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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Northacre | LSE:NTA | London | Ordinary Share | GB0006877939 | ORD 2.5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 95.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMNTA
RNS Number : 3010L
Northacre PLC
29 July 2011
NORTHACRE PLC (the "Company" or "Group")
Results for the year ended 28(th) February 2011
29(th) July 2011
Northacre PLC today announces its results for the year ended 28(th) February 2011.
Northacre is the brand behind many of London's landmark addresses. Over the last twenty years Northacre has revived significant areas of Westminster, Kensington and Chelsea, developing in the most sought after locations in the capital for both local and international purchasers.
Northacre's reputation for creating prestigious, award-winning residences from existing properties is unrivalled.
Chairman's Statement
This past year has seen the Group focus on the delivery of The Lancasters Development, in our joint venture with Minerva PLC. The Group has cemented its profile as one of London's most experienced prime residential developers through this landmark scheme, which has seen the revival of a prominent building in a hitherto undervalued area of central London. The Lancasters has transformed the north side of Hyde Park and will have a lasting impact on the area. The development, which nears completion this summer, is testament to our Group's continuing focus on quality, steadfast development management, and individuality in the conceptualisation and marketing of each development.
Following the completion of the first phases of The Lancasters in early 2011, we look forward to full completion in late summer 2011. At the same time we are also working to bring forward The Vicarage, a 42,000 Sq ft prime residential development in Kensington, which will see us deliver, as development managers, 14 duplex and lateral apartments. This development, led by Northacre, is due to commence in 2012.
We are engaged in discussions on a number of central London opportunities in which Northacre would act either as a full joint venture partner or take the role of development manager.
There continues to be a relative shortage in the supply of development opportunities and more entrants into the market chasing fewer sites. That said, equity investors are keen to finance prime residential developments undertaken by experienced developers such as Northacre, given the history of strong returns in the sector and the undoubted continuation of London's appeal as one of the top locations for international buyers looking for a principal or second home.
We have reviewed our cost base and made some efficiencies to suit the changing market conditions. I am gratified by the support and focus of the Board, management and staff within the Group and I am proud to work with one of the top teams in the sector.
Outlook
Our Group's core skills are in the design, development management, branding and marketing of prime residential developments in central London. As such, we are in an unrivalled position to offer our skills in an advisory capacity with limited equity participation. We look to the future with renewed confidence and focus and are well placed to capitalise on the product success and financial returns as we complete The Lancasters Development.
Klas Nilsson
Chairman and Chief Executive
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.
Enquiries:
Northacre PLC
Klas Nilsson (Chairman and Chief Executive)
Ken MacRae (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
Financial Review
In the year under review, The Lancasters has been the main feature for each of the divisions within the Group. The Intarya designed show apartment (5,385 Sq ft), which opened in summer 2010, helped to attract an excellent level of sales and since the year end has sold for the full asking price. Since the end of February 2011 there has been a good volume of sales such that the Development is now c.70% sold.
The Group's funding has historically consisted of a mix of project financing for individual developments and working capital facilities for the Group's operational needs. These have been augmented in the past year with Directors loans, underwritten by Mr Klas Nilsson and Mr Mohamed AlRafi, and a related party loan from Mr Abdulsalam AlRafi. The aggregate of all Director and related party loans at the year end was GBP2,877,163 (including interest) of which GBP1,200,000 was undrawn at the year end (see the detailed notes on these loans in the financial statements attached). Since the year end, additional facilities of GBP500,000 from Mr Mohamed AlRafi and GBP2,000,000 from Mr Abdulsalam AlRafi have been secured. The Group has called on these loans to cover a period of lower recurring fee income and settlement of one of two loans from the Northacre PLC Directors Retirement and Death Benefit Scheme. These loans are due to be fully repaid out of the proceeds of The Lancasters profit share.
Our overheads are being reviewed and as a consequence we have made some headcount reduction and other cost savings. The review of costs is an on-going process. We have renewed our efforts to secure more fee income in the Intarya interior design practice and Northacre Development Management Services with a view to delivering a higher sustainable fee income in future years.
Review of Results
Headlines
Net assets per share is 92.90 pence (2010: 38.32 pence). Net comprehensive profit for the year is GBP14,584,963 (2010: Loss of GBP1,635,169). The loss per share attributable to equity holders is 16.17 pence (2010: 14.72 pence).
Consolidated Statement of Comprehensive Income
Turnover for the year increased by 10% to GBP5,664,484 (2010: GBP5,151,225). The majority share continues to be fee income rather than development profit. The Group's interior design subsidiary, Intarya, reported revenue growth of 11% to GBP4,249,606 (2010: GBP3,815,427). The Development Management subsidiary saw an increase in revenue of 24% to GBP969,652 (2010: GBP780,710) whereas the architectural subsidiary, Nilsson Architects, has experienced the impact of the economic downturn with the absence of new architectural projects, reporting a decrease in fee income of 20% to GBP445,226 (2010: GBP555,088).
Administrative expenses remained at the level of GBP5.2m (2010: GBP5.2m) as a result of measures undertaken by the Board at the beginning of last year. Measures taken after the year end have significantly reduced these expenses on an annual basis.
In accordance with International Accounting Standards we have made a fair valuation of our investment at The Lancasters with reference to secured sales as at 28(th) February 2011. This has also been reflected in the results for the year.
Consolidated Statement of Financial Position
In accordance with International Accounting Standards, the investments in joint ventures (classified as available for sale financial assets in the Consolidated Statement of Financial Position) represent, where appropriate, the cash equity invested 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 and including this fair value adjustment the available for sale financial assets amounted to GBP21.2m (2010: GBP3.5m).
Financing
The Group's project funding generally consists of equity, cash and bank borrowings with the aim of maximising its return from the equity invested into the various development opportunities which satisfy the investment criteria.
We are actively seeking development opportunities and we are committed to increasing the Northacre portfolio within prime central London. Increasing fee income from new developments is a priority for the Board.
