TIDMNTA
RNS Number : 3086I
Northacre PLC
24 July 2012
NORTHACRE PLC (the "Company" or "Group")
Results for the year ended 29th February 2012
24th July 2012
Northacre PLC today announces its results for the year ended
29(th) February 2012.
Heritage
For over 20 years Northacre has successfully designed, developed
and marketed over GBP1.5bn of prime residential sites in London, a
track record unrivalled by any other residential developer.
Northacre's development portfolio includes The Lancasters in
Bayswater, Park Street in Mayfair and The Vicarage Gate, The
Bromptons & Earls Terrace in Kensington & Chelsea, all of
which are recognised as some of London's finest and most sought
after addresses.
Chairman's Statement
In the 2011/12 financial year we succeeded in placing the
business on a better footing for the future, and this is partly
reflected in the operating loss resulting from adjustments to our
cost base and the costs involved in refinancing our debt. Funding
of the Group is now on a more stable basis for the foreseeable
future and at a much lower overall cost than in the recent past.
This is no mean achievement in an environment of great uncertainty
where the impact of the faltering Euro on financial markets has
inevitably affected small businesses like ours.
Securing full completion of The Lancasters Development prior to
the year end is a milestone achievement. This development has been
6 years in the making and to realise the product of such quality is
of great pride to the Group. We continue to enjoy a strong working
relationship with our partners on the project, Minerva, who are now
under new ownership following their delisting from the market in
2011. We are confident that the few remaining unsold apartments at
The Lancasters will be sold in the coming months.
A key focus for the Group is now also The Vicarage Gate
development adjacent to Kensington Palace Gardens. We are very
excited about bringing this development to reality after planning
delays. The market for prime residential in London is more
international and, it seems, more sought after than at any time in
my experience. This is good to see but makes it extremely
challenging to secure new development opportunities, although the
Group continues to strive to bring forward the next development.
Since the year end, I decided to reduce my involvement in the
operational affairs of the Group in order to concentrate more of my
time on product design. I have stepped aside as Chief Executive
Officer in favour of Ken MacRae, who joined us in June 2011. Ken's
background, coming from real estate private equity and finance, has
proved invaluable to the Company in the successful refinancing of
the Company's existing debts as well as sourcing finance for new
development opportunities in a market where funding from
traditional sources is virtually non-existent. Ken has been of
great support to me during this year and I am looking forward to
progressing the Group with Ken at the helm.
Dividend Policy
The Board regards as a strong priority the payment of a dividend
to Shareholders just as soon as profits permit. With this in mind,
we feel it is helpful to set out our priorities in terms of
distributions in the near term.
The Board's intention is that proceeds from our projects will be
used in the following way:
I. Repayment of all debt
II. Funding of working capital
III. Dividend distribution to Shareholders
IV. Bonus payments to staff and Directors
While the distribution of a dividend is listed third above, it
is the strongest priority of the Board in terms of the distribution
of 'surplus' capital, i.e. after all liabilities are settled and
sufficient medium-term working capital secured. Currently, we are
able to forecast that we ought to be in a position to do this after
sufficient proceeds are received from The Lancasters Development,
provided no unforeseen events arise.
Final Thoughts
Page 6 of the Report and Accounts (Annual Report and Accounts
will be available on our website) carries a photograph of the
Tempesta sculpture, created by the renowned sculptor Helaine
Blumenfeld, and which we recently unveiled at The Lancasters. The
sculpture was funded by the Northacre-Minerva project and
represents one of the most significant contributions of public art
for a residential development ever made. This inspiring work of art
also shows the importance to Northacre of enhancing the living
environment as well as producing financially successful
developments.
As ever, I am greatly encouraged by the dedication of our
people, as we strive to secure further opportunities for the Group
in the months and years ahead.
Klas Nilsson
Executive Chairman
Copies of the Annual Report and Accounts will be available at
the office of Northacre PLC at 8 Albion Riverside, 8 Hester Road,
London SW11 4AX and are available on our website www.northacre.com
and are being posted to shareholders who elected to receive hard
copies.
Enquiries:
Northacre PLC
Klas Nilsson (Executive Chairman)
Ken MacRae (Chief Executive Officer & Finance Director)
020 7349 8000
Hudson Sandler Limited
Michael Sandler
020 7796 4133
Peel Hunt LLP (Nominated Adviser and Broker)
Capel Irwin
Harry Florry
020 7418 8900
Chief Executive's and Financial Review
Highlights
-- Net Asset Value (NAV) increased to 138.99 pence (2011: 92.90 pence)
-- Operating loss for the year is GBP6.5m (2011: GBP2.8m)
-- Total Comprehensive Income for the period is GBP12.3m (2011: GBP14.6m)
In the year under review, good progress has been made in the
Group on a number of fronts, although we have taken charges to the
accounts reflecting operational adjustments and refinancing in the
year. These inflated our non-recurring operating costs in 2011 and
produced a significant loss for the year, before recognition of the
fair value attributable to our financial assets, principally The
Lancasters Development profit share entitlement.
In 2011/12 our priorities were to rationalise the business to
better match the ongoing projects and improve our operational
efficiency, in order to continue providing the best development
management service to our partners on The Vicarage Gate and The
Lancasters projects, and to consolidate our financing at a lower
overall cost of funds. Each of these priorities has now been
realised, and I will address these in turn.
Operations
We have reduced the operating cost base of the Group, through
headcount reductions where appropriate and through managing
administrative costs prudently. As a result, after non-recurring
expenses such as loan arrangement costs, redundancy costs and
settlements with former Directors, the running costs of the
business are lower than in previous years. This will be most
accurately reflected in the 2012/13 year and beyond. We have
reduced the scale of the architecture business in line with a
reduced architecture role on The Lancasters and The Vicarage Gate
projects, which has resulted in a reduction in our operating costs.
Despite this, we retain a highly capable design management
capability to provide the lead on product design and space planning
as part of our development management service. The interior design
business has a new Managing Director, Daniel Kostiuc. Daniel and
his team are making good progress in securing new revenue for the
business and we hope to secure new contracts in the remainder of
the year.
Developments
Our development management team is engaged on two projects, at
The Vicarage Gate and the continuing responsibility at The
Lancasters. They are also working to secure new development
projects and have bid on several opportunities in the period.
The Lancasters
We completed the construction phase of The Lancasters
Development, with our partners, Minerva, during the year. Sales
have continued since the year end and only a small number of
apartments remain unsold. We expect all remaining apartments will
be sold in the coming months. We received an interim dividend of
GBP1.15m in the year and a further GBP3.0m after year end, making
GBP4.15m in total. These receipts represented the payout of two
tiers of the profit share structure. The potential value of profit
share from The Lancasters Development is recognised in our accounts
at a discounted level, taking into account the unsold units and the
time it may take to dispose of these. Further comment on this is
made in the Director's report.
