Annual Financial Report and notice of AGM

RNS Number : 2314J

Northacre PLC

12 July 2013

 



 

 

NORTHACRE PLC

(the ''Company'' or ''Group'')

Results for the year ended 28^th February 2013

Northacre PLC is pleased to announce its financial results for the year ended 28^th February 2013. The Annual Report and Accounts for the year then ended and Notice of the Company's Annual General Meeting, to be held at the Company's registered office at 9.30am on 19^th August 2013, will be available shortly on the Company's website www.northacre.com and are being posted to those shareholders who have elected to receive hard copies.

Extracts from the Company's Annual Report and Accounts are shown below.

Enquiries:

Northacre PLC

Klas Nilsson (Non-Executive Chairman)

020 7349 8000

finnCap Limited (Nominated Adviser and Broker)

Stuart Andrews

Henrik Persson

020 7220 0500

Chairman's Statement

The dominant event of the year has been the acquisition of the controlling shareholding in Northacre PLC by Spadille Limited, a company wholly owned and controlled by Abu Dhabi Capital Management LLC ("ADCM").

The acquisition was facilitated through the sale of my own shareholding and another major shareholder on January 17^th 2013. ADCM have since consolidated their holdings during the offer period to 66.8% of the issued Ordinary share capital of Northacre PLC.

Northacre PLC has as such entered a new prosperous era, and as the founder and Non-Executive Chairman, I welcome ADCM on board to complete my vision for the Company in an ever increasingly competitive market.  Our joint vision is to re-establish Northacre PLC firmly back as the number one prime residential development manager in London.

We are further planning to project the Company internationally and capitalise on the inherent strength and established pedigree of the Northacre brand, and where our experience and expertise can add value.

Since the year end, we have received the resignations of three Directors namely the Chief Executive Officer and Finance Director Ken MacRae, Executive Director Mohamed AlRafi and Non-Executive Director Malcolm Williams. The Company wishes to express its appreciation to those Directors for their contribution to the Company as Directors and Board members over the past years.

Jassim Alseddiqi and Mustafa Kheriba, Chief Executive Officer and Chief Operating Officer of ADCM, were appointed Executive Directors and members of the Board on the 27^th February 2013. The Company has identified a new Chief Executive Officer who will join Northacre on the 2^nd September 2013. Details of this appointment will be disclosed in due course.

The Group is happy to announce that all apartments at The Lancasters Development have now been sold and dividends of £42.7m have been received from the joint venture company, being Northacre's share of the profits. A further £7.1m are expected within the next 12 months.

Our development team is focusing their attention on the Vicarage Gate Development expected to complete in spring 2015.

As a result of Jassim Alseddiqi and Mustafa Kheriba taking up their executive roles, the Company has renewed its efforts to secure the next development opportunity - now with evidence of substantial funding.

London has achieved a global city status with an increasing number of international purchasers who wish to work, live and or study in the capital, and with London being the fastest growing city in Europe with an expected growth of one million people over the next decade, there is an increasing demand for good residential stock.

We remain optimistic. Our product should command that extra premium in a market place where the discerning purchaser is ever more demanding.

Klas Nilsson

Non-Executive Chairman

Executive Director's Statement

Northacre PLC has been successful in developing and delivering landmark properties over the past two decades. The recent completion of The Lancasters Development enhanced the resilience of our mantra and placed our balance sheet in vigorous health.

Building on last year's results, the Company made good progress as more competitive market conditions emerged during the year. While we are actively seeking to acquire new schemes, our view still holds strong that patience will be required to acquire the right opportunities that are suitable for a Northacre branded development and at the right price.

This is an exciting time in the life cycle of Northacre PLC. Our objectives are clear, and our stakeholders have specific, identifiable commitments which focus on every area of the business. These commitments have been assiduously and earnestly embraced by all.  We adamantly believe that we have the right mix of strategy, commitment to excellence and personnel to implement the Company's plan, and to cement the Company's reputation and stronghold as a leading development manager in the prime Central London arena.

Healthy Pipeline

Post the delivery of The Lancasters Development, Northacre PLC is currently developing Vicarage Gate House. The Vicarage Gate House scheme is looking to be one of the most prestigious residential developments in Central London and will be the talk of the town once completed.

Furthermore, the Business Development team maintains a strong and healthy pipeline of opportunities, and we will continue to manage the pipeline carefully to ensure we chose the right opportunity for Northacre. With the assistance and support of ADCM, we have set out a clear set of priorities. The development team will continually look for ways to create shareholder value by being better at sourcing and securing new opportunities. The Company now encourages a culture where outperformance is expected and where everyone is measured on the value they create.

Outlook

The prime residential market in London continued to experience strong growth into 2013. Prime London property has proven a favourable investment asset class for the world's wealthy in the current environment, and has been resilient to stagnant domestic economic growth and the government's new stamp duties. 

Northacre PLC is well-positioned with a healthy cash balance and a new strong and harmonising relationship with ADCM, allowing the Company to source and finance new development opportunities with more ease.

Culminating with the successful completion of The Lancasters Development this year, Northacre PLC has further solidified its position in the prime Central London residential market with its exceptional track record, strong brand pedigree, and experienced team.

Last but not least, we seek to embark on expanding the pedigree and brand of Northacre globally, and are presently exploring opportunities to carve a new niche globally.

Mustafa Kheriba

Executive Director

 

Financial Review

Financial Highlights

·     Net Asset Value (NAV) increased to 150.11 pence per share (2012: 138.99 pence per share)

·     Revenue increased by 17% to £3.5m (2012: £3.0m)

·     Operating loss for the year is £7.7m (2012: £6.5m)

·     Profit before tax is £16.8m (2012: loss £7.9m)

·     Dividends received during the year were £26.6m (2012: £1.2m)

·     Further dividends of £15m were received after the reporting date

Review of Financial Results

Consolidated Income Statement

This has been a successful year during which the Group received over 50% of our total expected profit share from The Lancasters Development which, at the date of this report, was fully sold. The total dividend income received from The Lancasters Development in the year was £26.6m (2012: £1.2m) with a further £15.0m received after the year end.

Group revenue for the year increased by 17% to £3.5m (2012: £3.0m), which reflected a higher level of activity in Intarya, the Group's interior design business. Intarya's revenue increased by 45% to £3.2m (2012: £2.2m).Development management fee income fell by 58% to £0.349m (2012: £0.829m) as expected due to the reduced role required as The Lancasters Development was sold.

Administrative expenses increased to £8.9m (2012: £6.7m). The increase was driven by additional legal and professional fees of £0.5m in relation to the offer made by ADCM and the full bonus provision of £3.4m for staff and directors following the receipt of significant dividends from The Lancasters Development. Our cost base is driven by the employment of skilled teams of professionals to manage current and potential developments. The Group has streamlined the cost base in recent years to reflect the lower activity on The Lancasters Development and lack of new projects. Excluding the bonus provision, Group staff costs were reduced by £0.3m to £3.1m (2012: £3.4m).

The receipt of dividends from The Lancasters Development allowed the Group to repay all of its debt during the year. Loan arrangement costs decreased by 81% to £0.3m (2012: £1.6m). Finance costs were at a similar level of £2.1m (2012: £2.1m) and are forecasted to be £nil in the next year as the Group's positive cash position allows it to meet the day-to-day working capital requirements.

Our profit before tax is £16.8m (2012: loss £7.9m) and the significant increase is a reflection of investment revenue of £26.6m (2012: £1.2m) received during the year.

Consolidated Statement of Comprehensive Income

In accordance with International Accounting Standards we have measured fair value of the available for sale financial asset, being The Lancasters Development, with reference to the secured sales. The change in fair value reported for the year was a decrease of £18.7m (2012: increase £19.6m), which reflected an increase in the fair value of £7.9m (2012: £20.8m) and dividends received of £26.6m (2012: £1.2m).

Consolidated Statement of Financial Position

The receipt of significant dividends from The Lancasters Development in the year was the main driver of the change in the constituent assets and liabilities of the Northacre PLC Consolidated Statement of Financial Position.

