Results for the year ended 28 February 2014

RNS Number : 1484M

Northacre PLC

14 July 2014

 



 

 

NORTHACRE PLC

(the ''Company'' or ''Group'')

Results for the year ended 28^th February 2014

Northacre PLC is pleased to announce its financial results for the year ended 28^th February 2014. The Annual Report and Accountsfor the year then ended and Notice of the Company's Annual General Meeting, to be held at the Company's registered office at 9.30am on 26^th August 2014,will be available shortly on the Company'swebsite www.northacre.com and are being posted to those shareholders who have elected to receive hard copies.

Extracts from the Company's Annual 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

It is Northacre's ambition to reposition itself as London's No. 1 prime residential developer. This will only manifest itself through increased trading and profitability - a process which has begun with the investment in 33 Thurloe Square and 1 Palace Street as well as the on-going participation in the development of Vicarage Gate.

Northacre's activities in the bidding process for development opportunities has increased nearly fivefold compared to previous years, thanks to our major shareholder's ability to raise finance in a market that, whilst challenging, continues to show long term increases in values. As a result there are clear signs of an increasingly positive attitude in the market towards Northacre and its prospects.

As the founder of Northacre I am pleased to see how well the integration of our new CEO, Niccolò Barattieri di San Pietro has worked with staff and our major shareholder as well as external stakeholders.

The Group now has the real prospect of achieving its ambition to become London's No. 1 developer in the prime residential sector, in particular with the opportunity created by our major redevelopment of 1 Palace Street which is destined to become one of the most significant residential developments in London.

Klas Nilsson

Non-Executive Chairman

Executive Director's Statement

This year has been one of positive momentum for Northacre PLC.  In one year we have signed four development management agreements, more than in any other year in the history of the Company.  We have also committed over £12m of capital to projects: this is the most ever committed by Northacre PLC in a 12 month period.

It should be noted that we are able to operate successfully in a very competitive market which is testament to the impact our majority shareholder has had on the business.

Business Development

Acquiring properties which meet our stringent criteria, both from a development and investment perspective, has become increasingly challenging.  However, in the last twelve months we have expanded our contact base considerably and feel confident that we are uniquely positioned to secure further opportunities.  Our track record in the last twelve months should be a testament to that.  The collaboration with our shareholder, Abu Dhabi Capital Management LLC (ADCM), has enabled us to pursue opportunities of substantial size, where there are fewer investors pursuing them.

Developments

1 Palace Street

1 Palace Street will be the only residential development overlooking the gardens of Buckingham Palace. This unique attribute along with its imposing Grade II listed façade will facilitate us in delivering the best residential development in London.

This opportunity was sourced and completed by ADCM with Northacre PLC committing to contribute £10m of equity. Since completion took place in early January 2014, we have been working closely with Squire and Partners in order to fully redesign the approved scheme. We expect to submit a new planning application by the middle of July 2014. Should we receive planning approval in the autumn, we will be starting demolition in January 2015.

Vicarage Gate House

Vicarage Gate House is progressing according to the development plan with practical completion scheduled for March 2015.  The construction phase has been running very smoothly and no major issues have arisen. Sales have been progressing well and three units have been reserved/exchanged. We have achieved over £4,000 per square foot on the penthouse which is a record for the area.

33 Thurloe Square

33 Thurloe Square is an imposing Grade II listed property overlooking the Victoria & Albert Museum. It was the original residence of Sir Henry Cole the first director of the museum, hence of historic importance for the area. This opportunity was sourced by ADCM and Northacre PLC contributed 15% of the equity.

All our planning objectives were achieved. We secured listed building consent to increase the square footage of the existing property along with consent to build a double basement. This increased the total square footage from 4,777 to 6,500 square feet.

As we were about to start work on site we received an unsolicited offer for £12,750,000 which represents a significant premium to the market. We exchanged contracts on 6^th June 2014 and completed on 24^th June 2014.

We achieved a net IRR of over 30% for our investors along with a substantial return for Northacre PLC in terms of development management fees, performance fee and return on our invested equity.

13 & 14 Vicarage Gate

This site is adjacent to Vicarage Gate House and is a development of 8 apartments.  These two interconnected period buildings will allow us to develop four lateral flats which are very rare in these kinds of buildings. We started works on site at the end of June 2014 with completion due twelve months after.

Chester Square

This is a two year project for a private client.  Northacre PLC was appointed as a development manager and Intarya, the Group's interior design team, will be working on the interior architecture and furnishings. The client selected Northacre PLC as he wanted a company who had a strong track record in achieving complicated planning and one with a true understanding of the high-end market.

The Lancasters

This project has proved to be an excellent long term investment with a total dividend income of £50m.  Following the acquisition of Lancaster Gate (Hyde Park) Limited in December 2013, Northacre PLC realised its full profit from this project and we are now in the process of completing the snagging  with a view to transferring the freehold to the residents by the end of the year.

Outlook

With the general elections next year and after such a protracted period of strong growth, we feel that the year ahead will be one of price consolidation for the prime central London residential market.  However, in the longer term we firmly believe that the high-end residential market is underpinned by a multitude of factors which will continue to push prices higher.

At present Northacre PLC has about 4% market share in the super prime residential development sphere in London putting us amongst the top ten developers by Gross Development Value (GDV). Our goal is to be in the top three over the next three to five years.

Northacre PLC, with its unique track record, healthy cash balance and strong relationship with our major shareholder, is uniquely positioned to fully exploit the positive trend. We are fully committed to building Northacre PLC into a substantial luxury brand.

Niccolò Barattieri di San Pietro

Chief Executive Officer

 

Financial Review

The Group's financial position improved significantly during the year under review with various events affecting the Group's results and Consolidated Statement of Financial Position at the year end.

