.6) (1,219) (0.6)Fair value of financial instruments in joint venture, net of deferred tax 90 – 252 0.1Share of inherent capital gains tax in joint venture – – 88 0.1Fair value of trading property in excess of book value – – 961 0.4EPRA NAV 300,282 136.5 293,543 133.4


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20. Related party transactions and balancesDirectors’ feesDirectors’ fees of £0.2 million (2012: £0.2 million) were payable for the year, as disclosed in note 4. As at 31 March 2013, £19,000 (2012: £28,000) of these fees remained outstanding and are included within other amounts payable (note 14).

Management fees payableNick Leslau and Mike Brown hold partnership interests in, and are Chairman and Chief Executive respectively of, Prestbury Investments LLP which is Property Advisor to the Group under the terms of the Investment Advisory Agreement entered into on 21 May 2009. Under the terms of that agreement, management fees of £5.1 million (2012: £5.0 million) were payable to Prestbury Investments LLP in respect of the year, of which £nil (2012: £nil) was outstanding as at the balance sheet date. £0.1 million (2012: £0.1 million) of this fee has been offset by the Property Advisor in recognition of the fact that the Property Advisor directly receives a management fee of the same amount from the Hospitals joint venture as described in note 11, in relation to the services provided which are sub-contracted by the Company. This amount is included in other income in the income statement.

In the course of its duties as Property Advisor and in accordance with the terms of the Investment Advisory Agreement, Prestbury is entitled to recover the costs and expenses properly incurred in connection with its duties. During the year, Prestbury has recharged at cost £31,000 (2012: £50,000) to the Group in this respect, of which £nil (2012: £nil) remains outstanding at 31 March 2013.

Incentive fees payableUnder the terms of the carried interest arrangements between the Company, Prestbury (Scotland) Limited Partnership (‘Prestbury Scotland’, a partnership in which Nick Leslau and Mike Brown have 49% and 25% interests respectively in relation to its business regarding the Group), and OZ UK Real Estate Securities Limited (‘OZ’), once the £211.4 million of net funds raised on listing have been returned to shareholders (assuming no further share issues), then cash returns over and above that amount may ultimately be shared 80% to shareholders and 20% to Prestbury Scotland and OZ, subject to shareholders having first received the net proceeds of share issues in cash plus an 11% per annum preferred return.

The carried interest payments are payable only on cash realisations other than where either the Investment Advisory Agreement has been terminated (where the net asset value of the Group is used in the calculation as if that amount had been returned to shareholders in cash) or there has been a takeover of the Company (in which case the offer price is used in the calculation).

No carried interest payment has yet become payable. Taking account of the uncertainties arising from the length of the period over which the incentive fee will be determined, the challenging future returns required and current market index projections of property value growth over the medium term, the Board has concluded that it continues to be inappropriate to make a provision for the incentive fee at this stage. The Board keeps this position under review and, in accordance with the requirements of the relevant accounting standard, IAS 37, will provide for a liability for incentive payments if it is considered more likely than not that payments will be made.

Incentive fees receivableOnce the investors in the St Katharine Docks joint venture have received cash returns equal to their participations in St Katharine Docks (currently totalling £103.1 million) plus an 11% per annum preferred return, any cash returns over and above that amount will be shared 80% to the Group and 20% to the non-controlling interests. Taking into account current valuation levels and the uncertainty over the ultimate net disposal value of the joint venture, no account has yet been taken of potential incentive fees arising from this arrangement.


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20. Related party transactions and balances continuedSubsidiary entitiesThe Group financial statements include the financial statements of Max Property Group Plc and the subsidiary and joint venture entities shown below. Max Property Group Plc is the ultimate controlling party of its subsidiaries.

