TIDMPCA
RNS Number : 8161T
Palace Capital PLC
19 November 2019
19 November 2019
PALACE CAPITAL PLC
("Palace Capital" or the "Company")
Interim Results for the 6 months ended 30 September 2019
CAPITAL EXPITURE STRATEGY AND INCREASED LETTING ACTIVITY
UNDERPIN CONTINUED POSITIVE PERFORMANCE
Palace Capital (LSE: PCA), the UK REIT that has a diversified
portfolio of UK regional commercial real estate in carefully
selected locations outside of London, is pleased to announce its
unaudited results for the six months ended 30 September 2019.
HIGHLIGHTS
Continued total property return outperformance
-- Total property return of 1.5% over the period, outperforming
the MSCI UK Quarterly Benchmark of 0.8% and marking three
successive years of outperformance
-- EPRA earnings increased to GBP6.7 million (September 2018:
GBP3.5 million) reflecting underlying strength of investment
portfolio
-- EPRA EPS of 14.5p, 153% cover of 9.5p dividend for the six-month period
-- Q2 dividend of 4.75p declared and payable in December 2019
-- IFRS net assets of GBP178.7 million maintained (March 2019: GBP180.3 million)
-- EPRA NAV per share 391p reduced by 3.9% (March 2019: 407p)
-- Conservative gearing maintained at 34% LTV and weighted
average interest rate reduced from 3.3% to 3.2%
-- WAULT increased to 5.2 years to break and 6.6 years to expiry
(31 March 2019: 4.5 years to break) as a result of lease renewals
and new lettings
-- Converted to REIT status with effect from 1 August 2019
-- Increased revolving credit facility with NatWest to GBP40
million and extended for a further five years at a lower margin
Active asset management delivering long term portfolio
enhancement
-- Hudson Quarter flagship development scheme in York, which
includes 127 apartments with over 20% already sold or under offer,
on track for completion in January 2021
-- Planning consent secured for 28 apartments and 4,000 sq ft of
retail space at 45 High Street, Weybridge, Surrey in one of the
UK's most affluent areas
-- GBP13.2 million of disposals during the period, including
remaining non-core residential units from Warren Portfolio
-- Overall EPRA occupancy at 84% reducing temporarily as we
continue to focus on strategic refurbishment or redevelopment
delivering long term benefits
Positive leasing momentum driving income
-- 12 lease renewals and five rent reviews completed at an
average 3% above ERV and a 25% uplift on previous passing rents,
creating GBP0.4 million additional annual rental income
-- Nine new leases provided an additional GBP0.5 million of annual income, including:
o 23,500 sq ft at Sol, Northampton to Gravity Fitness for a
minimum term of 10 years at a 17% premium to ERV
o 14,665 sq ft of space let at Boulton House, Manchester,
bringing the asset to 82% occupancy with 13,170 sq ft remaining to
be let
-- Lease surrender with Forensic Science Service at Priory
House, Birmingham secured GBP2.85 million, being all the remaining
rent due under the lease, and discussions underway to dispose of
remaining short leasehold interest
-- Adjoining site to the 28,000 sq ft holding at 24 Blackwater
Way, Aldershot acquired for GBP0.2 million and a new 10-year lease
agreed with BHW Automotive Limited for the entire property at a
rent of GBP227,000 per annum exclusive, an increase of GBP10,000
per annum. The lease benefits from a fixed increase after five
years to GBP250,254 per annum and the latest valuation of the
property shows a 51% capital value uplift as a result
Balance Sheet 30 Sept 2019 31 March 2019
Property valuation GBP275.8m GBP286.3m
Net assets GBP178.7m GBP180.3m
EPRA NAV per share 391p 407p
Income Statement Six months to Six months to
30 Sept 2019 30 Sept 2018
Profit after tax GBP2.6m GBP7.3m
EPRA earnings GBP6.7m GBP3.5m
Earnings per share 5.6p 15.9p
EPRA earnings per share 14.5p 7.7p
Adjusted earnings per share 8.5p 8.0p
Total accounting return -1.5% 3.7%
Total shareholder return 0.2% -3.8%
Total dividend per share 9.5p 9.5p
Dividend cover* 90% 84%
*Dividend cover is calculated on the adjusted earnings per share
which is a recurring earnings basis and specifically excludes the
one-off significant surrender premium of GBP2.85m received in the
current period.
Neil Sinclair, Chief Executive of Palace Capital said:
"During the period we have stepped up our development activity,
a strategy we believe is best placed to increase shareholder value
in the long term by creating an even stronger portfolio that can
meet the demand we are seeing outside of London for well located,
fit for purpose property that delivers higher quality income and
capital growth. Our commitment to a total return strategy is now
starting to pay off, both in terms of income and capital growth,
and should enable us to maintain our positive performance.
"At the end of June, we placed 20 apartments at Hudson Quarter,
York, on the market and demand has been such that we have now sold
21 with a further 7 under offer. We are well ahead of our business
plan at Hudson Quarter and with letting activity brisk on our other
refurbishments, we are most encouraged despite the current
political uncertainty."
Stanley Davis, Chairman of Palace Capital said:
"Our strategy at Palace Capital is delivering growth, both in
terms of income and long-term capital value, and I am very pleased
that we have now outperformed the MSCI IPD Quarterly Benchmark for
three consecutive years. While the significant capital expenditure
we have deployed across a number of different properties has not
yet fully resulted in a corresponding uplift in property valuations
due to the time lag between completing capital works and letting
the refurbished space, and therefore has had a slight impact on our
NAV, I firmly believe this investment will support our future
growth. In the six years since our re-admission in October 2013 we
have produced a total accounting return of 123%, outperforming
almost the entire peer group.
"We continue to abide by a disciplined acquisition policy and,
having not assessed a suitable opportunity in the period that meets
our strict criteria, we believe that the best use of capital to
deliver value for our shareholders in the current market is to
unlock the growth potential in our existing portfolio. The Board is
confident Palace Capital is well positioned for the future, with a
strong core income profile and a number of value-enhancing
refurbishment and redevelopment opportunities."
For further information please contact:
PALACE CAPITAL PLC
Neil Sinclair, Chief Executive
Stephen Silvester, Finance Director
Tel. +44 (0)20 3301 8331
Broker
Numis Securities
Heraclis Economides / Oliver Hardy
Tel: +44 (0)20 7260 1000
Broker
Arden Partners plc
Corporate Finance: Paul Shackleton / Ciaran Walsh / Daniel
Gee-Summons
Corporate Broking: James Reed-Daunter
Tel: +44 (0)207 614 5900
Financial PR
FTI Consulting
Claire Turvey / Methuselah Tanyanyiwa
Tel: +44 (0)20 3727 1000
palacecapital@fticonsulting.com
About Palace Capital plc (www.palacecapitalplc.com)
Palace Capital plc (LSE: PCA) is a UK REIT that has a GBP275.8
million diversified portfolio of UK regional commercial property.
