REG - Palace Capital PLC - Preliminary Results for year ended 31 March 2025
05/06/2025 07:00
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RNS Number : 5066L Palace Capital PLC 05 June 2025
5 June 2025
PALACE CAPITAL PLC
("Palace Capital", the "Group" or the "Company")
Preliminary Results for the year ended 31 March 2025
DELIVERING ON OUR STRATEGY TO RETURN CAPITAL TO SHAREHOLDERS
Palace Capital (LSE: PCA) announces its audited preliminary results for the
year ended 31 March 2025.
Steven Owen, Executive Chairman, commented:
"During the financial year ended 31 March 2025 (FY25), we made further
progress on our strategy to return capital to shareholders through the
disposal of investment and residential properties. This was achieved through
the sale of £35.0 million of assets at 6.0% above the 31 March 2024 valuation
and returning cash of £21.7 million to shareholders by way of a successful,
oversubscribed tender offer in July 2024, which contributed an additional 2.0
pence to EPRA NTA per share. Since the updated strategy of the Company was
announced in July 2022, we have returned over £43 million of cash to
shareholders and during FY25 repaid all outstanding borrowings. The Company
currently has cash of £30.3 million, compared with £22.2 million as at 31
March 2025. The results below reflect the disposals and debt reduction
strategy as well as the good progress made with our asset management
activities and the ongoing reduction in the level of administrative expenses,
which have continued since the year end.
"The Company currently has five investment properties remaining, which were
valued at £39.0 million as at 31 March 2025. One of these assets (Leamington
Spa) is under offer, another (Halifax) is expected to be marketed for sale in
September or the fourth quarter of 2025, subject to market conditions,
following its part disposal in March 2025. The remaining three require the
completion of ongoing asset management activities in order to be ready for
sale. In addition, there were ten apartments remaining at Hudson Quarter in
York valued at £4.3 million as at 31 March 2025.
"The success of our disposal strategy since July 2022 means that the Company
is now debt free and the remaining portfolio is unencumbered, which together
with its strong cash position gives it both flexibility and optionality over
the timing of its disposal programme. It is therefore anticipated that the
Company will return further cash to shareholders by way of a tender offer
expected to be in July once the disposal of its property at Leamington Spa has
been completed. Discussions with shareholders regarding the timing and
strategy for these remaining assets and returns to shareholders have commenced
and are continuing."
Income statement metrics Year ended Year ended Change
31 March 2025 31 March 2024
Net rental income £4.8m £9.6m (50.0%)
Adjusted profit before tax £3.5m £5.4m (35.2%)
Adjusted earnings per share 11.3p 13.8p (18.1%)
IFRS profit/(loss) before tax £1.4m (£9.3m)
Basic earnings per share 4.5p (23.7p)
Dividends
Dividend per share 15.0p 15.0p
Balance Sheet and operational metrics
EPRA NTA per share 251p 262p (4.2%)
Net asset value £72.5m £97.8m (25.9%)
Cash returned to shareholders (including costs) (£22.1m) (£15.2m) +45.4%
Like-for-like portfolio valuation decrease (5.9%) (15.5%)
Total accounting return 1.5% (6.4%)
Total shareholder return 0.4% 13.7%
EPRA occupancy rate 84.8% 82.0%
Debt
Loan to value nil nil
Total gross debt nil (£8.3m)
Total net cash £22.2m £11.5m +93.0%
Average cost of debt nil 2.9%
Average debt maturity nil 2.3 years
Financial highlights
· Adjusted profit before tax of £3.5 million (2024: £5.4 million)
reflecting the reduction in income following disposals, offset in part by the
significant reduction in finance costs and recurring administrative expenses.
· IFRS profit before tax of £1.4m (2024: loss of £9.3 million)
primarily due to EPRA earnings of £2.7m and the profit on property disposals
of £1.7 million, offset by the valuation deficit of £2.9 million.
· Adjusted EPS of 11.3 pence (2024: 13.8 pence) reflecting the
movement in adjusted profit before tax but partly mitigated by the accretive
tender offer.
· Total dividends paid or declared for the year of 15.0 pence per
share (2024: 15.0 pence per share).
· Cash returned to shareholders of £22.1 million (including costs)
by way of a successful tender offer in July 2024, a 2.0 pence per share
accretion to EPRA NTA.
· EPRA NTA per share decreased by 4.2% to 251 pence (2024: 262
pence) due primarily to the portfolio revaluation deficit, offset by the 2.0
pence per share tender offer accretion.
· Total property portfolio valuation reduced by 5.9% (2024:
decrease of 15.5%) on a like-for-like basis.
· Net cash position of £22.2 million (2024: £11.5 million). In
the twelve months to 31 March 2025, gross debt reduced by £8.3 million to
£nil.
· Total administrative expenses reduced by £1.1 million in FY25
with other, ongoing cost reduction measures when fully implemented expected to
result in annualised administrative expenses of c.£1.3 million from the
second half of 2025.
· A resolution proposing the renewal of the share buyback authority
to purchase up to 15% of shares will be proposed at the 2025 AGM to be held on
9 July 2025.
Operational highlights
· Successful disposal of five investment properties and two units
for £31.0 million, 6.3% ahead of the 31 March 2024 book value.
· Sale of seven apartments at Hudson Quarter, York for £4.0
million. There are ten units remaining.
· Post 31 March 2025, completed the sale of HQ Office, York for a
gross price of £10.0 million, which, after adjusting for rent top ups, was in
line with the 31 March 2024 valuation.
· An additional £0.7 million of annualised net rental income was
created during FY25 through leasing and review activity and the associated
reduction in non-recoverable property costs which was, on average, 3% ahead of
the 31 March 2024 ERVs. Annualised net rental income lost from lease
expiries and breaks totalled £0.5 million resulting in a net additional
annualised increase of £0.2 million from active asset management activity.
Net rental income lost through disposals totalled £2.1 million per annum
resulting in a net reduction in annualised net rental income of £1.9 million.
· Rent collection for the 12 months to 31 March 2025 of 99% (2024:
98%).
· EPRA occupancy at 31 March 2025 increased on a like-for-like
basis to 84.8% from 82.0% at 31 March 2024.
· WAULT of 7.2 years to break and 9.8 years to expiry reflecting
asset management activities and resilience of portfolio (2024: 5.4 years to
break and 7.5 years to expiry).
PALACE CAPITAL PLC
Steven Owen, Executive Chairman
info@palacecapitalplc.com
Financial PR
FTI Consulting
Dido Laurimore / Andrew Davis
Tel: +44 (0)20 3727 1000
palacecapital@fticonsulting.com
Palace Capital plc
For further information on Palace Capital plc (LSE: PCA) please visit
www.palacecapitalplc.com (http://www.palacecapitalplc.com/) .
The Annual Report and Accounts together with the Notice convening the 2025
Annual General Meeting will be published and posted to Shareholders in June
2025.
Cautionary Statement
This announcement does not constitute an offer of securities by the Company.
Nothing in this announcement is intended to be, or intended to be construed
as, a profit forecast or a guide as to the performance, financial or
otherwise, of the Company or the Group whether in the current or any future
financial year. This announcement may include statements that are, or may be
deemed to be, ''forward-looking statements''. These forward-looking statements
can be identified by the use of forward-looking terminology, including the
terms ''believes'', ''estimates'', ''anticipates'', ''expects'', ''intends'',
''plans'', ''target'', ''aim'', ''may'', ''will'', ''would'', ''could'' or
''should'' or, in each case, their negative or other variations or comparable
terminology. They may appear in a number of places throughout this
announcement and include statements regarding the intentions, beliefs or
current expectations of the directors, the Company or the Group concerning,
amongst other things, the operating results, financial condition, prospects,
growth, strategies and dividend policy of the Group or the industry in which
it operates. By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on circumstances that
may or may not occur in the future and may be beyond the Company's ability to
control or predict. Forward-looking statements are not guarantees of future
performance. The Group's actual operating results, financial condition,
dividend policy or the development of the industry in which it operates may
differ materially from the impression created by the forward-looking
statements contained in this announcement. In addition, even if the operating
results, financial condition and dividend policy of the Group, or the
development of the industry in which it operates, are consistent with the
forward-looking statements contained in this announcement, those results or
developments may not be indicative of results or developments in subsequent
periods. Important factors that could cause these differences include, but are
not limited to, general economic and business conditions, industry trends,
competition, changes in government and other regulation, changes in political
and economic stability and changes in business strategy or development plans
and other risks.
Other than in accordance with its legal or regulatory obligations, the Company
does not accept any obligation to update or revise publicly any
forward-looking statement, whether as a result of new information, future
events or otherwise.
Executive Chairman's statement
Update on delivery of strategic objectives
During the financial year ended 31 March 2025 (FY25), we continued to progress
our strategy to return capital to shareholders through the disposal of
investment and residential properties. This was achieved through the sale of
£35.0 million of assets at 6.0% above the 31 March 2024 valuation and
returning cash of £21.7 million to shareholders by way of a successful,
oversubscribed tender offer in July 2024, which contributed an additional 2.0
pence to EPRA NTA per share. Since the updated strategy of the Company was
announced in July 2022, we have returned over £43 million of cash to
shareholders.
Since 1 April 2025, the Company completed the sale of HQ Office, York, a
freehold, multi-let building, for a gross price of £10.0 million, which,
after adjusting for rent top ups, was in line with the 31 March 2024
valuation. We are also under offer on the sale of the office building at
Leamington Spa. There are ten apartments remaining at Hudson Quarter, York,
valued at £4.3 million as at 31 March 2025.
