SOVEREIGN
REVERSIONS PLC
Providing a fuller life
in later years
Annual Report 
and Accounts 2006 Our business is to provide finance to homeowners in their later years through
equity release. Home & Capital Trust Limited, our associate, offers home reversion
plans and manages them for a number of investors. We acquire new home
reversions from this source and also buy equity release assets in the secondary
market. 
We intend 
• to be a market leader in providing finance to elderly homeowners through
equity release
• to play an active role in developing and promoting standards of best practice
in the equity release industry
• to become a substantial investor in home reversions and equivalent equity
release assets
• to provide shareholders with relatively low risk capital growth from our
investment activity and an enhanced return from our participation in the equity
release market.
1 Financial and Operational Highlights of the year
2 Investment Portfolio
3 Chairman’s Statement
4 The Equity Release Market
6 Chief Executive’s Report
13 Directors
14 Corporate Responsibility
15 Corporate Governance
16 Audit Committee Report
17 Remuneration Report
19 Directors’ Report
22 Independent Auditors’ Report
24 Consolidated Results
25 Balance Sheet
26 Cash Flow Statement
27 Notes to the Financial Statements
44 Notice of Annual General Meeting
47 Five Year Record
IBC Investor Information
Future built on trust
SOVEREIGN
REVERSIONS PLC Financial and Operational Highlights
Results Restated
2006 2005
Net asset value per share 344.6p 331.5p +4.0%
(1)
Embedded value per share 530.2p 498.8p +6.3%
(1)
Earnings per share — based on historical profits 12.43p 8.71p +42.3%
Net cash flow generated for investment per share 22.2p 8.75p +153.7%
Dividends paid per share 2.70p 2.50p +8.0%
Notes on the basis of calculation are set out on page 47.
• “The Group has continued the process of building a substantial portfolio of equity
release assets.” Following the acquisition of a portfolio in May 2006, the Group
has interests in over 780 properties with a vacant value of over £140m.
• “Regulation should provide a significant boost to the home reversion market over
the two to three years after implementation.”
• “We are in a good position to take advantage of the growth and other
developments in the industry.”
1
Job no.12255 Date 30.06.06 Proof 3
Net Asset Value
(£m)
Embedded Value 
(£m)
Historical Cost Profit
(£’000)
Net Cash Flow
Generated for Investment
(£’000)
2002 ’03 ’04 ’05 2006 2002 ’03 ’04 ’05 2006 2002 ’03 ’04 ’05 2006 2002 ’03 ’04 ’05 2006
0
50
40
30
20
10
0
80
60
40
20
0
2,000
1,500
1,000
500
0
3,000
2,000
1,000
(1)
after the payment of dividends 2 Sovereign Reversions plc Annual Report & Accounts 2006
Job no.12255 Date 30/06/2006 Proof 03
Investment Portfolio
Vacant value
Region 2006
£m %
Scotland 0.4 0.5%
North 1.7 2.1%
North West 5.2 6.3%
Yorkshire & Humberside 7.0 8.6%
Wales 2.6 3.2%
West Midlands 7.6 9.4%
East Midlands 6.3 7.8%
East Anglia 4.8 5.8%
Outer South East 18.8 23.2%
Outer Metropolitan 8.7 10.7%
Greater London 4.9 6.1%
South West 13.2 16.3%
Total 81.2 100%
Total Vacant Value
£81.2m
“Our portfolio deliberately has a
wide geographical spread.” 3
Job no.12255 Date 30/06/2006 Proof 03
Chairman’s Statement
In my first year as Chairman, the Group has continued the
process of building a substantial portfolio of equity release
assets. 
Investments
Our portfolio grew by 10.3% from £46.6m to £51.4m during the
year. Purchases came almost entirely from new home reversions
arranged by our associate, Home & Capital Trust Limited. In May
2006, we completed the purchase of a portfolio of 112 shared
equity loans for £3.2m, to give us a good start to the current
year. We are continuing to implement a balanced investment
strategy of acquiring both new and secondary market assets.
During the year our net assets per share (diluted for warrants and
options) grew by 4.0% from 331.5 pence to 344.6 pence.
Embedded value per share increased by 6.3% from 498.8 pence
to 530.2 pence.
Financial performance
Earnings per share, based on historical profits (after revaluation
transfers), our principal yardstick for measuring profit
performance, increased by 42.3% from 8.71 pence to 12.43
pence. The main reason for this growth was the increase in our
profit on the sale of equity release assets from £1.61m to
£2.94m. This excellent result reflects the success of the
investment policy we have been pursuing over a number of
years, which has achieved a high proportion of acquisitions in the
secondary market, where the maturity profile tends to be more
rapid than for new reversions.
Our associate, Home & Capital Trust Limited, has expanded its
activities following a capital injection, continues to trade profitably
and is providing us with an increasing flow of new reversions.
Dividends
In the last year we increased our annual dividend by 8.0% from
2.50 pence per share to 2.70 pence per share, in two equal half-
yearly payments. We are increasing our first interim dividend in
the current year by 7.4% from 1.35 pence to 1.45 pence per
share. Whilst continuing to give priority to net asset performance,
our policy is to seek to provide steadily increasing annual
dividends where circumstances permit.
Industry development
We continue to play an active role in the development of the
home reversion product within the equity release industry. The
main legislation has now been passed to enable home reversions
to be regulated by the FSA. Through Graeme Marshall, our Chief
Executive, we are actively involved in the consultation process
and expect regulation to be implemented in 2007. Regulation
should boost both consumers’ and intermediaries’ confidence in
home reversion plans and thus provide a significant boost to this
sector of the equity release market in the two to three years
following implementation. 
Outlook 
The changes now taking place in the equity release market will
bring both challenges and opportunities to the Group. I am
confident that we are equipped to meet the challenges and that
we are in a good position to take advantage of the growth and
other developments in the industry. Sovereign continues to be
the only specialist vehicle through which investors can participate
in the equity release market through shares which can be traded. 
I am delighted that Robert Lo, my predecessor as Chairman,
who has been a director since inception, remains as a non-
executive director. We continue to benefit from his contribution to
the Board. During his six years as Chairman he oversaw a
transformation of the Group from a small BES company, through
a number of private and public acquisitions, to an AIM listing. We
will be seeking to achieve further substantial progress in the next
few years. 
Paul Spencer
Chairman
30 June 2006
“We are continuing to implement a
balanced investment strategy of
acquiring both new and secondary
market assets.” 4 Sovereign Reversions plc Annual Report & Accounts 2006
Job no.12255 Date 30/06/2006 Proof 03
The Equity Release Market
Equity release
Equity release provides a means for homeowners in later years to
convert into cash some of the capital embedded in their homes.
In the last year, over £1bn was raised in this way to improve the
lifestyles of retired homeowners, or to provide for contingencies,
such as long-term care. Many people taking advantage of equity
release spend part of the money raised to achieve a lifestyle not
provided for by their pension arrangements and savings.
As 70% of the over 65s own their own home, equity release
already offers a widely available solution for the retired. Industry
commentators are expecting this market to grow rapidly. This
view is shared by the Government, which is in the process of
The main equity release products
The home reversion plan, such as those arranged by our
associate Home & Capital Trust Limited and financed by the
Group, involves the sale of all or part of the property in exchange
for a cash lump sum and a lifetime rent-free lease. The proportion
of the home sold is purchased at a discount, reflecting the
homeowner’s life expectancy. A series of payments may be
arranged. A lifetime mortgage is a loan secured on the property
on which no interest is paid until the property is sold.
These two core equity release products provide a choice for
customers reflecting inter alia different risk profiles and attitudes
to inheritance, as well as opinions on how the value of their home
might change over time. 
A homeowner taking out a home reversion plan retains a defined
percentage interest in the property, assuming a shared ownership
reversion, under which only part of the home is sold. The product
tends to appeal to homeowners who do not wish to borrow in
later life. The degree of certainty which is a feature of a home
reversion brings a number of advantages. Reversion plan holders
can always raise further sums later through selling an additional
percentage of the home to supplement their income or provide
finance for future generations in time of need.
introducing comprehensive regulation of the industry for the
protection of consumers.
The forecast substantial growth of the equity release industry is
likely to be underpinned by the pensions requirements of future
generations. The recent Pensions Commission review has
estimated a £57bn shortfall in pensions, as a result of rising life
expectancy, lower birth rates and recent low stock market
returns. It seems inevitable that equity release will come to be
regarded as a mainstream financial planning tool to help bridge
this gap.
A lifetime mortgage enables borrowers to continue to own 100%
of their home and thus benefit from the whole of any increase in
the value of the property over and above interest costs. However,
where there is a falling property market and the homeowner
exceeds normal life expectancy by some years, there is a risk
that the effect of compound interest may reduce or eliminate the
borrower’s equity interest in their home when the plan comes to
an end. Lifetime mortgages meeting the minimum standards of
Safe Home Income Plans (“SHIP”) feature a “no negative equity
guarantee” which ensures that, even if the property value
ultimately falls short of the outstanding loan, this will not result in
any cost to the borrower’s estate. This is a key protection for a
consumer taking out a lifetime mortgage.
Expectations of likely house price growth are therefore a major
factor in the decision on which type of plan to choose. The
strong increase in the value of residential property in the early
2000s has tended to influence homeowners and their financial
advisers in favour of a lifetime mortgage, on the basis that the
likely benefits of house price growth outweighed the risks of
rolling up compound interest over an uncertain period. However,
when the short-term direction of house prices is uncertain, the
home reversion plan is likely to appeal to more risk-averse equity
release customers, in view of the degree of certainty it provides.  5
Job no.12255 Date 30/06/2006 Proof 03
How my home kept me rolling
Car enthusiast Derrick Payne is in big demand at weddings when
he volunteers to get the bride to the church on time. His
gleaming white 1971 Rolls-Royce Silver Shadow adds a touch of
class to the big day. However, Derrick, 74, thought he might have
to give up his chauffeuring hobby because the car needed an
expensive overhaul. But now, by releasing value from his
bungalow near Wakefield, West Yorkshire, he can afford to have
the work done on the car, plus some house renovations,
including new windows and a conservatory.
The former RAF engineering officer says: ‘I am a widower and
have no dependants, so I am not looking to leave the house to
anyone. I felt that I should be making the most of my money now
— before I fall off my peg.’
He is one of a growing number of retired property owners who
choose to release equity from their home through a reversion
scheme. Derrick arranged his reversion through Home & Capital
Trust and was paid just under half of today’s market value for a
100 per cent interest in his property.
Derrick Payne — whose home reversion plan was
bought by Sovereign and was sourced by and is
managed by Home & Capital Trust Limited 
From an article by Stephen Womack in 
the Mail on Sunday on 14 May 2006 Total Equity Release Transactions (SHIP)
 Lifetime Mortgages      Home Reversions
Value Released £m
1250
1000
750
500
250
0
2000 2001 2002 2003 2004 2005
6 Sovereign Reversions plc Annual Report & Accounts 2006
Job no.12255 Date 30/06/2006 Proof 03
SHIP reported a year-on-year 7% fall in total equity release
business conducted through its members from £1.19bn in 2004
to £1.10bn in 2005. Home reversion transactions grew by 35%
from £40.5m to £54.6m, whilst sales of lifetime mortgages fell
from £1.15bn to £1.05bm — a 9% fall. While a number of factors
contributed to this decline in value of business written, the main
cause was concern about the short-term direction of the
property market. This resulted in both a reduction in activity
(mirroring the sharp fall in transactions in the housing market) and
a slight shift from lifetime mortgages to home reversions.