Ken MacRae
Finance Director
Consolidated Statement of Comprehensive Income
For the year ended 28(th) February 2011
Note 2011 2010 Restated Group GBP GBP Group Revenue 3 5,664,484 5,151,225 Cost of sales (3,268,795) (2,483,201) ------------ ------------ Gross Profit 2,395,689 2,668,024 Administrative expenses (5,199,700) (5,161,630) Other operating income 4 - 3,117 ------------ ------------ Group Loss from Operations (2,804,011) (2,490,489) Investment revenue 5 66,192 (26,517) Other losses 6 (1,355,248) (1,310,760) Finance costs 7 (217,995) (120,880) Share of (loss)/profit of associate 14(a) (8,971) 6,918 ------------ ------------ Loss before Taxation 8 (4,320,033) (3,941,728) ------------ ------------ Taxation 10 - 7,120 ------------ ------------ Loss for the period attributable to equity holders of the Company (4,320,033) (3,934,608) ============ ============ Other comprehensive income: Changes in fair value of available for sale financial assets 14(b) 18,904,996 2,299,439 ------------ ------------ Total comprehensive profit/(loss) for the period 14,584,963 (1,635,169) ============ ============ Loss per ordinary share Basic - Continuing and total operations 24 (16.17)p (14.72)p Diluted - Continuing and total operations 24 (16.17)p (14.72)p Company Loss for the period attributable to equity holders of the Company (2,341,603) (1,396,556) ============ ============ Other comprehensive income - - ------------ ------------ Total comprehensive loss for the period 11 (2,341,603) (1,396,556) ============ ============
Consolidated Statement of Financial Position
As at 28(th) February 2011
Note 2011 2010 GBP GBP Non-Current Assets Goodwill 12 8,828,460 8,828,460 Property, plant and equipment 13 1,250,948 322,159 Investments in associates 14(a) 42,168 51,139 Available for sale financial assets 14(b) 21,205,344 3,456,473 ----------- ------------ 31,326,920 12,658,231 ----------- ------------ Current Assets Inventories 15 336,008 48,628 Trade and other receivables 16 863,589 2,597,670 Cash and cash equivalents - 268,407 ----------- ------------ 1,199,597 2,914,705 ----------- ------------ Total Assets 32,526,517 15,572,936 Current Liabilities Trade and other payables 17 2,683,054 2,567,406 Corporation tax 18 - - Borrowings, including lease finance 19 377,251 433,567 ----------- ------------ 3,060,305 3,000,973 ----------- ------------ Non-Current Liabilities Borrowings, including lease finance 20 2,290,555 1,231,269 Provisions for other liabilities 21 2,350,000 1,100,000 ----------- ------------ 4,640,555 2,331,269 ----------- ------------ Total Liabilities 7,700,860 5,332,242 =========== ============ Equity Share capital 25 668,091 668,091 Share premium account 18,552,361 18,552,361 Retained earnings 5,605,205 (8,979,758) ----------- ------------ Total Equity 24,825,657 10,240,694 ----------- ------------ Total Equity and Liabilities 32,526,517 15,572,936
Company Statement of Financial Position
As at 28(th) February 2011
Note 2011 2010 GBP GBP Non-Current Assets Property, plant and equipment 13 1,238,914 256,217 Investments 14(c) 10,090,079 10,089,981 ------------- ------------ 11,328,993 10,346,198 ------------- ------------ Current Assets Trade and other receivables 16 15,037,990 15,076,319 Cash and cash equivalents - 93,672 ------------- ------------ 15,037,990 15,169,991 ------------- ------------ Total Assets 26,366,983 25,516,189 Current Liabilities Trade and other payables 17 13,718,813 12,809,371 Corporation tax 18 - - Borrowings, including lease finance 19 351,759 405,828 ------------- ------------ 14,070,572 13,215,199 ------------- ------------ Non-Current Liabilities Borrowings, including lease finance 20 2,283,620 1,196,596 Provisions for other liabilities 21 2,020,000 770,000 ------------- ------------ 4,303,620 1,966,596 ------------- ------------ Total Liabilities 18,374,192 15,181,795 ============= ============ Equity Share capital 25 668,091 668,091 Share premium account 18,552,361 18,552,361 Retained earnings (11,227,661) (8,886,058) ------------- ------------ Total Equity 7,992,791 10,334,394 ------------- ------------ Total Equity and Liabilities 26,366,983 25,516,189
Consolidated and Company Statements of Cash Flows
For the year ended 28(th) February 2011
Group Company 2011 2010 2011 2010 GBP GBP GBP GBP Cash flows from operating activities Loss for the period before tax (4,320,033) (3,941,728) (2,341,603) (1,403,676) Adjustments for: Investment revenue (66,192) 26,517 (53,945) (32,711) Finance costs 217,995 120,880 196,127 102,599 Loss on disposal of investment 105,248 723,260 - - Share of loss/(profit) in associate 8,971 (6,918) - - Depreciation and amortisation 102,382 111,836 60,000 55,000 Increase in inventories (287,380) (19,984) - - Increase in trade and other receivables 1,734,181 803,149 38,329 (1,280,853) Increase in trade and other payables 1,365,548 348,869 2,159,442 2,559,408 ------------ ------------ ------------ ------------ Cash used in operations (1,139,280) (1,834,119) 58,350 (233) Interest paid (217,995) (120,880) (196,127) (102,599) Tax refunded - 7,120 - 7,120 ------------ ------------ ------------ ------------ Net cash used in operating activities (1,357,275) (1,947,879) (137,777) (95,712) ------------ ------------ ------------ ------------ Cash flows from investing activities Acquisition of interest in available for sale financial assets - (11,100) - - Increase in investments - - (98) - Purchase of plant, property & equipment (1,031,171) (327,722) (1,042,697) (311,217) Proceeds of sale of available for sale financial assets 1,050,977 1,853,344 - - Interest received 13,692 (56,517) 1,445 2,711 Dividends received 52,500 30,000 52,500 30,000 ------------ ------------ ------------ ------------ Net cash generated from/(used in) investing activities 85,898 1,488,005 (988,850) (278,506) ------------ ------------ ------------ ------------ Cash flows from financing activities Proceeds from borrowings 1,217,849 300,000 1,217,849 300,000 Proceeds from finance leases - 482,877 - 397,350 Repayment of borrowings (275,000) (275,000) (275,000) (275,000) Repayment of finance leases (158,564) (143,041) (130,825) (119,926) ------------ ------------ ------------ ------------ Net cash from financing activities 784,285 364,836 812,024 302,424 ------------ ------------ ------------ ------------ Decrease in cash and cash equivalents (487,092) (95,038) (314,603) (71,794) Cash and cash equivalents at the beginning of the year 268,407 363,445 93,672 165,466 ------------ ------------ ------------ ------------ Cash and cash equivalents at the end of the year (218,685) 268,407 (220,931) 93,672 ============ ============ ============ ============
Consolidated and Company Statements of Changes in Equity
For the year ended 28(th) February 2011
Called Up Share Share Premium Retained Group Capital Account Earnings Total GBP GBP GBP GBP As at 1(st) March 2009 668,091 18,552,361 (7,344,589) 11,875,863 Comprehensive Loss for the period - - (3,934,608) (3,934,608) Other Comprehensive Profit for the period: Changes in fair value of available for sale financial assets - - 2,299,439 2,299,439 As at 28( th) February 2010 668,091 18,552,361 (8,979,758) 10,240,694 ======== =========== ============= ============ As at 1(st) March 2010 668,091 18,552,361 (8,979,758) 10,240,694 Comprehensive Loss for the period - - (4,320,033) (4,320,033) Other Comprehensive Profit for the period: Changes in fair value of available for sale financial assets - - 18,904,996 18,904,996 As at 28(th) February 2011 668,091 18,552,361 5,605,205 24,825,657 ======== =========== ============= ============ Called Up Share Share Premium Retained Company Capital Account Earnings Total GBP GBP GBP GBP As at 1(st) March 2009 668,091 18,552,361 (7,489,502) 11,730,950 Total Comprehensive Loss for the period - - (1,396,556) (1,396,556) As at 28(th) February 2010 668,091 18,552,361 (8,886,058) 10,334,394 ======== =========== ============= ============ As at 1(st) March 2010 668,091 18,552,361 (8,886,058) 10,334,394 Total Comprehensive Loss for the period - - (2,341,603) (2,341,603) As at 28(th) February 2011 668,091 18,552,361 (11,227,661) 7,992,791 ======== =========== ============= ============
Notes to the Consolidated Financial Statements
For the year ended 28(th) February 2011
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 1(st) March 2010 and have been applied to and impacted the financial information presented:
-- Improvements to IFRSs 2009 - This is the second set of amendments published under the IASBs annual improvements process and incorporates minor amendments to twelve standards and interpretations. The amendments are effective for annual periods beginning on or after 1(st) January 2010.
