Interim Results
Northacre PLC
20 November 2007
Northacre PLC (the 'Group' or 'Company')
Interim Results
Six Months to 31 August 2007
Overview
Northacre has re-established itself at the forefront of the residential
development market, with a portfolio of five schemes across prime Central
London. Although recent turmoil in the financial sector has impacted on the
levels of activity in the speculation and investment end of the market, there
continues to be a good appetite for Northacre's revival style of high quality
residential developments.
Financial Results
Turnover for the period was £3,052,244 (2006 - £2,410,837) with gross profit of
£2,546,484 (2006 - £1,789,819). Pre-tax profit was £150,465 (2006: £123,401)
with a basic profit per share of 0.60 pence (2006 - 0.55 pence). The anticipated
bonus fee of £2.6m from the Park Street scheme has been received in the period
and has been fully utilised in redeeming the Group's debt position. Following
the successful re-financing of The Lancasters senior debt funding, the Group's
equity investment to date of £980,000 has been returned and placed on deposit
for investment in future schemes. As announced on 5th November 2007 the Company
has, through a joint venture, exchanged contracts for the West London Telephone
Exchange site. The contract has the benefit of a delayed completion until
December 2008. The Group's equity commitment is £600,000 representing 5% of the
total equity requirement but also entitles Northacre to a profit share ranging
from 5% to 50% of the development returns. The Board is not declaring an interim
dividend.
Operational Review
Park Street
Successful completion of the scheme has been achieved with, as anticipated, the
bonus fee received in April 2007. This Park Street development has been a useful
exercise as a forerunner to the Lancasters and its quality of design and finish.
Vicarage Gate
Further discussions with the Royal Borough of Kensington and Chelsea are
continuing in the hope of finding a solution to this long outstanding planning
struggle. We anticipate returning to a new public inquiry by the end of the
first quarter of 2008 if an agreement cannot be reached.
The Kensington
Following a lengthy period of detailed public consultation we now expect a
planning hearing and a decision on this landmark site at the Kensington Odeon by
the end of this year. Works for commencing the development of this scheme are
programmed to begin during the first half of 2008.
The Lancasters
With the development funding secured, the main demolition works for developing
this revival scheme overlooking Hyde Park at The Lancasters is well underway.
The first phase of the marketing campaign is due to be launched in the early
part of 2008. The response to our art hoarding installed around the site has
been overwhelming.
Leinster House Hotel
It is our intention to secure a planning consent in the short term for a
conversion of this hotel to residential apartments opposite The Lancasters.
West London Telephone Exchange
In our first joint venture with Bomac, an Irish investment group, the Group has
now exchanged contracts for the acquisition of the West London Telephone
Exchange site in Warwick Road W8. This site together with three other
neighbouring sites represents the assembly of a substantial regeneration scheme
in the central zone of Kensington. The Council has prepared a planning brief
setting out their planning policy for the treatment of this important new 'eco
village'. Once this planning brief is adopted, Northacre expects to secure a
planning consent for its new residential scheme in Warwick Road during the first
half of 2008.
The operating subsidiaries of Nilsson Architects and Lifestyles (Interiors) have
secured new assignments in the period under review. We are confident their
positive contribution to the Group fee income will be maintained.
The Group continues to review further new opportunities, which meet our
investment criteria that provide additional fee income together with rising
profit participation according to the performance of its schemes.
