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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Palace Capital Plc | LSE:PCA | London | Ordinary Share | GB00BF5SGF06 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 240.00 | 236.00 | 240.00 | 240.00 | 235.00 | 240.00 | 11,168 | 16:35:01 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Agents & Mgrs | 33.3M | -35.7M | -0.9506 | -2.47 | 88.27M |
From Apr 2019 to Apr 2024
TIDMPCA
RNS Number : 5010F
Palace Capital PLC
17 November 2020
17 November 2020
PALACE CAPITAL PLC
("Palace Capital" or the "Company")
Interim Results for the six months ended 30 September 2020
RESILIENT RENT COLLECTION AND ACTIVE ASSET MANAGEMENT ENSURE STABLE PORTFOLIO PERFORMANCE
Palace Capital (LSE: PCA), the Main Market listed property investment company that has a diversified portfolio of UK commercial real estate in carefully selected locations outside of London, announces its unaudited results for the six months ended 30 September 2020.
Financial Highlights
Active asset management underpins resilient rent collection and dividend payment
-- 82% of all rents due on and since the September quarter day collected, a higher percentage than at the equivalent stage in the previous two quarters with December monthly payments still to come when collection is expected to exceed 90%.
-- 94% of rent due on the June quarter day was collected compared to 96% on the March quarter day (excludes deferred rent).
-- EPRA earnings of GBP3.2 million (September 2019: GBP6.7 million), with reduction reflecting a one-off surrender premium included in the comparative period last year.
-- IFRS loss before tax for the period of GBP7.2 million (September 2019: GBP1.2 million) reflecting GBP10.5 million loss on revaluation of investment properties.
-- Adjusted EPS of 7.3p, 146% cover of 5p dividend for the six-month period.
-- Q2 dividend of 2.5p declared and payable on 31 December 2020. Q1 dividend of 2.5p was paid in October 2020.
-- EPRA NTA per share of 347p reduced by 4.7% (March 2020: 364p) and IFRS net assets of GBP158.4 million (March 2020: GBP166.3 million), reflecting reductions due to asset revaluations following the pandemic and strategic capital expenditure on developments and refurbishments.
-- LTV at 42% reflecting drawdowns on development loan at Hudson Quarter, due to complete in March 2021, weighted average cost of debt reduced from 3.1% to 2.9%.
-- Solid balance sheet with cash reserves and immediately available facilities of GBP26.3 million as at 30 September 2020, to handle any unforeseen circumstances and to take advantage of potential opportunities in the short to medium term.
Operational highlights
Ongoing strategic disposals and redevelopment programme further enhancing portfolio quality
-- 36 apartments now sold at an aggregate value of GBP9.6 million at flagship Hudson Quarter, York development. Practical completion of the scheme is now due in March 2021 and it remains on budget.
-- Disposals of Meadowcourt, Sheffield for GBP1.25 million, 30% above book value, and Hyde Abbey House, Winchester sold post half year end for GBP1.46 million, 17% above book value.
-- Rental concessions granted at Sol Northampton with Accor Hotels in return for a five-year lease extension until 2032 and with Gravity Fitness in return for removal of the break clause, securing the lease until 2034. Rental concession granted post the half year end at Broad Street Plaza, Halifax with TGI Friday's in return for three-year lease extension until 2030.
-- Agents instructed on four further sales of non-core assets, with a combined book value of GBP8.3 million as at 30 September 2020.
Hot Features
Premium
Balance Sheet 30 Sept 2020 31 March 2020
Property valuation GBP281.6m GBP277.8m
Net assets GBP158.4m GBP166.3m
EPRA NTA per share 347p 364p
Income Statement Six months Six months
to to
30 Sept 2020 30 Sept 2019
Loss before tax (GBP7.2m) (GBP1.2m)
EPRA earnings GBP3.2m GBP6.7m
Earnings per share (15.5p) 5.6p
Adjusted earnings per share 7.3p 8.5p
Total accounting return (3.3%) (1.5%)
Total shareholder return 7.2% 0.2%
Total dividend per share 5.0p 9.5p
Dividend cover 146% 90%
Neil Sinclair, Chief Executive of Palace Capital said:
"Our strength in the regional office and industrial sectors, reflected in the quality of our occupier base, has enabled us to maintain high levels of rent collection across the period, despite the ongoing Covid-19 headwinds. The resilience in the income collection and the successful active portfolio management are testament to our team's experience and hard work during an extremely challenging half year period.
"While the market continues to be relatively uncertain due to the Covid-19 pandemic and with the Brexit deadline also close, we remain confident that the outlook for the UK regions is a positive one; the supply of good quality, well located office assets remains constrained and our portfolio is therefore very well placed, with additional value identified and unlocked as we progress our redevelopment and refurbishment programmes."
Stanley Davis, Chairman of Palace Capital said:
"Our financial year commenced one week after lockdown, therefore the pandemic and its impact will have a clear bearing on our results for this year. However, our well-located portfolio has shown its strength during this uncertain time and is well positioned to benefit from the trends we are seeing emerge from the pandemic, including relocation to the regions.
"In the short term we will continue to deploy our strategy of maintaining maximum liquidity, ensuring strong rent collection and pursuing the disposal of non-core assets. At the same time, the recent news of a potential vaccination programme getting underway by the end of this year or early next year provides some welcome hope that we may be moving toward the end of this Covid related uncertainty. We are preparing ourselves for the post Covid-19 era and the economic recovery, so that we can take advantage of the investment opportunities that we believe will emerge and progress our total return strategy."
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 / George Fry
Tel: +44 (0)20 7260 1000
Broker
Arden Partners plc
Corporate Finance: Paul Shackleton / Ciaran Walsh
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
Palace Capital plc (LSE: PCA) is a UK REIT that has a GBP281.6 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
Our financial year commenced one week after lockdown; therefore, the pandemic and its impact has had a clear bearing on our results for this period and will continue to during the second half of the year.