The Company has been in a net cash position since April 2024 and in line with
the terms of the loan agreement with Scottish Widows, the Company repaid the
outstanding £8.0 million loan (£7.9 million net of the loan break gain) in
March 2025, in advance of the completion of the sale of the NHS units at
Halifax as reported on 11 April 2025. The Company is now debt free and the
portfolio is entirely unencumbered and currently has cash of £30.3 million,
compared with £22.2 million as at 31 March 2025.
Total investment properties sold since the change of strategy in July 2022
amount to £145.6 million (£160.3 million including residential apartments).
The Company currently has five investment properties remaining, which were
valued at £39.0 million as at 31 March 2025. One of these assets (Leamington
Spa) is under offer and another (Halifax) is expected to be marketed for sale
in September or the fourth quarter of 2025, subject to market conditions,
following its part disposal in March 2025. The three remaining properties
require the completion of ongoing asset management activities in order to be
ready for sale. An update on progress made together with the current position
is set out below under 'Disposal and asset management strategy post FY25'. We
reported in the Interim Results in November 2024 that conditions in the
investment market for certain types of assets, particularly leisure assets,
were such that, in the Board's view, the sale of these assets should be
deferred until market demand and pricing improve, particularly given the high
income yield and long unexpired lease terms. We remain of this view although
we expect market conditions to improve later this year assuming that financial
markets are less volatile than at present. The increase in bank lending to UK
real estate businesses seen over the last twelve months is encouraging and
should bring more liquidity to property investment markets as should further
interest rate reductions which are expected during 2025.
Palace Capital continues to reduce its level of administrative expenses in
line with its strategy with a reduction of £1.1 million in total
administrative expenses in FY25 and with measures being implemented expected
to result in a significant reduction in headcount from six to three executives
from the second half of 2025. This together with other cost reduction measures
when fully implemented are expected to result in annualised administrative
expenses of c.£1.3 million from the second half of 2025.
Dividend
The Group paid or declared dividends of 15.0 pence per share in relation to
the year ended 31 March 2025 (2024: 15 pence per share), including a proposed
fourth quarter dividend of 3.75 pence per share. The fourth quarter final
dividend of 3.75 pence per share will be paid as an interim dividend on 14
July 2025 to Shareholders on the register at 13 June 2025. The ex dividend
date will be 12 June 2025. The entire dividend will be paid as a Property
Income Distribution.
Outlook
We reported in the Interim Results in November 2024 that conditions in the
investment market for certain types of assets, particularly leisure assets,
were such that, in the Board's view, the sale of these assets should be
deferred until market demand and pricing improve, particularly given the high
income yield and long unexpired lease terms. We remain of this view although
we expect market conditions to improve later this year assuming that financial
markets are less volatile than at present. The 0.25% reduction in base rates
last month is a welcome step to improving liquidity in real estate markets,
particularly for residential property.
At an operational level, the Company continues to make good progress with its
asset management activities to enable the remaining properties to be ready for
sale as set out in the Operational Review.
The success of our disposal strategy since July 2022 means that the Company is
now debt free and the remaining portfolio is unencumbered which together with
its strong cash position gives it both flexibility and optionality over the
timing of its disposal programme. In the meantime, the Company anticipates it
will return further cash to shareholders by way of a tender offer expected to
be in July once the disposal of its property at Leamington Spa has been
completed. Discussions with shareholders regarding the timing and strategy for
these remaining assets and returns to shareholders have commenced and are
continuing.
Steven Owen
Executive Chairman
4 June 2025
Operational Review
Portfolio overview
As at 31 March 2025, the portfolio comprised seven properties (March 2024: 12)
comprising by value 58% office, 34% leisure and 8% residential, which were
independently valued by CBRE at £53.2 million reflecting a reduction in value
of 5.9% or £3.3 million on a like-for-like basis compared with the valuation
as at 31 March 2024.
The investment portfolio declined by £2.9 million or 5.6% over FY25 compared
with £3.2 million or 5.6% for the half year ended 30 September 2024 (HY 25).
As previously reported, the investment portfolio produced a small increase
compared with the valuation as at 30 September 2024 principally as a result of
the completion of the Vue lease regear at Sol, Northampton in 2025 and the
unwinding of some lease incentive balances on certain offices.
The value of the four office assets fell by 6.5% or £2.2 million over FY25,
with the 12% fall in the value of St James's Gate, Newcastle accounting for
75% of the office portfolio valuation deficit. The decline was driven by a
combination of softening yields and slower than expected trading at the space
occupied by Orega, a premium, flexible, serviced office workspace provider. In
HY25 the office portfolio decline was £2.6 million.
The two leisure assets reduced by 4.0% or £0.7 million over FY25 due mainly
to an increase in the equivalent yield on Halifax following the sale of the
long leasehold interest for £4.8 million to Calderdale and Huddersfield NHS
Foundation Trust, at a 7.5% NIY and 38% ahead of the March 2024 valuation.
The deficit on the leisure assets in HY25 was £0.6 million.
The residential properties at Hudson Quarter, York declined by £0.4 million
or 8.7% over FY25, all of which occurred in the second half of FY25 due to
muted sales activity since November 2024.
Asset management
Operationally, the business remains robust. An additional £0.7 million of
annualised net rental income was created during FY25 through leasing and rent
review activity and the associated reduction in non-recoverable property
costs, which was on average 3% ahead of the March 2024 ERVs.
During FY25 a key letting was achieved at Imperial Court, Leamington Spa
(20,419 sq ft) where we completed a 10 year lease with a mutual break in year
five to Lighthouse Games Ltd at a rent of £0.38 million per annum, which was
in line with the March 2024 ERV.
It has previously been reported that an agreement was reached in principle
with Vue Cinemas at Sol, Northampton to regear their lease and bring their
total term to 20 years, expiring in 2044, with a material increase in rent and
five-yearly upward only rent reviews linked to RPI with a cap and collar
structure. The lease regear was completed in January 2025 and the
comprehensive refurbishment of the cinema, including a recliner seating
upgrade, associated auditoria decorative works and foyer refurbishment
commenced in March 2025 and is expected to take four months to complete. The
Company has made a significant capital contribution towards these works as
reported previously.
An Agreement for Lease on lower ground vacant office suite (3,660 sq ft) at HQ
York was completed in March 2025 increasing the occupancy rate of the property
to over 90% with only half a floor (2,932 sq ft) remaining available. This
letting was critical to the Company being able to sell the property for £10
million in April 2025, as previously announced.
Disposal and asset management strategy post FY25
The portfolio currently consists of five investment properties and one
residential property in York.
As at 31 March 2025 there were ten apartments valued at £4.3 million
remaining for sale at Hudson Quarter, York. Market conditions remain
difficult following the Budget in October 2024 although enquiries have
increased since price reductions were announced in March 2025.
The strategy for the remaining five investment properties, which had a value
of £39.0 million as at 31 March 2025, is as follows:
Broad Street Plaza, Halifax
At the end of March 2025, Units 5&6b were sold on a long leasehold
interest for £4.8 million to Calderdale and Huddersfield NHS Foundation
Trust, at a 7.5% NIY and 38% ahead of the March 2024 valuation. Additionally,
the sale included the removal of a seven year annual uncapped service charge
shortfall landlord liability, the value of which was estimated at £0.4
million, and which will benefit the future sale of Halifax. The sale resulted
in a reduction in the lot size of the property which potentially could attract
a wider range of purchasers in due course.
The investment market for leisure assets continues to be difficult with debt
finance currently hard to obtain for such assets, notwithstanding the
diversity and longevity of income from some of these properties, including
Halifax. The lack of liquidity in this sector means that valuations can be
volatile.
The March 2025 valuation of Halifax was £8.5 million, NIY of 13.2%, EY of
16.0%, the WAULT to expiry was 14.0 years (8.5 years to break) and the
occupancy rate was 90%.
Short term interest rates reduced in May and are expected to reduce further
over the coming months and it is expected that this property will be marketed
for sale in September or the fourth quarter of 2025 subject to market
conditions at that time.
Sol, Northampton
As noted above, the completion of the Vue lease regear was transformational
for this property and together with other recent asset management activities
extended the core WAULT to 13.2 years on expiry (12.9 years to break) and
increased the occupancy rate to 95% as at March 2025.
The higher rental income achieved at Sol from the above activities increased
the valuation as at March 2025 to £9.7 million (March 2024: £8.6 million)
resulting in a NIY of 14.2% and EY of 12.2%. Included within the valuations is
a contingency relating to a review of the fabric of the building and a
comprehensive fire strategy review. The completion of these reviews will
determine whether any further steps or works are required. This work is an
essential part of the process of preparing the property for sale.
As is the case with Halifax, the investment market for leisure assets is
currently weak with a limited pool of buyers and therefore the focus is on the
completion of the refurbishment of the Vue cinema and other asset management
activities before considering the appropriate timing for disposal which is
unlikely to be before the fourth quarter of 2025/first quarter of 2026, again
subject to market conditions at that time. It is arguable that Sol could be
viewed over a longer timeline, say two years, before full value may be
realised for shareholders.
The blended key metrics for the two leisure assets are NIY 13.8%, EY 13.7%,
WAULT 13.6 years and 10.7 years to expiry and break respectively (March 2024:
NIY 13.4%, EY 12.8%, WAULT 14.2 years and 11.1 years to expiry and break
respectively).
