14 November 2024
Palace
Capital plc
("Palace Capital" or the "Company")
Interim
Results for the six months ended 30 September 2024
DELIVERING ON OUR STRATEGY
TO RETURN CAPITAL TO SHAREHOLDERS
Palace Capital (LSE: PCA)
announces its unaudited results for the six months ended 30
September 2024.
Steven Owen, Executive Chairman,
commented:
"During the first half of this financial
year, we
continued to progress our strategy to return capital to
shareholders through the disposal of investment and residential
properties. This was achieved through the sale of £28.8 million of
assets at 1.9% above the 31 March 2024 valuation and returning cash
of £21.7 million by way of a successful, oversubscribed tender
offer in July 2024, which contributed an additional 2.0 pence to
EPRA NTA. Since the strategic wind down of the Company was
announced in July 2022, we have returned over £43 million of cash
to shareholders.
"Assuming that the property at
Fareham, on which contracts were exchanged in July 2024 as
previously announced, completes in the first quarter of 2025 for a
net price of £3.1 million, the Company will have six investment
properties remaining, which were valued at £51.7 million as at 30
September 2024. Following the completion of asset management
initiatives, it is expected that three of these assets will be
marketed for sale in the first quarter of 2025 and the sale of
these assets, together with the completion of Fareham, are expected
to generate significant cash proceeds to be returned to
shareholders. The remaining three assets require the completion of
further asset management activities in order to be ready for
sale. In addition, there are eleven
apartments remaining at Hudson Quarter in York, which are valued at
£5.5 million, and sales of these will continue subject to market
conditions.
"The
Company has been in a net cash position since April 2024 and
as at 13 November 2024, gross debt was £8.1 million. Proforma
cash, assuming all exchanged properties complete, was £24.2
million, resulting in net cash of £16.1 million.
"Given
its strong cash position, the Company has both flexibility and
optionality over the timing of its disposal programme and its
further return of cash to shareholders, which will be achieved
either through a share buyback programme or another tender
offer."
|
Income statement metrics
|
Six months to
30 Sept 2024
|
Six months
to
30 Sept
2023
|
Change
|
|
Adjusted profit before
tax
|
£2.1m
|
£2.3m
|
(8.7%)
|
|
Adjusted earnings per
share
|
6.1p
|
5.5p
|
+10.9%
|
|
IFRS loss before tax
|
(£0.9m)
|
(£0.2m)
|
|
|
Basic earnings per
share
|
(2.8p)
|
(0.4p)
|
|
|
Dividends
|
|
|
|
|
Total dividend paid per
share
|
7.5p
|
7.5p
|
|
|
Balance Sheet and operational
metrics
|
30 Sept
2024
|
31 March
2024
|
Change
|
|
EPRA NTA per share
|
252p
|
262p
|
(3.8%)
|
|
Cash
returned to shareholders (including costs)
|
£22.1m
|
£15.2m
|
+45.4%
|
|
Net asset value
|
£72.3m
|
£97.8m
|
(26.1%)
|
|
Like-for-like portfolio valuation
decrease
|
(5.1%)
|
(15.5%)
|
|
|
Total accounting return
|
(1.0%)
|
(6.4%)
|
|
|
Total shareholder
return
|
1.1%
|
13.7%
|
|
|
EPRA occupancy rate
|
84.0%
|
82.0%
|
|
|
Cash and debt
|
|
|
|
|
Cash
|
£21.3m
|
£19.8m
|
+7.6%
|
|
Total drawn debt
|
(£8.2m)
|
(£8.3m)
|
(1.2%)
|
|
Total net cash
|
£13.1m
|
£11.5m
|
+13.9%
|
|
Average cost of debt
|
2.9%
|
2.9%
|
|
|
Average debt maturity
|
1.8
years
|
2.3
years
|
|
Financial highlights
|
•
|
Adjusted profit before tax
of £2.1 million (September 2023: £2.3 million)
reflects the reduction in income following disposals offset by the
significant reduction in finance costs and recurring administrative
costs.
|
|
•
|
IFRS loss before tax for the
period of £0.9 million (September 2023: £0.2 million loss)
primarily due to the valuation deficit of £3.2 million offset by
the profit on property disposals of £0.6 million.
|
|
•
|
Adjusted EPS of 6.1 pence
(September 2023: 5.5 pence), an increase of 10.9%, reflects the
reduced number of shares in issue following the tender
offer.
|
|
•
|
Dividends paid of 7.5 pence per
share (September 2023: 7.5 pence).
|
|
•
|
Cash returned to shareholders of
£22.1 million (including costs) by way of a successful tender offer
in July 2024, a 2.0 pence per share accretion to EPRA
NTA.
|
|
•
|
EPRA NTA per share decreased by
3.8% to 252 pence (March 2024: 262 pence) due to the portfolio
revaluation deficit.
|
|
•
|
Total property portfolio valuation
reduced by 5.1% on a like-for-like basis, principally due to the
valuation decline of the office at St James's Gate,
Newcastle.
|
|
•
|
Net cash of £13.1 million (March
2024: £11.5 million).
|
Operational highlights
|
•
|
In the period to 30 September
2024, the Company completed or exchanged on five investment
properties for £26.1 million, 1.6% ahead of the 31 March 2024
valuation. A further five apartments at
Hudson Quarter, York were sold in the first half of the year for
£2.7 million. Since 1 October 2024, contracts have been exchanged
for the sale of one apartment for £0.5 million, leaving eleven
units remaining. Aggregate proceeds of the 116 apartments completed
or exchanged total £43.9 million.
|
|
•
|
Portfolio WAULT of 6.4 years to break and 9.1
years to expiry reflects asset management activities and disposal
of short WAULT properties (March
2024: 5.4 years
to break and 7.5 years to
expiry).
|
|
•
|
An additional £0.4 million of annualised net rental income was
created during the half year through leasing and review activity
and the associated reduction in non-recoverable property costs
which was on average 4.6% ahead of the 31
March 2024 ERVs. Annualised net rental income lost from lease
expiries and breaks totalled £0.5 million,
resulting in a net annualised decrease of
£0.1 million rising to £0.2 million
following the administration of TGI Friday's at the end of
September. Net rental income lost following disposals totalled
£1.9 million per annum, resulting in a net
loss in annualised net rental income of £2.0 million.
|
|
•
|
Rent collection for the first half
of the financial year was 98% (March 2024:
98%).
|
|
•
|
EPRA occupancy of 84.0% at 30 September 2024 (March 2024:
82.0%).
|
Palace Capital
plc
Steven Owen, Executive
Chairman
info@palacecapitalplc.com
Financial PR
FTI Consulting
Dido Laurimore / Giles
Barrie
Tel:
+44 (0)20 3727 1000
palacecapital@fticonsulting.com
Cautionary Statement
This announcement does not
constitute an offer of securities by the Company. Nothing in this
announcement is intended to be, or intended to be construed as, a
profit forecast or a guide as to the performance, financial or
otherwise, of the Company or the Group whether in the current or
any future financial year. This announcement may include statements
that are, or may be deemed to be, ''forward-looking statements''.
These forward-looking statements can be identified by the use of
forward-looking terminology, including the terms ''believes'',
''estimates'', ''anticipates'', ''expects'', ''intends'',
''plans'', ''target'', ''aim'', ''may'', ''will'', ''would'',
''could'' or ''should'' or, in each case, their negative or other
variations or comparable terminology. They may appear in a number
of places throughout this announcement and include statements
regarding the intentions, beliefs or current expectations of the
directors, the Company or the Group concerning, amongst other
things, the operating results, financial condition, prospects,
growth, strategies and dividend policy of the Group or the industry
in which it operates. By their nature, forward-looking statements
involve risks and uncertainties because they relate to events and
depend on circumstances that may or may not occur in the future and
may be beyond the Company's ability to control or predict.