-- IFRS 3 (revised), 'Business combinations' and consequential amendments to IAS 27, 'Consolidated and separate financial statements', IAS 28, 'Investments in associates' and IAS 31, 'Interests in joint ventures', are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1(st) July 2009.
-- IAS 36 (amendment) "Impairment of assets", effective from 1(st) January 2010 clarifies that the largest cash generating unit (or group of units) to which goodwill should be allocated for the purposes of impairment testing is an operating segment, as defined by paragraph 5 of IFRS 8, "Operating segments".
-- IAS 38 (amendment) "Intangible assets", effective from 1(st) January 2010. The amendment clarifies guidance in measuring the fair value of an intangible asset in a business combination and permits the grouping of intangible assets as a single asset if each asset has similar economic lives.
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1(st) March 2010, but are not currently considered to be relevant to the Group (although they may affect the accounting for future transactions and events):
-- IFRIC 16 'Hedges of a net investment in a foreign operation', effective for annual periods beginning on or after 1(st) July 2009.
-- IFRIC 17, 'Distributions of non-cash assets to owners', effective for annual periods beginning on or after 1(st) July 2009.
-- IFRIC 18, 'Transfers of assets from customers', effective for transfer of assets received on or after 1(st) July 2009.
-- IAS 1 (amendment), 'Presentation of financial statements'. The amendment clarifies that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non-current.
-- IFRS 2 (amendments), 'Group cash-settled share based payment transactions', was effective from 1(st) January 2010 and expands the guidance contained in IFRIC 11 to address the classification of group arrangements that were not covered by that interpretation.
-- IAS 32 (amended) 'Classification of rights issues', issued in October 2009. The amendment addresses the accounting for rights issues that are denominated in a currency other than the functional currency of the issuer.
-- IFRS 5 (amendment) "Non-current assets held for sale and discontinued operations". The amendment clarifies that IFRS 5 specifies the disclosures required in respect of non-current assets classified as held for sale or discontinued operations.
The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1(st) March 2010 and have not been early adopted:
-- 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 1(st) January 2011.
-- Amendments to IFRS 1 'First-time Adoption of International Financial Reporting Standards - These amendments provide limited exemption for comparative IFRS 7 disclosures for first-time adopters. The amendments are effective for annual periods beginning on or after 1(st) July 2010.
-- 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 1(st) July 2011.
-- IFRS 9, 'Financial instruments', issued in November 2009 and effective from 1(st) January 2013. 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.
-- 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 1(st) January 2011 and clarifies and simplifies the definition of a related party. The Group will apply the revised standard from 1(st) March 2011 and when applied the Group and the Parent Company will need to disclose any transactions between its subsidiaries.
-- 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 interpretation is effective for annual periods beginning on or after 1(st) July 2010. The Group will apply the interpretation from 1(st) March 2011.
-- 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. The amendment is effective for annual periods beginning 1(st) January 2011.
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 partly through monies loaned from the Northacre PLC Directors Retirement and Death Benefit Scheme, partly from the Group's bankers and partly from other loans. The Directors expect the facilities currently agreed 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 GBP750,000 is not repayable until July 2013.
(ii) The Group's bankers have agreed revised facilities with a review on 30(th) September 2011. An extension to this facility is currently being discussed with the bank.
(iii) A Director loan of GBP300,000 was made available by MTAF Group (Mohamed AlRafi) on 16(th) October 2009. The loan is not repayable until dividends from The Lancasters Development are received.
(iv) An additional Director loan of GBP300,000 was made available by MTAF Group (Mohamed AlRafi) on 4(th) August 2010. A fixed premium of GBP50,000 was due on 3(rd) February 2011 as per the loan agreement. The increased loan of GBP350,000 is not repayable until dividends from The Lancasters Development are received.
(v) A loan facility of GBP114,000 was made available by Director Klas Nilsson in September 2009. The loan has no fixed date of repayment.
(vi) An additional loan of GBP80,000 was made available by Director Klas Nilsson in July 2010. The Group repaid GBP52,890 of the balance in the period September 2010 to November 2010. The loan has no fixed date of repayment.
(vii) A loan facility of GBP2,000,000 was made available by Abdulsalam AlRafi (father of Director Mohamed AlRafi) on 28(th) January 2011. The loan is available on a drawdown basis and as at 28(th) February 2011 the Group had used GBP800,000 of the total funds available. The loan is not repayable until dividends from The Lancasters Development are received.
(viii) A Director loan of GBP500,000 was made available by MTAF Group (Mohamed AlRafi) on 26(th) May 2011. The loan has no fixed date of repayment.
(ix) An additional loan facility of GBP2,000,000 was made available by Abdulsalam AlRafi (father of Director Mohamed AlRafi) on 24(th) June 2011. The loan is available on a drawdown basis and is not repayable until dividends from The Lancasters Development are received.