Consolidated Income Statement

Group revenue for the year decreased to £3.0m (2013: £3.5m), which reflected a lower level of activity in Intarya, the Group's interior design business. Intarya's revenue fell by 37% to £2.0m (2013: £3.2m) while development management fee income increased by 150% to £1.0m (2013: £0.4m) due to the new agreements signed for the 1 Palace Street and 33 Thurloe Square projects.

Administrative expenses fell by 45% to £4.9m (2013: £8.9m). The decrease reflected the fact that there was no bonus provision in the financial year ended February 2014 in comparison to £4.6m of bonuses and NI accrued in the financial year ended February 2013. The Group achieved significant savings of £0.4m in legal and other professional fees. As forecasted, loan arrangement fees and finance costs decreased to £nil (2013: £0.3m and £2.1m respectively) due to the fact that all of the Group's debt was repaid in prior periods.

On 16th December 2013 the Group acquired Minerva's interest in Lancaster Gate (Hyde Park) Limited. £15m dividends were received during the year with a final payment of £7.3m received following the acquisition. The total dividends received from The Lancasters Development amounted to £50m.

The Group reported a profit before tax of £12.3m (2013: £16.8m).

Consolidated Statement of Comprehensive Income

The change in fair value of the interest in Lancaster Gate reported for the year, being a decrease of £15m (2013: £18.7m), was due to the realisation of the dividends received of £15m.

Consolidated Statement of Financial Position

The Group has improved its cash position further and as at 28th February 2014 had cash and cash equivalents of £21.2m (2013: £9.2m). The principal source of cash (£22.3m) was the further dividends received from The Lancasters Development. In December 2013 the Group raised an additional £12.5m cash by issuing new shares and through a cashbox acquisition. This improved cash position enabled the Group to invest in two new projects, 1 Palace Street and 33 Thurloe Square. As at 28th February 2014, Northacre PLC had provided a total of £10.3m in cash for these two projects, representing an equity investment of £8.8m in respect of 1 Palace Street and £1.5m through a combination of equity investment and shareholder loan in respect of 33 Thurloe Square.

In addition it permitted the Group to pay a special dividend to shareholders of 40p per share in July 2013.

Looking forward, the Group will focus on securing new projects and will increase both its development income and investment income. Our strengthened financial position means we are better placed than in recent years to take advantage of investment opportunities.

Kasia Maciborska-Singh

Group Financial Controller

Consolidated Income Statement

For the year ended 28^th February 2014

	Note		2014		2013
			£		£
Group
Group revenue	3		2,955,797		3,521,402
Cost of sales			(1,294,225)		(2,235,379)
Gross profit			1,661,572		1,286,023
Administrative expenses			(4,868,726)		(8,943,929)
Group loss from operations			(3,207,154)		(7,657,906)
Investment revenue	4		15,063,052		26,577,553
Profit on disposal of available for sale financial asset	5		111,213		-
Other gains	6		336,264		-
Finance costs	7		(100)		(2,117,427)
Profit for the year before taxation	8		12,303,275		16,802,220
Taxation	11		(102,993)		4,832,506
Profit for the year attributable to equity holders of the Company			12,200,282		21,634,726
Profit per ordinary share
Basic - Continuing and total operations	23		39.51p		80.96p
Diluted - Continuing and total operations	23		39.51p		80.96p

Company
Profit/(loss) for the year attributable to equity holders of the Company			44,703,358		(5,074,317)

Consolidated Statement of Comprehensive Income

For the year ended 28^th February 2014

	Note		2014		2013
			£		£
Group
Profit for the period attributable to equity holders of the Company			12,200,282		21,634,726
Other comprehensive loss:
Changes in fair value of available for sale financial assets	15(a)		(15,000,000)		(18,662,028)
Total comprehensive (loss)/income for the period			(2,799,718)		2,972,698

Company
Profit/(loss) for the period attributable to equity holders of the Company			44,703,358		(5,074,317)
Other comprehensive income			-		-
Total comprehensive profit/(loss) for the period	12		44,703,358		(5,074,317)

Consolidated Statement of Financial Position

As at 28^th February 2014 

	Note				2014				2013
					£				£
Non-current assets
Goodwill	13				8,007,417				8,007,417
Property, plant and equipment	14				822,739				919,229
Available for sale financial assets	15(a)				8,824,659				22,148,579
					17,654,815				31,075,225
Current assets
Inventories	17				168,559				1,378
Trade and other receivables	18				6,667,711				4,585,083
Cash and cash equivalents					21,239,909				9,194,508
					28,076,179				13,780,969
Total assets					45,730,994				44,856,194
Current liabilities
Trade and other payables	19				6,615,535				4,741,075
Borrowings, including lease finance					-				-
					6,615,535				4,741,075
Non-current liabilities
Borrowings, including lease finance					-				-
					-				-
Total liabilities					6,615,535				4,741,075
Equity
Share capital	24				1,058,388				668,091
Share premium account	24				22,565,286				18,552,361
Merger reserve	24				8,086,293				-
Retained earnings					7,405,492				20,894,667
Total equity					39,115,459				40,115,119
Total equity and liabilities					45,730,994				44,856,194
Approved by the Board on 14th July 2014
N. Barattieri di San Pietro

   Director

   Company registration no. 03442280

Company Statement of Financial Position

As at 28^th February 2014

	Note				2014				2013
					£				£
Non-current assets
Property, plant and equipment	14				823,633				937,237
Investments	15(c)				16,830,968				8,007,421
					17,654,601				8,944,658
Current assets
Trade and other receivables	18				10,110,093				3,218,933
Cash and cash equivalents					18,808,382				9,019,416
					28,918,475				12,238,349
Total assets					46,573,076				21,183,007
Current liabilities
Trade and other payables	19				9,780,661				30,894,008
Borrowings, including lease finance					-				-
					9,780,661				30,894,008
Non-current liabilities
Borrowings, including lease finance					-				-
					-				-
Total liabilities					9,780,661				30,894,008
Equity
Share capital	24				1,058,388				668,091
Share premium account	24				22,565,286				18,552,361
Merger reserve	24				8,086,293				-
Retained earnings					5,082,448				(28,931,453)
Total equity					36,792,415				(9,711,001)
Total equity and liabilities					46,573,076				21,183,007
Approved by the Board on 14th July 2014
N. Barattieri di San Pietro