PERFORMANCE
The Group made a loss after tax of GBP7.2 million in the period (September 2019: profit of GBP2.6 million). This was largely due to a 3.5% like-for-like reduction in property valuations in the period which compares to the MSCI UK quarterly property index which reported capital values down 3.7% in the same period. Rental income for the period reduced to GBP8.2 million (September 2019: GBP8.8 million) partially as a result of some increased vacancy across the portfolio and also due to the inclusion of a bad debt provision of GBP0.3 million in light of the Covid-related rent arrears.
The portfolio has an annual contracted rent roll of GBP16.9 million and a net income after property costs of GBP14.9 million per annum compared to an ERV of GBP20.2 million. Adjusted earnings totalled GBP3.4 million, translating to an adjusted EPS of 7.3p per share, 146% cover of the 5.0p per share for the period. Our second quarterly dividend of 2.5p will be payable on 31 December 2020 to shareholders on the register on 11 December 2020. The entire dividend will be paid as a Property Income Distribution.
BALANCE SHEET
Our balance sheet remains in good shape; an IFRS net asset value of GBP158.4 million with GBP26.3 million in cash and available facilities and, despite the like-for-like reduction in the portfolio valuations, our regional portfolio retains its resilient characteristics. As at 30 September 2020, our portfolio was independently valued by Cushman and Wakefield at GBP281.6 million and this valuation is not subject to 'material valuation uncertainty' which the valuer had applied to the year-end valuations.
The increase in LTV to 42% is largely due to drawdowns from the development facility for the continued construction progress at our Hudson Quarter development, which is due to complete in March 2021. This level of gearing is projected to fall to close to 30% once all residential units have been sold.
PANDEMIC RESPONSE
At the start of the first major lockdown in March, we immediately set our priorities as being to:
-- Ensure the safety of our staff and sites; -- Maintain our robust rent collection; -- Comply with our banking covenants; -- Curtail all non-essential capital expenditure; and -- Continue with disposal of non-core properties at or above book value.
Our high rent collection figures have ensured compliance with our banking covenants for the last two quarters, while the continuation of our strategic disposal of non-core assets has further supplemented our cash reserves.
We have a high-quality occupier base and our asset managers, who have worked incredibly hard over the past number of months, are continuing their meaningful dialogue with all of our tenants throughout this challenging time. As at the date of this announcement, our top 20 tenants, who contribute 44% of our income are all up to date with their rental payments for the current quarter.
LOOKING FORWARD
While we are now in the middle of a second lockdown, which might be extended despite being due to end early next month, the recent news of a potential vaccination programme getting underway by the end of this year or early next year provides some welcome hope that we may be moving toward the end of this Covid related uncertainty. However, we have no reason to amend our prudent response strategy at present and maintaining a healthy cash position will enable us to deal with any other unexpected circumstances that may be forthcoming. These reserves will also allow us to reduce some of our debt during the financial year and to take advantage of the attractive investment opportunities that we believe will arise during 2021.
The management team's deep and long held experience in the real estate sector means we benefit from extensive networks and relationships which will hold us in good stead as and when distressed opportunities emerge next year. We have a track record, since the early years of Palace Capital, of successful corporate acquisitions, having acquired a Quintain subsidiary and Property Investment Holdings Ltd for GBP39.25 million and GBP32 million respectively. These cost-effective transactions were available to us because the companies in both cases had high leverage and being corporates, it facilitated significant savings in Stamp Duty Land Tax. These portfolio investments have performed exceptionally well for the Company and therefore this is an investment strategy with which we intend to continue.
The working from home guidance has of course influenced office occupation and I am in no doubt that our way of working has been changed long term. However, these trends towards flexible and home working were already underway pre Covid-19, and the forced move to remote working has simply accelerated this momentum. Our strong view is, however, that this shift in working patterns will benefit the regions as companies reflect on the requirement for expensive Central London offices. Debate around the demise of the office is premature and recent lettings activity shows that employers remain convinced of the role of the workplace: significant pre-lettings in excess of 80,000 sq ft have recently been announced in the city centres of Edinburgh, Manchester and Leeds.
Previous forecasts of the demise of the office - in the early 1980s with the advancement of computer technology and again in the early 2000s during the dotcom era - proved unfounded and our view is that they will again. We have always pursued a very disciplined acquisition strategy, which has focused on good quality assets in town centres and close to transport hubs, including major railway stations, so we firmly believe that we will see continued demand for our regional offices, particularly in Manchester, Leeds, York, Newcastle-upon-Tyne and Liverpool.
Savills, in August of this year, published a report which compared the current supply / demand dynamics in the regional office market with 2009. The report estimated that since 2015, excluding London, 31 million sq ft of office space has been converted to residential under Permitted Development Rights in England. Current availability of Grade B and C space across the regional markets in England has fallen by 45% since 2015. In parallel to this, there has been limited speculative office development in the regions in recent years. They further reported in August that there was a total available office supply of 11.3 million sq ft in the UK regional office markets, reflecting a 17% decrease since the end of 2019. However, of that just over 3 million sq ft is Grade A reflecting a 4% decrease since the end of 2019. When this is compared to average annual take up levels, this reflects only enough supply to meet the demand for 11 months of take up. Against this market backdrop we are well placed to benefit as HM Government continues to pursue its levelling up agenda and businesses contemplate the relocation of some of their operations from London and the South East, or implement a 'hub and spoke' model with a greater regional presence to meet the demands of their employees in an environment where the competition for talent is strong.