The Company maintains a disciplined investment strategy focused on
towns and cities outside of London that are characterised by
thriving local economies and strengthening fundamentals. Within
those locations the highly experienced management team select
assets that provide opportunities to drive both capital value and
long-term rental income through tailored active asset management
programmes ultimately delivering attractive shareholder
returns.
www.palacecapitalplc.com
CHAIRMAN'S STATEMENT:
I am pleased to report our interim results for the six months
ended 30 September 2019. Overall, we have had an encouraging start
to the year as we continue to work hard to ensure our strategic
aims are met and that we are delivering value to our Shareholders
despite the ongoing political and economic uncertainty in the
UK.
PERFORMANCE:
Our total property return is 1.5% and the Group made a profit
after tax of GBP2.6 million in the period with an EPS of 5.6p per
share. EPRA earnings totalled GBP6.7 million, translating to an
EPRA EPS of 14.5p per share and providing over 150% cover for
dividends in the period of 9.5p per share. An alternative measure
of recurring earnings is our adjusted earnings of GBP3.9 million,
which excludes the GBP2.85 million in cash received from the
surrender of the lease at Priory House, Birmingham, and totalled
8.5p per share for the six months to 30 September 2019 (September
2018: 8.0p per share).
Following shareholder support for our conversion to a UK REIT on
1 August, we are already experiencing tax savings and we expect
these to continue to flow through for the remainder of this
financial year.
In the first half of the year, our style of active management
continued to deliver improvements through our highly skilled and
experienced team, resulting in a number of successful lettings,
renewals and rent reviews. As a result of this we generate the
necessary income which allows us to maintain our dividend, while
growing the net assets of the Company.
In line with our strategy, we have tactically reserved space for
refurbishment or redevelopment. This means that portfolio occupancy
has fallen to 84% whilst we await appropriate planning consent for
certain redevelopments, and in some instances, we have let space on
a short-term basis. This normally means lower rentals than
conventional leases, but we believe the long-term benefits will
justify this approach in the current investment market. A case in
point is the Hudson Quarter development in York, where we are now
starting to reap the benefits as planned.
As at 30 September 2019, our portfolio was independently valued
by Cushman and Wakefield at GBP275.8 million with an annual
contracted rent roll of GBP16.3 million and a net income after
property costs of GBP14.8 million per annum.
Our EPRA NAV has decreased by 3.9% to 391p per share (March
2019: 407p) as we continue to invest in our portfolio and dispose
of non-core assets. However, we have maintained net assets which
have only slightly reduced to GBP178.7 million as compared to
GBP180.3 million in March 2019, a reduction of less than 1%.
Recurring income growth is a continuing focus but increasing our
capital values is also a priority. For the six months to 30
September 2019 there was a 32% uplift in rental income, including
the surrender premium net of irrecoverable costs, which totalled
GBP10.7 million (up from GBP8.1 million for the six months to 30
September 2018). Our contractual passing rental income totalled
GBP16.3 million per annum compared to an ERV of GBP21.2 million per
annum and it is this growth-gap that we are targeting in order to
further increase our income and improve dividend cover.
Our second quarterly dividend of 4.75p will be payable on 27
December 2019 to shareholders on the register as at 6 December 2019
and this will take us to 9.5p for the six-month period. The
dividend will include a Property Income Distribution (PID) in light
of the minimum REIT distribution requirements.
While our ability to cover our dividend has been limited by the
fact that we have not made a significant earnings enhancing
acquisition since 1 Derby Square, Liverpool in December 2018, we
remain committed to our investment criteria. While we are
constantly looking at possible acquisitions, my colleagues and I
believe that in the current market, investing in our core portfolio
is the correct strategy for our shareholders and we intend to
maintain this approach for the foreseeable future.
I stated last year that we are somewhat different from our peer
group. Firstly, the majority of our acquisitions have been of
corporate entities; we have saved in excess of GBP10.0 million in
SDLT (Stamp Duty Land Tax) since re-admission and have inherited
tax losses and unclaimed capital allowances. Secondly, we are a
total return property company and consequently we are prepared to
redevelop or refurbish our assets in order to create additional
value. We believe this approach will outperform a pure income
policy over time.
In any event the real estate investment market has been
particularly subdued, and leading agents are reporting much lower
volumes of transactions from their capital market divisions. This
is likely to continue whilst there is political uncertainty in the
UK. In the meantime, this is impacting our share price which does
not fully reflect the underlying net asset value of the Company.
However, we have maintained our performance and we are well
positioned to unlock further value from within the portfolio.
Overall, we have a strong and well-located core portfolio with
sustainable income from high quality tenants, as well as
significant reversionary potential to grow rental income by over
30% together with the added value of a pipeline of development and
refurbishment projects.
We therefore approach the second half of the year with
confidence.
MARKET BACKDROP:
The UK regional office market remains robust, particularly in
those locations where we have significant holdings.
In Manchester, according to Savills Research published in
September, the total office take up for the six months to 30 June
was 806,024 sq ft, which is 7% ahead of the same period last year
and 32% ahead of the five-year average. Alongside this significant
rise in demand, office availability has fallen to its lowest level
ever.
Savills research in August also showed that Leeds, where we own
a 90,000 sq ft building at Bank House, King Street, saw record take
up in the first half of the year. 436,312 sq ft of office space was
leased, 41% ahead of the same period last year, including major
lettings of 71,000 sq ft at Central Square and 135,000 sq ft at 4
Wellington Place.
Finally, there is ever increasing activity in Liverpool. We have
highlighted that we are seeing a broader trend of occupiers
relocating from out of town properties into city centres, which are
often more accessible for employees and provide them with a more
vibrant surrounding as work and leisure time becomes increasingly
blended. Sony recently announced that it is moving from the
Wavertree Technology Park on the city outskirts and taking 65,000
sq ft at the former Liverpool Echo building in the city centre. In
addition, BT, which has a requirement for 100,000 sq ft, has
shortlisted three city centre locations and is expected to make a
decision by the end of this year.
Since 2014, Liverpool has lost over 1 million sq ft of office
space which has been converted to either residential or student
accommodation; this trend has been felt across the UK and we have
focused in the regions on those cities which have a limited and
dwindling office supply. With political parties stating that they
intend to commit investment towards connectivity and a better
regional transport infrastructure, we are well placed to take
advantage of this policy.
Regional office returns have exceeded those generated by London
every year since 2016. In addition, regional offices (48% of the
Company's portfolio) provide the strongest, risk adjusted sector in
the UK and remain a key sector that we are focused on. In contrast,
the retail sector continues to contract but our conservative
strategy means we have a very limited exposure and the assets that
we do hold are primarily let to tenants with quality covenants.