  Director

  Company registration no. 03442280

Consolidated and Company Statements of Cash Flows

For the year ended 28^th February 2014

		Group				Company
		2014		2013		2014		2013
		£		£		£		£
Cash flows from operating activities
Profit/(loss) for the period before tax		12,303,275		16,802,220		44,227,761		(8,511,585)
Adjustments for:
Investment revenue		(15,063,052)		(26,577,553)		(42,756,665)		(20,443)
Finance costs		100		2,117,427		-		2,119,810
Loss on disposal of investments		1,108		-		1,108		-
Goodwill on acquisition less stamp duty paid		(368,287)		-		-		-
Profit on sale of available for sale financial assets		(111,213)		-		-		-
Fair value adjustment		(7,148,575)		-		-		-
Depreciation and amortisation		148,181		150,069		113,604		118,605
(Increase)/decrease in inventories		(13,748)		116,628		-		-
(Increase)/decrease in trade and other receivables		(4,834,599)		(946,061)		(8,849,164)		6,089,337
Increase/(decrease) in trade and other payables		5,350,579		1,076,897		(21,055,109)		9,615,255
Cash (used in)/generated from operations		(9,736,231)		(7,260,373)		(28,318,465)		9,410,979
Interest paid		(100)		(2,117,427)		-		(2,119,810)
Corporation tax - consortium relief refunded		3,292,776		2,297,536		2,375,362		1,669,504
Net cash (used in)/generated from  operating activities		(6,443,555)		(7,080,264)		(25,943,103)		8,960,673
Cash flows from investing activities
Purchase of property, plant & equipment		(51,691)		(6,700)		-		-
Increase in investments		(8,824,655)		-		(8,824,655)		-
Acquisition of subsidiary, net of cash acquired		10,502,191		-		-		-
Interest received		63,052		20,494		49,606		20,443
Dividends received		15,000,000		26,557,059		42,707,059		-
Net cash generated from investing activities		16,688,897		26,570,853		33,932,010		20,443
Cash flows from financing activities
Proceeds from issue of shares		12,489,516		-		12,489,516		-
Proceeds from borrowings		-		13,000,000		-		-
Repayment of borrowings		-		(24,190,342)		-		(699,602)
Repayment of finance leases		-		(22,702)		-		(15,767)
Dividends paid		(10,689,457)		-		(10,689,457)		-
Net cash generated/(used in) from financing activities		1,800,059		(11,213,044)		1,800,059		(715,369)
Increase in cash and cash equivalents		12,045,401		8,277,545		9,788,966		8,265,747
Cash and cash equivalents at the beginning of the year		9,194,508		916,963		9,019,416		753,669
Cash and cash equivalents at the end of the year		21,239,909		9,194,508		18,808,382		9,019,416

Consolidated and Company Statements of Changes in Equity

For the year ended 28^th February 2014

				Called Up		Share
				Share		Premium		Merger		Retained
Group				Capital		Account		Reserve		Earnings		Total
				£		£		£		£		£
As at 1st March 2012				668,091		18,552,361		-		17,921,969		37,142,421
Profit for the period				-		-		-		21,634,726		21,634,726
Other comprehensive loss for the period:
Changes in fair value of available for sale financial assets				-		-		-		(18,662,028)		(18,662,028)
As at 28th February 2013				668,091		18,552,361		-		20,894,667		40,115,119
As at 1st March 2013				668,091		18,552,361		-		20,894,667		40,115,119
Profit for the period				-		-		-		12,200,282		12,200,282
Other comprehensive loss for the period:
Changes in fair value of available for sale financial assets				-		-		-		(15,000,000)		(15,000,000)
Transactions with owners of the Company:
Issue of Ordinary shares				390,297		4,012,925		8,086,293		-		12,489,515
Dividends				-		-		-		(10,689,457)		(10,689,457)
As at 28th February 2014				1,058,388		22,565,286		8,086,293		7,405,492		39,115,459
				Called Up		Share
				Share		Premium		Merger		Retained
Company				Capital		Account		Reserve		Earnings		Total
				£		£		£		£		£
As at 1st March 2012				668,091		18,552,361		-		(23,857,136)		(4,636,684)
Total comprehensive loss for the period				-		-		-		(5,074,317)		(5,074,317)
As at 28th February 2013				668,091		18,552,361		-		(28,931,453)		(9,711,001)
As at 1st March 2013				668,091		18,552,361		-		(28,931,453)		(9,711,001)
Total comprehensive profit for the period				-		-		-		44,703,358		44,703,358
Transactions with owners of the Company:
Issue of Ordinary shares				390,297		4,012,925		8,086,293		-		12,489,515
Dividends				-		-		-		(10,689,457)		(10,689,457)
As at 28th February 2014				1,058,388		22,565,286		8,086,293		5,082,448		36,792,415

Notes to the Consolidated Financial Statements

For the year ended 28^th February 2014

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 new standards, amendments to standards or interpretations are mandatory for the Group for the first time for the financial year beginning 1^st March 2014, but are not currently considered to be relevant to the Group (although they may affect the accounting for future transactions and events):

·      IFRS 10, 'Consolidated Financial Statements', effective from 1st January 2014, as amended by IAS 27 Investment Entities. 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', effective from 1st January 2014. This standard establishes principles for financial reporting by parties to a joint arrangement.  'Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)' amends IFRS 11 such that the acquirer of an interest in a joint operation in which the activity constitutes a business, as defined in IFRS 3, is required to apply all of the principles on business combinations accounting in IFRS 3 and other IFRSs with the exception of those principles that conflict with the guidance in IFRS 11. The effective date is on or after 1^st January 2016.