Home reversion transactions are continuing their slow but steady
climb back to the levels of three years ago, as we have been
anticipating.
The regulation of the home reversions industry is proceeding to
timetable. The primary legislation was passed in December 2005.
The Treasury has completed its consultation on the secondary
legislation and the FSA’s consultation on the regulations
themselves will close in July 2006. The FSA is targeting bringing
in formal regulation in the spring of 2007.
The scope of the proposed regulation is wider than we had
expected. It will encompass both homeowners taking out
reversion plans and investors in home reversions, who under
certain circumstances will be deemed to be reversion providers
requiring regulation. We have responded to the Treasury
Consultation on the scope of the secondary legislation and will
shortly be submitting our views to the FSA on the detailed
regulations which will flow from this. The regulation of investors in
home reversions is likely to lead to considerable reorganisation
within the industry. Some participants will cease investment
altogether; others will continue to invest through regulated
vehicles. These changes can only strengthen consumer
protection in the long term. At the same time, regulation may also
cause some private investors to cease investing in home
reversions, which will deprive the market of a long-standing and
reliable source of funding. The changes in the industry which new
regulation will bring about should provide opportunities for the
Group, as well as challenges.
“Home reversion transactions grew
by 35% . . . whilst sales of lifetime
mortgages fell . . .”
Chief Executive’s Report
Developments in the Equity Release Market
Home Reversion Transactions (SHIP) £m
2003
H2
2004
H1
2004
H2
2005
H1
2005
H2
36 19 21 24 31 7
Job no.12255 Date 30/06/2006 Proof 03
“The overall value of our investment
portfolio grew by 10.3%.”
We expect one effect of regulation will be to bring more providers
into the home reversion market. We are already seeing some
indication of new interest through recent applications to join SHIP ,
where, for the first time for a number of years, new applicants are
generally offering reversion products, rather than lifetime
mortgages.
Currently financial intermediaries sell around two thirds of lifetime
mortgages, but less than half of home reversion plans sold.
Following regulation, we expect that financial intermediaries will
become more active in selling home reversions.
While expectations for short-term performance of residential
property remain generally low, the home reversion frequently
provides the best option for elderly homeowners seeking to
release equity. Market regulation will increase confidence in this
product and we believe that these factors will underpin the
sustained growth of the home reversion market.
The Development of our Investment
Portfolio
Investment policy
Our investment policy is to seek to reduce portfolio risk through:
•
holding a wide number of individual assets, with no one asset
representing more than 1% of the portfolio;
•
having a spread of ages in our tenant profile with a view to
achieving a smooth realisation pattern; and
•
spreading our investments geographically, to minimise
exposure to regional property cycles.
Number of investments 30 April 2005 Purchases End of tenancies Sales 30 April 2006
Home reversions and 
shared equity loans 592 92 (33) — 651
Assured tenancies 2 — — — 2
Properties for sale 23 — 33 (41) 15
Total 617 92 — (41) 668
Value £46.6m £51.4m 8 Sovereign Reversions plc Annual Report & Accounts 2006
Job no.12255 Date 30/06/2006 Proof 03
The overall value of our investment portfolio grew by 10.3%
during the year. We continue to seek to build it through the
combination of regular purchases of individual new home
reversions arranged by Home & Capital Trust Limited and buying
in the secondary market portfolios of home reversions or
equivalent equity release assets. The assets acquired in the
secondary market are normally plans arranged some years earlier
and therefore have more rapid realisation profiles than new home
reversions. Our programme of acquiring new home reversions,
which we started in 2001, is designed to enhance embedded
Chief Executive’s Report continued
value and provide a continuation of this vacancy profile as our
existing portfolio matures. 
No portfolios were acquired during the year, but in May 2006 we
acquired a portfolio of 112 shared equity loans for £3.2m. The
average age of the borrowers in this portfolio is 85. 
As a result of the portfolio purchase just after the year end, we
now have interests in property with a vacant possession value of
over £140m, with the average property in which we have an
interest being worth £189,000.
Our portfolio deliberately has a wide geographical spread. The
objective of this policy is to minimise exposure to regional
property cycles. Thirty-eight per cent in terms of value of our
investments are held outside the south of England. Although we
have increased our investments in London during the year, our
overall exposure to Greater London, which we perceive as having
greater volatility than the UK residential market as a whole,
remains low at around 6% of the value of our portfolio.  
A fuller analysis of our portfolio at the year end is provided on
page 2.
Home Reversion by Area — April 2006
 Greater London
 South East
 Rest of South
 Rest of UK
Age of Planholders — April 2006
 < 75
 75 – 79
 80 – 84
 > 85 9
Job no.12255 Date 30/06/2006 Proof 03
“Home & Capital Trust Limited
continues to be an industry leader
both in practice and in new
products and to invest in the
future.”
It is the secondary market element which has driven the increase
in our realisations in recent years. With new reversion plans, we
would expect comparatively few realisations in early years, as
homeowners arranging home reversion plans will almost
invariably be in good health but we should see a reasonable
growth in the value of these investments as they mature.
Valuation 
Assets acquired prior to 31 October 2005 have been
independently valued by Allsop LLP as at 30 April 2006; assets
acquired since that date have been valued by the directors at
cost. One-third of the independently valued properties were
inspected externally. Where properties were not inspected, Allsop
has applied a composite average of indices to the value when
previously inspected by them. 
Sovereign’s home reversions and shared equity loans are carried
in the Group’s accounts at an average of 61% of their vacant
possession value, the same as the previous year. The increased
maturity of our occupant profile has been offset by the lower rate
paid on new reversions acquired during the year. We continue to
adopt a conservative basis for discounting the vacant possession
value of properties to allow for tenants’ lifetime occupancy, with
the result that a substantial part of the discount is only released
when the tenancies end.  
Home & Capital Trust Limited
Our 40.5% shareholding in Home & Capital Trust Limited gives us
a strategic stake in one of the leading home reversion providers.
John Inskip, who founded the firm, provided the first cash
reversion plans in 1976 and Home & Capital Trust Limited has
specialised in this area for almost thirty years. It was a founder
member of SHIP in 1991, and through my role as Deputy
Maturing Investments
2003 2004 2005 2006
23 25 27 31 10 Sovereign Reversions plc Annual Report & Accounts 2006
Job no.12255 Date 30/06/2006 Proof 03
Chief Executive’s Report continued
Chairman and Chairman of the Home Reversion Board it still
plays an active role in setting industry standards. Recently it has
been actively considering the shape of future legislation.  
Although our shareholding was only acquired in July 2004, our
relationship with the firm goes back to our own origins, as it
arranged some of our home reversion plans in 1993/94. Prior to
my involvement in Sovereign Reversions plc, I was Home &
Capital Trust Limited’s Deputy Chairman, then Chief Executive
from 1998 until October 2003, when my colleague, Rupert
Pearce Gould became its Executive Chairman. It has been
managing our reversion portfolio since 1999 and in recent years
has been instrumental in not only sourcing new reversions but
also managing the home reversion plans over their life and
obtaining maximum value from them when they come to an end.
In the past year Home & Capital Trust Limited has strengthened
its capital base with a £500,000 rights issue, which was taken up
in full by all shareholders. This has enabled it to establish a new
subsidiary, HCT Equity Release Limited, which is regulated by the
FSA and advises on equity release (both home reversions and
lifetime mortgages) and related financial products.
Home & Capital Trust Limited continues to be an industry leader
both in practice and in new products and to invest for the future.
In the year to 31 October 2005, it made a profit of £91,000 and it
continues to trade profitably during the current year. 
Financial Performance
Performance measures
Our objective is to achieve long-term growth in capital value,
which can be measured in terms of the increase in net asset
value per share (“NAVPS”) over a period of years. NAVPS has
grown by 13.4 % compound per annum over the last five years,
in addition to dividend payments. However, the Board considers
that growth in embedded value per share (“EVPS”), which reflects
potential future asset growth, is an equally important measure of
performance. EVPS reached 723.3 pence immediately before our
equity issue in April 2004, which had the effect of reducing EVPS
to 477.3 pence. In the last two years EVPS has grown by 11.0%
to 530.2 pence.
Profits from investment activity
Historical cost profits were £1.693m last year, an increase of
50.0% over the previous year.
The profit from the sale of investment properties is the key driver
of our profit performance. The chart opposite shows the result of
our investment activity over the last five years.
In the last financial year, our total profit on sale of investments
increased by 82% over the previous year from £1.613m to
£2.936m. The comparable figure for the year to 30 April was
lower than normal against the background of a stagnant property
Part of Home & Capital Trust’s current promotional campaign to IFAs. 11
Job no.12255 Date 30/06/2006 Proof 03
“We realised 41 asset sales
compared with 18 in the 
previous year.”
market, resulting in our holding an abnormally high number of 23
properties for sale. In the year to April 2006, we experienced a
slight revival of activity in the property market, and benefited from
improved service levels from Home & Capital Trust Limited.
Consequently, we realised 41 asset sales, compared with just 18
in the previous year. Under normal circumstances, we would
expect asset sales to track the maturity pattern referred to on
page 9.
Although we were operating in an exceptionally quiet market for
the first half of the year, there were no distress sales and sales
proceeds were in excess of previous valuations. The compound
gross internal rate of return per annum on reversions sold during
the year ranged between 11% p.a. and 40% p.a. on the majority
of our sales. 
Administrative expenses 
Gross administrative expenses (before rental income) increased
from £686,000 to £845,000. There was a 44% increase in
reversion management fees payable to Home & Capital Trust
Limited, mainly due to the increase in the size of our asset
portfolio; these fees are on normal commercial terms and directly
relate to the number of properties being managed. There has been
a £149,000 increase in direct remuneration costs. In the year to
April 2005, two of the directors were provided through Home
Equity Limited prior to its acquisition at the end of the first quarter;
two non-executive directors joined the Board during that year. In
the current year all directors were paid for the full year. Some of
the increase is as a result of the decision taken last year to employ
a financial controller directly, rather than share costs with Home &
Capital Trust Limited. Our audit and tax compliance fees have also
increased, partially because we have become a larger group.
Profit on Sale of Investment Properties
 Realised Profit
 Reserve Realised
3,000
2,500
2,000
2002 2003 2004 2005 2006
£’000
0
1,500
1,000
500
-500 12 Sovereign Reversions plc Annual Report & Accounts 2006
Job no.12255 Date 30/06/2006 Proof 03
Cash Generation and Financing
Cash generation
Despite the long-term nature of our home reversion investments,
the Group now consistently generates cash for reinvestment.
Sale proceeds from investment properties last year continued to
be well in excess of our operating expenses and debt service
requirements; we expect this to be a continuing feature that
facilitates our financial planning. 
Investment Philosophy
We continue to seek to build a substantial portfolio of equity
release assets whose returns will contain an actuarial element,
but be substantially driven by the performance of the residential
property market. 
We believe that, over time, the residential property market will deliver
very satisfactory returns for investors. In 2005, demand for housing
was estimated to grow by 290,000 dwellings; supply, although
higher than in the previous year, was 160,000 units. There is already
a massive deficit in new housing supply over demand. The most
recently announced government target is to increase housing
construction from 160,000 units to 190,000 units by 2016. As
annual growth in demand is not expected to abate, it seems to be
widely accepted that the shortfall in housing supply will continue to
grow for many years to come. Against this background, we expect
house prices ultimately to rise substantially from current values.