The Group secured a new loan facility of £15m (of which only £13m was drawn down) with Auster Real Estate Opportunities S.a.r.l. on 1^st May 2012. Following receipt of significant dividends from The Lancasters Development, the loan of £14.3m, including interest, was repaid on 29^th November 2012. As at 28^th February 2013 Group borrowings were £nil (2012: £11.2m) and total liabilities were reduced by 68% to £4.7m (2012: £14.8m).

The dividends from The Lancasters Development improved the Northacre PLC cash position from £0.9m at the start of the year to £9.2m at February 2013. After the reporting date our cash position improved further following a receipt of an additional Lancaster's dividends of £15m. Northacre PLC's cash position as at the date of this report is circa £20m with a further £7.1m expected from The Lancasters Development in the next 12 months.

Looking forward, the Group will focus on securing new projects and will increase both its development income and investment income. Supported by ADCM and with its substantial funding support we expect to be in good position to manage further developments in the future.

Kasia Maciborska

Group Financial Controller

Consolidated Income Statement

For the year ended 28^th February 2013

	Note		2013		2012
Continuing Operations			£		£
Group
Group Revenue	3		3,521,402		3,021,353
Cost of sales			(2,235,379)		(2,068,876)
Gross Profit			1,286,023		952,477
Administrative expenses			(8,943,929)		(6,676,018)
Other operating costs:
Exceptional items	4		-		(756,879)
Group Loss from Operations			(7,657,906)		(6,480,420)
Investment revenue	5		26,577,553		1,177,224
Other gains	6		-		312,832
Finance costs	7		(2,117,427)		(2,054,269)
Impairment of goodwill	12		-		(821,043)
Profit/(Loss) for the year before Taxation	8		16,802,220		(7,865,676)
Taxation	10		4,832,506		577,204
Profit/(Loss) for the year attributable to equity holders of the Company			21,634,726		(7,288,472)
Profit/(Loss) per ordinary share
Basic - Continuing and total operations	24		80.96p		(27.27)p
Diluted - Continuing and total operations	24		80.96p		(27.27)p

Company
Loss for the year attributable to equity holders of the Company			(5,074,317)		(12,629,475)

Consolidated Statement of Comprehensive Income

For the year ended 28^th February 2013

	Note		2013		2012
Continuing Operations			£		£
Group
Profit/(Loss) for the period attributable to equity holders of the Company			21,634,726		(7,288,472)
Other comprehensive income:
Changes in fair value of available for sale financial assets	14(b)		(18,662,028)		19,605,236
Total comprehensive income for the period			2,972,698		12,316,764

Company
Loss for the period attributable to equity holders of the Company			(5,074,317)		(12,629,475)
Other comprehensive income			-		-
Total comprehensive loss for the period	11		(5,074,317)		(12,629,475)

Consolidated Statement of Financial Position

As at 28^th February 2013

	Note				2013				2012
					£				£
Non-Current Assets
Goodwill	12				8,007,417				8,007,417
Property, plant and equipment	13				919,229				1,062,598
Available for sale financial assets	14(b)				22,148,579				40,810,580
					31,075,225				49,880,595
Current Assets
Inventories	15				1,378				118,006
Trade and other receivables	16				4,585,083				998,556
Cash and cash equivalents					9,194,508				916,963
					13,780,969				2,033,525
Total Assets					44,856,194				51,914,120
Current Liabilities
Trade and other payables	17				4,741,075				3,558,655
Borrowings, including lease finance	19				-				10,513,442
					4,741,075				14,072,097
Non-Current Liabilities
Borrowings, including lease finance	20				-				699,602
					-				699,602
Total Liabilities					4,741,075				14,771,699
Equity
Share capital	25				668,091				668,091
Share premium account					18,552,361				18,552,361
Retained earnings					20,894,667				17,921,969
Total Equity					40,115,119				37,142,421
Total Equity and Liabilities					44,856,194				51,914,120

Company Statement of Financial Position

As at 28^th February 2013

	Note				2013				2012
					£				£
Non-Current Assets
Property, plant and equipment	13				937,237				1,055,842
Investments	14(c)				8,007,421				8,007,421
					8,944,658				9,063,263
Current Assets
Trade and other receivables	16				3,218,933				7,412,064
Cash and cash equivalents					9,019,416				753,669
					12,238,349				8,165,733
Total Assets					21,183,007				17,228,996
Current Liabilities
Trade and other payables	17				30,894,008				21,150,311
Borrowings, including lease finance	19				-				15,767
					30,894,008				21,166,078
Non-Current Liabilities
Borrowings, including lease finance	20				-				699,602
					-				699,602
Total Liabilities					30,894,008				21,865,680
Equity
Share capital	25				668,091				668,091
Share premium account					18,552,361				18,552,361
Retained earnings					(28,931,453)				(23,857,136)
Total Equity					(9,711,001)				(4,636,684)
Total Equity and Liabilities					21,183,007				17,228,996

Consolidated and Company Statements of Cash Flows

For the year ended 28^th February 2013

		Group				Company
		2013		2012		2013		2012
		£		£		£		£
Cash flows from operating activities
Profit/(Loss) for the period before tax		16,802,220		(7,865,676)		(8,511,585)		(12,876,022)
Adjustments for:
Investment revenue		(26,577,553)		(1,177,224)		(20,443)		(191,575)
Finance costs		2,117,427		2,054,269		2,119,810		2,003,907
Profit on disposal of investment in associate		-		(127,832)		-		-
Depreciation and amortisation		150,069		223,808		118,605		183,072
Goodwill impairment		-		821,043		-		-
Provision against investments		-		-		-		2,082,358
Decrease in inventories		116,628		218,002		-		-
(Increase)/decrease in trade and other receivables		(946,061)		(134,967)		6,089,337		7,625,926
Increase/(decrease) in trade and other payables		1,076,897		(1,474,399)		9,615,255		5,686,498
Cash (used in)/generated from operations		(7,260,373)		(7,462,976)		9,410,979		4,514,164
Interest paid		(2,117,427)		(2,054,269)		(2,119,810)		(2,003,907)
Corporation tax - consortium relief refunded		2,297,536		577,204		1,669,504		246,547
Net cash (used in)/generated from  operating activities		(7,080,264)		(8,940,041)		8,960,673		2,756,804
Cash flows from investing activities
Proceeds from sale of investment in associate		-		170,000		-		170,000
Purchase of plant, property & equipment		(6,700)		(35,458)		-		-
Interest received		20,494		7,224		20,443		1,875
Dividends received		26,557,059		1,170,000		-		20,000
Net cash generated from investing activities		26,570,853		1,311,766		20,443		191,875
Cash flows from financing activities
Proceeds from borrowings		13,000,000		10,490,740		-		-
Repayment of borrowings		(24,190,342)		(1,568,247)		(699,602)		(1,843,247)
Repayment of finance leases		(22,702)		(158,570)		(15,767)		(130,832)
Net cash (used in)/generated from financing activities		(11,213,044)		8,763,923		(715,369)		(1,974,079)
Increase in cash and cash equivalents		8,277,545		1,135,648		8,265,747		974,600
Cash and cash equivalents at the beginning of the year		916,963		(218,685)		753,669		(220,931)
Cash and cash equivalents at the end of the year		9,194,508		916,963		9,019,416		753,669