DEVELOPMENT PIPELINE
Our strategy focuses on delivering attractive total returns to our investors. We achieve this through active asset management to maximise the income potential of our assets, but also by identifying and creating development and refurbishment opportunities that can ultimately provide a higher quality, more secure income. We have a pipeline of prime, city centre opportunities, two of which are in Milton Keynes and another in Leamington Spa. Our property in Leamington Spa is fully let until 2022 and while we have no significant expenditure envisaged on these properties in the next 12 months, we have identified opportunities to unlock further capital appreciation by way of the planning process and, ultimately, redevelopment. Milton Keynes (as recently highlighted in the Financial Times, 27/10/20) is one of the fastest growing cities in the UK and only 30 minutes by train from London so we have taken the view to accept some vacancy here forfeiting potential income as part of the development contribution to total returns. Leamington Spa is a quality town with high residential values that is only 65 minutes by train from the capital.
PORTFOLIO OVERVIEW
At Hudson Quarter, our flagship development in York, we have sold 36 apartments at a total value of GBP9.6 million and we have a further unit currently under offer. We had sold 28 as at 31 March 2020. The pace of the sales process has been impacted by the government lockdown, which closed our show apartment for four months from March to July and has now effectively closed it again until at least early December except by appointment. During this time, however, we have been actively targeting overseas buyers through social media particularly in the Middle East and Far East, where interest has been strong, given the quality of the product.
Due to the impact of Covid-19, sales are somewhat slow at the moment. This will have an impact on our ability to reinvest the proceeds during the early part of our next financial year, which was our original plan. However, we are confident that post lockdown and approaching completion of this high quality scheme, potential sales will accelerate. The proceeds from these will then enable us to repay any remaining development debt, reduce the Group's LTV and to take advantage of value enhancing opportunities.
As previously announced, 4,500 sq ft of the office space has been pre-let to the listed legal and professional services firm Knights, on a 10-year lease at a record rent for York, which will commence when our building is completed in March 2021. We have also had considerable interest in HQ, the self-contained 35,000 sq ft office building, and we believe that, with York being only 105 minutes by a non-stop train service from London and HQ being within a two minute walk from the Station, the development is extremely well positioned to be a beneficiary of the post pandemic environment.
The reduction in NAV reported today is impacted by our two leisure assets, Sol Northampton and Broad Street Plaza in Halifax, which have been mostly affected by the lockdown closures and the prevailing sentiment towards the leisure industry. However, news of a potential vaccine has improved the outlook for the industry and these assets are well placed to bounce back post pandemic. We have strong covenants in both schemes and rent payments across both assets are up to date. Moreover, we are in discussion with a number of potential tenants regarding the vacant space in these properties as parties start focusing on the recovery in the economy.
CONCLUSION & OUTLOOK
Notwithstanding a very challenging economic environment, we are continuing with our strategy of maintaining maximum liquidity, ensuring strong rent collection and pursuing the disposal of non-core assets. At the same time we are preparing ourselves for the post Covid-19 era as the Government focuses on the economic recovery, so that we can take advantage of the distressed opportunities that we believe will arise from the Spring of 2021 and move forward with our value enhancing redevelopment/refurbishment plans. This is not an easy time, but we have a great team and a quality Board. We are very confident in our ability to prosper in this new normal.
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 43-45 of the Annual Report and Accounts for the year ended 31 March 2020, several risks continue to be elevated as a result of the ongoing Covid-19 pandemic.
The Board continues to monitor events and is taking appropriate action to prepare for any short to medium-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
16 November 2020
Palace Capital plc
Condensed consolidated statement of comprehensive income
For the six months ended 30 September 2020
Notes Unaudited Unaudited Audited
6 months 6 months Year to
to to 31 March
30 September 30 September 2020
2020 2019 GBP000
GBP000 GBP000
Rental and other
income 3 8,263 11,917 21,147
Property operating
expenses (1,000) (1,214) (2,392)
------------------------------------- -------------- ------ ------------------- ------------------- -------------------
Net property income 7,263 10,703 18,755
Dividend income from listed
equity investments - 53 105
Administrative expenses (2,260) (2,193) (4,284)
Operating profit before gains
and losses on property assets
and listed equity investments 5,003 8,563 14,576
Profit/(loss) on disposal of
investment properties 259 (24) 138
Loss on revaluation of investment
properties 8 (10,457) (6,177) (17,154)
Reversal of impairment/(impairment)
of trading properties 8 414 (305) (763)
Loss on disposal of assets
held for sale - (269) (269)
(Loss)/gain on revaluation
of listed equity investments (167) 101 (425)
Operating (loss)/profit (4,948) 1,889 (3,897)
Finance income 1 11 18
Finance expense (1,796) (2,414) (3,845)
Debt termination costs - (501)
-
Changes in fair value of interest
rate derivatives (409) (663) (846)
Loss before taxation (7,152) (1,177) (9,071)
Taxation 4 - 3,729 3,632
----------------------------------------------------- ------ ------------------- ------------------- -------------------
(Loss)/profit for the period
and total comprehensive income (7,152) 2,552 (5,439)
===================================================== ====== =================== =================== ===================
Earnings per ordinary share
Basic 6 (15.5p) 5.6p (11.8p)
Diluted 6 (15.5p) 5.6p (11.8p)
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 2020
Unaudited Unaudited Audited
30 September 30 September 31 March
2020 2019 2020
Notes GBP000 GBP000 GBP000
Non-current assets
Investment properties 8 241,403 255,514 248,699
Listed equity investments
at fair value 2,373 3,066 2,540
Right of use asset 238 405 313
Property, plant and equipment 93 81 101
244,107 259,066 251,653
---------------------------------- ----- ------------- ------------- ---------
Current assets
Trading property 8 38,395 18,895 27,557
Trade and other receivables 9 10,014 7,102 9,323