PORTFOLIO ACTIVITY:
Hudson Quarter, Toft Green, York
Construction commenced on this two-acre site in February 2019
and it remains on time and on budget. Progress on the residential
sales is well ahead of expectations and soft marketing has now
commenced to let the office space. Our drawdown with Barclays
commences next month, so all costs to date, including demolition,
have been met from our own resources. Given the backdrop of
political uncertainty, we are delighted with progress to date.
Sol, Northampton
We have faced challenges in the leisure sector which are well
known, particularly since we accepted the surrender of the Gala
Casino lease for GBP4 million in 2015. However, our asset
management strategy is now delivering positive results; not only
did we let 12,000 sq ft to Soo Yoga earlier this year, but we have
also let 23,500 sq ft to Gravity Fitness for a minimum term of 10
years at 17% above the ERV with additional rent achievable based on
turnover targets. The scheme is now 89% let and strong interest is
being shown in the remaining 21,000 sq ft.
Boulton House, Chorlton Street, Manchester
We acquired this 75,000 sq ft office building in Manchester city
centre for GBP10.6 million just before the Referendum result in
June 2016, when most of our competitors withdrew from the market.
The property is now valued at GBP15.2 million, after a circa
GBP800,000 refurbishment, and we are achieving close to GBP19.00
per sq ft, a significant increase from the rents of
GBP12.50-GBP13.50 per sq ft at the point of purchase.
41-45, High Street, Weybridge, Surrey
Planning consent was secured in July 2019 for 4,000 sq ft of
retail space and 28 apartments on this prime site, which is
immediately opposite a Waitrose supermarket. We have commenced
stripping out the existing building to mitigate the rates liability
and the professional team are now being engaged with a view to us
commencing the scheme late next year.
2-3 St James' Gate, Newcastle-upon-Tyne
We have committed circa GBP2.5 million to refurbish two vacant
floors, the entrance hall and other areas in order to give the
building a more prominent identity. There is an underlying shortage
of Grade A space in Newcastle and we believe that this property has
excellent growth prospects, both in terms of income and capital
value in light of the rents being achieved on similar buildings in
the area.
249 Midsummer Boulevard, Milton Keynes
We are currently evaluating a major development of this site and
we intend to make appointments to move forward with a planning
application in the near future. We have already received a
preliminary report indicating that the site is capable of a scheme
with a floor area of more than double the existing property. In the
meantime, it will be our intention to limit our outgoings by
letting the vacant space on a relatively short-term basis. An
economic report called 'UK Powerhouse', published by the leading
law firm Irwin Mitchell and the Centre for Economic Research in
July of this year, reveals that Milton Keynes will be the fastest
growing city at the start of 2021. This was affirmed by national
commercial consultancy Lambert Smith Hampton in research released
in February of this year.
Imperial Court & Imperial House, Leamington Spa
These two adjacent office buildings totalling 40,000 sq ft stand
on a 1.5-acre town centre site and currently produce GBP600,000 per
annum on leases expiring in 2022. This is a high value location and
we will shortly start assessing future redevelopment options.
Lendal, Museum Street, York
This retail and office building was part of the Warren Portfolio
acquired in 2017. There is a critical shortage of office space in
York, so we took the decision to refurbish 5,600 sq ft of offices
on the upper floors. We have let one floor at a headline rental of
GBP22.50 per sq ft which is the highest achieved within York. We
have agreed terms to let the majority of the remaining space.
Regency House, High Street, Winchester
This office building is also part of the Warren Portfolio. Part
was let on acquisition, but we have refurbished 4,500 sq ft, most
of which is now under offer at rents in excess of what we might
have expected at the point of purchase.
BALANCE SHEET:
Despite a challenging economic backdrop, we are well capitalised
and continue to remain conservatively geared at 34% net of cash. At
the half year we had borrowings of GBP106.9 million, of which 63%
is hedged. We pride ourselves on having a productive working
relationship with our lenders, as demonstrated by our increased
GBP40 million NatWest Revolving Credit Facility, which was secured
in August of this year for a further term of five years at a lower
margin. The contribution from our lenders is key to maintaining an
efficient capital structure and enhancing the performance of our
business.
CONCLUSION AND OUTLOOK:
These results are being announced in the middle of a General
Election campaign. All parties are encouraging economic development
in the UK's regions and with our assets being well-positioned in
the right locations, we are well placed to take advantage of this.
Our core income producing properties, together with our development
and refurbishment pipeline and the ongoing progress at Hudson
Quarter, means that we can expect to generate significant value for
shareholders over the long term.
We have holdings in towns and cities that are affected by a lack
of development and the loss of office use to residential, and this
supply / demand pressure is leading to increasing rental
values.
Property is a medium to long term investment and I remain
confident that we are well positioned to continue to grow the value
of our portfolio for our investors. Although I have been in
business a long time, I believe the best years for Palace Capital
are yet to come in what continues to be an exciting journey.
Statement of principal risks and uncertainties
Whilst we consider there has been no material changes to the
Group's principal risks, as set out on pages 40-41 of the Annual
Report and Accounts for the year ended 31 March 2019, several risks
associated with the commercial property market in general are
elevated as a result of the continuing political uncertainty
surrounding the UK's departure from the EU and the General
Election.
The Board continues to monitor external events and is taking
appropriate action to prepare for any short-term risks that could
arise whilst this period of uncertainty continues. Our business is
resilient, and we are able to respond quickly, positioning us well
for the longer term.
Statement of directors' responsibilities
The directors' confirm that the condensed set of consolidated
financial statements have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and that the interim
management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed interim
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report.
The directors of Palace Capital plc are listed on the Company
website https://www.palacecapitalplc.com/
By order of the Board
Stanley Davis, Chairman
18 November 2019
Palace Capital plc
Condensed consolidated statement of comprehensive income
For the six months ended 30 September 2019
Notes Unaudited Unaudited Audited
6 months 6 months Year to
to to 31 March
30 September 30 September 2019
2019 2018 GBP000
GBP000 GBP000
Rental and other
income 3 11,917 9,210 18,750
Property operating
expenses (1,214) (1,101) (2,318)
-------------------------------------- -------------- ------ ------------------- ------------------- -------------------
Net property income 10,703 8,109 16,432
Dividend income from listed
equity investments 53 - 43
Administrative expenses (2,193) (1,985) (4,122)
Operating profit before gains
and losses on property assets
and listed equity investments 8,563 6,124 12,353
(Loss)/profit on disposal of
investment properties (24) 211 218
(Loss)/gain on revaluation
of investment properties 8 (6,177) 3,880 (382)
Impairment of trading properties 8 (305) - -
Loss on disposal of assets
held for sale (269) - (579)
Impairment on assets held for
sale 8 - - (291)
Gain/(loss) on revaluation
of listed equity investments 101 - (214)
Operating profit 1,889 10,215 11,105
Finance income 11 11 20
Finance expense (2,414) (1,953) (3,763)
Changes in fair value of interest
rate derivatives (663) 77 (929)
(Loss)/profit before taxation (1,177) 8,350 6,433
Taxation 4 3,729 (1,078) (1,263)
------------------------------------------------------ ------ ------------------- ------------------- -------------------
Profit for the period and total
comprehensive income 2,552 7,272 5,170
====================================================== ====== =================== =================== ===================
Earnings per ordinary share
Basic 6 5.6p 15.9p 11.3p
Diluted 6 5.6p 15.8p 11.3p
The accompanying notes form an integral part of these condensed
consolidated interim financial statements.
