REG - Palace Capital PLC - Final Results <Origin Href="QuoteRef">PCA.L</Origin> - Part 2
06/06/2016 07:05
- Part 2: For the preceding part double click ID:nRSF2361Aa
Effect of:
Expenses not deductible for tax purposes 163 134
Capital losses and indexation used in the period (1,416) (2,090)
Capital allowances in excess of depreciation (77) (253)
Other adjustments 47 40
Deferred tax not previously recognised (76) (127)
Utilisation of losses brought forward 297 -
Tax under provided in prior years 6 -
Trading losses used in the period (341) (732)
Tax charge/(credit) for the period 953 (107)
Deferred taxes at 31 March relates to the following:
2016 2015
£'000 £'000
Deferred tax assets
Losses available to carry forward 334 500
Deferred tax asset 334 500
500
2016 2015
£'000 £'000
Deferred tax asset - brought forward 500 100
Deferred tax (charge)/credit for the period (221) 127
Deferred tax recognised on acquisition 55 273
Deferred tax asset - carried forward 334 500
500
At 31 March 2016, the Group had tax losses of £1,681,228 (2015: £3,110,762)
available to carry forward to future periods. A deferred tax asset of £334,000
(2015: £500,000) has been recognised as it is expected to be utilised in the
foreseeable future.
Capital allowances have been claimed on improvements to investments properties
amounting to £13,846,721 (2015: £8,676,012). A deferred tax liability
amounting to £1,872,057 (2015: £1,735,202) has not been recognised in the
financial statements as it is expected that they will not reverse when the
properties are disposed of.
A deferred tax liability on the revaluation of investment properties to fair
value has not been provided as once the availability of capital losses,
indexation allowances and the 1982 valuations for certain properties have been
taken into account it is anticipated that no capital gains tax would be
payable if the properties were disposed of at their fair value as the
potential capital gains after indexation of approximately £9,700,000 are
offset by potential losses of £13,500,000. As at 31 March 2016 the Group also
had approximately £7,400,000 (2015: £6,900,000) of realised capital losses to
carry forward.
8 EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share has been calculated on profit after tax attributable
to ordinary shareholders for the period (as shown on the Consolidated
Statement of Comprehensive Income) and the weighted average number of ordinary
shares in issue during the period (see below table).
Diluted earnings per share
Diluted earnings per share has been calculated on profit after tax
attributable to ordinary shareholders for the period (as shown on the
Consolidated Income Statement) and the diluted weighted average number of
ordinary shares in issue during the period (see below table):
2016 2015
£'000 £'000
Profit after tax attributable to ordinary shareholders for the period 10,799 14,015
14,015
2016No of shares 2015No of shares
Weighted average number of shares for basic earnings per share 24,597,258 17,010,762
Dilutive effect of share options 20,730 80,082
Weighted average number of shares for diluted earnings per share 24,617,988 17,090,844
EARNINGS PER ORDINARY SHARE;Basic 43.9p 82.4p
Diluted 43.9p 82.0p
Diluted
43.9p
82.0p
EPRA and adjusted diluted earnings per share
The European Public Real Estate Association (EPRA) has issued Best Practices
Recommendations, the latest update of which was issued in December 2014, which
gives guidelines for performance measures.
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 close-out costs and share based-payments
and 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 and therefore it is more
appropriate to use the basic number of shares. The EPRA diluted earnings per
share also takes into account the dilution of share options and warrants if
exercised.
Palace Capital also report on an adjusted earnings measure which is based on
recurring earnings after tax and on the basis of the basic number of shares.
The EPRA and adjusted earnings per share for the period are calculated based
upon the following information:
2016 2015
£'000 £'000
Profit after tax attributable to ordinary shareholders for the period 10,799 14,015
Costs of acquisition 815 639
Gains on revaluation of investment property portfolio (3,620) (9,769)
Profit on disposal of investment properties (290) (178)
EPRA earnings for the period 7,704 4,707
Surrender premium (3,172) -
Share based payment 110 114
Adjusted earnings after tax for the period 4,642 4,821
EPRA AND ADJUSTED EARNINGS PER ORDINARY SHARE;EPRA Basic 31.3p 27.7p
EPRA Diluted 31.3p 27.5p
Adjusted EPS Basic 18.9p 28.3p
Adjusted EPS Basic
18.9p
28.3p
9 NET ASSETS VALUE PER SHARE
EPRA NAV calculation makes adjustments to IFRS NAV to provide stakeholders
with the most relevant information on the fair value of the assets and
liabilities within a true real estate investment company with a long-term
investment strategy. EPRA NAV is adjusted to take effect of the exercise
options, convertibles and other equity interests and excludes the fair value
of financial instruments and deferred tax on latent gains. EPRA NNNAV measure
is to report net asset value including fair values of financial instruments
and deferred tax on latent gains.