Cash and cash equivalents 10 14,269 13,965 14,919
---------------------------------- ----- ------------- ------------- ---------
Total current assets 62,678 39,962 51,799
---------------------------------- ----- ------------- ------------- ---------
Total assets 306,785 299,028 303,452
---------------------------------- ----- ------------- ------------- ---------
Current liabilities
Trade and other payables 11 (13,170) (9,700) (14,053)
Borrowings 12 (1,836) (1,836) (1,836)
Lease liabilities for
right of use asset (172) (168) (164)
---------------------------------- ----- ------------- ------------- ---------
Total current liabilities (15,178) (11,704) (16,053)
---------------------------------- ----- ------------- ------------- ---------
Net current assets 47,500 28,258 35,746
--------------------------------------------- ------------- ------------- ---------
Non-current liabilities
Borrowings 12 (129,625) (105,026) (117,520)
Deferred tax (228) (204) (228)
Lease liabilities for
investment properties (1,805) (1,834) (1,806)
Lease liabilities for
right of use asset (67) (238) (154)
Derivative financial instruments 13 (1,517) (1,335) (1,343)
---------------------------------- ----- ------------- ------------- ---------
Total non-current liabilities (133,242) (108,637) (121,051)
---------------------------------- ----- ------------- ------------- ---------
Net Assets 158,365 178,687 166,348
---------------------------------- ----- ------------- ------------- ---------
Equity
Share capital 14 4,639 4,639 4,639
Share premium account - 125,019 125,019
Merger reserve 3,503 3,503 3,503
Capital redemption reserve 340 340 340
Treasury share reserve (1,287) (1,348) (1,349)
Capital reduction reserve 125,019 - -
Retained earnings 26,151 46,534 34,196
---------------------------------- ----- ------------- ------------- ---------
Equity shareholders' funds 158,365 178,687 166,348
--------------------------------------------- ------------- ------------- ---------
Basic NAV per ordinary
share 7 344p 388p 361p
Diluted NAV per ordinary
share 7 343p 388p 361p
EPRA NTA per ordinary
share 7 347p 391p 364p
-------------------------------------- ----- ------------- ------------- ---------
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 16 November 2020.
Palace Capital plc
Condensed consolidated statement of cash flows
For the six months ended 30 September 2020
Notes Unaudited
6 months Unaudited Audited
to 6 months to Year to
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
Operating activities
Loss before tax (7,152) (1,177) (9,071)
Adjustments for non-cash items:
Loss on revaluation of properties 8 10,457 6,177 17,154
(Gain)/impairment of trading
properties 8 (414) 305 763
Loss/(gain) on revaluation of
investments 167 (101) 425
(Profit)/loss on sale of investment
properties 8 (259) 24 (138)
Loss on disposal of investment
property held for sale 8 - 269 269
Depreciation 23 16 32
Amortisation of right of use
asset 74 82 148
Share-based payment 150 100 130
Net finance costs 2,204 3,066 5,174
-------------------------------------- ------ ------------- ------------- ---------
Cash generated by operations 5,250 8,761 14,886
Changes in working capital (974) (1,353) 860
-------------------------------------- ------ ------------- ------------- ---------
Cash flows from operations 4,276 7,408 15,746
Interest received 1 11 18
Interest and other finance costs
paid (1,855) (1,985) (3,680)
Corporation tax received/(paid) (1,128) (1,554) (2,173)
Cash flows from operating activities 1,294 3,880 9,911
-------------------------------------- ------ ------------- ------------- ---------
Investing activities
Capital expenditure on refurbishments
of property 8 (905) (3,061) (5,667)
Capital expenditure on developments 8 (2,856) (1,363) (3,925)
Capital expenditure on trading
property 8 (10,125) (4,833) (13,915)
Proceeds from disposal of investment
properties 8 1,219 1,476 2,708
Proceeds from assets held for
sale 8 - 11,488 11,487
Amounts transferred out of/(into)
restricted cash deposits 181 (620) (525)
Purchase of non-current asset
- equity investment - (328) (329)
Dividends from listed equity
investments - 53 105
Purchase of property, plant and
equipment (14) - (36)
Cash flows from investing activities (12,500) 2,812 (10,097)
-------------------------------------- ------ ------------- ------------- ---------
Financing activities
Bank loan repaid (1,071) (16,717) (18,325)
Proceeds from new bank loans 12,960 5,471 19,736
Loan issue costs - (627) (978)
Dividends paid 5 (1,152) (4,364) (8,743)
Cash flows from financing activities 10,737 (16,237) (8,310)
-------------------------------------- ------ ------------- ------------- ---------
Net (decrease)/increase in cash (469) (9,545) (8,496)
Opening cash and cash equivalents 10 13,899 22,395 22,395
-------------------------------------- ------ ------------- ------------- ---------
Closing cash and cash equivalents 10 13,430 12,850 13,899
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 2020
Treasury Capital
Share Share Shares Other reduction Retained Total
Capital Premium Reserve Reserves reserve Earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- --------- --------- -------- ---------- ---------- ---------- --------
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
Costs from issue of - - - - - - -
new shares
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
---------------------------- --------- --------- -------- ---------- ---------- ---------- --------
Total comprehensive
loss for the period - - - - - (7,991) (7,991)
Share based payments - - - - - 30 30
Exercise of share options - - (1) - - 1 -
Issue of deferred bonus
share options - - - - - 1 1
Dividends - - - - - (4,379) (4,379)
As at 31 March 2020 4,639 125,019 (1,349) 3,843 - 34,196 166,348
---------------------------- --------- --------- -------- ---------- ---------- ---------- --------
Total comprehensive
loss for the period - - - - - (7,152) (7,152)
Share based payments - - - - - 150 150
Exercise of share options - - 62 - - (62) -
Issue of deferred bonus
share options - - - - - 171 171
Dividends - - - - - (1,152) (1,152)
Transfer to capital
reduction reserve account* - (125,019) - - 125,019 - -
As at 30 September 2020 4,639 - (1,287) 3,843 125,019 26,151 158,365
============================ ========= ========= ======== ========== ========== ========== ========
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
*During the year, the Group made an order to reduce the Group's share premium account and the crediting of the relevant sum to distributable profits. The Court order approving the Share Premium Reduction and a statement of capital were registered with the Registrar of Companies on 29 September 2020. The Share Premium Reduction is now effective, and the amount that had been standing to the credit of the Company's share premium account (GBP125,018,886.38) has been credited to the Company's distributable profits.