Country of incorporation Nature of business

Wholly ownedMax Property GP Limited1 Jersey General partnerMax Property LP Limited1 Jersey Limited partnerMax Property LP2 Jersey Intermediate holding entityMPG Opco Limited Jersey Intermediate holding companyMPG Finco Limited England & Wales Group financeMPG Hedging Limited Jersey Treasury operationsMax Investor Limited Jersey Intermediate holding companyMax Industrial Limited Jersey Intermediate holding companyMax Industrial 2 Limited Jersey Property tradingMax Industrial Limited Partner Limited Jersey Limited partnerMax Industrial GP Limited England & Wales General partnerMax Industrial Nominee Limited England & Wales Nominee companyMax Industrial LP England & Wales Property investmentMax Office Properties Limited Jersey Intermediate holding companyMax Office Limited Jersey Intermediate holding companyMax Office Investor Limited Jersey Intermediate holding companyMax Office Finance Limited Jersey Property tradingMax Office Limited Partner Limited Jersey Limited partnerMax Office GP Limited England & Wales General partnerMax Office Nominee Limited England & Wales Nominee companyMax Office LP England & Wales Property investmentProvincial Offices LLP England & Wales Property investmentMax Bars Limited Partner Limited Jersey Limited partnerMax Bars GP Limited England & Wales General partnerMax Bars Nominee Limited England & Wales Nominee companyMax Bars LP England & Wales Property investmentMPG Pubs Holdings Limited Jersey Intermediate holding companyMPG Pubs Finance Limited Jersey Group financeMPG Pubs Limited Partner Limited Jersey Limited partnerMPG Pubs GP Limited England & Wales General partnerMPG Pubs Nominee Limited England & Wales Nominee companyMPG Pubs LP England & Wales Property investmentMPG St Katharine Limited Jersey Intermediate holding companyMPG St Katharine Finance Limited Jersey Group financeMPG St Katharine Limited Partner Limited Jersey Limited partnerMPG St Katharine Nominee 1 Limited England & Wales Nominee companyMPG St Katharine Nominee 2 Limited England & Wales Nominee companyMPG Holborn Limited Jersey Intermediate holding companyMPG Holborn LP Limited Jersey Limited partnerMPG Holborn GP Limited England & Wales General partnerMPG Holborn Nominee Limited England & Wales Nominee companyMPG Holborn LP England & Wales Property investmentMax Property Group Limited England & Wales DormantMax Property 1 Limited England & Wales DormantMax Property 2 Limited England & Wales Dormant

1 Max Property GP Limited and Max Property LP Limited are directly owned by Max Property Group Plc. All other entities are indirectly owned

2 Prestbury (Scotland) Limited Partnership and OZ UK Real Estate Securities Limited have partnership interests in Max Property Limited Partnership which entitle them to share in any incentives that may become payable, as more fully described above under the heading ‘incentive fees payable’


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20. Related party transactions and balances continuedCountry of incorporation Nature of business

83.3% ownedMax Office 2 LLP England & Wales Property investmentSilbury Court LLP England & Wales Property investment60% ownedMPG St Katharine LP England & Wales Property investmentSKIL 3 Limited England & Wales Nominee companySKIL 4 Limited England & Wales Nominee companySt Katharine’s Estate Management Company Limited England & Wales Estate managementSKD Marina Limited England & Wales Operator of marina45% ownedMPG Hospital Holdings Limited3 England & Wales Intermediate holding companyMPG Hospital Properties Limited3 England & Wales Property investment

3 Treated as joint ventures because the Group has 50% of the voting rights

21. Commitments and contingent liabilities31 March

2013£000

31 March 2012£000

Capital commitments – Max share 11,316 2,537Capital commitments – non-controlling interests’ share 7,309 948

18,625 3,485

Capital commitments are in respect of refurbishment works on investment properties.

22. Events after the balance sheet dateOn 4 April 2013, the sale of two industrial units at Boundary Business Centre, Woking completed for cash consideration of £0.4 million. The entire proceeds were subsequently used to repay part of the loan secured on the Industrious portfolio. Unconditional contracts for sale had been exchanged prior to the balance sheet date and the sale proceeds were included in trade and other receivables and the loan repayment in trade and other payables at the balance sheet date. Since that date, the sale of a further industrial unit has completed for total cash consideration of £0.1 million, which was used to repay part of the loan secured on the Industrious portfolio.

On 30 April 2013, the Group exchanged contracts for the sale of two London Pubs, The Famous Cock in Islington and The Golden Heart in Whitechapel. Completion is due to occur on 24 June 2013 for cash consideration of £5.3 million, which is a profit of £0.7 million or 0.3p per share over the 31 March 2013 book value. £2.2 million of the proceeds will be used to repay part of the loan secured on the London Pubs portfolio and the remainder will be added to the Group’s cash reserves.

On 14 May 2013, Administrators were appointed to the principal tenant of the Nightclubs portfolio, Atmosphere Bars and Clubs Limited. The Administrators have yet to make clear their intentions for the Group’s properties occupied by Atmosphere. The valuation at 31 March 2013 of the assets affected was £6.8 million and the gross rental income at that date is £1.1 million. Of the total, one asset valued at £1.0 million with £0.2 million of rent is fully sublet and so should not be affected by the administration.


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Independent Auditors’ Report to the Members of Max Property Group PlcWe have audited the parent company financial statements of Max Property Group Plc for the year ended 31 March 2013 which comprise the Balance Sheet and the related notes. 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).

This report is made solely to the Company’s members, as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an Auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and AuditorsAs explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the 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.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate.