Vicarage Gate
Since the year end, we secured planning consent on The Vicarage
Gate project and finalised the statutory agreements with the
planning authority. The development will provide c41,000 sq ft of
net saleable prime residential in a single building of modern
lateral apartments in one of the most desirable parts of
Kensington, next to Kensington Palace Gardens. Northacre is the
appointed development manager for the project. We have overseen
completion of the first phase of demolition of the site and
construction will commence in the summer, with full completion of
the building works expected in late 2014 or early 2015. Although we
sold our equity interest in the project, as announced in August
2010, we are entitled to share in the profits after a
pre-determined return to the investor. Currently, we forecast a
significant profit share coming from this project, dependent on
successful delivery.
Funding
With the objective of reducing our cost of funding, we
consolidated all external financing with a single loan from a
Middle East based funder in October 2011. However, since the year
end, we took advantage of the predominance of specialist finance
houses in the London market to refinance the facility at a much
lower cost of funds, with a vehicle managed by Chenavari Investment
Managers. Our funding cost has therefore been lowered to below 20%
p.a. This is still high but represents the nature of the funding
market at present, where traditional banks have substantially
withdrawn from small business lending. We aim to repay this
facility entirely as soon as proceeds from our developments
permit.
Significant non-recurring items which have inflated the loss
Impairment to Goodwill
Goodwill of GBP8.8m had been reflected in Northacre's accounts
since the business was listed on AIM in September 2000 and, as the
Directors are required to ensure that Goodwill reasonably reflects
the value that might be achieved through future revenue
opportunities. Our revaluation of goodwill has resulted in a charge
of GBP0.8m in the current year.
Loan arrangement and legal fees
Arranging the refinancing of our debt during the year has
resulted in a significant charge arising from loan redemption fees,
new loan arrangement fees, and legal costs associated with the
refinancing.
Review of Financial Results
Headlines
Revenue for the year decreased to GBP3.0m (2011: GBP5.7m),
reflecting reduced fee income from The Lancasters Development and a
lower level of activity in Intarya, which is being addressed and is
now improving. We received profit share income from The Lancasters
in the year of GBP1.15m and a further GBP3.0m after the year end.
Net Assets Per Share as at 29th February 2012 is 138.99 pence
(2011: 92.90 pence). The Net Asset Value reflects a number of
factors, including the reserves and the Board's opinion of the
value attributable to the Group's share of profits accruing from
The Lancasters Development, in so far as this can be valued
considering that the project has not been fully sold. A discount is
therefore applied to this reflecting an element of uncertainty
attached to the unsold units. Following the valuation the fair
value of The Lancasters Development amounted to GBP40.8m (2011:
GBP21.2m). This valuation is represented by the GBP42m fair value,
less the GBP1.15m dividend received in the period. Although the
loss attributable to equity holders is GBP7.3m (2011: GBP4.3m), the
consolidated comprehensive income for the period is GBP12.3m (2011:
GBP14.6m). This reflects the net position for the year after
recognising the estimate of value in The Lancasters Development
profit share entitlement, slightly discounted as noted above.
Consolidated Income Statement and Consolidated Statement of
Comprehensive Income
Revenue for the year decreased to GBP3.0m (2011: GBP5.7m). The
Group received some profit share during the year, which is shown as
investment revenue, supplementing fee income but reported a revenue
fall across all of its subsidiaries reflecting the reduced role
played on The Lancasters and The Vicarage Gate Developments.
Investment income increased to GBP1.2m (2011: GBP0.1m). GBP1.15m of
the reported increase represents a first interim dividend received
from The Lancasters Development. Administrative expenses were
GBP6.7m (2011: GBP5.0m) as a result of measures undertaken to
reduce overheads and the cost of refinancing debt. In accordance
with International Accounting Standards we have made a fair
valuation of our investment in The Lancasters Development with
reference to secured and forecast sales as at 29th February 2012.
The change in fair value reported for the year was an increase of
GBP19.6m (2011: GBP18.9m).
Consolidated Statement of Financial Position
In accordance with International Accounting Standards, the
investments in development projects (classified as available for
sale financial assets in the Consolidated Statement of Financial
Position) represent, where appropriate, the equity value in each of
our secured development schemes and any fair value adjustments. As
mentioned above, we have calculated the fair value of our
investment at The Lancasters Development and, including this fair
value adjustment, the available for sale financial assets amounted
to GBP40.8m (2011: GBP21.2m).
Outlook
The prime residential market in London has been extraordinarily
competitive in the past two years. The increase in prime house
prices has been well publicised, with central London values
returning to pre-recession levels. Within this environment we are
working on securing new development projects and to secure
strategic relationships with large central London landowners who
can provide development opportunities where Northacre's skills,
track record and branding can add significant value. Northacre
consists of an excellent group of people who are dedicated to
creating great residential places. The entire team are fully
committed to the future development of the business.
Ken MacRae
Chief Executive Officer
& Finance Director
Consolidated Income Statement
For the year ended 29(th) February 2012
Note 2012 2011
Continuing Operations GBP GBP
Group
Group Revenue 3 3,021,353 5,664,484
Cost of sales (2,068,876) (3,268,795)
------------ ------------
Gross Profit 952,477 2,395,689
Administrative expenses (6,676,018) (5,006,077)
Other operating costs:
Exceptional items 4 (756,879) (193,623)
Group Loss from Operations (6,480,420) (2,804,011)
Investment revenue 5 1,177,224 66,192
Other gains/(losses) 6 312,832 (1,355,248)
Finance costs 7 (2,054,269) (217,995)
Impairment of goodwill 12 (821,043) -
Loss for the period from continuing
operations (7,865,676) (4,311,062)
Discontinued Operations
Share of loss from associated undertaking 14(a) - (8,971)
------------ ------------
Loss before Taxation 8 (7,865,676) (4,320,033)
------------ ------------
Taxation 10 577,204 -
------------ ------------
Loss for the period attributable
to equity holders of the Company (7,288,472) (4,320,033)
============ ============
Loss per ordinary share
Basic - Continuing and total operations 24 (27.27)p (16.17)p
Diluted - Continuing and total
operations 24 (27.27)p (16.17)p
Company
Loss for the period attributable
to equity holders of the Company (12,629,475) (2,341,603)
============= ============
Consolidated Statement of Comprehensive Income
For the year ended 29(th) February 2012
Note 2012 2011
Continuing Operations GBP GBP
Group
Loss for the period attributable
to equity holders of the Company (7,288,472) (4,320,033)
------------ ------------
Other comprehensive income:
Changes in fair value of available
