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Palace Capital PLC (PCA)

  Print          Annual reports

Tuesday 16 November, 2021

Palace Capital PLC

Interim Results

RNS Number : 4533S
Palace Capital PLC
16 November 2021
 

16 November 2021

PALACE CAPITAL PLC

("Palace Capital" or the "Company")

Interim Results for the six months ended 30 September 2021

ACTIVE ASSET MANAGEMENT AND PORTFOLIO REPOSITIONING DRIVE 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 with a focus on the office and industrial sectors, announces its unaudited results for the six months ended 30 September 2021.

 Highlights

Active asset management and improved rent collection drive performance and increased dividend payment

· IFRS profit before tax for the period up 211% to £8.0 million (September 2020: £7.2 million loss) as a result of development profits, leasing activity, property valuation increases, and profits on disposals

· Basic EPS up 212% to 17.4p (September 2020: 15.5p loss).  

· Adjusted EPS of 8.7p, reflecting a 1.4x cover of the 6.25p dividend for the period. 

· EPRA NTA per share of 362p, up 3.6% (March 2021: 350p) and IFRS net assets of £163.6 million (March 2021: £157.8 million).  

· Increased EPRA earnings of £3.7 million (September 2020: £3.2 million).  

· 97% of rents collected for the June quarter and 90% of all rents due on and since the September quarter day collected to the date of this announcement, both higher than the equivalent quarter in 2020. This is expected to increase to 95% when the monthly payments for December are received.  

· 8.3% increase in minimum quarterly dividend to 3.25p per share, with the Q2 dividend at this level payable on 31 December 2021. 

· Group LTV reduced to 36% (March 2021: 42%) reflecting strong sales at Hudson Quarter, York and ongoing disposal programme, with all disposals above book value. 

· Solid balance sheet with cash reserves and immediately available facilities of £18.7 million as at 30 September 2021. 

· £26.5 million development facility from Barclays Bank now reduced to £1.6 million, which will be repaid in full by the end of this month. 

· Net Debt of £93.2 million (March 2021: £118.9 million).  

· Total accounting return of 5.2% (September 2020: -3.3%).

 

S trategic disposals and continuing Hudson Quarter sales providing capital for reinvestment

· 64 apartments completed or exchanged at Hudson Quarter for a total of £21.0 million with an additional 8 under offer to the value of £3.0 million. 

· £18.9 million of property sold or exchanged under the £30 million disposal strategy, of which £12.0 million was exchanged or completed by 30 September 2021, and a further £6.9 million exchanged or completed since 30 September 2021. All disposals were above book value. 

· 29 lease events in the period providing £0.6 million additional income per annum, 3% ahead of ERV.  

· ESG embedded in asset business plans as a priority focus, with an improving EPC profile. Portfolio 98% 2023 EPC compliant .

 

 

Balance Sheet

30 Sept 2021

31 March 2021

Investment property valuation

£231.5m

£237.7m

Trading property valuation

£30.5m

£45.1m

Total property portfolio valuation

£262.0m

£282.8m

Number of assets

45

48

Net assets

£163.6m

£157.8m

EPRA NTA per share

362p

350p

 

Income Statement

Six months to
30 Sept 2021

Six months to
30 Sept 2020

Profit/(loss) before tax

£8.0m

(£7.2m)

EPRA earnings

£3.7m

£3.2m

Earnings per share

17.4p

(15.5p)

Adjusted earnings per share

8.7p

7.3p

Total accounting return

5.2%

(3.3%)

Total shareholder return

5.1%

7.2%

Total dividend per share

6.25p

5.0p

Dividend cover

1.4x

1.5x

 

Stanley Davis, Chairman of Palace Capital said:

"We are making strong progress across the business and the focus we have been able to put towards implementing our strategy as we have emerged from the pandemic is clearly reflected in the numbers we are reporting today. Our rent collection levels are high, we are achieving strong sales at Hudson Quarter, including two, three bedroom apartments at £1.20 million and £1.05 million. Our £30 million disposal programme is on track and our balance sheet is in good health. This is enabling us to look at potential investments, both direct property and corporate opportunities, as we seek to recycle capital with one acquisition in legals.

"Since the end of the half year the letting market has further improved and we are seeing increased activity at our office holdings as the regions see a return to normal working activity. Avison Young in their Q3 update of regional activity in the Big Nine Regional Cities state that "Occupier confidence across the Big Nine office markets has reached its highest level since the pandemic started which is reflected in the strongest take up for two years. Increasing confidence has released pent up demand and requirements that have been on hold during the past 18 months. As such there has been a depth to the number and size of deals this quarter, including some exceptional lettings." We have holdings in the city centres of Leeds, Manchester, Liverpool and Newcastle, four of the Big Nine.

"Finally, I am due to stand down as Chairman at the end of this calendar year. It has been the most wonderful journey since Neil Sinclair and I started working together at Palace in 2010. I never expected to face a pandemic, but the Board and the Management Team have responded magnificently, and I see nothing other than an exciting future for Palace Capital."