Opinion on the financial statementsIn our opinion the financial statements:

X give a true and fair view of the state of the Company’s affairs as at 31 March 2013; X have been properly prepared in accordance with United Kingdom Generally Accepted

Accounting Practice; and X have been prepared in accordance with Companies (Jersey) Law 1991.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:

X proper accounting records have not been kept, or proper returns adequate for our audit have not been received from branches not visited by us; or

X the financial statements are not in agreement with the accounting records and returns; or X we have not received all the information and explanations we require for our audit.

Russell FieldFor and on behalf of BDO LLPChartered AccountantsGatwickUnited Kingdom23 May 2013

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Company Independent Auditors’ Report

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Com

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Fin

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Note

31 March 2013£000

31 March 2012£000

Current assets:Prepayments and accrued income 24 23Loans to subsidiary undertakings D 171,720 152,017Cash and cash equivalents 33,781 54,344Total assets 205,525 206,384Current liabilities:Trade creditors – (32)Accruals and deferred income (152) (120)Total liabilities (152) (152)Net assets 205,373 206,232Equity:Stated capital E 211,367 211,367Retained loss (5,994) (5,135)Total equity F 205,373 206,232

The notes on pages 64 and 65 form part of the Company financial statements.

The Company financial statements were approved and authorised for issue by the Board of Directors on 23 May 2013 and were signed on its behalf by:



Company Balance Sheet


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A. Basis of preparationThe Company’s financial statements have been prepared in accordance with applicable laws and United Kingdom accounting standards, on a going concern basis and under the historic cost convention. The principal accounting policies relevant to the Company have been applied consistently in the current and prior year as follows:

X Loans to subsidiaries are stated at cost less provision for any impairment. X Cash and cash equivalents comprise cash in hand and deposits repayable on demand with

any qualifying financial institution. Deposits are repayable on demand if they can be withdrawn at any time without notice and without penalty.

The Company has not set out its own profit and loss account, as permitted by the Companies (Jersey) Law 1991. The Company’s loss after tax for the year was £0.9 million (2012: £0.5 million).

B. Auditors’ remunerationThe remuneration in respect of the audit of the Company for the year was £33,500 (2012: £32,500). Fees payable to the Auditors by the Group are disclosed in note 4 to the Group financial statements.

C. Investment in subsidiary undertakingsThe following companies were subsidiary undertakings as at 31 March 2013.

Country of incorporation and operation Nature of business

Max Property GP Limited Jersey General partnerMax Property LP Limited Jersey Limited partner

Both subsidiary companies are wholly owned. The subsidiary entities indirectly owned by the Company are disclosed in note 20 to the Group financial statements.

D. Loans to subsidiary undertakingsThe amounts due from subsidiary undertakings are unsecured, bear no interest and have no repayment date.

E. Stated capitalDetails of the stated capital of the Company are disclosed in note 17 to the Group financial statements.

F. Reconciliation of movements in shareholders’ fundsStated capital

£000Retained loss

£000Total£000

At 31 March 2011 211,367 (4,588) 206,779Loss for the year – (547) (547)At 31 March 2012 211,367 (5,135) 206,232Loss for the year – (859) (859)At 31 March 2013 211,367 (5,994) 205,373

Notes to the Company financial statements

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G. Related partiesDirectors’ feesDirectors’ fees are disclosed in note 4 to the Group financial statements.

Management fees payableNick Leslau and Mike Brown hold partnership interests in, and are Chairman and Chief Executive respectively of, Prestbury Investments LLP, which is Property Advisor to the Company under the terms of the Investment Advisory Agreement entered into on 21 May 2009. Under the terms of that agreement, management fees of £0.5 million (2012: £0.5 million) were payable to Prestbury Investments LLP by the Company in respect of the year ended 31 March 2013, of which £nil (2012: £nil) was payable as at the balance sheet date. £0.1 million (2012: £0.1 million) of this fee has been offset by the Property Advisor in recognition of the fact that the Property Advisor directly receives a management fee from the Hospitals joint venture as described in note 11 to the Group financial statements, in relation to the services provided which are sub-contracted by the Company.

In the course of its duties as Property Advisor and in accordance with the terms of the Investment Advisory Agreement, Prestbury is entitled to recover the costs and expenses properly incurred in connection with its duties. During the year, Prestbury has recharged at cost £21,000 (2012: £24,000) to the Company in this respect, of which £nil (2012: £nil) remains outstanding at 31 March 2013.

Incentive fees payableThe incentive arrangements described in note 20 to the Group financial statements are guaranteed by the Company.