We recognise that short-term house price movements will be
influenced by other factors, including interest rate adjustments
and consumer spending patterns. When the property market is
performing poorly, or less well than alternative investments, this is
likely to create opportunities for us as buyers in the equity release
market. We will not eschew these opportunities to invest, merely
because the short-term outlook for residential property is dull.
In the light of this strategic objective, we are likely to continue to
be investors, irrespective of short-term conditions in the
residential property market. We expect this strategy to produce
the best returns for shareholders over the long term.
Outlook
The equity release market, and the home reversion sector in
particular, are now undergoing rapid change in anticipation of
FSA regulation, which is to embrace the whole market in 2007.
As well as playing an active role in shaping the industry, we
expect to be an active participant in the opportunities which
these changes will create.
Market development and relatively slow growth in the residential
property market will present opportunities for us to execute 
our investment strategy of building a substantial investment portfolio.
We are looking forward to the challenges of the new financial year.
Graeme Marshall
Chief Executive
30 June 2006
Chief Executive’s Report continued
Use Of Proceeds From Sales Of Investments
 Admin expenses
 Interest
 Dividends
 Tax
 Surplus available 
for reinvestment
5000
4000
3000
2000
1000
2002 2003 2004 2005 2006
£000
0
Bank funding
In the light of the funds received from our equity-raising in April
2004, we have made little use of our bank facilities during the
year. We continue to have loan facilities immediately available. We
are now starting to draw down on these facilities to make new
investments and have done so in relation to our £3.2m portfolio
purchase since the year end. We are confident that our available
asset security, and the support we enjoy from two key banking
relationships, will give us access to further funding if required.
Access to further equity
We remain adequately capitalised for the purpose of continuing
our regular programme of buying new reversions in parallel with
further portfolios should they become available. However, there
may be occasions where it is advantageous for us to provide
some consideration in the form of equity, or issue equity in the
course of acquiring a larger portfolio. At the forthcoming Annual
General Meeting we are again seeking from shareholders a
renewal of our annual mandate for the Board to issue shares for
cash and disapply pre-emption rights.  13
Job no.12255 Date 30/06/2006 Proof 03
Directors
Paul Spencer
(Chairman, non-executive)
Appointed in 2004. Aged 56, he was Group Finance Director and
UK Chief Executive of Royal and SunAlliance Group plc from
1996 to 2002.
He is Chairman of NS & I (National Savings and Investment) and
State Street Managed Pension Funds Limited, Deputy Chairman
of CMC Markets plc and on the boards of WPP Group plc,
Resolution plc and  Nipponkoa Insurance (Europe) Limited. He is
a governor of the charity Motability and Chairman of the
Association of Corporate Treasurers Advisory Board, having
served as Group Treasurer at Hanson plc and Rolls-Royce plc. 
Graeme Marshall
(Chief Executive)
Aged 53, he has been instrumental in formulating and
implementing Sovereign’s strategy since his appointment in 1999.
He has worked full-time in the home reversions industry since
1997 and was Managing Director of Home & Capital Trust
Limited from 1998 until October 2003. He is a Deputy Chairman
of SHIP and Chairman of its Reversions Board. 
Prior to his involvement in home reversions he qualified as a
chartered accountant with KPMG and spent seven years with
them, followed by 15 years in finance and corporate
development roles.
The Rt. Hon. John Gummer MP
(non-executive, independent)
Appointed in 2004. Aged 66, he has been a Member of
Parliament since 1970 and served as a Government minister for
sixteen years. He was Secretary of State for the Environment
from 1993 to 1997, where he had responsibility for housing
matters. He is a regular writer on property issues, especially for
Estates Gazette and Planning.
In 1997 he founded Sancroft International Limited which provides
advice to corporations on environmental, ethical and health &
safety issues. He is Chairman of the Association of Independent
Financial Advisors, Veolia Water UK Limited and Valpak Limited. 
Robert Lo
(Non-executive, chairman of Audit and Remuneration
Committees, independent)
Aged 54, he has been a director since inception in 1992. A
solicitor, he is an Executive Director of Nabarro Wells & Co
Limited, a corporate finance advisory company. He was formerly
head of the Corporate Advisory Department of Johnson Fry,
which raised substantial equity funds under the Business
Expansion Scheme. 
Rupert Pearce Gould
Aged 55, he has been involved in the management of Sovereign
since becoming a director in 1999 and has played a major role in
implementing its acquisition and financing strategy. He has been
Chairman of Home & Capital Trust Limited since 1999 and
Executive Chairman since October 2003.
He is Chief Executive of Cambridge Corporate Consultants
Limited, corporate finance advisers regulated by the FSA.  A
Chartered Accountant, he spent six years with N.M. Rothschild &
Sons Limited in corporate finance and venture capital prior to
establishing his own advisory company. 14 Sovereign Reversions plc Annual Report & Accounts 2006
Job no.12255 Date 30/06/2006 Proof 03
Corporate Responsibility
We are committed to high ethical standards in all our dealings.
We are particularly conscious of our responsibilities in our
relationships with elderly people. Our values are shared by our
associate, Home & Capital Trust Limited, whose specialist
business depends on marketing and managing home reversion
plans and building a long-term relationship of trust with elderly
people.
Sovereign only buys new home reversions that comply with
SHIP’s code of practice. These are generally arranged by Home
& Capital Trust Limited, which is also our reversions manager.
We aim to achieve high service standards in the management of
our reversion plans. Occupants are visited regularly by
professionals from Home & Capital Trust Limited who assist them
with any problems associated with the maintenance of their
homes. Visitors regularly provide advice to occupants on
independent living as they grow older, including moving house, if
this best suits their needs.
Our Chief Executive, Graeme Marshall, has represented our
associate, Home & Capital Trust Limited, on the Board of SHIP
since 1999 and is chairman of the SHIP Reversions Board.
Home & Capital Trust was a founder member of SHIP . Through
his participation in the Board of SHIP , Graeme Marshall has been
active in developing industry best practice in a changing
regulatory environment.
Protection for homeowners arranging equity release
Homeowners arranging home reversion or other equity release
plans are advised to do so only through members of SHIP , a
voluntary body established by the industry in 1991 to set
standards of consumer protection.  
SHIP’s safeguards include, in addition to a no negative equity
guarantee: 
•
security of tenure for life;
• the ability to move home without financial penalty;
•
clear presentation of its plans; and
•
a requirement that no plan may be taken out without the
customer having first received independent legal advice.
The sale of lifetime mortgages has been regulated by the FSA
since 2004 and home reversion plans are expected to be
regulated in 2007. However, SHIP requires from its members
standards of product design and advice which go beyond
regulation and therefore represent best practice for the industry.
SHIP is therefore expected to play an important role in consumer
protection even after the industry is fully regulated.  
Current protection for homeowners arranging home reversions
Prior to the introduction of formal regulation of home reversions,
SHIP has taken a number of steps to ensure that its members
conduct the sale of home reversions in a manner which is as far
as possible equivalent to the new regulatory regime for lifetime
mortgages. An independent Reversions Complaints Board has
been established, with powers to compensate customers and
fine product-providers. The SHIP Reversions Board has also
issued a Guidance Note requiring a Product Description Letter to
be issued for all reversions sold by members, containing
equivalent information to a lifetime mortgage product. These
steps ensure as far as possible that, in industry best practice, the
sale of a home reversion is akin to the sale of a regulated
product. 15
Job no.12255 Date 30/06/2006 Proof 03
Corporate Governance
The Board is accountable to shareholders for the good corporate
governance of the Group. The principles of corporate
governance and a code of best practice are set out in the
Combined Code. Under the rules of the Alternative Investment
Market the Group is not required to comply in full with the Code,
nor to state where it departs from it. The Board considers that
the size and nature of the Group does not warrant compliance
with all the Code’s requirements. This statement sets out how the
principles of the Code are applied to Sovereign Reversions plc.
Board of Directors
The directors of the Company are listed on page 13. The roles of
Chairman and Chief Executive are split. There are three non-
executive directors (including the Chairman), of whom The Rt.
Hon. JS Gummer MP and RA Lo are considered to be
independent. The Company has not designated a senior
independent director as required by the Combined Code as,
having regard to the size of the Board, such a designation is not
considered necessary.
The Board meets regularly to discuss issues relating to strategy,
budgets, acquisitions, financing policy, the approval of interim
and preliminary announcements and dividend policy. It also
requires the Chief Executive to report at each meeting on
corporate governance issues. There are four such regular
meetings per annum; directors hold additional meetings as
required.
Board Committees
The Board has established an Audit Committee and a
Remuneration Committee. Each Committee is chaired by Robert
Lo and the additional member is Paul Spencer.
Reports from the Audit and Remuneration Committees are set
out on pages 16–19.
Going Concern
Having made appropriate enquiries, the directors are satisfied
that the Group has adequate resources to continue its operations
for the foreseeable future. The directors therefore continue to
adopt the going concern basis in preparing the accounts.
Relationship with Shareholders
The Board considers relations with shareholders to be important.
Regular presentations are given to institutional shareholders and
the Board considers the Annual General Meeting an opportunity
to communicate with all shareholders. 16 Sovereign Reversions plc Annual Report & Accounts 2006
Job no.12255 Date 30/06/2006 Proof 03
The Audit Committee is responsible for reviewing accounting
procedures and controls and for the publication of the Group’s
accounts, and also reviews risk management and the
effectiveness of the Group’s system of internal financial control.
The Committee receives reports from, and consults with, the
Company’s external Auditors. It also considers matters relating to
the appointment, independence and objectivity of the Auditors
and reviews the results and effectiveness of the audit.
Internal Control and Risk Management
The Group maintains a system of internal financial control and
risk management in order to provide reasonable, but not
absolute, assurance of:
•
the maintenance of proper accounting records and the
reliability of financial information used within the business and
for publication;
•
the safeguarding of assets against unauthorised use or
disposition; and 
•
the assessment of areas of risk and managing them in order
to achieve the Group’s objectives.
The Board regularly reviews the effectiveness of the Group’s
system of internal controls which include:
•
a management reporting system that includes a regular
evaluation of our working capital position;
•
regular reporting to the Board on financial and treasury
matters;
•
a detailed authorisation process to ensure that no
commitments are entered into without appropriate
authorisation and that no director participates in any decision
in the Group in which he has an interest; 
•
ensuring that the Group’s Controls and Procedures Manual and
Business Risk Statement are subject to regular review; and
•
ensuring that any subcontracted functions are subject to an
internal audit.
External Auditors
The Board regularly reviews its relationship with all its professional
advisers. As part of this process, audit and tax advisory services
were submitted for tender during the year. Following the
completion of this exercise, BDO Stoy Hayward LLP was invited
to become the Group’s auditors and tax advisers.
International Financial Reporting Standards
(“IFRS”)
Following an initial analysis in 2005, the Board continues to
consider the implications and timetable for implementing IFRS.
As an AIM company, the latest implementation date will be in
respect of the year ending 30 April 2008. Although the Board
considers that the application of the changes required to restate
the Group’s balance sheet under IFRS will be relatively
straightforward, its concerns regarding changes required to the
Income Statement remain. 
The Board considers that the major effects of the implementation
of IFRS on the Group’s balance sheet will be:
a) to provide for deferred taxation on the Group’s unrealised
gains on its investments, which is not permitted under UK
GAAP;
b) to eliminate negative goodwill;
c) to continue to value the Group’s investment in associate at
fair value. Any goodwill arising will not be amortised, but
subject to annual impairment review.