The diluted net assets and the number of diluted ordinary issued shares at the
end of the period assumes that all the outstanding options at the period end
are exercised at the option price.
Net asset value is calculated using the following information:
2016 2015
£'000 £'000
Net assets at the end of the period 106,815 80,016
Effect of exercise of share options 109 109
Diluted net assets at end of the period 106,924 80,125
Exclude fair value of financial instruments & exclude deferred tax on latent capital gains - -
EPRA NAV 106,924 80,125
Include fair value of financial instruments & include deferred tax on latent capital gains - -
EPRA NNNAV 106,924 80,125
106,924
80,125
2016No of shares 2015No of shares
Number of ordinary issued shares issued at the end of the period 25,781,229 20,225,673
Dilutive effect of share options 20,730 16,308
Number of ordinary issued shares for diluted net assets per share 25,801,959 20,241,981
NET ASSETS PER ORDINARY SHAREBasic 414p 396p
Diluted 414p 396p
EPRA NAV 414p 396p
EPRA NNNAV 414p 396p
396p
EPRA NNNAV
414p
396p
10 DIVIDENDS
Payment date Dividend per share 2016£'000 2015 £'000
2016
Final dividend proposed 29 July 2016 9.00 - -
Interim dividend 30 December 2015 7.00 1,805 -
Distribution of current year profit 16.00 1,805 -
2015
Final dividend 31 July 2015 7.00 1,416 -
Interim dividend 30 December 2014 6.00 - 1,204
Distribution of prior year profit 13.00 1,416 1,204
2014
Final dividend 31 July 2014 2.50 - 313
Interim dividend 7 May 2014 2.00 - 249
4.50 - 562
Dividends reported in the Group statement of changes in equity 3,221 1,766
Proposed Dividends
2016£'000 2015 £'000
2016 final dividend: 9p (2015: 7p) 2,320 1,416
Proposed dividends on ordinary shares are subject to approval at the Annual
General Meeting and are not recognised as a liability as at 31 March 2016.
11 INTANGIBLE FIXED ASSETS
Goodwill
£'000
Cost
At 1 March 2014 and 31 March 2015 6
Additions -
At 31 March 2016 6
6
Goodwill
£
Provision for diminution in value
At 1 March 2014 and 31 March 2015 -
Provided in the year 6
At 31 March 2016 6
Carrying value at 31 March 2016 -
Carrying value at 31 March 2015 6
6
12 BUSINESS COMBINATIONS
Acquisition in year ended 31 March 2016
O&H Northampton Limited
On 17 June 2015 the Group acquired 100% of the share capital of O&H
Northampton Limited (O&H) for a consideration of £1. O&H is a property
investment company owning Sol Central, a leisure complex in Northampton, which
was acquired to expand the Group's property portfolio. Following the
acquisition O&H changed its name to Palace Capital (Northampton) Limited.
Carrying value at acquisition date Adjustments Fair value at acquisition date
£'000 £'000 £'000
Investment properties 20,700 - 20,700
Receivables and prepayment 389 - 389
Deferred tax asset 55 - 55
Cash at bank and in hand 228 - 228
Payables and other creditors (344) - (344)
Corporation tax (128) - (128)
Accrued interest (822) - (822)
Other loans (3,441) - (3,441)
Bank loans (16,637) - (16,637)
Net assets - - -
Consideration 20,078
Payments of other loans and bank loans on acquisition (20,078)
Net consideration -
Goodwill on acquisition -
The acquired subsidiary contributed £1,597,000 to the profit before tax of the
Group.
The deferred tax asset represents tax losses incurred in the period prior to
our acquisition. No deferred tax has been recognised on the adjustments to
fair value as a result of the historical cost of the investment properties
exceeding their fair value.
The fair value of the investment properties at acquisition was based on a
valuation performed at the time of the acquisition amounting to £20,700,000
obtained from DTZ Debenham Tie Leung Limited.