Palace Capital plc
Notes to the condensed consolidated financial statements
For the six months ended 30 September 2020
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.
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 2020, and are expected to be used in the Group's Annual Report for the year ended 31 March 2021.
The financial information for the year ended 31 March 2020 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 2020 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 2020 was unqualified and did not contain statements under s498(2) or (3) of the Companies Act 2006. The report for the year ended 31 March 2020 did include an emphasis of matter paragraph, drawing attention to the material valuation uncertainty statement made by the valuers. The opinion was not modified in respect of this matter. The financial information for the periods ended 30 September 2019 and 30 September 2020 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 16 November 2020.
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 Directors have made an assessment of the Group's ability to continue as a going concern which included the current uncertainties created by Covid-19, coupled with the Group's cash resources, borrowing facilities, rental income, acquisitions and disposals of investment properties, committed capital and other expenditure and dividend distributions. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in these financial statements.
Although there has been significant headroom on the majority of covenants within the period ended 30 September 2020, the impact of Covid-19 and the resultant lock-down initially resulted in a number of tenants withholding rental payments and, in particular at the two leisure schemes in Halifax and Northampton. As a result, two of the facilities, Scottish Widows and Santander, did not meet their ICR covenant tests at the April 2020 test dates. On request the banks provided covenant waivers for both the April and July covenant test dates. All covenant tests were satisfied in both July and October 2020.
As part of the going concern assessment, and taking the above into consideration, the Directors reviewed a number of scenarios which included extreme downside sensitivities and reverse stress tests in relation to rental cash collection assuming no property acquisitions, no further capital expenditure beyond that committed and no dividends. The forecast shows there is enough headroom on all the interest cover bank covenants to ensure these covenants are not breached. GBP0.8m cash remains in a lock-up account on behalf of Scottish Widows in order to satisfy the LTV covenant. On all other facilities there would need to be a significant reduction in the bank's property valuations to be at risk of breaching the respective LTV covenants. We would mitigate any potential risk of breaching the loan covenants by keeping an open dialogue with all tenants to ensure prompt rent collection, monitor lease renewals and actively seek to lease any vacant units at the property.
In addition, as at 30 September 2020 the Group had GBP14.3 million of cash and cash equivalents, of which GBP13.4 million was unrestricted cash, a reasonable gearing level of 42% and a fair value property portfolio of GBP281.6 million. The Directors have reviewed the forecasts for the Group taking into account the impact of Covid-19 on trading over the twelve months from the date of signing the 30 September 2020 Interim Report.
The forecasts have been assessed against a range of possible downside outcomes incorporating significantly lower levels of income in line with the possible effects of the pandemic. The Directors have a reasonable expectation that the Group have adequate resources to continue in operation for at least 12 months from the date of the 30 September 2020 Interim Report.
Accordingly, they continue to adopt the going concern basis in preparing the Interim Report.
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
2020 2019 2020
GBP000 GBP000 GBP000
------------------------------ ------------- ------------- ---------
Rent receivable 8,216 8,813 17,717
Dilapidations & other income 27 238 439
Surrender premium - 2,850 2,850
Insurance commission 20 16 141
------------------------------- ------------- ------------- ---------
Total revenue 8,263 11,917 21,147
------------------------------- ------------- ------------- ---------
Service charge & vacant rates (681) (732) (2,218)
Other property costs (319) (482) (174)
------------------------------- ------------- ------------- ---------
Property operating expenses (1,000) (1,214) (2,392)
------------------------------- ------------- ------------- ---------
Net property income 7,263 10,703 18,755
=============================== ============= ============= =========
4 Taxation
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
-------------------------------- ------------- ------------- ---------
Current income tax charge - 166 198
Tax overprovided in prior year - (168) (222)
Capital gains charged in period - 1,649 1,744
Deferred tax - (5,376) (5,352)
Tax credit - (3,729) (3,632)
================================= ============= ============= =========
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.
5 Dividends
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 September 30 September 31 March
Payment Date 2020 2019 2020
GBP000 GBP000 GBP000
----------------------- --------------- ------------- --------------------- ------------
Ordinary dividends
paid
----------------------- --------------- ------------- --------------------- ------------
2019 Interim dividend:
4.75p per share 12 April 2019 - 2,182 2,182
2019 Final dividend:
4.75p per share 13 July 2019 - 2,182 2,182
2020 Interim dividend:
4.75p per share 18 October 2019 - - 2,189
2020 Interim dividend: 27 December
4.75p per share 2019 - - 2,190
2020 Final dividend:
2.50p per share 14 August 2020 1,152 - -
1,152 4,364 8,743
======================== ============================== ===================== ============
Proposed dividend
2021 Q1 interim dividend: 2.50p
per share paid on 16 October
2020.
2021 Q2 interim dividend: 2.50p
per share payable on 31 December
2020.
