NTA.L Regulatory News (NTA)

NORTHACRE PLC (the ''Company'' or ''Group'')

Results for the year ended 29th February 2012

24th July 2012

Northacre PLC today announces its results for the year ended 29th February 2012.

Heritage

For over 20 years Northacre has successfully designed, developed and marketed over £1.5bn of prime residential sites in London, a track record unrivalled by any other residential developer.

Northacre's development portfolio includes The Lancasters in Bayswater, Park Street in Mayfair and The Vicarage Gate, The Bromptons & Earls Terrace in Kensington & Chelsea, all of which are recognised as some of London's finest and most sought after addresses.

Chairman's Statement

In the 2011/12 financial year we succeeded in placing the business on a better footing for the future, and this is partly reflected in the operating loss resulting from adjustments to our cost base and the costs involved in refinancing our debt. Funding of the Group is now on a more stable basis for the foreseeable future and at a much lower overall cost than in the recent past. This is no mean achievement in an environment of great uncertainty where the impact of the faltering Euro on financial markets has inevitably affected small businesses like ours.

Securing full completion of The Lancasters Development prior to the year end is a milestone achievement. This development has been 6 years in the making and to realise the product of such quality is of great pride to the Group. We continue to enjoy a strong working relationship with our partners on the project, Minerva, who are now under new ownership following their delisting from the market in 2011. We are confident that the few remaining unsold apartments at The Lancasters will be sold in the coming months.

A key focus for the Group is now also The Vicarage Gate development adjacent to Kensington Palace Gardens. We are very excited about bringing this development to reality after planning delays. The market for prime residential in London is more international and, it seems, more sought after than at any time in my experience. This is good to see but makes it extremely challenging to secure new development opportunities, although the Group continues to strive to bring forward the next development. Since the year end, I decided to reduce my involvement in the operational affairs of the Group in order to concentrate more of my time on product design. I have stepped aside as Chief Executive Officer in favour of Ken MacRae, who joined us in June 2011. Ken's background, coming from real estate private equity and finance, has proved invaluable to the Company in the successful refinancing of the Company's existing debts as well as sourcing finance for new development opportunities in a market where funding from traditional sources is virtually non-existent. Ken has been of great support to me during this year and I am looking forward to progressing the Group with Ken at the helm.

Dividend Policy

The Board regards as a strong priority the payment of a dividend to Shareholders just as soon as profits permit. With this in mind, we feel it is helpful to set out our priorities in terms of distributions in the near term.

The Board's intention is that proceeds from our projects will be used in the following way:

I. Repayment of all debt

II. Funding of working capital

III. Dividend distribution to Shareholders

IV. Bonus payments to staff and Directors

While the distribution of a dividend is listed third above, it is the strongest priority of the Board in terms of the distribution of 'surplus' capital, i.e. after all liabilities are settled and sufficient medium-term working capital secured. Currently, we are able to forecast that we ought to be in a position to do this after sufficient proceeds are received from The Lancasters Development, provided no unforeseen events arise.

Final Thoughts

Page 6 of the Report and Accounts (Annual Report and Accounts will be available on our website) carries a photograph of the Tempesta sculpture, created by the renowned sculptor Helaine Blumenfeld, and which we recently unveiled at The Lancasters. The sculpture was funded by the Northacre-Minerva project and represents one of the most significant contributions of public art for a residential development ever made. This inspiring work of art also shows the importance to Northacre of enhancing the living environment as well as producing financially successful developments.

As ever, I am greatly encouraged by the dedication of our people, as we strive to secure further opportunities for the Group in the months and years ahead.

Klas Nilsson

Executive Chairman

Copies of the Annual Report and Accounts will be available at the office of Northacre PLC at 8 Albion Riverside, 8 Hester Road, London SW11 4AX and are available on our website www.northacre.com and are being posted to shareholders who elected to receive hard copies.

Enquiries:

Northacre PLC

Klas Nilsson (Executive Chairman)

Ken MacRae (Chief Executive Officer & Finance Director)

020 7349 8000

Hudson Sandler Limited

Michael Sandler

020 7796 4133

Peel Hunt LLP (Nominated Adviser and Broker)

Capel Irwin

Harry Florry

020 7418 8900

Chief Executive's and Financial Review

Highlights

·; Net Asset Value (NAV) increased to 138.99 pence (2011: 92.90 pence)

·; Operating loss for the year is £6.5m (2011: £2.8m)

·; Total Comprehensive Income for the period is £12.3m (2011: £14.6m)

In the year under review, good progress has been made in the Group on a number of fronts, although we have taken charges to the accounts reflecting operational adjustments and refinancing in the year. These inflated our non-recurring operating costs in 2011 and produced a significant loss for the year, before recognition of the fair value attributable to our financial assets, principally The Lancasters Development profit share entitlement.