Enquiries :
Northacre Plc Tel : (020) 7349 8000
John Hunter, Chief Executive
Manish Santilale, Finance Director
KBC Peel Hunt Ltd Tel : (020) 7418 8900
Capel Irwin
Nicholas Marren
Summarised Consolidated Interim Income Statement
(Unaudited)
6 Months 6 Months Year
ended ended ended
Note 31.8.2007 31.8.2006 28.2.2007
Unaudited Unaudited Unaudited
Restated Restated
£'000 £'000 £'000
Group Revenue 2 3,052 2,411 8,087
Cost of sales (506) (621) (1,498)
Gross Profit 2,546 1,790 6,589
Administrative expenses (2,398) (1,669) (3,982)
Other operating income 12 37 62
Group Profit from Operations 160 158 2,669
Finance Income 60 30 69
Finance Expense (69) (64) (163)
Share of profit from associated - 23
undertakings
Profit before Taxation 151 124 2,598
Taxation 3 (14) - (56)
Profit for the period attributable
to equity holders of the Company 4 137 124 2,542
Profit per ordinary share - 5
continuing operations
Basic 0.60p 0.55p 11.19p
There were no acquisitions or disposals of any
activities in the period.
Summarised Consolidated Interim Balance Sheet
(Unaudited)
31.8.2007 31.8.2006 28.2.2007
Note Unaudited Unaudited Unaudited
Restated Restated
£'000 £'000 £'000
Non Current Assets
Goodwill 8,828 8,828 8,828
Property, plant and equipment 52 25 21
Investments 66 47 66
Investment in joint 1,693 2,151 2,413
ventures
10,639 11,051 11,328
Current Assets
Inventories 263 113 114
Trade and other 1,790 897 3,925
receivables
Cash and cash 1,143 - 33
equivalents
3,196 1,010 4,072
Total Assets 13,835 12,061 15,400
Current Liabilities
Trade and other 1,507 1,768 2,231
payables
Borrowings, including lease 1,000 397 978
finance
2,507 2,165 3,209
Non Current
Liabilities
Borrowings, including lease 550 1,674 1,550
finance
550 1,674 1,550
Total Liabilities 3,057 3,839 4,759
Equity
Share capital 568 568 568
Share premium account 17,449 17,449 17,449
Retained Earnings (7,239) (9,795) (7,376)
Total Equity 4 10,778 8,222 10,641
Total Equity and 13,835 12,061 15,400
Liabilities
Summarised Consolidated Interim Cash Flow Statement
(Unaudited)
6 Months 6 Months Year
ended ended ended
31.8.2007 31.8.2006 28.2.2007
Unaudited Unaudited Unaudited
Restated Restated
£'000 £'000 £'000
Net Cash Flow from Operating
Activities
Profit from Operations 160 158 2,669
Adjustments for:
Depreciation and amortisation 8 7 12
Decrease/(increase) in working 1,373 (514) (3,245)
capital
Interest Paid (69) (71) (48)
Net cash inflow/(outflow) from 1,472 (420) (612)
operations
Net Cash Flow from Investing
Activities
Purchase of property, plant (39) (10) (12)
and equipment
Purchase of interest in joint (260) (555) (817)
venture
Return of equity in joint 980 - -
venture
Net cash used in investing 681 (565) (829)
activities
Net Cash Flow from Financing
Activities
Interest received 20 7 9
Dividends received 40 30 60
New loans - 124 -
Transfer to short term loan (1,000) - -
Loan repayment (125) - -
Net cash from financing (1,065) 161 69
activities
Increase/(Decrease) in Cash
and Cash
Equivalents 1,088 (824) (1,372)
Cash and cash equivalents at (945) 427 427
beginning of period
Cash and cash equivalents at 143 (397) (945)
end of period
Notes to the Unaudited Interim Financial Statements
For the Six Months ended 31st August 2007
1 Basis of Preparation and Accounting Policies
Basis of Preparation
The interim financial information is unaudited. The interim financial information was
approved by the Board of Directors on 19th November 2007.
The results, assets and liabilities of the comparative period to 31 August 2006 and the year
ended 28 February 2007 have been restated in order to adopt International Financial
Reporting Standards for the first time. The information for the year ended 28 February 2007
is based on the statutory financial statements for the year but has been adjusted to comply
with International Financial Reporting Standards. The adjustments have not been subject to
audit. The statutory financial statements for the year ended 28 February 2007, prepared
under applicable UK accounting standards, have been reported on by the Group auditors and
delivered to the Registrar of Companies. The audit report was unqualified and did not
contain a statement under s237 (2) or s237 (3) of the Companies Act 1985.
