Preliminary Results

Northacre PLC
31 August 2004


Northacre Plc

Results for the year ending 29 February 2004


Northacre today announces its results for the year ended 29 February 2004.

     
•    Financial results adversely impacted by further planning and construction 
     delays across subsidiary companies combined with a lower level of market 
     activity

•    Sale of offices for £2.85 million secured with completion due in September 
     2004 - proceeds to be used for redeeming debt

•    Imminent completion on two major projects will provide profit share
     entitlement in the next financial year

•    Following a further review - anticipate implementing further strategic and 
     operational measures with the primary aim of achieving more focus for
     Northacre's core business
     
•    Pipeline of new business since year end is promising with a healthy 
     prospect of improving fee income client base

John Hunter, Chief Executive of Northacre, commented:

' The Group has again suffered the impact of further planning and construction
delays in it's development programme together with a lower level of activity in
it's subsidiary companies.  However, with the growing demand for Northacre's
branded style of high quality residential developments in mind, we plan to
implement additional strategic and operational measures with the primary aim of
achieving more focus on our core business.'

                                                                31st August 2004


Enquiries:

Northacre Plc
John Hunter                                          020 7349 8000


                           Chief Executive's Review

Overview

The Northacre brand continues to be synonymous with the finest quality of
residential schemes in well established Central London landmark locations.
Northacre's core business is in acquiring opportunities and adding value through
the development process.

Financial Results

Turnover, including share of associates, for the period was £4,054,450 (2003
£3,845,825) with gross profit of £2,501,666 (2003 £3,418,809).  Pre-tax loss was
£2,174,472 (2003 £2,412,656) before amortisation of goodwill with a basic loss
per share of 15.16 pence (2003 14.26 pence).  The Board is not declaring an
interim dividend payment.

These results have been adversely impacted by further construction and planning
delays at KINGS Chelsea, The Phillimores (QEC) and Vicarage Gate House.  Reduced
income at Nilsson Design Limited and Lifestyles (Interiors) Limited has also
impacted in this financial period.

The Board has reviewed the estimated useful life of the goodwill in the
consolidated balance sheet in the light of their current actions to re-structure
the group's activities and now consider that an estimated useful life of 10
years (previously 20) is more appropriate.  The effect on the current year's
amortisation charge is an increase of £458,078.

Board Changes

The Board is delighted to announce the appointment of Manish Santilale as
Finance Director effective from 17th August 2004.  Manish qualified as a
Chartered Certified Accountant in 1995.  Having held the position as Group
Finance Controller since 1997, his promotion to Finance Director will greatly
assist with the Group's consolidation and structural review going forward.
Manish replaces Simon Elgar, who resigned on 10th August 2004.

Operating Subsidiaries

Against testing market conditions and a slow down in activity, our operating
subsidiaries have all seen reduced income in the period.  However, the pipeline
of new business since the year-end has been promising, with a healthy increase
in the private client base as well as a new architectural appointment for a
residential scheme in Eaton Square. We are more confident of an improvement in
turnover for 2005.

Operational Review

Vicarage Gate House

Following an unsuccessful period of detailed negotiations with the Local
Authority, it has been decided that on the grounds of non-determination we
should seek a planning decision for our Vicarage Gate House scheme on Appeal at
a Public Enquiry.  We anticipate a decision will be forthcoming by April 2005
for construction to commence during the first half of 2005.  To this end, an
extension of the existing site loan facility with ING-BHF has been formalised.
Together with our partners, First Islamic Investment Bank, we are confident of a
positive outcome.  The Group continues to receive development management fees
while the design of the proposed scheme is on hold awaiting the outcome of this
planning decision.

The Phillimores (Queen Elizabeth College)

The Phillimores (QEC) is on programme with practical completion due to take
place before the end of the next financial year.  Such has been the healthy
progress of sales, we anticipate receiving our carried interest deferred
consideration amounting to £2.75 million following practical completion.  The
Group will continue to receive fees for architectural services through Nilsson
Design Limited until the project is complete.

KINGS Chelsea

Following further construction delays, the KINGS Chelsea development is now
complete.  In the absence of fee income the Group continues to provide services
for an on site marketing operation as well as customer care follow up.
Currently there remain 9 unsold apartments for sale, 2 of these apartments are
under offer in solicitors' hands.  We anticipate that all sales will be complete
within the next 12 months.  Under our accounting policy, no profits have been
recognised for this scheme in the period under review.