·      IFRS 12, 'Disclosure of interests in other entities', effective from 1st January 2014, as amended by IAS 27 Investment 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.

·      Amendment to IAS 32, 'Offsetting Financial Assets and Liabilities', effective from 1st January 2014 clarifies that the tax effect of a distribution to holders of equity instruments should be accounted for in accordance with IAS 32.

·      Amendment to IAS 36, 'Impairment of Assets', effective from 1st January 2014  as amended by  'Recoverable Amount Disclosures for Non-Financial Assets' being the clarification of disclosures required.

·      Amendment to IAS 39, 'Financial Instruments - Recognition and Measurement', effective from 1st January 2014  as amended by  'Novation of Derivatives and Continuation of Hedge Accounting which permits an entity to elect to continue to apply the hedge accounting requirements in IAS 39 for a fair value hedge of the interest rate exposure of a portion of a portfolio of financial assets or financial liabilities when IFRS 9 is applied, and to extend the fair value option to certain contracts that meet the 'own use' scope exception.

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1^st March 2014 and have not been early adopted:

·      IFRS 9, 'Financial Instruments', issued in November 2009 and effective from 1st 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 13, 'Fair value measurement', effective from 1st July 2014. 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. The amendment clarifies the scope of the portfolio exception.

·      IAS 19 (Revised), 'Employee Benefits' effective for periods beginning on or after 1st July 2014. 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.

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 received from The Lancasters Development dividends and through fees receivable from its projects: Vicarage Gate House, 13-14 Vicarage Gate, 33 Thurloe Square and 1 Palace Street.

The Directors have prepared detailed cash flow projections for the period ending 28^th February 2019 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 meet its on-going working capital requirements. 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. Subsidiary undertakings are all entities over which the Group has the power to govern the financial and operating policies of the subsidiary and therefore exercises control. The existence and effect of both current voting rights and potential voting rights that are currently exercisable or convertible are considered when assessing whether control of an entity is exercised. Subsidiaries are consolidated from the date at which the Group obtains the relevant level of control and are de-consolidated from the date at which control ceases.

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. Despite the increase, Lancaster Gate (Hyde Park) Limited continued to be treated as an available for sale financial asset until 16^th December 2013 as the Group did not exercise significant influence. On 16^th December 2013 the Group acquired the remaining 74.9% of the issued share capital of Lancaster Gate (Hyde Park) Limited. The subsidiary's results for the period 16^th December 2013 to 28^th February 2014 are included in financial statements of the Group.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Property, plant and equipment

Property, plant and equipment are stated at historical cost, net of any depreciation and any provision for impairment.

Depreciation has been calculated on a straight line basis and aims to write off the costs, less estimated residual value of each property, plant and equipment over their expected useful lives using the following periods:

                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 performance fees are recognised when the amounts involved have been finally determined and agreed criteria for recognition have been fulfilled. 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

Investments in subsidiaries, associates and joint ventures, and other investments are presented in the Group and Parent financial statements at cost, less any necessary provision or impairment.

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.

Pensions

The Group operates a defined contribution pension scheme under which fixed contributions are payable. Pension costs charged to the income statement represent amounts payable to the scheme during the year.

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.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are charged to the share premium account.

Equity balances

·      Called up share capital represents the aggregate nominal value of ordinary shares in issue.

·      The share premium account represents the incremental paid up capital above the nominal value of ordinary shares issued.

·      The merger reserve represents the excess over nominal value of the fair value of consideration received for equity shares issued directly to acquire another entity meeting the specific requirements of section 612 of the Companies Act 2006.

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 cash and cash equivalents and equity attributable to equity holders of the Parent Company, comprising issued capital, share premium account, the merger reserve created following the Cash Box Acquisition 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 minimise net debt whilst investing in the development opportunities.

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. Directors are 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
									2014		2013
	Principal activities:								£		£
	Development management								900,705		300,350
	Interior design								1,991,837		3,172,369
	Architectural design								63,255		48,683
									2,955,797		3,521,402
	Profit before taxation								2014		2013
									£		£
	Development management								12,364,592		17,092,734
	Interior design								(105,086)		3,001
	Architectural design								43,769		(293,515)
									12,303,275		16,802,220
	Assets								2014		2013
									£		£
	Development management								45,138,754		43,762,088
	Interior design								454,183		928,793
	Architectural design								138,057		165,313
									45,730,994		44,856,194
	Liabilities								2014		2013
									£		£
	Development management								5,259,612		2,941,712
	Interior design								550,923		920,447
	Architectural design								805,000		878,916
									6,615,535		4,741,075
	A geographical analysis of the Group's revenue, assets and liabilities is given below:
	Revenue								2014		2013
									£		£
	United Kingdom								2,536,571		2,385,562
	Saudi Arabia								396,162		1,135,840
	USA								23,064		-
									2,955,797		3,521,402
	Included in the revenue above are revenues in respect of customers who account for over 10% of the Group's total revenue.
									2014		2013
									£		£
	Customer A (Interior design)								396,162		1,135,840
	Customer B (Interior design)								-		40,952
	Customer C (Interior design)								-		807,000
	Customer D (Interior design)								707,113		1,095,712
	Customer E (Development management & interior design)								326,669		-
	Customer F (Interior design)								422,206		-
	Customer G (Development management)								509,783		-
									2,361,933		3,079,504
	Assets								2014		2013
									£		£
	United Kingdom								45,618,042		44,180,739
	Saudi Arabia								112,952		675,455
									45,730,994		44,856,194
	Liabilities								2014		2013
									£		£
	United Kingdom								6,544,924		4,384,169
	United Arab Emirates								-		1,648
	USA								-		(104)
	Spain								-		(828)
	Italy								-		(241)
	Saudi Arabia								70,611		356,431
									6,615,535		4,741,075

4.	Investment revenue							2014		2013
								£		£
	Interest received							63,052		20,494
	Dividends received							15,000,000		26,557,059
								15,063,052		26,577,553

5.	Profit on disposal of available for sale financial assets							2014		2013
								£		£
	Derecognition of available for sale financial assets							7,259,788		-
	Change in fair value of available for sale financial assets previously recognised in Other Comprehensive Income							(7,148,575)		-
								111,213		-

Profit on disposal of available for sale financial assets arises following the acquisition of Lancaster Gate (Hyde Park) Limited on 16^th December 2013.         A loss of £7.1m represents all gains recognised and booked to Other Comprehensive Income up to the time of derecognition of available for sale financial assets, as these gains are required to be transferred to the Consolidated Income Statement after the available for sale financial assets have been sold.