Consolidated and Company Statements of Changes in Equity

For the year ended 28^th February 2013

				Called Up		Share
				Share		Premium		Retained
Group				Capital		Account		Earnings		Total
				£		£		£		£
As at 1st March 2011				668,091		18,552,361		5,605,205		24,825,657
Loss for the period				-		-		(7,288,472)		(7,288,472)
Other Comprehensive Profit for the period:
Changes in fair value of available for sale financial assets				-		-		19,605,236		19,605,236
As at 29th February 2012				668,091		18,552,361		17,921,969		37,142,421
As at 1st March 2012				668,091		18,552,361		17,921,969		37,142,421
Profit for the period				-		-		21,634,726		21,634,726
Other Comprehensive Loss for the period:
Changes in fair value of available for sale financial assets				-		-		(18,662,028)		(18,662,028)
As at 28th February 2013				668,091		18,552,361		20,894,667		40,115,119
				Called Up		Share
				Share		Premium		Retained
Company				Capital		Account		Earnings		Total
				£		£		£		£
As at 1st March 2011				668,091		18,552,361		(11,227,661)		7,992,791
Total Comprehensive Loss for the period				-		-		(12,629,475)		(12,629,475)
As at 29th February 2012				668,091		18,552,361		(23,857,136)		(4,636,684)
As at 1st March 2012				668,091		18,552,361		(23,857,136)		(4,636,684)
Total Comprehensive Loss for the period				-		-		(5,074,317)		(5,074,317)
As at 28th February 2013				668,091		18,552,361		(28,931,453)		(9,711,001)

Notes to the Consolidated Financial Statements

For the year ended 28^th February 2013

1.              Principal Accounting Policies

                The principal accounting policies are as follows:

Accounting Basis and Standards

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

The following new standards, amendments to standards or interpretations are mandatory for the Group for the first time for the financial year beginning 1^st March 2012, but are not currently considered to be relevant to the Group (although they may affect the accounting for future transactions and events):

·      Amendment to IFRS 1, 'Presentation of Financial Statements' on Other Comprehensive Income.' The amendment confirms the treatment of borrowing costs relating to qualifying assets for which the commencement date for capitalisation is before the date of transition to IFRSs.

·      Amendments to IFRS 7 'Financial Instruments: Disclosures'. These amendments are intended to provide greater transparency around risk exposures when a financial asset is transferred but the transferor retains some level of continuing exposure in the asset. The amendments also require disclosures where transfers of financial assets are not evenly distributed throughout the period.

·      Amendment to IAS 12, 'Income taxes'. Deferred tax accounting for investment property at fair value'  IAS 12 requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess whether recovery will be through use or through sale when the asset is measured using the fair value model in IAS 40 Investment Property. The amendment provides a practical solution to the problem by introducing a presumption that recovery of the carrying amount will, normally, be through sale.

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1^st March 2012 and have not been early adopted:

·      IFRS 9, 'Financial instruments', issued in November 2009 and effective from 1^st January 2015. IFRS 9 represents the first phase of the IASB's project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. It sets out the classification and measurement criteria for financial assets and liabilities and requires all financial assets, including assets currently classified under IAS 39 as available for sale, to be measured at fair value through profit and loss unless the assets can be classified as held at amortised cost. Qualifying equity investments held at fair value may have their fair value changes taken through other comprehensive income by election.

·      IFRS 10, 'Consolidated Financial Statements', effective from 1^st January 2013. This standard builds on existing principles by identifying the concept of control as the determining factor in which an entity should be included within the consolidated financial statements. The standard provides additional guidance to assist in determining control where this is difficult to assess.

·      IFRS 11, 'Joint arrangements', effective from 1^st January 2013. This standard establishes principles for financial reporting by parties to a joint arrangement.

·      IFRS 12, 'Disclosure of interests in other entities', effective from 1^st January 2013. This standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, structured entities and other off balance sheet vehicles.

·      IFRS 13, 'Fair value measurement', effective from 1^st January 2013. This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP.

·      IAS 1, 'Other Comprehensive Income', effective from 1^st January 2013. The main change resulting from these amendments is a requirement for entities to group items presented in other comprehensive income on the basis of whether they are potentially reclassifiable to profit or loss subsequently. The amendments do not address which items are presented in other comprehensive income.

·      IAS 19 (Revised), 'Employee Benefits' effective from 1^st January 2013. These amendments are intended to provide a clearer indication of an entity's obligations resulting from the provision of defined benefit pension plan and how those obligations will affect its financial position, financial performance and cash flow.

·      IAS 27 (Revised), 'Separate Financial Statements' (Revised), effective from 1^st January 2013  has the objective of setting standards to be applied in accounting for investments in subsidiaries, joint ventures, and associates when an entity elects, or is required by local regulations, to present separate (non-consolidated) financial statements.

·      IAS 28 (Revised), 'Associates and Joint Ventures' (Revised), effective from 1^st January 2013 prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures.

·      Amendment to IAS 32, 'Offsetting Financial Assets and Liabilities', effective from 1^st January 2013 clarifies that the tax effect of a distribution to holders of equity instruments should be accounted for in accordance with IAS 32.

Business Combinations and Goodwill

Goodwill relating to acquisitions prior to 1^st March 2006 is carried at the net book value on that date and is no longer amortised but is subject to annual impairment review.  On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition.  Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill.  Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the income statement in the period of acquisition.  Goodwill is tested annually for impairment.

Going Concern

The Company and Group currently meet their day-to-day working capital requirements through monies received from The Lancasters Development dividends. All of the Groups' loan facilities have been repaid during the year under review. In particular:

(i) The loan due to Northacre PLC Directors Retirement and Death Benefit Scheme of £699,602 (2012: £699,602) was repaid on 17^th December 2012. The total amount repaid was £711,300 including interest of £11,698.

(ii) A Eurobond loan facility of £10,500,000 was agreed with Abu Dhabi Capital Management LLC (''ADCM'') on 20^th October 2011 and drawn down in full on 31^st October 2011. This loan allowed the Group to repay its bankers facility and all Directors and related party loans. A fixed premium of £800,000 was due on signature of the agreement. According to the agreement, the Group had a right to early redemption and after receiving the first dividend payment from The Lancasters Development, the Group repaid £1,051,448 of the loan on 18^th January 2012 plus £76,050 accrued interest. After securing new financing the Eurobond was repaid in full on 30^th May 2012. The total amount repaid was £11,276,653 including interest of £1,828,101.

(iii) A loan facility of £15,000,000 was agreed with Auster Real Estate Opportunities S.a.r.l. (''Auster'') on 1^st May 2012 and £13,000,000 was drawn down on 30^th May 2012. This loan allowed the Group to repay the ADCM loan and secure more flexible loan terms for the Group. A fixed premium of 2% of the facility amount was due on draw down of the loan. The loan was due to be repaid in 18 months from the date of the draw down unless sufficient dividends were received from The Lancasters Development. Following receipt of a further £10m dividends from The Lancasters Development on 23^rd November 2012 the Group repaid the Auster loan in full on 29^th November 2012. The total amount repaid during the year was £14,300,000 including interest of £1,300,000.

The Directors have prepared detailed cash flow projections for the period ended 28^th February 2018 making reasonable assumptions about the levels and timings of income and expenditure, and in particular the timing of receipt of certain fees due from major developments. These projections show that the Group can meet its ongoing working capital requirements. On this basis the Directors consider it appropriate to prepare the financial statements on a going concern basis.

Significant Judgements and Estimates of Areas of Uncertainty

In preparing these financial statements the Directors are required to make judgements and best estimates of the outcome of and in particular, the timing of revenues, expenses, assets and liabilities based on assumptions. These assumptions are based on historical experience and various other factors that are considered reasonable under the various circumstances. The estimates and assumptions are reviewed on a regular basis with any revisions being applied in the relevant period. The material areas where estimates and assumptions are made are:

-     The valuation of goodwill

-     The valuation of available for sale financial assets

-     The status and progress of the developments and projects

Basis of Consolidation

The Group financial statements include the financial statements of the Company and its subsidiary undertakings. The Group's proportion of the voting rights of Lancaster Gate (Hyde Park) Limited increased from to 5% to 25.1% on 30^th June 2010. Lancaster Gate (Hyde Park) Limited continues to be treated as an available for sale financial asset. The Directors do not regard Lancaster Gate (Hyde Park) Limited as an associate because the Directors consider that the Group does not exercise significant influence over its operating and financial activities, despite the fact that the Group holds in excess of 20% of the voting rights in Lancaster Gate (Hyde Park) Limited, because the control of the Board by Minerva PLC, the controlling shareholding they hold and their power to exercise, and actual exercise of, the commercial decision making for Lancaster Gate (Hyde Park) Limited preclude the Group from exercising such influence.

