NTA.L Regulatory News (NTA)

21 Aug 2006 07:00

Northacre PLC21 August 2006 Northacre Plc Results for the year ending 28 February 2006 Northacre today announces its results for the year ended 28 February 2006. • Turnover increased to £8.1 million (2005:£3.0 million) and pre-tax profit before amortisation of goodwill, of £2.3 million. (2005: Loss £1.18 million). • Final sales completed and a commercial settlement agreed for payment of the KINGS Chelsea profitshare entitlement in the financial year. • Majority of sales complete and the sales overage entitlement agreed for payment on The Phillimores since the financial year-end. • Further planning delays at Vicarage Gate House now likely to involve a High Court decision in 2006 and a second Public Inquiry in 2007. • Mayfair development on programme at 44-46 Park Street for practical completion in 2006 with the potential for the receipt of some profitshare entitlement in the financial year to February 2007. • Joint Venture acquisition of The Odeon Cinema site in Kensington High Street completed in the financial year for commencement of the residential development in 2007, subject to securing the appropriate planning consent. • Further Joint Venture acquisition of 75 - 89 Lancaster Gate (former Thistle Hotel) with residential consent exchanged in the financial year and since completed for residential development in 2007. • Since the financial year-end there has been additional fee income secured by all Group subsidiaries, enhancing future growth prospects. • Further new opportunities under consideration for further fee income and additional profitshare through joint venture acquisitions in prime Central London as well as Central European sites. • Market conditions remain buoyant and favourable for future growth. "Northacre has made considerable progress this year. The Group has at lastmanaged to reach a settlement of its profitshare entitlement on two majorschemes at KINGS Chelsea and The Phillimores. Although these amounts were lessthan anticipated, the receipts have been effective in reducing the Group's debtposition. A new programme of development activity is underway with two new major primedevelopment schemes, acquired in partnership with Minerva PLC at The Odeon,Kensington High Street and Lancaster Gate, Hyde Park. With Park Street andVicarage Gate House in progress, Group fee income has improved with the prospectof profit growth in the short to medium term. Copies of the Annual Report and Accounts will be available at the office ofNorthacre Plc at 48 Old Church Street, London SW3 5BY and are being posted toshareholders. 21st August 2006 Enquiries: Northacre Plc Tel : 020 7349 8000John Hunter, Chief ExecutiveManish Santilale, Finance Director Overview Northacre's brand name is now firmly established at the forefront of the marketfor prime residential development market in Central London. The company'srevival concept for breathing new life and purpose into old period stylebuildings has now become the Group's trademark. With its skilled team ofdevelopment managers, architects and interior designers, creating added valuethrough the development process continues to be the Group's forte. Together withthe work in progress at Park Street and Vicarage Gate House, the Group hasacquired two new revival opportunities in the financial year both in partnershipwith Minerva PLC at The Odeon Cinema in Kensington High Street and LancasterGate (former Thistle Hotel) opposite Hyde Park. The combination of these schemeshas lead to improved fee income and is likely to improve the short to mediumterm prospects for continued profit growth. Financial Results Turnover, including share of associates, for the period was £8,122,417 (2005£3,039,401) with gross profit of £5,749,558 (2005 £1,445,348). Pre-tax profitwas £2,301,360 (2005 loss £1,182,267) before amortisation of goodwill with abasic earnings per share of 4.58 pence (2005 loss 10.76 pence) The Board is notdeclaring a dividend payment. Securing the profitshare entitlements on KINGS Chelsea and The Phillimores hashad a positive impact on these results albeit these receipts were later thanforecast and of an amount lower than anticipated. On KINGS Chelsea theentitlement has been settled at £1.6m and on The Phillimores the sales overageentitlement of £2.7m has been agreed with these funds received since the yearend. These amounts have been fully utilised in reducing the Group's debtposition. Board Changes The Board is delighted to announce the appointment of Edward Harris asNon-Executive Director effective from 5th December 2005. Edward Harris, whosebackground is in Cost and Project Management, has previously worked as aconsultant on a number of Northacre schemes. Edward replaces Shemeel Khan whoresigned on 5th December 2005. Operating Subsidiaries As a result of planning and construction delays, the operating subsidiaries havesuffered from lower activity and fee income. Measures were implemented to reduceoverheads throughout the Group during the period. More recently, following theappointment of a new Managing Director in our interior design company, newassignments have been secured. Since the financial year-end, improved incomefrom all subsidiaries is now generating a positive contribution to the Group. Operational Review KINGS Chelsea Construction delays in completing the development at KINGS Chelsea resulted inslower than anticipated sales. The Board took the commercial view to accept£1.6m as full and final settlement of the Group's entitlement to profitshare inorder that the Group could focus its resources on new projects in hand. The Phillimores Although two apartments remain unsold at The Phillimores, the sales overageentitlement has been agreed at £2.7m. An amount remains due for the two unsoldapartments when these sales are completed. Vicarage Gate House Following the unconditional acquisition of Vicarage Gate House in May 2003, theproposed residential scheme has since been immersed in a planning struggle, asyet unresolved. To the surprise of many, the scheme was refused at a PublicInquiry in October 2005. Although this was disappointing, we are confident thatwith the Secretary of State's decision not to support the Inspector's refusal, apositive outcome will be reached in the High Court by the end of 2006. This willrequire that the scheme returns to another Public Inquiry before a residentialscheme can be granted. Accordingly, the site loan with Deutsche Postbank hasbeen formally extended. 