Annual Financial Report and notice of AGM

NORTHACRE PLC

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

Results for the year ended 28th February 2013

Northacre PLC is pleased to announce its financial results for the year ended 28th February 2013. The Annual Report and Accounts for the year then ended and Notice of the Company's Annual General Meeting, to be held at the Company's registered office at 9.30am on 19th August 2013, will be available shortly on the Company's website www.northacre.com and are being posted to those shareholders who have elected to receive hard copies.

Extracts from the Company's Annual Report and Accounts are shown below.

Enquiries:

Northacre PLC

Klas Nilsson (Non-Executive Chairman)

020 7349 8000

finnCap Limited (Nominated Adviser and Broker)

Stuart Andrews

Henrik Persson

020 7220 0500

Chairman's Statement

The dominant event of the year has been the acquisition of the controlling shareholding in Northacre PLC by Spadille Limited, a company wholly owned and controlled by Abu Dhabi Capital Management LLC ("ADCM").

The acquisition was facilitated through the sale of my own shareholding and another major shareholder on January 17th 2013. ADCM have since consolidated their holdings during the offer period to 66.8% of the issued Ordinary share capital of Northacre PLC.

Northacre PLC has as such entered a new prosperous era, and as the founder and Non-Executive Chairman, I welcome ADCM on board to complete my vision for the Company in an ever increasingly competitive market. Our joint vision is to re-establish Northacre PLC firmly back as the number one prime residential development manager in London.

We are further planning to project the Company internationally and capitalise on the inherent strength and established pedigree of the Northacre brand, and where our experience and expertise can add value.

Since the year end, we have received the resignations of three Directors namely the Chief Executive Officer and Finance Director Ken MacRae, Executive Director Mohamed AlRafi and Non-Executive Director Malcolm Williams. The Company wishes to express its appreciation to those Directors for their contribution to the Company as Directors and Board members over the past years.

Jassim Alseddiqi and Mustafa Kheriba, Chief Executive Officer and Chief Operating Officer of ADCM, were appointed Executive Directors and members of the Board on the 27th February 2013. The Company has identified a new Chief Executive Officer who will join Northacre on the 2nd September 2013. Details of this appointment will be disclosed in due course.

The Group is happy to announce that all apartments at The Lancasters Development have now been sold and dividends of £42.7m have been received from the joint venture company, being Northacre's share of the profits. A further £7.1m are expected within the next 12 months.

Our development team is focusing their attention on the Vicarage Gate Development expected to complete in spring 2015.

As a result of Jassim Alseddiqi and Mustafa Kheriba taking up their executive roles, the Company has renewed its efforts to secure the next development opportunity - now with evidence of substantial funding.

London has achieved a global city status with an increasing number of international purchasers who wish to work, live and or study in the capital, and with London being the fastest growing city in Europe with an expected growth of one million people over the next decade, there is an increasing demand for good residential stock.

We remain optimistic. Our product should command that extra premium in a market place where the discerning purchaser is ever more demanding.

Klas Nilsson

Non-Executive Chairman

Executive Director's Statement

Northacre PLC has been successful in developing and delivering landmark properties over the past two decades. The recent completion of The Lancasters Development enhanced the resilience of our mantra and placed our balance sheet in vigorous health.

Building on last year's results, the Company made good progress as more competitive market conditions emerged during the year. While we are actively seeking to acquire new schemes, our view still holds strong that patience will be required to acquire the right opportunities that are suitable for a Northacre branded development and at the right price.

This is an exciting time in the life cycle of Northacre PLC. Our objectives are clear, and our stakeholders have specific, identifiable commitments which focus on every area of the business. These commitments have been assiduously and earnestly embraced by all. We adamantly believe that we have the right mix of strategy, commitment to excellence and personnel to implement the Company's plan, and to cement the Company's reputation and stronghold as a leading development manager in the prime Central London arena.

Healthy Pipeline

Post the delivery of The Lancasters Development, Northacre PLC is currently developing Vicarage Gate House. The Vicarage Gate House scheme is looking to be one of the most prestigious residential developments in Central London and will be the talk of the town once completed.

Furthermore, the Business Development team maintains a strong and healthy pipeline of opportunities, and we will continue to manage the pipeline carefully to ensure we chose the right opportunity for Northacre. With the assistance and support of ADCM, we have set out a clear set of priorities. The development team will continually look for ways to create shareholder value by being better at sourcing and securing new opportunities. The Company now encourages a culture where outperformance is expected and where everyone is measured on the value they create.

Outlook

The prime residential market in London continued to experience strong growth into 2013. Prime London property has proven a favourable investment asset class for the world's wealthy in the current environment, and has been resilient to stagnant domestic economic growth and the government's new stamp duties.

Northacre PLC is well-positioned with a healthy cash balance and a new strong and harmonising relationship with ADCM, allowing the Company to source and finance new development opportunities with more ease.

Culminating with the successful completion of The Lancasters Development this year, Northacre PLC has further solidified its position in the prime Central London residential market with its exceptional track record, strong brand pedigree, and experienced team.