for sale financial assets 14(b) 19,605,236 18,904,996
------------ ------------
Total comprehensive income for
the period 12,316,764 14,584,963
============ ============
Company
Loss for the period attributable
to equity holders of the Company (12,629,475) (2,341,603)
------------- ------------
Other comprehensive income - -
------------- ------------
Total comprehensive loss for the
period 11 (12,629,475) (2,341,603)
============= ============
Consolidated Statement of Financial Position
As at 29(th) February 2012
Note 2012 2011
GBP GBP
Non-Current Assets
Goodwill 12 8,007,417 8,828,460
Property, plant and equipment 13 1,062,598 1,250,948
Investments in associates 14(a) - 42,168
Available for sale financial
assets 14(b) 40,810,580 21,205,344
----------- -----------
49,880,595 31,326,920
----------- -----------
Current Assets
Inventories 15 118,006 336,008
Trade and other receivables 16 998,556 863,589
Cash and cash equivalents 916,963 -
----------- -----------
2,033,525 1,199,597
----------- -----------
Total Assets 51,914,120 32,526,517
Current Liabilities
Trade and other payables 17 3,558,655 2,683,054
Corporation tax 18 - -
Borrowings, including
lease finance 19 10,513,442 377,251
----------- -----------
14,072,097 3,060,305
----------- -----------
Non-Current Liabilities
Borrowings, including
lease finance 20 699,602 2,290,555
Provisions for other liabilities 21 - 2,350,000
----------- -----------
699,602 4,640,555
----------- -----------
Total Liabilities 14,771,699 7,700,860
----------- -----------
Equity
Share capital 25 668,091 668,091
Share premium account 18,552,361 18,552,361
Retained earnings 17,921,969 5,605,205
----------- -----------
Total Equity 37,142,421 24,825,657
----------- -----------
Total Equity and Liabilities 51,914,120 32,526,517
Company Statement of Financial Position
As at 29(th) February 2012
Note 2012 2011
GBP GBP
Non-Current Assets
Property, plant and equipment 13 1,055,842 1,238,914
Investments 14(c) 8,007,421 10,090,079
------------- -------------
9,063,263 11,328,993
------------- -------------
Current Assets
Trade and other receivables 16 7,412,064 15,037,990
Cash and cash equivalents 753,669 -
------------- -------------
8,165,733 15,037,990
------------- -------------
Total Assets 17,228,996 26,366,983
Current Liabilities
Trade and other payables 17 21,150,311 13,718,813
Corporation tax 18 - -
Borrowings, including
lease finance 19 15,767 351,759
------------- -------------
21,166,078 14,070,572
------------- -------------
Non-Current Liabilities
Borrowings, including
lease finance 20 699,602 2,283,620
Provisions for other liabilities 21 - 2,020,000
------------- -------------
699,602 4,303,620
------------- -------------
Total Liabilities 21,865,680 18,374,192
------------- -------------
Equity
Share capital 25 668,091 668,091
Share premium account 18,552,361 18,552,361
Retained earnings (23,857,136) (11,227,661)
------------- -------------
Total Equity (4,636,684) 7,992,791
------------- -------------
Total Equity and Liabilities 17,228,996 26,366,983
Consolidated and Company Statements of Cash Flows
For the year ended 29(th) February 2012
Group Company
2012 2011 2012 2011
GBP GBP GBP GBP
Cash flows from operating
activities
Loss for the period before
tax (7,865,676) (4,320,033) (12,876,022) (2,341,603)
Adjustments for:
Investment revenue (1,177,224) (66,192) (191,575) (53,945)
Finance costs 2,054,269 217,995 2,003,907 196,127
(Profit)/loss on disposal
of investment in associate (127,832) 105,248 - -
Share of loss in associate - 8,971 - -
Depreciation and amortisation 223,808 102,382 183,072 60,000
Goodwill impairment 821,043 - - -
Provision against investments - - 2,082,358 -
Decrease/(increase) in inventories 218,002 (287,380) - -
(Increase)/decrease in trade
and other receivables (134,967) 1,734,181 7,625,926 38,329
(Decrease)/increase in trade
and other payables (1,474,399) 1,365,548 5,686,498 2,159,442
------------ ------------ ------------- ------------
Cash used in operations (7,462,976) (1,139,280) 4,514,164 58,350
Interest paid (2,054,269) (217,995) (2,003,907) (196,127)
Corporation tax - consortium
relief refunded 577,204 - 246,547 -
------------ ------------ ------------- ------------
Net cash (used in)/generated
from operating activities (8,940,041) (1,357,275) 2,756,804 (137,777)
------------ ------------ ------------- ------------
Cash flows from investing
activities
Proceeds from sale of/(purchase
of) investment in associate 170,000 - 170,000 (98)
Purchase of plant, property
& equipment (35,458) (1,031,171) - (1,042,697)
Proceeds of sale of available
for sale financial assets - 1,050,877 - -
Interest received 7,224 13,692 1,875 1,445
Dividends received 1,170,000 52,500 20,000 52,500
------------ ------------ ------------- ------------
Net cash generated from/(used
in) investing activities 1,311,766 85,898 191,875 (988,850)
------------ ------------ ------------- ------------
Cash flows from financing
activities
Proceeds from borrowings 10,490,740 1,217,849 - 1,217,849
Repayment of borrowings (1,568,247) (275,000) (1,843,247) (275,000)
Repayment of finance leases (158,570) (158,564) (130,832) (130,825)
------------ ------------ ------------- ------------
Net cash from financing activities 8,763,923 784,285 (1,974,079) 812,024
------------ ------------ ------------- ------------
Increase/(decrease) in cash
and cash equivalents 1,135,648 (487,092) 974,600 (314,603)
Cash and cash equivalents
at the beginning of the year (218,685) 268,407 (220,931) 93,672
------------ ------------ ------------- ------------
Cash and cash equivalents
at the end of the year 916,963 (218,685) 753,669 (220,931)
============ ============ ============= ============
Consolidated and Company Statements of Changes in Equity
For the year ended 29(th) February 2012
Called
Up Share
Share Premium Retained
Group Capital Account Earnings Total
GBP GBP GBP GBP
As at 1(st) March 2010 668,091 18,552,361 (8,979,758) 10,240,694
Loss for the period - - (4,320,033) (4,320,033)
Other Comprehensive Profit
for the period:
Changes in fair value of
available for sale financial
assets - - 18,904,996 18,904,996
As at 28(th) February
2011 668,091 18,552,361 5,605,205 24,825,657
======== =========== ============= =============
As at 1(st) 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 29(th) February
2012 668,091 18,552,361 17,921,969 37,142,421
======== =========== ============= =============
Called
Up Share
Share Premium Retained
Company Capital Account Earnings Total
GBP GBP GBP GBP
As at 1(st) March 2010 668,091 18,552,361 (8,886,058) 10,334,394
Total Comprehensive Loss
for the period - - (2,341,603) (2,341,603)
As at 28(th) February
2011 668,091 18,552,361 (11,227,661) 7,992,791
======== =========== ============= =============
As at 1(st) 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 29(th) February
2012 668,091 18,552,361 (23,857,136) (4,636,684)
======== =========== ============= =============
Notes to the Consolidated Financial Statements
For the year ended 29(th) February 2012
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 standards, amendments and interpretations to
published standards are mandatory for accounting periods beginning
on or after 1(st) March 2011 and have been applied to the financial
information presented:
-- Improvements to IFRSs 2010 - This is the third set of
amendments published under the IASBs annual improvements process
and incorporates minor amendments to seven standards and
interpretations. The amendments are effective for annual periods
beginning on or after 1(st) January 2011.