Palace Capital plc
Condensed consolidated statement of financial position
30 September 2019
Unaudited Unaudited Audited
30 September 30 September 31 March
2019 2018 2019
Notes GBP000 GBP000 GBP000
Non-current assets
Investment properties 8 255,514 260,178 258,331
Listed equity investments
at fair value 3,066 - 2,636
Right of use asset 405 - -
Property, plant and
equipment 81 103 97
259,066 260,281 261,064
--- ----- ------------- ------------- ---------
Current assets
Assets held for sale 8 - 21,708 11,756
Trading property 8 18,895 - 14,367
Trade and other receivables 9 7,102 5,702 6,243
Cash and cash equivalents 10 13,965 13,818 22,890
----------------------------------- ----- ------------- ------------- ---------
Total current assets 39,962 41,228 55,256
----------------------------------- ----- ------------- ------------- ---------
Total assets 299,028 301,509 316,320
----------------------------------- ----- ------------- ------------- ---------
Current liabilities
Trade and other payables 11 (9,700) (8,460) (10,001)
Borrowings 12 (1,836) (6,124) (5,999)
----------------------------------- ----- ------------- ------------- ---------
Total current liabilities (11,536) (14,584) (16,000)
----------------------------------- ----- ------------- ------------- ---------
Net current assets 28,426 26,644 39,256
------------------------------------------ ------------- ------------- ---------
Non-current liabilities
Borrowings 12 (105,026) (91,692) (112,017)
Deferred tax (204) (6,972) (5,580)
Lease obligations (2,240) (1,587) (1,585)
Derivative financial
instruments 13 (1,335) (104) (815)
----------------------------------- ----- ------------- ------------- ---------
Total non-current liabilities (108,805) (100,355) (119,997)
----------------------------------- ----- ------------- ------------- ---------
Net Assets 178,687 186,570 180,323
----------------------------------- ----- ------------- ------------- ---------
Equity
Share capital 14 4,639 4,639 4,639
Share premium account 125,019 125,019 125,019
Merger reserve 3,503 3,503 3,503
Capital redemption
reserve 340 340 340
Treasury share reserve (1,348) (1,893) (1,771)
Retained earnings 46,534 54,962 48,593
----------------------------------- ----- ------------- ------------- ---------
Equity shareholders' funds 178,687 186,570 180,323
------------------------------------------ ------------- ------------- ---------
Basic NAV per ordinary
share 7 388p 407p 393p
Diluted NAV per ordinary
share 7 388p 406p 392p
EPRA NAV per ordinary
share 7 391p 421p 407p
------------------------------- ----- ------------- ------------- ---------
The accompanying notes form an integral part of these condensed
consolidated interim financial statements.
The condensed consolidated interim financial statements were
approved by the Board of Directors on 18 November 2019.
Palace Capital plc
Condensed consolidated statement of cash flows
For the six months ended 30 September 2019
Notes Unaudited
6 months Unaudited Audited
to 6 months to Year to
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
Operating activities
Loss before tax (1,177) 8,350 6,433
Adjustments for non-cash items:
Loss/(gain) on revaluation of
properties 8 6,177 (3,880) 382
Impairment of trading properties 8 305 - -
Loss on revaluation of assets
held for sale 8 - - 291
Gain on revaluation of investments 8 (101) - 214
Loss/(profit) on sale of investment
properties 8 24 (211) (218)
Loss on disposal of investment
property held for sale 8 269 - 579
Depreciation 98 16 31
Share-based payment 100 113 332
Net finance costs 3,066 1,865 4,672
-------------------------------------- ------ ------------- ------------- ---------
Cash generated by operations 8,761 6,253 12,716
Changes in working capital (1,300) (1,070) (796)
-------------------------------------- ------ ------------- ------------- ---------
Cash flows from operations 7,461 5,183 11,920
Interest received 11 11 20
Interest and other finance costs
paid (1,985) (1,620) (3,405)
Corporation tax received/(paid) (1,554) 9 (1,639)
Cash flows from operating activities 3,933 3,583 6,896
-------------------------------------- ------ ------------- ------------- ---------
Investing activities
Purchase of investment property 8 - (797) (15,505)
Capital expenditure on refurbishments
of property 8 (3,061) (2,368) (2,453)
Capital expenditure on developments 8 (1,363) - (1,923)
Capital expenditure on trading
property 8 (4,833) - (535)
Proceeds from disposal of investment
properties 8 1,476 948 2,078
Proceeds from assets held for
sale 8 11,488 - 9,082
Amounts transferred (into)/out
of restricted cash deposits (620) 336 553
Purchase of non-current asset
- equity investment (328) - (2,850)
Purchase of property, plant and
equipment - - (7)
Cash flows from investing activities 2,759 (1,881) (11,560)
-------------------------------------- ------ ------------- ------------- ---------
Financing activities
Bank loan repaid (16,717) (6,343) (8,037)
Proceeds from new bank loans 5,471 4,146 25,991
Loan issue costs (627) (13) (145)
Costs from issue of ordinary
share capital - (17) (17)
Dividends paid 5 (4,364) (4,355) (8,718)
Cash flows from financing activities (16,237) (6,582) 9,074
-------------------------------------- ------ ------------- ------------- ---------
Net (decrease)/increase in cash (9,545) (4,880) 4,410
Opening cash and cash equivalents 10 22,395 17,985 17,985
-------------------------------------- ------ ------------- ------------- ---------
Closing cash and cash equivalents 10 12,850 13,105 22,395
The accompanying notes form an integral part of these condensed
consolidated interim financial statements.