6.	Other gains							2014		2013
								£		£
	Written off share capital of dissolved dormant Group's subsidiaries							(1,108)		-
	Negative goodwill arising on acquisition of Lancaster Gate (Hyde Park) Limited							337,372		-
								336,264		-

7.	Finance costs											2014		2013
												£		£
	Interest on:
		Overdue tax										-		272
		Tax penalties/(refund)										100		(6,490)
		Other loans										-		2,123,645
												100		2,117,427

8.	Profit before taxation							2014		2013
								£		£
	Profit before taxation is stated after charging:
	Depreciation and amounts written off property, plant and equipment:
	Owned assets							148,181		150,069
	Operating lease rentals:
	Land and buildings							125,062		130,663
	Foreign exchange loss							41		75
	Fees payable to the Company's auditors for:
	- the audit of the Company's annual accounts							44,446		47,054
	Fees payable to the Company's auditors for other services to the Group:
	- the audit of the Company's subsidiaries							42,828		33,680
	Total audit fees							87,274		80,734
	Fees payable to the Company's auditors for:
	- taxation compliance services							10,537		13,888
	- other taxation advisory services							4,000		41,113
	- other services							31,158		17,260
	Total other fees							45,695		72,261

9.	Employees						2014		2013
							Number		Number
	The average weekly number of employees (including Directors) during the year was:
	Office and management						12		14
	Design and management						11		10
							23		24
							2014		2013
	Staff costs for the above employees:						£		£
	Wages and salaries						1,821,228		5,839,966
	Social security costs						62,702		786,068
	Other pension costs - money purchase schemes						74,068		115,040
							1,957,998		6,741,074
	Remuneration in respect of Directors was as follows:						2014		2013
							£		£
	Aggregate emoluments (including benefits in kind)						655,264		2,280,866
	Consultancy fees						57,150		-
	Other fees						40,000		186,125
							752,414		2,466,991
	Company contribution to money purchase pension schemes						23,354		66,280

	Remuneration for each Director (including benefits in kind)						2014		2013
							£		£
	K.B. Nilsson						127,150		797,216
	K. MacRae						344,764		418,150
	M.A. AlRafi						10,000		1,120,000
	M.F. Williams						10,000		65,500
	E.B. Harris						30,000		66,125
	N. Barattieri di San Pietro						213,000		-
	A. de Rothschild						17,500		-
							752,414		2,466,991
	Remuneration of £10,000 (2013: £120,000) for Director M.A. AlRafi was paid to MTAF Group. Remuneration of £30,000 (2012: £66,125) 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:						2014		2013
							£		£
	Aggregate emoluments (including benefits in kind)						344,764		1,120,000
	Company contribution to money purchase pension scheme						6,854		-
							351,618		1,120,000
	The total emoluments of £344,764 (2013: £1,120,000) above includes compensation for loss of office of £251,500 (2013: £nil); fees of £nil (2013: £120,000) and bonus of £nil (2013: £1,000,000).

11.	Taxation						2014		2013
							£		£
	(a) Analysis of charge in year
	Current tax:
	Corporation tax credit						-		(2,534,970)
	Adjustment in respect of prior periods						311,298		(2,297,536)
	Total current tax						311,298		(4,832,506)
	Deferred tax:
	Deferred tax credit						(208,305)		-
	Total deferred tax						(208,305)		-
	Total tax charge						102,993		(4,832,506)
	(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 23% (2013: 24%).
	The differences are explained below:
							2014		2013
							£		£
	Profit on ordinary activities before tax						12,303,275		16,802,220
	Profit on ordinary activities multiplied by the standard rate of
	corporation tax of 23% (2013: 24%)						2.829,753		4,032,533
	Effects of:
	Expenses not deductible for tax purposes						19,851		134,847
	Depreciation for the period in excess of capital allowances						18,919		16,277
	Dividends and distributions received						(3,450,000)		(6,373,694)
	Utilisation of tax losses						666,704		1,630,864
	Other timing differences						(328,727)		562,240
	Loss carried forward						243,500		-
	Consortium relief						-		(2,538,037)
	Consortium relief in respect of prior periods						311,298		(2,297,536)
	Current tax charge/(credit) for the year						311,298		(4,832,506)
	(c) Factors that may affect future tax charges
	The standard rate of corporation tax in the UK changed to 24% from 1st April 2012 and to 23% from 1st April 2013. The standard rate of corporation tax was further reduced to 21% from 1st April 2014.

   12.            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 profit for the financial year of £12,200,282 (2013: £21,634,726) includes a profit of £44,703,358 (2013: loss £5,074,317), which was dealt with in the financial statements of the Company.

13.	Goodwill
	Group								2014		2013
									£		£
	Cost								14,940,474		14,940,474
	Amortisation and impairment
	At the beginning of the year								6,933,057		6,933,057
	Impairment charge for the year								-		-
	At the end of the year								6,933,057		6,933,057
	Net book value								8,007,417		8,007,417

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 rate applied to the cash flow projections are derived from the Group's weighted average cost of capital. The discount rate applied is 6% (2013: 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 100% 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 (2013: nil) for the Intarya interior design business.