Acquisition related costs
The Group incurred acquisition related costs in respect of this transaction
amounting to £413,115 related to professional fees paid for due diligence,
general professional fees and legal related costs. These costs have been
included in administrative expenses in the Group's consolidated income
statement.
Gregory Projects (Halifax) Limited
On 11 March 2016 the Group acquired 100% of the share capital of Gregory
Projects (Halifax) Limited (GPH) for a consideration of £1. GPH is a property
investment company owning Broad Street Plaza, a leisure complex in Halifax,
which was acquired to expand the Group's property portfolio. Following the
acquisition GPH changed its name to Palace Capital (Halifax) Limited.
Carrying value at acquisition date Adjustments Fair value at acquisition date
£'000 £'000 £'000
Investment properties - 24,180 24,180
Receivables and prepayment 144 - 144
Work in progress 24,180 (24,180) -
Cash at bank and in hand 213 - 213
Payables and other creditors (231) - (231)
Accrued interest (84) - (84)
Other loans (9,017) - (9,017)
Bank loans (15,201) - (15,201)
Net assets - - -
Consideration 9,017
Payments of other loans and bank loans on acquisition (9,071)
Net consideration -
Goodwill on acquisition -
The acquired subsidiary contributed a loss of £121,000 to the profit before
tax of the Group. The fair value of the investment properties at acquisition
was based on the purchase price of the property as a result of the valuers
having no clear comparable alternatives. The valuation performed at the
year-end amounted to £24,000,000 and was obtained from Knight Frank. The fall
in the value of the property in this period related to the increased stamp
duty rates introduced by the government in its budget on 16 March 2016.
The fair value adjustment reclassifies the property as an investment property
rather than a property held for resale following the change in management of
the property.
Acquisition related costs
The Group incurred acquisition related costs of £401,491 related to
professional fees paid for due diligence, general professional fees and legal
related costs. These costs have been included in administrative expenses in
the Group's consolidated income statement.
Effect on Group results of the acquisitions
If both these acquisitions had occurred on 1 April 2015, Group revenue would
have been an estimated £16.7m and Group profit before tax would have been an
estimated £13.0m. In determining these amounts, management has assumed that
the fair value adjustments that arose on the date of acquisition would have
been the same if the acquisition occurred on 1 April 2015.
Dering Properties (Sutton) Limited
The acquisition of Dering Properties (Sutton) Limited was made on 17 August
2015. The directors have taken the view that this acquisition had similar
attributes to that of an asset purchase rather than a business combination and
therefore the value of the asset at the acquisition date amounting to
£3,925,000 has been added to the additions within investment properties
together with the costs of the acquisition amounting to £104,684.
Acquisition in year ended 31 March 2015
On 26 August 2014 the Group acquired 100% of the share capital of Property
Investment Holdings Limited (PIH) for a consideration of £3,613,828. The
consideration was satisfied by issuing 1,103,459 ordinary 10p shares at a fair
value price of £3.275. PIH is a property investment company which was
acquired to expand the Group's property portfolio.
Carrying value at acquisition date Adjustments Fair value at acquisition date
£'000 £'000 £'000
Investment properties 29,385 2,356 31,741
Tangible fixed assets - - -
Deferred tax asset - 273 273
Receivables and prepayment 26 279 305
Cash at bank and in hand - - -
Payables and other creditors (732) - (732)
Bank loans and overdraft (27,973) - (27,973)
Deferred tax (401) 401 -
Net assets 305 3,309 3,614
Consideration 3,614
Goodwill on acquisition -
The acquired subsidiary contributed £4,102,851 to the profit before tax of the
Group. If this acquisition had occurred on 1 April 2014, Group revenue would
have been an estimated £9.7m and Group profit before tax would have been an
estimated £14.4m. In determining these amounts, management has assumed that
the fair value adjustments that arose on the date of acquisition would have
been the same if the acquisition occurred on 1 April 2014.
Deferred tax asset amounting to £273,029 was recognised as a fair value
adjustment at the acquisition date being management's estimate, based on
budgets and forecasts, of the future utilisation of tax losses of
approximately £9m that were available to carry forward following the
refinancing of the bank loans of the PIH which took place at acquisition. The
deferred tax asset was increased to £500,000 at 31 March 2015 as a result of
the restructuring of PIH and the repayment of £10m of intra group loans which
has resulted in increasing the anticipated future annual profits of PIH.