Depreciation

Depreciation on property, plant and equipment is provided at rates estimated to write off the cost or revalued amounts, less estimated residual value, of each asset over its expected useful life as follows:

                Leasehold improvements                                          over the period of the lease

Fittings and office equipment                                    25% straight line

Computer equipment                                                                33 1/3% straight line

Impairment of Assets

Assets that have an indefinite useful life are not subject to amortisation but are instead tested annually for impairment and are subject to additional impairment testing if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Assets that are subject to depreciation and amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Indicators of impairment are reviewed annually.

An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. Any impairment charge is recognised in profit or loss in the year in which it occurs. When an impairment loss, other than an impairment loss on goodwill, subsequently reverses due to a change in the original estimate, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, up to the carrying amount that would have resulted, net of depreciation, had no impairment loss been recognised for the asset in prior years.

Inventories

Work in progress is valued at the lower of cost and net realisable value.  Cost of work in progress includes overheads appropriate to the stage of development.  Net realisable value is based upon estimated selling price less further costs expected to be incurred to completion and disposal.

Revenue

Revenue represents amounts earned by the Group in respect of services rendered during the period net of value added tax.  Shares in development profits and bonus fees are recognised when the amounts involved have been finally determined. Fees in respect of project management and interior and architectural design are recognised in accordance with the stage of completion of the contract.

Current Taxation

The tax expense for the year represents the total of current taxation and deferred taxation. The charge in respect of current taxation is based on the estimated taxable profit for the year. Taxable profit for the year is based on the profits as shown in profit or loss, as adjusted for items or expenditure, which are not deductible for tax purposes.

The current tax liability for the year is calculated using tax rates, which have either been enacted or substantively enacted at the reporting date.

Deferred Taxation

Deferred tax is provided in full on all temporary differences arising between the tax base of assets and liabilities and their carrying values in the financial statements. The deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of transaction affects neither accounting nor taxable profit or loss.

Deferred tax is determined using tax rates which have been enacted or substantively enacted at the reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Leased Assets

Assets held under finance leases and hire purchase contracts are capitalised in the statement of financial position and depreciated over their expected useful lives.  The interest element of the rental obligations is charged to profit or loss over the period of the lease on a straight-line basis.

Rentals under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Investments

Fixed asset investments are stated at cost less amounts written off.

Associates

Associates are all entities over which the Group exercise significant influence but does not exercise control. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost, which includes goodwill identified on acquisition, net of any accumulated impairment loss. The Group's share of its associate's profits or losses after acquisition of its interest is recognised in profit or loss and cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Where the Group's share of losses of an associate equals or exceeds the carrying amount of the investment, the Group only recognises further losses where it has incurred obligations or made payments on behalf of the associate.

Financial Assets

Available for sale financial assets consist of equity investments in other companies where the Group does not exercise either control or significant influence. The investments reflect loans and capital contributions made in respect of projects undertaken with other partners in which the Group will be entitled to an eventual profit share.

Available for sale financial assets are shown at fair value at each reporting date with changes in fair value being shown in Other Comprehensive Income, or at cost less any necessary provision for impairment where a reliable estimate of fair value is not able to be determined.

Pension Scheme Arrangements

The Group operates a money purchase scheme on behalf of one of its Directors.  It also contributes to certain Directors' and employees' personal pension schemes.  Pension costs charged represent the amounts payable to the schemes in respect of the period.

Foreign Currency Translation

Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Assets and liabilities are translated at the rate of exchange ruling at the reporting date. Exchange differences are taken into account in arriving at Group operating profit.

Financial Assets - Loans and Receivables

Trade receivables, loans and other receivables are classified as 'trade and other receivables' and are measured at cost less any provisions. Interest income is recognised by applying the appropriate interest rate of the contractual arrangement.

Financial Liabilities - Loans and Payables and Borrowings

Trade payables, other payables and borrowings are classified as 'trade and other payables' and 'borrowings, including lease finance'. These are measured at amortised cost and the interest expense is recognised by applying the appropriate interest rate of the contractual arrangement.

Borrowings

Interest-bearing borrowings are recognised initially at fair value, net of any transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective interest method with any differences between the proceeds (net of transaction costs) and the redemption value being recognised over the period of borrowings.

All borrowings are classified as current unless the Group has an unconditional right to defer payment of the borrowings until at least twelve months from the reporting date.

2.             Capital and Financial Risk Management

The Group manages its capital to ensure that the Group will be able to continue as a going concern, while maximising the return to shareholders through the optimisation of its debt and equity balance.

The capital structure of the Group, following the repayment of the Auster loan consists of cash and cash equivalents and equity attributable to equity holders of the Parent Company, comprising issued capital, share premium account and retained earnings.

The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends payable to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt or increase capital.

The Board regularly reviews the capital structure, with an objective to reduce net debt over time whilst investing in the business.

The Group's activities expose it to a variety of financial risks and those activities involve the analysis, evaluation, acceptance and management of some degree of risk or combination of risks. Taking risk is core to the property business and the operational risks are an inevitable consequence of being in business. The Group's aim is to achieve an appropriate balance between risk and return and minimise potential adverse effects on the Group's performance.

The Group's risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls, and to monitor the risks by means of a reliable up-to-date information system. The Group regularly reviews its risk management policies and systems to reflect changes in markets, products and emerging best practice.

Risk management is carried out by the Board of Directors. In addition, the internal financial control board is responsible for the identification of the major business risks faced by the Group and for determining the appropriate course of action to manage those risks. The most important types of risk are credit risk, liquidity and market risk. Market risk includes currency, interest rate and other price risks.

3.	Segmental Information
	Segmental information is presented in respect of the Group's business segments. The business segments are based on the Group's corporate and internal reporting structure. Segment results and assets include items directly attributable to a segment as well as those that can be allocated to a segment on a reasonable basis. The segmental analysis of the Group's business as reported internally to management is as follows:
	Revenue
									2013		2012
	Principal activities:								£		£
	Development management								300,350		692,615
	Interior design								3,172,369		2,192,233
	Architectural design								48,683		136,505
									3,521,402		3,021,353
	Profit/(Loss) before Taxation								2013		2012
									£		£
	Development management								17,092,734		(6,176,058)
	Interior design								3,001		(818,044)
	Architectural design								(293,515)		(871,574)
									16,802,220		(7,865,676)
	Assets								2013		2012
									£		£
	Development management								43,762,088		50,795,189
	Interior design								928,793		1,075,965
	Architectural design								165,313		42,966
									44,856,194		51,914,120
	Liabilities								2013		2012
									£		£
	Development management								2,941,712		12,725,626
	Interior design								920,447		1,284,968
	Architectural design								878,916		761,105
									4,741,075		14,771,699
	A geographical analysis of the Group's revenue, assets and liabilities is given below:
	Revenue								2013		2012
									£		£
	United Kingdom								2,385,562		1,925,772
	Ireland								-		7,563
	Saudi Arabia								1,135,840		874,158
	United Arab Emirates								-		50,400
	Thailand								-		41,251
	Switzerland								-		122,209
									3,521,402		3,021,353
	Included in the revenue above are revenues in respect of customers who account for over 10% of the Group's total revenue.
									2013		2012
									£		£
	Customer A (Interior design)								1,135,840		874,158
	Customer B (Interior design)								40,952		515,892
	Customer C (Development management)								-		407,615
	Customer C (Interior design)								807,000		174,311
	Customer D (Interior design)								1,095,712		-
									3,079,504		1,971,976

	Assets							2013		2012
								£		£
	United Kingdom							44,180,739		51,169,630
	Ireland							-		2,453
	United Arab Emirates							-		10,803
	Saudi Arabia							675,455		731,234
								44,856,194		51,914,120
	Liabilities							2013		2012
								£		£
	United Kingdom							4,384,169		4,162,779
	United Arab Emirates							1,648		10,503,566
	Hong Kong							-		2,365
	USA							(104)		2,925
	Spain							(828)		-
	Italy							(241)		-
	Saudi Arabia							356,431		100,064
								4,741,075		14,771,699

4.	Exceptional Items							2013		2012
								£		£
	Payments to former Directors							-		756,879
	Payments to former Directors during the prior year included compensation for loss of office and payments in respect of the claim by a former Director against the Company for wrongful and unfair dismissal which has been resolved by way of a comprehensive settlement of all claims against the Group, including entitlement to benefits arising from loans made by the Northacre PLC Directors Retirement and Death Benefit Scheme to the Company. The Company agreed to waive the former Director's loan account and also pay to him a settlement sum. The payment of these amounts were not due until sufficient dividends were received from The Lancasters Development. Following sufficient receipt of The Lancasters Development dividends all amounts due were settled during that prior  year.