-- IAS 24 (revised), 'Related party disclosures', issued in
November 2009. It supersedes IAS 24 (revised), 'Related party
disclosures', issued in 2003. The revised IAS 24 is required to be
applied from 1(st) January 2011 and clarifies and simplifies the
definition of a related party. The Group has applied the revised
standard from 1st March 2011 and when applied the Group and the
Parent Company have disclosed any transactions between its
subsidiaries.
The following new standards, amendments to standards or
interpretations are mandatory for the first time for the financial
year beginning 1(st) March 2011, but are not currently considered
to be relevant to the Group (although they may affect the
accounting for future transactions and events):
-- Amendment to IFRIC 14, 'Prepayments of a minimum funding
requirement' issued in November 2009. The amendment permits a
voluntary prepayment of a minimum funding requirement to be
recognised as an asset.
-- IFRIC 19, 'Extinguishing financial liabilities with equity
instruments'. This clarifies the requirements of IFRSs when an
entity renegotiates the terms of a financial liability with its
creditor and the creditor agrees to accept the entity's shares or
other equity instruments to settle the financial liability fully or
partially.
The following new standards, amendments to standards and
interpretations have been issued, but are not effective for the
financial year beginning 1(st) March 2011 and have not been early
adopted:
-- 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.
The amendments are effective for annual periods beginning on or
after 1(st) July 2011.
-- 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'. 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'. This standard establishes
principles for financial reporting by parties to a joint
arrangement.
-- IFRS 12, 'Disclosure of interest in other entities'. 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'. 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'. 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.
-- 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.
-- IAS 19 (Revised), 'Employee Benefits'. 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' IAS 27
(Revised) 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' IAS 28
(Revised) 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' 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 loaned from a third party loan.
The Directors expect the new loan facilities agreed after the year
end to remain in place for the foreseeable future and to be renewed
on equally favourable terms in due course. In particular:
(i) The loan due to Northacre PLC Directors Retirement and Death
Benefit Scheme of GBP699,602 (2011: GBP750,000) is not repayable
until 31(st) July 2013. Due to a pension fund split which was
signed on 11(th) January 2012, the Group repaid GBP50,398 of the
loan. The balance is due to be repaid on 31(st) July 2013.
(ii) A Eurobond loan facility of GBP10,500,000 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 GBP800,000 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
GBP1,051,448 of the loan on 18(th) January 2012 plus GBP76,050
accrued interest. Since the year end the Group secured new
financing and the Eurobond was repaid in full on 30(th) May 2012.
The total amount repaid was GBP11,276,653 including interest of
GBP1,828,101.
(iii) A new loan facility of GBP15,000,000 was agreed with
Auster Real Estate Opportunities S.a.r.l. on 1(st) May 2012 and
GBP13,000,000 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 is due to be repaid in
18 months from the date of the draw down unless sufficient
dividends are received from The Lancasters Development. If
dividends received from The Lancasters Development are greater than
the remaining liabilities, the loan will have to be repaid within 5
business days from the date of the dividend distribution.
The Directors have prepared detailed cash flow projections for
the period ended 28(th) February 2017 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 operate
within the current available facilities. 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 two 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 consists of debt, which
includes the borrowings disclosed in notes 19 and 20, 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 2012 2011
GBP GBP
Principal activities:
Development management 692,615 969,652
Interior design 2,192,233 4,249,606
Architectural design 136,505 445,226
------------ ------------
3,021,353 5,664,484
============ ============
Loss before Taxation 2012 2011
GBP GBP
Development management (6,176,058) (3,048,535)
Interior
design (818,044) (475,875)
Architectural
design (871,574) (786,652)
------------ ------------
(7,865,676) (4,311,062)
Share of loss of associate - (8,971)
------------ ------------
(7,865,676) (4,320,033)
============ ============
Assets 2012 2011
GBP GBP
Development management 50,795,189 27,482,303
Interior design 1,075,965 2,794,332
Architectural design 42,966 2,207,714
------------ ------------
51,914,120 32,484,349
Share of investment
in associate - 42,168
------------ ------------
Total Assets 51,914,120 32,526,517
============ ============
Liabilities 2012 2011
GBP GBP
Development management 12,725,626 3,288,677
Interior design 1,284,968 2,272,268
Architectural design 761,105 2,139,915
------------ ------------
Total Liabilities 14,771,699 7,700,860
============ ============
A geographical analysis of the Group's revenue,
assets and liabilities is given below:
Revenue 2012 2011
GBP GBP
United Kingdom 1,925,772 2,595,769
Ireland 7,563 818,478
Russia - 76,930
Saudi Arabia 874,158 1,240,672
United Arab Emirates 50,400 532,664
British Virgin Islands - (59,673)
Thailand 41,251 444,644
Hong Kong - 15,000
Switzerland 122,209 -
3,021,353 5,664,484
============ ============
Included in the revenue above are revenues in respect of customers
who account for over 10% of the Group's total revenue.
2012 2011
GBP GBP
Customer A (Interior design) 874,158 1,229,005
Customer B (Interior design) 515,892 -
Customer C (Development
management) 407,615 780,000
Customer C (Interior design) 174,311 1,182,767
Customer D (Interior design) - 818,478
------------ ------------
1,971,976 4,010,250
============ ============
Assets 2012 2011
GBP GBP
United Kingdom 51,169,630 31,716,419
Ireland 2,453 14,065
United Arab Emirates 10,803 591,417
Saudi Arabia 731,234 83,022
Switzerland - 83,402
Thailand - 38,192
51,914,120 32,526,517
============ ============
Liabilities 2012 2011
GBP GBP
United Kingdom 4,162,779 6,141,113
United Arab Emirates 10,503,566 1,517,849
Hong Kong 2,365 2,365
USA 2,925 19,505
Thailand - 20,028
Saudi Arabia 100,064 -
------------ ------------
14,771,699 7,700,860
============ ============
4. Exceptional Items 2012 2011
GBP GBP
Payments to former Directors 756,879 193,623
============ ============
Payments to former Directors include 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 Pension 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 are not due until sufficient
profits are received from The Lancasters Development. Please
refer to note 9 for detailed Director's remuneration disclosure.