The Directors have prepared detailed cash flow projections for the period ended 31(st) July 2012 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 carrying value of property, plant and equipment and depreciation
- The value of investments
- 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, together with the Group's share of the results of associates. 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. Lancaster Gate (Hyde Park) Limited continues to be treated as an available for sale financial asset. The Directors do not regard Lancaster Gate (Hyde Park) Limited as an associate because the Directors consider that the Group does not exercise significant influence over its operating and financial activities, despite the fact that the Group holds in excess of 20% of the voting rights in Lancaster Gate (Hyde Park) Limited, because the control of the Board by Minerva PLC, the controlling shareholding they hold and their power to exercise, and actual exercise of, the commercial decision making for Lancaster Gate (Hyde Park) Limited preclude the Group from exercising such influence.
Depreciation
Depreciation on property, plant and equipment is provided at rates estimated to write off the cost or revalued amounts, less estimated residual value, of each asset over its expected useful life as follows:
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 bonus fees are recognised when the amounts involved have been finally determined. 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 substantially 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 substantially 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
Fixed asset investments are stated at cost less amounts written off.
Associates
Associates are all entities over which the Group exercise significant influence but does not exercises 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.
Pension Scheme Arrangements
The Group operates a money purchase scheme on behalf of one of its Directors (2010: two Directors). It also contributes to certain Directors' and employees' personal pension schemes. Pension costs charged represent the amounts payable to the schemes in respect of the period.
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.
Financial Assets
Loans and Receivables
Trade receivable, 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'. 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 debt, which includes the borrowings disclosed in notes 19 and 20, cash and cash equivalents and equity attributable to equity holders of the Parent Company, comprising issued capital, share premium account 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. During the current period the Group sold its interest in Vicarage Gate Holdings Limited for a consideration of GBP2,250,000. This allowed the Group to strengthen its working capital position.
The Board regularly reviews the capital structure, with an objective to reduce net debt over time whilst investing in the business.
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. In addition, the internal financial control board is 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 The Group's primary segments are business segments. The segmental analysis of the Group's business was derived from its principal activities and are as reported internally to management as follows: 2010 - Revenue 2011 restated GBP GBP Principal activities: Development management 969,652 780,710 Interior design 4,249,606 3,815,427 Architectural design 445,226 555,088 ------------ ------------ 5,664,484 5,151,225 ============ ============ Loss before Taxation 2011 2010 GBP GBP GBP Development management (3,048,535) (3,261,447) Interior design (475,875) 194,590 Architectural design (786,652) (881,789) ------------ ------------ Share of (loss)/profit of associate (8,971) 6,918 ------------ ------------ (4,320,033) (3,941,728) ============ ============ Assets 2011 2010 GBP GBP Development management 27,482,303 9,495,356 Interior design 2,794,332 3,645,466 Architectural design 2,207,714 2,380,975 ------------ ------------ 32,484,349 15,521,797 Share of investment in associate 42,168 51,139 ------------ ------------ Total Assets 32,526,517 15,572,936 ============ ============ Liabilities 2011 2010 GBP GBP Development management 3,288,677 1,099,710 Interior design 2,272,268 2,647,525 Architectural design 2,139,915 1,585,007 ------------ ------------ Total Liabilities 7,700,860 5,332,242 ============ ============ A geographical analysis of the Group's revenue, assets and liabilities is given below: 2010 - Revenue 2011 restated GBP GBP United Kingdom 2,595,769 2,451,379 Ireland 818,478 31,125 Russia 76,930 57,113 Saudi Arabia 1,240,672 1,453,390 United Arab Emirates 532,664 465,622 British Virgin Islands (59,673) 641,650 Thailand 444,644 - Hong Kong 15,000 - Switzerland - 50,946 5,664,484 5,151,225 ============ ============ Assets 2011 2010 GBP GBP United Kingdom 31,716,419 14,176,389 Ireland 14,065 1,864 United Arab Emirates 591,417 22,114 Saudi Arabia 83,022 1,279,151 Switzerland 83,402 13,857 Thailand 38,192 - British Virgin Islands - 79,561 ------------ ------------ 32,526,517 15,572,936 ============ ============ Liabilities 2011 2010 GBP GBP United Kingdom 6,141,113 5,029,197 United Arab Emirates 1,517,849 300,000 Hong Kong 2,365 2,365 USA 19,505 - Thailand 20,028 - Canada - 680 7,700,860 5,332,242 ========== ========== 4. Other Operating Income 2011 2010 GBP GBP Rental income - 2,467 Other income - 650 ----- ------ - 3,117 ===== ====== 5. Investment Revenue 2011 2010 GBP GBP Interest received 13,692 21,386 Dividends received 52,500 30,000 Provision against interest receivable from Empress Partnership LLP - (77,903) ------- --------- 66,192 (26,517) ======= ========= 6. Other Losses 2011 2010 GBP GBP Net loss from disposal of interest in Vicarage Gate Holdings Limited 105,248 - Net surplus from disposal of interest in The Abingdons Partnership - (526,740) Provision for diminuition in value of investment - 587,500 Provision for acquisition of Templeco 643 Limited in lieu of settlement - 1,250,000 Provision for Northacre PLC Directors Retirement and Death Benefit Scheme profit share 1,250,000 - ---------- ---------- 1,355,248 1,310,760 ========== ========== 7. Finance Costs 2011 2010 GBP GBP Interest on: Bank loans and overdrafts 8,643 11,526 Overdue tax 1,474 546 Other loans 207,878 108,808 -------- -------- 217,995 120,880 ======== ======== 8. Loss Before Taxation 2011 2010 GBP GBP Loss on ordinary activities before taxation is stated after charging/(crediting): Depreciation and amounts written off property, plant and equipment: Owned assets 102,382 111,836 Operating lease rentals: Land and buildings 331,462 135,410 Auditors' remuneration 120,761 88,803 Auditors' remuneration in non-audit capacity: Other services relating to taxation 18,675 9,226 All other services 4,871 17,125 Foreign exchange loss 4,037 4,304 ======== ======== 9. Employees 2011 2010 Number Number The average weekly number of employees (including Directors) during the year was: Office and management 15 16 Design and management 29 32 ---------- ---------- 44 48 ========== ========== 2011 2010 Staff costs for the above employees: GBP GBP Wages and salaries 2,797,222 2,808,630 Social security costs 336,591 353,832 Other pension costs - money purchase schemes 69,850 114,439 ---------- ---------- 3,203,663 3,276,901 ========== ========== Remuneration in respect of Directors was as follows: 2011 2010 GBP GBP Aggregate emoluments (including benefits in kind) 496,731 542,869 Fees 55,833 40,000 ---------- ---------- 552,564 582,869 ========== ========== Company contribution to money purchase pension schemes 51,300 69,874 ========== ========== Remuneration for each Director (including benefits in kind) 2011 2010 GBP GBP K.B. Nilsson 255,265 203,421 J.R.G. Hunter - 201,940 M.K. Santilale 211,466 122,508 M.A. AlRafi 30,000 15,000 M.F. Williams 28,333 20,000 E.B. Harris 27,500 20,000 ---------- ---------- 552,564 582,869 ========== ========== The amounts above include remuneration in respect of the highest paid Director as follows: 2011 2010 GBP GBP Aggregate emoluments (including benefits in kind) 255,265 203,421 Company contribution to money purchase pension scheme 40,860 33,905 ---------- ---------- 296,125 237,326 ========== ========== 10. Taxation 2011 2010 GBP GBP (a) Analysis of charge in year Current tax: Corporation tax at the rate of 28% (2010 - 28%) - - Overprovision in prior year - (7,120) Total current tax - (7,120) ============= ============ (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 28%. The differences are explained below: 2011 2010 GBP GBP Loss on ordinary activities before tax (4,320,033) (3,941,728) ============= ============ Loss on ordinary activities multiplied by the standard rate of corporation tax of 28% (2010: 28%) (1,209,609) (1,103,684) Effects of: Expenses not deductible for tax purposes 49,587 182,022 Depreciation for the period in excess of capital allowances (17,004) 115 Dividends and distributions received (14,700) (8,400) Utilisation of tax losses - 215,261 Share of loss/(profit) of associates 2,512 (1,937) Loss carried forward 1,189,214 716,623 Current tax charge for - - the year (c) Factors that may affect future tax charges No deferred tax asset has been recognised on losses carried forward nor on the origination and reversal of timing differences due to the uncertainty of the timing of taxable profits. The total amount of the unprovided asset is GBP2,251,143 (2010 - GBP1,114,364). At the reporting date there are unrelieved capital losses of GBPnil (2010 - GBPnil). The standard rate of corporation tax in the UK changed to 26% from 1(st) April 2011.