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St Katharine Docks

Region Location AddressNo. of units

Total area(sq ft)

Typical unitsize (sq ft)

SE London International House 55 214,852 1,000-30,000SE London Commodity Quay n/a 137,810 n/aSE London Devon House 8 90,449 3,000-21,000

SE London Ivory House and other properties 22 70,519 500-18,500SE London Marina basin 160 berths

High Holborn Estate


Total area(sq ft)


SE London High Holborn House 51 87,165 500-11,600SE London Caroline House 13 19,071 800-2,800SE London Brownlow House 8 10,271 1,500-1,900SE London Hand Court 19 18,143 600-5,000SE London Bedford Row 9 13,039 600-3,000

Industrious portfolio


Total area(sq ft)


Lot sizes over £20 millionEA Ipswich Martlesham Heath Business Park, Gloster

Road, Martlesham Heath, Ipswich IP5 3RB122 503,865 500-5,000 &

1,000-20,000Lot sizes between £10-20 millionNE Newton Aycliffe Groat/Howden Road/Ricknall Avenue,

Aycliffe Industrial Park, Newton Aycliffe, County Durham DL5 6HW

4 274,616 50,000-132,000

Lot sizes between £5-10 millionNE Washington Bentall Business Park, Glover Industrial

Estate, Washington NE37 3JD27 638,932 10,000-50,000

NE Peterlee South West Industrial Estate, Peterlee, County Durham SR8 2LS; Lee House,Upper Yoden Way, Peterlee CountyDurham SR8 1BB; andRidgemont House, Bede Way, Peterlee, County Durham SR8 1EA

75 413,783 500-1,500 & 3,000-10,000

NW Crewe Crewe Hall Enterprise Park, Western Road, Crewe CW1 6UE

23 289,076 600-9,000

SE Tonbridge Eldon Way Industrial Estate, Paddock Wood, Tonbridge TN12 6BE

40 207,165 2,000-5,000

SE Dagenham Sterling Industrial Estate, Rainham Road South, Dagenham RM10 8TX

14 137,993 8,000-9,000

SE West Molesey West Molesey Industrial Estate, West Molesey, Surrey KT8 2QZ

8 94,064 3,000-20,000

SE Romford Ashton Gate Industrial Estate, Ashton Road, Harold Hill, Romford RM3 8UF

16 83,679 2,500-10,000

Lot sizes between £1-5 millionM Warley Summit Crescent Industrial Estate, off

Roebuck Lane, Smethwick, Warley B66 1BT27 248,126 2,500-5,500

S Glasgow Third Road, High Blantyre Industrial Estate, High Blantyre, Glasgow G72 0UP

15 227,165 5,000-5,500

NW Bury Peel Industrial Estate, Peel Mills, Chamberhall Street, Bury BL9 0LU

37 130,582 600-5,000

SE Bedford Arkwright Industrial Estate, Cambridge Road, Bedford MK42 0LE

15 129,934 5,000-10,000

M Rugby Midland Trading Estate, Consul Road, Rugby CV21 1PB

14 113,295 3,000-7,000

Property Portfolio assets held at 23 May 2013

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Total area(sq ft)


Lot sizes between £1-5 million continuedNW Wigan Haslemere Industrial Estate, Wigan Road,

Bryn, Wigan WN4 0BZ9 112,157 5,000-7,000

S East Kilbride Fairfield Place, College Milton Industrial Estate, East Kilbride, Lanarkshire G74 5LP

15 100,932 6,000

SE Southampton Bottings Industrial Estate, Botley, Southampton SO30 2DY

15 98,700 4,000-6,000

M Birmingham Socius Works, Spring Road, Smethwick, Birmingham B66 1PT

1 94,184 94,000

M Birmingham Kings Road Industrial Estate, Kings Road, Tyesley, Birmingham B11 2AX

6 83,952 8,000-15,000

NW Warrington 44-47 Hardwick Grange, Woolston, Warrington, Cheshire WA1 4RF

2 81,342 40,000

M West Bromwich Albion Industrial Estate, Oldbury Road,West Bromwich B70 9BP

11 80,574 3,000-6,000

M Tamworth Planet Works, Lichfield Road, TamworthB79 7TL

1 79,789 80,000

NW Altrincham Lyon Industrial Estate, Atlantic Street, Altrincham WA14 5EF

14 78,381 2,500-7,000

NW Manchester Deans Road Trading Estate, Deans Road, Swinton, Manchester M27 0RD

7 77,832 10,000

M Dudley Gibbons Industrial Estate, Dudley Road, Kingswinford, Dudley DY6 8XG

6 74,492 5,000-30,000

M Stourbridge Lye Valley Industrial Estate, Bromley Street, Lye, Stourbridge DY9 8HX

28 74,147 600-5,000

NW Rochdale Littleborough Industrial Estate, Littleborough, Rochdale OL15 8YL

4 63,332 6,000-10,000

SW Swindon Hawksworth Industrial Estate, Wyndham Road, Swindon SN2 1EJ

7 58,048 6,000

SE Basildon Saffron Court, Seax Way, Basildon,Essex SS15 6SS

37 57,115 500-2,500

SE Croydon Swift Centre, 41 Imperial Way, CroydonCR0 4RR

16 54,307 500-1,500

SW Swindon Isis Trading Estate, Stratton Road, Swindon SN1 2PT

9 53,186 5,000-6,000

M Birmingham Windsor Industrial Estate, Rupert Street, Aston, Birmingham B7 4PR

7 52,633 6,000-11,000

M Birmingham Westwood Road, Birmingham B6 7JF 1 49,087 49,000M Birmingham Griffin Business Park, Walmer Way,