Outlook

During the period, the Group has suffered additional financial loss as a result
of further planning and construction delays as well as a lower level of activity
in the market.  These factors have impacted on the Group's fee income for all
subsidiaries.  In order to stabilise the finances of the Group, a sale of the
Company's offices for £2.85 million has been secured with completion set to take
place in September 2004.  The effect of this will be to redeem the debt to
Coutts and Co and reduce the creditor position.  The Northacre Directors'
Pension Fund loan of £1 million has also been extended for a further year and a
loan stock instrument of £500,000 is due to be formalised for injecting
additional capital into the business.

In response to these difficult market conditions and lower activity, the Board
of Directors is conducting a review of the Group's structure with the aim of
implementing additional measures to consolidate and reduce further the current
level of overhead.  The objective will be to achieve more focus, from a smaller
team, on Northacre's core business for the development of residential schemes
where there continues to exist a growing demand for the Northacre branded style
of high quality developments.

                                          Consolidated Profit and Loss Account
                                        For the year ended 29th February 2004


                                                                                                                  
                                                      Note         2004           2004          2003           2003 
                                                                      £              £             £              £ 
Turnover including share of associates                                      4,054,450                    3,845,825  
Share of turnover of associates                                              (219,051)                    (251,207) 
Group Turnover - Continuing Activities                   2                  3,835,399                    3,594,618  
Cost of sales                                                 1,333,733                   1,001,939                 
Less: Exceptional item                                                -                    (826,130)                
                                                                           (1,333,733)                    (175,809) 
Gross Profit                                                                                                        
                                                                            2,501,666                    3,418,809  
Administrative expenses                                                    (5,282,252)                  (4,686,559) 
Provision for loss making contract                                           (350,000)                            - 
Other operating income                                                         18,696                       19,904  
Group Operating Loss                                                       (3,111,890)                  (1,247,846) 
Share of operating (loss)/profit of associates                                (76,828)                     111,964  
Operating Loss including share of associates and joint ventures            (3,188,718)                  (1,135,882) 
Provisions against investments                                                       -                  (1,566,077) 
Loss on Ordinary Activities before Interest                                                                         
and Investment Income                                                      (3,188,718)                  (2,701,959) 
Income from investments                                                        80,000                       81,000  
Interest receivable                                                            10,265                             - 
Interest payable and similar charges                                         (337,227)                    (567,827) 
Loss on Ordinary Activities before Taxation                                (3,435,680)                  (3,188,786) 
Taxation                                                                       (8,817)                     (50,972) 
Retained Loss for the Year                                                 (3,444,497)                  (3,239,758) 
Basic loss per ordinary share                                                 (15.16)p                     (14.26)p 
Fully diluted loss per ordinary share                                         (14.72)p                     (11.60)p 


                                   Consolidated Balance Sheet at 29th February 2004 

                                                                                                                    
                                               Note          2004           2004           2003           2003 
                                                                £              £              £              £ 
Fixed Assets                                                                                                    
Intangible fixed assets                                               11,350,876                    12,612,084  
Tangible fixed assets                                                  2,918,559                     3,404,791  
Investments in joint venture                                             870,225                     5,401,000  
Investment in associates                                                  46,991                       132,636  
                                                                      15,186,651                    21,550,511  
Current Assets                                            196,939                         15,866                
Work in progress                                                                                                
Debtors due within one year                               391,041                        635,808                
Cash at bank and in hand                                   89,823                        199,358                
                                                          677,803                        851,032                
Creditors: Amounts falling due                                                                                  
within one year                                        (6,012,375)                   (9,454,967)                
Net Current Liabilities                                               (5,334,572)                   (8,603,935) 
Total Assets less Current Liabilities                                  9,852,079                    12,946,576  
Provision for liabilities and charges                                   (350,000)                             - 
Net Assets                                                             9,502,079                    12,946,576  
Capital and Reserves                                                                                            
Called up share capital - equity interests                               567,841                       567,841  
Share premium account                                                 17,449,610                    17,449,610  
Profit and loss account                                               (8,515,372)                   (5,070,875) 
Shareholders' Funds                                                                                             
                                                                       9,502,079                    12,946,576  
 

 
                                          Consolidated Cash Flow Statement
                                        For the year ended 29th February 2004 