  For further information please contact:

 PALACE CAPITAL PLC

Neil Sinclair, Chief Executive / Matthew Simpson, Chief Financial Officer
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 / Elliot Mustoe

Corporate Broking: James Reed-Daunter

Tel: +44 (0)207 614 5900

 Financial PR 

FTI Consulting

Claire Turvey / Katie Hughes

Tel: +44 (0)20 3727 1000

[email protected]

About Palace Capital plc

Palace Capital plc (LSE: PCA) is a UK REIT that has a £262.0 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

Profit after tax increased by 211% to £8.0 million in the period (September 2020: £7.2 million loss). This reflects our development profits, new lease events resulting from our active asset management, increase in property valuations and profit on disposals. All indications show that we are recovering strongly from the effects of the pandemic, with our EPRA earnings, EPRA NTA, profit before tax and dividend all up, supporting a total accounting return of 5.2%.  Moreover, the ongoing portfolio repositioning is delivering a higher quality portfolio and strengthened balance sheet, positioning the Company well for any forthcoming investment opportunities. Rental income for the period reduced to £8.5 million (September 2020: £8.6 million), partly as a result of the timing of our disposals.

The portfolio has an annual contractual rent roll of £16.9 million per annum and a net income after property costs of £15.6 million per annum compared to an ERV of £20.0 million per annum. Adjusted earnings totalled £4.0 million translating to an adjusted EPS of 8.7p per share, reflecting a 1.4x cover of a dividend of 6.25p per share for the period. Our second quarterly dividend of 3.25p will be payable on 31 December 2021 to shareholders on the register on 10 December 2021. The entire dividend will be paid as a Property Income Distribution.

BALANCE SHEET:

Our balance sheet is in good shape and is getting stronger. Our IFRS net asset value is £163.6 million, a 3.6% increase on 31 March 2021, with £13.7 million in cash as at 30 September 2021. Our cash position is improving through our sales progress and was further enhanced by the divestment of our 5.58% stake in Circle Property plc for £3.2 million, reflecting an 8.6% total return. Our portfolio is resilient, comprising higher quality assets as the portfolio repositioning continues, and as at the half year end our properties were independently valued by Cushman & Wakefield at £262.0 million.

Our LTV reduced from 42% as at 31 March 2021 to 36% as at 30 September 2021, as a result of repaying £18.8 million of the Barclays development facility following strong sales of the apartments at Hudson Quarter. There is currently only £1.6 million of this facility remaining, which will be repaid in full by the end of this month.

The high rent collection figures illustrate the quality of our tenants and the success of our asset managers in proactively engaging with them.

PORTFOLIO OVERVIEW:

At the period end, the portfolio comprised 45 properties let to 186 tenants, providing a diversified occupier base.

Hudson Quarter, the award-winning mixed-use scheme in York, was completed in April this year. Investors, flat purchasers and indeed the media have complimented us on the quality of the scheme, which has been completed to a very high specification, further enhancing our profile and reputation across the regional markets.

We have sold or exchanged 64 apartments to the value of £21.0 million and have a further 8 under offer to the value of £3.0 million, which leaves 55 units remaining. York is one of those cities with little or no rental stock, whilst the Universities are short of residential accommodation. As part of our marketing strategy, we are now increasing our focus on long term investors as well as owner occupiers.

The letting of 11,280 sq ft in our stand-alone office building known as HQ is progressing, and we are hopeful that the lease will be signed early next month.

The two leisure assets in Halifax and Northampton, which represent 13.8% of the portfolio, are already seeing a significant recovery. The former is now virtually fully let, at 97% occupancy, whilst the latter is at 95% occupancy. We are seeing market evidence of investment values increasing and as stated last year, these properties will be sold when we feel the time is right.

At 127 Above Bar Street, Southampton we have acquired the freehold interest in this mixed-use property for £2.0 million. Until recently we only held a leasehold interest expiring in 2035. This property produces a gross rental income of £376,000 per annum, but with the asset reaching maturity we are earmarking it for sale in the next financial year.

At Sandringham House, Harlow we have a 32,800 sq ft office building, the majority of which was let to Exela, a NASDAQ quoted company, with the ground floor vacant. Since the end of the half year, we have negotiated a surrender of the existing lease and have relet the entire building to Exela until 2027 with an option to break in 2024 at a rental of £400,000 per annum. If the tenant does not break in 2024, then the rent increases to £424,000 per annum

ESG FOCUS:

The Company continues to progress its Environmental, Social and Governance ("ESG") strategy, which is becoming increasingly embedded into our day-to-day operations and informing our acquisition and disposal strategies. We are currently focused on enhancing the environmental performance of our assets, ensuring the portfolio remains efficient and keeps pace with the changing needs of our tenants. We are presently reviewing the output from the COP26 summit.

We support the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and having ensured we have the appropriate level of governance in place, we are currently considering scenarios to understand better the potential risks and opportunities associated with climate change for our business. We will report in accordance with the TCFD recommendations in our next Annual Report. The Board's ESG Committee continues to oversee our work in this area and more detail on our approach to ESG can be found on our website.