The interim financial information does not constitute statutory accounts within the meaning
of the Companies Act 1985.
Accounting Convention
The statutory financial statements for the year ended 28 February 2008 will be prepared in
accordance with International Financial Reporting Standards (IFRS) and therefore, the
interim financial information has also been prepared in accordance with those IFRS that are
expected to apply at the year end, except that IAS34 'Interim Financial Statements', which
is not mandatory for AIM companies, has not been adopted in the preparation of this
statement. The Group's financial statements were previously prepared under UK GAAP. Details
of the effects of changes are given below.
IFRS 1 permits those companies adopting IFRS for the first time to take certain exemptions
from the full requirements of IFRS in the transition period. The Group has taken advantage
of the following exemptions:
(a) IFRS 3 ' Business Combinations' - IFRS 3 has not been retrospectively applied
to acquisitions that took place prior to 1 March 2006.
The principal change to accounting policies arising from the adoption of IFRS is as follows:
Business Combinations and Goodwill
Goodwill relating to acquisitions prior to 1 March 2006 is carried at the net book
value on that date, is no longer amortised and 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.
The effect of this change is shown in note 6.
Notes to the Unaudited Interim Financial Statements
For the Six Months ended 31st August 2007
Going Concern
The company and group meet their day to day working capital requirements partly through monies loaned
from the Northacre PLC Directors Retirement and Death Benefit Scheme, partly from the group's bankers
and partly from other loans. These facilities are expected to remain in place for the foreseeable
future. In particular:
(i) One of the loans due to the Northacre PLC Directors Retirement and Death Benefit Scheme of
£1million is not due for repayment until 31st July 2008.
(ii) Two further loans of £275,000 each, from the Northacre PLC Directors Retirement Benefit Scheme
and from a third party are not repayable until the return of equity and/or realisation of profit share
from one specific project, which is not expected to occur before 31st August 2008.
(iii) The group's current banking facilities are in place until July 2008.
The directors have prepared detailed cash flow projections for the period ended 28th February 2009
making reasonable assumptions about the levels and timing 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 operate within the available facilities. On this basis the directors
consider it appropriate to prepare these interim financial statements on a going concern basis.
2 Segmental Information
The group's revenue has been analysed by principal activity as
follows:
6 Months ended 6 Months ended Year ended
31.8.2007 31.8.2006 28.2.2007
Unaudited Unaudited Unaudited
£'000 £'000 £'000
Profit shares and bonus fees - 45 - 2,619
property development
Development management 977 795 1,871
Interior design 883 777 1,985
Architectural design 1,147 839 1,612
3,052 2,411 8,087
3 Taxation
31.8.2007 31.8.2006 28.2.2007
Unaudited Unaudited Unaudited
£'000 £'000 £'000
Current taxation 14 - 56
Notes to the Unaudited Interim Financial Statements
For the Six Months ended 31st August 2007
4 Consolidated Interim Statement of Changes in
Shareholders' Equity
Share Share Retained Total
Capital Premium Earnings
£'000 £'000 £'000 £'000
As at 1 March 2006 568 17,449 (9,919) 8,098
Profit for the period - - 124 124
As at 31 August 2006 568 17,449 (9,795) 8,222
Profit for the period - - 2,419 2,419
As at 28 February 2007 568 17,449 (7,376) 10,641
Profit for the period - - 137 137
As at 31 August 2007 568 17,449 (7,239) 10,778
5 Earnings Per Share 6 Months 6 Months Year
ended ended ended
31.8.2007 31.8.2006 28.2.2007
Unaudited Unaudited Unaudited
Restated Restated
Weighted average number of shares in 22,713,644 22,713,644 22,713,644
issue
Profit for the period attributable to 137 124 2,542
equity holders of the Company (£'000)
Basic Earning Per Share 0.60 p 0.55 p 11.19 p
(pence)
The diluted earnings per share is not given as there are no diluting instruments in issue.