5.	Investment Revenue							2013		2012
								£		£
	Interest received							20,494		7,224
	Dividends received							26,557,059		1,170,000
								26,577,553		1,177,224

6.	Other Gains							2013		2012
								£		£
	Profit on disposal of interest in Campden Estates Limited							-		127,832
	Decrease in provision for acquisition of Templeco 643 Limited in lieu of settlement							-		135,000
	Decrease in provision for Northacre PLC Directors Retirement and Death Benefit Scheme profit share							-		50,000
								-		312,832

7.	Finance Costs											2013		2012
												£		£
	Interest on:
		Bank loans and overdrafts										-		10,325
		Overdue tax										272		1,028
		Tax (refund)/penalties										(6,490)		32,866
		Other loans										2,123,645		2,010,050
												2,117,427		2,054,269

8.	Profit/(loss) Before Taxation							2013		2012
								£		£
	Profit/(loss) before taxation is stated after charging:
	Depreciation and amounts written off property, plant and equipment:
	Owned assets							150,069		223,808
	Operating lease rentals:
	Land and buildings							130,663		153,699
	Foreign exchange loss							75		148
	Fees payable to the Company's auditors for:
	- the audit of the Company's annual accounts							47,054		39,344
	Fees payable to the Company's auditors for other services to the Group:
	- the audit of the Company's subsidiaries							33,680		25,906
	Total audit fees							80,734		65,250
	Fees payable to the Company's auditors for:
	- taxation compliance services							13,888		13,375
	- other taxation advisory services							41,113		25,311
	- other services							17,260		17,054
	Total other fees							72,261		55,740

9.	Employees						2013		2012
							Number		Number
	The average weekly number of employees (including Directors) during the year was:
	Office and management						14		14
	Design and management						10		24
							24		38
							2013		2012
	Staff costs for the above employees:						£		£
	Wages and salaries						5,839,966		3,248,121
	Social security costs						786,068		432,247
	Other pension costs - money purchase schemes						115,040		183,568
							6,741,074		3,863,936
	Remuneration in respect of Directors was as follows:						2013		2012
							£		£
	Aggregate emoluments (including benefits in kind)						2,280,866		765,060
	Consultancy fees						-		375,000
	Compensation for loss of office						-		65,000
	Fees						186,125		60,000
							2,466,991		1,265,060
	Company contribution to money purchase pension schemes						66,280		71,542
	Remuneration for each Director (including benefits in kind)						2013		2012
							£		£
	K.B. Nilsson						797,216		265,340
	K. MacRae						418,150		201,436
	M.K. Santilale						-		361,088
	M.A. AlRafi						1,120,000		60,000
	M.F. Williams						65,500		30,000
	E.B. Harris						66,125		30,000
	J. McGivern						-		317,196
							2,466,991		1,265,060
	Included in the prior year figures were consultancy fees of £375,000 which represented amounts accrued but not paid in 2012. These amounts were paid after sufficient dividends were received from The Lancasters Development in September 2012.
	Remuneration of £1,120,000 (2012: £60,000) for Director M.A. AlRafi is payable to MTAF Group. Remuneration of £66,125 (2012: £30,000) for Director E.B. Harris is payable to EC Harris LLP.
	The amounts above include remuneration in respect of the highest paid Director as follows:						2013		2012
							£		£
	Aggregate emoluments (including benefits in kind)						1,120,000		361,088
	Company contribution to money purchase pension scheme						-		5,624
							1,120,000		366,712
	The total emoluments of £1,120,000 (2012: £361,088) above includes: fees of £120,000 and bonus of £1,000,000 (2012: salary of £96,088; compensation for loss of office £65,000 and consultancy fees £200,000). The consultancy fees of £200,000 were not due till sufficient dividends from The Lancasters Development were received.

10.	Taxation						2013		2012
							£		£
	(a) Analysis of charge in year
	Current tax:
	Corporation tax credit						(2,534,970)		(577,204)
	Adjustment in respect of prior periods						(2,297,536)		-
	Total current tax						(4,832,506)		(577,204)
	(b) Factors affecting the tax charge for the year
	The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 24% (2012: 26%).
	The differences are explained below:
							2013		2012
							£		£
	Profit/(loss) on ordinary activities before tax						16,802,220		(7,865,676)
	Profit/(loss) on ordinary activities multiplied by the standard rate of
	corporation tax of 24% (2012: 26%)						4,032,533		(2,045,076)
	Effects of:
	Expenses not deductible for tax purposes						134,847		50,391
	Depreciation for the period in excess of capital allowances						16,277		(26,331)
	Dividends and distributions received						(6,373,694)		(304,200)
	Utilisation of tax losses						1,630,864		1,391
	Other timing differences						562,240		-
	Loss carried forward						-		2,323,825
	Group relief						-		(577,204)
	Consortium relief						(2,538,037)		-
	Consortium relief in respect of prior periods						(2,297,536)		-
	Current tax credit for the year						(4,832,506)		(577,204)
	(c) Factors that may affect future tax charges
	No deferred tax asset has been recognised on losses carried forward due to the uncertainty of the timing of taxable profits.  The total amount of the unprovided asset is £1,063,261 (2012: £4,574,968).
	The standard rate of corporation tax in the UK changed to 24% from 1st April 2012 and to 23% from 1st April 2013.

   11.            Profit of the Parent Company

	As permitted by section 408 of the Companies Act 2006, the profit or loss element of the Parent Company Income Statement is not presented as part of these financial statements.  The Group profit for the financial year of £21,634,726(2012: loss £7,288,472) includes a loss of £5,074,317 (2012: £12,629,475), which was dealt with in the financial statements of the Company.

12.	Goodwill
	Group								2013		2012
									£		£
	Cost								14,940,474		14,940,474
	Amortisation and impairment
	At the beginning of the year								6,933,057		6,112,014
	Impairment charge for the year								-		821,043
	At the end of the year								6,933,057		6,933,057
	Net book value								8,007,417		8,007,417

The Group performs an annual goodwill impairment review in accordance with IAS 36 'Impairment of Assets' based on its cash generating units (CGUs). The CGU that has associated goodwill allocated to it is the Group as a whole. This is the smallest identifiable group of assets that generate cash inflows to which goodwill is allocated.  Although the interior design business is a separate CGU goodwill was not specifically allocated to it when the goodwill arose because it was treated as an integrated business when the Group was originally restructured. The Directors consider that it is now not appropriate to allocate goodwill to this CGU.

Recoverable amount

In accordance with IAS 36 the recoverable amount of the cash generating unit is calculated, being the higher of value in use and fair value less costs to sell.

The fair value less costs to sell of the CGU is determined using cash flow projections derived from the business plan covering a five year period which has been approved by the Board. They reflect the Directors' expectations of the level and timing of revenue, expenses, working capital and operating cash flows, based on past experience and future expectations of business performance particularly future development projects.

Discount rates

The pre-tax discount rate applied to the cash flow projections are derived from the Group's weighted average cost of capital. The discount rate applied is 6% reflecting the future expected cost of capital for the Group.

Growth rates

Due to the nature of the Group's development business growth rates are not relevant. The cash flow projections assume a 100% probability of winning a level of development projects over the five years and make assumptions on the probability of achieving certain development performance fee criteria.

The business growth rates have been assumed to be nil for the Intarya interior design business.