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, 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
2020 2019 2020
GBP000 GBP000 GBP000
-------------------------------- ------------- ------------- ---------
Profit after tax attributable
to ordinary shareholders for
the period (7,152) 2,552 (5,439)
Adjustments:
Loss on revaluation of property
portfolio 10,457 6,177 17,154
(Gain)/impairment of trading
stock (414) 305 763
(Profit)/loss on disposal of
investment properties (259) 24 (138)
Loss on disposal of assets held
for sale - 269 269
Loss/(gain) on revaluation of
listed equity investments 167 (101) 425
Debt termination costs - 501 501
Fair value loss on derivatives 409 663 846
Deferred tax relating to EPRA
adjustments and capital gains
charged - (3,727) (3,608)
EPRA earnings for the period 3,208 6,663 10,773
-------------------------------- ------------- ------------- ---------
Share-based payments 150 100 130
Surrender premium - (2,850) (2,850)
-------------------------------- ------------- ------------- ---------
Adjusted profit after tax for
the period 3,358 3,913 8,053
-------------------------------- ------------- ------------- ---------
Tax excluding deferred tax on
EPRA adjustments and capital
gain charged - (2) (25)
-------------------------------- ------------- ------------- ---------
Adjusted profit before tax for
the period 3,358 3,911 8,028
-------------------------------- ------------- ------------- ---------
Unaudited
6 months Unaudited Audited
to 6 months to Year to
30 September 30 September 31 March
2020 2019 2020
-------------------------------- ------------- ------------- ----------
Weighted average number
of shares for basic earnings
per share 46,053,190 45,940,198 45,988,353
Dilutive effect of share
options - 32,108 -
Weighted average number
of shares for diluted earnings
per share 46,053,190 45,972,306 45,988,353
================================ ============= ============= ==========
Earnings per ordinary share
Basic (15.5p) 5.6p (11.8p)
Diluted (15.5p) 5.6p (11.8p)
EPRA and adjusted earnings per ordinary share
EPRA basic 7.0p 14.5p 23.4p
EPRA diluted 7.0p 14.5p 23.4p
Adjusted EPS 7.3p 8.5p 17.5p
-------------------------------- ------------- ------------- ----------
7 Net asset value per share
The Group has adopted the new EPRA NAV measures which came into effect for accounting periods starting 1 January 2020. EPRA issued new best practice recommendations (BPR) for financial guidelines on its definitions of NAV measures. The new NAV measures as outlined in the BPR are EPRA net tangible assets (NTA), EPRA net reinvestment value (NRV) and EPRA net disposal value (NDV). The Group has adopted these new guidelines and applies them in the 30 September 2020 Interim Report.
The Group considered EPRA Net Tangible Assets (NTA) to be the most relevant NAV measure for the Group and we are now reporting this as our primary NAV measure, replacing our previously reported EPRA NAV and EPRA NNNAV per share metrics. EPRA NTA excludes the intangible assets and the cumulative fair value adjustments for debt-related derivatives which are unlikely to be realised. See further information on the calculation in appendix 1.
30 September 2020 30 September 2019 30 March 2020 (audited*)
(unaudited) (unaudited)
EPRA EPRA EPRA EPRA EPRA EPRA EPRA EPRA EPRA
NTA NRV NDV NTA NRV NDV NTA NRV NDV
(GBP000) (GBP000) (GBP000) (GBP000) (GBP000) (GBP000) (GBP000) (GBP000) (GBP000)
Net assets
attributable
to
shareholders 158,365 158,365 158,365 178,687 178,687 178,687 166,348 166,348 166,348
Include:
Real estate
transfer
tax - 14,935 - - 16,483 - - 15,771 -
Fair value of
fixed
interest
rate debt - - (426) - - (144) - - (191)
Exclude:
Fair value of
derivatives 1,517 1,517 - 1,335 1,335 - 1,343 1,343 -
Deferred tax
on
latent
capital
gains and
capital
allowances 228 228 - 204 204 - 228 228 -
-------------- --------- --------- ---------- --------- --------- ---------- ---------- ---------- ----------
EPRA NAV 160,110 175,045 157,939 180,226 196,709 178,543 167,919 183,690 166,157
-------------- --------- --------- ---------- --------- --------- ---------- ---------- ---------- ----------
EPRA NAV per
share 347p 379p 342p 391p 426p 387p 364p 398p 360p
-------------- --------- --------- ---------- --------- --------- ---------- ---------- ---------- ----------
Unaudited Unaudited Audited
30 September 30 September 31 March
2020 2019 2020
--------------------------------- ------------- ------------- --------------
Number of ordinary shares issued
at the end of the period 46,069,690 46,036,508 46,036,508
Dilutive effect of share options 84,934 32,108 32,108
--------------------------------- ------------- ------------- --------------
Number of diluted ordinary
shares for diluted and EPRA
net assets per share 46,154,624 46,068,616 46,068,616
--------------------------------- ------------- ------------- --------------
Net assets per ordinary share
Basic NAV 344p 388p 361p
Diluted NAV 343p 388p 361p EPRA NTA 347p 391p 364p EPRA NRV 379p 426p 398p EPRA NDV 342p 387p 360p --------------------------------- ------------- ------------- --------------
*The Group has adopted the new EPRA NAV measures post the 31 March 2020 audit, therefore the new EPRA NAV measures computed at 31 March 2020 are unaudited.
8 Property Portfolio
Freehold Investment Leasehold Investment Total investment
properties properties properties
GBP000 GBP000 GBP000
At 1 April 2019 237,291 21,040 258,331
------------------------------------- -------------------- --------------------- -----------------
Additions - refurbishments 5,495 661 6,156
Capital expenditure on developments 3,936 - 3,936
Loss on revaluation of investment
properties (13,756) (3,398) (17,154)
Disposals (2,570) - (2,570)
------------------------------------- -------------------- --------------------- -----------------
At 31 March 2020 230,396 18,303 248,699
Additions - refurbishments 1,262 (82) 1,180
Capital expenditure on developments 2,941 - 2,941
Loss on revaluation of investment
properties (9,672) (785) (10,457)
Disposals (960) - (960)
------------------------------------- -------------------- --------------------- -----------------
At 30 September 2020 223,967 17,436 241,403
------------------------------------- -------------------- --------------------- -----------------
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 2019 254,209 4,122 258,331 14,367 11,756 284,454
---------------------------- -------------- -------------- -------------- ------------ ---------- -----------
Additions - refurbishments 6,156 - 6,156 - - 6,156
Capital expenditure
on developments - 3,936 3,936 - - 3,936
Additions - trading
properties - - - 13,953 - 13,953
Impairment of
trading properties - - - (763) - (763)
Loss on revaluation
of investment
properties (16,868) (286) (17,154) - - (17,154)
Disposals (2,570) - (2,570) - (11,756) (14,326)
---------------------------- -------------- -------------- -------------- ------------ ---------- -----------
At 31 March 2020 240,927 7,772 248,699 27,557 - 276,256
Additions - refurbishments 1,180 - 1,180 - - 1,180
Capital expenditure
on developments - 2,941 2,941 - - 2,941
Additions - trading
properties - - - 10,424 - 10,424
Reversal of impairment
of trading properties - - - 414 - 414
(Loss)/gain on
revaluation of
properties (10,574) 117 (10,457) - - (10,457)
Disposals (960) - (960) - - (960)
At 30 September
2020 230,573 10,830 241,403 38,395 - 279,798
---------------------------- -------------- -------------- -------------- ------------ ---------- -----------
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.