Notes to the Unaudited Interim Financial Statements
For the Six Months ended 31st August 2007
6 Restatement of Prior Periods to IFRS
The effect of the changes in accounting policies and other
restatements described in note 1 on the previously reported results,
assets and liabilities for the periods are, in summary, as follows:
IFRS
Adjustments
Goodwill
As
Previously Amortisation As
Stated Written back Restated
£'000 £'000 £'000
Six months ended 31 August
2006
Revenue 2,411 - 2,411
EBITDA 127 - 127
Group (loss)/profit from (472) 630 158
operations
(Loss)/profit before and (506) 630 124
after taxation
Goodwill 8,198 630 8,828
Property, plant and 25 - 25
equipment
Investments 47 - 47
Investment in Joint 2,151 - 2,151
Ventures
Current Assets 1,010 - 1,010
Total Assets 11,431 630 12,061
Current 2,165 - 2,165
Liabilities
Non-current 1,674 - 1,674
Liabilities
Total Liabilities 3,839 - 3,839
Equity 7,592 630 8,222
Total Equity and 11,431 630 12,061
Liabilities
Year ended 28 February 2007
Revenue 8,087 - 8,087
EBITDA 2,619 - 2,619
Group profit from 1,408 1,261 2,669
operations
Profit before and after 1,281 1,261 2,542
taxation
Goodwill 7,567 1,261 8,828
Property, plant and 21 - 21
equipment
Investments 66 - 66
Investment in Joint 2,413 - 2,413
Ventures
Current Assets 4,072 - 4,072
Total Assets 14,139 1,261 15,400
Current 3,209 - 3,209
Liabilities
Non-current 1,550 - 1,550
Liabilities
Total Liabilities 4,759 - 4,759
Equity 9,380 1,261 10,641
Total Equity and 14,139 1,261 15,400
Liabilities
The above IFRS adjustments relates to the write-back of amortised
goodwill since 1 March 2006.
Notes to the Unaudited Interim Financial Statements
For the Six Months ended 31st August 2007
7 Opening Reserves at 1st March 2006
No adjustments were required to be made to opening reserves or the opening
balance sheet as at 1st March 2006 in order to comply with IFRS after having
taken into account the exemptions permitted on transition to IFRS and
summarised in note 1.
8 Other Information
The interim statement was approved by the directors on 19 November
2007.
A copy of the interim statement will be posted to shareholders and made
available to the public for a period of 14 days from today at the company's
registered office: 48 Old Church Street, London SW3 5BY.
Independent Review Report to Northacre PLC
Introduction
We have been instructed by the company to review the financial information for the
six months ended 31st August 2007 which comprises the consolidated income
statement, the consolidated balance sheet, the consolidated cash flow statement and
the related notes. We have read the other information contained in the interim
report and considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the company in accordance with Bulletin 1999/4 issued
by the Auditing Practices Board. Our work has been undertaken so that we might
state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the company,
for our review work, for this report, or for the conclusions we have formed.
Directors' Responsibilities
The interim report, including the financial information contained therein, is the
responsibility of, and has been approved by, the directors. The Listing Rules of
the London Stock Exchange require that the accounting policies and presentation
applied to the interim figures should be consistent with those applied in preparing
the preceding annual accounts except where any changes, and the reasons for them,
are disclosed.
Review Work Performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board. A review consists principally of making
enquiries of group management and applying analytical procedures to the financial
information and underlying financial data and based thereon, assessing whether the
accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of controls
and verification of assets, liabilities and transactions. It is substantially less
in scope than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do not
express an audit opinion on the financial information.
Review Conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months ended
31st August 2007.
Kingston Smith LLP
Chartered Accountants
Devonshire House
60 Goswell Road
London EC1M 7AD
Date: 19th November 2007
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