The impact of these adjustments on the Group’s Net Asset Value
as at 30 April 2006 is set out in the table below.
£000
Shareholders’ funds — per audited accounts 47,749
Provision for deferred tax (5,846)
Negative goodwill released 462
Home & Capital Trust Limited — goodwill provision
written back 68
Shareholders’ funds — under IFRS 42,433
With regard to the Income Statement, IFRS require operating
performance to be combined with unrealised movements in asset
values, which does not, in the Board’s opinion, present to
shareholders a clear picture of the Group’s operating
performance. The directors consider that IFRS have not yet fully
addressed the particular circumstances of the industry in which
the Group operates, or indeed for property investment
companies in general. The Board will be reviewing the position
with its auditors in the coming months and may well benefit from
the first IFRS statements issued during this period by similar
listed companies. A further statement on IFRS will be issued
when the Group announces its interim results, or earlier if the
Board elects for earlier implementation.
Audit Committee Report 17
Job no.12255 Date 30/06/2006 Proof 03
The remuneration of GCW Marshall and RA Pearce Gould is
determined by the Remuneration Committee. The Remuneration
Committee is chaired by Robert Lo; Paul Spencer is its other
member. 
During the financial year, the Remuneration Committee has taken
independent professional advice from New Bridge Street
Consultants LLP on the Chief Executive’s salary including
identifying the appropriate comparator Group and the quantum
and structure of remuneration packages within this Group.
Following this advice, the Remuneration Committee determined
that an element of the Chief Executive’s remuneration package
should be in the form of performance-related bonuses set
against agreed objectives. 
Directors’ remuneration for the financial year was as follows:
The remuneration disclosed for GCW Marshall and RA Pearce
Gould in 2005 relates to the period from 1 August 2004, prior to
which they were remunerated through Home Equity Limited
which was manager to the Group up to that date. In the quarter
ended 31 July 2004, Home Equity Limited received £2,500 in
respect of GCW Marshall’s services and £2,500 in respect of RA
Pearce Gould’s services which are included in the table below.
Fees of £83,135 for corporate management paid to Home Equity
Limited, out of which it paid Home & Capital Trust Limited
£24,112 for property and administration services, have not been
included above.
Since the year end, The Remuneration Committee has reviewed
remuneration, following which GCW Marshall has elected to
waive any bonus due in respect of the financial year to April 2006
and GCW Marshall and RA Pearce Gould have agreed that their
remuneration should not be increased. The Remuneration
Committee has agreed to review the position if the level of activity
picks up and/or if circumstances change.
Remuneration Report
Salary/Fee Benefits Pension Total 2005 Total
£££££
P Spencer 22,917 — — 22,917 10,834
Rt. Hon. JS Gummer MP 15,000 — — 15,000 6,250
RA Lo 19,583 — — 19,583 20,833
GCW Marshall 150,000 4,578 18,000 172,578 107,500
RA Pearce Gould 54,759 — — 54,759 43,750
Total 262,259 4,578 18,000 284,837 189,167 18 Sovereign Reversions plc Annual Report & Accounts 2006
Job no.12255 Date 30/06/2006 Proof 03
Service contracts
GCW Marshall’s service contract is terminable on twelve months’
notice. 
The services of RA Pearce Gould are retained under a
consultancy agreement with Cambridge Corporate Consultants
Limited and that company is responsible for all benefits and
employment and office costs of RA Pearce Gould. From 1 May to
31 August 2005, this was at a fixed rate of £55,000 per annum
(plus VAT). During the year the terms of the contract were varied
to provide for a lower level of fixed remuneration of £30,000 
per annum (plus VAT) for services as a director, including
providing administrative support, plus fees charged at an 
hourly rate for ad hoc work. The new terms have been effective
since 1 September 2005. The contract has a twelve month
notice period. 
All other directors have service contracts terminable on three
months’ notice. Director’s fees paid to RA Lo are paid to 
NWCF LLP .
Directors’ long-term incentive arrangements
The terms of P Spencer’s employment included the grant of
50,000 options under a non-approved option scheme. These
options are exercisable during the financial year to 30 April 2009
at a price of 260 pence per share and have, inter alia,
performance conditions attached. To vest in full, the Company’s
total shareholder return (“TSR”) has to achieve a minimum of
12% compound per annum between 12 October 2004 and 
31 July 2008. No options will vest unless a minimum TSR of 10%
compound per annum is achieved over this period. The
Company’s mid-market share price at the date on which the
option was agreed was 257.5 pence. The option was formally
granted on 29 November 2004, on which date the Company’s
mid-market share price was 283.7 pence.
Both GCW Marshall and RA Pearce Gould are beneficially
interested in warrants in the Company which are exercisable up
to 30 April 2009 and which are disclosed in full in the Directors’
Report. These warrants were granted in 1999 to all shareholders
in Sovereign Reversions plc. Following advice from New Bridge
Street Consultants LLP , it has been agreed by the Remuneration
Committee that, as the warrants are unrelated to the
remuneration of these directors, they should not be taken into
account in reviews of their remuneration. 
Remuneration Report continued 19
Job no.12255 Date 30/06/2006 Proof 03
The directors submit their report and the Group financial
statements of Sovereign Reversions plc for the year ended 
30 April 2006. 
Directors
The following directors have held office throughout the year: 
P Spencer 
GCW Marshall                       
Rt. Hon. JS Gummer MP 
RA Lo 
RA Pearce Gould
GCW Marshall and RA Lo retire and, being eligible, offer
themselves for re-election.
Principal Activities and Future Prospects
The Group invests in home reversions and similar equity release
assets. The Group’s activities and prospects are reviewed in the
Chairman’s Statement on page 3 and the Chief Executive’s
Statement on pages 6 to 12.
Results for the Year
The Group’s results are set out on page 24. During the year, the
Company has paid a second 2005 interim dividend of 1.35
pence per share in July 2005 and a first 2006 interim dividend of
1.35 pence per share in February 2006. 
An interim dividend of 1.45 pence per share is proposed for the
year ended 30 April 2006, which will be accounted for in the year
ended 30 April 2007 as it is declared after the year end. This
dividend will be paid on 4 August 2006 to shareholders on the
register on 14 July 2006
Post-Balance Sheet Event
This is detailed in note 24 of the financial statements.
Directors’ Interests in Shares and Warrants
Directors’ interests in the shares and warrants of the Company,
including family interests, at the date of this report and previous
report were as follows:
Directors’ Report
Ordinary shares
of 50p each Warrants
2006 2005 2006 2005
P Spencer 20,000 20,000 — —
GCW Marshall:
— beneficial 994,061 994,061 1,708,889 1,708,889
— non-beneficial 6,600 6,600 220 220
The Rt Hon JS Gummer — — — —
RA Lo 45,000 45,000 1,500 1,500
RA Pearce Gould 60,033 60,033 533,553 533,553 20 Sovereign Reversions plc Annual Report & Accounts 2006
Job no.12255 Date 30/06/2006 Proof 03
Tax Status
The Company has agreed with the Inland Revenue that, with
effect from 1 May 2004, it has been treated as a trading
company for tax purposes. The directors and the auditors
consider that Sovereign is an investment company and will
continue to present accounts accordingly.
The consequences of being treated as a trading company for tax
purposes are:
a) it is not entitled to indexation relief on capital gains after 
30 April 2004; and
b) the Company’s shares may qualify to be treated as Business
Assets for taper relief purposes.
Financial Instruments
The main risk arising from the Group’s financial instruments is
interest rate risk. As all balances are denominated in sterling, no
currency risk arises. Details of the Group’s financial instruments
are set out in Note 16 to the Financial Statements.
Payment of Creditors
The Group’s policy is to agree terms of payment when entering
into major business transactions, to ensure that the supplier is
aware of these terms, and to abide by the agreed terms of
payment. No amounts for which invoices had been received were
due to suppliers at 30 April 2006 or at 30 April 2005.
The warrants are convertible into ordinary shares on or before 30 April 2009 as follows: 
Exercise price 325 pence 165 pence 250 pence 287.5 pence
Listed Unlisted Unlisted Unlisted Total
GCW Marshall 1,005,564 645,264 17,841 40,440 1,709,109
RA Lo 1,500——— 1,500
RA Pearce Gould 310,337 204,726 5,660 12,830 533,553
P Spencer has been granted performance-related options over 50,000 shares, exercisable at 260 pence during the financial year
ending on 30 April 2009. Further details of the options are provided in the Remuneration Report on page 18.
Substantial Interests
As at the date of this report the directors are aware that the following shareholders (other than directors) held or were beneficially
interested in ordinary shares amounting to 3% or more of the issued ordinary share capital of the Company.
% of issued 
No of shares share capital
Ferlim Nominees Limited — Ellis & Sons Third Amalgamated Properties Limited 1,164,951 8.86%
Hermes Investment Management — BT Pension Fund 754,870 5.74%
JP Morgan Fleming Mercantile Investment Trust plc 725,000 5.51%
Hermes Investment Management — Post Office Pension Fund 513,130 3.90%
Stancroft Trust Limited 440,000 3.35%
Directors’ Report continued 21
Job no.12255 Date 30/06/2006 Proof 03
International Financial Reporting Standards
(“IFRS”)
The directors are reviewing the impact of IFRS for the Group.
Further information is given in the Audit Committee Report on
page 16.
Statement of Directors’ Responsibilities
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and United Kingdom Generally Accepted Accounting Practice.
Company law requires the directors to prepare financial
statements for each financial year which give a true and fair view
of the state of affairs of the Company and of the profit or loss of
the Company for that period. In preparing these financial
statements, the directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable and
prudent; 
• state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business. 
The directors are responsible for keeping proper accounting
records that 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 Companies Act 1985.
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.
Financial statements are published on the Company’s website in
accordance with legislation in the United Kingdom governing the
preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and
integrity of the Group’s website is the responsibility of the
directors. The directors’ responsibility also extends to the
ongoing integrity of the financial statements contained therein.
All of the current directors have taken all the steps that they
ought to have taken to make themselves aware of any
information needed by the Company’s 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.
Auditors
During the year the directors reviewed the position of the auditors
and following on from presentations from three firms, the
directors resolved to appoint BDO Stoy Hayward LLP as its
auditors. A resolution to confirm the appointment of BDO Stoy
Hayward LLP , Chartered Accountants, as auditors will be put to
the members at the Annual General Meeting.
By order of the Board
GCW Marshall
Chief Executive
30 June 2006 22 Sovereign Reversions plc Annual Report & Accounts 2006
Job no.12255 Date 30/06/2006 Proof 03
Independent Auditors’ Report to the 
Shareholders of Sovereign Reversions plc
We have audited the Group and parent company financial
statements (the “financial statements”) of Sovereign Reversions
plc for the year ended 30 April 2006 which comprise the
Consolidated Profit and Loss Account, the Consolidated
Statement of Total Recognised Gains and Losses, the Note of
Historical Cost Profits and Losses, the Consolidated and
Company Balance Sheets, the Consolidated Cash Flow
Statement and the related notes. These financial statements have
been prepared under the accounting policies set out therein.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the financial
statements in accordance with applicable law and United
Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice) are set out in the Statement of
Directors’ Responsibilities
Our responsibility is to audit the financial statements in
accordance with relevant legal and regulatory requirements and
International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial
statements give a true and fair view and have been properly
prepared in accordance with the Companies Act 1985 and
whether the information given in the Directors’ Report is
consistent with those financial statements. We also report to you
if, in our opinion, the Company has not kept proper accounting
records, if we have not received all the information and
explanations we require for our audit, or if information specified
by law regarding directors’ remuneration and other transactions
is not disclosed.