Sensitivity analysis

The following changes in assumptions would cause the recoverable amount to fall below the current carrying value:

• A 6.8% increase in the discount rate to 12.8% for the latter three year period

• A 9% decrease in the development revenue cashflows over the five year period

• A 53.4% decrease in the other  interior design revenue cash flows over the five year period

13.	Property, plant and equipment
							Fittings
	Group				Leasehold		and Office		Computer
					Improvements		Equipment		Equipment		Total
	Cost				£		£		£		£
	At 1st March 2011				1,115,434		252,862		489,881		1,858,177
	Additions				-		17,442		21,465		38,907
	Disposals				-		(199,632)		(129,577)		(329,209)
	At 29th February 2012				1,115,434		70,672		381,769		1,567,875
	Additions				-		-		6,700		6,700
	Disposals				-		-		(180,000)		(180,000)
	At 28th February 2013				1,115,434		70,672		208,469		1,394,575
	Depreciation
	At 1st March 2011				-		212,385		394,844		607,229
	Charge for the year				123,072		15,537		85,199		223,808
	Disposals				-		(196,183)		(129,577)		(325,760)
	At 29th February 2012				123,072		31,739		350,466		505,277
	Charge for the year				113,605		13,904		22,560		150,069
	Disposals				-		-		(180,000)		(180,000)
	At 28th February 2013				236,677		45,643		193,026		475,346
	Net Book Value
	At 28th February 2013				878,757		25,029		15,443		919,229
	At 29th February 2012				992,362		38,933		31,303		1,062,598
	At 28th February 2011				1,115,434		40,477		95,037		1,250,948

							Fittings
	Company				Leasehold		and Office		Computer
					Improvements		Equipment		Equipment		Total
	Cost				£		£		£		£
	At 1st March 2011				1,173,914		-		180,000		1,353,914
	Additions				-		-		-		-
	At 29th February 2012				1,173,914		-		180,000		1,353,914
	Additions				-		-		-		-
	Disposals				-		-		(180,000)		(180,000)
	At 28th February 2013				1,173,914		-		-		1,173,914
	Depreciation
	At 1st March 2011				-		-		115,000		115,000
	Charge for the year				123,072		-		60,000		183,072
	At 29th February 2012				123,072		-		175,000		298,072
	Charge for the year				113,605		-		5,000		118,605
	Disposals				-		-		(180,000)		(180,000)
	At 28th February 2013				236,677		-		-		236,677
	Net Book Value
	At 28th February 2013				937,237		-		-		937,237
	At 29th February 2012				1,050,842		-		5,000		1,055,842
	At 28th February 2011				1,173,914		-		65,000		1,238,914

	Included above were assets held under finance lease or hire purchase contracts as follows:
							Fittings
	Group						and Office		Computer
							Equipment		Equipment		Total
	Cost						£		£		£
	At 1st March 2011						11,710		57,799		69,509
	Disposals						(9,399)		(1,799)		(11,198)
	At 29th February 2012						2,311		56,000		58,311
	Additions						-		-		-
	At 28th February 2013						2,311		56,000		58,311
	Depreciation
	At 1st March 2011						8,726		51,710		60,436
	Charge for the year						578		6,089		6,667
	Disposals						(7,050)		(1,799)		(8,849)
	At 29th February 2012						2,254		56,000		58,254
	Charge for the year						57		-		57
	At 28th February 2013						2,311		56,000		58,311
	Net Book Value
	At 28th February 2013						-		-		-
	At 29th February 2012						57		-		57
	At 28th February 2011						2,984		6,089		9,073
							Fittings
	Company						and Office		Computer
							Equipment		Equipment		Total
	Cost						£		£		£
	At 1st March 2011						-		180,000		180,000
	Additions						-		-		-
	At 29th February 2012						-		180,000		180,000
	Disposals						-		(180,000)		(180,000)
	At 28th February 2013						-		-		-
	Depreciation
	At 1st March 2011						-		115,000		115,000
	Charge for the year						-		60,000		60,000
	At 29th February 2012						-		175,000		175,000
	Charge for the year						-		5,000		5,000
	Disposals						-		(180,000)		(180,000)
	At 28th February 2013						-		-		-
	Net Book Value
	At 28th February 2013						-		-		-
	At 29th February 2012						-		5,000		5,000
	At 28th February 2011						-		65,000		65,000

 

 

14.	Investments
(a)	Interest in Associated Undertaking
	Group				2013		2013		2012		2012
					£		£		£		£
	Cost
	At 1st March						-				300
	Disposal of interest in associated undertaking						-				(300)
	At 28th/29thFebruary						-				-
	Group's Share of Undistributed Post Acquisition
	Results of Associated Undertaking
	At 1st March						-				41,868
	Share of undistributed profit				-				-
	Taxation				-				-
							-				-
	Disposal of interest in associated undertaking						-				(41,868)
	28th/29th February						-				-
	Net Book Value
	28th/29th February						-				-
	On 27th September 2011 Northacre PLC sold its 25% interest in Campden Estates Limited for a total cash consideration of £170,000 resulting in a profit on disposal of £127,832 (Note 6).

(b)	Available for Sale Financial Assets
	Group		2013		2013		2012		2012
			£		£		£		£
	At 1st March				40,810,580				21,205,344
	Disposals				-				-
	Increase in fair value		7,895,058				20,755,236
	Dividend received		(26,557,059)				(1,150,000)
	Net movement transferred (from)/to comprehensive income				(18,662,001)				19,605,236
	At 28th/29th February				22,148,579				40,810,580
	Net Book Value
	At 28th/29th February				22,148,579				40,810,580
	A fair valuation exercise has been undertaken based predominantly on the Group's expected profit from secured sales on The Lancasters Development as at 28th February 2013. As at 28th February 2013 the Group had received £27,707,059 of the expected profits from The Lancasters Development. Two further dividend payments of £10,000,000 and £5,000,000 were received after the year end on 8th April 2013 and 2nd July 2013.

(c)	Other Investments
					Subsidiary		Associated		Total
	Company				Undertakings		Undertaking
					£		£		£
	Cost
	At 1st March 2012 and 28th February 2013				14,492,681		-		14,492,681
	Impairment
	At 1st March 2012				6,485,260		-		6,485,260
	Impairment in the year				-		-		-
	As at 28th February 2013				6,485,260		-		6,485,260
	Net book value as at 28th February 2013				8,007,421		-		8,007,421
	Net book value as at 29th February 2012				8,007,421		-		8,007,421

	Company				Subsidiary		Associated		Total
					Undertakings		Undertaking
					£		£		£
	Cost
	At 1st March 2011				14,492,681		300		14,492,981
	Disposals				-		(300)		(300)
	As at 29th February 2012				14,492,681		-		14,492,681
	Impairment
	At 1st March 2011				4,402,902		-		4,402,902
	Impairment in the year				2,082,358		-		2,082,358
	As at 29th February 2012				6,485,260		-		6,485,260
	Net book value as at 29th February 2012				8,007,421		-		8,007,421
	Net book value as at 28th February 2011				10,089,779		300		10,090,079

(d)

Group Shareholdings

The Group has shareholdings in the following companies, all incorporated in England and Wales:

Subsidiary undertakings

Holding

Proportion held

Nature of Business

Waterloo Investments Limited

Ordinary shares

100%

Development management services

Intarya Limited

Ordinary shares

100%

Interior design

Northacre Development Management

Ordinary shares

100%

Development management

Services Limited

services

Nilsson Architects Limited

Ordinary shares

100%

Design architects

Northacre Capital (1) Limited

Ordinary shares

100%

Dormant

Northacre Capital (3) Limited

Ordinary shares

100%

Dormant

Northacre Capital (5) Limited

Ordinary shares

100%

Property development

Northacre Capital (7) Limited

Ordinary shares

100%

Dormant

Northacre Capital (8) Limited

Ordinary shares

100%

Property development

Templeco 643 Limited

Ordinary shares

100%

Dormant

Available for sale financial assets

Lancaster Gate (Hyde Park) Limited

Ordinary shares

25.1%

Property development

On 22nd June 2010 the Company entered into an agreement to acquire the entire issued share capital of Templeco 643 Limited for a consideration of £1,250,000. At the acquisition date Templeco 643 Limited had net liabilities at fair value of £4,115 resulting in goodwill of £1,254,115 potentially arising on acquisition. The Company acquired Templeco 643 Limited as settlement in lieu of the loan arrangement agreement to share in profits of The Abingdons Partnership. In accordance with the share purchase agreement the date of acquisition is the date the final payment of the consideration is made which is also the date at which control of Templeco 643 Limited passed to the Company. In the financial statements to 28th February 2010 the full consideration of £1,250,000 was expensed in the Consolidated Statement of Comprehensive Income as, based on the fair value of the net liabilities acquired, it was not considered to have any ongoing value to the Company. On 31st January 2012 a Deed of Variation reduced the final consideration to £1,115,000 with the resulting £135,000 adjustment being included in the consolidated financial statements for the year ended 29th February 2012. The final payment of the consideration was made on 17th July 2012 and at that date the issued share capital of Templeco 643 Limited was transferred to the Company and control passed to the Company. At that date the fair value of the net assets of Templeco 643 Limited were nil. There have been no transactions in Templeco 643 Limited in the period 17th July 2012 to 28th February 2013 and the Directors have applied to strike off Templeco 643 Limited. As a result there are no balances or transactions to be included in the Group financial statements for the year ended 28th February 2013. The following subsidiary undertakings were struck off on 14th August 2012 as there had been no trading activity during the prior and current reporting periods: Northacre Capital (2) Limited Northacre Capital (6) Limited Northacre Residential Limited

Nilsson Design Limited Northacre Land Limited Northacre Holdings Limited

Northacre Design Limited Northacre Capital Limited Northcare Management Limited Northcare Management Services Limited Lifestyles (Interiors) Limited

15.	Inventories									Group
										2013		2012
										£		£
	Stock									1,316		-
	Work in progress									62		118,006
										1,378		118,006
	The Company had no stock or work in progress in either the prior or current reporting period.

16.	Trade and other receivables					Group				Company
						2013		2012		2013		2012
						£		£		£		£
	Trade receivables					701,485		136,517		-		-
	Amounts owed by group undertakings					-		-		339,408		7,309,782
	Other receivables					3,818,280		79,831		2,853,322		79,048
	Prepayments and accrued income					65,318		782,208		26,203		23,234
						4,585,083		998,556		3,218,933		7,412,064
	At the year end there was no provision for doubtful debts (2012: £nil).

17.	Trade and other payables					Group				Company
						2013		2012		2013		2012
						£		£		£		£
	Trade payables					89,194		304,255		39,122		165,343
	Amounts owed to group undertakings					-		-		28,847,596		18,632,851
	Social security and other taxes					81,607		196,496		40,753		88,029
	Other payables					16,290		1,566,810		9,522		1,451,616
	Accruals and deferred income					4,553,984		1,491,094		1,957,015		812,472
						4,741,075		3,558,655		30,894,008		21,150,311

18.	Corporation Tax					Group				Company
						2013		2012		2013		2012
						£		£		£		£
	Corporation Tax					-		-		-		-
						-		-		-		-

19.	Borrowings, including lease finance					Group				Company
	Current Liabilities					2013		2012		2013		2012
						£		£		£		£
	Finance leases					-		22,702		-		15,767
	Other loans					-		10,490,740		-		-
						-		10,513,442		-		15,767
	Finance leases were secured on the related assets.
	Other loans represented the Eurobond loan facility as detailed in note 1. The Eurobond loan facility was secured on all issued share capital of Northacre Capital (5) Limited.

 

20.	Borrowings, including lease finance					Group				Company
	Non-Current Liabilities					2013		2012		2013		2012
						£		£		£		£
	Loan from pension scheme					-		699,602		-		699,602
						-		699,602		-		699,602
	The loan from the pension scheme of £699,602 (2012: £699,602) in respect of the Northacre PLC Directors Retirement and Death Benefit Scheme was repaid on 17th December 2012 following a further dividend distribution from The Lancasters Development. The total amount repaid including interest was £711,300.

	As at 28th February 2013 the Group and Parent Company had no obligations under finance leases that were secured on related assets as set out below:
						Group				Company
						2013		2012		2013		2012
	Gross amounts payable:					£		£		£		£
	Within one year					-		22,702		-		15,767
						-		22,702		-		15,767
	Less: finance charges allocated to future periods					-		(9,457)		-		(6,372)
						-		13,245		-		9,395

21.	Provisions for other liabilities					Group				Company
						2013		2012		2013		2012
						£		£		£		£
	Loan settlement costs and profit share payable
	At 1stMarch					-		2,350,000		-		2,020,000
	Payment in year					-		(625,000)		-		(437,500)
	Write back of provision in year					-		(185,000)		-		(144,500)
	Transfer to current liabilities: trade and other payables					-		(1,540,000)		-		(1,438,000)
	At 28th/29th February					-		-		-		-
	On 22nd June 2010, the Company entered into an agreement to acquire the entire issued share capital of Templeco 643 Limited for a consideration of £1,250,000. The Company acquired Templeco 643 Limited as settlement in lieu of the loan arrangement agreement to share in the profits of The Abingdons Partnership. Of the consideration, two payments of £75,000 each were made on 22nd June 2010 and 16th August 2010. The balance of £1,100,000 was due from the proceeds of the dividends from The Lancasters Development. The balance payable was renegotiated to £965,000 payable in instalments. The Group repaid £625,000 on 31st January 2012, £175,000 on 30th March 2012, £150,000 on 31st May 2012 and the balance of £15,000 on 30th June 2012. A provision of £1,200,000 (2012: £1,200,000) which was transferred to current liabilities: trade and other payables, represented the profit share payable to the Northacre PLC Directors Retirement and Death Benefit Scheme in relation to sale of Group's interest in The Abingdons Partnership. The amount represented the maximum possible profit share and was paid on 30th November 2012 from dividends received from The Lancasters Development.

22.	Future financial commitments
	Operating Leases					Group				Company
						2013		2012		2013		2012
						£		£		£		£
						Land & Buildings		Land & Buildings		Land & Buildings		Land & Buildings
	Net amount payable on operating leases which expire:
	Within one year					147,975		147,777		147,975		147,777
	In two to five years					591,900		591,900		591,900		591,900
	In over five years					478,790		626,765		478,790		626,765
						1,218,665		1,366,442		1,218,665		1,366,442

						Group				Company
	Operating Leases					2013		2012		2013		2012
						£		£		£		£
						Other		Other		Other		Other
	Net amount payable on operating leases which expire:
	Within one year					34,077		35,247		12,920		12,920
	In two to five years					58,588		92,665		32,300		45,220
	In over five years					-		-		-		-
						92,665		127,912		45,220		58,140

23.

Capital Commitments

At the reporting date there were no outstanding commitments for capital expenditure.

24.

Earnings per Share

Profit per share of 80.96p (2012: loss 27.27p) is calculated on the profit attributable to Ordinary shares of £21,634,726 (2012: loss £7,288,472) divided by the weighted number of Ordinary shares in issue during the period.

Computation of basic earnings per share:

2013

2012

Net profit/(loss)

£21,634,726

(£7,288,472)

Weighted average number of shares outstanding

26,723,643

26,723,643

Basic loss per share

80.96p

(27.27)p

Diluted loss per share

80.96p

(27.27)p

There were no potentially dilutive instruments in issue during the current or preceding year. All amounts shown relate to continuing operations.

25.	Share Capital										2013		2012
											£		£
	Called up, allotted and fully paid:
	26,723,643 Ordinary shares of 2.5p each										668,091		668,091
	Nil 'A' shares of 2.5p each										-		-
											668,091		668,091

  26.      Contingent Liabilities

The Company is included in a group registration for VAT purposes and is therefore jointly and severally liable for all other group companies' VAT liabilities        amounting to £nil (2012: £123,804).