5. Investment Revenue 2012 2011
GBP GBP
Interest
received 7,224 13,692
Dividends received 1,170,000 52,500
1,177,224 66,192
========== =======
6. Other Gains/(Losses) 2012 2011
GBP GBP
Loss on disposal of interest in
Vicarage Gate Holdings Limited - (105,248)
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 (1,250,000)
-------- ------------
312,832 (1,355,248)
======== ============
7. Finance Costs 2012 2011
GBP GBP
Interest on:
Bank loans and overdrafts 10,325 8,643
Overdue tax 1,028 1,474
Tax penalties 32,866 -
Other loans 2,010,050 207,878
---------- --------
2,054,269 217,995
========== ========
8. Loss Before Taxation 2012 2011
GBP GBP
Loss before taxation is stated after charging/(crediting):
Depreciation and amounts written
off property, plant and equipment:
Owned assets 223,808 102,382
Operating lease rentals:
Land and buildings 153,699 331,462
Foreign exchange loss 148 4,037
======== ========
Fees payable to the Company's auditors
for:
- the audit of the Company's
annual accounts 39,344 57,241
Fees payable to the Company's auditors for
other services to the Group:
- the audit of the
Company's subsidiaries 25,906 39,220
-------- --------
Total audit fees 65,250 96,461
======== ========
Fees payable to the Company's auditors
for:
- taxation compliance
services 13,375 23,750
- other taxation
advisory services 25,311 7,796
- other services 17,054 16,300
-------- --------
Total other fees 55,740 47,846
======== ========
9. Employees 2012 2011
Number Number
The average weekly number of
employees (including Directors)
during the year was:
Office and management 14 15
Design and management 24 29
----------- -----------
38 44
=========== ===========
2012 2011
Staff costs for
the above employees: GBP GBP
Wages and salaries 3,248,121 2,797,222
Social security
costs 432,247 336,591
Other pension costs
- money purchase schemes 183,568 69,850
----------- -----------
3,863,936 3,203,663
=========== ===========
Remuneration in respect of Directors
was as follows: 2012 2011
GBP GBP
Aggregate emoluments (including
benefits in kind) 765,060 496,731
Consultancy fees 375,000 -
Compensation for
loss of office 65,000 -
Fees 60,000 55,833
----------- -----------
1,265,060 552,564
=========== ===========
Company contribution to money
purchase pension schemes 71,542 51,300
=========== ===========
Remuneration for each Director
(including benefits in kind) 2012 2011
GBP GBP
K.B. Nilsson 265,340 255,265
K. MacRae 201,436 -
M.K. Santilale 361,088 211,466
M.A. AlRafi 60,000 30,000
M.F. Williams 30,000 28,333
E.B. Harris 30,000 27,500
J. McGivern 317,196 -
----------- -----------
1,265,060 552,564
=========== ===========
Included in the above are consultancy fees of GBP375,000 which
represent amounts accrued but not paid. These amounts will be
paid after sufficient dividends are received from The Lancasters
Development.
Remuneration of GBP60,000 (2011: GBP30,000) for Director M.A.
AlRafi is payable to MTAF Group.
Remuneration of GBP30,000 (2011: GBP27,500) 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: 2012 2011
GBP GBP
Aggregate emoluments (including
benefits in kind) 361,088 255,265
Company contribution to money
purchase pension scheme 5,624 40,860
----------- -----------
366,712 296,125
=========== ===========
The total emoluments of GBP361,088 (2011: GBP255,265) above includes:
salary of GBP96,088 (2011: GBP255,265); compensation for loss
of office GBP65,000 (2011: GBPnil) and consultancy fees GBP200,000
(2011: GBPnil). The consultancy fees of GBP200,000 are not due
to be paid till sufficient dividends from The Lancasters Development
are received.
10. Taxation 2012 2011
GBP GBP
(a) Analysis of
charge in year
Current tax:
Corporation tax at the
rate of 26% (2011: 28%) - -
Group relief (577,204) -
Total current tax (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 26% (2011: 28%).
The differences
are explained below:
2012 2011
GBP GBP
Loss on ordinary
activities before
tax (7,865,676) (4,320,033)
============= =============
Loss on ordinary activities multiplied
by the standard rate of
corporation tax of 26% (2011:
28%) (2,045,076) (1,209,609)
Effects of:
Expenses not deductible
for tax purposes 50,391 49,587
Depreciation for the period in
excess of capital allowances (26,331) (17,004)
Dividends and distributions
received (304,200) (14,700)
Utilisation of tax
losses 1,391 -
Share of loss/(profit)
of associates - 2,512
Loss carried forward 2,323,825 1,189,214
Group relief (577,204) -
Current tax (credit)/charge
for the year (577,204) -
(c) Factors that may
affect future tax charges
No deferred tax asset has been recognised on losses carried forward
nor on the origination and reversal of timing differences due
to the uncertainty of the timing of taxable profits. The total
amount of the unprovided asset is GBP4,574,968 (2011: GBP2,251,143).
The standard rate of corporation tax in the UK changed to 26%
from 1(st) April 2011.
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 loss
for the financial year of GBP7,288,472 (2011: GBP4,320,033) includes
a loss of GBP12,629,475 (2011: GBP2,341,603), which was dealt
with in the financial statements of the Company.
12. Goodwill
2012 2011
GBP GBP
Cost 14,940,474 14,940,474
----------- -----------
Amortisation and impairment
At the beginning
of the year 6,112,014 6,112,014
Amortisation charge for
the year - -
Impairment charge for
the year 821,043 -
----------- -----------
At the end
of the year 6,933,057 6,112,014
----------- -----------
Net book value 8,007,417 8,828,460
=========== ===========
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 rates applied to the cash flow projections
are derived from the Group's weighted average cost of capital.
The discount rate applied to the years ending 28(th) February
2013 and 2014 is 18% reflecting the current cost of the Group's
Auster Real Estate Opportunities S.a.r.l loan and for the years
ending 28(th) February 2015, 2016 and 2017 it 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 65%
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 0.25% increase in the discount rate to 6.25% for the latter
three year period
-- A 0.0025% decrease in the probability assumption to 64.75%
-- A 1% decrease in the other interior design revenue cash flows
over the five year period
Property, plant and
13. equipment
Fittings
Group Leasehold and Office Computer
Improvements Equipment Equipment Total
Cost GBP GBP GBP GBP
At 1(st) March
2010 - 361,974 465,032 827,006
Additions 984,217 22,105 24,849 1,031,171
Transfers 131,217 (131,217) - -
-------------
At 28(th) February
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 29(th) February
2012 1,115,434 70,672 381,769 1,567,875
============= =========== ========== ==========
Depreciation
At 1(st) March
2010 - 202,280 302,567 504,847
Charge for
the year - 10,105 92,277 102,382
At 28(th) February
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 29(th) February
2012 123,072 31,739 350,466 505,277
============= =========== ========== ==========
Net Book Value
At 29(th) February
2012 992,362 38,933 31,303 1,062,598
============= =========== ========== ==========
At 28(th) February
2011 1,115,434 40,477 95,037 1,250,948
============= =========== ========== ==========
At 28(th) February
2010 - 159,694 162,465 322,159
============= =========== ========== ==========
Fittings
Company Leasehold and Office Computer
Improvements Equipment Equipment Total
Cost GBP GBP GBP GBP
At 1(st) March
2010 - 131,217 180,000 311,217
Additions 1,042,697 - - 1,042,697
Transfers 131,217 (131,217) - -
-------------
