Interim Results

RNS Number : 7111I

Northacre PLC

21 November 2008

 



NORTHACRE PLC (the 'Company')

Interim Results 

Six months to 31 August 2008

21 November 2008

Overview

Northacre continues to maintain its position as the developer with an unrivalled track record for residential developments across Prime Central London. As forecasted, the recent downturn has significantly impacted all sectors of the market. Our schemes, however, are not due for delivery until 2010/2011 and we remain confident that by then market activity will have returned to levels similar to those of 2007.

Financial Results

Turnover for the period increased to £3,950,475 (2007 - £3,052,244) with gross profit increasing to £2,552,938 (2007 - £2,546,484). Profit before tax was £25,691 (2007 - £150,465) with a basic profit per share of 0.09 pence (2007 - 0.60 pence). Net Asset Value per share was 47.3 pence (2007 - 47.5 pence). The final account from the Park Street scheme has been received in the period and has been fully utilised in redeeming the Group's debt position. The operating subsidiaries, Nilsson Architects Ltd and Intarya Ltd have seen increased fee income generated from the developments in hand and, more notably, from new overseas assignments. The Board is not declaring an interim dividend.

Operational Review

Park Street

The final account for this successful scheme has been achieved in the period with the final bonus fee received in July 2008.

The Vicarage

Following the successful High Court decision last year, a second Public Inquiry has been set for the end of November 2008, with a decision anticipated in January 2009. In the meantime, negotiations with The Royal Borough of Kensington and Chelsea will continue in the hope that a suitable alternative planning solution can be agreed.

The Kensington

As announced on the 20 November 2008, the s106 Agreement has been completed and a formal planning consent issued by The Royal Borough of Kensington and Chelsea. In view of the current difficult economic climate the Group is continuing to explore with its partners the most prudent and sensible way of moving forward with the development.

The Lancasters

This landmark development continues to receive high acclaim from all quarters. The success of the first phase of marketing has generated £105m of early off-plan sales representing one third of the total apartments. The construction works are on programme for occupation of the first completed apartments by the end of 2010.

The Warwick

Following receipt of a unanimous planning consent in July 2008, and subject to the availability of debt, it remains our plan to implement the development works on site during 2009.

Despite the severity of the market downturn, the Group continues to seek new opportunities and assignments to add to its pipeline of business for generating additional fee income and profit participation. Moreover, the diversity of the Group and its source of income continues to be a very important attribute of the Northacre business plan going forward. 

All enquiries:

Northacre Plc

John Hunter - Chief Executive 

Manish Santilale - Finance Director

Tel: [phone]

KBC Peel Hunt Ltd        

Capel Irwin

Nicholas Marren

Tel: [phone]

Summarised Consolidated Interim Income Statement (Unaudited)
					6 Months		6 Months		Year
					ended		ended		ended
	Note				31.8.2008		31.8.2007		29.2.2008
					Unaudited		Unaudited		Audited
					£'000		£'000		£'000
Group Revenue	2				3,950		3,052		7,371
Cost of sales					(1,397)		(506)		(1,563)
Gross Profit					2,553		2,546		5,808
Administrative expenses					(2,537)		(2,398)		(5,715)
Other operating income					9		12		23
Group Profit from Operations					25		160		116
Finance Income					56		60		130
Finance Expense					(55)		(69)		(148)
Share of loss from associated undertakings					-		-		(15)
Profit before Taxation					26		151		83
Taxation	3				(5)		(14)		-
Profit for the period attributable
to equity holders of the Company					21		137		83
Profit per ordinary share	4
Basic					0.09p		0.60p		0.36p
Diluted					0.09p		0.60p		0.36p
There were no acquisitions or disposals of any activities in the period.