Sensitivity analysis

The following point changes in assumptions would cause the recoverable amount to fall below the current carrying value:

• A 41.3% increase in the discount rate to 47.3% for the latter five year period

• A 25.6% decrease in the development revenue cash flows over the five year period

• A 43.4% decrease in the other interior design revenue cash flows over the five year period

14.	Property, plant and equipment
							Fittings
	Group				Leasehold		and Office		Computer
					Improvements		Equipment		Equipment		Total
	Cost				£		£		£		£
	At 1st March 2012				1,115,434		70,672		381,769		1,567,875
	Additions				-		-		6,700		6,700
	Disposals				-		-		(180,000)		(180,000)
	At 28th February 2013				1,115,434		70,672		208,469		1,394,575
	Additions				-		2,754		48,937		51,691
	At 28th February 2014				1,115,434		73,426		257,406		1,446,266
	Depreciation
	At 1st March 2012				123,072		31,739		350,466		505,277
	Charge for the year				113,605		13,904		22,560		150,069
	Disposals				-		-		(180,000)		(180,000)
	At 28th February 2013				236,677		45,643		193,026		475,346
	Charge for the year				113,604		10,544		24,033		148,181
	At 28th February 2014				350,281		56,187		217,059		623,527
	Net book value
	At 28th February 2014				765,153		17,239		40,347		822,739
	At 28th February 2013				878,757		25,029		15,443		919,229
	At 28th February 2012				992,362		38,933		31,303		1,062,598

							Fittings
	Company				Leasehold		and Office		Computer
					Improvements		Equipment		Equipment		Total
	Cost				£		£		£		£
	At 1st March 2012				1,173,914		-		180,000		1,353,914
	Disposals				-		-		(180,000)		(180,000)
	At 28th February 2013				1,173,914		-		-		1,173,914
	Additions				-		-		-		-
	At 28th February 2014				1,173,914		-		-		1,173,914
	Depreciation
	At 1st March 2012				123,072		-		175,000		298,072
	Charge for the year				113,605		-		5,000		118,605
	Disposals				-		-		(180,000)		(180,000)
	At 28th February 2013				236,677		-		-		236,677
	Charge for the year				113,604		-		-		113,604
	At 28th February 2013				350,281		-		-		350,281
	Net book value
	At 28th February 2014				823,633		-		-		823,633
	At 28th February 2013				937,237		-		-		937,237
	At 28th February 2012				1,050,842		-		5,000		1,055,842

There were no assets held under finance lease or hire purchase contracts.

15.	Investments
(a)	Available for sale financial assets
	Group		2014		2014		2013		2013
			£		£		£		£
	At 1st March				22,148,579				40,810,580
	Increase in The Lancasters Development fair value		-				7,895,058
	Dividend received		(15,000,000)				(26,557,059)
	Derecognition		(7,148,575)				-
	Increase in 1 Palace Street and 33 Thurloe Square fair value		8,824,655				-
	Net movement transferred from comprehensive income				(13,323,920)				(18,662,001)
	At 28th February				8,824,659				22,148,579
	Net book value
	At 28th February				8,824,659				22,148,579
	The decrease in available for sale financial assets represents £15.0m (2013: £26.5m) dividends received from The Lancasters Development and derecognition of the available for sale financial assets following the acquisition of Lancaster Gate (Hyde Park) Limited on 16th December 2013. The Company is committed to invest £10m into the 1 Palace Street development. At 28th February 2014 the Company had paid £8,824,640 of this commitment. The £15 investment in 33 Thurloe Square represents a 15% equity stake. At 28th February 2014 the Company had paid costs of £1,459,774 which have been treated as a shareholder loan and included within trade and other receivables in the Consolidated and Company Statements of Financial Position.

(b)		Other investments
	Company
										Subsidiary				Other					Total
										Undertakings				Investments
										£				£					£
	Cost
	At 1st March 2013									14,492,681				-					14,492,681
	Additions									-				8,824,655					8,824,655
	As at 28th February 2014									14,492,681				8,824,655					23,317,336
	Impairment
	At 1st March 2013									6,485,260				-					6,485,260
	Impairment in the year									1,108				-					1,108
	As at 28th February 2014									6,486,368				-					6,486,368
	Net book value as at 28th February 2014									8,006,313				8,824,655					16,830,968
	Net book value as at 28th February 2013									8,007,421				-					8,007,421

	Company				Subsidiary		Other		Total
					Undertakings		Investments
					£		£		£
	Cost
	At 1st March 2012				14,492,681		-		14,492,681
	As at 28th February 2013				14,492,681		-		14,492,681
	Impairment
	At 1st March 2012				6,485,260		-		6,485,260
	Impairment in the year				-		-		-
	As at 28th February 2013				6,485,260		-		6,485,260
	Net book value as at 28th February 2013				8,007,421		-		8,007,421
	Net book value as at 29th February 2012				8,007,421		-		8,007,421

(c)

Group shareholdings

The Group has shareholdings in the following companies, all incorporated in England and Wales:

Subsidiary undertakings

Holding

Proportion 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 Limited

Ordinary shares

100%

Design architects

Northacre Capital (1) Limited

Ordinary shares

100%

Dormant

Northacre Capital (3) Limited

Ordinary shares

100%

Dormant

Northacre Capital (5) Limited

Ordinary shares

100%

Property development

Northacre Capital (7) Limited

Ordinary shares

100%

Dormant

Northacre International Limited

Ordinary shares

100%

Dormant

Lancaster Gate (Hyde Park) Limited

Ordinary shares

100%

Property development

Templeco 643 Limited was dissolved on 29th October 2013. Northacre Capital (8) Limited changed its name to Northacre International Limited on 3rd July 2013.

The holding in Lancaster Gate (Hyde Park) Limited is held by Northacre Capital (5) Limited.