44-46 Park Street Construction work at 44-46 Park Street continues on programme for practicalcompletion by the end of 2006. The marketing of the scheme is planned with thelaunch of the 'Ambassadorial' show apartment by Lifestyles Interiors in October2006. Subject to sales activity, we anticipate some payment of profitshareentitlement in the financial year to February 2007. In the meantime, the Groupreceives Development Management, Architectural and Interior Design fees fromthis ongoing development. The Odeon and Lancaster Gate The acquisition of these two new prime Central London opportunities comes at atime when the market is experiencing high levels of demand. Moreover, bothschemes ideally lend themselves to the revival treatment that was so successfulat The Bromptons and The Phillimores. Odeon will become a high profile landmarksite for a new mixed use multiscreen cinema and residential scheme, whileLancaster Gate will generate circa 100 apartments overlooking Hyde Park. In bothschemes, the Group has secured an exciting prospect for profit participation. Outlook Although the receipts of profitshare entitlement on both KINGS Chelsea and ThePhillimores were late and lower than anticipated, these receipts have had apositive impact on the results. The planning struggle at Vicarage Gate Housecontinues with a final outcome anticipated in 2007. In the meantime, the ParkStreet development is on schedule for producing profitshare receipts in thecurrent financial year to February 2007. Two new major development sites at The Odeon, Kensington and Lancaster Gate HydePark have been transacted during the financial period under review. Although TheOdeon requires planning consent for change of use to residential, the site isidentified within the local plan as a site for major residential development. Itis planned that these new projects will commence works on site in 2007. Thecompany has secured itself a substantial entitlement to profits from both ofthese schemes at a level more commensurate with its investment and operatingrole. It is evident in the market that generally, there appears to be an almostinsatiable appetite for high quality residential developments in prime CentralLondon. It is also clear however that, while there is a tendency for thisbuoyancy to be overstated, the Group is now well placed, with its portfolio ofrevival schemes, to take full advantage of these favourable market conditions. Our strategy is to continue to seek and acquire equity interest in similarresidential schemes to generate fee income and development profits. Our marketremains buoyant, there continues to be new opportunities where the skills andmarket knowledge inherent within our Group are able to create enhanced value toour shareholders. On a final note, and in view of the recent changes in our business, the Boardhave decided to review their accounting policy for the future in respect of therecognition of profit shares and bonus fees from our new developments. Followingdiscussions with our auditors it is the Board's intention to implement a policyof recognising revenue at an earlier stage based on the progress value of eachdevelopment on an annual basis and subject to them reaching certain developmentmilestones over the life of the scheme. Consolidated Profit and Loss AccountFor the year ended 28th February 2006 2006 2005 £ £Turnover including share of associates 8,122,417 3,039,401Share of turnover of associates (247,363) (227,761) ---------- ---------- Group Turnover - continuing activities 7,875,054 2,811,640Cost of Sales (2,125,496) (1,366,292) ---------- ---------- Gross Profit 5,749,558 1,445,348Administration Expenses (4,799,714) (3,611,761)Other operating income 67,085 30,927 ---------- ---------- Group Operating Profit/(Loss) - continuing 1,016,929 (2,135,486)activities Share of profit / (loss) of associate 12,823 (12,497) ---------- ---------- Operating Profit/(Loss) including share of 1,029,752 (2,147,983)associates and joint ventures ---------- ---------- Profit/(Loss) on Ordinary Activities before 1,029,752 (2,147,983)Interest and Investment IncomeIncome from investments 70,000 70,000Interest receivable 7,481 66,828Interest payable and similar charges (67,081) (432,320) ---------- ---------- Profit/(Loss) on Ordinary Activities before 1,040,152 (2,443,475)TaxationTaxation - - ---------- ---------- Retained Profit/(Loss) for the Year 1,040,152 (2,443,475) ========== ========== Basic profit/(loss) per ordinary share 4.58p (10.76)p ========== ========== Consolidated Balance Sheet at 28th February 2006 2006 2006 2005 2005 £ £ £ £ Fixed AssetsIntangible fixed assets 8,828,460 10,089,668Tangible fixed assets 20,748 30,934Investments in joint ventures 1,596,225 965,225Investments in associates 47,317 34,494 --------- --------- 10,492,750 11,120,321 Current AssetsWork in progress 24,267 182,681Debtors 884,075 495,141Cash at bank and in hand 427,443 109,758 --------- --------- 1,335,785 787,580 Creditors: Amounts falling (2,179,779) (4,849,297)due within one year --------- --------- Net Current Liabilities (843,994) (4,061,717) --------- --------- Total Assets less Current 9,648,756 7,058,604Liabilities Creditors: Amounts falling (1,550,000) -due after more than one year --------- --------- Net Assets 8,098,756 7,058,604 ========= ========= Capital and ReservesCalled up share capital - 567,841 567,841equity interestsShare premium account 17,449,610 17,449,610Profit and loss account (9,918,695) (10,958,847) --------- --------- 8,098,756 7,058,604 ========= ========= Consolidated Cash Flow StatementFor the year ended 28th February 2006 2006 2006 2006 2006 £ £ £ £ Net Cash Inflow / (Outflow) from 457,559 (352,062)Operating Activities Returns on Investments andServicing of FinanceInterest received 7,481 66,828Interest paid (67,081) (432,320)Interest element of finance - -lease rental paymentsDividend received 70,000 70,000 -------- -------- 10,400 (295,492) TaxationCorporation Tax - - Capital Expenditure andFinancial InvestmentSale of property - 2,849,740Purchase of other tangible (9,274) (6,516)assetsSale of other tangible assets - 250 -------- -------- Net cash (outflow)/inflow for (9,274) 2,843,474capital expenditure andfinancial investment Acquisitions and disposalsInvestment in joint venture (631,000) (95,000) -------- -------- Net cash (outflow)/inflow for (631,000) (95,000)acquisitions and disposals FinancingCapital element of finance lease - (15,805)rental paymentsIncrease/(decrease) in debt due (1,060,000) -within one yearIncrease/(decrease) in debt due 1,550,000 -in more than one year -------- -------- Net cash inflow / (outflow) from 490,000 (15,805)financing -------- -------- Increase in Cash in the Year 317,685 2,085,115 ======== ======== Notes to the Financial StatementsFor the year ended 28th February 2006 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 conventionand in accordance with applicable accounting standards. The company and group currently meet their day to day working capitalrequirements partly through monies loaned from the Northacre PLC DirectorsRetirement and Death Benefits Scheme, partly from the group's bankers and partlyfrom other loans. The directors expect the facilities currently agreed to remainin place for the foreseeable future and to be renewed on equally favourableterms in due course. In particular: (i) One of the loans due to Northacre PLC Directors Retirement and Death BenefitScheme of £1 million is not due for repayment until 31st July 2008 (ii) Two further loans of £275,000 each, from the Northacre PLC DirectorsRetirement and Death Benefit Scheme and from a third party are not repayableuntil the return of equity and/or realisation of profit share from one specificproject, which is not expected to occur before August 2007. (iii) The group's bankers have recently agreed revised facilities until August2007 The directors have prepared detailed cash flow projections for the period ended31st August 2007 making reasonable assumptions about the levels and timings ofincome and expenditure, and in particular the timing of receipt of certain feesdue from major developments. These projections show that the group can operatewithin the available facilities. On this basis the directors consider itappropriate to prepare the financial statements on a going concern basis. Basis of Consolidation The group accounts include the accounts of the company and its subsidiaryundertakings, together with the group's share of the results of joint venturesand associates. Depreciation Depreciation on fixed assets is provided at rates estimated to write off thecost or revalued amounts, less estimated residual value, of each asset over theexpected useful life as follows: Fixtures, fittings and office equipment 25% straight lineComputer equipment 33 1/3% straight lineMotor vehicles 25% straight line Work in Progress Work in progress is valued at the lower of cost and net realisable value. Costof work in progress includes overheads appropriate to the stage of development.Net realisable value is based upon estimated selling price less further costsexpected to be incurred to completion and disposal Turnover Turnover represents amounts earned by the group in respect of services renderedduring the period net of value added tax. Shares in development profits andbonus fees are recognised when the amounts involved have been finallydetermined. Deferred Taxation In accordance with FRS19, deferred tax is recognised as a liability or asset iftransactions or events that give the group the obligation to pay more tax infuture or a right to pay less tax in future have occurred by the balance sheetdate. Leased Assets Assets held under finance leases and hire purchase contracts are capitalised inthe balance sheet and depreciated over their expected useful lives. The interestelement of the rental obligations is charged to the profit and loss account overthe period of the lease on a straight-line basis. Rentals under operating leases are charged to income on a straight-line basisover 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 abusiness and the aggregate fair value of its separable net assets and is writtenoff over its estimated useful life of 10 years. Pension Scheme Arrangements The group operates a money purchase scheme on behalf of two of its directors. Italso contributes to certain directors' and employees' personal pension schemes.Pension costs charged represent the amounts payable to the schemes in respect ofthe period. 2. Turnover The group's turnover was derived from its principal activities. Sales were madein the following geographical markets: 2006 2005 £ £ United Kingdom 7,875,054 2,811,640 =========== =========== 2006 2005 £ £Principal activities:Profit shares - property development 4,305,017 -Development management 1,646,455 450,600Interior design 1,214,134 1,898,034Architectural design 709,448 463,006 ----------- ----------- 7,875,054 2,811,640 =========== =========== This information is provided by RNS The company news service from the London Stock Exchange