Some real estate market participants believe that the commercial real estate
sector is at an inflection point and that with interest rates likely to fall
further the arbitrage between properly yields and interest rates becomes more
attractive to investors, which could potentially lead to property yields
hardening and a repricing of certain leisure assets, particularly those with
long WAULTs and high yields.
St James' Gate, Newcastle
The office market in Newcastle remains challenging both from a letting and
investment perspective. In 2024 the take up of office space in the city was
mainly focused on best-in-class, new Grade A space with strong ESG
credentials.
Active asset management initiatives are ongoing and will include the light
refurbishment of the ground floor of 2 St James' Gate (2 SJG). Further
lettings of the vacant space are required in order to increase the occupancy
from 68% as at March 2025 and extend the WAULT prior to the asset being ready
for sale. It is pleasing to note that occupancy has increased under the
management agreement with Orega and this trend will need to be further
established before a sale can be contemplated which in our view is unlikely
before the second quarter of 2026.
As is the case with Sol, it is arguable that 2 SJG could be viewed over a
longer timeline, say two years, before full value may be realised for
shareholders.
Unit 3A is currently on the market for sale for £0.6 million and it is
expected that the vacant Unit 3C will be put on the market within the next
three months.
The March 2025 valuation of 2 SJG was £10.4 million, NIY of 6.9%, EY of
12.2%, the WAULT to expiry was 5.9 years (3.0 years to break).
Imperial Court and House, Leamington Spa
Following the completion of asset management activities the property was
marketed in the first quarter of this year and is now under offer.
The Forum, Exeter
In 2024 we actively explored a change of use for this 1970s office building to
one that we believe will realise more value on sale and identified PBSA as
having a significantly greater value. As part of this strategy, we are making
good progress with tenants to achieve a vacant possession block date within
the next twelve months and have submitted a pre-application for a PBSA scheme
to Exeter City Council to de-risk the site for a potential buyer.
If these initiatives are successful, we will market the property for sale,
which is likely to be in the fourth quarter of 2025. The March 2025 valuation
of Exeter as an office building was £3.0 million and the occupancy rate was
67%.
Summary
Since the change of strategy announcement on 19 July 2022, investment property
disposals have generated proceeds of £145.6 million at a 16.3% reduction to
the March 2022 valuation (which was the peak of the current property cycle) or
4.3% ahead when compared with the relevant March valuation prior to sale.
Daniel Davies
Head of Asset Management
Thomas Hood
Head of Investment
4 June 2025
Financial Review
Financial Overview
The Group's adjusted profit before tax decreased to £3.5 million (2024: £5.4
million) as a result of income lost through disposals, offset in part by the
significant reduction in finance costs and recurring administrative expenses.
Principally as a result of the revaluation deficit on the portfolio,
equivalent to 9 pence per share, EPRA NTA per share decreased by 4.2% to 251
pence per share (2024: 262 pence per share).
The Group continued to deliver at an operational level, by repaying all
remaining debt and making substantial progress in reducing administration
costs with a reduction of £1.1 million in FY25.
Investment property sales during the year realised a profit of £1.5 million
(2024: £2.3 million) whilst trading profits from the sale of residential
units contributed £0.2 million (2024: £0.2 million).
The deficit on the revaluation of the portfolio for the year of £2.9 million
was due principally to softening yields across the portfolio. Contractual
payments to the former Chief Financial Officer of £0.2 million, including
associated costs, have been treated as an exceptional item. A provision of
£0.6 million in relation to the Short Term Incentive Plan has been made
although no payment will be due until the Completion Date has been determined
in accordance with the rules of the STIP.
The aggregation of the profits and losses described in the preceding
paragraphs account for the IFRS profit before tax for the year of £1.4
million (2024: £9.3 million loss).
Financial Highlights
2025 2024
£'000
£'000
Income metrics
IFRS profit/(loss) before tax £1.4m (£9.3m)
Adjusted profit before tax £3.5m £5.4m
EPRA earnings £2.7m £4.0m
Basic EPS 4.5p (23.7p)
EPRA EPS 8.6p 10.1p
Adjusted EPS 11.3p 13.8p
Dividend per share paid or declared 15.0p 15.0p
Capital metrics
Like-for-like portfolio valuation decrease (5.9%) (15.5%)
Net Asset Value £72.5m £97.8m
Basic NAV per share 251p 260p
EPRA NTA per share 251p 262p
Total accounting return 1.5% (6.4%)
Total shareholder return 0.4% 13.7%
The summary of the Group financial results are as follows:
Income Statement
31 March 31 March 2024
2025 £m
£m
Gross property income 6.9 12.1
Property operating expenses (1.7) (2.5)
Expected Credit Loss provision (0.4) -
Net rental income 4.8 9.6
Recurring administrative expenditure (2.0) (2.6)
Finance income 0.8 0.3
Finance costs (0.1) (1.9)
Adjusted profit before tax 3.5 5.4
Tax 0.1 -
Adjusted profit after tax 3.6 5.4
Payments to former Directors and staff (including associated costs) (0.2) (0.6)
Short term incentive plan provision (including associated costs) (0.6) (0.6)
Share based payments (0.1) (0.2)
EPRA earnings 2.7 4.0
Loss on revaluations (2.9) (15.4)
Trading profit 0.2 0.2
Profit on disposal of investment properties 1.5 2.3
Other income statement movements (0.1) (0.5)
IFRS profit/(loss) after tax 1.4 (9.4)
Net rental income reduced by £4.8 million or 50.0% to £4.8 million (2024:
£9.6 million) largely due to net income lost from disposals in the year of
£4.8 million. Property operating expenses reduced by £0.8 million to £1.7
million reflecting void savings from disposals in the year.
The Group's recurring administrative expenditure reduced by 23.1% to £2.0
million in FY25 (March 2024: £2.6 million) for the period whereas total
administrative expenditure reduced by £1.1 million
Finance costs reduced by £1.8 million or 94.7% to £0.1 million (2024: £1.9
million) as a direct result of repaying all of its debt in the year. During
the year, our active cash management enabled us to receive £0.8 million in
interest income (2024: £0.3 million).
Rent collection remained strong at 99% (2024: 98%) throughout the year as
tenant financial covenant health remained robust through the economic
uncertainty.
EPRA NTA Movement
EPRA Net Tangible Assets ("NTA") decreased by 11.0p per share or 4.2% to 251p
(2024: 262 pence) during the year. This was largely due to the revaluation
deficit of £2.9m or 9.2p per share, or a 5.9% reduction in the portfolio on a
like-for-like basis.
Other movements to note include the buyback of shares of £22.1m, increasing
EPRA NTA by 2.0p per share, the profit on disposal of assets and Hudson
Quarter (HQ) trading profit of £1.7m, contributing 5.4p per share. These were
offset by the fair value, downward adjustment of trading properties (HQ York
residential) of £0.5m, or 1.6p per share and the payments including
associated costs to former Directors and staff of £0.2m reducing EPRA NTA by
1.0p per share and the STIP provision of £0.6m or 2.1 pence per share.
Conversely, net adjusted earnings, after dividends paid, decreased EPRA NTA by
a further 3.7p per share. Other movements contributed to a further reduction
of 0.8p per share.
£m No. of shares (diluted) Pence per share
EPRA NTA at 31 March 2024 98.3 37,554,525 262p
Share buyback (22.1) (8,667,760) 2.0p
EPRA NTA after buyback 76.2 28,886,765 264p
Adjusted earnings 3.5 11.3p
Disposal of assets 1.5 4.8p
Hudson Quarter trading profit 0.2 0.6p
Property portfolio revaluation deficit (2.9) (9.2p)
Cash dividends paid (4.7) (15.0p)
Fair value adj. of trading properties (0.5) (1.6p)
Payments to former Directors including associated costs (0.2) (1.0p)
Short term incentive plan including associated costs (0.6) (2.1p)
Other movements(1) - 5,770 (0.8p)
EPRA NTA at 31 March 2025 72.5 28,892,535 251p
1. Other movements include debt termination costs, shares purchased by
EBT, the denominator effect of the reduced number of shares at period end
compared with the average for the period and the effect of rounding.
Financing
The Group repaid its all of its remaining debt during the year and is now
entirely debt free and all assets unencumbered (2024: £8.3 million). The
significant de-leveraging of the balance sheet resulted in a net cash position
of £22.2 million as at the year end which has increased to £30.3 million
currently.
Set out above is a table showing the movement in gross debt during the year:
2025
£m
Gross debt at 31 March 2024 8.3
Repayment of debt from disposals (7.9)
Break gain on repayment of debt (0.1)
Amortisation of loans (0.3)
Gross debt at 31 March 2025 0.0
The Group's key debt metrics are summarised in the table below:
Debt metrics
31 March 2025 31 March 2024
Loan to value Nil Nil
Total gross debt Nil £8.3m
Total fixed debt Nil £8.3m
Average cost of debt Nil 2.9%
Average debt maturity (yrs) Nil 2.3yrs
NAV gearing Nil Nil
Andrew Wolfe
Financial Controller
4 June 2025
RISK MANAGEMENT
RISK FRAMEWORK
Risk management is an inherent part of the Board's decision making process.
This is then embedded into the business and its systems and processes. The
Board reviews its overall risk appetite and regularly considers, via the Audit
and Risk Committee, the principal risks facing the company, management's plans
for mitigating these and emerging risks. The Committee also considers, at
least annually, the effectiveness of the Company's system of risk management
and internal control. Further information on the work of the Committee in this
area is available in the Audit and Risk Committee report in the Report and
Accounts.