The pandemic and the measures taken to tackle Covid-19 continue to affect economies and real estate markets globally. Nevertheless, as at the valuation date property markets are mostly functioning again, with transaction volumes and other relevant evidence at levels where an adequate quantum of market evidence exists upon which to base opinions of value. Accordingly, and for the avoidance of doubt, the property valuation at 30 September 2020 is not reported as being subject to 'material valuation uncertainty' as defined by VPS 3 and VPGA 10 of the RICS Valuation - Global Standards.
At 30 September 2020, 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
2020 2019 2020
GBP000 GBP000 GBP000
---------------------------------- ------------- ------------- ---------
Cushman & Wakefield LLP (property
portfolio) 281,595 275,800 277,770
Fair value of property portfolio 281,595 275,800 277,770
Adjustment in respect of minimum
payment
under head leases included
as a liability 1,805 1,835 1,806
Less trading properties (38,395) (18,895) (27,557)
Less lease incentive balance
in prepayments (3,602) (3,028) (3,320)
Less rent top-up adjustment - (198) -
Carrying value per financial
statements 241,403 255,514 248,699
=================================== ============= ============= =========
Investment properties with a carrying value of GBP236,639,500 (31 March 2020: GBP232,023,000) and trading properties with a carrying value of GBP38,395,000 (31 March 2020: GBP27,557,000) are subject to a first charge to secure the Group's bank loans amounting to GBP132,651,000 (31 March 2020: GBP120,761,000).
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.
Reversal of impairment of trading properties
An impairment loss may only be reversed if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss had been recognised. If this is the case, then the carrying amount of the asset shall be increased to its recoverable amount. The increase will effectively be the reversal of an impairment loss.
9 Trade and other receivables
Unaudited Unaudited Audited
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
------------------------------- ------------- ------------- ---------
Current
Trade receivables 3,285 2,223 2,572
Prepayments and accrued income 4,080 4,229 3,748
Other taxes 820 374 625
Other debtors 1,829 276 2,378
-------------------------------- ------------- ------------- ---------
10,014 7,102 9,323
=============================== ============= ============= =========
10 Cash and cash equivalents
Unaudited Unaudited Audited
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
-------------------------- ------------- ------------- -------------------
Cash and cash equivalents
- unrestricted 13,430 12,850 13,899
Restricted cash 839 1,115 1,020
--------------------------- ------------- ------------- -------------------
14,269 13,965 14,919
========================== ============= ============= ===================
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 realised over time consistent with the loss of income on vacant units, and where the Group has agreed to deposit cash with a lender to provide additional security over loan facilities.
11 Trade and other payables
Unaudited Unaudited Audited
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
----------------------- ------------- ------------- ---------
Current
Trade payables 2,702 1,888 2,911
Accruals 3,759 1,909 3,146
Deferred rental income 3,488 3,281 3,567
Taxes 1,862 2,418 2,085
Other payables 1,359 204 2,344
------------------------ ------------- ------------- ---------
13,170 9,700 14,053
======================= ============= ============= =========
12 Borrowings
Unaudited Unaudited Audited
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
-------------------------- ------------- ------------- ---------
Current borrowings 1,836 1,836 1,836
Non-current borrowings 129,625 105,026 117,520
--------------------------- ------------- ------------- ---------
Total borrowings 131,461 106,862 119,356
=========================== ============= ============= =========
Non-current borrowings
Secured bank loans drawn 130,815 106,267 118,925
Unamortised facility fees (1,190) (1,241) (1,405)
--------------------------- ------------- ------------- ---------
129,625 105,026 117,520
========================== ============= ============= =========
The maturity profile of the Group's debt was as follows
Unaudited Unaudited Audited
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
----------------------- ------------- ------------- ---------
Within one year 1,836 1,836 1,836
From one to two years 44,099 1,836 6,792
From two to five years 75,390 92,669 100,589
From five to ten years 11,326 11,762 11,544
------------------------ ------------- ------------- ---------
Total borrowings 132,651 108,103 120,761
======================== ============= ============= =========
Facility and arrangement fees
As at 30 September 2020
Unamortised
All in Maturity facility Facility
cost date Loan balance fees drawn
Secured borrowings % GBP000 GBP000 GBP000
--------------------- -------- ---------- ------------ ----------- --------
Scottish Widows 2.90% July 2026 13,355 (151) 13,506
National Westminster August
Bank plc 2.16% 2024 28,242 (378) 28,620
Barclays 3.12% June 2024 40,193 (223) 40,416
January
Barclays 3.30% 2022 17,553 (210) 17,763
Santander Bank August
plc 3.56% 2022 25,352 (148) 25,500
Lloyds Bank plc 2.01% March 2023 6,766 (80) 6,846
131,461 (1,190) 132,651
===================== ======== ========== ============ =========== ========
Facility and arrangement fees
As at 31 March 2020
Unamortised
All in Maturity facility Facility
cost date Loan balance fees drawn
Secured borrowings % GBP000 GBP000 GBP000
--------------------- -------- ---------- ------------ ----------- --------
Scottish Widows 2.90% July 2026 13,560 (164) 13,724
National Westminster August
Bank plc 2.70% 2024 28,225 (395) 28,620
Barclays 3.18% June 2024 40,611 (255) 40,866
January
Barclays 3.48% 2022 4,649 (307) 4,956
Santander Bank August
plc 3.68% 2022 25,563 (187) 25,750
Lloyds Bank plc 2.55% March 2023 6,748 (97) 6,845
119,356 (1,405) 120,761
===================== ======== ========== ============ =========== ========
Facility and arrangement fees
As at 30 September 2019
Unamortised
All in Maturity facility Facility
cost 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
Santander Bank August
plc 3.72% 2022 25,774 (226) 26,000
March
Lloyds Bank plc 2.71% 2023 6,731 (114) 6,845
106,862 (1,241) 108,103
===================== ======== ========== ============ =========== ========
The Group has unused loan facilities amounting to GBP19,264,188 (31 March 2020: GBP32,924,000). A facility fee is charged on GBP11,380,000 with NatWest, at a rate of 1.05% p.a. and is payable quarterly. This facility is secured on the investment properties held by Property Investment Holdings Limited, Palace Capital (Properties) Limited and Palace Capital (Leeds) Limited.
