NTA Northacre

TIDMNTA

RNS Number : 7280W

Northacre PLC

11 November 2014

NORTHACRE PLC

(the "Company" or "Group")

Results for the six months ended 31(st) August 2014

11(th) November 2014

Northacre PLC is pleased to announce its interim financial results for the six months ended 31(st) August 2014. The Interim Report and Accounts for the period then ended will be available shortly on the Company's website www.northacre.com.

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

Enquiries:

Northacre PLC

Niccolò Barattieri di San Pietro (Chief Executive Officer)

020 7349 8000

finnCap Limited (Nominated Adviser and Broker)

Stuart Andrews

Henrik Persson

020 7220 0500

Chairman's Statement

The market remains strong albeit there are signs that the price increases in the property market, which we have seen over the past 12 months, are decelerating.

This is in part due to concern over the potential introduction of a mansion tax in the event of a change of government after the election in May 2015.

There are other factors, although individually of limited concern, but when combined do contribute to some uncertainty. The more important of these are:

   -    economic growth within the Eurozone in particular Germany; 
   -    concern over development in China; and 
   -    geopolitical issues such as the Middle East, Ukraine and Hong Kong. 

Northacre PLC has in the past remained reasonably unaffected by downturns in the property market where its product has proven to be resilient to external market prices and therefore we remain confident for its long-term prospects.

Klas Nilsson

Non-Executive Chairman

Chief Executive's Statement

The last six months were very demanding. We were pushing forward our current projects while trying to acquire new sites.

Business Development

In my view there have been some interesting opportunities in the last six months and they were pursued alongside Abu Dhabi Financial Group LLC (ADFG, formerly Abu Dhabi Capital Management LLC - ADCM), our majority shareholder.

These opportunities included the redevelopment of the Post Office (owned by the Science Museum) on Exhibition Road, London. We put a strong bid together and were selected to progress to the interview stages but ultimately we were not chosen as the preferred bidder.

There are a couple of other opportunities that the Group is pursuing at the moment of which we should know the outcome by the end of the callendar year.

Current developments

1 Palace Street

During the last few months we have fully redesigned the existing consented scheme and have submitted a new planning application at the beginning of August 2014. We are confident that we will get a positive outcome which will then allow us to start the stripping out and implementing the façade retention/demolition program.

Vicarage Gate House

The construction and fit out program is progressing well with practical completion expected towards the end of April 2015. We are a few weeks behind program, mainly due to the difficulties in achieving the desired quality with both the façade and fenestration. These issues are now mostly resolved and the program is moving forward swiftly.

There have been no new sales over the summer months however viewing activity has picked up considerably over the last month. We have had three offers below the asking price which have been rejected by the directors of the company. We are confident that as we get closer to practical completion we will have more potential sales.

33 Thurloe Square

As discussed in my last statement, prior to starting the redevelopment we received an unsolicited bid of GBP12.75m which represented a significant premium to the market. The transaction was completed on 24(th) June 2014 and resulted in a net IRR of over 30% for our investors and a substantial return for Northacre PLC in terms of development management fees, performance fee and return on our invested equity.

13&14 Vicarage Gate

Strip out started towards the end of June 2014 and has now been completed. We have also completed about two thirds of the structural work and we are now in the process of negotiating the main contract with Rackham Construction who have also done all the work until now.

We are looking to start marketing the property close to completion time however we have already had an offer, which has been accepted, for the first floor apartment. This offer comes in just shy of GBP3,000 per square foot and is in line with our expected end values once the project is completed. It also represents a very substantial premium in the neighbourhood.

Current developments (continued)

Chester Square

We have spent considerable time on the planning side as there are several components to this. We prepared a basement planning application which has now been submitted. The joining of two units together to create a new separate unit was agreed in principle with the council and we will be submitting a formal planning application during the first week of December 2014. Lastly we will also be submitting a listed building application in order to address any layout issues. We are planning to start the basement works in late January 2015.