Palace Capital plc
Condensed consolidated statement of changes in equity
For the six months ended 30 September 2019
Treasury
Share Share Shares Other Retained Total
Capital Premium Reserve Reserves Earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- --------- --------- -------- ---------- ---------- --------
As at 31 March 2018 4,639 125,036 (2,011) 3,843 51,792 183,299
----------------------- --------- --------- -------- ---------- ---------- --------
Total comprehensive
income for the period - - - - 7,272 7,272
Share based payments - - - - 113 113
Costs from issue of
new shares - (17) - - - (17)
Exercise of share
options - - 118 - (118) -
Issue of deferred
bonus share options - - - - 257 257
Dividends - - - - (4,354) (4,354)
As at 30 September
2018 4,639 125,019 (1,893) 3,843 54,962 186,570
----------------------- --------- --------- -------- ---------- ---------- --------
Total comprehensive
income for the period - - - - (2,102) (2,102)
Share based payments - - - - 220 220
Exercise of share
options - - 122 - (122) -
Dividends - - - - (4,365) (4,365)
As at 31 March 2019 4,639 125,019 (1,771) 3,843 48,593 180,323
----------------------- --------- --------- -------- ---------- ---------- --------
Total comprehensive
income for the period - - - - 2,552 2,552
Share based payments - - - - 100 100
Exercise of share
options - - 423 - (423) -
Issue of deferred
bonus share options - - - - 76 76
Dividends - - - - (4,364) (4,364)
As at 30 September
2019 4,639 125,019 (1,348) 3,843 46,534 178,687
======================= ========= ========= ======== ========== ========== ========
The accompanying notes form an integral part of these condensed
consolidated interim financial statements.
Palace Capital plc
Notes to the condensed consolidated financial statements
For the six months ended 30 September 2019
1 General information
These financial statements are for Palace Capital plc ("the
Company") and its subsidiary undertakings (together "the
Group").
The Company's shares are admitted to trading on the Main Market
of the London Stock Exchange. The Company is domiciled and
registered in England and Wales and incorporated under the
Companies Act 2006. The address of its registered office is 25 Bury
Street, London, SW1Y 6AL. On 1 August 2019 the Company converted to
a UK Real Estate Investment Trust ("REIT").
The nature of the Company's operations and its principal
activities are that of property investment in the UK.
Basis of preparation
The condensed consolidated financial information included in
this half yearly report has been prepared in accordance with the
IAS 34 "Interim Financial Reporting", as adopted by the European
Union. The current period information presented in this document is
unaudited and does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006.
The interim results have been prepared in accordance with
applicable International Accounting Standards (IAS) and
International Financial Reporting Standards (IFRS) issued by the
International Accounting Standards Board (IASB). These standards
are collectively referred to as "IFRS".
The accounting policies and methods of computations used are
consistent with those as reported in the Group's Annual Report for
the year ended 31 March 2019, except as described below, and are
expected to be used in the Group's Annual Report for the year ended
31 March 2020.
The financial information for the year ended 31 March 2019
presented in these unaudited condensed Group interim financial
statements does not constitute the Company's statutory accounts for
that period but has been derived from them. The Report and Accounts
for the year ended 31 March 2019 were audited and have been filed
with the Registrar of Companies. The Independent Auditor's Report
on the Report and Accounts for the year ended 31 March 2019 was
unqualified and did not draw attention to any matters by way of
emphasis and did not contain statements under s498(2) or (3) of the
Companies Act 2006. The financial information for the periods ended
30 September 2018 and 30 September 2019 are unaudited and have not
been subject to a review in accordance with International Standard
on Review Engagements 2410, Review of Interim Financial Information
performed by the Independent Auditor of the Entity, issued by the
Auditing Practices Board.
The interim report was approved by the Board of Directors on 18
November 2019.
Copies of this statement are available to the public for
collection at the Company's Registered Office at 25 Bury Street,
London, SW1Y 6AL and on the Company's website,
www.palacecapitalplc.com.
Going Concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chairman's Statement. The financial position of
the Group, its cash flows, liquidity position and borrowing
facilities are described in these financial statements.
The Directors have reviewed the current and projected financial
position of the Group, making reasonable assumptions about future
trading performance. As part of the review the Directors have
considered the Group's cash balances, debt maturity profile of its
undrawn facilities, and the long-term nature of tenant leases. On
the basis of this review, and after making due enquiries, the
Directors have a reasonable expectation that the Group has adequate
resources to continue operational existence for the foreseeable
future. As a consequence, the Directors believe that the Group is
well placed to manage its business risk successfully.
Accordingly, they continue to adopt the going concern basis in
preparing the Half Year Report.
Changes in accounting policies and disclosures
IFRS 16 Leases (became effective for accounting periods
commencing on or after 1 January 2019)
This standard requires lessees to recognise a right-of-use asset
and related lease liability representing the obligation to make
lease payments. Interest expense on the lease liability and
depreciation on the right-of-use asset will be recognised in the
Statement of Comprehensive Income. The Directors have assessed the
impact of this standard by calculating the present value of minimum
lease payments on the head office lease, a right-of-use asset was
recognised on the Balance Sheet at 1 April 2019 with a
corresponding lease liability, using the cumulative catch up
transition approach.
The right-of-use asset will be depreciated over the remaining
lease life and the corresponding lease liability interest will also
be recognised in the Groups Statement of Comprehensive Income.
2 Segmental reporting
During the period the Group operated in one business segment,
being property investment in the UK and as such no further
information is provided.
3 Net property income
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
------------------------------- ------------- ------------- ---------
Rent receivable 8,813 8,750 17,960
Surrender premium 2,850 - -
Management fees & other income 254 460 790
-------------------------------- ------------- ------------- ---------
Total revenue 11,917 9,210 18,750
-------------------------------- ------------- ------------- ---------
Service charge & vacant rates (732) (600) (1,844)
Other property costs (482) (501) (474)
-------------------------------- ------------- ------------- ---------
Property operating expenses (1,214) (1,101) (2,318)
-------------------------------- ------------- ------------- ---------
Net property income 10,703 8,109 16,432
================================ ============= ============= =========
4 Taxation
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
-------------------------------- ------------- ------------- ---------
Current income tax charge 166 637 1,008
Tax overprovided in prior year (168) - 12
Capital gains charged in period 1,649 - 1,194
Deferred tax (5,376) 441 (951)
Tax (credit)/charge (3,729) 1,078 1,263
================================= ============= ============= =========
As a result of the Company's conversion to a REIT on 1 August
2019, the Group is no longer required to pay UK corporation tax in
respect of property rental income and capital gains relating to its
property rental business. Consequently a GBP3,727,000 credit on the
profit and loss account and debit to the balance sheet has been
recognised for the reversal of deferred tax provided for capital
gains tax due to revaluation of investment properties to fair value
and the capital allowances that have been claimed on improvements
to investment properties. UK corporation tax was payable for the
first 4 months of the period up to 31 July 2019 before entry to the
REIT "regime".
5 Dividends
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 September 30 September 31 March
Payment Date 2019 2018 2019
GBP000 GBP000 GBP000
----------------------- --------------- ------------- --------------------- ------------
Ordinary dividends
paid
----------------------- --------------- ------------- --------------------- ------------
2018 Interim dividend:
4.75p per share 13 April 2018 - 2,177 2,177
2018 Final dividend:
4.75p per share 31 July 2018 - 2,177 2,177
2019 Interim dividend:
4.75p per share 19 October 2018 - - 2,182
2019 Interim dividend: 28 December
4.75p per share 2018 - - 2,182
2019 Interim dividend:
4.75p per share 12 April 2019 2,182 - -
2019 Final dividend:
4.75p per share 13 July 2019 2,182 - -
4,364 4,354 8,718
======================== ============================== ===================== ============
Proposed dividend
2020 Q1 interim dividend: 4.75p
per share paid on 18 October
2019.