BOARD CHANGES:

Stephen Silvester stepped down from the Board on 29 October 2021 and Matthew Simpson was appointed Chief Financial Officer on 11 November 2021.

The process for identifying my successor is well underway and we expect to announce the details of the new Chair in the near future.

CONCLUSION & OUTLOOK:

We have one of the strongest rent collection statistics in the sector, modest gearing which is on a downward trajectory and sales of non-core assets all at above book value. However, at the moment our share price discount to NAV is precluding us from issuing shares to make meaningful corporate acquisitions, which we did successfully when acquiring a subsidiary of Quintain plc and Property Investment Holdings Ltd. Our continued operational focus is on creating value for shareholders and, ultimately, to work to close the discount. While it is not our favoured route, we have not disregarded a share buyback programme and may consider it further, particularly if we continue to have a surplus of capital without the right accretive investment opportunities into which we can redeploy the capital. However, we are well aware of the necessity for consolidation in the sector and this is an avenue we have under constant review. The increasing confidence in the regional markets, the Government's levelling up agenda and our much improved balance sheet, means that we are very well placed for our next period of growth.

The successful vaccination programme and the recovery in the economy is enabling us to focus more fully on the implementation of our regional strategy.

Some companies, in our portfolio and across our towns and cities, have had a full return to the office whilst others have adopted a hybrid working model. It is becoming increasingly clear that the office will remain a fundamental part of the economy, as a space in particular for collaboration, creativity and socializing. We are seeing more inspections of our vacant space, increasing interest in the office investment market and in future office development, and are therefore confident in office space continuing to be in demand.

Our industrial holdings are showing continuing growth in rentals, and this bodes very well for the future. We completed multiple lease events across our industrial assets, this is reflected in our 6.1% like for like increase in our industrial valuations.

Our strategic disposal programme is on track to achieve £30 million of non-core disposals by the end of the financial year, with seven sales already completed or exchanged to date, to the value of £18.9 million. This will further strengthen the quality of our portfolio and its income profile.

As I stated previously, I will serve as Chairman until the end of this calendar year leaving the company in great shape and well placed for its next period of growth. I will subsequently continue to promote the interests of this Company which I have been very proud to lead.

 

Stanley Davis, Chairman

15 November 2021

 

STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES

The recent COP 26 Summit continues to dominate headlines. We have been monitoring the potential impacts of climate change as an emerging risk and the Board is firmly of the view that the risks associated with climate change are increasing significantly as governments and world leaders seek to establish targets to keep global warming to 1.5 degrees. The Board will continue to monitor events and is taking appropriate action to prepare for the short, medium and long-term risks that could arise as a result of climate change.

We consider there to be no further material changes to the Group's principal risks, as set out on pages 41-43 of the Annual Report and Accounts for the year ended 31 March 2021.

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.

 

 

 

 

Palace Capital plc

Condensed consolidated statement of comprehensive income

For the six months ended 30 September 2021

 

 

 

 

 

Unaudited

6 months to

30 September

2021

£000

Unaudited

6 months to

30 September

2020

£000

Audited

Year to

31 March

2021

£000

 

 

 

 

 

 

Revenue

 

  3

 

27,774

8,601

17,316

Cost of sales

 

  4

 

(17,506)

(1,000)

(1,500)

Movement in expected credit loss

 

 

-

(338)

(949)

Net property income

 

 

10,268

7,263

14,867

 

 

 

 

 

 

Dividend income from listed equity investments

 

 

64

-

72

Administrative expenses

 

 

(2,176)

(2,260)

(4,347)

Operating profit before gains and losses on property assets and listed equity investments

 

 

8,156

5,003

10,592

 

 

 

 

 

 

Profit on disposal of investment properties

9

 

380

259

905

Gain/(loss) on revaluation of investment properties

9

 

1,265

(10,457)

(14,750)

Reversal of impairment of trading properties

10

 

-

414

763

Gain/(loss) on revaluation of listed equity investments

 

 

-

(167)

709

Loss on disposal of listed equity investments

 

 

(80)

-

-

Operating profit/(loss)

 

 

9,721

(4,948)

(1,781)

 

 

 

 

 

 

Finance income

 

 

-

1

1

Finance expense

Debt termination costs

 

 

(1,618)

(1,796)

-

(3,347)

(140)

(48)

Changes in fair value of interest rate derivatives

 

 

(10)

(409)

(265)

Profit/(loss) before taxation

 

 

8,045

(7,152)

(5,532)

 

 

 

 

 

 

Taxation

  5

 

-

-

(1)

Profit/(loss) for the period and total comprehensive income

 

 

8,045

(7,152)

(5,533)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per ordinary share

 

 

Basic

7

 

17.4p

(15.5p)

(12.0p)

Diluted

7

 

17.4p

(15.5p)

(12.0p)

         

 

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 2021

 

 

 

Notes

Unaudited

30 September

2021

£000

Unaudited

30 September

2020

£000

Audited

31 March

2021

£000

 