In 2011/12 our priorities were to rationalise the business to better match the ongoing projects and improve our operational efficiency, in order to continue providing the best development management service to our partners on The Vicarage Gate and The Lancasters projects, and to consolidate our financing at a lower overall cost of funds. Each of these priorities has now been realised, and I will address these in turn.

Operations

We have reduced the operating cost base of the Group, through headcount reductions where appropriate and through managing administrative costs prudently. As a result, after non-recurring expenses such as loan arrangement costs, redundancy costs and settlements with former Directors, the running costs of the business are lower than in previous years. This will be most accurately reflected in the 2012/13 year and beyond. We have reduced the scale of the architecture business in line with a reduced architecture role on The Lancasters and The Vicarage Gate projects, which has resulted in a reduction in our operating costs. Despite this, we retain a highly capable design management capability to provide the lead on product design and space planning as part of our development management service. The interior design business has a new Managing Director, Daniel Kostiuc. Daniel and his team are making good progress in securing new revenue for the business and we hope to secure new contracts in the remainder of the year.

Developments

Our development management team is engaged on two projects, at The Vicarage Gate and the continuing responsibility at The Lancasters. They are also working to secure new development projects and have bid on several opportunities in the period.

The Lancasters

We completed the construction phase of The Lancasters Development, with our partners, Minerva, during the year. Sales have continued since the year end and only a small number of apartments remain unsold. We expect all remaining apartments will be sold in the coming months. We received an interim dividend of £1.15m in the year and a further £3.0m after year end, making £4.15m in total. These receipts represented the payout of two tiers of the profit share structure. The potential value of profit share from The Lancasters Development is recognised in our accounts at a discounted level, taking into account the unsold units and the time it may take to dispose of these. Further comment on this is made in the Director's report.

Vicarage Gate

Since the year end, we secured planning consent on The Vicarage Gate project and finalised the statutory agreements with the planning authority. The development will provide c41,000 sq ft of net saleable prime residential in a single building of modern lateral apartments in one of the most desirable parts of Kensington, next to Kensington Palace Gardens. Northacre is the appointed development manager for the project. We have overseen completion of the first phase of demolition of the site and construction will commence in the summer, with full completion of the building works expected in late 2014 or early 2015. Although we sold our equity interest in the project, as announced in August 2010, we are entitled to share in the profits after a pre-determined return to the investor. Currently, we forecast a significant profit share coming from this project, dependent on successful delivery.

Funding

With the objective of reducing our cost of funding, we consolidated all external financing with a single loan from a Middle East based funder in October 2011. However, since the year end, we took advantage of the predominance of specialist finance houses in the London market to refinance the facility at a much lower cost of funds, with a vehicle managed by Chenavari Investment Managers. Our funding cost has therefore been lowered to below 20% p.a. This is still high but represents the nature of the funding market at present, where traditional banks have substantially withdrawn from small business lending. We aim to repay this facility entirely as soon as proceeds from our developments permit.

Significant non-recurring items which have inflated the loss

Impairment to Goodwill

Goodwill of £8.8m had been reflected in Northacre's accounts since the business was listed on AIM in September 2000 and, as the Directors are required to ensure that Goodwill reasonably reflects the value that might be achieved through future revenue opportunities. Our revaluation of goodwill has resulted in a charge of £0.8m in the current year.

Loan arrangement and legal fees

Arranging the refinancing of our debt during the year has resulted in a significant charge arising from loan redemption fees, new loan arrangement fees, and legal costs associated with the refinancing.

Review of Financial Results

Headlines

Revenue for the year decreased to £3.0m (2011: £5.7m), reflecting reduced fee income from The Lancasters Development and a lower level of activity in Intarya, which is being addressed and is now improving. We received profit share income from The Lancasters in the year of £1.15m and a further £3.0m after the year end. Net Assets Per Share as at 29th February 2012 is 138.99 pence (2011: 92.90 pence). The Net Asset Value reflects a number of factors, including the reserves and the Board's opinion of the value attributable to the Group's share of profits accruing from The Lancasters Development, in so far as this can be valued considering that the project has not been fully sold. A discount is therefore applied to this reflecting an element of uncertainty attached to the unsold units. Following the valuation the fair value of The Lancasters Development amounted to £40.8m (2011: £21.2m). This valuation is represented by the £42m fair value, less the £1.15m dividend received in the period. Although the loss attributable to equity holders is £7.3m (2011: £4.3m), the consolidated comprehensive income for the period is £12.3m (2011: £14.6m). This reflects the net position for the year after recognising the estimate of value in The Lancasters Development profit share entitlement, slightly discounted as noted above.