At 28(th) February
2011 1,173,914 - 180,000 1,353,914
============= =========== ========== ==========
Additions - - - -
At 29(th) February
2012 1,173,914 - 180,000 1,353,914
============= =========== ========== ==========
Depreciation
At 1(st) March
2010 - - 55,000 55,000
Charge for
the year - - 60,000 60,000
-------------
At 28(th) February
2011 - - 115,000 115,000
============= =========== ========== ==========
Charge for
the year 123,072 - 60,000 183,072
------------- ----------- ---------- ----------
At 29(th) February
2012 123,072 - 175,000 298,072
============= =========== ========== ==========
Net Book Value
At 29(th) February
2012 1,050,842 - 5,000 1,055,842
============= =========== ========== ==========
At 28(th) February
2011 1,173,914 - 65,000 1,238,914
============= =========== ========== ==========
At 28(th) February
2010 - 131,217 125,000 256,217
============= =========== ========== ==========
Included above are assets held under finance lease or hire purchase
contracts as follows:
Fittings
Group and Office Computer
Equipment Equipment Total
Cost GBP GBP GBP
At 1(st) March
2010 11,710 57,799 69,509
Additions - - -
At 28(th) February
2011 11,710 57,799 69,509
================ ============= ============
Additions - - -
Disposals (9,399) (1,799) (11,198)
At 29(th) February
2012 2,311 56,000 58,311
================ ============= ============
Depreciation
At 1(st) March
2010 8,482 50,696 59,178
Charge for
the year 244 1,014 1,258
At 28(th) February
2011 8,726 51,710 60,436
================ ============= ============
Charge for
the year 578 6,089 6,667
Disposals (7,050) (1,799) (8,849)
---------------- ------------- ------------
At 29(th) February
2012 2,254 56,000 58,254
================ ============= ============
Net Book Value
At 29(th) February
2012 57 - 57
================ ============= ============
At 28(th) February
2011 2,984 6,089 9,073
================ ============= ============
At 28(th) February
2010 3,228 7,103 10,331
================ ============= ============
Fittings
Company and Office Computer
Equipment Equipment Total
Cost GBP GBP GBP
At 1(st) March
2010 - 180,000 180,000
Additions - - -
Transfers - - -
At 28(th) February
2011 - 180,000 180,000
================ ============= ============
Additions - - -
At 29(th) February
2012 - 180,000 180,000
================ ============= ============
Depreciation
At 1(st) March
2010 - 55,000 55,000
Charge for
the year - 60,000 60,000
At 28(th) February
2011 - 115,000 115,000
================ ============= ============
Charge for
the year - 60,000 60,000
---------------- ------------- ------------
At 29(th) February
2012 - 175,000 175,000
================ ============= ============
Net Book Value
At 29(th) February
2012 - 5,000 5,000
================ ============= ============
At 28(th) February
2011 - 65,000 65,000
================ ============= ============
At 28(th) February
2010 - 125,000 125,000
================ ============= ============
14. Investments
(a) Interest in Associated Undertaking
Group 2012 2012 2011 2011
GBP GBP GBP GBP
Cost
At 1(st) March 300 300
Disposal of interest in associated
undertaking (300) -
---------- --------
At 29(th) February - 300
---------- --------
Group's Share of Undistributed
Post Acquisition
Results of Associated Undertaking
At 1(st) March 41,868 50,839
Share of undistributed
profit - 2,482
Taxation - (11,453)
------------- ---------
- (8,971)
---------- --------
Disposal of interest in associated
undertaking (41,868) -
29(th) February - 41,868
---------- --------
Net Book Value
29(th) February - 42,168
========== ========
On 27(th) September 2011 Northacre PLC sold its 25% interest in Campden
Estates Limited for a total cash consideration of GBP170,000 resulting
in a profit on disposal of GBP127,832 with dividends of GBP20,000
received in the period.
Available for Sale Financial
(b) Assets
Group 2012 2012 2011 2011
GBP GBP GBP GBP
At 1(st) March 21,205,344 3,456,473
Disposals - (1,156,125)
Increase in fair value 20,755,236 18,904,996
Dividend received (1,150,000) -
------------ -----------
Net movement transferred to/(from)
comprehensive income 19,605,236 18,904,996
----------- ------------
At 29(th) February 40,810,580 21,205,344
=========== ============
Group's Share of Results
Group's share of loss
for the year - -
----------- ------------
Net Book Value
At 29(th) February 40,810,580 21,205,344
=========== ============
A fair valuation exercise has been undertaken based predominantly
on the Group's expected profit from secured sales on The Lancasters
Development as at 29(th) February 2012. As at 29(th) February 2012
the Group had received GBP1,150,000 of the expected profits from
The Lancasters Development. A second dividend of GBP3,000,000 was
received after the year end.
(c) Other Investments
Subsidiary Associated Total
Company Undertakings Undertaking
GBP GBP GBP
Cost
At 1(st) March 2011 14,492,681 300 14,492,981
Disposals - (300) (300)
As at 29(th) February
2012 14,492,681 - 14,492,681
============= ============ ===========
Impairment
At 1(st) March 2011 4,402,902 - 4,402,902
Impairment in the year 2,082,358 - 2,082,358
As at 29(th) February
2012 6,485,260 - 6,485,260
============= ============ ===========
Net book value as at
29(th) February 2012 8,007,421 - 8,007,421
============= ============ ===========
Net book value as at
28(th) February 2011 10,089,779 300 10,090,079
============= ============ ===========
Company Subsidiary Associated Total
Undertakings Undertaking
GBP GBP GBP
Cost
At 1(st) March 2010 14,492,583 300 14,492,883
Additions 98 - 98
As at 28(th) February
2011 14,492,681 300 14,492,981
============= ============ ===========
Impairment
At 1(st) March 2010 4,402,902 - 4,402,902
Impairment in the year - - -
As at 28(th) February
2011 4,402,902 - 4,402,902
============= ============ ===========
Net book value as at
28(th) February 2011 10,089,779 300 10,090,079
============= ============ ===========
Net book value as at
28(th) February 2010 10,089,681 300 10,089,981
============= ============ ===========
(d) Group Shareholdings
The Group has shareholdings in the following
companies, all incorporated in England and Wales:
Proportion
Subsidiary undertakings Holding 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 Design
Limited Ordinary shares 100% architects
Northacre Capital
(1) Limited Ordinary shares 100% Dormant
Northacre Capital
(2) Limited * Ordinary shares 100% Dormant
Northacre Capital
(3) Limited Ordinary shares 100% Dormant
Northacre Capital
(5) Limited Ordinary shares 100% Property development
Northacre Capital
(6) Limited * Ordinary shares 100% Dormant
Northacre Capital
(7) Limited Ordinary shares 100% Dormant
Northacre Capital
(8) Limited Ordinary shares 100% Property development
Northacre Residential
Limited * Ordinary shares 100% Dormant
Nilsson Design
Limited * Ordinary shares 100% Dormant
Northacre Land
Limited * Ordinary shares 100% Dormant
Northacre Holdings
Limited * Ordinary shares 100% Dormant
Northacre Design
Limited * Ordinary shares 100% Dormant
Northacre Capital
Limited * Ordinary shares 100% Dormant
Northcare Management
Limited * Ordinary shares 100% Dormant
Northcare Management
Services Limited * Ordinary shares 100% Dormant
Lifestyle (Interiors)
Limited * Ordinary shares 100% Dormant
Available for
sale financial
assets
Lancaster Gate (Hyde
Park) Limited Ordinary shares 25.1% Property development
* These subsidiary undertakings are in the process of being struck
off as there has been no trading activity during the prior and
current reporting period.