Non-current assets

 

 

 

 

 

 

Investment properties

 

9

229,584

241,403

235,854

 

Listed equity investments at fair value

 

 

-

2,373

3,249

 

Right of use asset

 

 

90

238

165

 

Property, plant and equipment

 

 

48

93

71

 

 

 

 

229,722

244,107

239,339

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Trading property

 

10

27,246

38,395

42,719

 

Trade and other receivables

 

11

11,080

10,014

9,764

 

Cash and cash equivalents

 

12

13,680

14,269

9,417

 

Total current assets

 

 

52,006

62,678

61,900

 

Total assets

 

 

281,728

306,785

301,239

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

13

(9,109)

(13,170)

(12,908)

 

Borrowings

 

14

(30,835)

(1,836)

(21,853)

 

Lease liabilities for right of use asset

 

 

(67)

(172)

(154)

 

Total current liabilities

 

 

(40,011)

(15,178)

(34,915)

 

 

 

 

 

 

Net current assets

11,995

47,500

26,985

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Borrowings

 

14

(75,407)

(129,625)

(105,432)

 

Deferred tax liability

 

 

(228)

(228)

(228)

 

Lease liabilities for investment properties

 

 

(1,802)

(1,805)

(1,804)

 

Lease liabilities for right of use asset

 

 

-

(67)

-

 

Derivative financial instruments

 

15

(690)

(1,517)

(1,029)

 

Total non-current liabilities

 

 

(78,127)

(133,242)

(108,493)

 

 

 

 

 

 

 

 

Net Assets

 

 

163,590

158,365

157,831

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Share capital

 

16

4,639

4,639

4,639

 

Merger reserve

 

 

3,503

3,503

3,503

 

Capital redemption reserve

 

 

340

340

340

 

Treasury share reserve

 

 

(715)

(1,287)

(1,288)

 

Capital reduction reserve

 

 

125,019

125,019

125,019

 

Retained earnings

 

 

30,804

26,151

25,618

 

Equity shareholders' funds

163,590

158,365

157,831

 

 

 

 

 

 

 

 

 

Basic NAV per ordinary share

 

8

353p

344p

343p

 

Diluted NAV per ordinary share

 

8

353p

343p

342p

 

EPRA NTA per ordinary share

 

8

362p

347p

350p

 

                 

 

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 15 November 2021.

 

 

Palace Capital plc

Condensed consolidated statement of cash flows

For the six months ended 30 September 2021

 

 

 

Restated

Restated

 

 

 

 

 

Notes

Unaudited

6 months to

30 September

2021

£000

Unaudited

6 months to

30 September

2020

£000

Audited

Year to

31 March

2021

£000

Operating activities

 

 

 

 

Profit/(loss) before tax

 

8,045

(7,152)

(5,532)

Adjustments for non-cash items: 

 

 

 

 

(Gain)/loss on revaluation of properties

9

(1,265)

10,457

14,750

Reversal of (gain)/impairment of trading properties

10

-

(414)

(763)

Loss/(gain) on revaluation of investments

 

-

167

(709)

Loss on disposal of equity investments

 

80

-

-

Profit on sale of investment properties

9

(380)

(259)

(905)

Depreciation

 

24

23

46

Amortisation of right of use asset

 

74

74

148

Debt termination costs

 

48

-

140

Share-based payment

 

158

150

300

Net finance costs

 

1,628

2,204

3,611

Cash generated by operations

 

8,412

5,250

11,086

(Increase)/decrease in trade and other receivables

 

(1,428)

(692)

491

Decrease in trade and other payables

 

(2,366)

(282)

(291)

Decrease in trading property

 

14,753

(10,125)

(14,646)

 

 

 

 

 

Cash flows from operations

 

19,371

(5,849)

(3,360)

Interest received

 

-

1

1

Interest and other finance costs paid

 

(1,593)

(1,855)

(3,575)

Corporation tax paid

 

(24)

(1,128)

(1,174)

Cash flows from operating activities

 

17,754

(8,831)

(8,108)

 

 

 

 

 

Investing activities

 

 

 

 

Capital expenditure on refurbishments of property

9

(2,967)

(905)

(2,425)

Capital expenditure on developments

9

-

(2,856)

(4,131)

Proceeds from disposal of investment properties

9

10,230

1,219

5,290

Amounts transferred (into)/out of restricted cash deposits

 

(3,043)

181

1,020

Proceeds from disposal of listed equity investments

 

3,169

-

-

Dividends from listed equity investments

 

64

-

72

Purchase of property, plant and equipment

 

(1)

(14)

(16)

Cash flows from investing activities

 

7,452

(2,375)

(190)

 

 

 

 

 

Financing activities

 

 

 

 

Bank loan repaid

 

(21,408)

(1,071)

(11,363)

Proceeds from new bank loans

 

-

12,960

18,916

Loan issue costs

 

(44)

-

(282)

Dividends paid

6

(2,534)

(1,152)

(3,455)

Cash flows from financing activities

 