Consolidated Income Statement and Consolidated Statement of Comprehensive Income

Revenue for the year decreased to £3.0m (2011: £5.7m). The Group received some profit share during the year, which is shown as investment revenue, supplementing fee income but reported a revenue fall across all of its subsidiaries reflecting the reduced role played on The Lancasters and The Vicarage Gate Developments. Investment income increased to £1.2m (2011: £0.1m). £1.15m of the reported increase represents a first interim dividend received from The Lancasters Development. Administrative expenses were £6.7m (2011: £5.0m) as a result of measures undertaken to reduce overheads and the cost of refinancing debt. In accordance with International Accounting Standards we have made a fair valuation of our investment in The Lancasters Development with reference to secured and forecast sales as at 29th February 2012. The change in fair value reported for the year was an increase of £19.6m (2011: £18.9m).

Consolidated Statement of Financial Position

In accordance with International Accounting Standards, the investments in development projects (classified as available for sale financial assets in the Consolidated Statement of Financial Position) represent, where appropriate, the equity value in each of our secured development schemes and any fair value adjustments. As mentioned above, we have calculated the fair value of our investment at The Lancasters Development and, including this fair value adjustment, the available for sale financial assets amounted to £40.8m (2011: £21.2m).

Outlook

The prime residential market in London has been extraordinarily competitive in the past two years. The increase in prime house prices has been well publicised, with central London values returning to pre-recession levels. Within this environment we are working on securing new development projects and to secure strategic relationships with large central London landowners who can provide development opportunities where Northacre's skills, track record and branding can add significant value. Northacre consists of an excellent group of people who are dedicated to creating great residential places. The entire team are fully committed to the future development of the business.

Ken MacRae

Chief Executive Officer

& Finance Director

Consolidated Income Statement

For the year ended 29th February 2012

Consolidated Statement of Comprehensive Income

For the year ended 29th February 2012

Consolidated Statement of Financial Position

As at 29th February 2012

Company Statement of Financial Position

As at 29th February 2012

Consolidated and Company Statements of Cash Flows

For the year ended 29th February 2012

Consolidated and Company Statements of Changes in Equity

For the year ended 29th February 2012

Notes to the Consolidated Financial Statements

For the year ended 29th February 2012

1. Principal Accounting Policies

The principal accounting policies are as follows:

Accounting basis and standards

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

The following standards, amendments and interpretations to published standards are mandatory for accounting periods beginning on or after 1st March 2011 and have been applied to the financial information presented:

·; Improvements to IFRSs 2010 - This is the third set of amendments published under the IASBs annual improvements process and incorporates minor amendments to seven standards and interpretations. The amendments are effective for annual periods beginning on or after 1st January 2011.

·; IAS 24 (revised), 'Related party disclosures', issued in November 2009. It supersedes IAS 24 (revised), 'Related party disclosures', issued in 2003. The revised IAS 24 is required to be applied from 1st January 2011 and clarifies and simplifies the definition of a related party. The Group has applied the revised standard from 1st March 2011 and when applied the Group and the Parent Company have disclosed any transactions between its subsidiaries.

The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1st March 2011, but are not currently considered to be relevant to the Group (although they may affect the accounting for future transactions and events):

·; Amendment to IFRIC 14, 'Prepayments of a minimum funding requirement' issued in November 2009. The amendment permits a voluntary prepayment of a minimum funding requirement to be recognised as an asset.

·; IFRIC 19, 'Extinguishing financial liabilities with equity instruments'. This clarifies the requirements of IFRSs when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entity's shares or other equity instruments to settle the financial liability fully or partially.

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1st March 2011 and have not been early adopted:

·; Amendment to IFRS 1, 'Presentation of Financial Statements' on Other Comprehensive Income.' The amendment confirms the treatment of borrowing costs relating to qualifying assets for which the commencement date for capitalisation is before the date of transition to IFRSs.

·; Amendments to IFRS 7 'Financial Instruments: Disclosures'. These amendments are intended to provide greater transparency around risk exposures when a financial asset is transferred but the transferor retains some level of continuing exposure in the asset. The amendments also require disclosures where transfers of financial assets are not evenly distributed throughout the period. The amendments are effective for annual periods beginning on or after 1st July 2011.