Our approach to risk identification and our open and supportive culture means
that asset managers and key individuals in the finance team are able to report
directly and at an early stage on issues, allowing management to take
appropriate mitigating action.
EMERGING RISKS
If economic and geo-political stability remains uncertain or worsens, this
could have an impact on the commercial property market with reduced valuations
and rental income. Further cost of living issues may negatively impact
consumer sentiment and inflation could reduce spending further while direct
and indirect costs to the Group may increase further which may not be fully
recoverable.
GOING CONCERN ASSESSMENT
In accordance with the 2018 UK Corporate Governance Code (the Code), the
Directors have assessed the Group's position over the:
· Short-term (over the next 12 months to June 2026 as required by
the 'Going concern' provision) and;
· Medium-term (a 2 year period to June 2027 as required by the
'Viability statement' provision)
Going concern
The Directors regularly assess the Group's ability to continue as a going
concern. The Strategic report sets out in detail the Group's financial
position, cash flows, liquidity position, and the factors which will affect
future performance. In assessing the going concern, the Directors considered:
· The Group's net cash position, noting that the Group is entirely
debt free
· The Group's 12 month 'base case scenario' forecast to June 2026,
which is management's best estimate of market and business changes, taking
into account:
o Disposal of investment and residential properties
o Committed capital expenditure
o Rent collection
· Downside scenario on the 12 month base case scenario forecast to
June 2026
The Group is in a strong financial position. At 31 March 2025 the Group had a
net cash position of £22.2m and a property portfolio valued at £53.2m with
net assets of £72.5m. During the year, the Group repaid all of its debt and
is now entirely debt free (31 March 2024: £8.3m). Rent collection remained
strong during the year at 99%. In addition to the strong financial position of
the Group at 31 March 2025, the Group continued to strengthen its balance
sheet post year end, with one investment property sold for £10.0m. At the
date of this assessment, the Group had cash of £30.3m.
The Directors conducted a detailed 12 month base case scenario forecast to
June 2026, making various assumptions over asset sales, rent collection and
committed capital expenditure. The forecasts indicated that the Group has
strong sustainable cash flows and would be able to meet its liabilities as
they fall due over the next 12 months.
In addition to the detailed 12 month base case scenario forecast to June 2026,
the Directors have considered a downside scenario in assessing the Group's
ability to continue as a going concern. The downside scenario assumptions used
in the assessment included a reduction in rent collection and slow down in HQ
residential sales and no sales of investment property in the going concern
period. Even on the downside scenario described above, the Group has
significant headroom and will still be able to meet its liabilities as they
fall due over the next 12 months.
Going concern statement
Based on the analysis undertaken on the base case and downside scenario, the
Group has sufficient liquidity to meet its ongoing liabilities that fall due
over the assessment period. Given the market information available, the
Directors are not aware of any material uncertainty that exists that may cast
doubt upon the Group's ability to continue as a going concern. As a result,
the Directors consider it appropriate to continue to prepare the financial
statements on a going concern basis.
Viability
In accordance with provision 31 of the UK Corporate Governance Code and taking
into consideration the current economic uncertainty, the Directors have
assessed the prospects of the Group and future viability over a two-year
period to June 2027, being longer than the 12 months required by the "Going
Concern" provision.
The Board's assessment of the Group's viability for the next two years has
been made with reference to the remaining investment property assets which
require completion of ongoing asset management activities in order to be ready
for sale. Conditions in the investment market for certain types of assets,
particularly leisure assets, were such that, in the Board's view, the sale of
these assets should be deferred until market demand and pricing improve,
particularly given the high income yield and long unexpired lease terms. This
is in line with the Groups strategy of maximising cash returns to
shareholders.
Review period
The Board considers a period of two years to be appropriate over which to
assess the long-term viability of the Company as it reflects the Group's view
on the length of time needed to complete asset management initiatives. The
Group's WAULT to break at 31 March 2025 was 7.2 years.
Assessment
The Directors conducted a detailed 2-Year viability assessment which included
a base case scenario forecast to June 2027, making various assumptions over
asset sales, rent collection and committed capital expenditure.
In addition to the base case scenario, the Directors have undertaken a robust
scenario assessment of the risks which could threaten the 2-year viability or
the operational existence of the Group. As part of the reasonable downside
modelling, the Directors have stress-tested working capital model and cash
flows using the same assumptions as stated above in the Going Concern
assessment, making no investment property or residential sales.
Confirmation of viability
Having assessed the current position of the Group, its prospects and principal
risks and taking into consideration the assumptions stated above, the Board
has a reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the next two years.
Statement of Principal Risks
The Audit and Risk Committee has considered that the following represent the
Group's principal risks, divided into Strategic, Financial, Portfolio and
Operational risks:
Strategic Risks
01
Market cycle, economic and political
Risk description
Failure to react appropriately to changing market conditions and adapt our
corporate strategy could negatively impact shareholder returns. A downturn in
the market could reduce the appetite in the investment market, leading to
lower valuations and affecting our disposal strategy and ability to return
capital to shareholders.
Uncertainty in the UK economic landscape, global supply chain issues,
inflation and interest rates, cost of energy crisis brings risks to the
property market, supply chains and to occupiers' businesses. This can
significantly impact market sentiment and our ability to extract value from
our properties resulting in lower shareholder returns, reduced liquidity and
increased occupier failure.
Mitigation
The Board monitors macro economic issues, market indicators and reviews the
Group's strategy and business objectives on a regular basis. It will tailor
the delivery of the Company's strategy in light of current and forecast market
conditions. Disposal of other assets will continue if the market conditions
allow for value to be achieved, whilst active asset management of the assets
will continue to support in delivering returns to shareholders. Third party
agent's advice is taken on all disposals. The Executive Committee regularly
reviews market conditions.
Current position
The Board is monitoring and considering the longer term impacts of the cycle
including the potential future of the office and the effects of enhanced ESG
requirements.
Likelihood after mitigation
Score 1 (low) - 10 (high)
6
Impact after mitigation
Score 1 (low) - 10 (high)
6
Overall Risk Rating
Score 1 (low) - 20 (high)
12
Financial Risks
02
Capital structure and liquidity
Risk description
An inappropriate level of gearing could put pressure on cash resources and
lead to a funding shortfall for operational activities.
Increasing costs of borrowing and increasing interest rates could affect the
Group's ability to borrow or reduce its ability to repay its debts.
Mitigation
The Board regularly reviews its capital risk management policy, gearing
strategy and debt maturity profile. The Group's LTV limit is 35%, and capital
has been used to repay debt to reduce exposure to interest rate volatility and
ensure debt compliance. During the year, the Group repaid its only outstanding
loan facility and therefore is debt free. The Board reviews financial
forecasts on a regular basis.. The Audit and Risk Committee considers the
going concern status of the Group biannually. The Board considers the
allocation of its capital in granular detail to ensure the most efficient use.
Current position
The Group is debt free and while the Group's LTV limit is 35% the current LTV
is nil. The Company has repaid £8.3 million of bank debt in the year to 31
March 2025.
Likelihood after mitigation
Score 1 (low) - 10 (high)
1
Impact after mitigation
Score 1 (low) - 10 (high)
1
Overall Risk Rating
Score 1 (low) - 20 (high)
2
Portfolio Risks
03 05
Portfolio strategy Valuation
Risk description Risk description
An inappropriate investment strategy that is not aligned to overall corporate Decreasing capital and rental values could impact the Group's portfolio
purpose objectives, economic conditions, or tenant demand may result in lower valuation leading to lower returns. Higher cost of debt can lead to property
investment returns. yields to be pushed out and valuations to fall as a result. Increasing gilt
yields, can leave property investment less attractive unless the desired
Mitigation return can be achieved.
The Board regularly reviews the Group's investment strategy and asset Mitigation
allocation to ensure this is aligned to the overall corporate strategy.
Independent valuations are undertaken for all assets at the half year and year
Current position end. These are reviewed by management and the Board. Members of the Audit and
Risk Committee meet with the valuers at least once a year to discuss
The Company is selectively marketing certain assets, as the market valuations and the valuation process. Management actively review leases,
stabilisation and recovery continues and the timing is considered optimal for tenant covenants and asset management initiatives to grow capital and rental
returns. Asset management initiatives are utilised to maximise value. values.
Appraisals for improving properties e.g. via refurbishment are ongoing for
certain assets. Current position
Likelihood after mitigation Valuations of the portfolio reflect the commercial property market in general.
The team continue to work to mitigate against falls in value through active
Score 1 (low) - 10 (high) asset management including ESG improvements.
4 Likelihood after mitigation
Impact after mitigation Score 1 (low) - 10 (high)
Score 1 (low) - 10 (high) 7
6 Impact after mitigation
Overall Risk Rating Score 1 (low) - 10 (high)
Score 1 (low) - 20 (high) 8
10 Overall Risk Rating
Score 1 (low) - 20 (high)
15
Operational Risks
04 06
Asset management Tenant demand and default
Risk description Risk description
Failure to implement asset business plans and elevated risks associated with Failure to adapt to changing occupier demands and/or poor tenant covenants may
refurbishment could lead to longer void periods, higher arrears and overall result in the loss of significant tenants, which could materially impact
investment performance, adversely impacting returns and cashflows. income, capital values and profit. Rising inflation, interest rates and living
costs could impact tenant businesses, such as the leisure industry, as demand
Mitigation falls for discretionary spending.