Forward-looking statements are not guarantees of future
performance. The Group's actual operating results, financial
condition, dividend policy or the development of the industry in
which it operates may differ materially from the impression created
by the forward-looking statements contained in this announcement.
In addition, even if the operating results, financial condition and
dividend policy of the Group, or the development of the industry in
which it operates, are consistent with the forward-looking
statements contained in this announcement, those results or
developments may not be indicative of results or developments in
subsequent periods. Important factors that could cause these
differences include, but are not limited to, general economic and
business conditions, industry trends, competition, changes in
government and other regulation, changes in political and economic
stability and changes in business strategy or development plans and
other risks.
Other than in accordance with its
legal or regulatory obligations, the Company does not accept any
obligation to update or revise publicly any forward-looking
statement, whether as a result of new information, future events or
otherwise.
EXECUTIVE CHAIRMAN'S STATEMENT
Update on delivery of strategic objectives
During the first half of this
financial year,
we continued to
progress our strategy to return capital to shareholders through the
disposal of investment and residential properties. This was
achieved through the sale of £28.8 million of assets at 1.9% above
the 31 March 2024 valuation and returning cash of £21.7 million by
way of a successful, oversubscribed tender offer in July 2024,
which contributed an additional 2.0 pence to EPRA NTA. Since the
strategic wind down of the Company was announced in July 2022, we
have returned over £43 million of cash to shareholders.
The
Company has been in a net cash position since April 2024 and
as at 13 November 2024, gross debt was £8.1 million. Proforma
cash, assuming all exchanged properties complete, was £24.2
million, resulting in net cash of £16.1 million.
Total
investment properties sold since the change of strategy in July
2022 amount to £130.9 million or £144.8 million including
residential apartments.
Assuming that the property at
Fareham, on which contracts were exchanged in July 2024 as
previously announced, completes in the first quarter of 2025 for a
net price of £3.1 million, the Company will have six investment
properties remaining, which were valued at £51.7 million as at 30
September 2024. Following the completion of asset management
initiatives, it is expected that three of these assets will be
marketed for sale in the first quarter of 2025 with the other three
requiring the completion of further asset management activities in
order to be ready for sale. The sale of these three assets together
with the completion of Fareham are expected to generate significant
cash proceeds to be returned to shareholders. In addition, there are eleven apartments remaining at Hudson
Quarter in York valued at £5.5 million and sales of these will
continue subject to market conditions. An
update on progress made together with the current position is set
out in the Operational Review.
Overview of results
The Group's adjusted profit before
tax reduced by 8.7% to £2.1 million (September 2023: £2.3 million)
as a result of income lost through disposals but offset by the
significant reduction in finance costs and recurring administrative
expenditure. Adjusted earnings per share, however, increased by
10.9% to 6.1 pence per share, reflecting the accretive benefit from
the tender offer completed in July 2024. Investment property sales
completed or exchanged during the half year period totalled £26.1
million, 1.6% ahead of the 31 March 2024
valuation. Profit on disposal of investment properties
realised £0.5 million (September 2023: £3.4 million) and trading
profits from the sale of residential units realised a profit of
£0.1 million (September 2023: £0.1 million).
The whole portfolio was
independently valued by CBRE at £60.9 million as at 30 September
2024, a reduction of 5.1% on a like-for-like basis. The
deficit on the revaluation of the
portfolio of £3.2 million
was principally due to a reduction of over £2
million in the value of St James's Gate, Newcastle as a result of
softening yields and slower than expected trading at the space
occupied under a management agreement by Orega, a premium, flexible, serviced office workspace provider.
An analysis of the valuation deficit is provided
in the Operational Review.
EPRA NTA decreased by 10.0 pence
per share or 3.8% to 252 pence (March 2024: 262 pence) during the
period, principally as a result of the revaluation deficit of £3.2
million or 9.5 pence per share, partially offset by the 2.0 pence
per share tender offer accretion and the profit from the disposal
of investment and trading properties, which contributed 1.9 pence
per share. The excess of dividends paid per share over adjusted
earnings per share was 1.4 pence per share and other items,
principally the denominator effect of the reduced number of shares
at period end compared with the average for the period, were 3.0
pence per share.
The Group's balance sheet remains
strong with cash reserves of £21.3 million as at 30 September 2024.
Gross debt reduced to £8.2 million (March 2024: £8.3 million),
which has resulted in a net cash position of £13.1 million (March
2024: £11.5 million)
Dividend
The Group paid dividends of 7.5
pence per share (September 2023: 7.5 pence per share) in relation
to the period ended 30 September 2024. The Company declares with
these results an interim dividend of 3.75 pence per share
which will be paid on 27 December 2024. Of this, 1.35 pence per
ordinary share will be paid as a Property Income Distribution
('PID') and 2.40 pence per ordinary share will be paid as a
Non-Property Income Distribution ('Non-PID'). The record date will
be 29 November 2024.
Outlook
Commercial property and financial
markets remain challenging, particularly following the changes
announced in last month's Budget. It remains to be seen whether the
recent reductions in UK base rates and the expectation that more
will follow next year will be enough to enable growth in business
activity and an improvement in liquidity for commercial property
transactions.
At an operational level, the
Company continues to make progress with its asset management
activities despite the difficult and uncertain conditions in
financial and property markets. Certain assets are now ready for
sale and it is expected that these will be offered to the market in
the New Year.
Given its strong cash position,
the Company has both flexibility and optionality over the timing of
its disposal programme and its further returns of cash to
shareholders, which will be achieved either through a share buyback
programme or another tender offer.
Steven Owen
Executive Chairman
13 November 2024
OPERATIONAL REVIEW
Portfolio overview
As at 30 September 2024, the
portfolio comprised eight properties (March 2024: 12) comprising by
value 55% office, 35% leisure and 10% residential.
CBRE independently valued the
portfolio at £60.9 million as at 30 September 2024, resulting in a
deficit of 5.1% on a like-for-like basis compared with the
valuation as at 31 March 2024.
The five office assets fell by
7.3% or £2.6 million, with the 16% fall in the value of St James's
Gate, Newcastle accounting for 80% of the office portfolio valuation
deficit. Excluding St James's Gate, the office portfolio declined
by 2.1%. The decline was driven by a combination of softening
yields and slower than expected trading at the space occupied by
Orega, a premium, flexible, serviced office
workspace provider. The Forum, Exeter declined by 5.1%, Hudson Quarter,
York by 2.4% and Imperial Court and House, Leamington Spa by
1.4%.
The
two leisure assets declined by 2.8% overall due mainly to the
insolvency of TGI Friday's at Halifax in September 2024. Equivalent
yields remained unchanged from those at 31 March 2024.
Asset management
Operationally, the business remains
robust. An additional £0.4 million of annualised net rental income was
created during the half year through leasing and review activity
and the associated reduction in non-recoverable property costs
which was, on average 4.6% ahead of the 31 March 2024
ERVs.
During the period a key letting was achieved
at Imperial Court, Leamington Spa (20,419 sq ft) where we completed
a 10 year lease with a mutual break in year five to Lighthouse
Games Ltd at a rent of £0.38 million per annum, which was in line
with the March 2024 ERV.