A facility fee is charged on GBP7,884,188 at a rate of 1.30% p.a. and is payable quarterly. The GBP7,884,188 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 % % 2020 2019 2020
Barclays Bank
plc 34,597,900 25/01/2023 1.3420 0.0174 (1,048) (897) (909)
Santander
plc 19,154,930 03/08/2022 1.3730 0.0132 (469) (438) (434)
-------------- ---------- ---------- -------- --------- ------------- ------------- ---------
53,752,830 (1,517) (1,335) (1,343)
-------------- ---------- ---------- -------- --------- ------------- ------------- ---------
14 Share capital
Authorised, issued and fully paid share capital is as follows:
Unaudited Unaudited Audited
30 September 30 September 31 March
2020 2019 2020
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. During the period, no ordinary shares held in treasury were transferred into The Palace Capital Employee Benefit Trust.
On 9 July 2020, the Company granted 33,182 shares, being the awards granted on 24 June 2019 under the Palace Capital Deferred Bonus Plan from The Palace Capital Employee Benefit Trust. As at 30 September 2020 there were 299,587 shares held in treasury.
The Company's issued share capital as at 30 September 2020 comprises 46,069,690 ordinary shares which is the denominator for the calculations of earnings per share and net asset value per share. This excludes the 318,825 ordinary shares held in treasury and the Employee Benefit Trust.
APPENDIX 1: NOTES TO EPRA NAV CALCULATIONS
Current measures Previously reported
measures
--------------------------------
EPRA EPRA EPRA EPRA EPRA NNNAV
At 30 September 2020 NTA (GBP000) NRV (GBP000) NDV (GBP000) NAV (GBP000) (GBP000)
-------------------------------- -------------- -------------- -------------- -------------- -----------
Net assets attributable
to shareholders 158,365 158,365 158,365 158,365 158,365
Include:
Real estate transfer tax - 14,935 - - -
Fair value of fixed interest - - (426) - -
rate debt
Exclude:
Fair value of derivatives 1,517 1,517 - 1,517 -
Deferred tax on latent capital
gains and capital allowances 228 228 - 228 -
-------------------------------- -------------- -------------- -------------- -------------- -----------
At 30 September 2020 160,110 175,045 157,939 160,110 158,365
-------------------------------- -------------- -------------- -------------- -------------- -----------
Diluted net assets per share 347p 379p 342p 347p 343p
-------------------------------- -------------- -------------- -------------- -------------- -----------
Current measures Previously reported
measures
--------------------------------
EPRA EPRA EPRA EPRA EPRA NNNAV
At 30 September 2019 NTA (GBP000) NRV (GBP000) NDV (GBP000) NAV (GBP000) (GBP000)
-------------------------------- -------------- -------------- -------------- -------------- -----------
Net assets attributable
to shareholders 178,687 178,687 178,687 178,687 178,687
Include:
Real estate transfer tax - 16,483 - - -
Fair value of fixed interest - - (144) - -
rate debt
Exclude:
Fair value of derivatives 1,335 1,335 - 1,335 -
Deferred tax on latent capital
gains and capital allowances 204 204 - 204 -
-------------------------------- -------------- -------------- -------------- -------------- -----------
At 30 September 2019 180,226 196,709 178,543 180,226 178,687
-------------------------------- -------------- -------------- -------------- -------------- -----------
Diluted net assets per share 391p 426p 387p 391p 388p
-------------------------------- -------------- -------------- -------------- -------------- -----------
Current measures Previously reported
measures
--------------------------------
EPRA EPRA EPRA EPRA EPRA NNNAV
At 31 March 2020 NTA (GBP000) NRV (GBP000) NDV (GBP000) NAV (GBP000) (GBP000)
-------------------------------- -------------- -------------- -------------- -------------- -----------
Net assets attributable
to shareholders 166,348 166,348 166,348 166,348 166,348
Include:
Real estate transfer tax - 15,771 - - -
Fair value of fixed interest - - (191) - -
rate debt
Exclude:
Fair value of derivatives 1,343 1,343 - 1,343 -
Deferred tax on latent capital
gains and capital allowances 228 228 - 228 -
-------------------------------- -------------- -------------- -------------- -------------- -----------
At 31 March 2020 167,919 183,690 166,157 167,919 166,348
-------------------------------- -------------- -------------- -------------- -------------- -----------
Diluted net assets per share 364p 398p 360p 364p 361p
-------------------------------- -------------- -------------- -------------- -------------- -----------
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