Chelmsley Wood, Birmingham B37 6QQ6 48,668 4,000-5,000

Y Leeds Enterprise Park Industrial Estate, Old Lane, Moorhouse Avenue, Beeston,Leeds LS11 8HA

29 47,919 1,000-2,000

SE Milton Keynes Caxton Court, Garamonde Drive, Wymbush, Milton Keynes MK8 9DD

32 45,601 500-2,000

SE Southampton Woodside Road, Eastleigh, Southampton SO50 4ET

6 43,665 5,000

EA Bury St Edmunds Chase Road Industrial Estate, Chase Road, Bury St Edmunds IP32 6NT

8 41,348 4,000-5,000

SE Bedford 2 Cardington Gate, St Martins Business Centre, St Martins Way, Bedford MK42 0LF

1 41,047 41,000

Y Sheffield Century Street Industrial Estate, Clement Street, Sheffield S9 5GX

29 40,240 800-2,500

NW Manchester Oakhill Trading Estate, Devonshire Road, Worsley, Manchester M28 3PT

5 37,299 5,000-8,000

Y Sheffield Newhall Industrial Estate, Newhall Road, Sheffield S9 2TW

20 37,120 700-2,000

Industrious portfolio continued


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Property Portfolio continued


Total area(sq ft)


Lot sizes between £1-5 million continuedSE Woking Boundary Business Centre, Boundary Way,

Woking GU21 5DH25 34,757 900-3,000

SE Croydon Endeavour Way, Beddington Farm Road, Croydon CR0 4TR

7 30,269 3,500

SW Chippenham Westpoint Business Park, Vincients Road, Chippenham SN14 6RB

11 29,584 2,500

SE Reading Oxford Road Industrial Estate, Gresham Way, Reading RG30 6AW

10 26,310 2,000-2,000

M Warwick Wedgnock Industrial Estate, Broxell Close, Wedgnock Lane, Warwick CV34 5YA

4 25,220 4,000

SE Farnborough Farnborough Business Centre, 12-14 Eelmoor Road, Farnborough GU14 7BD

17 24,619 1,000-2,000

SE Camberley Helix Business Park, Wilton Road, Camberley GU15 2QT

16 20,025 500-2,500

SE Horsham Redkiln Trading Estate, Redkiln Way, Horsham RH13 5QL

7 19,810 1,000-6,000

SE Romford The Business Centre, Farringdon Avenue, Romford RM3 8EN

6 19,024 2,000-4,000

Lot sizes under £1 millionM Rugby Crick Point, Crick Road, Hillmorton, Rugby

CV23 0AB1 54,909 55,000

S Irvine 17 Arkwright Way, Irvine, Ayrshire KA11 4JU 1 47,718 48,000NW Manchester Dale Industrial Estate, Phoenix Way,

Radcliffe, Manchester M26 9AD15 46,056 2,000-3,000

NW Bolton Gladstone Road, Farnworth, Bolton BL4 7EH

2 35,443 5,000

NW Stockport Bankfield Road Industrial Estate, Coronation Street, South Reddish, Stockport SK5 7SE

11 32,231 2,000-3,000

Y Dewsbury Mill Street Industrial Estate, Anchor Bridge Way, Dewsbury WF12 9QS

20 30,258 500-2,500

M Dudley Lodge Forge Trading Estate, Cradley Road, Cradley Heath, Dudley B64 7RW

15 29,905 1,000-2,500

S East Kilbride 9 Hawbank Road, East Kilbride, Lanarkshire G74 5EG

1 28,336 28,000

M Birmingham Dunton Industrial Estate, Mount Street, Nechells, Birmingham B7 5RE

10 27,390 2,200

M Warley 28 Stone Street, Oldbury, Warley B69 4JL 1 26,000 26,000NW Manchester Linnyshaw Industrial Estate, Moss Lane,

Worsley, Manchester M28 3LY5 25,243 3,000-5,000

NW Rochdale Halfpenny Industrial Estate, Oldham Road, off Church Street, Rochdale OL11 1NS

8 24,554 2,000-3,000

NW Oldham Parkside Industrial Estate, Edge Lane Street, Royton, Oldham OL2 6DS

24 24,122 500-1,200

NW Manchester Mersey Road Industrial Estate, Mersey Road North, Failsworth, Manchester M35 9LU