Prince Edward Mansions

On 1(st) August 2014 we announced the completion of the acquisition of 22 Prince Edward Mansions by Northacre Capital (7) Limited, a wholly owned subsidiary of Northacre PLC. The acquisition for GBP3.7m was payable in cash on completion and the subsequent development project will be financed by a combination of Northacre's existing cash resources and a bank loan.

This project is a sought-after period mansion block located in the heart of Notting Hill, London. The concept is to create an exclusive 2,675 square foot lateral penthouse apartment, with the potential use of outdoor terraces. We are aiming to finalise the planning application by mid-November 2014 with completion due in Autumn 2015.

The Lancasters

The freehold interest in the property has now been transferred to the residents. We are in the process of finalising the last few snagging items which we expect to complete before the year end.

Outlook

In the last months we observed a period of strong growth. With the general election in May 2015, we feel that the prime London residential market will become somewhat subdued until then. However, if further tax burdens are implemented, the UK is still only coming into line with other countries and the many plusses for London still hold firm; undoubtedly the most important dynamic is a lack of supply and cumulative growth of 20% is anticipated between 2014 and 2018.

Niccolò Barattieri di San Pietro

Chief Executive Officer

Financial Review

Consolidated Interim Statement of Comprehensive Income (Unaudited)

The Group's revenue for the six month period increased by GBP1.7m to GBP2.6m (2013: GBP0.9m) due to increase in development fee income by GBP2.2m. Intarya's revenue decreased by GBP0.5m to GBP0.2m (2013: GBP0.7m) as a result of lower activity in interior design side of business. The reported development fee income of GBP2.4m (2013: GBP0.2m) included fees from all current projects: Vicarage Gate House, 13 & 14 Vicarage Gate, 1 Palace Street, 33 Thurloe Square and Chester Square.

Investment income of GBP0.5m (2013: GBP15m) represented dividends received following the sale of the 33 Thurloe Square project in June 2014 and bank interest. Administrative expenses were at a similar level of GBP2.5m as the comparative period (2013: GBP2.4m). The Group reported a profit before taxation of GBP0.5m (2013: GBP13m).

Consolidated Interim Statement of Financial Position (Unaudited)

The Group has improved its cash position in comparison to last year and as at 31(st) August 2014 had cash and cash equivalents of GBP18.3m (2013: GBP7.4m). This was as a result of raising additional GBP12.5m cash by issuing new shares and through a cashbox acquisition, as well as receipt of final dividends from The Lancasters Development in December 2013.

Following the capital raise and receipt of final dividends from The Lancasters Development the Group invested in two new projects, 1 Palace Street and 33 Thurloe Square. As at 28(th) February 2014, the Group had provided a total of GBP10.3m in cash for these two projects, representing an equity investment of GBP8.8m in respect of 1 Palace Street and GBP1.5m through a combination of equity investment and shareholder loan in respect of 33 Thurloe Square. Following the sale of 33 Thurloe Square in June 2014, the shareholder loan of GBP1.5m was repaid.

In accordance with International Accounting Standards, the investments in development projects that have been classified as available for sale financial assets in the Consolidated Interim Statement of Financial Position (Unaudited) represent, where appropriate, the equity value in each of the development schemes and any fair value adjustments. As at 31(st) August 2014 the total of GBP8.8m represents the fair value of the investment in 1 Palace Street and 33 Thurloe Square projects. In comparison, last year amount of GBP7.1m related to the fair value of The Lancasters Development. The total of GBP7.1m represented the remaining dividends due to the Group from The Lancasters Development which was received in December 2013.

In addition the Group acquired a new project, 22 Prince Edward Mansions, in August 2014. As at 31(st) August 2014 the Group provided a total of GBP4.0m in cash for this project and the full amount is disclosed as inventories in the Consolidated Interim Statement of Financial Position (Unaudited).

Capital and Reserves

On 14(th) August 2014 the Directors declared a dividend of 35.43p per share (2013: 40p per share) with the payment date of 5(th) September 2014. A total dividend liability as at 31(st) August 2014 of GBP14.99m is included in current liabilities, trade and other payables. Following the payment of the dividend, the Directors do not recommend the payment of a further dividend as the funds of the Company are fully employed.