                                                                                                                 
Note                                                         2004           2004         2003         2003 
                                                                £              £            £            £ 
Net Cash (Outflow)/Inflow                                                                                  
from Operating Activities                                            (1,656,283)                  (27,681) 
Interest received                                         10,265                            -              
Interest paid                                           (331,860)                   (558,507)              
Interest element of finance lease rental payments         (5,367)                     (9,320)              
Dividend received                                         80,000                      81,000               
Taxation                                                               (246,962)                 (486,827) 
Corporation tax                                                                -                   18,123  
Capital Expenditure and Financial                                                                          
Investment                                                                                                 
Sale of property                                         475,000                            -              
Purchase of other tangible assets                        (43,257)                    (18,110)              
Sale of other tangible assets                                  -                      85,190               
Net cash inflow for capital expenditure                                                                    
and financial investment                                                431,743                    67,080  
Acquisitions and disposals                                                                                 
Investment in joint venture                             (489,225)                     (7,467)              
Proceeds on disposal of investment                                                                         
in joint venture                                       5,020,000                            -              
Net cash inflow/(outflow) for acquisitions                                                                 
and disposals                                                         4,530,775                    (7,467) 
Financing                                                                                                  
Capital element of finance lease rental payments          (3,512)                   (106,919)              
Increase/(decrease) in debt due within one                                                                 
year                                                  (1,150,000)                     350,633              
Net cash inflow from financing                                       (1,153,512)                  243,714  
Increase/(Decrease) in Cash in the Year                    1,905,761                  (193,058) 
 

                       Notes to the Financial Statements
                     For the year ended 29th February 2004

               
1    Principal Accounting Policies

     The principal accounting policies, which are unchanged from the previous 
     year, are as follows:

     Accounting basis and standards

     The financial statements have been prepared under the historical cost
     convention, modified to include the revaluation of freehold property, and 
     in accordance with applicable accounting standards.

     The company and group currently meet their day to day working capital
     requirements partly through monies loaned from the Northacre PLC Directors
     Retirement and Death Benefits Scheme and partly from the group's bankers. 
     Since the year end the directors have implemented a number of measures to 
     re-finance the group's activities, including the following:-
          
     i)   In August 2004 the company exchanged contracts for the sale of its 
          freehold property for £2.85 million. Completion is due to take place 
          on 15 September 2004 and the proceeds of the sale will be used to 
          redeem in full the indebtedness owed to the group's bankers Coutts & 
          Co.

     ii)  Agreement has been reached for one of the loans due to the Northacre 
          PLC Directors Retirement and Death Benefits Scheme of £1 million to be 
          extended until 31 July 2005.

     iii) Documentation has recently been agreed, and is shortly to be executed, 
          for the issue of £500,000 of convertible loan stock to a third party 
          investor. The resultant cash injection is expected to be received in 
          October 2004.

     The directors have prepared detailed cash flow projections for the period 
     ended 30 September 2005 making prudent assumptions about the levels and  
     timing of income and expenditure. These projections show that the group can 
     operate within the available facilities in the light of the changes 
     mentioned above. On this basis the directors consider it appropriate to 
     prepare the financial statements on a going concern basis.

     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.

     Depreciation

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

     Freehold buildings                                    nil
     Fixtures, fittings and office equipment               25% straight line
     Computer equipment                                    331/3% straight line
     Motor vehicles                                        25% straight line

     It is the group's practice to maintain its freehold buildings in a 
     continual state of sound repair and to make improvements thereto from time 
     to time. The directors review the valuation of the buildings annually for 
     impairment in its value and as they consider that the residual value at the 
     end of the useful economic life will not be less than its present carrying 
     value, no depreciation is chargeable.

     Work in Progress

     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.

     Turnover

     Turnover represents amounts invoiced 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.

     Deferred Taxation

     In accordance with FRS19, deferred tax is recognised as a liability or 
     asset if transactions or events that give the group the obligation to pay 
     more tax in future or a right to pay less tax in future have occurred by 
     the balance sheet date.

                                 Northacre PLC
                       Notes to the Financial Statements
               For the year ended 29th February 2004 (Continued)

          
1    Principal Accounting Policies (Continued)

     Leased Assets

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

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

     Investments

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

     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 was
     previously written off over an estimated minimum economic life of 20 years. 
     The directors have reviewed the estimated useful life of this asset in the 
     light of their current actions to re-organise the groups' activities and 
     now consider that an estimated useful life of 10 years is more appropriate.      
     The effect on the years' amortisation charge is an increase of £458,078.

     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.
     
2    Turnover

     The group's turnover was derived from its principal activities.

                                                          2004            2003
                                                             £               £
      Principal activities:


      Profit shares - property development             350,000               -
      Development management                           252,365         865,060
      Interior design                                1,877,347       1,145,797
      Architectural design                           1,355,687       1,583,761
                                                     3,835,399       3,594,618
     
3    Financial Information

     The financial information contained in this document does not constitute
     statutory accounts within the meaning of section 240 of the Companies Act 
     1985.



                      This information is provided by RNS
            The company news service from the London Stock Exchange