Northacre Capital (8) Limited was incorporated on 26(th) September
2011.
15. Inventories Group
2012 2011
GBP GBP
Stock - 11,845
Work in progress 118,006 324,163
---------------- ----------------
118,006 336,008
================ ================
The Company had no stock or work in progress in either the prior or
current reporting period.
16. Trade and other receivables Group Company
2012 2011 2012 2011
GBP GBP GBP GBP
Trade receivables 136,517 374,511 - -
Amounts owed by group
undertakings - - 7,309,782 6,146,872
Other receivables 79,831 168,339 79,048 185,659
Prepayments and accrued
income 782,208 320,739 23,234 8,705,459
-------- -------- ---------- -----------
998,556 863,589 7,412,064 15,037,990
======== ======== ========== ===========
At the year end there was no provision
for doubtful debts (2011: GBP216,956).
17. Trade and other payables Group Company
2012 2011 2012 2011
GBP GBP GBP GBP
Trade payables 304,255 819,788 165,343 375,279
Amounts owed to group
undertakings - - 18,632,851 12,334,914
Social security and
other taxes 196,496 530,434 88,029 42,199
Other payables 1,566,810 228,150 1,451,616 169,924
Accruals and deferred
income 1,491,094 1,104,682 812,472 796,497
---------- ---------- ----------- -----------
3,558,655 2,683,054 21,150,311 13,718,813
========== ========== =========== ===========
18. Corporation Tax Group Company
2012 2011 2012 2011
GBP GBP GBP GBP
Corporation Tax - - - -
----- ----- ----- -----
- - - -
===== ===== ===== =====
Borrowings, including
19. lease finance Group Company
Current Liabilities 2012 2011 2012 2011
GBP GBP GBP GBP
Finance leases 22,702 158,566 15,767 130,828
Other loans 10,490,740 - - -
Bank overdraft - 218,685 - 220,931
-------------- ----------- -------- ----------
10,513,442 377,251 15,767 351,759
============== =========== ======== ==========
Finance leases are secured on the related assets.
The bank overdraft facility of GBP500,000 was repaid on 31(st) October
2011 and cancelled on 1(st) November 2011.
Other loans represent 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.
Borrowings, including
20. lease finance Group Company
Non-Current Liabilities 2012 2011 2012 2011
GBP GBP GBP GBP
Loan from pension
scheme 699,602 750,000 699,602 750,000
Director loans - 693,052 - 693,052
Other loans - 824,797 - 824,797
Finance leases - 22,706 - 15,771
---------- ------------ ---------- ------------
699,602 2,290,555 699,602 2,283,620
========== ============ ========== ============
The loan from the pension scheme of GBP699,602 (2011: GBP750,000) is
in respect of the Northacre PLC Directors Retirement and Death Benefit
Scheme. The loan is due to be repaid on 31(st) July 2013 with interest
charged at 4% above the Clearing Bank's base rate. The loan was partially
repaid on 11(th) January 2011 in order to facilitate the pension fund
split. Interest due up until 29(th) February 2012 was also paid on
11(th) January 2011.
As at 29(th) February 2012 the Group and Parent Company had obligations
under finance leases that are secured on related assets as set out
below:
Group Company
2012 2011 2012 2011
Gross amounts payable: GBP GBP GBP GBP
Within one year 22,702 158,566 15,767 130,828
In two to five years - 22,706 - 15,771
22,702 181,272 15,767 146,599
--------- ---------- --------- ---------
Less: finance charges allocated
to future periods (9,457) (44,751) (6,372) (29,324)
13,245 136,521 9,395 117,275
========= ========== ========= =========
21. Provisions for other liabilities Group Company
2012 2011 2012 2011
GBP GBP GBP GBP
Loan settlement costs and profit
share payable
At 1(st) March 2,350,000 2,350,000 2,020,000 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 29(th) February - 2,350,000 - 2,020,000
============ ========== ============ ==========
On 22(nd) June 2010, the Company entered into an agreement to acquire
the entire issued share capital of Templeco 643 Limited for a consideration
of GBP1,250,000. 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 GBP75,000
each were made on 22(nd) June 2010 and 16(th) August 2010. The balance
of GBP1,100,000 was due from the proceeds of the dividends from The
Lancasters Development. The balance payable was renegotiated to GBP965,000
payable in instalments. The Group repaid GBP625,000 on 31(st) January
2012, GBP175,000 on 30(th) March 2012, GBP150,000 on 31(st) May 2012
and the balance of GBP15,000 on 30(th) June 2012.
A provision of GBP1,200,000 (2011: GBP1,250,000) which has been transferred
to current liabilities: trade and other payables, represents 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 represents the maximum possible profit share and will be
paid from dividends received from The Lancasters Development.
22. Future financial commitments
Operating Leases Group Company
2012 2011 2012 2011
GBP GBP GBP GBP
Land & Land & Land & Land &
Buildings Buildings Buildings Buildings
Net amount payable on operating
leases which expire:
Within one year 147,777 103,956 147,777 103,956
In two to five years 591,900 584,702 591,900 584,702
In over five years 626,765 774,740 626,765 774,740
----------- ----------- ----------- -----------
1,366,442 1,463,398 1,366,442 1,463,398
=========== =========== =========== ===========
Group Company
Operating Leases 2012 2011 2012 2011
GBP GBP GBP GBP
Other Other Other Other
Net amount payable on operating
leases which expire:
Within one year 35,247 46,467 12,920 16,320
In two to five years 92,665 144,978 45,220 65,280
In over five years - 8,160 - 8,160
127,912 199,605 58,140 89,760
======== ======== ======= =======
23. Capital Commitments
At the reporting date there were no outstanding commitments for
capital expenditure.
Earnings per
24. Share
Loss per share of 27.27p (2011: 16.17p) is calculated on the loss
attributable to Ordinary shares of GBP7,288,472 (2011: GBP4,320,033)
divided by the weighted number of Ordinary shares in issue during
the period.
Computation of basic
earnings per share: 2012 2011
Net loss (GBP7,288,472) (GBP4,320,033)
Weighted average number of shares
outstanding 26,723,643 26,723,643
Basic loss per share (27.27)p (16.17)p
Diluted loss per share (27.27)p (16.17)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 2012 2011
GBP GBP
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
A third party brought a claim against a subsidiary Company,
Waterloo Investments Limited, regarding payment of a profit share
of a completed development. Legal proceedings were commenced by the
third party in 2001. The amount claimed is GBP744,008. Waterloo
Investments Limited has counterclaimed against the third party for
GBP333,708 plus interest and costs. No provision has been made in
these financial statements for this liability as the Board is of
the opinion that there is no prospect that the claim against
Waterloo Investments Limited will be successful.
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 GBP123,804 (2011:
GBP56,570).
On receipt of sufficient dividends from The Lancasters
Development, it is the Board's intention to make the following
payments, with this priority:
i. repayment of existing debt including interest
ii. repayment of the pension fund loan and profit share
iii. other accrued liabilities
iv. to pay a dividend to the Company's shareholders.