The process for reviewing asset business plans is embedded in the annual Mitigation
budget process. Our experienced management team and use of advisors and
property managers supports the execution of asset management strategies. Management maintain close relationships with tenants understanding their needs
and supporting them throughout their business cycle. Managing agents support
Current position rent collection and collection of arrears on a regular basis. Tenant due
diligence and credit checks are undertaken on an ongoing basis to review
Our refurbishment pipeline is continuously assessed to ensure the right covenant strength of existing and prospective tenants. The finance and
projects are being brought forward at appropriate times ensuring exposure at property teams monitor and report to the Executive Committee on tenant
any one time is limited. The Executive Committee reviews the Group's Health covenants including potential new tenants. All arrears are monitored by the
and Safety systems and processes to ensure appropriate oversight of assets. Executive Committee on an ongoing basis.
Likelihood after mitigation Current position
Score 1 (low) - 10 (high) Rent collection rates remain robust at 99%. The team are closely monitoring
tenant covenants in high risk sectors, ensuring we are aware of any tenant
4 distress which can impact the rental collection.
Impact after mitigation Likelihood after mitigation
Score 1 (low) - 10 (high) Score 1 (low) - 10 (high)
4 6
Overall Risk Rating Impact after mitigation
Score 1 (low) - 20 (high) Score 1 (low) - 10 (high)
8 8
Overall Risk Rating
Score 1 (low) - 20 (high)
14
07 09
Business continuity and cyber security Climate change
Risk description Risk description
Business disruption as a result of physical damage to buildings, Government Longer term failure to anticipate and prepare for transition and physical
policy and measures implemented in response to pandemics, cyber attacks or risks associated with climate change including increasing policy and
other operational or IT failures or unforeseen events may impact income and compliance risks associated with existing and emerging environmental
profits. legislation could lead to increased costs and the Group's assets becoming
obsolete or unable to attract occupiers.
Mitigation
Mitigation
Our governance structure and internal control systems ensure sufficient Board
oversight, with delegated responsibilities, segregation of duties and clear The Group's ESG Committee oversees the execution of ESG related matters and
authorisation processes. A comprehensive programme of insurance is in place ensures these are integrated into our business model and corporate strategy.
which covers buildings, loss of rent, cyber risks, Directors' and Officers Climate related risks are considered as part of our overall corporate risk
liability and public liability. Antivirus software and firewalls protect IT assessment and ongoing environmental management of our buildings.
systems and data is regularly backed up.
Current position
Current position
There has been an increased focus on environmental management and management
The Board continues to review the internal control environment and ensure good have focused on asset management initiatives to increase the EPC ratings of
governance practices are adopted throughout the business. Cyber security our assets, increasing the marketability of the assets in a cost effective
arrangements have been kept under regular review to ensure we are deploying way.
the most up to date technologies.
Likelihood after mitigation
Likelihood after mitigation
Score 1 (low) - 10 (high)
Score 1 (low) - 10 (high)
5
2
Impact after mitigation
Impact after mitigation
Score 1 (low) - 10 (high)
Score 1 (low) - 10 (high)
5
2
Overall Risk Rating
Overall Risk Rating
Score 1 (low) - 20 (high)
Score 1 (low) - 20 (high)
10
4
08 10
People Regulatory and tax
Risk description Risk description
An inability to retain staff with the right skills and experience may result Non-compliance with the legal and regulatory requirements of a public real
in significant underperformance or impact the overall effectiveness of our estate company, including the REIT regime could result in convictions or fines
operations. Health and Safety of staff and others including tenants both and negatively impact reputation.
physically and mentally and providing a safe and healthy environment in our
properties is of utmost importance. Failure to do so could lead to staff and Mitigation
tenant ill health, litigation and regulatory issues, negative media and market
sentiment against the Company. The Company employs experienced staff and external advisers to provide
guidance on key regulatory, accounting and tax issues. Compliance with the
Mitigation REIT regime is regularly monitored by the Board and the Executive team
consider the impact on the regime as part of their decision making.
The Board engage with staff regularly and encourage a positive working
environment. We maintain an attractive reward and benefits package and Current position
undertake regular performance reviews for each employee. Insurance cover is in
place for Directors. Health and Safety is undertaken both internally and via Emerging corporate governance and audit reforms, require additional processes
the tenants and a key issue for our property managers. and procedures to be put in place and additional reporting on the company's
resilience. The Board is overseeing these changes.
Current position
Likelihood after mitigation
A competitive pay and benefits package has been implemented to align with
shareholders and ensure the retention of individuals with the skills, Score 1 (low) - 10 (high)
knowledge and experience required to implement the strategy. With the reduced
portfolio in the year, the Board will maintain an appropriate ongoing 4
administrative cost level but with sufficient cover and retention of employees
needed to implement the strategy. Impact after mitigation
Likelihood after mitigation Score 1 (low) - 10 (high)
Score 1 (low) - 10 (high) 2
7 Overall Risk Rating
Impact after mitigation Score 1 (low) - 20 (high)
Score 1 (low) - 10 (high) 6
7
Overall Risk Rating
Score 1 (low) - 20 (high)
14
Statement of
Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the Group
and Company financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare Group and Company financial
statements for each financial year. Under that law, the Directors have
prepared the Group financial statements in accordance with International
Financial Reporting Standards (IFRSs) as issued by UK adopted IFRS and
applicable law and have elected to prepare the Company financial statements in
accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law).
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and the Company and of the profit or loss of the Group
and the Company for the period. In preparing each of the Group and Company
financial statements the Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are reasonable and prudent;
• for the Group financial statements, state whether they have been
prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and international financial
reporting standards as issued by UK adopted IFRS and applicable law subject to
any material departures disclosed and explained in the financial statements;
• for the Company financial statements, state whether they have been
prepared in accordance with UK GAAP, subject to any material departure
disclosed and explained in the parent company financial statements;
• prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Group and the parent Company will
continue in business; and
• under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors' Report, Directors'
Remuneration Report and Corporate Governance Statement that complies with that
law and those regulations.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the
requirements of the Companies Act 2006.
They are also responsible for safeguarding the assets of the Group and hence
for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for ensuring the Annual Report and the financial
statements are made available on a website. Financial statements are published
on the Company's website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of
the Company's website is the responsibility of the Directors. The Directors'
responsibility also extends to the ongoing integrity of the financial
statements contained therein.
DIRECTORS' RESPONSIBILITIES STATEMENT
The Directors confirm to the best of their knowledge:
• the financial statements have been prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit and loss of the Group and
Company;
• the Strategic Report includes a fair review of the development and
performance of the business and the financial position of the Company and the
undertakings included in the consolidation as a whole, together with a
description of the principal risks and uncertainties that they face; and
• the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
Shareholders to assess the Group's and Company's performance, business model
and strategy.
On behalf of the Board
Phil Higgins
Company Secretary
PALACE CAPITAL PLC Annual Report and Accounts 2025
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2025
2025 2024
Note £'000 £'000
Revenue 1 13,245 19,599
Cost of sales 3b (7,868) (9,776)
Movement in expected credit loss 12 (353) -
Net property income 5,024 9,823
Administrative expenses 3c (2,889) (3,998)
Operating profit before gains and losses on property assets 2,135 5,825
Profit on disposal of investment properties 1,502 2,298
Loss on revaluation of investment property portfolio 9 (2,868) (15,383)
Impairment of trading properties 10 (61) -
Operating profit/(loss) 708 (7,260)
Finance income 850 312
Finance expense 2 (126) (1,909)
Debt termination costs (35) (459)
Profit/(loss) before taxation 1,397 (9,316)
Taxation 5 25 (46)
Profit/(loss) after taxation for the year and total comprehensive 1,422 (9,362)
profit/(loss) attributable to owners of the Parent
Earnings per ordinary share
Basic 6 4.5p (23.7p)
Diluted 6 4.5p (23.7p)
All activities derive from continuing operations of the Group. The notes form
an integral part of these financial statements.
Consolidated Statement of Financial Position
as at 31 March 2025
2025 2024
Note £'000 £'000
Non-current assets
Investment properties 9 33,363 73,845
Right of use asset 11 - 38
Trade and other receivables 12 5,021 5,625
38,384 79,508
Current assets
Assets held for sale 9 9,875 -
Trading property 10 4,340 8,126
Trade and other receivables 12 2,201 3,352
Cash and cash equivalents 13 22,222 19,766
38,638 31,244
Total assets 77,022 110,752
Current liabilities
Trade and other payables 14 (3,277) (4,066)
Borrowings 15 - (318)
Lease liabilities for right of use asset 18 - (39)
Creditors: amounts falling due within one year (3,277) (4,423)
Net current assets 35,361 26,821
Non-current liabilities
Borrowings 15 - (7,933)
Short term incentive plan provision (1,209) (565)
Deferred tax liability 5 (32) (57)
Lease liabilities for investment properties 18 - -
Net assets 72,504 97,774
Equity
Called up share capital 19 2,889 3,756
Treasury shares - -
Merger reserve 3,503 3,503
Capital redemption reserve 2,090 1,223
Capital reduction reserve 63,182 89,931
Retained earnings/(accumulated losses) 840 (639)
Equity - attributable to the owners of the Parent 72,504 97,774
Basic NAV per ordinary share 7 251p 260p
Diluted NAV per ordinary share 7 251p 260p
These financial statements were approved by the Board of Directors and
authorised for issue on 4 June 2025 and are signed on its behalf by:
STEVEN OWEN
Executive Chairman
Consolidated Statement of Changes in Equity
for the year ended 31 March 2025
Share Capital Treasury Share Other Reserves Capital Reduction Reserve Retained Earnings/(Accumulated Losses) Total Equity
£'000 Reserve £'000 £'000 £'000 £'000
Note £'000
At 31 March 2023 4,639 (7,343) 3,843 118,477 8,859 128,475
Total comprehensive loss for the year - - - - (9,362) (9,362)
Share-based payments 20 - - - - 137 137
Exercise of share options - 161 - - (273) (112)
Dividends paid 8 - - - (6,045) - (6,045)
Share buyback - (15,179) - - - (15,179)
Shares purchased by employee benefits trust - (140) - - - (140)
Cancellation of treasury shares (883) 22,501 883 (22,501) - -
At 31 March 2024 3,756 - 4,726 89,931 (639) 97,774
Total comprehensive profit for the year - - - - 1,422 1,422
Share-based payments 20 - - - - 57 57
Dividends paid 8 - - - (4,658) - (4,658)
Share buyback - (22,091) - - - (22,091)
Cancellation of treasury shares (867) 22,091 867 (22,091) - -
At 31 March 2025 2,889 - 5,593 63,182 840 72,504
The share capital represents the nominal value of the issued share capital of
Palace Capital plc.