As
previously reported, an agreement was reached in principle with Vue
Cinemas at Sol, Northampton to regear their lease and bring their
total term to 20 years, expiring in 2044, with a material increase
in rent and five-yearly upward only rent reviews linked to RPI with
a cap and collar structure. In return the Company will make a
significant capital contribution towards the comprehensive
refurbishment of the cinema, including a recliner seating upgrade,
associated auditoria decorative works and foyer refurbishment.
Documentation has now been agreed and once the final specification
has been finalised the transaction can be completed.
At
Broad Street Plaza, Halifax, the lease break in July 2027 to Pure
Gym was removed in return for a rent free period which improved the
WAULT at break for the property from 9.6 years as at 31 March 2024
to 9.8 years as at 30 September 2024, the latter also reflecting
the administration of TGI Friday's in September 2024.
Disposal and asset management strategy
post HY25
The
portfolio as at 13 November 2024 consists of seven investment
properties and one residential property in York.
Apartment sales at Hudson Quarter, York have
continued since 30 September 2024, with a further apartment sale
having exchanged for £0.5 million. There are 11 units remaining for
sale but market conditions, which had materially improved during
the Spring of 2024, have since been adversely affected by the
changes announced in the Budget in October.
Assuming the completion of the sale of
Fareham, the strategy for the remaining six investment properties,
which had a value of £51.7 million as at 30 September 2024, is as
follows:
Broad Street Plaza,
Halifax
The
investment market for leisure assets remains difficult with debt
finance hard to obtain for such assets, notwithstanding the
diversity and longevity of income from some of these properties,
including Halifax. The lack of liquidity in this sector means that
valuations can be volatile. The current income yield on a geared
basis for Halifax is 34%, due to the 2.9% coupon debt secured on
the asset, and the WAULT to expiry is 14.4 years (9.8 years to
break).
The
current occupancy rate is 92% including the recently vacated space
of 7,000 sq ft due to TGI Friday's entering administration and the
closure of several of their restaurants, including Halifax, across
the country. Given the reduction in short term interest rates, it
is expected that this property will be marketed for sale in the
first quarter of 2025.
Sol, Northampton
As
noted above, the agreement to regear the Vue lease is
transformational for this property and extends the WAULT to 13.0
years on expiry and 12.8 years to break. There are ongoing
discussions with both existing and prospective tenants in regards
to taking additional space with the potential to improve and
diversify the overall leisure offering at the property which will
contribute towards it being an attractive town centre
destination.
On
the investment side, as is the case with Halifax, the leisure
market is currently weak with a limited pool of buyers and
therefore the focus is on the completion of the asset management
activity, including the refurbishment of the Vue cinema, to drive
value before considering the appropriate timing for
disposal.
St James' Gate,
Newcastle
Active asset management initiatives are
underway and further lettings of the vacant space are required in
order to increase the occupancy from its current level of 68% and
extend the WAULT prior to the asset being ready for sale.
Additionally, an improvement in occupancy and operating income
under the management agreement with Orega will need to be
established before a sale can be contemplated in the current
market.
HQ, York
(Commercial)
The
lower ground vacant office suite (3,660 sq ft) is still under offer
and, assuming the lease is completed, the property will be 90%
occupied with only half a floor (2,932 sq ft) remaining available.
The WAULT to break and expiry is 6.0 and 7.4 years respectively. HQ
York is an institutional grade property and it is expected that it
will be marketed in the first quarter of 2025.
Imperial Court and House, Leamington
Spa
This
property is now fully occupied following the letting of Imperial
Court to Lighthouse Games. Other asset management activities were
either completed during the period or are expected to complete
shortly in order to achieve a vacant possession block date in four
and a half years' time, which will provide an opportunity for a
potential redevelopment of the entire site.
It is
expected that this property will be marketed in the first quarter
of 2025.
The Forum, Exeter
We
have actively explored a change of use for this 1970s office
building to one that we believe will realise more value on sale. As
part of this strategy, we are making progress with tenants to
achieve a vacant possession block date within the next two years
and have had a pre-application meeting with Exeter City
Council.
If
these initiatives are successful, we will market the property for
sale, which is likely to be in the second quarter of
2025.
Summary
Post
31 March 2024, total residential and investment sales exchanged or
completed currently stand at £29.3 million and as a result,
since the change of strategy announcement on 19 July 2022,
investment property disposals (either completed or exchanged) have
generated proceeds of £130.9 million at a 15.6% reduction to the
March 2022 valuation (which was the peak of the current property
cycle) or 3.6% ahead when compared with the relevant March
valuation prior to sale.
FINANCIAL REVIEW
The Group's adjusted profit before
tax reduced by 8.7% to £2.1 million (September 2023: £2.3 million)
as a result of income lost through disposals but offset by the
significant reduction in finance costs and recurring administrative
expenditure. Adjusted earnings per share, however, increased
by 10.9% to 6.1 pence per share (September 2023: 5.5 pence per
share) reflecting the accretive benefit from the tender offer
completed in July 2024.
The summary of the Company's
financial results are as follows:
Income Statement Summary
|
Income Statement
|
30 Sept
2024
|
30 Sept
2023
|
|
Gross property income
|
£3.8m
|
£6.9m
|
|
Property operating
expenses
|
(£0.8m)
|
(£1.5m)
|
|
Expected Credit Loss
provision
|
(£0.3m)
|
-
|
|
Net rental income
|
£2.7m
|
£5.4m
|
|
Recurring administrative
expenditure
|
(£1.0m)
|
(£1.7m)
|
|
Finance income
|
£0.5m
|
£0.2m
|
|
Finance costs
|
(£0.1m)
|
(£1.6m)
|
|
Adjusted profit before tax
|
£2.1m
|
£2.3m
|
|
Tax
|
-
|
-
|
|
Adjusted profit after tax
|
£2.1m
|
£2.3m
|
|
Payments to former Directors
(including associated costs)
|
(£0.1m)
|
-
|
|
Short term incentive plan
provision (including associated costs)
|
(£0.3m)
|
-
|
|
Share based payments
|
-
|
(£0.1m)
|
|
EPRA earnings
|
£1.7m
|
£2.2m
|
|
Loss on revaluations
|
(£3.2m)
|
(£5.6m)
|
|
Trading profit
|
£0.1m
|
£0.1m
|
|
Profit on disposal of investment
properties
|
£0.5m
|
£3.4m
|
|
Debt termination costs
|
-
|
(£0.3m)
|
|
IFRS loss after tax
|
(£0.9m)
|
(£0.2m)
|
Net rental income in the period
reduced to £2.7 million (September 2023: £5.4 million) due to
income lost through disposals. This was partially offset by a £0.7
million reduction in property operating expenses as a result of
disposals and asset management activity. An expected credit loss
provision of £0.3 million was put through due to some tenants being
in financial difficulty.
The Group's recurring
administrative expenditure reduced by £0.7 million or 41.2% to £1.0
million (September 2023: £1.7 million) following progress made in
reducing administrative costs in prior periods.
Finance costs have reduced by
93.8% or £1.5 million to £0.1 million (September 2023: £1.6
million) following the repayment of all floating rate debt in the
prior financial year.
EPRA NTA Movement
EPRA NTA decreased by 10.0 pence
per share or 3.8% to 252 pence (March 2024: 262 pence) during the
period. The revaluation deficit of £3.2 million or 9.5 pence per
share reduced EPRA NTA as a result of a 5.1% like-for-like
reduction in the property portfolio. This was partially offset by
the £21.7 million tender offer (£22.1 million including costs) in
the period, which was accretive by 2.0 pence per share, and the
profit from the disposal of investment properties which contributed
1.5 pence per share.