16.	Acquisition of subsidiary
	On 16th December 2013 the Group obtained control of Lancaster Gate (Hyde Park) Limited by acquiring the remaining 74.9% of the issued shares and voting rights of the company. As a result the Group's equity interest in Lancaster Gate (Hyde Park) Limited increased from 25.1% to 100%. Lancaster Gate (Hyde Park) Limited is the company that was established by Northacre PLC and Minerva Limited as a joint venture to acquire, manage and develop The Lancasters Development. This development reached its practical completion in November 2011 and the last apartment was sold in June 2013. Northacre PLC acquired Minerva's interest and in return, the Group has full ownership and received all dividend distributions whilst continuing to manage the on-going snagging process.
	The purchase of Minerva's stake and taking on the snagging process is not expected to have a material effect on the Group's operations or financial performance. Since the date of acquisition to 28th February 2014 the subsidiary contributed a profit of £56,754 to the results of the Group.
	The fair value of the assets and liabilities acquired which were equivalent to their book values at the date of acquisition were as follows:
													Fair values
													£
	Cash and cash equivalents												16,684,593
	Work in progress												153,433
	Other receivables												337,357
	Accruals and deferred income												(2,193,630)
	Trade and other payables												(83,221)
	Corporation tax payable												(1,199,268)
	Net assets												13,699,264
	The consideration for the acquisition and the goodwill arising on acquisition were as follows:
													£
	Consideration paid												6,182,402
	Fair value of net identifiable assets												(13,699,264)
	Fair value of the previously held investment												7,148,575
	Stamp duty												30,915
	Negative goodwill												(337,372)
	On 23rd December 2013 the Group acquired NTA CB Limited as part of total capital raising of £12.5m as detailed in note 24. NTA CB Limited had a balance sheet comprising solely of £8,347,142 of cash and the company was dissolved following the completion of the transaction.

17.	Inventories									Group
										2014		2013
										£		£
	Stock									9,099		1,316
	Work in progress									159,460		62
										168,559		1,378
	The Company had no stock or work in progress in either the prior or current reporting period.

18.	Trade and other receivables					Group				Company
						2014		2013		2014		2013
						£		£		£		£
	Trade receivables					3,763,209		701,485		-		-
	Amounts owed by group undertakings					-		-		7,096,422		339,408
	Other receivables					2,734,177		3,818,280		2,891,453		2,853,322
	Prepayments and accrued income					170,325		65,318		122,218		26,203
						6,667,711		4,585,083		10,110,093		3,218,933
	At the year end there was no provision for doubtful debts (2013: £nil). Included within other receivables is a total of £1,459,774 (2013: £nil) which represents amounts paid on behalf of  Bassamey Property Holdings Limited, a vehicle which will deliver the development of the 33 Thurloe Square project. The project is being financed from existing cash resources of Northacre PLC and other investors and amounts paid by Northacre PLC represent a shareholder loan.
	A deferred tax asset of £208,305 (2013: £nil) has been recognised on losses carried forward and is included in other receivables.

19.	Trade and other payables					Group				Company
						2014		2013		2014		2013
						£		£		£		£
	Trade payables					297,211		89,194		54,223		39,122
	Amounts owed to group undertakings					-		-		8,411,065		28,847,596
	Social security and other taxes					534,829		81,607		16,092		40,753
	Other payables					5,055		16,290		2,270		9,522
	Accruals and deferred income					5,778,440		4,553,984		1,297,011		1,957,015
						6,615,535		4,741,075		9,780,661		30,894,008

20.	Corporation tax					Group				Company
						2014		2013		2014		2013
						£		£		£		£
	Corporation Tax					-		-		-		-
						-		-		-		-

21.	Future financial commitments
	Operating leases					Group				Company
						2014		2013		2014		2013
						£		£		£		£
						Land & Buildings		Land & Buildings		Land & Buildings		Land & Buildings
	Net amount payable on operating leases which expire:
	Within one year					147,975		147,975		147,975		147,975
	In two to five years					591,900		591,900		591,900		591,900
	In over five years					330,815		478,790		330,815		478,790
						1,070,690		1,218,665		1,070,690		1,218,665

						Group				Company
	Operating leases					2014		2013		2014		2013
						£		£		£		£
						Other		Other		Other		Other
	Net amount payable on operating leases which expire:
	Within one year					31,804		34,077		12,920		12,920
	In two to five years					33,465		58,588		19,380		32,300
	In over five years					-		-		-		-
						65,269		92,665		32,300		45,220

22.

Capital commitments

As per the announcement dated 18th September 2013, the Company is committed to invest £10m in Palace Revive Limited, a special purpose company financed by a variety of institutional investors, established to acquire a property at 1 Palace Street. The Company paid £8,824,640 in the period to 28th February 2014 with a further £1,175,360 equity contribution to be paid post year-end.

23.

Earnings per share

Profit per share of 39.51p (2013: 80.96p) is calculated on the profit attributable to Ordinary shares of £12,200,282 (2013: £21,634,726) divided by the weighted number of Ordinary shares in issue during the period.

Computation of basic earnings per share:

2014

2013

Net profit

£12,200,282

£21,634,726

Weighted average number of shares outstanding

30,879,049

26,723,643

Basic profit per share

39.51p

80.96p

Diluted profit per share

39.51p

80.96p

There were no potentially dilutive instruments in issue during the current or preceding year. All amounts shown relate to continuing operations.