9 23,547 2,500

Y Sheffield Stevenson Way Industrial Estate, Stevenson Way, Attercliffe, Sheffield S9 3WZ

5 22,538 4,500

Y Doncaster Shaw Lane Industrial Estate, Ogden Road, Doncaster DN2 4SQ

10 20,973 1,500-2,500

Y Sheffield Enterprise Park, Woodbourn Road,Sheffield S9 3JL

15 20,841 1,000-2,000

SE Newbury Brookway Trading Estate, Hambridge Lane, Newbury RG14 5PE

10 17,154 1,000-2,500

Y Leeds Dartstone West Industrial Estate, Nepshaw Lane, Morley, Leeds LS27 7JQ

3 15,849 3,000-7,000

NW Wigan Kingfisher Court, South Lancs Industrial Estate, Bryn, Wigan WN4 9DW

7 12,359 1,500-2,500

Industrious portfolio continued

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Provincial Office portfolio


Total area(sq ft)


NW Manchester Concord Business Park, Threapwood Road, Manchester M22 0RR

6 124,661 10,000-40,000

SE Horsham Broadlands Business Campus, Langhurstwood Road, Horsham RH12 4QP

8 116,170 10,500-25,000

SE Newbury Overbridge Square, Hambridge Lane, Newbury RG14 5UX

9 66,851 3,200-14,500

SE Fareham Solent Centre, Solent Business Park, Whiteley, Fareham, Hampshire PO15 7AL

23 70,698 600-11,000

SW Bristol New Bond House, Newfoundland Street, Bristol BS2 8QR

9 47,130 1,600-10,000

Held in 83.3% joint ventureSE Milton Keynes Centric MK, Foxhunter Drive, Milton

Keynes MK14 6GE6 suites 103,723 17,800

SE Milton Keynes Silbury Court, Silbury Boulevard, Milton Keynes MK9 2AF

15 suites 34,878 700-10,000

SE Milton Keynes Silbury Court, Silbury Boulevard, Milton Keynes MK9 2AF

9 suites 43,168 1,600-1,800

SE Milton Keynes Workplace Building, Precedent Drive, Rooksley, Milton Keynes MK13 8PD

1 27,470 27,500

Nightclubs portfolio

Region Location AddressTotal area

(sq ft)

M Northampton 4-5 The Parade, Market Square, Northampton NN1 2EA

38,885

NE Middlesbrough Wilson Street, MiddlesbroughTS11 1SP

26,834

Y Halifax Commercial Street, Halifax HX1 1BX 26,794Y Barnsley Wellington Street, Barnsley S70 1SW 26,159M Leicester Humberstone Gate, Leicester LE1 3PJ 25,228NE Scunthorpe Doncaster Road, Scunthorpe

DN15 7RQ15,944

NW Llandudno Mostyn Broadway, LlandudnoLL30 1YR

15,902

SE Luton 20-44 Gordon Street, Luton LU1 2QP 13,378SE Banbury 60-62 Broad Street, Banbury

OX16 6BL10,002

SE Bedford 18-20 St Peter’s Street, BedfordMK40 2NN

9,900

NW Wrexham Brook Street, Wrexham LL13 7LH 9,033


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Property Portfolio continued

London Pubs portfolio

Region Location AddressTotal area

(sq ft)

SE London The Avalon, 16 Balham Hill, Clapham, London SW12 9EB

6,970

SE London Connolly’s Bar & Diner, 450 Chiswick High Road, Chiswick, London W4 5TT