(23,986)

10,737

3,816

 

 

 

 

 

Net increase/(decrease) in cash

 

1,220

(469)

(4,482)

Opening cash and cash equivalents

12

9,417

13,899

13,899

Closing cash and cash equivalents

12

10,637

13,430

9,417

 

 

     

     

   

 

 

 

 

 

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 2021

 

 

 

Share

 Capital

£000

 

Share

 Premium

£000

Treasury Shares

Reserve

£000

 

Other

Reserves

£000

Capital reduction reserve

£000

 

Retained Earnings

£000

 

Total 

equity

 000

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

 

 

 

 

 

 

 

 

Total comprehensive profit for the period

-

-

-

-

-

1,619

1,619

Share based payments

-

-

-

-

-

150

150

Exercise of share options

-

-

(1)

-

-

1

-

Issue of deferred bonus share options

-

-

-

-

-

-

-

Dividends

-

-

-

-

-

(2,303)

(2,303)

 

 

 

 

 

 

 

 

As at 31 March 2021

4,639

-

(1,288)

3,843

125,019

25,618

157,831

 

 

 

 

 

 

 

 

 

-

-

-

-

-

8,046

8,046

Share based payments

-

-

-

-

-

158

158

Exercise of share options

-

-

573

-

-

(573)

-

EBT share purchased

-

-

-

-

-

(16)

(16)

Issue of deferred bonus share options

-

-

-

-

-

105

105

Dividends

-

-

-

-

-

(2,534)

(2,534)

 

 

 

 

 

 

 

 

As at 30 September 2021

4,639

-

(715)

3,843

125,019

30,804

163,590

 

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 (£125,018,886) 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 2021

 

 

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 2021 and are expected to be used in the Group's Annual Report for the year ended 31 March 2022.

 

Further to these accounting policies, as a result of the disposal of trading properties in the first six months, the Group would like to provide further clarity on the accounting policies for trading property revenue and trading property cost of sales.

 

Revenue from the sale of trading properties is recognised when the performance obligation associated with the sale is completed. The transaction price comprises the fair value of the consideration received or receivable, net of value added tax, rebates and discounts. Revenue is recognised in the income statement when control is transferred to the customer. This is deemed to be when title of the property passes to the customer on legal completion.

 

Trading property cost of sales includes direct expenditure relating to the construction of the trading properties, capitalised interest, and selling costs incurred as a result of residential sales. Selling costs includes agent and legal fees. Cost of sales is expensed to the income statement and is recognised on completion of each residential unit. The cost for each unit is calculated using the ratio of the unit selling price, over the total forecasted sales proceeds of all residential units. This ratio is then applied to the total forecasted development cost to get the cost of sale per unit.

 

The financial information for the year ended 31 March 2021 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 2021 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 2021 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 2020 and 30 September 2021 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 15 November 2021.

 

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 .

 

Restatement

 

The cash flow statement for the comparative periods have been corrected to present cash outflows from an increase in trading properties as operating activities for the year to 31 March 2021 of £14,646,000 (six months to 30 September 2020: £10,125,000) that were previously presented as investing activities. This has resulted in an increase in the net movement in investing activities for the year to 31 March 2021 of £14,646,000 (six months to 30 September 2020: £10,125,000) and a corresponding net decrease in the cash inflows from operating activities in the Consolidated Cash Flow Statement. These cashflows represent expenditure on trading properties that were expected to be sold in the normal course of the Group's business and are therefore operating in nature.  There was no impact on profit or net assets for any periods presented.

 

 

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.

As at 30 September 2021 the Group had £13.7m of cash and cash equivalents, of which £10.6m was unrestricted cash, a low gearing level of 36% and a fair value property portfolio of £262.0m. The Directors have reviewed the forecasts for the Group taking into account the impact of Covid-19 on trading over the 12 months from the date of signing this annual report. The forecasts have been assessed against a range of possible downside outcomes incorporating significantly lower levels of income in line with the possible ongoing 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 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

2021

£000

Unaudited

6 months to

30 September

2020

£000

Audited

Year to

31 March

2021

£000

 

 

 

 

 

Rents received from investment properties

 

8,453

8,554

17,150

Dilapidations & other property related income

 

89

27

56

Trading property revenue

 

19,187

-

-

Insurance commission

 

45

20

110

Total revenue

 

27,774

8,601

17,316

 

 

 

 

 

 

 

 

 

 

4  Cost of sales

 

 

Unaudited

6 months to

30 September

2021

£000

Unaudited

6 months to

30 September

2020

£000

Audited

Year to

31 March

2021

£000

 

 

 

 

 

Void investment and development property costs

 

841

681

1,275

Legal, lettings and consultancy costs

 

326

319

225

Trading property costs of sales

 

16,339

-

-

Total cost of sales

 

17,506

1,000

1,500

 

5  Taxation

 

 

Unaudited

6 months to

30 September

2021

£000

Unaudited

6 months to

30 September

2020

£000

Audited

Year to

31 March

2021

£000

 

 

 

 

 

Tax underprovided in prior year

 

-

-

1

Tax charge

 

-

-

1

 

  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.