Last but not least, we seek to embark on expanding the pedigree and brand of Northacre globally, and are presently exploring opportunities to carve a new niche globally.

Mustafa Kheriba

Executive Director

Financial Review

Financial Highlights

·; Net Asset Value (NAV) increased to 150.11 pence per share (2012: 138.99 pence per share)

·; Revenue increased by 17% to £3.5m (2012: £3.0m)

·; Operating loss for the year is £7.7m (2012: £6.5m)

·; Profit before tax is £16.8m (2012: loss £7.9m)

·; Dividends received during the year were £26.6m (2012: £1.2m)

·; Further dividends of £15m were received after the reporting date

Review of Financial Results

Consolidated Income Statement

This has been a successful year during which the Group received over 50% of our total expected profit share from The Lancasters Development which, at the date of this report, was fully sold. The total dividend income received from The Lancasters Development in the year was £26.6m (2012: £1.2m) with a further £15.0m received after the year end.

Group revenue for the year increased by 17% to £3.5m (2012: £3.0m), which reflected a higher level of activity in Intarya, the Group's interior design business. Intarya's revenue increased by 45% to £3.2m (2012: £2.2m).Development management fee income fell by 58% to £0.349m (2012: £0.829m) as expected due to the reduced role required as The Lancasters Development was sold.

Administrative expenses increased to £8.9m (2012: £6.7m). The increase was driven by additional legal and professional fees of £0.5m in relation to the offer made by ADCM and the full bonus provision of £3.4m for staff and directors following the receipt of significant dividends from The Lancasters Development. Our cost base is driven by the employment of skilled teams of professionals to manage current and potential developments. The Group has streamlined the cost base in recent years to reflect the lower activity on The Lancasters Development and lack of new projects. Excluding the bonus provision, Group staff costs were reduced by £0.3m to £3.1m (2012: £3.4m).

The receipt of dividends from The Lancasters Development allowed the Group to repay all of its debt during the year. Loan arrangement costs decreased by 81% to £0.3m (2012: £1.6m). Finance costs were at a similar level of £2.1m (2012: £2.1m) and are forecasted to be £nil in the next year as the Group's positive cash position allows it to meet the day-to-day working capital requirements.

Our profit before tax is £16.8m (2012: loss £7.9m) and the significant increase is a reflection of investment revenue of £26.6m (2012: £1.2m) received during the year.

Consolidated Statement of Comprehensive Income

In accordance with International Accounting Standards we have measured fair value of the available for sale financial asset, being The Lancasters Development, with reference to the secured sales. The change in fair value reported for the year was a decrease of £18.7m (2012: increase £19.6m), which reflected an increase in the fair value of £7.9m (2012: £20.8m) and dividends received of £26.6m (2012: £1.2m).

Consolidated Statement of Financial Position

The receipt of significant dividends from The Lancasters Development in the year was the main driver of the change in the constituent assets and liabilities of the Northacre PLC Consolidated Statement of Financial Position.

The Group secured a new loan facility of £15m (of which only £13m was drawn down) with Auster Real Estate Opportunities S.a.r.l. on 1st May 2012. Following receipt of significant dividends from The Lancasters Development, the loan of £14.3m, including interest, was repaid on 29th November 2012. As at 28th February 2013 Group borrowings were £nil (2012: £11.2m) and total liabilities were reduced by 68% to £4.7m (2012: £14.8m).

The dividends from The Lancasters Development improved the Northacre PLC cash position from £0.9m at the start of the year to £9.2m at February 2013. After the reporting date our cash position improved further following a receipt of an additional Lancaster's dividends of £15m. Northacre PLC's cash position as at the date of this report is circa £20m with a further £7.1m expected from The Lancasters Development in the next 12 months.

Looking forward, the Group will focus on securing new projects and will increase both its development income and investment income. Supported by ADCM and with its substantial funding support we expect to be in good position to manage further developments in the future.

Kasia Maciborska

Group Financial Controller

Consolidated Income Statement

For the year ended 28th February 2013

Consolidated Statement of Comprehensive Income

For the year ended 28th February 2013

Consolidated Statement of Financial Position

As at 28th February 2013

Company Statement of Financial Position

As at 28th February 2013

Consolidated and Company Statements of Cash Flows

For the year ended 28th February 2013

Consolidated and Company Statements of Changes in Equity

For the year ended 28th February 2013

Notes to the Consolidated Financial Statements

For the year ended 28th February 2013

1. Principal Accounting Policies

The principal accounting policies are as follows:

Accounting Basis and Standards

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

The following new standards, amendments to standards or interpretations are mandatory for the Group for the first time for the financial year beginning 1st March 2012, but are not currently considered to be relevant to the Group (although they may affect the accounting for future transactions and events):

·; 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.

·; 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.