Adjusted earnings before tax of
£2.1 million increased EPRA NTA by 6.1 pence per share, this was
offset by the dividends paid in the period of 7.5 pence per share.
Hudson Quarter trading profit (net of fair value adjustment to
trading properties) increased EPRA NTA by 0.2 pence per share,
whilst other movements contributed to a reduction of 2.8 pence per
share.
|
|
£m
|
No. of shares
(diluted)
|
Pence per
share
|
|
EPRA NTA at 31 March 2024
|
98.3
|
37,554,525
|
262.0p
|
|
Tender offer (including
costs)
|
(22.1)
|
(8,667,760)
|
2.0p
|
|
EPRA NTA after tender offer
|
76.2
|
28,886,765
|
264.0p
|
|
Profit on sale of investment
properties
|
0.5
|
|
1.5p
|
|
Adjusted earnings before
tax
|
2.1
|
|
6.1p
|
|
Hudson Quarter trading
profit
|
0.1
|
|
0.4p
|
|
Loss on revaluation of investment
property
|
(3.2)
|
|
(9.5p)
|
|
Cash dividends paid
|
(2.5)
|
|
(7.5p)
|
|
Fair value adj. of trading
properties
|
(0.1)
|
|
(0.2p)
|
|
Other movements*
|
(0.4)
|
|
(2.8p)
|
|
EPRA NTA at 30 September 2024
|
72.7
|
28,886,765
|
252.0p
|
*Other movements include payments to former Directors, short
term incentive plan provision and the denominator effect of the
reduced number of shares at period end compared with the average
for the period and the effect of
rounding.
Financing
The Group has only one debt
facility which is at a fixed interest rate of 2.9% until July 2026.
During the period, gross debt reduced to £8.2 million (March 2024:
£8.3 million) and as at 13 November was £8.1 million.
At 30 September 2024 the Group was
in a net cash position of £13.1 million (March 2024: £11.5
million). The Company has remained compliant with all covenants on
its bank facilities in the period.
STATEMENT OF PRINCIPAL RISKS
We consider there has been no
material changes to the Company's principal risks, as set out in
the Annual Report and Accounts for the year ended 31 March 2024 and
summarised below.
|
|
|
|
|
|
|
|
|
|
MARKET CYCLE ECONOMIC AND POLITICAL
|
|
CAPITAL STRUCTURE AND LIQUIDITY
|
|
PORTFOLIO STRATEGY
|
|
|
|
Risk description
Failure to react appropriately to
changing market conditions and adapt our corporate strategy could
negatively impact shareholder returns. A downturn in the
market could reduce the appetite in the investment market, leading
to lower valuations and affecting our disposal strategy and ability
to return capital to shareholders.
Uncertainty in the UK economic
landscape, global supply chain issues, inflation and interest rates
brings risks to the property market, supply chains and to
occupiers' businesses. This can significantly impact market
sentiment and our ability to extract value from our properties
resulting in lower shareholder returns, reduced liquidity and
increased occupier failure.
|
|
Risk description
An inappropriate level of gearing
or failure to comply with debt covenants or manage re-financing
events could put pressure on cash resources and lead to a funding
shortfall for operational activities.
Increasing costs of borrowing and
increasing interest rates could affect the Group's ability to
borrow or reduce its ability to repay its debts
|
|
Risk description
An inappropriate investment
strategy that is not aligned to overall corporate purpose
objectives, economic conditions, or tenant demand may result in
lower investment returns.
|
|
|
ASSET MANAGEMENT
|
VALUATION
|
TENANT DEMAND AND DEFAULT
|
|
|
Risk description
Failure to implement asset
business plans and elevated risks associated with refurbishment
could lead to longer void periods, higher arrears and overall
investment performance, adversely impacting returns and
cashflows.
|
Risk description
Decreasing capital and rental values
could impact the Group's portfolio valuation leading to lower
returns. Higher cost of debt can lead to property yields to be
pushed out and valuations to fall as a result. Increasing gilt
yields, can leave property investment less attractive unless the
desired return can be achieved.
|
Risk description
Failure to adapt to changing
occupier demands and/or poor tenant covenants may result in us
losing significant tenants, which could materially impact income,
capital values and profit. Rising inflation, interest rates and
living costs could impact tenant businesses, such as the leisure
industry, as demand falls for discretionary spending.
|
|
|
|
BUSINESS CONTINUITY AND CYBER
SECURITY
|
|
PEOPLE
|
|
CLIMATE CHANGE
|
|
|
Risk description
Business disruption as a result of physical
damage to buildings, Government policy and measures implemented in
response to pandemics, cyber attacks or other operational or IT
failures or unforeseen events may impact income and
profits.
|
|
Risk description
An
inability to attract or retain staff with the right skills and
experience or failure to implement appropriate succession plans may
result in significant underperformance or impact the overall
effectiveness of our operations. Health and Safety of staff and
others including tenants both physically and mentally and providing
a safe and healthy environment in our properties is of utmost
importance. Failure to do so could lead to staff and tenant ill
health, litigation and regulatory issues, negative media and market
sentiment against the Company.
|
|
Risk description
Longer term failure to anticipate and
prepare for transition and physical risks associated with climate
change including increasing policy and compliance risks associated
with existing and emerging environmental legislation could lead to
increased costs and the Group's assets becoming obsolete or unable
to attract occupiers or purchasers.
|
|
|
REGULATORY AND
TAX
|
|
|
|
|
|
Risk description
Non-compliance with the legal and regulatory
requirements of a public real estate company, including the REIT
regime could result in convictions or fines and negatively impact
reputation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
www.palacecapitalplc.com
By order of the Board
Phil Higgins
Company Secretary
13 November 2024
Palace Capital plc
Condensed consolidated statement of comprehensive
income
For the six months ended 30
September 2024
|
|
Notes
|
|
Unaudited
6 months
to
30
September
2024
£000
|
Unaudited
6 months
to
30
September
2023
£000
|
Audited
Year
to
31
March
2024
£000
|
|
|
|
|
|
|
|
|
Revenue
|
|
3
|
|
8,117
|
12,108
|
19,599
|
|
Cost of sales
|
|
4
|
|
(5,030)
|
(6,551)
|
(9,776)
|
|
Movement in expected credit
loss
|
|
|
|
(255)
|
-
|
-
|
|
Net property income
|
|
|
2,832
|
5,557
|
9,823
|
|
|
|
|
|
|
|
|
Administrative expenses
|
|
|
(1,389)
|
(1,816)
|
(3,998)
|
|
Operating profit before gains and
losses on property assets
|
|
|
1,443
|
3,741
|
5,825
|
|
|
|
|
|
|
|
|
Profit on disposal of investment
properties
|
|
|
500
|
3,383
|
2,298
|
|
Loss on revaluation of investment
properties
|
9
|
|
(3,241)
|
(5,613)
|
(15,383)
|
|
Operating (loss)/profit
|
|
|
(1,298)
|
1,511
|
(7,260)
|
|
|
|
|
|
|
|
|
Finance income
|
|
|
488
|
176
|
312
|
|
Finance expense
Debt termination costs
|
|
|
(135)
|
(1,552)
(324)
|
(1,909)
|
|
-
|
(459)
|
|
Loss before taxation
|
|
|
(945)
|
(189)
|
(9,316)
|
|
|
|
|
|
|
|
|
Taxation
|
5
|
|
-
|
16
|
(46)
|
|
Loss after taxation for the period and total comprehensive
loss attributable to owners of the Parent
|
|
|
(945)
|
(173)
|
(9,362)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ordinary share
|
|
|
|
Basic
|
6
|
|
(2.8p)
|
(0.4p)
|
(23.7p)
|
|
Diluted
|
6
|
|
(2.8p)
|
(0.4p)
|
(23.7p)
|
|
|
|
|
|
|
|
|
The accompanying notes form an
integral part of these condensed consolidated interim financial
statements.