 

6  Dividends

 

 

 

 

 

 

Payment Date

Unaudited

6 months to

30 September

2021

£000

Unaudited

6 months to

30 September

2020

£000

Audited

Year to

31 March

2021

£000

Ordinary dividends paid

 

 

 

 

 

2020 Final dividend: 2.50p per share

 

14 August 2020

-

1,151

1,151

2021 Interim dividend: 2.50p per share

 

16 October 2020

-

-

1,152

2021 Interim dividend: 2.50p per share

 

31 December 2020

-

-

1,152

2021 Interim dividend: 2.50p per share

 

9 April 2021

1,152

-

-

2021 Final dividend: 3.00p per share

 

5 August 2021

1,382

-

-

 

2,534

  1,151

3,455

 

Proposed dividend

2022 Q1 interim dividend: 3.00p per share paid on 15 October 2021.

2022 Q2 interim dividend: 3.25p per share payable on 31 December 2021.

 

 

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, one-off surrender premiums received, and non-recovery development loan interest. 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

6 months to

30 September

2021

£000

Unaudited

6 months to

30 September

2020

£000

Audited

Year to

31 March

2021

£000

 

 

 

 

 

 

Profit/(loss) after tax attributable to ordinary shareholders for the period

8,045

(7,152)

(5,533)

 

 

 

 

 

 

Adjustments:

 

 

 

 

(Gain)/loss on revaluation of property portfolio

(1,265)

10,457

14,750

 

Reversal of impairment of trading properties

-

(414)

(763)

 

Profit on disposal of investment properties

(380)

(259)

(905)

 

Trading property revenue and cost of sales

(2,848)

-

-

 

Loss/(gain) on revaluation of listed equity investments

-

167

(709)

 

Loss on disposal of listed equity investments

80

-

-

 

Debt termination costs

48

-

140

 

Fair value loss on derivatives

10

409

265

 

EPRA earnings for the period

3,690

3,208

7,245

 

 

 

 

 

 

Share-based payments

158

150

300

 

Development loan interest

166

-

-

 

Adjusted profit after tax for the period

4,014

3,358

7,545

 

Tax excluding deferred tax on EPRA adjustments and capital gain charged

-

-

1

 

Adjusted profit before tax for the period

4,014

3,358

7,546

 

 

 

 

 

 

Unaudited

6 months to

30 September

2021

Unaudited

6 months to

30 September

2020

Audited

Year to

31 March

2021

 

Weighted average number of shares for basic earnings per share

46,226,727

46,053,190

46,061,417

 

Dilutive effect of share options

36,766

-

-

 

Weighted average number of shares for diluted earnings per share

46,263,493

46,053,190

46,061,417

 

 

 

 

 

 

Earnings per ordinary share

 

 

 

 

Basic

17.4p

(15.5p)

(12.0p)

 

Diluted

17.4p

(15.5p)

(12.0p)

 

EPRA and adjusted earnings per ordinary share

 

EPRA basic

8.0p

7.0p

15.7p

 

EPRA diluted

8.0p

7.0p

15.7p

 

Adjusted EPS

8.7p

7.3p

16.4p

 

 

8  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 2021 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.

 

 

 

 

30 September 2021 (unaudited)

30 September 2020 (unaudited)

30 March 2021 (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

163,590

163,590

163,590

158,365

158,365

158,365

157,831

157,831

157,831

Include:

 

 

 

 

 

 

 

 

 

Fair value adjustment of trading properties

3,279

3,279

3,279

-

-

-

2,247

2,247

2,247

Real estate transfer tax

-

17,148

-

-

14,935

-

-

18,365

-

Fair value of fixed interest rate debt

-

-

60

-

-

(426)

-

-

(59)

Exclude:

 

 

 

 

 

 

 

 

 

Fair value of derivatives

690

690

-

1,517

1,517

-

1,029

1,029

-

Deferred tax on latent capital gains and capital allowances

228

-

228

-

228

-

EPRA NAV

184,935

166,929

160,110

157,939

179,700

160,019

EPRA NAV per share

399p

360p

347p

342p

389p

347p

 

 

 

 

 

 

 

 

 

 

Unaudited

 30 September

2021

Unaudited

30 September

2020

Audited

31 March

2021

 

 

Number of ordinary shares issued at the end of the period

46,288,470

46,069,690

46,069,690

 

 

Dilutive effect of share options

36,766

84,934

84,934

 

 

Number of diluted ordinary shares for diluted and EPRA net assets per share

46,325,236

46,154,624

46,154,624

 

 

 

 

 

 

 

 

Net assets per ordinary share

 

 

 

 

 

Basic NAV

353p

344p

343p

 

 

Diluted NAV

353p

343p

  342p

 

 

EPRA NTA

362p

347p

  350p

 

 

EPRA NRV

399p

379p

  389p

 

 

EPRA NDV

360p

342p

347p

 

                           

 

 

 

9  Property Portfolio

 