No deferred tax has been recognised on the adjustments to fair value as a
result of the historical cost of the investment properties exceeding their
fair value.
The fair value of the investment properties at acquisition was based on a
valuation performed at the time of the acquisition amounting to £32,020,000
obtained from DTZ Debenham Tie Leung Limited less a lease incentive balance
which has been included in prepayments amounting to £278,901.
A fair value adjustment to prepayments amounting to £278,901 was made to bring
the revenue recognition policy of PIH into line with that of the Group so that
the rental income from investment properties leased out under operating leases
is recognised in the Income Statement on a straight-line basis over the term
of the lease.
Acquisition related costs
The Group incurred acquisition related costs of £638,668 related to
professional fees paid for due diligence, general professional fees and legal
related costs. These costs have been included in administrative expenses in
the Group's consolidated income statement.
13 Investment Properties
Freehold Investment properties Leasehold Investment properties Total
£'000 £'000 £'000
At 1 April 2014 41,620 17,820 59,440
Arising on acquisition of subsidiary undertaking 31,741 - 31,741
Additions - refurbishment 2,497 11 2,508
Additions - new properties 305 - 305
Gains on revaluation of investment property 9,180 589 9,769
Disposals (775) - (775)
At 1 April 2015 84,568 18,420 102,988
Arising on acquisition of subsidiary undertakings 44,880 - 44,880
Additions - refurbishment 1,149 33 1,182
Additions - new properties 18,653 4,886 23,539
Gains on revaluation of investment properties 1,840 1,780 3,620
Disposals (1,667) - (1,667)
At 31 March 2016 149,423 25,119 174,542
25,119
174,542
Investment properties are stated at fair value as determined by the Directors.
The fair value of the Group's property portfolio is based upon external
valuations and is inherently subjective. The fair value represents the amount
at which the assets could be exchanged between a knowledgeable, willing buyer
and a knowledgeable, willing seller in an arms-length transaction at the date
of valuation, in accordance with International Financial Reporting Standard
13. The fair value of each of the properties has been assessed by the
directors. In determining the fair value of investment properties, the
directors make use of historical and current market data as well as existing
lease agreements
As a result of the level of judgement used in arriving at the market
valuations, the amounts which may ultimately be realised in respect of any
given property may differ from the valuations shown in the statement of
financial position.
In addition to the gain on revaluation of investment properties included in
the table above, realised gains of £290,525 (2015: £177,698) relating to
investment properties disposed of during the year were recognised in profit or
loss.
A reconciliation of the valuations carried out by the external valuers to the
carrying values shown in the balance sheet was as follows:
2016 2015
£ £'000
Scanlans Consultant Surveyors LLP 2,017 2,260
Cushman & Wakefield LLP 147,174 65,215
DTZ Debenham Tie Leung Limited - 35,280
Knight Frank 24,000 -
Directors valuation 250 -
Fair value 173,441 102,755
Adjustment in respect of minimum payment under head leases separately included as a liability in the balance sheet 2,076 1,220
Less lease incentive balance included in prepayments (975) (987)
Carrying value 174,542 102,988
174,542
102,988
Investment properties with a carrying value of £151,065,990 (2015:
£101,768,108) are subject to a first charge to secure the Group's bank loans
amounting to £72,678,233 (2015: £36,205,461).
The valuations of all investment property held by the Group is classified as
Level 3 in the IFRS 13 fair value hierarchy as they are based on unobservable
inputs. There have been no transfers between levels of the fair value
hierarchy during the year.
Valuation process
The valuation reports produced by the external 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 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 external 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; 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.