2020 Q2 interim dividend: 4.75p
per share payable on 27 December
2019.
Since becoming a REIT on 1 August 2019, the Group is required to
distribute at least 90% of qualifying income profits each year as a
Property Income Distribution (PID). The first proposed qualifying
PID will be on 27 December 2019, which will also consist of an
interim dividend (non-PID). Further REIT information is available
on the Company's website.
6 Earnings per share
The Group financial statements are prepared under IFRS which
incorporates non-realised fair value measures and non-recurring
items. Alternative Performance Measures ('APMs'), being financial
measures, which are not specified under IFRS, are also used by
Management to assess the Group's performance. These include a
number of European Public Real Estate Association ('EPRA')
measures, prepared in accordance with the EPRA Best Practice
Recommendations (BPR) reporting framework the latest update of
which was issued in November 2016. We report a number of these
measures because the Directors consider them to improve the
transparency and relevance of our published results as well as the
comparability with other listed European real estate companies.
EPRA Earnings is a measure of operational performance and
represents the net income generated from the operational
activities. It is intended to provide an indicator of the
underlying income performance generated from the leasing and
management of the property portfolio. EPRA earnings are calculated
taking the profit after tax excluding investment property
revaluations and gains and losses on disposals, changes in fair
value of financial instruments, associated closeout costs, one-off
finance termination costs, share-based payments and other one-off
exceptional items. EPRA earnings is calculated on the basis of the
basic number of shares in line with IFRS earnings as the dividends
to which they give rise accrue to current shareholders. The EPRA
diluted earnings per share also takes into account the dilution of
share options and warrants if exercised.
Palace Capital also reports an adjusted earnings measure which
is based on recurring earnings before tax and the basic number of
shares. This is the basis on which the directors consider dividend
cover. This takes EPRA earnings as the starting point and then adds
back tax and any other fair value movements or one-off items that
were included in EPRA earnings. For Palace Capital this includes
share-based payments being a non-cash expense and also one-off
surrender premiums received. The corporation tax charge (excluding
deferred tax movements, being a non-cash expense) is deducted in
order to calculate the adjusted earnings per share. The earnings
per ordinary share for the period is calculated based upon the
following information:
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
-------------------------------------- ------------- ------------- ---------
Profit after tax attributable
to ordinary shareholders for
the period 2,552 7,272 5,170
Adjustments:
Loss/(gain) on revaluation of
property portfolio 6,482 (3,880) 382
Impairment on assets held for
sale - - 291
Loss/(profit) on disposal of
investment properties 24 (211) (218)
Loss on disposal of assets held
for sale 269 - 579
Gain on revaluation of listed
equity investments (101) - 214
Debt termination costs 501 - -
Fair value loss/(gain) on derivatives 663 (77) 929
Deferred tax relating to EPRA
adjustments and capital gains
charged (3,727) 441 243
EPRA earnings for the period 6,663 3,545 7,590
-------------------------------------- ------------- ------------- ---------
Share-based payments 100 113 332
Surrender premium (2,850) - -
-------------------------------------- ------------- ------------- ---------
Adjusted profit after tax for
the period 3,913 3,658 7,922
-------------------------------------- ------------- ------------- ---------
Tax excluding deferred tax on
EPRA adjustments and capital
gain charged (2) 637 1,020
-------------------------------------- ------------- ------------- ---------
Adjusted profit before tax for
the period 3,911 4,295 8,942
-------------------------------------- ------------- ------------- ---------
Unaudited
6 months Unaudited Audited
to 6 months to Year to
30 September 30 September 31 March
2019 2018 2019
-------------------------------- ------------- ------------- ----------
Weighted average number
of shares for basic earnings
per share 45,940,198 45,806,334 45,834,436
Dilutive effect of share
options 32,108 106,695 63,690
Weighted average number
of shares for diluted earnings
per share 45,972,306 45,913,029 45,898,126
================================ ============= ============= ==========
Earnings per ordinary share
Basic 5.6p 15.9p 11.3p
Diluted 5.6p 15.8p 11.3p
EPRA and adjusted earnings per ordinary share
EPRA basic 14.5p 7.7p 16.6p
EPRA diluted 14.5p 7.7p 16.5p
Adjusted EPS 8.5p 8.0p 17.3p
-------------------------------- ------------- ------------- ----------
7 Net asset value per share
EPRA NAV calculation makes adjustments to IFRS NAV to provide
stakeholders with the most relevant information on the fair value
of the assets and liabilities within a true real estate investment
company with a long-term investment strategy. EPRA NAV is adjusted
to take effect of the exercise of options, convertibles and other
equity interests and excludes the fair value of financial
instruments and deferred tax on latent gains. EPRA NNNAV measure is
to report net asset value including fair values of financial
instruments and deferred tax on latent gains.
The diluted net assets and the number of diluted ordinary issued
shares at the end of the period assumes that all the outstanding
options that are exercisable at the period end are exercised at the
option price.