11. Profit of the Parent Company
As permitted by section 408 of the Companies Act 2006, the profit or loss element of the Parent Company Statement of Comprehensive Income is not presented as part of these financial statements. The Group loss for the financial year of GBP4,320,033 (2010: GBP3,934,608) includes a loss of GBP2,341,603 (2010: GBP1,396,556), which was dealt with in the financial statements of the Company. 12. Goodwill 2011 2010 GBP GBP Cost 14,940,474 14,940,474 ------------------ ----------------- Amortisation At the beginning of the year 6,112,014 6,112,014 Charge for the year - - ------------------ ----------------- At the end of the year 6,112,014 6,112,014 ------------------ ----------------- Net carrying amount 8,828,460 8,828,460 ================== ================= In accordance with IAS 36 'Impairment of assets' the Directors have assessed the carrying value of goodwill at the reporting date, and having assessed the fair value less costs to sell of the relevant cash-generating units that carry out the Group's on-going projects, are of the opinion that this is in excess of their carrying value in the financial statements, and that the value in use of the cash-generating units does not materially exceed this amount. Accordingly, the Directors have used fair value less costs to sell as the recoverable amount in their assessment of potential impairment and as at the reporting date are of the opinion that there has been no impairment to the carrying value of goodwill. Property, plant 13. and equipment Fittings Group Leasehold and Office Computer Improvements Equipment Equipment Total Cost GBP GBP GBP GBP At 1(st) March 2009 - 267,889 300,951 568,840 Additions - 135,251 192,471 327,722 Disposals - (41,166) (28,390) (69,556) ------------- At 28(th) February 2010 - 361,974 465,032 827,006 Additions 984,217 22,105 24,849 1,031,171 Transfers 131,217 (131,217) - - ------------- ----------- ---------- ---------- At 28(th) February 2011 1,115,434 252,862 489,881 1,858,177 ============= =========== ========== ========== Depreciation At 1(st) March 2009 - 233,658 228,909 462,567 Charge for the year - 9,788 102,048 111,836 Released on disposal - (41,166) (28,390) (69,556) ------------- ----------- ---------- ---------- At 28(th) February 2010 - 202,280 302,567 504,847 Charge for the year - 10,105 92,277 102,382 ------------- ----------- ---------- ---------- At 28(th) February 2011 - 212,385 394,844 607,229 Net Book Value At 28(th) February 2011 1,115,434 40,477 95,037 1,250,948 ============= =========== ========== ========== At 28(th) February 2010 - 159,694 162,465 322,159 ============= =========== ========== ========== At 28(th) February 2009 - 34,231 72,042 106,273 ============= =========== ========== ========== Fittings Company Leasehold and Office Computer Improvements Equipment Equipment Total Cost GBP GBP GBP GBP At 1(st) March 2009 - - - - Additions - 131,217 180,000 311,217 ------------- At 28(th) February 2010 - 131,217 180,000 311,217 Additions 1,042,697 - - 1,042,697 Transfers 131,217 (131,217) - - ------------- ----------- ---------- ---------- At 28(th) February 2011 1,173,914 - 180,000 1,353,914 Depreciation At 1(st) March 2009 - - - - Charge for the year - - 55,000 55,000 ------------- At 28(th) February 2010 - - 55,000 55,000 Charge for the year - - 60,000 60,000 ------------- ----------- ---------- ---------- At 28(th) February 2011 - - 115,000 115,000 Net Book Value At 28(th) February 2011 1,173,914 - 65,000 1,238,914 ============= =========== ========== ========== At 28(th) February 2010 - 131,217 125,000 256,217 ============= =========== ========== ========== At 28(th) February - - - - 2009 ============= =========== ========== ========== 14. Investments 2011 Interest in Group Associated Undertaking Interest in Associated (a) Undertaking GBP GBP Cost At 1(st) March 2010 and at 28(th) February 2011 300 ------------ Group's Share of Undistributed Post Acquisition Results of Associated Undertaking At 1(st) March 2010 50,839 Share of undistributed profit 2,482 Taxation (11,453) --------- (8,971) ------------ At 28(th) February 2011 41,868 ------------ Net Book Value At 28(th) February 2011 42,168 ============ At 28(th) February 2010 51,139 ============ Revenue of Associated Undertaking for the year to 31(st) December 2010 743,298 ============ Net Profit of Associated Undertaking for the year to 31(st) December 2010 219,931 ============ Net Assets of Associated Undertaking as at 31(st) December 2010 73,264 ============ 2010 Interest in Associated Undertaking GBP GBP Cost At 1(st) March 2009 and at 28(th) February 2010 300 ------------ Group's Share of Undistributed Post Acquisition Results of Associated Undertaking At 1(st) March 2009 43,921 Share of undistributed profit 17,773 Taxation (10,855) --------- 6,918 ------------ At 28(th) February 2010 50,839 ------------ Net Book Value At 28(th) February 2010 51,139 ============ At 28(th) February 2009 44,221 ============ Revenue of Associated Undertaking for the year to 31(st) December 2009 704,499 ============ Net Profit of Associated Undertaking for the year to 31(st) December 2009 150,964 ============ Net Assets of Associated Undertaking as at 31(st) December 2009 63,333 ============ Available for Sale Financial (b) Assets Group 2011 2010 GBP GBP At 1(st) March 2010 3,456,473 2,472,538 Additions - 11,100 Disposals (1,156,125) (739,104) Provision for diminution in value - (587,500) Increase in fair value transferred to equity 18,904,996 2,299,439 At 28(th) February 2011 21,205,344 3,456,473 Group's Share of Results Group's share of loss for the year - - ---------------- ------------- Net Book Value At 28(th) February 2011 21,205,344 3,456,473 ================ ============= The disposal relates to the sale of our interest in Vicarage Gate Holdings Limited to Kokomo Beach Pte Ltd. A fair valuation exercise has been undertaken based predominantly on the Group's expected profit from secured sales on The Lancasters Development as at 28(th) February 2011. (c) Other Investments Subsidiary Associated Total Company Undertakings