REG - Palace Capital PLC - Half-year Report <Origin Href="QuoteRef">PCA.L</Origin> - Part 2
04/12/2017 07:05
- Part 2: For the preceding part double click ID:nRSD2140Ya
109,559
Unaudited 30 September2017 Unaudited30 September2016 Audited31 March 2017
Number of ordinary shares of 10p each issued as at the end of the period 25,250,692 25,650,692 25,150,692
Dilutive effect of share options 36,322 10,514 87,584
Number of diluted ordinary shares 25,287,014 25,661,206 25,238,276
Net assets per ordinary share
Basic NAV 442p 419p 436p
Diluted NAV 441p 419p 434p
EPRA NAV 451p 419p 443p
EPRA NNNAV 441p 419p 434p
8 Investment Properties
Freehold Investment properties Leasehold Investment properties Total
£000 £000 £000
At 1 April 2016 149,423 25,119 174,542
Additions - new properties 10,950 - 10,950
Additions - refurbishments 4,505 74 4,579
Gains on revaluation of investment properties 3,090 11 3,101
Disposals (7,740) (1,516) (9,256)
At 31 March 2017 160,228 23,688 183,916
Additions - new properties 20,000 - 20,000
Additions - refurbishments 891 34 925
Gains on revaluation of investment properties 1,155 241 1,396
Disposals (795) (2,610) (3,405)
At 30 September 2017 181,479 21,353 202,832
Investment properties are stated at fair value 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.
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
giving property may differ from the valuations shown in the statement of
financial position.
At 30 September 2017, 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 September2017£000 Unaudited30 September2016£000 Audited31 March 2017£000
Fair value 202,840 183,650 183,175
Adjustment in respect of minimum payment
under head leasesincluded as a liability 1,600 2,076 1,959
Less lease incentive balance in prepayments (1,608) (939) (1,218)
Carrying value 202,832 184,787 183,916
Investment properties with a carrying value of £186,180,000 (31 March 2017:
£162,320,000) are subject to a first charge to secure the Group's bank loans
amounting to £93,757,000 (31 March 2017: £78,730,000).
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 period 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.
9 Trade and other receivables
Unaudited 30 September2017£000 Unaudited30 September2016£000 Audited31 March 2017£000
Current
Trade receivables 2,285 1,882 951
Prepayments and accrued income 2,230 758 1,499
Other taxes 359 - -
Other debtors 144 530 61
5,018 3,170 2,511
Non-current
Prepayments and accrued income - 809 -
- 809 -
10 Current trade and other payables
Unaudited 30 September2017£000 Unaudited30 September2016£000 Audited31 March 2017£000
Trade payables 875 850 570
Accruals 1,346 3,155 1,317
Deferred rental income 4,273 1,491 2,860
Taxes 1,852 2,396 1,408
Other payables 7 60 6
8,353 7,952 6,161
11 Borrowings
Unaudited 30 September2017£000 Unaudited30 September2016£000 Audited31 March 2017£000
Current borrowings 2,186 3,241 2,036
Non-current borrowings 90,464 77,519 75,758
Total borrowings 92,650 80,760 77,794
Non-current borrowings
Secured bank loans drawn 91,571 78,623 76,694
Unamortised facility fees (1,107) (1,104) (936)
90,464 77,519 75,758
The maturity profile of the Group's debt was as follows
Unaudited 30 September2017£000 Unaudited30 September2016£000 Audited31 March 2017£000
Within one year 2,186 3,241 2,036
From one to two years 2,186 2,036 2,036
From two to five years 76,751 63,517 61,806
From five to ten years 12,634 13,070 12,852
Total borrowings 93,757 81,864 78,730
Facility and arrangement fees
As at 30 September 2017
Secured borrowings All in cost% Maturity date Facility drawn£000 Unamortised facility fees£000 Loan balance£000
Scottish Widows 2.90 Jul 2026 14,814 (212) 14,602
National Westminster Bank plc 2.84 Mar 2021 31,250 (305) 30,945
Nationwide Building Society 3.12 Nov 2020 16,755 (138) 16,617
Santander Bank plc 2.59 Aug 2022 27,000 (419) 26,581
Lloyds Bank plc 2.44 May 2019 3,938 (33) 3,905
93,757 (1,107) 92,650
The National Westminster Bank plc facility is secured on the investment
properties held by Property Investment Holdings Limited and Palace Capital
(Properties) Limited. Interest is charged on the unutilised element of this
facility at 1.25% per annum, and is payable quarterly. This facility was fully
drawn down as at 30 September 2017 (31 March 2017: £3.6m undrawn).
12 Share capital
Authorised, issued and fully paid share capital is as follows:
Unaudited 30 September2017 Unaudited30 September2016 Audited31 March 2017
Ordinary 10p shares 25,800,279 25,800,279 25,800,279
Share capital - number of shares in issue 25,800,279 25,800,279 25,800,279
Share capital - £ 2,580,028 2,580,028 2,580,028
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 19 September 2017 The Company
transferred 100,000 ordinary shares held in Treasury into The Palace Capital
Employee Benefit Trust.
On 19 September 2017 the Company granted 66,352 ordinary shares for awards
made under the 2014 LTIP from The Palace Capital Employee Benefit Trust. As at
31 March 2017 there were 649,587 shares held in treasury but as a result of
the 100,000 shares transferred into the Employee Benefit Trust, there are
549,587 shares remaining in Treasury.
Movement in ordinary authorised share capital Price per share pence Number of ordinary shares issued Total number of shares
As at 1 Apr 2016 25,781,229
Exercise of warrants June 2016 200 19,050
As at 30 Sep 2016, 31 March 2017 and 30 Sep 2017 25,800,279
The Company's issued share capital as at 30 September 2017 comprises
25,250,692 ordinary shares which can be used by shareholders as the
denominator for the calculations which excludes the 549,587 ordinary shares
held in treasury.
13 Retained earnings & Reserves
For the purpose of preparing the consolidated financial statement of the
Group, the following reserves are held:
- Share Capital represents the nominal value of the issued share capital of Palace Capital plc
- Share Premium represents the excess over nominal value of the fair value consideration received for equity shares net of expenses of the share issue.
- The Merger Reserve represents the excess over nominal value of the fair value consideration for the acquisition of subsidiaries satisfied by the issue of shares in accordance with S612 of the Companies Act 2006.
- The Capital redemption reserve represents the cancellation of Deferred Shares and the removal of them from the Company's balance sheet.
- The Treasury share reserve represents buyback of the company's own shares. These shares are recognised at cost as a deduction from equity shareholders' funds. Subsequent consideration received for the sale of such shares is also recognised in equity, with any difference between the sale proceeds and the original cost being taken to revenue reserves.No gain or loss is recognised in the performance statements on transactions in treasury shares.
14 Post balance sheet events
On 9 October 2017 the acquisition of the entire share capital of the
investment property company, R.T Warren (Investments) Limited completed for a
total consideration of £53.3m. The Company undertook a share placing and open
offer raising £70.0m on the AIM. 20,588,236 new shares were issued at an issue
price of 340 pence per share. Following Admission of the shares, the issued
ordinary share capital of the Company consists of 45,838,928 ordinary shares.
This figure excludes the 549,587 ordinary shares held in treasury.
This information is provided by RNS
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