Palace Capital plc
Condensed consolidated statement of financial
position
For the six months ended 30
September 2024
|
|
|
Notes
|
Unaudited
30
September
2024
£000
|
Unaudited
30
September
2023
£000
|
Audited
31
March
2024
£000
|
|
Non-current assets
|
|
|
|
|
|
|
Investment properties
|
|
9
|
48,889
|
111,337
|
73,845
|
|
Right of use asset
|
|
|
10
|
33
|
38
|
|
Trade and other
receivables
|
|
11
|
5,573
|
3,303
|
5,625
|
|
Property, plant and
equipment
|
|
|
-
|
16
|
-
|
|
|
|
|
54,472
|
114,689
|
79,508
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Trading property
|
|
10
|
5,572
|
8,713
|
8,126
|
|
Trade and other
receivables
|
|
11
|
3,657
|
4,776
|
3,352
|
|
Cash and cash
equivalents
|
|
12
|
21,288
|
8,870
|
19,766
|
|
|
|
|
30,517
|
22,359
|
31,244
|
|
Total assets
|
|
|
84,989
|
137,048
|
110,752
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Trade and other
payables
|
|
13
|
(3,711)
|
(6,962)
|
(4,066)
|
|
Borrowings
|
|
14
|
(318)
|
(11,951)
|
(318)
|
|
Lease liabilities for right of use
asset
|
|
|
(10)
|
(33)
|
(39)
|
|
Creditors: amounts falling due within one
year
|
|
|
(4,039)
|
(18,946)
|
(4,423)
|
|
Net current assets
|
26,478
|
3,413
|
26,821
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
Borrowings
|
|
14
|
(7,788)
|
(8,078)
|
(7,933)
|
|
Short term incentive plan
provision
|
|
|
(830)
|
-
|
(565)
|
|
Deferred tax liability
|
|
|
(57)
|
(61)
|
(57)
|
|
Net Assets
|
|
|
72,275
|
109,963
|
97,774
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Called up share capital
|
|
15
|
2,889
|
4,639
|
3,756
|
|
Merger reserve
|
|
|
3,503
|
3,503
|
3,503
|
|
Capital redemption
reserve
|
|
|
2,090
|
340
|
1,223
|
|
Treasury share reserve
|
|
|
-
|
(22,457)
|
-
|
|
Capital reduction
reserve
|
|
|
65,348
|
115,249
|
89,931
|
|
(Accumulated losses)/retained
earnings
|
|
|
(1,555)
|
8,689
|
(639)
|
|
Equity shareholders' funds
|
72,275
|
109,963
|
97,774
|
|
|
|
|
|
|
|
|
Basic NAV per ordinary
share
|
|
7
|
250p
|
293p
|
260p
|
|
Diluted NAV per ordinary
share
|
|
7
|
250p
|
293p
|
260p
|
|
EPRA NTA per ordinary
share
|
|
7
|
252p
|
294p
|
262p
|
|
|
|
|
|
|
|
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 13
November 2024.
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 2024
|
|
Share
Capital
£000
|
Treasury
Shares
Reserve
£000
|
Other
Reserves
£000
|
Capital
Reduction Reserve
£000
|
(Accumulated Losses)/ Retained Earnings
£000
|
Total
equity
£000
|
|
As at 31 March 2023
|
4,639
|
(7,343)
|
3,843
|
118,477
|
8,859
|
128,475
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the
period
|
-
|
-
|
-
|
-
|
(173)
|
(173)
|
|
Share based payments
|
-
|
-
|
-
|
-
|
68
|
68
|
|
Exercise of share
options
|
-
|
65
|
-
|
-
|
(65)
|
-
|
|
Dividends paid
|
-
|
-
|
-
|
(3,228)
|
-
|
(3,228)
|
|
Share buyback
|
-
|
(15,179)
|
-
|
-
|
-
|
(15,179)
|
|
|
|
|
|
|
|
|
|
As at 30 September 2023
|
4,639
|
(22,457)
|
3,843
|
115,249
|
8,689
|
109,963
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the
period
|
-
|
-
|
-
|
-
|
(9,189)
|
(9,189)
|
|
Share based payments
|
-
|
-
|
-
|
-
|
69
|
69
|
|
Exercise of share
options
|
-
|
96
|
-
|
-
|
(208)
|
(112)
|
|
Dividends paid
|
-
|
-
|
-
|
(2,817)
|
-
|
(2,817)
|
|
Shares purchased by employee
benefits trust
|
-
|
(140)
|
-
|
-
|
-
|
(140)
|
|
Cancellation of treasury
shares
|
(883)
|
22,501
|
883
|
(22,501)
|
-
|
-
|
|
|
|
|
|
|
|
|
|
As at 31 March 2024
|
3,756
|
-
|
4,726
|
89,931
|
(639)
|
97,774
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the
period
|
-
|
-
|
-
|
-
|
(945)
|
(945)
|
|
Share based payments
|
-
|
-
|
-
|
-
|
29
|
29
|
|
Dividends paid
|
-
|
-
|
-
|
(2,492)
|
-
|
(2,492)
|
|
Tender offer
|
-
|
(22,091)
|
-
|
-
|
-
|
(22,091)
|
|
Cancellation of treasury
shares
|
(867)
|
22,091
|
867
|
(22,091)
|
-
|
-
|
|
|
|
|
|
|
|
|
|
As at 30 September 2024
|
2,889
|
-
|
5,593
|
65,348
|
(1,555)
|
72,275
|
The accompanying notes form an
integral part of these condensed consolidated interim financial
statements.