31 March 2016 Significant unobservable inputs
Cushman & Wakefield Knight Frank Scanlans
Value of investment properties £147,174,000 £24,000,000 £2,017,000
Area (sq ft) 1,710,355 114,274 22,820
Gross Estimated Rental Value £12,559,734 £1,775,104 £196,910
Net Initial YieldMinimumMaximumWeighted average -6.9%13.4%6.1% 6.3%31.0% 7.0% 8.3%10.5% 9.8%
Reversionary YieldMinimumMaximumWeighted average 5.5% 15.8%6.7% 6.9%6.9% 6.9% 8.3%10.5% 9.8%
Equivalent YieldMinimumMaximumWeighted average 3.2% 12.1%8.0% 6.3%17.5% 7.5% 8.3%10.5% 9.8%
Negative Net Initial Yields arise where properties are vacant or partially
vacant and void costs exceed rental income
31 March 2015 Significant unobservable inputs
Cushman & Wakefield DTZ Scanlans
Value of investment properties £65,215,000 £35,280,000 £2,260,000
Area (sq ft) 1,095,327 301,392 22,820
Gross Estimated Rental Value £6,703,332 £2,740,900 £195,653
Net Initial YieldMinimumMaximumWeighted average -6.4%13.8%7.6% 3.2%10.8% 6.5% 7.5%10.0% 8.5%
Reversionary YieldMinimumMaximumWeighted average 6.0% 16.3%6.4% 5.9%9.6% 7.0% 7.5%10.0% 8.5%
Equivalent YieldMinimumMaximumWeighted average 0.9% 13.5%9.0% 6.0%9.0% 7.2% 7.5%10.0% 8.5%
Sensitivity of measurement to variations in the significant unobservable
inputs
Unobservable input Impact on fair value measurement of significant increase in input Impact on fair value measurement of significant decrease in input
Gross Estimated Rental Value Increase Decrease
Net Initial Yield Decrease Increase
Reversionary Yield Decrease Increase
Equivalent Yield Decrease Increase
The relationship between the unobservable inputs and their impact on the fair
value measurement is not certain. Changes to the tenancies and/or income
profile of an investment asset may also impact the fair value outside one or
more of the above inter-relationships according to individual circumstances.
14 PROPERTY, PLANT AND EQUIPMENT
IT,fixtures and fittings
£000
At 1 April 2014 1
Assets acquired -
Additions 62
At 1 April 2015 63
Assets acquired -
Additions 3
At 31 March 2016 66
Depreciation
At 1 April 2014 -
Provided during the year 11
At 1 April 2015 11
Provided during the year 18
At 31 March 2016 29
Net book value at 31 March 2016 37
Net book value at 31 March 2015 52
15 TRADE AND OTHER RECEIVABLES
2016 2015
£000 £000
Current
Gross amounts receivable from tenants 2,727 1,938
Less: provision for impairment (243) (90)
Net amount receivable from tenants 2,484 1,848
Other taxes 68 5
Deposit on purchase of investment property - 1,000
Other debtors 37 27
Accrued income 150 63
Prepayments 588 432
3,327 3,375
3,375
2016 2015
£000 £000
Non-Current
Accrued income 825 924
825 924
924
Accrued income amounting to £975,000 (2015: £986,892) relates to rents
recognised in advance as a result of spreading the effect of rent free and
reduced rent periods, capital contributions in lieu of rent free periods and
contracted rent uplifts over the expected terms of their respective leases.
Movements in the provision for impairment of trade receivables were as
follows:
2016 2015
£'000 £'000
Brought forward 90 89
Arising on acquisition - 10
Utilised in the period (11) (33)
Provisions increased 164 24
243 90
90
As at 31 March, the analysis of trade receivables that were past due but not
impaired is as follows:
2016 2015
£'000 £'000
0-30 days 2,106 1,599
31-60 days 95 (34)
61-90 days 66 52
91 - 120 days 46 204
More than 120 days 171 27
2,484 1,848
1,848
16 CASH AND CASH EQUIVALENTS
All of the Group's cash and cash equivalents at 31 March 2016 and 31 March
2015 are in sterling and held at floating interest rates.
2016 2015
£'000 £'000
Cash and cash equivalents 8,576 12,278
12,278
The Directors consider that the carrying amount of cash and cash equivalents
approximates to their fair value.