Treasury shares represents the consideration paid for shares bought back from
the market. On 17 July 2024 all shares held in Treasury were cancelled.
Other reserves comprise the merger reserve and the capital redemption reserve.
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 nominal value of cancelled
preference share capital redeemed.
The capital reduction reserve represents distributable profits generated as a
result of the share premium reduction and cancellation of shares.
Consolidated Statement of Cash Flows
for the year ended 31 March 2025
Note 2025 2024
£'000 £'000
Operating activities
Profit/(loss) before taxation 1, 397 (9,316)
Finance income (850) (312)
Finance expense 2 126 1,909
Loss on revaluation of investment property portfolio 9 2,868 15,383
Profit on disposal of investment properties (1,502) (2,298)
Impairment of trading properties 61 -
Debt termination costs 35 459
Depreciation of tangible fixed assets 11 - 23
Amortisation of right of use asset 11 38 119
Share-based payments 20 57 137
Decrease/(increase) in receivables 500 (2,536)
Decrease in payables (149) (3,369)
Decrease in trading property 3,725 2,929
Net cash generated from operations 6,306 3,128
Interest received 850 312
Interest and other finance charges paid (102) (2,339)
Net cash flows from operating activities 7,054 1,101
Investing activities
Capital expenditure on refurbishment of investment property (175) (1,544)
Proceeds from disposal of investment property 30,637 92,217
Net cash flow generated from investing activities 30,462 90,673
Financing activities
Bank loans repaid 17 (8,311) (56,022)
Dividends paid 8 (4,658) (6,045)
Share buyback (22,091) (15,179)
Payment of share options exercised - (271)
Net cash flow used in financing activities (35,060) (77,517)
Net increase in cash and cash equivalents 2,456 14,257
Cash and cash equivalents at beginning of the year 19,766 5,509
Cash and cash equivalents at the end of the year 13 22,222 19,766
Notes to the Consolidated Financial Statements
Basis of accounting
These preliminary results have been prepared in accordance with the Disclosure
Guidance and Transparency Rules of the UK Financial Conduct Authority and in
accordance with International Accounting Standards, in conformity with the
requirements of the Companies Act 2006, and International Financial Reporting
Standards, as issued by the IASB (IFRS-UK) and applicable law.
The financial information does not constitute the Group's financial statements
for the periods ended 31 March 2025 or 31 March 2024, but is derived from
those financial statements. Financial statements for the year ended 31 March
2024 have been delivered to the Registrar of Companies and those for the year
ended 31 March 2025 will be delivered following the Company's Annual General
Meeting. The auditor's reports on both the 31 March 2024 or 31 March 2025
financial statements were unqualified; did not draw attention to any matters
by way of emphasis; and did not contain statements under section 498 (2) or
(3) of the Companies Act 2006.
The Directors continue to adopt the going concern basis in preparing the
Group's financial statements. The consolidated financial statements of the
Group comprise the results of Palace Capital plc ("the Company") and its
subsidiary undertakings.
The Company is quoted on the Main Market of the London Stock Exchange and is
domiciled and registered in England and Wales and incorporated under the
Companies Act. The address of its registered office is Thomas House, 84
Eccleston Square, London, SW1V 1PX.
Basis of preparation
The Group financial statements have been prepared in accordance with
UK-adopted International Accounting Standards, (the 'applicable framework'),
and have been prepared in accordance with the provisions of the Companies Act
2006 (the 'applicable legal requirements'). The Group financial statements
have been prepared under the historical cost convention as modified by the
revaluation of investment properties, the revaluation of property, plant and
equipment, pension scheme and financial assets held at fair value.
Exemption to the audit of subsidiary accounts under Section 479a of the
Companies Act 2006
The following subsidiaries which consolidate into the Group accounts are
exempt from being audited under section 479A of the Companies Act 2006:
Palace Capital (Leeds) Limited (Registered number: 06068651)
Palace Capital (Northampton) Limited (Registered number: 04982121)
Palace Capital (Properties) Limited (Registered number: 07866050)
Palace Capital (Developments) Limited (Registered number: 09849073)
Palace Capital (Signal) Limited (Registered number: 06991031)
Palace Capital (Halifax) Limited (Registered number: 05122315)
Property Investment Holdings Limited (Registered number: 00582889)
Palace Capital (Newcastle) Limited (Registered number: 05348319)
Palace Capital (York) Limited (Registered number: 12080228)
Palace Capital (Dartford) Limited (Registered number: 10523678)
Going concern
The Directors have made an assessment of the Group's ability to continue as a
going concern which included the current economic headwinds coupled with the
Group's cash resources, borrowing facilities, rental income, disposals of
investment properties, committed capital and other expenditure and dividend
distributions.
The Group's business activities, together with the factors likely to affect
its future performance and position, are set out in the Strategic Report. The
financial position of the Group, its cash flows, and liquidity position are
described in these financial statements. In addition, note 24 to the financial
statements includes the Group's objectives, policies and processes for
managing its capital, its financial risk management objectives, details of its
financial instruments and its exposures to credit risk and liquidity risk.
As at 31 March 2025 the Group had £22.2m of unrestricted cash and cash
equivalents and a property portfolio with a fair value of £53.2m. During the
year the Group repaid all of its debt and is now entirely debt free and all
assets unencumbered. The Directors have reviewed the forecasts for the Group
taking into account the impact of the current economic environment on trading
over the 12 months from the date of signing this annual report. The forecasts
have been assessed against a downside scenario incorporating lower levels of
income. See Going Concern and Viability Statement of the Annual Report for
further details.
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 financial statements.
New standards adopted during the year
New standards effective for the year ended 31 March 2025 did not have a
material impact on the financial statements and were not adopted.
New standards issued but not yet effective
There are no other standards that are not yet effective that would be expected
to have a material impact on the Group in the current or future reporting
periods and on the foreseeable future transactions other than IFRS 18, which
was recently issued by the IASB and management are still considering if and
how this will impact the presentation of the Statement of Comprehensive Income
and disclosure of defined performance measures.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
Palace Capital plc and its subsidiaries as at the year-end date.
Subsidiaries are all entities over which the Company has control being: power
to direct the activities of the entity; exposure to variable returns from the
entity; and the ability of the Company to use its power to affect those
variable returns. Where necessary, adjustments have been made to the financial
statements of subsidiaries and associates to bring the accounting policies
used and accounting periods into line with those of the Group. Intra-group
balances and any unrealised gains and losses arising from intra-group
transactions are eliminated in preparing the Consolidated Financial
Statements.
The results of subsidiaries acquired during a year are included from the
effective date of acquisition, being the date on which the Group obtains
control until the date that control ceases.
The consideration transferred for the acquisition of a subsidiary is the fair
value of the assets transferred, the liabilities incurred and the equity
interests issued by the Group. This fair value includes any contingent
consideration. Acquisition-related costs are expensed as incurred.
If the consideration is less than the fair value of the assets and liabilities
acquired, the difference is recognised directly in the Statement of
Comprehensive Income.
Where an acquired subsidiary does not meet the definition of a business, it is
accounted for as an asset acquisition rather than a business combination. A
business is an integrated set of activities and assets that is capable of
being conducted and managed for the purpose of providing goods or services to
customers, generating investment income (such as dividends or interest) or
generating other income from ordinary activities.
Revenue
Revenue is primarily derived from property income and represents the value of
accrued charges under operating leases for rental of the Group's investment
properties. Revenue is measured at the fair value of the consideration
received. All income is derived in the United Kingdom.
Rental income from investment properties leased out under operating leases is
recognised in the Statement of Comprehensive Income on a straight-line basis
over the term of the lease. Contingent rent reviews are recognised when such
reviews have been agreed with tenants. Lease incentives, rent concessions and
guaranteed rent review amounts are recognised as an integral part of the net
consideration for use of the property and amortised on a straight-line basis
over the term of lease. Judgement is exercised when determining the term over
which the lease incentives should be recognised.
Amounts received from tenants to terminate leases or to compensate for
dilapidations are recognised in the Group Statement of Comprehensive Income
when the right to receive them arises. Surrender premium income are payments
received from tenants to surrender their lease obligations and are recognised
immediately in the Group's Consolidated Statement of Comprehensive Income.