Net asset value is calculated using the following
information:
Unaudited Unaudited Audited
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
------------------------------------ ------------------------- ------------- ---------
Net assets at the end of the
period 178,687 186,570 180,323
Diluted net assets 178,687 186,570 180,323
Include fair value adjustment
on trading properties - - 250
Exclude deferred tax on latent
capital gains & capital allowances 204 6,972 5,580
Exclude fair value of financial
instruments 1,335 104 815
------------------------------------ ------------------------- ------------- ---------
EPRA NAV 180,226 193,646 186,968
Include deferred tax on latent
capital gains & capital allowances (204) (6,972) (5,580)
Include fair value of financial
instruments (1,335) (104) (815)
------------------------------------ ------------------------- ------------- ---------
EPRA NNNAV 178,687 186,570 180,573
------------------------------------ ------------------------- ------------- ---------
Unaudited Unaudited Audited
30 September 30 September 31 March
2019 2018 2019
--------------------------------- ------------- ------------- --------------
Number of ordinary shares issued
at the end of the period 46,036,508 45,843,866 45,883,249
Dilutive effect of share options 32,108 106,695 63,690
--------------------------------- ------------- ------------- --------------
Number of diluted ordinary
shares for diluted and EPRA
net assets per share 46,068,616 45,950,561 45,946,939
--------------------------------- ------------- ------------- --------------
Net assets per ordinary share
Basic NAV 388p 407p 393p
Diluted NAV 388p 406p 392p
EPRA NAV 391p 421p 407p
EPRA NNNAV 388p 406p 393p
8 Property Portfolio
Freehold Investment Leasehold Investment Total investment
properties properties properties
GBP000 GBP000 GBP000
At 1 April 2018 232,742 21,121 253,863
------------------------------------- -------------------- --------------------- -----------------
Additions - new properties 15,505 - 15,505
Additions - refurbishments 2,521 179 2,700
Capital expenditure on developments 2,014 - 2,014
Transfer to trading properties (13,509) - (13,509)
Loss on revaluation of investment
properties (122) (260) (382)
Disposals (1,860) - (1,860)
------------------------------------- -------------------- --------------------- -----------------
At 31 March 2019 237,291 21,040 258,331
Additions - refurbishments 3,099 398 3,497
Capital expenditure on developments 1,363 - 1,363
Loss on revaluation of investment
properties (3,659) (2,518) (6,177)
Disposals (1,500) - (1,500)
------------------------------------- -------------------- --------------------- -----------------
At 30 September 2019 236,594 18,920 255,514
------------------------------------- -------------------- --------------------- -----------------
Standing Investment Total Trading Assets Total
investment properties investment properties held for property
properties under properties sale portfolio
construction
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April 2018 253,863 - 253,863 - 21,708 275,571
---------------------------- -------------- -------------- -------------- ------------ ---------- -----------
Additions - refurbishments 2,700 - 2,700 - - 2,700
Additions - new
properties 15,505 - 15,505 - -
Transfer to investment
property in the
course of construction (3,810) 3,810 - - - -
Capital expenditure
on developments 1,772 242 2,014 - - 2,014
Transfer to trading
properties (13,509) - (13,509) 13,509 - -
Additions - trading
properties - - - 858 - 858
Loss/(gain) on
revaluation of
investment properties (452) 70 (382) - - (382)
Loss on revaluation
of assets held
for sale - - - - (291) (291)
Disposals (1,860) - (1,860) - (9,661) (11,521)
---------------------------- -------------- -------------- -------------- ------------ ---------- -----------
At 31 March 2019 254,209 4,122 258,331 14,367 11,756 284,454
Additions - refurbishments 3,497 - 3,497 - - 3,497
Capital expenditure
on developments - 1,363 1,363 - - 1,363
Additions - trading
properties - - - 4,833 - 4,833
Loss on revaluation
of properties (6,021) (156) (6,177) (305) - (6,482)
Disposals (1,500) - (1,500) - (11,756) (13,256)
At 30 September
2019 250,185 5,329 255,514 18,895 - 274,409
---------------------------- -------------- -------------- -------------- ------------ ---------- -----------
The property portfolio has been independently valued at fair
value. The valuations have been prepared in accordance with the
RICS Valuation - Global Standards July 2017 ("the Red Book") and
incorporate the recommendations of the International Valuation
Standards and the RICS valuation - Professional Standards UK
January 2014 (Revised April 2015) which are consistent with the
principles set out in IFRS 13.
The valuer in forming its opinion make a series of assumptions,
which are typically market related, such as net initial yields and
expected rental values and are based on the valuer's professional
judgement. The valuer has sufficient current local and national
knowledge of the particular property markets involved and has the
skills and understanding to undertake the valuations
competently.
At 30 September 2019, the Group's freehold and leasehold
investment properties were externally valued by Royal Institution
of Chartered Surveyors ("RICS") registered independent valuers. A
reconciliation of the valuations carried out by the external
valuers to the carrying values shown in the balance sheet was as
follows:
Unaudited Unaudited Audited
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
---------------------------------- ------------- ------------- ---------
Cushman & Wakefield LLP (property
portfolio) 275,800 261,625 274,560
Assets held for sale - 21,708 11,756
----------------------------------- ------------- ------------- ---------
Fair value of property portfolio 275,800 283,333 286,316
Adjustment in respect of minimum
payment
under head leases included
as a liability 1,835 1,600 1,600
Less assets held for sale - (21,708) (11,756)
Less trading properties (18,895) - (14,367)
Less lease incentive balance
in prepayments (3,028) (2,346) (2,752)
Less rent top-up adjustment (198) (701) (460)
Less fair value uplift on trading
properties - - (250)
Carrying value per financial
statements 255,514 260,178 258,331
=================================== ============= ============= =========
Investment properties with a carrying value of GBP232,735,000
(31 March 2019: GBP250,960,000) are subject to a first charge to
secure the Group's bank loans amounting to GBP108,103,000 (31 March
2019: GBP119,350,000).
Valuation process - investment properties
The valuation reports produced by the independent valuers are
based on information provided by the Group such as current rents,
terms and conditions of lease agreements, service charges and
capital expenditure. This information is derived from the Group's
financial and property management systems and is subject to the
Group's overall control environment.
In addition, the valuation reports are based on assumptions and
valuation models used by the independent valuers. The assumptions
are typically market related, such as yields and discount rates,
and are based on their professional judgment and market
observations. Each property is considered a separate asset, based
on its unique nature, characteristics and the risks of the
property.
The Executive Director responsible for the valuation process
verifies all major inputs to the external valuation reports,
assesses the individual property valuation changes from the prior
year valuation report and holds discussions with the independent
valuers. When this process is complete, the valuation report is
recommended to the Audit Committee, which considers it as part of
its overall responsibilities.
The key assumptions made in the valuation of the Group's
investment properties are:
-- The amount and timing of future income streams;
-- Anticipated maintenance costs and other landlord's
liabilities;
-- An appropriate yield; and
-- For investment properties under construction: gross
development value, estimated cost to complete and an appropriate
developer's margin.
Valuation technique - standing investment properties
The valuations reflect the tenancy data supplied by the group
along with associated revenue costs and capital expenditure. The
fair value of the commercial investment portfolio has been derived
from capitalising the future estimated net income receipts at
capitalisation rates reflected by recent arm's length sales
transactions.
9 Trade and other receivables
Unaudited Unaudited Audited
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
------------------------------- ------------- ------------- ---------
Current
Trade receivables 2,223 2,531 1,935
Prepayments and accrued income 4,229 2,797 3,527
Other taxes 374 250 177
Other debtors 276 124 604
-------------------------------- ------------- ------------- ---------
7,102 5,702 6,243
=============================== ============= ============= =========
10 Cash and cash equivalents
Unaudited Unaudited Audited
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
-------------------------- ------------- ------------- ---------
Cash and cash equivalents
- unrestricted 12,850 13,105 22,395
Restricted cash 1,115 713 495
--------------------------- ------------- ------------- ---------
13,965 13,818 22,890
========================== ============= ============= =========
Restricted cash is cash where there is a legal restriction to
specify its type of use. This is typically where the Group has
agreed to deposit cash with a lender with regards to top-ups
received from vendors on completion funds, to be realized over time
consistent with the loss of income on vacant units.