·; 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 10, 'Consolidated Financial Statements'. This standard builds on existing principles by identifying the concept of control as the determining factor in which an entity should be included within the consolidated financial statements. The standard provides additional guidance to assist in determining control where this is difficult to assess.

·; IFRS 11, 'Joint arrangements'. This standard establishes principles for financial reporting by parties to a joint arrangement.

·; IFRS 12, 'Disclosure of interest in other entities'. This standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, structured entities and other off balance sheet vehicles.

·; IFRS 13, 'Fair value measurement'. This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP.

·; IAS 1, 'Other Comprehensive Income'. The main change resulting from these amendments is a requirement for entities to group items presented in other comprehensive income on the basis of whether they are potentially reclassifiable to profit or loss subsequently. The amendments do not address which items are presented in other comprehensive income.

·; Amendment to IAS 12, 'Income taxes'. Deferred tax accounting for investment property at fair value' IAS 12 requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess whether recovery will be through use or through sale when the asset is measured using the fair value model in IAS 40 Investment Property. The amendment provides a practical solution to the problem by introducing a presumption that recovery of the carrying amount will, normally, be through sale.

·; IAS 19 (Revised), 'Employee Benefits'. These amendments are intended to provide a clearer indication of an entity's obligations resulting from the provision of defined benefit pension plan and how those obligations will affect its financial position, financial performance and cash flow.

·; IAS 27 (Revised), 'Separate Financial Statements' IAS 27 (Revised) has the objective of setting standards to be applied in accounting for investments in subsidiaries, joint ventures, and associates when an entity elects, or is required by local regulations, to present separate (non-consolidated) financial statements.

·; IAS 28 (Revised), 'Associates and Joint Ventures' IAS 28 (Revised) prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures.

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

Business Combinations and Goodwill

Goodwill relating to acquisitions prior to 1st March 2006 is carried at the net book value on that date and is no longer amortised but is subject to annual impairment review. On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the income statement in the period of acquisition. Goodwill is tested annually for impairment.

Going Concern

The Company and Group currently meet their day-to-day working capital requirements through monies loaned from a third party loan. The Directors expect the new loan facilities agreed after the year end to remain in place for the foreseeable future and to be renewed on equally favourable terms in due course. In particular:

(i) The loan due to Northacre PLC Directors Retirement and Death Benefit Scheme of £699,602 (2011: £750,000) is not repayable until 31st July 2013. Due to a pension fund split which was signed on 11th January 2012, the Group repaid £50,398 of the loan. The balance is due to be repaid on 31st July 2013.

(ii) A Eurobond loan facility of £10,500,000 was agreed with Abu Dhabi Capital Management LLC (''ADCM'') on 20th October 2011 and drawn down in full on 31st October 2011. This loan allowed the Group to repay its bankers facility and all Directors and related party loans. A fixed premium of £800,000 was due on signature of the agreement. According to the agreement, the Group had a right to early redemption and after receiving the first dividend payment from The Lancasters Development, the Group repaid £1,051,448 of the loan on 18th January 2012 plus £76,050 accrued interest. Since the year end the Group secured new financing and the Eurobond was repaid in full on 30th May 2012. The total amount repaid was £11,276,653 including interest of £1,828,101.

(iii) A new loan facility of £15,000,000 was agreed with Auster Real Estate Opportunities S.a.r.l. on 1st May 2012 and £13,000,000 was drawn down on 30th May 2012. This loan allowed the Group to repay the ADCM loan and secure more flexible loan terms for the Group. A fixed premium of 2% of the facility amount was due on draw down of the loan. The loan is due to be repaid in 18 months from the date of the draw down unless sufficient dividends are received from The Lancasters Development. If dividends received from The Lancasters Development are greater than the remaining liabilities, the loan will have to be repaid within 5 business days from the date of the dividend distribution.

The Directors have prepared detailed cash flow projections for the period ended 28th February 2017 making reasonable assumptions about the levels and timings of income and expenditure, and in particular the timing of receipt of certain fees due from major developments. These projections show that the Group can operate within the current available facilities. On this basis the Directors consider it appropriate to prepare the financial statements on a going concern basis.

Significant judgements and estimates of areas of uncertainty

In preparing these financial statements the Directors are required to make judgements and best estimates of the outcome of and in particular, the timing of revenues, expenses, assets and liabilities based on assumptions. These assumptions are based on historical experience and various other factors that are considered reasonable under the various circumstances. The estimates and assumptions are reviewed on a regular basis with any revisions being applied in the relevant period. The material areas where estimates and assumptions are made are:

- The valuation of goodwill

- The valuation of available for sale financial assets