17 TRADE AND OTHER PAYABLES
2016 2015
£'000 £'000
Trade payables 638 242
Corporation tax 662 -
Other taxes 1,036 587
Other payables 67 21
Deferred rental income 2,605 1,843
Accruals 1,807 394
6,815 3,087
3,087
18 BORROWINGS
2016 2015
£'000 £'000
Current
Bank loans 2,233 400
Non-current liabilities
Bank loans 69,711 35,406
Total borrowings 71,944 35,806
2016 2015
£'000 £'000
Non-current liabilities
Secured Bank loans drawn 70,445 35,806
Unamortised lending costs (734) (400)
69,711 35,406
69,711
35,406
The maturity profile of the Group's debt was as follows
2016 2015
£'000 £'000
Within one year 2,233 400
From one to two years 17,068 20,003
From two to five years 53,377 15,803
72,678 36,206
36,206
Facility and arrangement fees
As at 31 March 2016
Secured Borrowings Margin over LIBOR % Maturity date Loan Balance £'000 Unamortised facility fees £'000 Facility drawn£'000
Santander Bank PlcLloyds Bank PlcNational Westminster Bank plc 2.25%2.10%2.50% Jun 2020May 2019Mar 2021 9,8154,24621,734 (150)(66)(266) 9,9654,31222,000
Nationwide Building SocietyClose Brothers Group plc 2.45%4.00% Nov 2020Sep 2017 19,7961,193 (204)(7) 20,0001,200
Barclays Bank plc 2.75% Jul 2017 15,160 (41) 15,201
71,944 (734) 72,678
As detailed in note 13 the bank borrowings are secured on investment
properties with a carrying value of £151,065,990.The Group has an unused loan
facility amounting to £8,000,000 (2015: £nil). Interest is charged on this
facility at a rate of 1.25% and is payable quarterly. This facility is
secured on the investment properties held by Property Investment Holdings
Limited and Palace Capital (Properties) Limited
The Group has chosen not to enter into any hedging to date as a result of the
historically low interest rates and constantly monitors this approach to
manage interest rate risk.
The Group has been in compliance with all financial covenants of the above
facilities applicable throughout the year.
19 GEARING and loan to value RATIO
The calculation of gearing is based on the following calculations of net
assets and net debt:
2016 2015
£'000 £'000
Net asset value 106,815 80,016
Borrowings 71,944 35,806
Obligations under finance leases 2,067 1,214
Cash and cash equivalents (8,576) (12,278)
Net Debt 65,435 24,742
NAV Gearing 61.3% 30.9%
The calculation of bank loan to property value is calculated as follows:
2016 2015
£'000 £'000
Fair value of Property portfolio 173,441 102,755
Borrowings - Bank loans 72,678 36,205
Cash at bank (8,576) (12,278)
Net bank borrowings 64,102 23,927
Loan to value ratio 41.9% 35.2%
Net Loan to value ratio 37.0% 23.3%
23.3%
20 LEASES
Operating lease receipts in respect of rents on investment properties are
receivable as follows:
2016 2015
£'000 £'000
Within one year 12,165 8,269
From one to two years 10,734 6,984
From two to five years 24,987 12,999
From five to 25 years 44,204 12,139
After 25 years 685 693
92,775 41,084
41,084
Operating lease payments in respect of rents on leasehold properties occupied
by the Group are payable as follows:
2016 2015
£'000 £'000
Within one year 45 45
From one to two years 12 45
From two to five years - 12
57 102
102
Finance lease obligations in respect of rents payable on leasehold properties
were payable as follows:
2016 2015
Minimum lease payments Interest Present value of minimum lease payments Present value of minimum lease payments
£'000 £'000 £'000 £'000
Within one year 130 (128) 2 2
From one to two years 130 (128) 2 2
From two to five years 386 (380) 6 6
From five to 25 years 2,515 (2,447) 68 64
After 25 years 10,316 (8,327) 1,989 1,140
13,477 (11,410) 2,067 1,214
The net carrying amount of the leasehold properties is shown in note 13.
The Group has over 200 leases granted to its tenants. These vary dependent on
the individual tenant and the respective property and demise and vary
considerably from short term leases of less than 1 year to longer term leases
of over 10 years. A number of these leases contain rent free periods. Standard
lease provisions include service charge payments and recovery of other direct
costs. All investment properties in the Group's portfolio generated rental
income during the both the current and prior periods except for one property,
with an investment value of £1.5m, which was vacant throughout the current
year but had some rental income in the prior year. The direct operating costs
for this property during the year ended 31 March 2016 amounted to £163,000.
21 Share capital
2016 2015
Authorised, issued and fully paid share capital is as follows: £'000 £'000
25,781,229 Ordinary Shares of 10p each (2015: 20,225,673) 2,578 2,023
315,937 Deferred Shares of 90p each (2015: 315,937) 284 284
2,862 2,307
2,307
2016 2015
Reconciliation of movement in ordinary share capital £'000 £'000
At start of year 2,023 1,244
Issued in the year 555 779
At end of year 2,578 2,023
2,023
Year ending 31 March 2016
On 17 June 2015 the company issued 5,555,556 ordinary 10p shares at a price of
£3.60. Issue costs amounting to £885,383 were incurred and have been deducted
from the share premium account.