Summarised Consolidated Interim Balance Sheet (Unaudited)
							31.8.2008		31.8.2007		29.2.2008
							Unaudited		Unaudited		Audited
							£'000		£'000		£'000
Non current assets
Goodwill							8,828		8,828		8,828
Property, plant and equipment							98		52		90
Investments							51		66		51
Investments in joint ventures							2,441		1,693		2,410
							11,418		10,639		11,379
Current Assets
Inventories							93		263		123
Trade and other receivables							2,792		1,790		3,016
Cash and cash equivalents							-		1,143		297
							2,885		3,196		3,436
Total Assets							14,303		13,835		14,815
Current Liabilities
Trade and other payables							2,178		1,507		2,542
Borrowings, including lease finance							95		1,000		-
							2,273		2,507		2,542
Non Current Liabilities
Borrowings, including lease finance							1,286		550		1,550
							1,286		550		1,550
Total Liabilities							3,559		3,057		4,092
Equity
Share capital							568		568		568
Share premium account							17,449		17,449		17,449
Retained Earnings							(7,273)		(7,239)		(7,294)
Total Equity							10,744		10,778		10,723
Total Equity and Liabilities							14,303		13,835		14,815

Summarised Consolidated Interim Cash Flow Statement (Unaudited)
					6 Months		6 Months		Year
					ended		ended		ended
					31.8.2008		31.8.2007		29.2.2008
					Unaudited		Unaudited		Audited
					£'000		£'000		£'000
Net Cash Flow from Operating Activities
Profit from Operations before tax					26		151		83
Adjustments for:
Investment income					(56)		(60)		(130)
Finance costs					55		69		148
Share of loss in associate					-		-		15
Depreciation and amortisation					25		8		28
(Increase)/Decrease in working capital					(115)		1,373		1,261
Interest Paid					(55)		(69)		(148)
Taxation Paid					-		-		(52)
Net cash (outflow)/inflow from operations					(120)		1,472		1,205
Net Cash Flow from Investing Activities
Purchase of property, plant and equipment					(33)		(39)		(96)
Purchase of interest in joint venture					-		(260)		(977)
Return of equity in joint venture					(31)		980		980
Net cash used in investing activities					(64)		681		(93)
Net Cash Flow from Financing Activities
Interest received					26		20		60
Dividends received					30		40		70
Transfer to short term loan					-		(1,000)		-
Loan repayment					(264)		(125)		-
Net cash from financing activities					(208)		(1,065)		130
(Decrease)/Increase in Cash and Cash
Equivalents					(392)		1,088		1,242
Cash and cash equivalents at beginning of period					297		(945)		(945)
Cash and cash equivalents at end of period					(95)		143		297

Consolidated Interim Statement of Changes in Shareholders' Equity (Unaudited)
		Share		Share		Retained		Total
		Capital		Premium		Earnings
		£'000		£'000		£'000		£'000
As at 1 March 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
Loss for the period		-		-		(55)		(55)
As at 29 February 2008		568		17,449		(7,294)		10,723
Profit for the period		-		-		21		21
As at 31 August 2008		568		17,449		(7,273)		10,744

Notes to the Unaudited Interim Financial Statements

For the Six Months ended 31 August 2008

1

Basis of Preparation and Accounting Policies

Basis of Preparation

The interim financial information for the six months ended 31 August 2008 and 31 August 2007 is unaudited. The interim financial information was approved by the Board of Directors on 20 November 2008.

The statutory financial statements for the year ended 29 February 2008, prepared under International Financial Reporting Standards (IFRS), 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.

These accounts have been prepared in accordance with International Accounting Standard (IAS) 34 'Interim Financial Reporting'.

The interim financial information does not constitute statutory accounts within the meaning of the Companies Act 1985.

Accounting Policies

The accounting policies adopted are consistent with those applied as at 29 February 2008 and those that the Directors expect to be adopted as at 28 February 2009. They are set out in full in the financial statements for the year ended 29 February 2008.

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 £750,000 is not due for repayment until 31 July 2013.

(ii) Two further loans of £275,000 each, from the Northacre PLC Directors Retirement and Death 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 31 August 2009.

(iii) The group's current banking facilities are in place until November 2009.