We read other information contained in the Annual Report, and
consider whether it is consistent with the audited financial
statements. The other information comprises the Chairman’s
Statement, the Chief Executive’s Report, the Corporate
Responsibility statement, the Corporate Governance statement,
the Audit Committee Report, the Remuneration Report and the
Directors’ Report. We consider the implications for our report if
we become aware of any apparent misstatements or material
inconsistencies with the financial statements. Our responsibilities
do not extend to any other information.
Our report has been prepared pursuant to the requirements of
the Companies Act 1985 and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose of
the Companies Act 1985 or has been expressly authorised to do
so by our prior written consent. Save as above, we do not
accept responsibility for this report to any other person or for any
other purpose and we hereby expressly disclaim any and all such
liability.
Basis of audit opinion
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test basis,
of evidence relevant to the amounts and disclosures in the
financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in
the preparation of the financial statements, and of whether the
accounting policies are appropriate to the Group’s and
Company’s circumstances, consistently applied and adequately
disclosed. 23
Job no.12255 Date 30/06/2006 Proof 03
We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable
assurance that the financial statements are free from material
misstatement, whether caused by fraud or other irregularity or
error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial
statements.
Opinion
In our opinion: 
•
the Group financial statements give a true and fair view, in
accordance with United Kingdom Generally Accepted
Accounting Practice, of the state of the Group’s affairs as at
30 April 2006 and of its profit for the year then ended;
•
the parent company financial statements give a true and fair
view, in accordance with United Kingdom Generally Accepted
Accounting Practice, of the state of the parent company’s
affairs as at 30 April 2006;
•
the financial statements have been properly prepared in
accordance with the Companies Act 1985; and
•
the information given in the Directors’ Report is consistent
with the financial statements.
BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
Hatfield
30 June 2006 24 Sovereign Reversions plc Annual Report & Accounts 2006
Job no.12255 Date 30/06/2006 Proof 03
Consolidated Results
For the year ended 30 April 2006
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Restated
2006 2005
Notes £’000 £’000
Administrative expenses (824) (657)
Goodwill amortised 3 306 377
Group operating loss (518) (280)
Share of operating profit/(loss) of Associate 34 (23)
Total operating loss (484) (303)
Realised profit/(loss) on sale of investment properties 859 (6)
Bank interest receivable 82 334
Interest payable and similar charges 5 (322) (273)
Profit/(loss) on ordinary activities before taxation 4 135 (248)
Taxation 7 72 106
Profit/(loss) for the year 18 207 (142)
The operating loss for the year arises from the Group’s continuing operations.
Earnings per share
Basic 9 1.58p (1.13)p
Diluted 9 1.52p (1.13)p
CONSOLIDATED NOTE OF HISTORICAL COST PROFITS AND LOSSES
Restated
2006 2005
£’000 £’000
Profit/(loss) on ordinary activities before taxation 135 (248)
Realisation of property revaluation gains of previous periods 2,077 1,620
Historical cost profit for the year before taxation 2,212 1,372
Taxation (519) (243)
Historical cost profit for the year after taxation 1,693 1,129 
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Restated
2006 2005
£’000 £’000
Profit/(loss) for the financial year
— Group (as adjusted – see note 2) 170 (164)
— Associate 37 22
Profit for the year 207 (142)
Tax on realised profits transferred from revaluation reserve (591) (349)
Unrealised surplus on revaluation of investment properties (as adjusted – see note 2) 3,046 5,117
Total recognised gains and losses relating to year 2,662 4,626
The notes on pages 27 to 43 form part of the financial statements. 25
Job no.12255 Date 30/06/2006 Proof 03
Balance Sheet
As at 30 April 2006
Restated Restated
2006 2005 2006 2005
Group Group Company Company
Notes £’000 £’000 £’000 £’000
Fixed assets
Intangible assets 10 (462) (833) — —
Tangible assets 11 49,960 44,322 44,930 39,169
Assets held for resale 11 1,523 2,249 1,476 1,990
Investments:
Shares in Group companies 12 —  —  14,479 13,362
Share of associate 13 933  769  —  — 
51,954 46,507 60,885 54,521
Current assets
Debtors 14 466 198 465 142
Cash at bank and in hand 348 2,852 334 1,984
814 3,050 799 2,126 
Creditors: Amounts falling due within one year 15 (2,519) (659) (2,384) (529)
Net current (liabilities)/assets (1,705) 2,391 (1,585) 1,597 
Total assets less current liabilities 50,249 48,898 59,300 56,118 
Creditors: Amounts falling due after
more than one year 15 (2,500) (3,100) (11,706) (11,564)
47,749 45,798 47,594 44,554 
Capital and reserves
Called up share capital 17 6,575 6,485 6,575 6,485
Share premium account 18 19,167 19,164 19,167 19,164
Capital redemption reserve 18 28 28 28 28
Other reserve 18 452 — 452 —
Revaluation reserve 18 17,211 16,242 17,250 16,160
Profit and loss account 18 4,316 2,979 4,122 2,717
Shareholders’ funds 19 47,749 44,898 47,594 44,554
Minority interest — 900 — —
47,749 45,798 47,594 44,554
Net asset value per share
Basic 363.1p 346.2p
Diluted 9 344.6p 331.5p
Approved by the Board and authorised for issue on 30 June 2006 
P Spencer Chairman
GCW Marshall Chief Executive
The notes on pages 27 to 43 form part of the financial statements. 26 Sovereign Reversions plc Annual Report & Accounts 2006
Cash Flow Statement
For the year ended 30 April 2006
Job no.12255 Date 30/06/2006 Proof 03
Restated
2006 2005
Notes £’000 £’000
Reconciliation of operating loss to net cash outflow
Operating loss (518) (280)
(Increase)/decrease in debtors (268) 23
Increase/(decrease) in creditors 17 (8)
Amortisation of  goodwill (306) (377)
Net cash outflow from operating activities (1,075) (642)
Returns on investments and servicing of finance
Interest received 82 324
Interest paid (300) (273)
Returns on investments and servicing of finance (218) 51
Taxation (350) (223)
Capital expenditure and financial investment
Purchase of investment properties and similar assets (5,718) (6,318)
Sale of investment properties and similar assets 4,713 2,305
Net cash outflow from capital expenditure and financial investment (1,005) (4,013)
Acquisitions
Purchase of subsidiary and associate undertakings (553) (2,034)
Net cash acquired — 867
Acquisitions 12 (553) (1,167)
Equity dividends paid (356) (313)
Financing
Issue of ordinary share capital 3 —
New debt raised 1,050 600
Debt repaid — (2,684)
Net cash inflow/outflow from financing 1,053 (2,084)
Decrease in cash 21 (2,504) (8,391)
The notes on pages 27 to 43 form part of the financial statements. 27
Job no.12255 Date 30.06.06 Proof 3
Notes to the Financial Statements
1 ACCOUNTING POLICIES
Basis of accounting
The financial statements have been prepared under the historical cost convention (modified to include the revaluation of
investment properties) in accordance with applicable accounting standards.
In preparing these financial statements the Group has adopted for the first time FRS 21 ‘Events after the balance sheet date’,
FRS 22 ‘Earnings per share’, presentational requirements of FRS 25 ‘Financial Instruments: Disclosure and presentation’ and FRS
28 ‘Corresponding amounts’. Further details are given in Note 2.
The following principal accounting policies have been applied:
Basis of consolidation
The consolidated financial statements incorporate those of Sovereign Reversions plc and of its subsidiary undertakings.
Subsidiaries acquired during the year are consolidated using the acquisition method. Their results are incorporated from the date
control passes. All financial statements are made up to 30 April 2006. 
An entity is treated as an associated undertaking where the Group has a participating interest and exercises significant influence
over its operating and financial policy decisions.
In the Group accounts, interests in associated undertakings are accounted for using the equity method of accounting. The
consolidated profit and loss account includes the Group’s share of the operating results, interest, pre-tax results and attributable
taxation of such undertakings based on audited financial statements as disclosed in Note 13. In the consolidated balance sheet
the interests in associated undertakings are shown as the Group’s share of the identifiable net assets, including any unamortised
premium paid on acquisition.
Intangible assets
Where the cost of acquiring subsidiaries exceeds the fair value of the assets acquired, goodwill is recognised on consolidation, is
capitalised and written off to the profit and loss account over the directors’ estimate of its useful economic life. Where the fair
value of the assets acquired exceeds the purchase consideration, negative goodwill is recognised on consolidation, is capitalised
and is written back to the profit and loss account over an appropriate period. Negative goodwill, which relates to acquisitions of
companies invested in home reversions, is being amortised over the expected life of non-monetary assets acquired of five years.
Positive goodwill, which relates to the acquisition of Home Equity Holdings Limited, which holds the Company’s investment in
Home & Capital Trust Limited, is being amortised over its expected useful economic life of 20 years.
Impairment tests on the carrying value of goodwill are undertaken:
•
at the end of the first full year following acquisition
•
in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable on a long- 
term basis.
Tangible assets
Tangible assets, comprising home reversions and shared equity loans, are included in the financial statements once an
irrevocable purchase contract has been entered into. They are accounted for in accordance with SSAP 19: “Accounting for
Investment Properties”, which provides that these assets should not be subject to periodic depreciation charges (unless held on
short lease), but should be shown at open market value. Open market value in the case of the Group’s tangible assets reflects
the fact that they are subject to lifetime occupancy rights. Annual revaluations to investment properties are credited to the
revaluation reserve and are released to the profit and loss reserve when the revaluation is realised. This treatment is contrary to
the Companies Act 1985, which states that, subject to any provision for depreciation or diminution in value, fixed assets are
normally to be stated at purchase price or production cost.   28 Sovereign Reversions plc Annual Report & Accounts 2006
Job no.12255 Date 30/06/2006 Proof 03
The treatment of these assets under the Companies Act would not, in the opinion of the directors, give a true and fair view as
they are not held for consumption in the business but as investments, the disposal of which would not materially affect any
operations of the enterprise. In such a case it is the current value of these investments, and changes in that current value, which
are of prime importance. Consequently, for the proper appreciation of the financial position, the accounting treatment required by
SSAP 19 is considered by the directors to be appropriate for the Group’s tangible assets.
Details of the carrying value and historic cost information for tangible assets are disclosed in Note 11.
Assets held for resale
Assets held for resale are investment properties which have become vacant and are accounted for in a similar way to investment
properties above. They are valued by the directors at the year end and are included in the financial statements on the basis of
their net realisable value. This is net of provisions and estimated disposal expenses.
Sales of assets held for resale are recorded once an irrevocable sale contract has been entered into, provided that the sale has
been legally completed by the date on which the relevant financial statements are approved by the directors.
Investments
The investments of the Company are stated at the net holding cost of acquiring subsidiaries and are disclosed in Note 12. The
Group’s investments are stated at the net assets of the associate company plus goodwill as disclosed in Note 13.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date,
where contractual transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the
future have occurred at the balance sheet date. Timing differences are differences between the Group’s taxable profits and its
results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods
different from those in which they are recognised in the financial statements.
Deferred tax is measured on a non-discounted basis at average tax rates that are expected to apply in the periods in which
timing differences are expected to reverse, based on tax rates and laws that have been substantially enacted by the balance
sheet date.  