24.	Equity
	Share capital										2014		2013
											£		£
	Called up, allotted and fully paid:
	42,335,538 (2013: 26,723,643) Ordinary shares of 2.5p each										1,058,388		668,091
											1,058,388		668,091
	On 5th December 2013, Northacre PLC announced a proposal to raise a total of approximately £12.5m (before expenses) by way of an Open Offer for 5,177,968 Ordinary Shares and the acquisition of NTA CB Limited (Cash Box Acquisition) whose sole asset was cash of approximately £8.4 million, in consideration for the issue to Spadille Limited of 10,433,927 consideration shares. The total number of new shares issued was 15,611,895 at £0.80 pence per share.
	Share premium account and reserves										Share premium		Merger reserve
											£		£
	At 1st March 2013										18,552,361		-
	Cash box acquisition										-		8,086,293
	Premium on shares issued										4,012,926		-
	At 28th February 2014										22,565,287		8,086,293
	The share premium account represents the incremental paid up capital above the nominal value of the Ordinary shares of 2.5p issued.
	The merger reserve was created on the issue of 10,433,927 shares to Spadille Limited in consideration for the acquisition of NTA CB Limited (Cash Box Acquisition) with sole assets of £8,347,142. NTA CB Limited has been dissolved following the completion of the transaction.

25.	Dividends
											2014		2013
											£		£
	A special dividend paid during the year of 40p										10,689,457		-
											10,689,457		-
	No final dividend has been declared prior to the approval of these financial statements and the Board will continue to actively consider the payment of dividends.

  26.      Contingent liabilities

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 £477,048 (2013: £nil).

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		2014			2013
	Related Party		Relationship		£	£		£	£		Nature of Transactions
					Total transactions in the year	Balance at the year end		Total transactions in the year	Balance at the year end
	Northacre PLC		1		-	-		699,602	-		Loan repayable to the Scheme
	Directors Retirement and										by Northacre PLC. Loan was repaid
	Death Benefit Scheme										on 27th December 2012
	Northacre PLC Directors Retirement and Death Benefit Scheme		1		-	-		24,859	-		Interest payable to the Scheme on
											the loan to Northacre PLC. All
											interest was paid on 27th December 2012
	Northacre PLC		1		-	-		1,200,000	-		Provision in respect of profit share
	Directors Retirement and										to the Scheme in relation to the sale
	Death Benefit Scheme										of Group's interests in The
											Abingdons Partnership. It was paid on 30th November 2012
	K. Nilsson		2		57,150	(57,150)		-	-		Consultancy fees for services
											provided for the 1 Palace Street project for the period December 2013 to February 2014
	E.B. Harris		3		30,000	(30,000)		66,125	(30,000)		Non-executive Directors fees for
											March 2013 - February 2014 invoiced from E.C. Harris LLP
	M. Williams		4		10,000	-		65,500	(5,000)		Non-executive Directors fees for
											March 2013
	M.A. AlRafi		5		10,000	-		120,000	-		Executive Directors fees for
											March 2013 - June 2013
	M.A. AlRafi		5		-	(975,000)		1,000,000	(975,000)		Bonus of £1,000,000 was payable
											from The Lancasters Development dividends. £25,000 was paid on 28th November 2012 and the balance of £975,000 was paid post year end on 28th March 2014
	A. de Rothschild		6		17,500	(17,500)		-	-		Non-executive Directors fees for
											July 2013 - February 2014
	ADCM Ltd		7		1,100,000	-		-	-		Consultancy fees charged for
											April 2013 - February 2014 with £1,200,000 being paid in the year
	ADCM Ltd		7		116,544	27,596		-	-		Expenses charged by ADCM Ltd as
											per the consultancy agreement. £144,140 was paid in the year with £27,596 credit outstanding at the year end
	Palace Revive		8		2,705,004	-		-	-		Development management fees for
	Developments Limited										period of January 2014 to December 2014 as per development management agreement.
	Palace Revive		8		58,949	10,770		-	-		Expenses paid on behalf of Palace
	Developments Limited										Revive Developments Limited. £10,770 represents expenses paid but not reclaimed at the year end.
	Palace Real Estate		9		8,824,640	8,824,640		-	-		Amount invested by Northacre PLC
	Partners LP										into Palace Real Estate Partners LP to develop 1 Palace Street project.

	Nature of Relationships
1	K.B. Nilsson is a trustee and beneficiary of the Northacre PLC Directors Retirement and Death Benefit Scheme.
2	K.B. Nilsson is a Director of the Company.
3	E.B. Harris is a Director of the Company, and a member of E.C. Harris LLP.
4	M. Williams was a Director of the Company (resigned on 27th March 2013).
5	M.A. AlRafi was a Director of the Company (resigned on 25th June 2013).
6	A. de Rothschild was a Director of the Company (resigned on 11th February 2014)
7	ADCM Ltd is a fully owned subsidiary of ADCM LLC, the Group's ultimate parent company.
8	Palace Revive Developments Limited is a company set up to develop 1 Palace Street project and is controlled by ADCM Ltd.
9	Palace Real Estate Partners LP is a partnership that controls Palace Revive Developments Limited.

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		2014			2013
	Related Party		Relationship		£	£		£	£		Nature of Transactions
					Total transactions in the year	Balance at the year end		Total transactions in the year	Balance at the year end
	Group entities		1		231,000	-		264,931	-		Management fees receivable
											in year from Group
											subsidiaries provided at arm's length
	Group entities		1		(60,000)	-		(51,372)	-		Management fees 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 18 and 19 of the Consolidated Financial Statements.

28.     Events after the reporting date

On 23^rd April 2014 the Group announced that it has entered into a Development Management Agreement with Vicarage Gate (1314) Limited. Under the agreement the Company will be the Development Manager for the development of the 13 & 14 Vicarage Gate project. Under the terms of the Development Management Agreement, the Company will be entitled to a fixed development management fee and a performance fee.

On 19^th May 2014 the Group announced that it intends to change its accounting reference date from 28^th February to 31^st December.

On 25^th June 2014 the Group announced a sale of 33 Thurloe Square project for the agreed price of £12.75m.The Group anticipates that the total proceeds from its participation in the project (comprising of both return on its equity investment and fees under the DMA) will be approximately £1.2 million.

29.     Immediate and ultimate parent undertakings

The immediate and ultimate parent undertakings are Spadille Limited and Abu Dhabi Capital Management LLC respectively.

 

END

 

 

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