Undertaking Investments GBP GBP GBP Cost At 1(st) March 2010 14,492,583 300 14,492,883 Additions 98 - 98 As at 28(th) February 2011 14,492,681 300 14,492,981 ============= ============ ============ Impairment At 1(st) March 2010 4,402,902 - 4,402,902 Impairment in the year - - - As at 28(th) February 2011 4,402,902 - 4,402,902 ============= ============ ============ Net book value as at 28(th) February 2011 10,089,779 300 10,090,079 ============= ============ ============ Net book value as at 28(th) February 2010 10,089,681 300 10,089,981 ============= ============ ============ Company Subsidiary Associated Total Undertakings Undertaking Investments GBP GBP GBP Cost At 1(st) March 2009 14,492,583 300 14,492,883 Additions - - - As at 28(th) February 2010 14,492,583 300 14,492,883 ============= ============ ============ Impairment At 1(st) March 2009 4,402,902 - 4,402,902 Impairment in the year - - - As at 28(th) February 2010 4,402,902 - 4,402,902 ============= ============ ============ Net book value as at 28(th) February 2010 10,089,681 300 10,089,981 ============= ============ ============ Net book value as at 28(th) February 2009 10,089,681 300 10,089,981 ============= ============ ============ (d) Group Shareholdings The Group has shareholdings in the following companies, all incorporated in England and Wales: Proportion Subsidiary Holding held Nature of undertakings Business Waterloo Ordinary shares 100% Development Investments management Limited services Intarya Limited Ordinary shares 100% Interior design Northacre Ordinary shares 100% Development Development management Management Services Limited services Nilsson Architects Ordinary shares 100% Design Limited architects Northacre Capital Ordinary shares 100% Property (1) Limited development Northacre Capital Ordinary shares 100% Property (2) Limited development Northacre Capital Ordinary shares 100% Property (3) Limited development Northacre Capital Ordinary shares 100% Property (5) Limited development Northacre Capital Ordinary shares 100% Property (6) Limited development Northacre Capital Ordinary shares 100% Property (7) Limited development Northacre Ordinary shares 100% Dormant Residential Limited Nilsson Design Ordinary shares 100% Dormant Limited Northacre Land Ordinary shares 100% Dormant Limited Northacre Holdings Ordinary shares 100% Dormant Limited Northacre Design Ordinary shares 100% Dormant Limited Northacre Capital Ordinary shares 100% Dormant Limited Northcare Ordinary shares 100% Dormant Management Limited Northcare Ordinary shares 100% Dormant Management Services Limited Lifestyle Ordinary shares 100% Dormant (Interiors) Limited Associated undertaking Campden Estates Ordinary shares 25% Residential Limited property (year ended 31(st) lettings and December) management Available for sale financial assets 44-46 Park Street Ordinary shares 45% Property Limited development Lancaster Gate Ordinary shares 25.1% Property (Hyde Park) development Limited The Empress Limited Liability 5% Property Partnership LLP Partnership development 15. Inventories Group 2011 2010 GBP GBP Stock 11,845 7,919 Work in progress 324,163 40,709 -------- ------- 336,008 48,628 ======== ======= Trade and other 16. receivables Group Company 2011 2010 2011 2010 GBP GBP GBP GBP Trade receivables 374,511 1,014,064 - - Amounts owed by group undertakings - - 6,146,872 6,986,808 Other receivables 168,339 185,961 185,659 160,652 Prepayments and accrued income 320,739 1,397,645 8,705,459 7,928,859 -------- ---------- --------------- ------------- 863,589 2,597,670 15,037,990 15,076,319 ======== ========== =============== ============= At the year end there was a provision for doubtful debts of GBP216,956 (2010: GBPnil). Trade and other 17. payables Group Company 2011 2010 2011 2010 GBP GBP GBP GBP Trade payables 819,788 133,251 375,279 152,645 Amounts owed to group undertakings - - 12,334,914 11,858,537 Social security and other taxes 530,434 311,272 42,199 78,193 Other payables 228,150 323,831 169,924 227,874 Accruals and deferred income 1,104,682 1,799,052 796,497 492,122 ----------- ----------- ----------- ----------- 2,683,054 2,567,406 13,718,813 12,809,371 =========== =========== =========== =========== Included in other payables is a loan due to a Director Klas Nilsson. The loan does not have a fixed date of repayment. Interest is charged at 10% per annum. The total amount outstanding at the year end was GBP159,314 (2010: GBP117,730) including interest. 18. Corporation Tax Group Company 2011 2010 2011 2010 GBP GBP GBP GBP Corporation Tax - - - - ----- ----- ----- ----- - - - - ===== ===== ===== ===== Borrowings, including lease 19. finance Group Company Current Liabilities 2011 2010 2011 2010 GBP GBP GBP GBP Loan from pension scheme - 275,000 - 275,000 Finance leases 158,566 158,567 130,828 130,828 Bank overdraft 218,685 - 220,931 - ---------- -------- ---------- ---------- 377,251 433,567 351,759 405,828 ========== ======== ========== ========== Finance leases are secured on the related assets. The bank overdraft facility of GBP500,000 incurs interests at 3.75% per annum over the base rate. The facility is secured by a personal guarantee as detailed in note 27. Borrowings, including lease 20. finance Group Company Non-Current Liabilities 2011 2010 2011 2010 GBP GBP GBP GBP Loan from pension scheme 750,000 750,000 750,000 750,000 Director loans 693,052 300,000 693,052 300,000 Other loans 824,797 - 824,797 - Finance leases 22,706 181,269 15,771 146,596 ----------- ----------- ----------- ----------- 2,290,555 1,231,269 2,283,620 1,196,596 =========== =========== =========== =========== The loan from the pension scheme of GBP750,000 is in respect of the Northacre PLC Directors Retirement and Death Benefit Scheme. The loan is due to be repaid on 31(st) July 2013 with interest charged at 4% above the Clearing Bank's base rate. A Director loan was provided by MTAF Group (Mohamed AlRafi) in two instalments, GBP100,000 on 22(nd) October 2009 and GBP200,000 on 28(th) October 2009. Interest is charged at 10% per annum and the lender is entitled to 1.125% of