Financial instruments
The financial instrument of the Company consists of a hedging agreement with the bank to the effect that the interest rate on
certain borrowings is capped. Cash flows arising on interest rate swaps used to manage the Group’s exposure to cash flow and
fair value interest rate risks are accounted for as an adjustment to the interest payments on the hedged borrowings. Details of the
financial instrument are disclosed in Note 15.
Short-term debtors and creditors have been excluded from the financial instruments disclosures in note 16.
Finance costs
Finance costs are charged to profit over the term of the debt to which they relate.
Financial liabilities and equity
Financial liabilities and equity are classified according to the substance of the financial instrument’s contractual obligations, rather
than the financial instrument’s legal form.
Segmental analysis
The Group has one class of business activity and carries out this activity in one geographical region only.
Notes to the Financial Statements continued 29
Job no.12255 Date 30/06/2006 Proof 03
2 CHANGES TO ACCOUNTING POLICIES AND RESTATEMENT OF PRIOR YEAR RESULTS
FRS 21: ‘Events after the balance sheet date’
The Group has adopted FRS21 ‘Events after the balance sheet date’. Previously, equity dividends declared after the balance
sheet date were recognised as liabilities at the year end, as required by company law and SSAP17 ‘Accounting for post-balance
sheet events’. In accordance with FRS21 and recent changes in law, if a final equity dividend is declared after the balance sheet
date but before the financial statements are authorised for issue, the dividend is not recognised as a liability at the balance 
sheet date.
The adoption of FRS 21 has resulted in an increase in shareholders’ funds of £177,000 as at 1 May 2005 (2004: £159,000) due
to the exclusion of the dividend proposed at 30 April 2005.
FRS 22: ‘Earnings per share’
The Group has adopted FRS 22 ‘Earnings per share’ as disclosed in Note 9. There is no financial effect on the financial
statements.
FRS 25: ‘Financial instruments: disclosure and presentation’
The Group has adopted the presentational requirements of FRS 25 ‘Financial Instruments: disclosure and presentation’. There is
no financial effect on the financial statements.
FRS 28: ‘Corresponding amounts’
The Group has adopted FRS 28 ‘Corresponding amounts’. There is no financial effect on the financial statements.
Restatements
In addition to the restatement required as a result of FRS 21 as noted above, there was a restatement made to the 2005 profit for
the year. The profit and loss account was restated in the prior year by £393,000 to reflect an adjustment necessary between the
realised profits on sale of investment properties and realisation of property revaluation gains of previous periods. This reduced the
profit and loss “profit for the year” from £145,000 to a “loss for the year” of £248,000. There was no overall impact on the profit
and loss reserves in the balance sheet for the prior year.
For the year ended 30 April 2006 we have amended the presentation of the three primary statements of the Profit and Loss
Account, Note of Historical Cost Profits and Losses and the Statement of Recognised Gains and Losses to provide to readers a
more visible indication of the results of the Group.
3 GOODWILL AMORTISED
2006 2005
£’000 £’000
Subsidiaries 345 220
Associate (39) 157
Total goodwill credited against profit on ordinary activities before taxation 306 377 30 Sovereign Reversions plc Annual Report & Accounts 2006
Notes to the Financial Statements continued
Job no.12255 Date 30/06/2006 Proof 03
4 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
2006 2005
£’000 £’000
This is stated after charging:
Auditors’ remuneration:
Audit services — current auditors 27 —
— previous auditors 17 18
Non-audit — current auditors 10 —
— previous auditors 11 11
And crediting:
Rental income 21 28
Included in the Group audit fee is an amount of £25,000 (2005: £18,000) in respect of the Company.
5 INTEREST PAYABLE AND SIMILAR CHARGES
2006 2005
£’000 £’000
Interest payable on bank and building society loans 266 186 
Fees 56 87 
322 273 
6 EMPLOYEES’ AND DIRECTORS’ REMUNERATION
2006 2005 2006 2005
Group Group Company Company
£’000 £’000 £’000 £’000
Staff costs (including directors) consist of:
Wages and salaries 309 180 309 180
Social Security costs 24 12 24 12
Other pension costs 19 11 19 11
352 203 352 203
The average number of employees (including directors)
during the year was as follows:
Administration 7 6 7 6
7 6 7 6
The emoluments of directors were:
Salaries, fees and benefits 267 178 267 178
Company contributions to money purchase pension schemes 18 11 18 11
Details of directors’ remuneration are shown in the Remuneration Report on page 17. 31
Job no.12255 Date 30/06/2006 Proof 03
7 TAXATION
Restated
2006 2005
£’000 £’000
Current tax
UK corporation tax on ordinary profits of the year 67 63
Adjustment in respect of previous periods 5 57
72 120
Share of Associate’s tax — (14)
72 106
UK corporation tax on realised profits transferred from revaluation reserve
— Group (591) (337)
— Associate — (12)
(591) (349)
Total (519) (243)
2006 2005
£’000 £’000
Factors affecting tax charge for period:
The tax assessed for the period is lower than the standard rate of corporation tax in the UK (30%).
The differences are explained below:
Profit/(loss) on ordinary activities before tax 135 (248) 
Profit/(loss) on ordinary activities multiplied by the standard rate of corporation tax in the UK
of 30% (2005: 30%) 41 (74) 
Effects of:
Amortisation not taxable (92) (113)
(Loss)/profit on disposal of properties (258) 12
Capital gains chargeable for the year 846 460 
Expenses allowed in the tax computation and capitalised in accounts — 8
Expenses not allowable 3 3 
Adjustments in respect of prior periods (5) (57)
Effect of marginal rates (15) (15)
Other adjustments (1) 19
Current tax charge for period 519 243 
The Group provides for deferred tax on gains arising on the revaluation of properties to their market value only where there is a
binding agreement to sell the asset. There were no such agreements at 30 April 2006 or 30 April 2005.
At 30 April 2006 the amount of deferred tax unprovided on the surplus on revaluation of fixed assets is £5,845,791 (2005:
£4,813,396). 32 Sovereign Reversions plc Annual Report & Accounts 2006
Notes to the Financial Statements continued
Job no.12255 Date 30/06/2006 Proof 03
8 DIVIDENDS 
Restated
2006 2005
£’000 £’000
Second interim dividend proposed for the prior year: 1.35 pence per share (2005: 1.25 pence) 177 157
First interim dividend paid for the current year: 1.35 pence per share (2005: 1.25 pence) 179 159
356 316
The proposed second interim dividends for the current and prior year set out below have not been recognised as a liability at the
respective year ends as the dividend was declared after the balance sheet date. Under the previous accounting policy the
dividends would have been accrued at the balance sheet date.
Restated
2006 2005
£’000 £’000
Second interim dividend proposed for the current year: 1.45 pence per share (2005: 1.35 pence) 191 177
The second interim dividend for the current year will be paid on 4 August 2006 to shareholders on the register on 14 July 2006.
9 EARNINGS AND NET ASSET VALUE PER SHARE
Earnings per share
The calculations of earnings per share are based on the following profits and numbers of shares:
2006 2005 2006 2005
Basic Basic Diluted Diluted
Based on profit for the year £’000 £’000 £’000 £’000
Profit/(loss) for the financial year 207 (142) 207 (142) 
2006 2005 2006 2005
Based on historic cost profits for the year Basic Basic Diluted Diluted
(after revaluation transfers) £’000 £’000 £’000 £’000
Profit/(loss) for the financial year 1,693 1,129 1,693 1,129 
2006 2005
No. of No. of
Weighted average number of shares shares shares 
For basic earnings per share 13,119,056 12,552,158
Conversion of warrants & options 508,053 406,377
For diluted earnings per share 13,627,109 12,958,535  33
Job no.12255 Date 30/06/2006 Proof 03
9 EARNINGS AND NET ASSET VALUE PER SHARE continued
As property investment companies, earnings per share calculation based on historical profits for the year (after revaluation
transfers) is the most appropriate measure of the Group’s earnings performance. Earnings per share on this basis are:
Restated
2006 2005
Basic 12.91p 9.02p
Diluted 12.43p 8.71p
Net asset value per share
The calculations of basic net asset value per share (“NAV”) are based on the number of shares in issue at the end of each year. 
For the calculation of diluted NAV, the total warrants and options in issue at the year end are added to the number of shares in
issue and the net assets are increased by the proceeds which would be received if all such warrants and options were exercised.  
2006 2005
No. of No. of
Number of shares in issue at year end shares shares
For basic NAV 13,149,158 12,969,264
Conversion of warrants & options 4,051,538 4,052,979
For diluted NAV 17,200,696 17,022,243
Restated
2006 2005
£’000 £’000
Proceeds on conversion of warrant and options 11,531 11,533
10 INTANGIBLE ASSETS
2006
Group £’000
Cost
1 May 2005 (1,969)
Adjustment in fair values 26
30 April 2006 (1,943)
Amortisation
1 May 2005 1,136
Amortised in year 345
30 April 2006 1,481
Net book value
30 April 2006 (462)
30 April 2005 (833)
Intangible assets represent the negative goodwill arising on consolidation following the acquisition of the companies referred to in
Note 13.
The adjustment in fair value in goodwill arises from the directors’ reassessment of the fair values arising from the acquisition of the
remaining share of Capital Reversions PLC.
Negative goodwill is being amortised over five years from the date of acquisition. 34 Sovereign Reversions plc Annual Report & Accounts 2006
Notes to the Financial Statements continued
Job no.12255 Date 30/06/2006 Proof 03
11 TANGIBLE ASSETS
2006 2005 2006 2005
Group Group Company Company
£’000 £’000 £’000 £’000
Home reversions, shared equity loans and assured tenancies
Valuation
1 May 2005 44,322 30,906 39,169 30,906
Additions 5,718 11,674 5,718 6,716
Transfers to assets held for resale/disposals (2,912) (2,271) (2,625) (2,271)
Revaluation 2,832 4,013 2,668 3,818
30 April 2006 49,960 44,322 44,930 39,169
Independently valued 47,102 35,543 42,072 35,543
Valued by the directors 2,858 8,779 2,858 3,626
Total 49,960 44,322 44,930 39,169
Independently valued tangible assets were valued by Allsop LLP at their open market value (subject to lifetime occupancy rights)
at 30 April 2006 in accordance with the Royal Institution of Chartered Surveyors Appraisal and Valuation Manual. 
Tangible assets valued by the directors, comprising all reversionary interests acquired since 1 November 2005, have been valued
at their acquisition cost. The cost of these assets is not considered materially different to their open market value (subject to
lifetime occupancy rights) as at 30 April 2006.