Palace Capital plc
Condensed consolidated statement of cash
flows
For the six months ended 30
September 2024
|
|
Notes
|
Unaudited
6 months
to
30
September
2024
£000
|
Unaudited
6 months
to
30
September
2023
£000
|
Audited
Year
to
31
March
2024
£000
|
|
Operating activities
|
|
|
|
|
|
Loss before taxation
|
|
(945)
|
(189)
|
(9,316)
|
|
Finance income
|
|
(488)
|
(176)
|
(312)
|
|
Finance expense
|
|
135
|
1,552
|
1,909
|
|
Loss on revaluation of investment
property portfolio
|
9
|
3,241
|
5,613
|
15,383
|
|
Profit on disposal of investment
properties
|
|
(500)
|
(3,383)
|
(2,298)
|
|
Debt termination costs
|
|
-
|
324
|
459
|
|
Depreciation of tangible fixed
assets
|
|
-
|
7
|
23
|
|
Amortisation of right of use
asset
|
|
29
|
99
|
119
|
|
Share-based payment
|
|
29
|
68
|
137
|
|
Increase in trade and other
receivables
|
|
(785)
|
(680)
|
(2,536)
|
|
Decrease in trade and other
payables
|
|
(88)
|
(1,231)
|
(3,369)
|
|
Decrease in trading
property
|
|
2,554
|
2,342
|
2,929
|
|
Net cash generated from
operations
|
|
3,182
|
4,346
|
3,128
|
|
Interest received
|
|
488
|
176
|
312
|
|
Interest and other finances
charges paid
|
|
(120)
|
(1,818)
|
(2,339)
|
|
Net cash flows from operating activities
|
|
3,550
|
2,704
|
1,101
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
Capital expenditure on
refurbishment of investment property
|
9
|
(111)
|
(2,657)
|
(1,544)
|
|
Proceeds from disposal of
investment properties
|
9
|
22,825
|
65,835
|
92,217
|
|
Net cash flow generated from investing
activities
|
|
22,714
|
63,178
|
90,673
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
Bank loan repaid
|
|
(159)
|
(44,096)
|
(56,022)
|
|
Loan issue costs
|
|
-
|
(18)
|
-
|
|
Dividends paid
|
8
|
(2,492)
|
(3,228)
|
(6,045)
|
|
Share buyback
|
|
-
|
(15,179)
|
(15,179)
|
|
Tender offer
|
|
(22,091)
|
-
|
-
|
|
Payment of share options
exercised
|
|
-
|
-
|
(271)
|
|
Net cash flow used in financing activities
|
|
(24,742)
|
(62,521)
|
(77,517)
|
|
|
|
|
|
|
|
Net increase in cash
|
|
1,522
|
3,361
|
14,257
|
|
Opening cash and cash
equivalents
|
12
|
19,766
|
5,509
|
5,509
|
|
Closing cash and cash equivalents
|
12
|
21,288
|
8,870
|
19,766
|
|
|
|
|
|
|
|
|
|
|
|
|
Palace Capital plc
Notes to the condensed
consolidated financial
statements
For the six months ended 30
September 2024
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 Thomas House, 84 Eccleston Square, London,
SW1V 1PX.
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 2024 and
are expected to be used in the Group's Annual Report for the year
ended 31 March 2025.
The financial information for the
year ended 31 March 2024 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 2024
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 2024 was unqualified and did not contain
statements under s498(2) or (3) of the Companies Act 2006. The
financial information for the periods ended 30 September 2023 and
30 September 2024 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 13 November 2024.
Copies of this statement are
available to the public for collection at the Company's Registered
Office at Thomas House, 84 Eccleston Square, London, SW1V 1PX 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 around the economic
climate brought on by rising inflation and interest rates. In this
assessment, the Directors considered the impact on the Group's cash
resources, borrowing facilities, rental income, disposals of
investment and trading properties, committed capital and dividend
distributions. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described in these
financial statements.
As at 30 September 2024 the Group
had £21.3 million of unrestricted cash and cash equivalents, and a
loan facility of £8.2 million which is fixed at 2.9% until July
2026, resulting in a net cash position of £13.1 million. The fair
value of the property portfolio is £60.9 million. The Directors
have reviewed the forecasts for the Group over the 12 months from
the date of signing this report.
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 approval of the
financial statements. 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
Revenue
|
|
|
Unaudited
6 months to
30
September
2024
£000
|
Unaudited
6 months
to
30
September
2023
£000
|
Audited
Year
to
31
March
2024
£000
|
|
|
|
|
|
|
|
Gross rental income
|
|
3,722
|
6,839
|
11,603
|
|
Dilapidations and other property
related income
|
|
69
|
55
|
453
|
|
Insurance commission
|
|
-
|
-
|
58
|
|
Gross property income
|
|
3,791
|
6,894
|
12,114
|
|
Trading property income
|
|
2,729
|
2,584
|
4,286
|
|
Service charge income
|
|
1,597
|
2,630
|
3,199
|
|
Total revenue
|
|
8,117
|
12,108
|
19,599
|
4
Cost of sales
|
|
|
Unaudited
6 months to
30
September
2024
£000
|
Unaudited
6 months
to
30
September
2023
£000
|
Audited
Year
to
31
March
2024
£000
|
|
|
|
|
|
|
|
Void costs
|
|
599
|
1,027
|
1,871
|
|
Legal, lettings and consultancy
costs
|
|
243
|
457
|
601
|
|
Property operating
expenses
|
|
842
|
1,484
|
2,472
|
|
Trading property costs of
sales
|
|
2,591
|
2,437
|
4,286
|
|
Service charge expense
|
|
1,597
|
2,630
|
3,018
|
|
Total cost of sales
|
|
5,030
|
6,551
|
9,776
|
5
Taxation
|
|
|
Unaudited
6 months to
30
September
2024
£000
|
Unaudited
6 months
to
30
September
2023
£000
|
Audited
Year
to
31
March
2024
£000
|
|
|
|
|
|
|
|
Tax underprovided in prior
year
|
|
-
|
-
|
65
|
|
Deferred tax
|
|
-
|
(16)
|
(19)
|
|
Tax credit
|
|
-
|
(16)
|
46
|
As a UK REIT, the income profits
of the Group's UK property rental business are exempt from
corporation tax, as are any gains it makes from the disposal of its
properties, provided they are not held for trading. The Group is
otherwise subject to UK corporation tax at the prevailing
rate.
6
Earnings per share
Basic earnings per share and
diluted earnings per share have been calculated on loss after tax
attributable to ordinary Shareholders for the year (as shown on the
Consolidated Statement of Comprehensive Income) and for the
earnings per share, the weighted average number of ordinary shares
in issue during the period (see table below) and for diluted
weighted average number of ordinary shares in issue during the year
(see table below).
|
|
|
Unaudited
6 months
to
30
September
2024
£000
|
Unaudited
6 months
to
30
September
2023
£000
|
Audited
Year
to
31
March
2024
£000
|
|
|
Loss after tax attributable to
ordinary Shareholders for the year
|
(945)
|
(173)
|
(9,362)
|
|
|
|
|
|
|
|
|
|
Unaudited
6 months
to
30
September
2024
|
Unaudited
6 months
to
30
September
2023
|
Audited
Year
to
31
March
2024
|
|
|
Weighted average number of shares
for basic earnings per share
|
33,935,021
|
41,505,586
|
39,524,282
|
|
|
Dilutive effect of share
options
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
Weighted average number of shares
for diluted earnings per share
|
33,935,021
|
41,505,586
|
39,524,282
|
|
|
|
|
|
|
|
|
Earnings per ordinary share
|
|
|
|
|
|
Basic
|
(2.8p)
|
(0.4p)
|
(23.7p)
|
|
|
Diluted
|
(2.8p)
|
(0.4p)
|
(23.7p)
|
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 reporting framework the latest update
of which was issued in November 2019. The Group reports a
number of these measures (detailed in the glossary of terms)
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 and one-off finance termination
costs. 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 Group 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.
This includes share-based payments being a non-cash expense, as
well as payments to former Directors, which is a one-off
exceptional item. The corporation tax charge (excluding deferred
tax movements, being a non-cash expense) is deducted in order to
calculate the adjusted earnings per share, if the charge is in
relation to recurring earnings.