Northacre's dividends from The Lancasters Development. The loan is not repayable until dividends from The Lancasters Development are received. An additional Director loan of GBP300,000 was provided by MTAF Group (Mohamed AlRafi) on 3(rd) August 2010. No interest was charged for the first 6 months with a fixed premium of GBP50,000 due after the initial 6 month period. From 3(rd) February 2011 interest is charged at 10% per annum and the lender is entitled to 0.75% of Northacre's dividends from The Lancasters project. The loan is not repayable until dividends from The Lancasters Development are received. A loan facility of GBP2,000,000 was made available by Abdulsalam AlRafi (father of Director Mohamed AlRafi) on 28(th) January 2011. The loan is available on a drawdown basis and as at 28(th) February 2011 the Group used GBP800,000 of the available funds. Interest is charged at 3% per month. The loan is not repayable until dividends from The Lancasters Development are received. As at 28(th) February 2011 the Group and Parent Company had obligations under finance leases that are secured on related assets as set out below: Group Company 2011 2010 2011 2010 Gross amounts payable: GBP GBP GBP GBP Within one year 158,566 158,567 130,828 130,828 In two to five years 22,706 181,269 15,771 146,596 In over five years - - - - 181,272 339,836 146,599 277,424 ---------- ---------- --------- --------- Less: finance charges allocated to future periods (44,751) (83,210) (29,324) (55,442) 136,521 256,626 117,275 221,982 ========== ========== ========= ========= Provisions for 21. other liabilities Group Company 2011 2010 2011 2010 GBP GBP GBP GBP Loan settlement costs and profit share payable 2,350,000 1,100,000 2,020,000 770,000 =========== =========== =========== ======== On 22(nd) June 2010, the Company entered into an agreement to acquire the entire issued share capital of Templeco 643 Limited for a consideration of GBP1,250,000. The Company acquired Templeco 643 Limited as settlement in lieu of the loan arrangement agreement to share in the profits of The Abingdons Partnership therefore the total consideration of GBP1,250,000 was reported within other losses in the year to 28(th) February 2010 (see note 6). Of the consideration, GBP75,000 was paid on 22(nd) June 2010 with a further GBP75,000 paid on 16(th) August 2010. The balance of GBP1,100,000 is due from the proceeds of the dividends from The Lancasters Development. An additional provision of GBP1,250,000 represents the profit share payable to the Northacre PLC Directors Retirement and Death Benefit Scheme in relation to sale of Group's interest in The Abingdons Partnership. The amount will be paid from dividends received from The Lancasters Development. 22. Future financial commitments Operating Leases Group Company 2011 2010 2011 2010 GBP GBP GBP GBP Land & Land & Land & Land & Buildings Buildings Buildings Buildings Net amount payable on operating leases which expire: Within one year 103,956 91,363 103,956 91,363 In two to five years 584,702 494,157 584,702 494,157 In over five years 774,740 857,241 774,740 857,241 ----------- ----------- ----------- ----------- 1,463,398 1,442,761 1,463,398 1,442,761 =========== =========== =========== =========== Group Company 2011 2010 2011 2010 GBP GBP GBP GBP Other Other Other Other Net amount payable on operating leases which expire: Within one year 46,467 21,134 16,320 9,705 In two to five years 144,978 37,875 65,280 23,478 In over five years 8,160 - 8,160 - 199,605 59,009 89,760 33,183 ======== ======= ======= ======= 23. Capital Commitments At the reporting date there were no outstanding commitments for capital expenditure. Earnings per 24. Share Loss per share of 16.17p (2010: 14.72p) is calculated on the loss attributable to ordinary shares of GBP4,320,033 (2010: GBP3,934,608) divided by the weighted number of ordinary shares in issue during the period. Computation of basic earnings per share: 2011 2010 Net loss (GBP4,320,033) (GBP3,934,608) Weighted average number of shares outstanding 26,723,643 26,723,643 Basic loss per share (16.17)p (14.72)p Diluted loss per share (16.17)p (14.72)p There were no potentially dilutive instruments in issue during the current or preceding year. All amounts shown relate to continuing and total operations. There was no impact on loss per share arising from the prior period restatement (see note 29). 25. Share Capital 2011 2010 GBP GBP Called up, allotted and fully paid: 26,723,643 Ordinary shares of 2.5p each 668,091 668,091 Nil 'A' shares of 2.5p each - - -------- -------- 668,091 668,091 ======== ========
26. Contingent Liabilities
A third party has brought a claim against a subsidiary Company, Waterloo Investments Limited, regarding payment of a profit share of a completed development. Legal proceedings were commenced by the third party in 2001. The amount claimed is GBP744,008. Waterloo Investments Limited has counterclaimed against the third party for GBP333,708 plus interest and costs. No provision has been made in these financial statements for this liability as the Board is of the opinion that there is no prospect that the claim against Waterloo Investments Limited will be successful.
A former Director has made a claim against the Company for wrongful and unfair dismissal. The dispute with the former Director remains unresolved as at the date of approval of these financial statements. Substantial claims are asserted including an unfair dismissal claim but the Board remains of the view that the claims are unlikely to succeed. Nonetheless, as is usual in any litigation, without prejudice commercial settlement terms will be further considered as may be appropriate. At present the Board are of the opinion that the claims are unlikely to succeed and no provision has therefore been made in the financial statements.
The Company and Group trading subsidiaries have given an unlimited guarantee and debenture secured on the assets of the Group to its bankers in respect of a facility arrangement. At the reporting date the net amount owed to the bank was GBP218,685 (2010: GBPnil).