Freehold Investment properties

Leasehold Investment properties

Total investment properties

 

£000

£000

£000

At 1 April 2020

230,396

18,303

248,699

Additions - refurbishments

2,273

(44)

2,229

Capital expenditure on developments

4,061

-

4,061

Loss on revaluation of investment properties

(13,614)

(1,136)

(14,750)

Disposals

(3,975)

(410)

(4,385)

At 31 March 2021

219,141

16,713

235,854

Additions - refurbishments

2,169

21

2,190

Capital expenditure on developments

125

-

125

Gain/(loss) on revaluation of investment properties

1,432

(167)

1,265

Disposals

(9,850)

-

(9,850)

At 30 September 2021

213,017

16,567

229,584

 

 

 

 

 

Standing investment properties

Investment properties under construction

Total investment properties

Trading properties

Total property portfolio

 

£000

£000

£000

£000

£000

At 1 April 2020

240,927

7,772

248,699

27,557

276,256

Additions - refurbishments

2,229

-

2,229

-

2,229

Capital expenditure on developments

-

4,061

4,061

-

4,061

Additions - trading properties

-

-

-

14,399

14,399

Gain/(loss) on revaluation of investment properties

(14,867)

117

(14,750)

763

(13,987)

Disposals

(4,385)

-

(4,385)

-

(4,385)

At 31 March 2021

223,904

11,950

235,854

42,719

278,573

Additions - refurbishments

2,190

-

2,190

-

2,190

Capital expenditure on developments

-

125

125

-

125

Additions - trading properties

-

-

-

866

866

Gain/(loss) on revaluation of properties

1,449

(184)

1,265

-

1,265

Disposals

(9,850)

-

(9,850)

(16,339)

(26,189)

At 30 September 2021

217,693

11,891

229,584

27,246

256,830

 

 

The property portfolio (other than assets held for sale) 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 2021, 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

 30 September

2021

£000

Unaudited

30 September

2020

£000

Audited

31 March

2021

£000

 

 

 

 

 

Cushman & Wakefield LLP (property portfolio)

 

262,005

281,595

282,820

Fair value of property portfolio

 

262,005

281,595

282,820

 

 

 

 

 

Adjustment in respect of minimum payment

 

 

 

 

under head leases included as a liability

 

1,802

1,805

1,804

Less trading properties at lower of cost and net realisable value

 

(27,246)

(38,395)

(42,719)

Less lease incentive balance in accrued income

 

(3,698)

(3,602)

(3,804)

Less fair value uplift on trading properties

 

(3,279)

-

(2,247)

Carrying value of investment properties

 

229,584

241,403

235,854

 

 

 

 

Investment properties with a carrying value of £229,520,000 (31 March 2021: £234,613,000) and trading properties with a carrying value of £27,246,000 (31 March 2021: £42,719,000) are subject to a first charge to secure the Group's bank loans amounting to £106,906,000 (31 March 2021: £128,313,000).

 

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.

 

10  Trading property

 

 

At 1 April 2020

 

27,557

Costs capitalised

 

14,399

Reversal of impairment of trading properties

 

763

At 31 March 2021

 

42,719

Costs capitalised

 

866

Disposal of trading properties

 

(16,339)

At 30 September 2021

 

27,246

 

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. During the six month period, residential units to the value of £ 19,225,000 were sold.

 

 

 

11  Trade and other receivables

 

 

Unaudited

 30 September

2021

£000

Unaudited

30 September

2020

£000

Audited

31 March

2021

£000

Current

 

 

 

 

Trade receivables

 

2,174

3,285

2,775

Prepayments and accrued income

 

4,294

4,080

4,385

Other taxes

 

248

820

143

Other debtors

 

4,364

1,829

2,461

 

 

11,080

10,014

9,764

 

 

 

 

 

           

   

12  Cash and cash equivalents

 

 

Unaudited

 30 September

2021

£000

Unaudited

30 September

2020

   000

Audited

31 March

2021

£000

Cash and cash equivalents - unrestricted

 

10,637

13,430

  9,417

Restricted cash

 

3,043

839

  -

 

 

13,680

14,269

  9,417

 

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, and proceeds from sale of trading properties which is used to repay the development facility.

 

13  Trade and other payables

 

 

Unaudited

 30 September

2021

£000

Unaudited

30 September

2020

£000

Audited

31 March

2021

£000

Current

 

 

 

 

Trade payables

 

554

2,702

1,143

Accruals

 

2,488

3,759

3,711

Deferred rental income

 

3,465

3,488

3,347

Taxes

 

1,225

1,862

2,100

Other payables

 

1,377

1,359

2,607

 

 

9,109

13,170

12,908

 

14  Borrowings

 

 

Unaudited

 30 September

2021

£000

Unaudited

30 September

2020

£000

Audited

31 March

2021

£000

Current borrowings

 

30,835

1,836

21,853

Non-current borrowings

 

75,407

129,625

105,432

Total borrowings

 

106,242

131,461

127,285

 

 

 

 

 

Non-current borrowings

 