Insurance commissions are recognised as performance obligations are fulfilled
in terms of the individual performance obligations within the contract with
the insurance provider. Revenue is determined by the transaction price in the
contract and is measured at the fair value of the consideration received.
Revenue is recognised once the underlying contract between insured and insurer
has been signed.
Revenue from the sale of trading properties is recognised when control of the
trading property, along with the significant risks and rewards, have
transferred from the Group, which is usually on completion of contracts and
transfer of property title.
Service charge income relates to expenditure that is directly recoverable from
tenants. Service charge income is recognised as revenue in the period to which
it relates as required by IFRS 15 Revenue from Contracts with Customers.
Dividend income comprises dividends from the Group's listed equity investments
and is recognised when the Shareholder's right to receive payment is
established. Revenue is measured at the fair value of the consideration
received. All income is derived in the United Kingdom.
The disposal of investment properties is recognised when significant risks and
rewards attached to the property have transferred from the Group. This will
ordinarily occur on completion of contract, with such transactions being
recognised when this condition is satisfied. The profit or loss on disposal of
investment property is recognised separately in the Consolidated Statement of
Comprehensive Income and is the difference between the net sales proceeds and
the opening fair value asset plus any capital expenditure during the period to
disposal.
Deferred income
Where invoices to customers have been raised which relate to a period after
the Group year end, being 31 March 2025, the Group will recognise deferred
income for the difference between revenue recognised and amounts billed for
that contract.
Cost of sales
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.
Service charges and other such receipts arising from expenses recharged to
tenants are as stated in note 3b. Notwithstanding that the funds are held on
behalf of the occupiers, the ultimate risk for paying and recovering these
costs rests with the Group.
Borrowing costs
Bank borrowings are initially recognised at fair value net of any transaction
costs directly attributable to the issue of the instrument. After initial
recognition, loans and borrowings are subsequently measured at amortised cost
using the effective interest method. Amortised cost is calculated by taking
into account any issue costs, and any discount or premium on settlement. Gains
and losses are recognised in profit or loss in the Consolidated Statement of
Comprehensive Income when the liabilities are derecognised, as well as through
the amortisation process.
Interest associated with trading properties is capitalised from the start of
the development work until the date of practical completion. The rate used is
the rate on specific associated borrowings. Interest is then expensed through
the income statement post completion of the development.
Financial assets
The Group classifies its financial assets into one of the categories discussed
below, depending on the purpose for which the asset was acquired. The Group's
accounting policy for each category is as follows:
Fair value through profit or loss
This category comprises in-the-money derivatives (see "Financial liabilities"
section for out-of-the-money derivatives classified as liabilities). They are
carried in the Consolidated Statement of Financial Position at fair value with
changes in fair value recognised in the Consolidated Statement of
Comprehensive Income in the finance income or expense line.
Amortised cost
Impairment provisions for current and non-current trade receivables are
recognised based on the simplified approach within IFRS 9 using a provision
matrix in the determination of the lifetime expected credit losses. During
this process the probability of the non-payment of the trade receivables is
assessed. This probability is then multiplied by the amount of the expected
loss arising from default to determine the lifetime expected credit loss for
the trade receivables. For trade receivables, which are reported net, such
provisions are recorded in a separate provision account with the loss being
recognised within cost of sales in the Consolidated Statement of Comprehensive
Income. On confirmation that the trade receivable will not be collectable, the
gross carrying value of the asset is written off against the associated
provision.
The Group's financial assets measured at amortised cost comprise trade and
other receivables and cash and cash equivalents in the Consolidated Statement
of Financial Position.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with
banks, and other short-term highly liquid investments with original maturities
of three months or less.
Financial liabilities
The Group classifies its financial liabilities into one of two categories,
depending on the purpose for which the liability was acquired. The Group's
accounting policy for each category is as follows:
Fair value through profit or loss
This category comprises out-of-the-money derivatives (see "Financial assets"
for in-the-money derivatives where the time value offsets the negative
intrinsic value). They are carried in the Consolidated Statement of Financial
Position at fair value with changes in fair value recognised in the
Consolidated Statement of Comprehensive Income.
Amortised cost
Trade payables and accruals are initially measured at fair value and are
subsequently measured at amortised cost, using the effective interest rate
method.
Other financial liabilities
Bank borrowings are initially recognised at fair value net of any transaction
costs directly attributable to the issue of the instrument. Such
interest-bearing liabilities are subsequently measured at amortised cost using
the effective interest rate method, which ensures that any interest expense
over the period to repayment is at a constant rate on the balance of the
liability carried in the Consolidated Statement of Financial Position. For the
purposes of each financial liability, interest expense includes initial
transaction costs and any premium payable on redemption, as well as any
interest or coupon payment while the liability is outstanding.
Contributions to pension schemes
The Company operates a defined contribution pension scheme. The pension costs
charged against profits are the contributions payable to the scheme in respect
of the accounting period.
Investment properties
Investment properties are those properties that are held either to earn rental
income or for capital appreciation or both.
Investment properties are measured initially at cost including transaction
costs and thereafter are stated at fair value, which reflects market
conditions at the balance sheet date. Surpluses and deficits arising from
changes in the fair value of investment properties are recognised in the
Consolidated Statement of Comprehensive Income in the year in which they
arise.
Investment properties are stated at fair value as determined by the
independent external valuers. The fair value of the Group's property portfolio
is based upon independent 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 arm's
length transaction at the date of valuation, in accordance with Global
Valuation Standards. In determining the fair value of investment properties,
the independent valuers make use of historical and current market data as well
as existing lease agreements.
The Group recognises investment property as an asset when it is probable that
the economic benefits that are associated with the investment property will
flow to the Group and it can measure the cost of the investment reliably. This
is usually the date of completion of acquisition or completion of construction
if the development is a mixed-use scheme.
Investment properties cease to be recognised on completion of the disposal or
when the property is withdrawn permanently from use and no future economic
benefit is expected from disposal.
The Group evaluates all its investment property costs at the time they are
incurred. These costs include costs incurred initially to acquire an
investment property and costs incurred subsequently to add to, replace part
of, or service a property. Any costs deemed as repairs and maintenance or any
costs associated with the day-to-day running of the property are recognised in
the Consolidated Statement of Comprehensive Income as they are incurred.
Non-current assets held for sales and disposal groups
Non-current assets and disposal groups are classified as held for sale when:
They are available for immediate sale;
Management is committed to a plan to sell;
It is unlikely that significant changes to the plan will be made or that the
plan will be withdrawn;
An active programme to locate a buyer has been initiated;
The asset or disposal group is being marketed at a reasonable price in
relation to its fair value; and
A sale is expected to complete within 12 months from the date of
classification. Non-current assets and disposal groups classified as held for
sale are measured in accordance with the fair value model of IAS 40.
Following their classification as held for sale, non-current assets (including
those in a disposal group) are not depreciated. The results of operations
disposed during the year are included in the Consolidated Statement of
Comprehensive Income up to the date of disposal. A discontinued operation is a
component of the Group's business that represents a separate major line of
business or geographical area of operations or is a subsidiary acquired
exclusively with a view to resale, that has been disposed of, has been
abandoned or that meets the criteria to be classified as held for sale.
Trading properties
Trading property is developed for sale or held for sale after development is
complete, and is carried at the lower of cost and net realisable value.
Trading properties are derecognised on completion of sales contracts. Costs
includes direct expenditure and capitalised interest. Cost of sales, including
costs associated with off-plan residential sales, are expensed to the
Consolidated Statement of Comprehensive Income as incurred.
Current taxation
Current tax assets and liabilities for the period not under UK REIT
regulations are measured at the amount expected to be recovered from or paid
to the tax authorities. The tax rates and the tax laws used to compute the
amount are those that are enacted or substantively enacted, by the balance
sheet date.
Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the
initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the tax profit nor the
accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in profit or loss, except when it relates to items charged
or credited directly to other comprehensive income, in which case the deferred
tax is also dealt with in other comprehensive income.
Dividends to equity holders of the parent
Interim ordinary dividends are recognised when paid and final ordinary
dividends are recognised as a liability in the period in which they are
approved by the Shareholders.
Share-based payments
The fair value of the share options are determined at the grant date and are
expensed on a straight-line basis over the vesting period. Non-market vesting
conditions are taken into account by adjusting the number of equity
instruments expected to vest at each reporting date so that ultimately the
cumulative amount recognised over the vesting period is based on the number of
options that eventually vest. Non-vesting conditions and market vesting
conditions are factored into the fair values of the options granted. As long
as all other vesting conditions are satisfied, a charge is made irrespective
of whether the market vesting conditions are satisfied. The cumulative expense
is not adjusted for failure to achieve a market vesting condition or where a
non-vesting condition is not satisfied.
Equity
The 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. Treasury share reserve represents the consideration paid for
shares bought back on the open market. 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 nominal
value of cancelled share capital redeemed. The capital reduction reserve
represents distributable profits generated as a result of the share premium
reduction or cancellation of shares.
Critical accounting judgements and key sources of estimation and uncertainty
The preparation of the financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from these estimates. Information about such judgements and
estimation is contained in the accounting policies or the notes to the
accounts, and the key areas are summarised below.