2006 2005 2006 2005
Group Group Company Company
£’000 £’000 £’000 £’000
Assets held for resale
1 May 2005 2,249 1,267 1,989 1,267
Transfers from Home reversions, shared equity loans
and assured tenancies 2,912 2,271 2,625 2,271
Additions — 259 — —
Disposals (3,851) (1,954) (3,348) (1,954)
Revaluation by the directors 213 406 210 406
30 April 2006 1,523 2,249 1,476 1,990
2006 2005 2006 2005
Group Group Company Company
Historical information £’000 £’000 £’000 £’000
Cost
Tangible assets 33,505 29,361 28,744 24,251
Assets held for resale 679 1,122 636 863
Net book value 34,184 30,483 29,380 25,114  35
Job no.12255 Date 30/06/2006 Proof 03
12 SHARES IN GROUP COMPANIES
2006
Company £’000
Cost 
1 May 2005 16,425
Additions 1,117
30 April 2006 17,542
Provision
1 May 2005 and 30 April 2006 (3,063)
Net book value at 30 April 2006 14,479
Net book value at 30 April 2005 13,362
The Company’s subsidiaries, all of which are 100% owned and have financial years ending on 30 April, are:
Company Class of share Nature of business
Registered in England and Wales
Home Equity Holdings Limited Ordinary Holding company
Home Equity Limited Ordinary (indirect) Dormant
Second Spring Reversions Limited Ordinary Non-trading 
Sovereign Retirement Capital Limited Ordinary Investment in equity release assets
Capital Reversions PLC Ordinary Investment in home reversions
Registered in Scotland
Reversionary Gains I Limited Ordinary Dormant
Reversionary Gains II Limited Ordinary Dormant
Reversionary Gains III Limited Ordinary Dormant
Reversionary Gains IV Limited Ordinary Dormant
Unchained Reversions Limited Ordinary Dormant
Acquisitions during the year:
During the year the Company completed the acquisition of Capital Reversions PLC of which it owned 77.97% at 30 April 2005.
£916,833 of the remaining consideration was settled in the form of 178,453 new shares in the Company and £356,925 in cash.  
During the year the Company subscribed for a £200,000 increase in the share capital of Sovereign Retirement Capital Limited. 36 Sovereign Reversions plc Annual Report & Accounts 2006
Notes to the Financial Statements continued
Job no.12255 Date 30/06/2006 Proof 03
13 ASSOCIATE — HOME & CAPITAL TRUST LIMITED
2006 2005
Group £’000 £’000
Share of net assets 23 25
Subscription to rights issue 205 —
228 25
Goodwill on consolidation
1 May 2005 744 773
Amortised in year (39) (29)
705 744
Net book value 933 769
As at 30 April 2006 the Company owned 40.49% of the issued share capital of Home & Capital Trust Limited, via its holding in
Home Equity Holdings Limited, the Company’s immediate parent. Home & Capital Trust Limited arranges and manages home
reversion plans.
At 30 April 2006 the Group’s interest in its Associate is stated at the Group’s share of its net assets, net of positive goodwill of
£705,170, based on its latest available audited accounts, being for the year ended 31 October 2005. At this date it had net
assets of £650,000. The goodwill arising on consolidation is being amortised over 20 years from July 2004, which is the
directors’ estimate of its useful economic life.
In July 2005 Home & Capital Trust Limited had a rights issue which was fully subscribed. There has been no movement in its net
assets or results between 31 October 2005 and 30 April 2006 that is material to the Group.
14 DEBTORS
2006 2005 2006 2005
Group Group Company Company
£’000 £’000 £’000 £’000
Prepayments  134 167 133 111
Other debtors 332 31 332 31
Total 466 198 465 142  37
Job no.12255 Date 30/06/2006 Proof 03
15 CREDITORS
2006 2005 2006 2005
Group Group Company Company
£’000 £’000 £’000 £’000
Amounts falling due within one year:
Corporation tax 460 331 366 240 
Accruals and deferred income 409 328 368 289
Secured loans 1,650 — 1,650 —
2,519 659 2,384 529
Amounts falling due in more than one year:
Secured loans 2,500 3,100 2,500 3,100 
Amounts owed to Group undertakings — — 9,206 8,464 
2,500 3,100 11,706 11,564 
Amounts repayable by instalments:
Due in less than one year  1,650 — 1,650 —
Due in more than one but not more than 2 years — 600 — 600 
Due in 5 years or more 2,500 2,500 2,500 2,500
4,150 3,100 4,150 3,100 
The loans comprise:
a) a £5m fixed term loan repayable by 31 May 2011, of which £2.5m remained outstanding at 30 April 2006 (2005: £2.5m).
Interest on this loan has been fixed until 11 October 2007 at a rate of 5.46% plus margin;
b) a £5m revolving credit facility renewable on 31 May 2006, of which £0.75m had been drawn at 30 April 2006 (2005: £0.6m);
c) a £7m revolving credit facility of which £0.9m (2005: £Nil) has been drawn at 30 April 2006. This is repayable on demand.
The Company has entered into a hedging agreement to the effect that the interest rate on £2.5m of borrowings is capped at
5.48% plus margin until 30 May 2008, but the interest rate paid shall not be less than 3.5% plus margin.
The loans are secured by legal or equitable charges over the Company’s properties and assignment of realisation proceeds. The
Company will also bear agreed costs of the lenders in complying with liquidity and other regulatory requirements. 38 Sovereign Reversions plc Annual Report & Accounts 2006
Notes to the Financial Statements continued
Job no.12255 Date 30/06/2006 Proof 03
16 FINANCIAL INSTRUMENTS
The main risk arising from the Group’s financial instruments is interest rate risk. As all balances are denominated in sterling, no
currency risk arises.
The Group’s financial instruments at 30 April 2006 comprised cash and bank loans. The main purpose of these financial
instruments is to finance the Group’s acquisition of property and to enable the settlement of administrative and finance costs.
The fair value of the Group’s financial instruments is deemed to be equal to book value.
Interest rate risk profile:
The Group finances its operations through shareholder equity and bank loans.  
Floating Fixed
Total rate rate
£’000 £’000 £’000
At 30 April 2006
Financial assets 348 348 —
Financial liabilities (4,150) (1,650) (2,500)
At 30 April 2005
Financial assets 2,852 2,852 —
Financial liabilities (3,100) (600) (2,500)
The maturity profile, hedging arrangements and details of the fixed rate liability of the financial liabilities are detailed in Note 15
above. The floating rate liabilities pay interest based on rates ruling in the London inter-bank market.
Short-term debtors and creditors have been omitted from the disclosures in this note. 39
Job no.12255 Date 30/06/2006 Proof 03
17 SHARE CAPITAL
2006 2005
£’000 £’000
Authorised:
30,000,000 (2005: 30,000,000) ordinary shares of 50p each 15,000 15,000
Allotted, issued and fully paid:
13,149,158 (2005:12,969,264) ordinary shares of 50p each 6,575 6,485
Shares issued during the year:
On acquisition of Capital Reversions PLC (note 11) 178,453
Warrants exercised  1,441
179,894
The Company has the following warrants and options in issue:
Exercise Exercise
Listed price Unlisted price
At 1 May 2005: 2,938,284 976,519
Exercised during the year (281) (1,160)
At 30 April 2006 2,938,003 325 pence 975,359 165 pence
At 1 May 2005 and 30 April 2006 — 26,990 250 pence
At 1 May 2005 and 30 April 2006 — 61,186 287.5 pence
Total warrants at 30 April 2006 2,938,003 1,063,535
Options at 1 May 2005 and 30 April 2006 — 50,000 260 pence
Total warrants and options at 30 April 2006 2,938,003 1,113,535
The warrants are convertible into ordinary shares on or before 30 April 2009. The options, of which further details are provided in
the Remuneration Report on page 18, are exercisable during the financial year ending on 30 April 2009.
If all outstanding warrants and options were exercised, the proceeds received would be £11,531,000. 40 Sovereign Reversions plc Annual Report & Accounts 2006
Notes to the Financial Statements continued
Job no.12255 Date 30/06/2006 Proof 03
18 RESERVES
Share Capital Profit
premium redemption Other Revaluation and loss
account reserve reserve reserve account
Group £’000 £’000 £’000 £’000 £’000
At 1 May 2005 as previously stated 19,164 28 — 16,242 2,802
Prior year adjustment (see note 2) ———— 177
At 1 May 2005 as restated 19,164 28 — 16,242 2,979
Profit for the year ———— 207
Tax on realised profits transferred
from revaluation reserve ———— (591)
Revaluations in year — Group — — — 3,046 —
Transfer of realised profits — — — (2,077) 2,077
Dividends ———— (356)
Premium on shares issued 3 ————
Premium on shares issued on
acquisition of subsidiary — — 452 — —
30 April 2006 19,167 28 452 17,211 4,316
Share Capital Profit
premium redemption Other Revaluation and loss
account reserve reserve reserve account
Company £’000 £’000 £’000 £’000 £’000
At 1 May 2005 as previously stated 19,164 28 — 16,160 2,540
Prior year adjustment (see note 2) ———— 177
At 1 May 2005 as restated 19,164 28 — 16,160 2,717
Profit for the year ———— 487
Tax on realised profits transferred
from revaluation reserve ———— (515)
Revaluations in year — — — 2,879 —
Transfer of realised profits — — — (1,789) 1,789
Dividends ———— (356)
Premium on shares issued 3 ————
Premium on shares issued on
acquisition of subsidiary — — 452 — —
30 April 2006 19,167 28 452 17,250 4,122 41
Job no.12255 Date 30/06/2006 Proof 03
19 RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS
Restated
2006 2005
Group £’000 £’000
Profit/(loss) for the financial year 207 (142)
Dividends  (356) (316) 
(149) (458)
Tax on realised profits transferred from revaluation reserve (591) (349)
Unrealised revaluations in year 3,046 5,117
Shares issued during the year 545 1,718
Share of Associate’s profits and gains reclassified as negative goodwill upon acquisition — (294)
Net increase in shareholders’ funds 2,851 5,734
At 1 May 2005 and 1 May 2004 as previously stated 44,721 39,005
Prior year adjustment (See note 2) 177 159
Opening shareholders’ funds at 1 May 2005 as restated 44,898 39,164
Closing shareholders’ funds 47,749 44,898
Restated
2006 2005
Company £’000 £’000
Profit/(loss) for the financial year 487 (520)
Dividends  (356) (316)
131 (836)
Tax on realised profits transferred from revaluation reserve (515) (335)
Unrealised revaluations in year 2,879 4,617
Shares issued during the year 545 1,718
Net increase in shareholders’ funds 3,040 5,164
At 1 May 2005 and 1 May 2004 as previously stated 44,377 39,231
Prior year adjustment (See note 2) 177 159
Opening shareholders’ funds at 1 May 2005 as restated 44,554 39,390
Closing shareholders’ funds 47,594 44,554 42 Sovereign Reversions plc Annual Report & Accounts 2006
Notes to the Financial Statements continued
Job no.12255 Date 30/06/2006 Proof 03
20 DIRECTORS’ INTERESTS IN TRANSACTIONS
a) The Company acquired and sold a number of properties through Home & Capital Trust Limited, in which RA Pearce Gould is
a director. Fees payable to Home & Capital Trust Limited for these services amounted to £453,140 (2005: £257,914). Home
& Capital Trust Limited has also provided property management services to the Group for which it charged fees amounting to
£147,498 (2005: £188,162). The amount outstanding at 30 April 2006 is £71,899 (2005: £Nil).
b) Cambridge Corporate Consultants Limited is the Company’s corporate adviser. RA Pearce Gould is a shareholder in and a
director of Cambridge Corporate Consultants Limited, which charged fees of £9,400 (2005: £25,000) for its services during
the year in relation to the acquisition of Capital Reversions PLC and corporate finance advice. 
All of the above arrangements were on a normal commercial basis and at arm’s length. Amounts disclosed are exclusive of VAT.