4,904

SE London The Crown, 153 Dovehouse Street, Chelsea, London SW3 6LB

2,012

SE London The Eagle, 104 Chatham Road, Battersea, London SW11 6HG

2,255

SE London The Earl of Spencer, 262 Merton Road, Wandsworth, LondonSW18 5JL

8,616

SE London Fifty Five, 31 Jamestown Road, Camden, London NW1 7DB

5,024

SE London Frog & Forget-Me-Not, 32 The Pavement, Clapham, LondonSW4 0JE

6,042

SE London The Halfway House, 24 Priests Bridge, Barnes, London SW14 8TA

4,462

SE London The King’s Head, 474-476 Fulham Road, Fulham, London SW6 1BY

8,783

SE London Landor Hotel, 70 Landor Road, Stockwell, London SW9 9PH

9,215

SE London The Lord Clyde, 27 Clennam Street, Southwark, London SE1 1ER

3,180

SE London Lounge 34, 34 Lower Marsh, Lambeth, London SE1 7RG

3,959

SE London The Manor Arms, 128 Clapham Manor Street, Clapham, London SW4 4ED

1,964

SE London My Dining Room, 18 Farm Lane, Fulham, London SW6 1PP

4,011

SE London The Oxford Arms, 265 Camden High Street, Camden, London NW1 7BU

4,888

SE London The Princess Alice, 40 Commercial Street, Aldgate, London E1 6LP

5,536

SE London The Rose & Crown, 65 Union Street, Borough, London SE1 1SG

4,839

SE London The Rose & Crown, 86 High Street, Highgate, London N6 5HX

3,950

SE London The Selkirk, 60 Selkirk Road, Tooting, London SW17 0ES

3,188

SE London The Shipwright’s Arms, 88 Tooley Street, Bermondsey, London SE1 2TF

4,734

SE London The Thornbury Castle, 29a Enford Street, Marylebone, London W1H 1DG

3,986

SE London The Three Kings, 7 Clerkenwell Close, Clerkenwell, London EC1R 0DY

2,002

SE London The Two Brewers, 121 Whitecross Street, St Lukes, London EC1Y 8JH

2,978

SE London The Victoria, 10 West Temple Sheen, East Sheen, London SW14 7RT

5,564

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Hospitals portfolio

Region Location Address

NW Blackburn Gisburn Park Hospital, Gisburn, Nr Clitheroe, Lancashire BB7 4HX

29 bed private hospital

NW Liverpool Kenilworth Road Diagnostics Centre, 1 Kenilworth Road, Crosby, Liverpool L23 3AD

Private consulting rooms

S Ayr Carrick Glen Hospital, Dalmellington Road,Ayr KA6 6PG


S Stirling Kings Park Hospital, Polmaise Road,Stirling FK7 9PU


Region key:EA East AngliaM MidlandsNE North EastNW North WestS ScotlandSE South EastSW South WestY Yorkshire


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AIM The Alternative Investment Market of the London Stock Exchange

CISX The Daily Official List of the Channel Islands Stock Exchange

EPRA European Public Real Estate Association

EPRA EPS A measure of earnings per share designed by EPRA to present underlying earnings from core operating activities

EPRA NAV A measure of net asset value designed by EPRA to present net asset value excluding the effects of fluctuations in value of instruments that are held for long-term benefit, net of deferred tax

EPRA vacancy rate ERV of vacant space divided by ERV of the whole portfolio, excluding in each case any property under development

EPS Earnings per share, calculated as the earnings for the year after tax attributable to members of the parent Company (that is, excluding any non-controlling interests) divided by the weighted average number of shares in issue in the year

Equivalent Yield The constant capitalisation rate which, if applied to all cash flows from an investment property, results in the market value

ERV Estimated rental value: the open market rental value expected to be achievable at the date of valuation

Gearing Net debt as a proportion of equity attributable to shareholders of the Group

Investment AdvisoryAgreement

The agreement made between the Company, Prestbury Investments LLP and Gallium Fund Solutions Limited under which Prestbury provides certain services to the Group

LTV The outstanding amount of a loan as a percentage of property value. Gross LTV is the calculation for the gross loan amount and net LTV offsets cash balances against the loan amount

NAV Net asset value

Net Initial Yield Annualised net rents on investment properties as a percentage of the investment property valuation

Property Advisor or Prestbury

Prestbury Investments LLP

psf Per square foot

Reversionary Yield The anticipated yield to which the Net Initial Yield will rise once the rent reaches the ERV

sq ft Square feet

Glossary

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Registered Office 26 New Street, St Helier, Jersey JE2 3RA

Directors Aubrey Adams, Non-Executive ChairmanMike Brown Freddie CohenKeith HamillNick LeslauAlex OhlssonJohn Stephen, Senior Independent DirectorDavid Waters

All Directors are Non-Executive Directors.

Company Secretary Bedell Secretaries Limited26 New Street, St Helier, Jersey JE2 3RA

Property Advisor Prestbury Investments LLPCavendish House, 18 Cavendish Square, London W1G 0PJ

Nominated Advisor and Broker

Oriel Securities Limited150 Cheapside, London EC2V 6ET

Auditors BDO LLP2 City Place, Beehive Ring Road, Gatwick, West Sussex RH6 0PA

Property Valuers CBRE LimitedHenrietta House, Henrietta Place, London W1G 0NB

Derivatives Valuers JC Rathbone Associates Limited12 St. James’s Square, London SW1Y 4LB

Registrar Capita Registrars (Jersey) Limited12 Castle Street, St Helier, Jersey JE4 5UW

Website www.maxpropertygroup.com

Email enquiries [email protected]

Company Information


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Max Property Group Plc(‘the Company’)

NOTICE is hereby given that the Annual General Meeting of the shareholders of the Company will be held at 26 New Street, St Helier, Jersey JE2 3RA on 4 September 2013 at 1:30 pm for transacting the following business:

Ordinary resolutions:1. To receive and approve the Report of the Directors and the Financial Statements of the

Company for the year ended 31 March 2013 together with the report of the Auditors thereon.