After retaining sufficient cash to fund future development
projects and if, following the payment of dividends as referred to
above, there are sufficient retained profits and funds available
(which is at present uncertain), the Board then intends to make
bonus payments to staff and directors, reflecting the success of
The Lancasters Development. Should all expected dividends from The
Lancasters Development be received, and there are sufficient cash
resources remaining after satisfying the aforementioned priorities
including a substantial dividend, the aggregate of these bonus
payments could amount to c12.5% of the anticipated total profit
share from The Lancasters Development.
27. Related Party Transactions
Group
The Group's related parties as defined by International Accounting
Standard 24 (revised), the nature of the relationship and the amount
of transactions
with them during the period were as
follows:
Nature
of 2012 2011
Nature of
Related Party Relationship GBP GBP GBP GBP Transactions
Total Balance Total Balance
transactions at the transactions at the
in the year in the year
year end year end
Northacre Management fee
PLC 1 (3,000) - - 3,000 receivable
Directors
Retirement
and from the Scheme
Death Benefit
Scheme
Northacre Loan repayable
PLC 1 50,398 (699,602) - (750,000) to the Scheme
Directors
Retirement
and by Northacre PLC
Death Benefit
Scheme
Northacre Loan repayable
PLC 1 - - 275,000 - to the Scheme by
Directors Northacre PLC.
Retirement The loan was
and repaid
Death Benefit on 26(th) June
Scheme 2010
Northacre Interest payable
PLC 1 98,883 - (19,517) (98,883) to the Scheme on
Directors the loans to
Retirement Northacre
and PLC. All
Death Benefit interest accrued
Scheme to 29(th) February
2012 was paid on
11(th) January
2011 and 29(th)
February 2012
Northacre Disbursements paid
PLC 1 (108,465) - 18,680 108,465 by Northacre
Directors
Retirement PLC on behalf of
and the Scheme
Death Benefit
Scheme
Provision in
Northacre respect
PLC 1 50,000 (1,200,000) (1,250,000) (1,250,000) of profit share
Directors to the Scheme in
Retirement relation to the
and sale
of Group's
Death Benefit interests
Scheme in The
Abingdons
Partnership
and write back
of part of that
premium
Amount owed to
K.B. Nilsson 2 140,617 - (27,110) (140,617) K.B. Nilsson from
Northacre PLC.
The loan was
repaid
on 31(st) October
2011
Interest payable
K.B. Nilsson 2 (23,498) - (14,474) (18,697) to K.B Nilsson
on the loan to
Northacre PLC.
The interest was
paid on 31(st)
October 2011
K.B. Nilsson
provided
K.B. Nilsson 2 - - - - a
personal guarantee
for GBP570,000
to the Group's
bankers as
security
in respect of all
liabilities of
the Group to the
bank. The
guarantee
was released on
7(th) November
2011
Non-executive
Directors
E.B. Harris 3 20,000 (30,000) (30,000) (50,000) fees for
March 2011 -
February
2012 invoiced from
E.C. Harris LLP
Non-executive
Directors
M. Williams 4 (30,000) - (28,333) - fees for
March 2011 -
February
2012
Loan repayable
M.A. AlRafi 5 300,000 - - (300,000) to MTAF Group
(M.A. AlRafi) by
Northacre PLC.
Loan was repaid
on 31(st) October
2011
Interest payable
M.A. AlRafi 5 (19,889) - (30,230) (40,559) to MTAF Group
(M.A. AlRafi) on
the GBP300,000
loan
to Northacre PLC.
Interest was paid
on 31(st) October
2011
Premium paid on
M.A. AlRafi 5 (390,000) - - - the early
redemption of the
GBP300,000 loan
to Northacre PLC.
Premium was paid
on 31(st) October
2011
Executive
Directors
M.A. AlRafi 5 (60,000) - 1,350 (13,650) fees for
March 2011 -
February
2012
Loan repayable
M.A. AlRafi 5 350,000 - (350,000) (350,000) to MTAF Group
(M.A. AlRafi) by
Northacre PLC
including a
GBP50,000
fixed premium.
Loan was repaid
on 31(st) October
2011
Interest payable
M.A. AlRafi 5 (23,493) - (2,493) (2,493) to MTAF Group
(M.A. AlRafi) on
the GBP350,000
loan
to Northacre PLC.
Interest was paid
on 31(st) October
2011
Premium paid on
M.A. AlRafi 5 (260,000) - - - the early
redemption of the
GBP350,000 loan
to Northacre PLC.
Premium was paid
on 31(st) October
2011
Loan repayable
M.A. AlRafi 5 - - (1,973) - to MTAF Group
(M.A. AlRafi) by
Northacre PLC
Loan repayable
A. AlRafi 6 (3,200,000) - (800,000) (800,000) to A. AlRafi
by Northacre PLC.
Loan was repaid
on 31(st) October
2011
Interest payable
to A. AlRafi on
A. AlRafi 6 (631,169) - (24,797) (24,797) the
GBP800,000 loan
to Northacre PLC.
Interest was paid
on 31(st) October
2011
Loan arrangement
A. AlRafi 6 - - (100,000) - fee paid to
A. AlRafi for
GBP2m
loan facility
Nature of
Relationships
K.B. Nilsson is a trustee and beneficiary of the Northacre PLC Directors
1 Retirement and Death Benefit Scheme.
K.B. Nilsson is a Director
2 of the Company.
E.B. Harris is a Director of the Company,
3 and a member of E.C. Harris LLP.
M. Williams is a Director
4 of the Company.
M.A. AlRafi is a Director
5 of the Company.
A. AlRafi is the father
6 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 2012 2011
Nature of
Related Party Relationship GBP GBP GBP GBP Transactions
Total Balance Total Balance
transactions at the transactions at the
in the year in the year
year end year end
Management
Fees
Group entities 1 321,357 - 791,061 - receivable
in year from
Group
subsidiaries
provided at
arm's length
Management
Fees
Group entities 1 (30,417) - (69,998) - 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 financial statements.
Events after the Reporting
28. Date
Group
On 4(th) May 2012 Northacre PLC received a second distribution from
The Lancasters Development. The total amount received was GBP2,997,559.
Together with the first distribution of GBP1,150,000 received on 4(th)
December 2011 the Group received to date GBP4,147,559 of the total
expected profits from The Lancasters Development.
On 1(st) May 2012 Northacre PLC entered into a new loan agreement with
Auster Real Estate Opportunities S.a.r.l. established in Luxembourg.
The total loan amount is GBP15m of which GBP13m was drawn down on the
30(th) May 2012. The loan allowed the Group to repay its current Eurobond
facility of GBP10.5m and secure more favourable terms. Interest is
charged at 1.5% per month and the loan carries a fixed premium of 2%
of the total facility (GBP260,000) which was paid on drawdown. The
loan is due to be repaid upon receipt of sufficient dividends from
The Lancasters Development or 18 months from the date of the drawdown,
whichever is the earlier.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BLGDRXXDBGDX
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