27. Related Party Transactions Group The Group's related parties as defined by International Accounting Standard 24, the nature of the relationship and the amount of transactions with them during the period were as follows: Nature of 2011 2010 Related Nature of Party Relationship GBP GBP GBP GBP Transactions Balance Balance Total at the Total at the transactions year transactions year in the year end in the year end Amount owed by J.R.G. Hunter 1 1,428 34,360 (28,296) 32,932 J.R.G. Hunter to Northacre PLC at 28(th) February 2011. The highest amount owed by J.R.G Hunter in the year was GBP34,360 (2010: GBP86,574) Amount included J.R.G. Hunter 1 10,187 193,623 43,915 183,436 in accrued income in respect of services provided at arm's length to J.R.G Hunter Provision against J.R.G. Hunter 1 (193,623) (193,623) - - accrued income in respect of services provided at arm's length to J.R.G Hunter Rent and services Campden Estates 2 - - 3,117 - payable by Campden Estates Limited Limited for use of office space Amount owed by Campden Estates 2 - - (3,584) - Campden Estates Limited to Limited Northacre PLC at 28(th ) February 2011 Northacre Management fee PLC 3 - (3,000) - (3,000) receivable Directors Retirement and from the Scheme Death Benefit Scheme Northacre Loan repayable PLC 3 - (750,000) - (750,000) to the Scheme Directors Retirement and by Northacre PLC Death Benefit Scheme Northacre Loan repayable PLC 3 275,000 - - (275,000) to the Scheme by Directors Retirement Northacre PLC. The and loan was repaid Death Benefit on 26(th) June Scheme 2010 Northacre Interest payable PLC 3 (19,517) (98,883) (11,372) (79,366) to the Scheme on Directors Retirement the loans to and Northacre PLC Death Benefit Scheme Northacre Disbursements paid PLC 3 18,680 108,465 51,680 89,785 by Northacre Directors Retirement PLC on behalf of and the Scheme Death Benefit Scheme Provision in Northacre respect of profit PLC 3 (1,250,000) (1,250,000) - - share Directors to the Scheme in Retirement relation to the and sale Death Benefit of Group's Scheme interests in The Abingdons Partnership Amount owed to K.B. Nilsson 4 (27,110) (140,617) (106,748) (113,507) K.B. Nilsson from Northacre PLC at 28(th) February 2011. The highest amount owed to K.B. Nilsson in the year was GBP(193,507) (2010:GBP(106,748)) Interest payable K.B. Nilsson 4 (14,474) (18,697) (4,223) (4,223) to K.B Nilsson on the loan to Northacre PLC Nature of 2011 2010 Related Nature of Party Relationship GBP GBP GBP GBP Transactions Balance Balance Total at the Total at the transactions year transactions year in the year end in the year end K.B. K.B. Nilsson Nilsson 4 - - - - has provided a personal guarantee for GBP570,000 to the Group's bankers as security in respect of all liabilities of the Group to the bank Non-executive E.B. Directors Harris 5 (30,000) (50,000) (20,000) (20,000) fees for March 2009 - February 2011 invoiced from E.C. Harris LLP Non-executive M. Directors Williams 6 (28,333) - (20,000) - fees for March 2010 - February 2011 Loan M.A. repayable to AlRafi 7 - (300,000) (300,000) (300,000) MTAF Group (M.A. AlRafi) by Northacre PLC Interest M.A. payable to AlRafi 7 (30,230) (40,559) (10,329) (10,329) MTAF Group (M.A. AlRafi)on the GBP300,000 loan To Northacre PLC Executive M.A. Directors AlRafi 7 1,350 (13,650) (15,000) (15,000) fees for March 2010 - February 2011 Loan M.A. repayable to AlRafi 7 (350,000) (350,000) - - MTAF (M.A. AlRafi) by Northacre PLC including a GBP50,000 fixed premium Interest M.A. payable to AlRafi 7 (2,493) (2,493) - - MTAF Group (M.A. AlRafi) on the GBP300,000 loan to Northacre PLC Loan M.A. repayable to AlRafi 7 (1,973) - - - MTAF Group (M.A. AlRafi) by Northacre PLC. Amount received in the year was GBP200,000 and amount repaid GBP201,973 including interest GBP1,973 Loan repayable to A. AlRafi 8 (800,000) (800,000) - - A. AlRafi by Northacre PLC Interest payable to A. AlRafi on A. AlRafi 8 (24,797) (24,797) - - the GBP800,000 loan to Northacre PLC Loan arrangement A. AlRafi 8 (100,000) - - - fee paid to A. AlRafi for GBP2m loan facility Nature of Relationships 1 J.R.G. Hunter was a Director until 11(th) February 2010. 2 Campden Estates Limited is an associated undertaking of Northacre PLC. 3 J.R.G. Hunter and K.B. Nilsson are trustees and potential beneficiaries of the Northacre PLC Directors Retirement and Death Benefit Scheme. 4 K.B. Nilsson is a Director of the Company. 5 E.B. Harris is a Director of the Company, and a member of E.C. Harris LLP. 6 M. Williams is a Director of the Company. 7 M.A. AlRafi is a Director of the Company. 8 A. AlRafi is the father of M.A. AlRafi. Company The Directors', associated company 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. Nature of 2011 2010 Nature of Related Party Relationship GBP GBP GBP GBP Transactions Balance Balance Total at the Total at the transactions year transactions year in the year end in the year end Management Fees Group entities 1 791,061 - 885,281 - receivable in year from Group subsidiaries provided at arm's length Management Fees payable Group entities 1 (69,998) - (67,498) - 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 16 and 17 of the financial statements.
28. Events after the Reporting Date
On 24(th) June 2011 the Company secured an additional loan facility of GBP2,000,000 that was made available by Abdulsalam AlRafi (father of Director and shareholder Mohamed AlRafi). The loan is available on a drawdown basis and as at 21(st) July 2011 the Group had used GBP1,100,000 of the funds available. Interest is charged at 3% per month. The loan is due to be repaid within 18 months of the date of the first drawdown.
An additional loan of GBP500,000 was provided by Director Mohamed AlRafi. The loan was provided in four instalments: GBP100,000 on 26(th) May 2011, GBP130,000 on 9(th ) June 2011, GBP150,000 on 13(th) June 2011 and GBP120,000 on 20(th) June 2011. Interest is charged at 3% per month. The loan does not have a fixed date of repayment but it is the Directors' intention to repay the loan as soon as additional funding is secured.
Since the end of the year there were changes to the Board of Directors. Jayne McGivern was appointed as Chief Executive Officer of the Group on 11(th ) March 2011 and resigned from the position on 17(th) May 2011. Klas Nilsson has taken on the role of Interim Chief Executive Officer. On 24(th) June 2011 Manish Santilale resigned as Finance Director. His resignation was followed by the appointment of Ken MacRae as Finance Director.
29. Prior year restatement
Group revenue and administrative expenses for the year ended 28(th) February 2010 have been restated to remove management fees receivable and payable of GBP991,057. There is no impact on the total comprehensive loss for the period or net assets at 28(th) February 2010.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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