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1st March 2012 and have not been early adopted:

·; IFRS 9, 'Financial instruments', issued in November 2009 and effective from 1st January 2015. IFRS 9 represents the first phase of the IASB's project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. It sets out the classification and measurement criteria for financial assets and liabilities and requires all financial assets, including assets currently classified under IAS 39 as available for sale, to be measured at fair value through profit and loss unless the assets can be classified as held at amortised cost. Qualifying equity investments held at fair value may have their fair value changes taken through other comprehensive income by election.

·; IFRS 10, 'Consolidated Financial Statements', effective from 1st January 2013. This standard builds on existing principles by identifying the concept of control as the determining factor in which an entity should be included within the consolidated financial statements. The standard provides additional guidance to assist in determining control where this is difficult to assess.

·; IFRS 11, 'Joint arrangements', effective from 1st January 2013. This standard establishes principles for financial reporting by parties to a joint arrangement.

·; IFRS 12, 'Disclosure of interests in other entities', effective from 1st January 2013. 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', effective from 1st January 2013. 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', effective from 1st January 2013. 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.

·; IAS 19 (Revised), 'Employee Benefits' effective from 1st January 2013. 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' (Revised), effective from 1st January 2013 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' (Revised), effective from 1st January 2013 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', effective from 1st January 2013 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 received from The Lancasters Development dividends. All of the Groups' loan facilities have been repaid during the year under review. In particular:

(i) The loan due to Northacre PLC Directors Retirement and Death Benefit Scheme of £699,602 (2012: £699,602) was repaid on 17th December 2012. The total amount repaid was £711,300 including interest of £11,698.

(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. After securing new financing 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 loan facility of £15,000,000 was agreed with Auster Real Estate Opportunities S.a.r.l. (''Auster'') 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 was due to be repaid in 18 months from the date of the draw down unless sufficient dividends were received from The Lancasters Development. Following receipt of a further £10m dividends from The Lancasters Development on 23rd November 2012 the Group repaid the Auster loan in full on 29th November 2012. The total amount repaid during the year was £14,300,000 including interest of £1,300,000.

The Directors have prepared detailed cash flow projections for the period ended 28th February 2018 making reasonable assumptions about the levels and timings of income and expenditure, and in particular the timing of receipt of certain fees due from major developments. These projections show that the Group can meet its ongoing working capital requirements. On this basis the Directors consider it appropriate to prepare the financial statements on a going concern basis.

Significant Judgements and Estimates of Areas of Uncertainty

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

- The valuation of goodwill

- The valuation of available for sale financial assets

- The status and progress of the developments and projects

Basis of Consolidation

The Group financial statements include the financial statements of the Company and its subsidiary undertakings. The Group's proportion of the voting rights of Lancaster Gate (Hyde Park) Limited increased from to 5% to 25.1% on 30th 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 substantively enacted at the reporting date.

Deferred Taxation

Deferred tax is provided in full on all temporary differences arising between the tax base of assets and liabilities and their carrying values in the financial statements. The deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of transaction affects neither accounting nor taxable profit or loss.

Deferred tax is determined using tax rates which have been enacted or substantively enacted at the reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Leased Assets

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

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

Investments

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 exercise control. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost, which includes goodwill identified on acquisition, net of any accumulated impairment loss. The Group's share of its associate's profits or losses after acquisition of its interest is recognised in profit or loss and cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Where the Group's share of losses of an associate equals or exceeds the carrying amount of the investment, the Group only recognises further losses where it has incurred obligations or made payments on behalf of the associate.

Financial Assets

Available for sale financial assets consist of equity investments in other companies where the Group does not exercise either control or significant influence. The investments reflect loans and capital contributions made in respect of projects undertaken with other partners in which the Group will be entitled to an eventual profit share.

Available for sale financial assets are shown at fair value at each reporting date with changes in fair value being shown in Other Comprehensive Income, or at cost less any necessary provision for impairment where a reliable estimate of fair value is not able to be determined.

Pension Scheme Arrangements

The Group operates a money purchase scheme on behalf of one of its Directors. It also contributes to certain Directors' and employees' personal pension schemes. Pension costs charged represent the amounts payable to the schemes in respect of the period.

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 receivables, loans and other receivables are classified as 'trade and other receivables' and are measured at cost less any provisions. Interest income is recognised by applying the appropriate interest rate of the contractual arrangement.

Financial Liabilities - Loans and Payables and Borrowings

Trade payables, other payables and borrowings are classified as 'trade and other payables' and 'borrowings, including lease finance'. These are measured at amortised cost and the interest expense is recognised by applying the appropriate interest rate of the contractual arrangement.

Borrowings

Interest-bearing borrowings are recognised initially at fair value, net of any transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective interest method with any differences between the proceeds (net of transaction costs) and the redemption value being recognised over the period of borrowings.

All borrowings are classified as current unless the Group has an unconditional right to defer payment of the borrowings until at least twelve months from the reporting date.

2. Capital and Financial Risk Management

The Group manages its capital to ensure that the Group will be able to continue as a going concern, while maximising the return to shareholders through the optimisation of its debt and equity balance.

The capital structure of the Group, following the repayment of the Auster loan consists of 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.

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.