The directors have prepared detailed cash flow projections for the period ended 31 August 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.

Notes to the Unaudited Interim Financial Statements

For the Six Months ended 31 August 2008 (continued)

1

Basis of Preparation and Accounting Policies (continued)

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 thereof, 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 and recoverability of goodwill

-

The book value of fixed assets and depreciation

Basis of Consolidation

The group accounts include the accounts of the company and its subsidiary undertakings, together with the group's share of the results of joint ventures and associates.

Revenue

Turnover 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.

Investments in joint ventures

The company's investments described as investments in joint ventures represent equity stakes and capital contributions made in respect of projects undertaken with other partners. The group's equity stake in all the joint ventures ranges from 5% to 45% with an incentivised profit share entitlement ranging from 50% to 60% depending on certain thresholds being achieved in each project.

All the investments are in unquoted undertakings where a reliable estimate of fair value is not able to be determined because of the range of potential estimates. The investments are therefore stated at cost, less any necessary provision for impairment.

Goodwill

Goodwill is determined by comparing the amount paid on the acquisition of a business and the aggregate fair value of its separable net assets and is reviewed annually for impairment and adjusted appropriately to reflect the true value as at that date.

Financial Risk Management

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.

Notes to the Unaudited Interim Financial Statements

For the Six Months ended 31 August 2008 (continued)

1

Basis of Preparation and Accounting Policies (continued)

Financial Risk Management (continued)

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.

2

Segmental Information

The group's primary segments are business segments. The segmental analysis of the group's business was derived from its principal activities as follows:

Revenue

6 Months ended

6 Months ended

Year ended

31.8.2008

31.8.2007

29.2.2008

Unaudited

Unaudited

Audited

£'000

£'000

£'000

Profit shares and bonus fees - property development

-

45

147

Development management

630

977

2,816

Interior design

1,881

883

2,603

Architectural design

1,439

1,147

1,805

3,950

3,052

7,371

Profit before Taxation
					31.8.2008		31.8.2007		29.2.2008
					Unaudited		Unaudited		Audited
					£'000		£'000		£'000
Development management					(672)		(444)		(740)
Interior design					67		81		374
Architectural design					631		514		464
					26		151		98
Share of (loss)/profit of associate					-		-		(15)
					26		151		83

Notes to the Unaudited Interim Financial Statements
For the Six Months ended 31 August 2008 (continued)
3	Taxation
					31.8.2008		31.8.2007		29.2.2008
					Unaudited		Unaudited		Audited
					£'000		£'000		£'000
	Current taxation				5		14		-
4	Earnings Per Share				6 Months		6 Months		Year
					ended		ended		ended
					31.8.2008		31.8.2007		29.2.2008
					Unaudited		Unaudited		Audited
	Weighted average number of shares in issue				22,713,644		22,713,644		22,713,644
	Profit for the period attributable to equity holders of the
	Company (£'000)				21		137		83
	Basic Earnings Per Share (pence)				0.09p		0.60p		0.36p
	Diluting Earnings Per Share (pence)				0.09p		0.60p		0.36p
	There are no potentially dilutive instruments in issue during the current or preceding year. All amounts shown relate to continuing and total operations.
5	Other Information
	The interim statement was approved by the directors on 20 November 2008.
	A copy of the interim statement will be made available today on our website www.northacre.com

Independent Review Report to Northacre Plc
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 August 2008 which comprises the consolidated income statement, the consolidated balance sheet, the consolidated cash flow statement, the consolidated statement of changes in shareholders' equity and the related notes. We have read other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information contained in the condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. Our work is 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 half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Rules of the Alternative Investment Market.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly report based on our Review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.
Independent Review Report to Northacre Plc (continued)
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months to 31 August 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Rules of the Alternative Investment Market.
	Kingston Smith LLP
	Chartered Accountants
Devonshire House
60 Goswell Road
London EC1M 7AD
Date: 20 November 2008

 

END

 

 

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