REG - Palace Capital PLC - Half Yearly Report <Origin Href="QuoteRef">PCA.L</Origin> - Part 2
30/11/2015 07:11
- Part 2: For the preceding part double click ID:nRSd2813Ha
9.1p 12.8p 28.3p
7 Net asset 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 of
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.
Net asset value is calculated using the following information:
Unaudited 30 September2015£000 Unaudited30 September2014£000 Audited31 March 2015£000
Net assets at the end of the period 104,938 75,029 80,016
Effect of exercise of share options 109 338 109
Diluted net assets 105,047 75,367 80,125
Exclude fair value of financial instruments & exclude deferred tax on latent capital gains - - -
EPRA NAV 105,047 75,367 80,125
Include fair value of financial instruments & include deferred tax on latent capital gains - - -
EPRA NNNAV 105,047 75,367 80,125
Unaudited 30 September2015000s Unaudited30 September2014000s Audited31 March 2015000s
Number of ordinary shares of 10p each issued as at the end of the period 25,781 20,076 20,226
Number of unexpired share options 221 249 186
Number of diluted ordinary shares 26,002 20,325 20,412
Basic NAV per ordinary share 407p 374p 396p
Diluted NAV per ordinary share 404p 371p 393p
EPRA NAV per ordinary share 404p 371p 393p
EPRA NNNAV per ordinary share 404p 371p 393p
8 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 2,802 11 2,813
Gains on revaluation of investment properties 9,180 589 9,769
Disposals (775) - (775)
At 31 March 2015 84,568 18,420 102,988
Arising on acquisition of subsidiary undertaking 20,700 - 20,700
Additions 10,916 4,885 15,801
Gains on revaluation of investment properties 1,197 1,111 2,308
Disposals (1,447) - (1,447)
At 30 September 2015 115,934 24,416 140,350
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, in accordance with IFRS 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
giving property may differ from the valuations shown in the statement of
financial position.
At 30 September 2015, the Group's freehold and leasehold investment properties
were externally valued by Royal Institution of Chartered Surveyors ("RICS")
registered 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 September2015£000 Unaudited30 September2014£000 Audited31 March 2015£000
Fair value 139,315 98,620 102,755
Adjustment in respect of minimum payment
under head leasesincluded as a liability 2,076 1,220 1,220
Less lease incentive balance in prepayments (1,041) - (987)
Carrying value 140,350 99,840 102,988
Investment properties with a carrying value of £136,366,651 (31 March 2015:
£101,768,108) are subject to a first charge to secure the Group's bank loans
amounting to £51,092,960 (31 March 2015: £36,205,461).
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 September2015£000 Unaudited30 September2014£000 Audited31 March 2015£000
Current
Trade receivables 3,197 1,503 1,848
Deposit on purchase of investment property - - 1,000
Prepayments and accrued income 861 220 495
Other receivables 86 150 32
4,144 1,873 3,375
Non- Current
Accrued income 935 498 924
935 498 924
10 Current trade and other payables
Unaudited 30 September2015£000 Unaudited30 September2014£000 Audited31 March 2015£000
Trade payables 184 683 242
Accruals 1,967 1,460 394
Deferred rental income 2,756 653 1,843
Taxes 2,219 630 587
Other payables 6 122 21
7,132 3,548 3,087
11 Borrowings
Unaudited 30 September2015£000 Unaudited30 September2014£000 Audited31 March 2015£000
Current borrowings 850 400 400
Non current borrowings 49,678 33,608 35,407
Total borrowings 50,528 34,008 35,807
Secured bank loans drawn 51,092 34,432 36,207
Unamortised facility fees (564) (424) (400)
50,528 34,008 35,807
Facility and arrangement fees
As at 30 September 2015
Secured borrowings Margin% Maturity date Facility drawn£000 Unamortised facility fees£000 LoanBalance£000
Santander Bank plc 2.25% Jun 2020 11,335 (168) 11,167
Lloyds Bank plc 2.10% Apr 2020 4,437 (77) 4,360
National Westminster Bank plc 2.75% Aug 2019 14,517 (185) 14,332
Nationwide Building Society* 3.75% Oct 2016 19,603 (124) 19,479
Close Brothers Group plc 4.00% Sep 2017 1,200 (10) 1,190
51,092 (564) 50,528
*On 11 November 2015 the Group refinanced its debt facility with Nationwide
for a 5 year term until November 2020 at an increased facility of £20.0
million and at a reduced margin of 2.45%.
12 Business combinations
On 17 June 2015 the group acquired 100% of the share capital of O&H
Northampton Limited for a cash consideration of £1.
Carrying value at acquisition date Adjustments Fair value at acquisition date
£000 £000 £000
Investment properties 20,700 - 20,700
Receivables and prepayment 444 - 444
Cash at bank 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 -
Goodwill on acquisition -
Management determined that the acquisition should be accounted for as a
business combination in accordance with IFRS 3 'Business Combinations'. The
fair value of £1 was considered equal to the carrying value representing the
entity's net assets. The fair value of the investment property 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 of £413,115 related to
professional fees paid for due diligence, general professional fees and legal
related costs. These costs have been included in the Group's consolidated
income statement.
13 Share capital
Authorised, issued and fully paid share capital is as follows:
Unaudited 30 September2015 Unaudited30 September2014 Audited31 March 2015
Ordinary 10p shares 25,781,229 20,075,673 20,225,673
Deferred 90p shares 315,937 315,937 315,937
Share capital - number of shares in issue 26,097,166 20,391,610 20,541,610
Share capital - £000's 2,862 2,292 2,307
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.
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 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.
Movement in ordinary authorised share capital Number of ordinary shares issued000s Price per sharepence Total number of shares000s
As at 1 Apr 2014 12,441
Exercise of warrants June 2014 80 200 12,521
Equity issue Aug 2014 7,555 310 20,076
As at 30 Sep 2014 20,076
Exercise of warrants Feb 2015 150 200 20,226
As at 1 Apr 2015 20,226
Equity issue Jun 2015 5,555 360 25,781
Carried forward at 30 Sep 2015 25,781
14 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 value of preference
shares redeemed.
- Share based payment reserve represents the fair value of share options
expensed through the income statement to date but not exercised.
15 Post balance sheet events
On 11 November 2015 the Group refinanced its debt facility with Nationwide for
a further 5 years until November 2020 at an increased facility of £20.0
million and at a reduced margin of 2.45%.
This information is provided by RNS
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