11 Trade and other payables
Unaudited Unaudited Audited
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
----------------------- ------------- ------------- ---------
Current
Trade payables 1,888 632 1,229
Accruals 1,909 1,757 2,272
Deferred rental income 3,281 3,155 3,457
Taxes 2,418 2,697 2,540
Other payables 204 219 503
------------------------ ------------- ------------- ---------
9,700 8,460 10,001
======================= ============= ============= =========
12 Borrowings
Unaudited Unaudited Audited
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
-------------------------- ------------- ------------- ---------
Current borrowings 1,836 6,124 5,999
Non-current borrowings 105,026 91,692 112,017
--------------------------- ------------- ------------- ---------
Total borrowings 106,862 97,816 118,016
=========================== ============= ============= =========
Non-current borrowings
Secured bank loans drawn 106,267 93,081 113,351
Unamortised facility fees (1,241) (1,389) (1,334)
--------------------------- ------------- ------------- ---------
105,026 91,692 112,017
========================== ============= ============= =========
The maturity profile of the Group's debt was as follows
Unaudited Unaudited Audited
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
----------------------- ------------- ------------- ---------
Within one year 1,836 6,124 5,999
From one to two years 1,836 2,436 29,825
From two to five years 92,669 78,447 71,546
From five to ten years 11,762 12,198 11,980
------------------------ ------------- ------------- ---------
Total borrowings 108,103 99,205 119,350
======================== ============= ============= =========
Facility and arrangement fees
As at 30 September 2019
Unamortised
All in cost Maturity facility Facility
% date Loan balance fees drawn
Secured borrowings GBP000 GBP000 GBP000
--------------------- ------------- ---------- ------------ ----------- --------
Scottish Widows 2.90% July 2026 13,765 (177) 13,942
National Westminster August
Bank plc 2.86% 2024 19,560 (440) 20,000
Barclays 3.20% June 2024 41,032 (284) 41,316
August
Santander Bank plc 3.72% 2022 25,774 (226) 26,000
Lloyds Bank plc 2.71% March 2023 6,731 (114) 6,845
106,862 (1,241) 108,103
===================== ============= ========== ============ =========== ========
Facility and arrangement fees
As at 31 March 2019
Unamortised
All in cost Maturity facility Facility
% date Loan balance fees drawn
Secured borrowings GBP000 GBP000 GBP000
--------------------- ------------- ---------- ------------ ----------- --------
Scottish Widows 2.90% July 2026 13,985 (175) 14,160
National Westminster
Bank plc 3.35% March 2021 29,204 (185) 29,389
January
Barclays 3.24% 2023 38,589 (554) 39,143
August
Santander Bank plc 3.74% 2022 25,961 (289) 26,250
Lloyds Bank plc 2.80% March 2023 6,715 (130) 6,845
Lloyds Bank plc 2.95% May 2019 3,562 (1) 3,563
---------------------- ------------- ---------- ------------ ----------- --------
118,016 (1,334) 119,350
===================== ============= ========== ============ =========== ========
Facility and arrangement fees
As at 30 September 2018
Unamortised
All in cost Maturity facility Facility
% date Loan balance fees drawn
Secured borrowings GBP000 GBP000 GBP000
--------------------- ------------- ---------- ------------ ----------- --------
Scottish Widows 2.91 July 2026 14,191 (187) 14,378
National Westminster
Bank plc 3.63 March 2021 14,658 (231) 14,889
January
Barclays 3.14 2023 39,123 (627) 39,750
August
Santander Bank plc 3.69 2022 26,169 (331) 26,500
Lloyds Bank plc 2.91 April 2019 3,675 (13) 3,688
97,816 (1,389) 99,205
===================== ============= ========== ============ =========== ========
The Group has unused loan facilities amounting to GBP46,500,000
(31 March 2019: GBP26,500,000). A facility fee is charged on
GBP20,000,000 at a rate of 1.05% p.a. and a fee is charged on
GBP26,500,000 at a rate of 1.30% p.a. and both are payable
quarterly. This facility is secured on the investment properties
held by Property Investment Holdings Limited and Palace Capital
(Properties) Limited. The GBP26,500,000 balance of the unused
facilities relates to a Barclays loan secured on the Hudson
Quarter, York development held by Palace Capital (Developments)
Limited.
13 Derivatives financial instruments
The Group adopts a policy of entering into derivative financial
instruments with banks to provide an economic hedge to its interest
rate risks and ensure its exposure to interest rate fluctuations is
mitigated.
The contract rate is the fixed rate the Group are paying for its
interest rate swaps.
The valuation rate is the variable LIBOR and bank base rate the
banks are paying for the interest rate swaps.
Details of the interest rate swaps the Group has entered can be
found in the table below.
The valuations of all derivatives held by the Group are
classified as Level 2 in the IFRS 13 fair value hierarchy as they
are based on observable inputs. There have been no transfers
between levels of the fair value hierarchy during the year.
Notional Expiry Contract Valuation Unaudited Unaudited Audited
principal date rate rate 30 September 30 September 31 March
Bank % % 2019 2018 2019
Barclays Bank
plc 35,097,900 25/01/2023 1.3420 0.5483 (897) (37) (526)
Santander
plc 19,530,516 03/08/2022 1.3730 0.5549 (438) (67) (289)
-------------- ---------- ---------- -------- --------- ------------- ------------- ---------
54,628,416 (1,335) (104) (815)
-------------- ---------- ---------- -------- --------- ------------- ------------- ---------
14 Share capital
Authorised, issued and fully paid share capital is as
follows:
Unaudited Unaudited Audited
30 September 30 September 31 March
2019 2018 2019
Ordinary 10p shares 46,388,515 46,388,515 46,388,515
Share capital - number of shares
in issue 46,388,515 46,388,515 46,388,515
================================== ============= ============= ==========
Share capital - GBP 4,638,852 4,638,852 4,638,852
================================== ============= ============= ==========
The Company has set up an employee benefit trust, 'The Palace
Capital Employee Benefit Trust', for the granting of shares
applicable to directors and employees under the Long-Term Incentive
Plan. On 20 June 2019 the Company transferred 150,000 ordinary
shares held in Treasury into The Palace Capital Employee Benefit
Trust.
On 24 July 2019 the Company granted 67,798 shares, being the
awards granted on 17 July 2018 under the Palace Capital Deferred
Bonus Plan from The Palace Capital Employee Benefit Trust. On 24
July 2019, 85,461 share options were exercised under the 2016
employee LTIP scheme.
As at 31 March 2019 there were 449,587 shares held in treasury
but as a result of the 150,000 shares transferred into the Employee
Benefit Trust, there are 299,587 shares remaining in Treasury.
The Company's issued share capital as at 30 September 2019
comprises 46,036,508 ordinary shares which is the denominator for
the calculations of earnings per share and net asset value per
share. This excludes the 352,007 ordinary shares held in treasury
and the Employee Benefit Trust.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
IR LFFLILELTLIA
(END) Dow Jones Newswires
November 19, 2019 02:00 ET (07:00 GMT)
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