The earnings per ordinary share
for the period is calculated based upon the following
information:
|
|
|
Unaudited
6 months
to
30
September
2024
£000
|
Unaudited
6 months
to
30
September
2023
£000
|
Audited
Year
to
31
March
2024
£000
|
|
|
|
|
|
|
|
|
Loss after tax attributable to ordinary shareholders for the
period
|
(945)
|
(173)
|
(9,362)
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
Loss on revaluation of investment
property portfolio
|
3,241
|
5,613
|
15,383
|
|
|
Profit on disposal of investment
properties
|
(500)
|
(3,383)
|
(2,298)
|
|
|
Trading property revenue and cost
of sales
|
(138)
|
(147)
|
(181)
|
|
|
Debt termination costs
|
-
|
324
|
459
|
|
|
EPRA earnings for the period
|
1,658
|
2,234
|
4,001
|
|
|
|
|
|
|
|
|
Share-based payments
|
29
|
68
|
137
|
|
|
Payments to former Directors
(including associated costs)
|
115
|
-
|
611
|
|
|
Short term incentive plan
provision (including associated costs)
|
265
|
-
|
640
|
|
|
Adjusted profit after tax for the period
|
2,067
|
2,302
|
5,389
|
|
|
Tax excluding deferred tax on EPRA
adjustments and capital gain charged
|
-
|
(16)
|
46
|
|
|
Adjusted profit before tax for the period
|
2,067
|
2,286
|
5,435
|
|
|
|
|
|
|
|
|
EPRA and adjusted earnings per ordinary
share
|
|
|
|
EPRA basic
|
4.9p
|
5.4p
|
10.1p
|
|
|
EPRA diluted
|
4.9p
|
5.4p
|
10.1p
|
|
|
Adjusted EPS
|
6.1p
|
5.5p
|
13.8p
|
7
Net asset value per share
The Company 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 Company has adopted these
new guidelines and applies them in the 30 September 2024 Interim
Report.
The Company considered EPRA Net
Tangible Assets (NTA) to be the most relevant NAV measure for the
Company 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.
|
|
30 September 2024 (unaudited)
|
30 September 2023
(unaudited)
|
31 March 2024
(audited)
|
|
EPRA NTA
(£000)
|
EPRA NRV
(£000)
|
EPRA NDV
(£000)
|
EPRA NTA
(£000)
|
EPRA NRV
(£000)
|
EPRA NDV
(£000)
|
EPRA NTA
(£000)
|
EPRA NRV
(£000)
|
EPRA NDV
(£000)
|
|
Net assets attributable to
shareholders
|
72,275
|
72,275
|
72,275
|
109,963
|
109,963
|
109,963
|
97,774
|
97,774
|
97,774
|
|
Include:
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustment of trading
properties
|
392
|
392
|
392
|
587
|
587
|
587
|
449
|
449
|
449
|
|
Real estate transfer
tax
|
-
|
3,631
|
-
|
-
|
7,589
|
-
|
-
|
5,294
|
-
|
|
Fair value of fixed interest rate
debt
|
-
|
-
|
430
|
-
|
-
|
929
|
-
|
-
|
606
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
Deferred tax on latent capital
gains and capital allowances
|
57
|
57
|
-
|
61
|
61
|
-
|
57
|
57
|
-
|
|
EPRA NAV
|
72,724
|
76,355
|
73,097
|
110,611
|
118,200
|
111,479
|
98,280
|
103,574
|
98,829
|
|
EPRA NAV per share
|
252p
|
264p
|
253p
|
294p
|
315p
|
297p
|
262p
|
276p
|
263p
|
|
|
|
Unaudited
30
September
2024
|
Unaudited
30
September
2023
|
Audited
31
March
2024
|
|
|
Number of ordinary shares issued
at the end of the period
|
28,886,765
|
37,559,953
|
37,554,525
|
|
|
Dilutive effect of share
options
|
-
|
-
|
-
|
|
|
Number of diluted ordinary shares for diluted and EPRA net
assets per share
|
28,886,765
|
37,559,953
|
37,554,525
|
|
|
|
|
|
|
|
|
Net assets per ordinary share
|
|
|
|
|
|
Basic NAV
|
250p
|
293p
|
260p
|
|
|
Diluted NAV
|
250p
|
293p
|
260p
|
|
|
EPRA NTA
|
252p
|
294p
|
262p
|
8
Dividends
|
|
|
Payment Date
|
Unaudited
6 months
to
30
September
2024
£000
|
Unaudited
6 months
to
30
September
2023
£000
|
Audited
Year
to
31
March
2024
£000
|
|
Ordinary dividends paid
|
|
|
|
|
|
|
2023 Interim dividend: 3.75p per
share
|
|
14 April
2023
|
-
|
1,645
|
1,645
|
|
2023 Final dividend: 3.75p per
share
|
|
4 August
2023
|
-
|
1,583
|
1,583
|
|
2024 Interim dividend: 3.75p per
share
|
|
13
October 2023
|
-
|
-
|
1,408
|
|
2024 Interim dividend: 3.75p per
share
|
|
29
December 2023
|
-
|
-
|
1,409
|
|
2024 Interim dividend: 3.75p per
share
|
|
19 April
2024
|
1,408
|
-
|
-
|
|
2024 Final dividend: 3.75p per
share
|
|
25
August 2024
|
1,084
|
-
|
-
|
|
|
2,492
|
3,228
|
6,045
|
|
Proposed dividend
|
|
2025 Q1 interim dividend: 3.75p
per share paid on 25 October 2024.
|
|
2025 Q2 interim dividend: 3.75p
per share payable on 27 December 2024.
|
9
Property Portfolio
|
|
Freehold
Investment properties
|
Leasehold Investment properties
|
Total
investment properties
|
|
|
£000
|
£000
|
£000
|
|
At 1 April 2023
|
163,978
|
12,526
|
176,504
|
|
Additions -
refurbishments
|
1,544
|
-
|
1,544
|
|
Loss on revaluation of investment
properties
|
(15,383)
|
-
|
(15,383)
|
|
Disposals
|
(76,294)
|
(12,526)
|
(88,820)
|
|
At 31 March 2024
|
73,845
|
-
|
73,845
|
|
Additions -
refurbishments
|
111
|
-
|
111
|
|
Loss on revaluation of investment
properties
|
(3,241)
|
-
|
(3,241)
|
|
Disposals
|
(21,826)
|
-
|
(21,826)
|
|
At 30 September 2024
|
48,889
|
-
|
48,889
|
|
|
Investment properties
|
Trading
properties
|
Total
property portfolio
|
|
|
£000
|
£000
|
£000
|
|
At 1 April 2023
|
176,504
|
11,055
|
187,559
|
|
Additions -
refurbishments
|
1,544
|
-
|
1,544
|
|
Additions - trading
properties
|
-
|
90
|
90
|
|
Loss on revaluation of
properties
|
(15,383)
|
-
|
(15,383)
|
|
Disposals
|
(88,820)
|
(3,019)
|
(91,839)
|
|
At 31 March 2024
|
73,845
|
8,126
|
81,971
|
|
Additions -
refurbishments
|
111
|
-
|
111
|
|
Additions - trading
properties
|
-
|
37
|
37
|
|
Loss on revaluation of
properties
|
(3,241)
|
-
|
(3,241)
|
|
Disposals
|
(21,826)
|
(2,591)
|
(24,417)
|
|
At 30 September 2024
|
48,889
|
5,572
|
54,461
|
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
makes 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 2024, the
Company's property portfolio was externally valued by CBRE, a Royal
Institution of Chartered Surveyors ("RICS") registered independent
valuer. A reconciliation of the valuations carried out by the
external valuer to the carrying values shown in the balance sheet
was as follows:
|
|
|
Unaudited
30
September
2024
£000
|
Unaudited
30
September
2023
£000
|
Audited
31
March
2024
£000
|
|
Property portfolio
valuation
|
|
60,945
|
124,455
|
88,670
|
|
|
|
|
|
|
|
Less trading properties at lower
of cost and net realisable value
|
|
(5,572)
|
(8,713)
|
(8,126)
|
|
Less lease incentive balance in
accrued income
|
|
(6,091)
|
(3,818)
|
(6,250)
|
|
Less fair value uplift on trading
properties
|
|
(393)
|
(587)
|
(449)
|
|
Carrying value of investment
properties
|
|
48,889
|
111,337
|
73,845
|
An investment property is subject
to a first charge to secure the Group's bank loans amounting to
£8,152,000 (31 March 2024: £8,311,000).