Year ending 31 March 2015
On 23 June 2014 79,665 warrants were exercised and as a result the company
issued 79,665 ordinary 10p shares at a price of £2.00.
On 26 August 2014 the company issued 6,451,612 ordinary 10p shares at a price
of £3.10. Issue costs amounting to £795,684 were incurred and have been
deducted from the share premium account.
In addition, on the same day the company issued 1,103,459 ordinary 10p shares
in exchange for 100% of the share capital of Property Investment Holdings
Limited. The fair value of these shares was £3.275 per share.
On 18 February 2015 150,000 warrants were exercised and as a result the
company issued 150,000 ordinary 10p shares at a price of £2.00.
The Deferred Shares have the following rights and restrictions. As regards
income the Deferred Shares shall not entitle the holders thereof to receive
any dividend or other distribution unless and until the holders of the
Ordinary Shares shall have received in aggregate amongst them the sum of
£100,000,000 in respect of such dividend or distribution. As regards voting
the Deferred Shares shall not entitle the holders thereof to receive notice of
or to attend or vote at any General Meeting of the Company. As regards
capital on a return of capital on a winding up the holders of Deferred Shares
shall only be entitled to receive the amount paid up on such shares after the
holders of the Ordinary Shares have received the sum of £1,000,000 for each
Ordinary Share held by them and shall have no other right to participate in
the assets of the Company.
Share options:
2016 2015
Reconciliation of movement in outstanding share options No of options No of options
At start of year 448,754 811,752
Issued in the year 120,268 -
Exercised in the year - (229,665)
Lapsed in the year - (133,333)
At end of year 569,022 448,754
448,754
As at 31 March 2016, the Company had the following outstanding unexpired
options.
Description of unexpired share options 2016 2015
No of options Weighted average Option price No of options Weighted average Option price
Senior executive plan (note 22) 549,972 13p 429,704 17p
Warrants issued to Nominated Advisors and Broker 19,050 200p 19,050 200p
Total 569,022 20p 448,754 25p
Exercisable 50,643 216p 19,050 200p
Not exercisable 518,379 0p 429,704 17p
Warrants issued to the Groups Nominated advisors and Broker
No new share options were issued to the Group's Nominated advisor or Broker
during the year. The Group's Nominated advisor and Broker received 248,715
options in 2014 in exchange for part of the fee charged by the brokers for the
share issue that occurred during that year and the directors considered the
fair value of the service to be £50,000. These options were exercisable at a
price of £2.00 per share.
No new share options were issued to the Group's Broker and none were exercised
during the year (2015: issued none and exercised 229,665). The average share
price at the date of exercise was £3.48 per share.
The weighted average remaining contractual life of the options outstanding at
31 March 2016 was 2 years (2015: 2).
22 Share bASED PAYMENTS
Senior executive plan
The following table illustrates the number and weighted average exercise
prices of, and movements in, share options during the year:
Number of options Exercise price Date from which exercisable Expiry date
Outstanding at 31 March 2014 and 2015 429,704 17p
Issued during the period (LTIP 2015) 120,268 0p 8 Dec 2018 8 Dec 2018
Outstanding at 31 March 2016 549,972 13p
LTIP 2014
The options are awarded to management on achievements against target on two
separate measures over the three financial years ending 31 March 2017. Half
the options will be awarded based on the first target and half based on the
achievement of the second.
Earnings per share (EPS) growth: is based on a proforma profit after tax
excluding property revaluations and
- More to follow, for following part double click ID:nRSF2361AcRecent news on Palace Capital
See all newsREG - Palace Capital PLC - Disposal Update
AnnouncementREG - Palace Capital PLC - Withdrawal of Meeting Notice and Board Changes
AnnouncementREG - Palace Capital PLC - RESPONSE TO LAKESTREET CAPITAL’S ANNOUNCEMENT
AnnouncementREG - Palace Capital PLC - Response to Lakestreet Capital Partners AG
AnnouncementREG - Lakestreet Capital Palace Capital PLC - LAKESTREET DEMANDS CHANGE AT PALACE CAPITAL
Announcement