27.	Related Party Transactions
	Group
	The Group's related parties as defined by International Accounting Standard 24 (revised), the nature of the relationship and theamount of transactions
	with them during the period were as follows:
			Nature of		2013			2012
	Related Party		Relationship		£	£		£	£		Nature of Transactions
					Total transactions in the year	Balance at the year end		Total transactions in the year	Balance at the year end
	Northacre PLC		1		-	-		(3,000)	3,000		Management fee receivable
	Directors Retirement and										from the Scheme
	Death Benefit Scheme
	Northacre PLC		1		699,602	-		50,398	(699,602)		Loan repayable to the Scheme
	Directors Retirement and										by Northacre PLC. Loan was repaid
	Death Benefit Scheme										on 27th December 2012
	Northacre PLC Directors Retirement and Death Benefit Scheme		1		24,859	-		98,883	-		Interest payable to the Scheme on
											the loan to Northacre PLC. All
											interest was paid on 27thDecember 2012
	Northacre PLC		1		-	-		(108,465)	-		Disbursements paid by Northacre
	Directors Retirement and										PLC on behalf of the Scheme
	Death Benefit Scheme
	Northacre PLC		1		1,200,000	-		50,000	(1,200,000)		Provision in respect of profit share
	Directors Retirement and										to the Scheme in relation to the sale
	Death Benefit Scheme										of Group's interests in The
											Abingdons Partnership. The profit share was paid on 30th November 2012
	K.B. Nilsson		2		-	-		140,617	-		Amount owed to K.B. Nilsson from
											Northacre PLC. The loan was repaid on 31st October 2011
	K.B. Nilsson		2		-	-		(23,498)	-		Interest payable to K.B Nilsson
											on the loan to Northacre PLC.
											The interest was paid on 31st October 2011
	K.B. Nilsson		2		-	-		-	-		K.B. Nilsson provided a
											personal guarantee for £570,000 to the Group's bankers as security in respect of all liabilities of the Group to the bank. The guarantee was released on 7th November 2011
	E.B. Harris		3		66,125	(30,000)		20,000	(30,000)		Non-executive Directors fees for
											March 2012 - February 2013 invoiced from E.C. Harris LLP
	M. Williams		4		65,500	(5,000)		(30,000)	-		Non-executive Directors fees for
											March 2012 - February 2013
	M.A. AlRafi		5		-	-		300,000	-		Loan repayable to MTAF Group
											(M.A. AlRafi) by Northacre PLC.
											Loan was repaid on 31st October 2011
	M.A. AlRafi		5		-	-		(19,889)	-		Interest payable to MTAF Group
											(M.A. AlRafi)on the £300,000 loan
											to Northacre PLC. Interest was paid on 31st October 2011

	M.A. AlRafi		5		-	-		(390,000)	-		Premium paid on the early
											redemption of the £300,000 loan to Northacre PLC. Premium was paid
											on 31st October 2011
	M.A. AlRafi		5		120,000	-		(60,000)	-		Executive Directors fees for
											March 2012 - February 2013
	M.A. AlRafi		5		-	-		350,000	-		Loan repayable to MTAF Group
											(M.A. AlRafi) by Northacre PLC
											Including a £50,000 fixed premium.
											Loan was repaid on 31st October 2011
	M.A. AlRafi		5		-	-		(23,493)	-		Interest payable to MTAF Group
											(M.A. AlRafi) on the £350,000 loan
											to Northacre PLC. Interest was paid on 31st October 2011
	M.A. AlRafi		5		-	-		(260,000)	-		Premium paid on the early
											redemption of the £350,000 loan to Northacre PLC. Premium was paid
											on 31st October 2011
	M.A. AlRafi		5		1,000,000	(975,000)		-	-		Bonus of £1,000,000 is payable from
											The Lancasters Development dividends. £25,000 was paid on 28th November 2012 and the balance of £975,000 will be paid after the year end
	A. AlRafi		6		-	-		(3,200,000)	-		Loan repayable to A. AlRafi
											by Northacre PLC. Loan was repaid
											on 31st October 2011
	A. AlRafi		6		-	-		(631,169)	-		Interest payable to A. AlRafi on the
											£800,000 loan to Northacre PLC.
											Interest was paid on 31st October 2011

	Nature of Relationships
1	K.B. Nilsson is a trustee and beneficiary of the Northacre PLC Directors Retirement and Death Benefit Scheme.
2	K.B. Nilsson is a Director of the Company.
3	E.B. Harris is a Director of the Company, and a member of E.C. Harris LLP.
4	M. Williams was a Director of the Company (resigned on 27th March 2013).
5	M.A. AlRafi was a Director of the Company (resigned on 25th June 2013).
6	A. AlRafi is the father of M.A. AlRafi.

Company
The Directors' and pension fund transactions in the Company are included in the Group disclosure above. In addition to these, the Company has the following related party transactions as defined by International Accounting Standard 24 (revised).
			Nature of		2013			2012
	Related Party		Relationship		£	£		£	£		Nature of Transactions
					Total transactions in the year	Balance at the year end		Total transactions in the year	Balance at the year end
	Group entities		1		264,931	-		321,357	-		Management Fees receivable
											in year from Group
											subsidiaries provided at arm's length
	Group entities		1		(51,372)	-		(30,417)	-		Management Fees payable in
											year to Group subsidiaries
											provided at arm's length
	Nature of Relationships
1	The Group entities are wholly owned subsidiaries of the Company.
The balances at the reporting date are shown under notes 16 and 17 of the consolidated financial statements.

28.     Events after the Reporting Date

On 8^th April 2013 Northacre PLC received a fifth distribution of £10,000,000 from The Lancasters Development with a further £5,000,000 received on 2^nd July 2013. Together with the previous distributions of £27,707,059 the Group has received to date £42,707,059 of the total expected profits from The Lancasters Development.

On 17^th January 2013, Spadille Limited announced a mandatory cash offer to acquire the entire issued and to be issued share capital of Northacre PLC, the full terms and conditions of which and the procedures for acceptance were set out in the offer document posted to Northacre Shareholders on 7^th February 2013. On 15^th February 2013, Spadille Limited announced that the offer was wholly unconditional. On 1^st March 2013, Spadille Limited announced that the offer would remain open for acceptances until 1.00 p.m. (London time) on 14^th March 2013. On 15^th March 2013 the Group announced that the offer was no longer open for further acceptances. Together with the 13,365,000 Northacre PLC shares acquired by Spadille Limited prior to 15^th February 2013, the number of Northacre PLC shares acquired by Spadille Limited or for which valid acceptances had been received by Spadille Limited before 14^th March 2013 is 17,861,400 Northacre PLC shares, representing 66.84 per cent of Northacre's PLC issued share capital.

On 19^th June 2013 the Group announced that Ken MacRae had resigned as Chief Executive Officer and Finance Director of Northacre PLC. 

On 25^th June 2013 the Group announced that Mohamed AlRafi had resigned as a Director of Northacre PLC. 

On 27^th June 2013 the Group announced that it has entered into a consultancy agreement with ADCM under which ADCM will provide a range of advice, analysis and management support services to the Company. ADCM will also seek to introduce the Company to its network of real estate finance and development professionals, investors, and actively seek to source new opportunities for the Company across local and wider markets. Under the terms of the seven-year agreement, which the Company may terminate at each anniversary date, the Company shall pay to ADCM an annual fee of £1.2 million and ADCM shall be entitled to receive a fee of 35% of profits earned by the Company as a result of engagements entered into during the term of the agreement. Any profits arising in relation to The Lancasters Development are specifically excluded from this fee arrangement. Jassim Alseddiqi and Mustafa Kheriba, both Directors of the Company, are deemed to be related parties of ADCM and the Company.

On 3^rd July 2013 the Group announced that Alexandre de Rothschild had been appointed as a Non-Executive Director of Northacre PLC.

29.     Immediate and Ultimate Parent Undertakings

The immediate and ultimate parent undertakings are Spadille Limited and Abu Dhabi Capital Management LLC respectively.

 

END

 

 

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