2. To consider and if thought fit reappoint Nick Leslau as a Director of the Company until the conclusion of the next Annual General Meeting at which he is elected to retire by rotation.

3. To consider and if thought fit reappoint Alex Ohlsson as a Director of the Company until the conclusion of the next Annual General Meeting at which he is elected to retire by rotation.

4. To reappoint BDO LLP as the Auditors until the conclusion of the next Annual General Meeting.

5. That the Directors be authorised to fix the remuneration of the Auditors.

6. That the Directors’ fees be approved

Special resolution:7. To grant standing authority such that the Company be authorised generally and without

conditions to make market purchases of its Ordinary Shares. That the Company be and is hereby generally and unconditionally authorised to make market purchases of fully paid shares in the capital of the Company (“shares”) pursuant to Article 57 of the Companies (Jersey) Law 1991(the “Law”) and the Company’s Articles of Association provided that:

(i) the maximum number of shares authorised to be purchased is 14.99% of the total shares in issue as at the date of this resolution (for the avoidance of doubt being 32,978,000 shares (rounded to the nearest whole number));

(ii) the minimum price which may be paid for a share is £0.01;

(iii) the maximum price which may be paid for a share is not more than 5% above the average of the middle market quotations of a share taken from the London Stock Exchange for the five business days immediately preceding the date of the purchase (or such other amount as may be specified by the London Stock Exchange from time to time);

(iv) the minimum and maximum prices specified in sub-paragraphs (ii) and (iii) of this resolution are in all cases exclusive of any expenses by the Company;

Notice of Annual General Meeting

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(v) the Company shall fund the payments of the purchases of shares in any manner permitted by the Law;

(vi) the authority hereby conferred shall expire on the earlier of: (a) the date of the Annual General Meeting of the Company to be held in 2014; and (b) 18 months from the date of the passing of this resolution, unless such authority is varied, revoked or renewed prior to such time by the Company in general meeting by special resolution;

(vii) the Company may enter into a contract to purchase shares under the authority hereby conferred prior to the expiry of such authority which will or may be completed or executed wholly or partly after the expiry of such authority; and

(viii) in the event that the Company purchases any of its own Ordinary Shares, they will be cancelled or, to the extent determined by the Directors and permitted by the Law, be held as treasury shares.

By order of the Board

Bedell Secretaries LimitedCompany SecretaryDated: 23 May 2013

Notes:1. Every holder has the right to appoint some other person(s) of their choice, who need not be a shareholder, as their proxy to

exercise all or any of their rights to attend, speak and vote on their behalf at the meeting. If you wish to appoint a person other than the Chairman, please insert the name of your chosen proxy holder in the space provided. If the proxy is being appointed in relation to less than your full voting entitlement, please enter the number of shares in relation to which they are authorised to act as your proxy. If left blank your proxy will be deemed to be authorised in respect of your full voting entitlement (or if the proxy form has been issued in respect of a designated account for a shareholder, the full voting entitlement for that designated account).

2. To appoint more than one proxy you may photocopy the proxy form. Please indicate the proxy holder’s name and the number of shares in relation to which they are authorised to act as your proxy (which, in aggregate, should not exceed the number of shares held by you). Please also indicate if the proxy instruction is one of multiple instructions being given. All forms must be signed and should be returned together in the same envelope.

3. In the case of a corporation, the proxy must be given under its common seal or signed by a duly authorised officer, attorney or other person authorised to sign it. A proxy need not be a member.

4. The completion and return of the proxy form will not prevent you from attending in person and voting at the Annual General Meeting should you subsequently decide to do so. If you attend the meeting in person, your proxy appointment will automatically be terminated.

5. Only those shareholders entered on the relevant register of shareholders of the Company as at 6:00 pm on 2 September 2013 shall be entitled to attend and vote at this Annual General Meeting in respect of the number of shares registered in their name at that time. Changes to entries on the relevant register of shareholders after 6:00 pm on 2 September 2013 shall be disregarded in determining the rights of any person to attend or vote at this Annual General Meeting.

6. To be valid, the Form of Proxy (accompanied by any power of attorney under which it is executed (if applicable)) must be sent to Capita Registrars (Jersey) Limited for the attention of Capita Registrars, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible but, in any event, so as to arrive no later than 48 hours before the time appointed for holding the Annual General Meeting.

7. Shares held in CREST may be voted through the CREST voting service. To appoint one or more proxies or to give an instruction to a proxy via the CREST system, CREST messages must be received by the issuer’s agent (ID number RA10) not later than 48 hours before the time appointed for holding the meeting.


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Printed on FSC® certified material, sourced from well managed and sustainable forests.All process waste is reused and recycled wherever possible, in full compliance with current legislation.


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