21 ANALYSIS OF NET DEBT
At At
1 May 2005 Cash movement 30 April 2006
£’000 £’000 £’000
Cash at bank and in hand 2,852 (2,504) 348
Loans repayable in less than one year — (1,650) (1,650)
Loans repayable in more than (3,100) 600 (2,500)
(248) (3,554) (3,802) 43
Job no.12255 Date 30/06/2006 Proof 03
22 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2006 2005
£’000 £’000
Decrease in cash in the year (2,504) (8,391)
Cash (inflow)/outflow from (increase)/decrease in debt (1,050) 2,084
Change in net debt resulting from cash flows (3,554) (6,307)
Loans acquired with subsidiary — (1,126)
Opening net debt (248) 7,185
Closing net debt (3,802) (248)
Acquisitions during the year did not have a material effect on the Group’s cash flows for the period.
23 PROFIT AND LOSS
The Company has relied upon the exemption contained in the Companies Act 1985 section 230(3) not to present its own profit
and loss account. The Company made a profit after tax of £486,624 for the year to 30 April 2006 (2005: loss of £227,102).
24 POST BALANCE SHEET EVENT
In May 2006 the Group acquired a portfolio of 112 shared equity loans for a consideration of £3,256,000. 44 Sovereign Reversions plc Annual Report & Accounts 2006
Notice of Annual General Meeting
Job no.12255 Date 23.06.06 Proof 1
Notice is hereby given that the Annual General Meeting of the Company will be held at the offices of Field Fisher Waterhouse, 35 Vine
Street, London EC3N 2AA on Tuesday 12 September 2006 at 11.00 a.m. for the following purposes, namely:
Ordinary business
1. To receive and adopt the accounts for the year ended 30 April 2006 and the reports of the directors and auditors thereon.
2. To re-elect GCW Marshall as a director.
3. To re-elect R Lo as a director.
4. To confirm the appointment of BDO Stoy Hayward, Chartered Accountants, as auditors until the conclusion of the next Annual
General Meeting at which accounts are laid before the members and to authorise the directors to fix their remuneration.
Special business
To consider and, if thought fit, pass the following resolutions of which resolution number 5 will be proposed as an ordinary resolution
and resolutions number 6 and 7 will be proposed as special resolutions:
5 That the directors be and they are hereby generally and unconditionally authorised pursuant to Section 80 of the Companies Act
1985, as amended (“Act”) to exercise all of the powers of the Company to allot relevant securities (as defined in the said Section)
up to an aggregate nominal amount of £2,191,526 (representing one-third of the Company’s issued share capital at the last
balance sheet date) provided that this authority shall expire at the conclusion of the next Annual General Meeting of the Company
save that the Company may make an offer or agreement before the expiry of this authority which would or might require relevant
securities to be allotted after such expiry and the directors may allot relevant securities pursuant thereto as if the authority
conferred hereby had not expired, such authority to be in substitution for any existing authorities conferred on the directors
pursuant to Section 80 of the Act.
6 That, subject to the passing of the previous resolution, the directors be and they are hereby generally empowered pursuant to
Section 95 of the Act to allot equity securities (as defined in Section 94(2) of the Act) pursuant to the authority conferred by
Resolution 5 above as if Section 89(1) of the Act did not apply to any such allotment, provided that this power shall be in
substitution for any previous powers conferred on the directors pursuant to the said Section 95 and shall be limited to:
(i) the allotment of equity securities in connection with an issue or offer in favour of shareholders where the equity securities
respectively attributable to the interests of all such shareholders or to be offered to such shareholders are proportionate (as
nearly as may be practicable) to the respective number of ordinary shares held by them on the record date for such allotment
or offer, but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to
fractional entitlements or legal or practical problems under the laws of, or the requirements of, any recognised regulatory body
or any stock exchange in, any territory; and
(ii) the allotment for cash (otherwise than pursuant to sub-paragraph (i) above) of further equity securities up to an aggregate
nominal amount of £657,457 (representing 10 per cent of the Company’s issued share capital at the balance sheet date); 
provided that the power hereby granted shall expire at the conclusion of the next Annual General Meeting of the Company save
that the Company may make an offer or agreement before the expiry of this power which would or might require equity securities
to be allotted otherwise than in accordance with Section 89 of the Act after such expiry and the directors may allot equity
securities pursuant thereto as if the power conferred hereby had not expired. 45
Job no.12255 Date 30/06/2006 Proof 03
7 That the Company be and is hereby generally and unconditionally authorised for the purposes of Section 166 of the Act to make
one or more market purchases (within the meaning of Section 163(3) of the Act) on the London Stock Exchange of ordinary
shares of 50p each in the capital of the Company provided that:
(i) the maximum aggregate number of shares hereby authorised to be purchased is 1,314,915 ordinary shares of 50p each
(representing 10 per cent of the Company’s issued share capital at the balance sheet date);
(ii) the minimum price which may be paid for such shares is 50p per share (exclusive of expenses);
(iii) the maximum price (exclusive of expenses) which may be paid for an ordinary share shall not be more than 105 per cent of
the average closing middle market quotation for an ordinary share as derived from the AIM appendix to the Stock Exchange
Daily Official List for the five business days immediately preceding the date on which the ordinary share is purchased;
(iv) unless previously renewed, varied or revoked, the authority hereby conferred shall expire at the conclusion of the Company’s
next annual general meeting;
(v) the Company may make a contract or contracts to purchase ordinary shares under the authority hereby conferred prior to the
expiry of such authority which will or may be executed wholly or partly after the expiry of such authority and may make a
purchase of ordinary shares in pursuance of any such contract or contracts; and
(vi) any shares which as a result of the exercise of this authority are undesignated shares in the authorised capital of the Company
shall immediately following such exercise be redesignated as ordinary shares of 50 pence each of the Company.
By order of the Board
Nigel Hare-Scott
Company Secretary
30 June 2006
Registered Office
31 Goldington Road
Bedford 
MK40 3LH 46 Sovereign Reversions plc Annual Report & Accounts 2006
Job no.12255 Date 30/06/2006 Proof 03
Notes:
1. A member entitled to attend and vote at the meeting convened by the notice set out above is entitled to appoint a proxy to attend
and, on a poll, vote instead of him. A proxy need not be a member of the Company. A form of proxy is enclosed.
2. To be effective, completed forms of proxy and the power of attorney or other authority (if any) under which they are signed or a
copy of that power or authority certified notarially or in accordance with the Powers of Attorney Act 1971 must be lodged in
accordance with the instructions printed thereon, not later than 48 hours before the time appointed for the meeting or any
adjourned meeting.
3. Completion and return of a form of proxy will not preclude a member from attending and voting at the meeting in person should
he wish to do so.
4. The Company, pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, specifies that only those members
registered in the register of members of the Company as at 11.00 a.m. on 10 September 2006 shall be entitled to attend and
vote at this meeting in respect of the number of shares registered in their name at that time. Changes to entries in the register of
members after that time shall be disregarded in determining the rights of any person to attend or vote at this meeting.
Notice of Annual General Meeting continued 47
Job no.12255 Date 30/06/2006 Proof 03
Five Year Record
30 April 30 April 30 April 30 April 30 April
2002 2003 2004 2005 2006
Net asset value £’000 11,405 16,594 39,095 44,898 47,749
Embedded value (1) £’000 22,539 34,477 61,434 73,378 79,668
Investment portfolio units 312 414 467 617 668
Net asset value per share (2) pence 224.4 293.5 306.4 331.5 344.6
Embedded value per share pence pence
— pre-dilution 483.2 694.3 503.5 565.8 605.9
— post-dilution 467.2 654.8 477.3 498.8 530.2
Profit from sale of equity release assets £’000 688 1,498 1,877 1,613 2,936
Historical cost profit after taxation £’000 384 669 902 1,129 1,693
Earnings per share (2) pence 4.33 0.44 1.63 (1.13) 1.52
Earnings per share based on historical profits (2) pence 3.77 12.48 15.51 8.71 12.43
Dividend per share pence — — 2.50 2.50 2.70
Net cash flow generated for investment (3) £’000 979 1,503 1,678 1,135 2,919
Net cash flow generated for investment per share pence 20.3 28.5 13.6 8.8 22.2
Share price pence 170.0 227.0 300.0 302.5 337.5
Total shareholder return (4) — 33.5% 33.2% 2.1% 12.5%
Notes:
(1) Embedded value represents net asset value adjusted to reflect equity release assets at their vacant  possession value and
excluding the effect of taxation.
(2) Per share calculations have been adjusted for the impact of the exercise of warrants and options, based on year end positions in
the case of asset-based calculations and on weighted averages in the case of earnings and net cash flow (as set out in note 9 to
the Financial Statements).
(3) Net cash flow generated for investment represents cash proceeds from sales less administrative expenses, net interest and
taxation and dividends paid.
(4) Total shareholder return measures the change in share price, plus dividends paid, divided by the share price at the end of the
preceding financial year.
(5) Figures have been restated where appropriate to conform with current accounting policies. 48 Sovereign Reversions plc Annual Report & Accounts 2006
Job no.12255 Date 23.06.06 Proof 1 Designed and Printed by Jones & Palmer Limited, Birmingham. tel: (0121) 236 9007
Investor Information
REGISTERED OFFICE AND COMPANY SECRETARY 
31 Goldington Road, Bedford, MK40 3LH 
Tel: 01234 356300    Fax: 01234 364433  
info@sovereign-reversions.co.uk 
www.sovereign-reversions.co.uk
Company number 269624 (England and Wales)
Nigel Hare-Scott or Mark Thomas
REVERSION MANAGER
Home & Capital Trust Limited
31 Goldington Road, Bedford, MK40 3LH 
Tel: 01234 340511    Fax: 01234 271547  
enqu@homecapital.co.uk
www.homecapital.co.uk 
REGISTRARS
Capita Registrars Limited
Northern House, Woodsome Park, Fenay Bridge, 
Huddersfield, HD8 0LA
Tel: 0870 1623131    Fax: 01484 600911
shareholderservices@capitaregistrars.com
NOMINATED ADVISER AND BROKER
Charles Stanley
25 Luke Street, London, EC2 4AR
Tel: 020 7149 6000 
Philip.Davies@csysecurities.com
Philip Davies or Freddy Crossley
STOCKBROKER
James Sharp & Co
Exchange House, 39 Knowsley Street, Bury, Lancs, BL9 0ST
Tel: 0161 764 4043    Fax: 0161 764 1628
mail@jamessharp.co.uk 
Martin Entwistle or Ian Bolton
CORPORATE ADVISER
Cambridge Corporate Consultants Limited
Harston Manor, Harston, Cambridge, CB2 5NT
Tel: 01223 870768
ccc@3c4finance.co.uk
Stephen Allen or Rupert Pearce Gould
Unsolicited approaches to shareholders
We are aware that in the course of the year a number of our private shareholders have been contacted by financial
intermediaries purporting to be appointed by Sovereign. We understand that these intermediaries are generally not authorised or
regulated and are seeking to sell research or recommend shares in smaller companies.  
We are obliged under Company Law to provide a copy of our share register to any person who requests it. However, we never
make use of our share register in connection with financial promotions. If an intermediary contacts any shareholder “on behalf of
Sovereign” you should be aware that this approach is without our authority and should exercise appropriate caution. In
particular, no shareholder should be induced to make any payment to such intermediary without taking professional advice.     
In the event that any shareholder receives an unsolicited proposition in relation to Sovereign shares, which may also involve the
payment of money, please inform the Company immediately. We will always take action under these circumstances.  SOVEREIGN
REVERSIONS PLC
Sovereign Reversions plc
31 Goldington Road
Bedford
MK40 3LH
Telephone: 01234 356300
Fax: 01234 364433
info@sovereign-reversions.co.uk
www.sovereign-reversions.co.uk