Valuation process
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 Company'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 Head of Investment is
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 Company's investment properties are:
• The amount and timing of future
income streams;
• Anticipated maintenance costs
and other landlord's liabilities; and
• An appropriate yield
Valuation technique
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.
10
Trading property
|
|
|
Total
£000
|
|
At 1 April 2023
|
|
11,055
|
|
Costs capitalised
|
|
90
|
|
Disposal of trading
properties
|
|
(3,019)
|
|
At 31 March 2024
|
|
8,126
|
|
Costs capitalised
|
|
37
|
|
Disposal of trading
properties
|
|
(2,591)
|
|
At 30 September 2024
|
|
5,572
|
The
Group has developed a large mixed-use scheme at Hudson Quarter,
York. Part of the approved scheme consisted of residential units
which the Group held for sale. As a result, the residential element
of the scheme was classified as trading property.
11
Trade and other receivables
|
|
|
Unaudited
30
September
2024
£000
|
Unaudited
30
September
2023
£000
|
Audited
31
March
2024
£000
|
|
Current
|
|
|
|
|
|
Trade receivables
|
|
1,906
|
2,040
|
1,326
|
|
Prepayments and accrued
income
|
|
799
|
836
|
957
|
|
Other taxes
|
|
178
|
255
|
165
|
|
Other debtors
|
|
774
|
1,645
|
904
|
|
|
|
3,657
|
4,776
|
3,352
|
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
Accrued income
|
|
5,573
|
3,303
|
5,625
|
|
|
|
5,573
|
3,303
|
5,625
|
|
|
|
|
|
|
|
Total trade and other receivables
|
|
9,230
|
8,079
|
8,977
|
|
|
|
|
|
|
12
Cash and cash equivalents
|
|
|
Unaudited
30
September
2024
£000
|
Unaudited
30
September
2023
£000
|
Audited
31
March
2024
£000
|
|
Cash and cash
equivalents
|
|
21,288
|
8,870
|
19,766
|
|
|
|
21,288
|
8,870
|
19,766
|
13
Trade and other payables
|
|
|
Unaudited
30
September
2024
£000
|
Unaudited
30
September
2023
£000
|
Audited
31
March
2024
£000
|
|
Current
|
|
|
|
|
|
Trade payables
|
|
57
|
79
|
50
|
|
Accruals
|
|
415
|
2,077
|
704
|
|
Deferred rental income
|
|
1,288
|
2,285
|
1,694
|
|
Other taxes
|
|
585
|
798
|
480
|
|
Other payables
|
|
1,366
|
1,723
|
1,138
|
|
|
|
3,711
|
6,962
|
4,066
|
14
Borrowings
|
|
|
Unaudited
30
September
2024
£000
|
Unaudited
30
September
2023
£000
|
Audited
31
March
2024
£000
|
|
Current borrowings
|
|
|
|
|
|
Bank loans
|
|
318
|
12,086
|
318
|
|
Unamortised lending
costs
|
|
-
|
(135)
|
-
|
|
|
|
318
|
11,951
|
318
|
|
|
|
|
|
|
|
Non-current borrowings
|
|
|
|
|
|
Bank loans
|
|
7,834
|
8,152
|
7,993
|
|
Unamortised lending
costs
|
|
(46)
|
(74)
|
(60)
|
|
|
|
7,788
|
8,078
|
7,933
|
|
|
|
|
|
|
|
Total borrowings
|
|
|
|
|
|
Bank loans
|
|
8,152
|
20,238
|
8,311
|
|
Unamortised lending
costs
|
|
(46)
|
(209)
|
(60)
|
|
|
|
8,106
|
20,029
|
8,251
|
The maturity profile of the Group's debt was as
follows
|
|
|
Unaudited
30
September
2024
£000
|
Unaudited
30
September
2023
£000
|
Audited
31
March
2024
£000
|
|
|
|
|
|
|
|
Within one year
|
|
318
|
12,086
|
318
|
|
From one to two years
|
|
7,834
|
318
|
318
|
|
From two to five years
|
|
-
|
7,834
|
7,675
|
|
Total borrowings
|
|
8,152
|
20,238
|
8,311
|
Facility and arrangement fees
As at 30 September 2024
(unaudited)
|
Secured borrowings
|
|
All in cost
%
|
Maturity
date
|
Facility
drawn
£000
|
Unamortised facility
fees
£000
|
Loan
balance
£000
|
|
|
|
|
|
|
|
|
|
Scottish Widows
|
|
2.90%
|
July 2026
|
8,152
|
(46)
|
8,106
|
|
|
|
|
|
8,152
|
(46)
|
8,106
|
As at 31 March 2024
(audited)
|
Secured borrowings
|
|
All in
cost
%
|
Maturity
date
|
Facility
drawn
£000
|
Unamortised facility fees
£000
|
Loan
balance
£000
|
|
|
|
|
|
|
|
|
|
Scottish Widows
|
|
2.90%
|
July
2026
|
8,311
|
(60)
|
8,251
|
|
|
|
|
|
8,311
|
(60)
|
8,251
|
As at 30 September 2023
(unaudited)
|
Secured borrowings
|
|
All in
cost
%
|
Maturity
date
|
Facility
drawn
£000
|
Unamortised facility fees
£000
|
Loan
balance
£000
|
|
|
|
|
|
|
|
|
|
Scottish Widows
|
|
2.90%
|
July
2026
|
8,470
|
(74)
|
8,396
|
|
National Westminster Bank
plc
|
|
7.29%
|
August
2024
|
5,898
|
(106)
|
5,792
|
|
Barclays
|
7.14%
|
June
2024
|
5,870
|
(29)
|
5,841
|
|
|
|
|
|
20,238
|
(209)
|
20,029
|
15
Share capital
Authorised, issued and fully paid
share capital is as follows:
|
|
|
Unaudited
30
September
2024
|
Unaudited
30
September
2023
|
Audited
31
March
2024
|
|
|
|
|
|
|
|
Share capital -
£000
|
|
2,889
|
4,639
|
3,756
|
|
Ordinary 10p
shares
|
|
28,892,535
|
46,388,515
|
37,560,295
|
|
|
|
|
|
|
|
Share capital - number of shares
in issue
|
|
28,892,535
|
46,388,515
|
37,560,295
|
|
Movement in ordinary authorised
share capital is as follows:
|
|
|
Total
number of shares
|
|
As at 31 March 2024
|
|
|
37,560,295
|
|
Cancellation of treasury
shares
|
|
16 July
2024
|
(8,667,760)
|
|
As at 30 September 2024
|
|
|
28,892,535
|
|
|
|
|
|
|
|
|
|
|
|
Treasury shares at 31 March 2024
and 30 September 2024
|
-
|
|
-
|
|
|
|
|
|
|
Total number of shares in issue at 30 September 2024
(excluding shares held in treasury)
|
|
|
28,892,535
|
|
|
|
|
|
16
Post balance sheet events
On 5 November 2024, the Group
exchanged on one residential unit at Hudson Quarter, York for a
total consideration of £0.5 million.