 

 

 

Secured bank loans drawn

 

76,071

130,815

106,238

Unamortised facility fees

 

(664)

(1,190)

(806)

 

 

75,407

129,625

105,432

 

 

 

 

The maturity profile of the Group's debt was as follows

 

 

Unaudited

 30 September

2021

£000

Unaudited

30 September

2020

£000

Audited

31 March

2021

£000

 

 

 

 

 

Within one year

 

30,835

1,836

22,075

From one to two years

 

8,063

44,099

32,813

From two to five years

 

68,008

75,390

65,750

From five to ten years

 

-

11,326

7,675

Total borrowings

 

106,906

132,651

128,313

 

Facility and arrangement fees

As at 30 September 2021

Secured borrowings

 

 

All in cost

%

 

Maturity

date

Loan balance

£000

Unamortised facility fees

£000

Facility drawn

£000

 

 

 

 

 

 

 

Scottish Widows

 

2.90%

July 2026

9,002

(105)

9,107

National Westminster Bank plc

 

2.18%

August 2024

23,532

(279)

23,811

Barclays

3.18%

June 2024

37,368

(158)

37,526

Barclays

3.33%

January 2022

4,617

-

4,617

Santander Bank plc

3.56%

August 2022

24,931

(69)

25,000

Lloyds Bank plc

2.03%

March 2023

6,792

(53)

6,845

 

 

 

 

106,242

(664)

106,906

 

 

Facility and arrangement fees

As at 31 March 2021

Secured borrowings

 

 

All in cost

%

 

Maturity

date

Loan balance

£000

Unamortised facility fees

£000

Facility drawn

£000

 

 

 

 

 

 

 

Scottish Widows

 

2.90%

July 2026

9,149

(115)

9,264

National Westminster Bank plc

 

2.19%

August 2024

28,291

(329)

28,620

Barclays

3.17%

June 2024

37,785

(191)

37,976

Barclays

3.34%

January 2022

20,136

(222)

20,358

Santander Bank plc

3.55%

August 2022

25,142

(108)

25,250

Lloyds Bank plc

2.04%

March 2023

6,782

(63)

6,845

 

 

 

 

127,285

(1,028)

128,313

 

Facility and arrangement fees

As at 30 September 2020

Secured borrowings

 

 

All in cost

%

 

Maturity

date

Loan balance

£000

Unamortised facility fees

£000

Facility drawn

£000

 

 

 

 

 

 

 

Scottish Widows

 

2.90%

July 2026

13,355

(151)

13,506

National Westminster Bank plc

 

2.16%

August 2024

28,242

(378)

28,620

Barclays

3.12%

June 2024

40,193

(223)

40,416

Barclays

3.30%

January 2022

17,553

(210)

17,763

Santander Bank plc

3.56%

August 2022

25,352

(148)

25,500

Lloyds Bank plc

2.01%

March 2023

6,766

(80)

6,846

 

 

 

 

131,461

(1,190)

132,651

 

The Group has unused loan facilities amounting to £16,189,000 (31 March 2021: £13,320,000). A facility fee is charged on £16,189,000 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 £1,497,182 at a rate of 1.30% p.a. and is payable quarterly. The £1,497,182 balance of the unused facilities relates to a Barclays loan secured on the Hudson Quarter, York development held by Palace Capital (Developments) Limited.

 

15  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.

 

 

Bank

Notional principal

Expiry date

Contract rate %

 

Valuation rate %

Unaudited

30 September

2021

Unaudited 30 September 2020

Audited

31 March

2021

Barclays Bank plc 

35,722,900

25 January 2023

1.34%

0.41%

(475)

(1,048)

  (717)

Santander plc

20,000,000

3 August 2022

1.37%

0.28%

(215)

(469)

(312)

 

55,722,900

 

 

 

(690)

(1,517)

(1,029)

 

 

16  Share capital

Authorised, issued and fully paid share capital is as follows:

 

 

Unaudited

 30 September

2021

Unaudited

30 September

2020

Audited

31 March

2021

 

 

 

 

 

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 - £

 

4,638,852

4,638,852

4,638,852

           

 

 

The Company has set up an employee benefit trust, 'The Palace Capital Employee Benefit Trust', for the granting of shares applicable to directors and employees under the Long-Term Incentive Plan. On 22 June 2021 the Company transferred 200,000 ordinary shares held in Treasury into The Palace Capital Employee Benefit Trust.

 

On 14 July 2021 the Company granted 90,049 shares, being the awards granted on 14 July 2020 under the Palace Capital Deferred Bonus Plan from The Palace Capital Employee Benefit Trust. On 13 and 19 August 2021, 134,814 share options were exercised under the 2018 employee LTIP scheme. As at 30 September 2021 there were 99,587 shares held in treasury.

 

The Company's issued share capital as at 30 September 2021 comprises 46,288,470 ordinary shares which is the denominator for the calculations of earnings per share and net asset value per share. This excludes the 100,045 ordinary shares held in treasury and the Employee Benefit Trust.

 

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