Estimates
Property Valuation
The key source of estimation uncertainty rests in the values of property
assets, which significantly affects the value of investment properties in the
Consolidated Statement of Financial Position. The investment property
portfolio is carried at fair value, which requires a number of estimates in
assessing the Group's assets relative to market transactions. The approach to
this valuation and the amounts affected are set out in the accounting policies
and note 9.
Trading properties are held at the lower of cost and net realisable value. Net
realisable value is the value of an asset that can be realised upon the sale
of the asset, less a reasonable estimate of the costs associated with the
eventual sale or disposal of the asset.
The Group has valued the investment properties at fair value. To the extent
that any future valuation affects the fair value of the investment properties
and assets held for sale, this will impact on the Group's results in the
period in which this determination is made.
Short term incentive plan
The amount recognised as the short term incentive plan ('STIP') provision is
management's estimate of the total expected payout when the plan comes to an
end, which has been assumed as when all of the assets are sold. As the STIP is
"backend loaded" and only pays out when the Remuneration Committee has
determined that the performance period has ended under the Rules of the STIP,
the total estimated provision has been calculated over the period to June
2026, consistent with that adopted for the Viability Statement. As a result,
the provision recognised on the balance sheet for the year ended 31 March 2025
represents 12 months of this total estimated provision which has been
calculated by reference to sales achieved to date and the assumed sales of the
remaining assets to reflect the uncertainty around financial and property
markets. The timing and success of future sales will impact the timing and
quantum of the total payment.
1. Rental and other income
The chief operating decision maker ("CODM") takes the form of the Group's
Executive Committee which is of the opinion that the principal activity of the
Group is to invest in commercial real estate in the UK.
Operating segments are identified on the basis of internal financial reports
about components of the Group that are regularly reviewed by the CODM.
The internal financial reports received by the Group's Executive Committee
contain financial information at a Group level as a whole and there are no
reconciling items between the results contained in these reports and the
amounts reported in the financial statements. Additionally, information is
provided to the Group's Executive Committee showing gross property income and
property valuation by individual property. Therefore, each individual property
is considered to be a separate operating segment in that its performance is
monitored individually.
The Directors have considered the requirements of IFRS 8 as to aggregation of
operating segments into reporting segments. All of the Group's revenue is
generated from investment and trading properties located outside of London.
The properties are managed as a single portfolio by an asset management team
whose responsibilities are not segregated by location or type but are managed
on an asset-by-asset basis.
The route to market is determined by reference to the current economic
circumstances that fluctuate through the life cycle of the portfolio. The
Group holds a diversified portfolio across different sectors including office,
retail, leisure, and residential. The Group has from time to time engaged in
development projects such as Hudson Quarter, York. This is not regarded as a
separate business or division.
The Directors therefore consider that the individual properties have similar
economic characteristics and therefore have been aggregated into a single
reportable segment under the provision of IFRS 8.
All of the Group's properties are based in the UK. No geographical grouping is
contained in any of the internal financial reports provided to the Group's
Executive Committee and, therefore, no geographical segmental analysis is
required.
Revenue - type 2025 2024
£'000 £'000
Gross rental income 6,450 11,603
Dilapidations and other property related income 479 453
Insurance commission - 58
Gross property income 6,929 12,114
Service charge income 2,326 4,286
Trading property income 3,990 3,199
Total revenue 13,245 19,599
The biggest tenant is 20.7% of the rent roll as at 31 March 2025 (2024:
14.8%). Similarly, there was no individual or corporate that accounts for more
than 10% of the trading property income.
2. Interest payable and similar charges
2025 2024
£'000 £'000
Interest on bank loans* 97 1,655
Amortisation of loan arrangement fees 25 213
Other finance charges 4 41
126 1,909
*Includes a net break gain of £137,000 following full repayment of the
Scottish Widows loan facility.
3. Profit for the year
a) The Group's profit for the year is stated after charging the following:
2025 2024
£'000 £'000
Depreciation of tangible fixed assets and amortisation of right of use assets 38 142
Fees payable to the Auditor for the audit of the Group's annual accounts and 169 192
subsidiaries' annual accounts
169 192
b) The Group's cost of sales comprise the following:
2025 2024
£'000 £'000
Void property costs 1,436 1,871
Legal, lettings and consultancy costs 318 601
Property operating expenses 1,754 2,472
Service charge expenses 2,326 4,286
Trading property cost of sales 3,788 3,018
7,868 9,776
c) The Group's administrative expenses comprise the following:
2025 2024
£'000 £'000
Recurring staff costs 1,099 1,675
Short term incentive plan provision (including associated costs) 644 640
Other overheads* 373 249
Accounting, tax and audit fees 239 280
Payments to former Directors and Staff (including associated costs) 175 611
Stock Exchange costs 155 132
PR and marketing costs 61 79
Share-based payments 57 137
Legal and professional fees 44 40
Amortisation of right of use asset 38 119
ESG costs 4 13
Depreciation of tangible fixed assets - 23
2,889 3,998
* Other overheads comprise of rent, rates, service charge, consulting, and
other office costs
d) EPRA cost ratios are calculated as follows:
2025 2024
£'000 £'000
Gross property income 6,929 12,114
Administrative expenses 2,889 3,998
Property operating expenses 1,754 2,472
Movement in expected credit loss 353 -
EPRA costs (including property operating expenses) 4,996 6,470
EPRA cost ratio (including property operating expenses) 72.1% 53.4%
Less property operating expenses (1,754) (2,472)
EPRA costs (excluding property operating expenses) 3,242 3,998
EPRA cost ratio (excluding property operating expenses) 46.8% 33.0%
Total expense ratio 3.8% 3.6%
4. Employees and directors' remuneration
Staff costs during the period were as follows:
2025 2024
£'000 £'000
Non-Executive Directors' fees 74 151
Wages and salaries 805 1,181
Pensions 90 124
Social security costs 130 219
Total recurring staff costs 1,099 1,675
Payments to former Directors and staff (incl. NI and pension contributions) 175 564
Short term incentive plan provision (incl. NI) 644 565
Share-based payments 57 137
1,975 2,941
The average number of employees of the Group and the Company during the period
was:
2025 2024
Number Number
Directors 2 2
Senior management and other employees 5 6
7 8
Key management are the Group's Directors. Remuneration in respect of key
management was as follows:
2025 2024
£'000 £'000
Emoluments for qualifying services 278 398
Social security costs 43 74
Pension - 25
Total recurring key management costs 321 497
Payments to former Directors (incl. NI and pension contributions) - 357
Short term incentive plan provision (incl. NI) 291 256
Share-based payments - 16
612 1,126
5. Taxation
2025 2024
£'000 £'000
Tax underprovided in prior year - 65
Deferred tax (25) (19)
Tax (credit)/charge (25) 46
2025 2024
£'000 £'000
Profit/(loss) on ordinary activities before tax 1,397 (9,316)
Based on profit/(loss) for the period: Theoretical Tax at 25% (2024: 25%) 349 (2,329)
Effect of:
Net expenses not deductible for tax purposes 24 40
Deferred tax released to profit and loss on Hudson Quarter residential sales (25) (19)
Tax underprovided in prior year - 65
REIT exempt income (800) (1,135)
Non-taxable items 427 3,424
Tax (credit)/charge for the period (25) 46
As a UK REIT, the income profits of the Group's UK property rental business
are exempt from corporation tax, as are any gains it makes from the disposal
of its properties, provided they are not held for trading. The Group is
otherwise subject to UK corporation tax at the prevailing rate.
Deferred taxes relate to the following:
2025 2024
£'000 £'000
Deferred tax liability - brought forward (57) (76)
Deferred tax release on sale of trading property 25 19
Deferred tax liability - carried forward (32) (57)
2025 2024
£'000 £'000
Investment property unrealised valuation gains (32) (57)
Deferred tax liability - carried forward (32) (57)
The deferred tax liability of £32,000 relates to investment properties
transferred into trading stock, prior to the Group becoming a REIT. As at 31
March 2025 the Group had approximately £5,915,000 (2024: £5,915,000) of
realised capital losses to carry forward. There has been no deferred tax asset
recognised as the Directors do not consider it probable that future taxable
profits will be available to utilise these losses.
6. Earnings per share
Basic earnings per share
Basic earnings per share and diluted earnings per share have been calculated
on loss after tax attributable to ordinary Shareholders for the year (as shown
on the Consolidated Statement of Comprehensive Income) and for the earnings
per share, the weighted average number of ordinary shares in issue during the
period (see table below) and for diluted weighted average number of ordinary
shares in issue during the year (see table below).
2025 2024
£'000 £'000
Profit/(loss) after tax attributable to ordinary Shareholders for the year 1,422 (9,362)
2025 2024
No. No.
of shares of shares
Weighted average number of shares for basic earnings per share 31,325,057 39,524,282
Dilutive effect of share options - -
Weighted average number of shares for diluted earnings per share 31,325,057 39,524,282
Earnings per ordinary share
Basic 4.5p (23.7p)
Diluted 4.5p (23.7p)
Key Performance Measures
The Group financial statements are prepared under IFRS which incorporates
non-realised fair value measures and non-recurring items. Alternative
Performance Measures ("APMs"), being financial measures which are not
specified under IFRS, are also used by management to assess the Group's
performance. These include a number of European Public Real Estate Association
("EPRA") measures, prepared in accordance with the EPRA Best Practice
Recommendations reporting framework the latest update of which was issued in
September 2024. The Group reports a number of these measures (detailed in the
glossary of terms) because the Directors consider them to improve the
transparency and relevance of our published results as well as the
comparability with other listed European real estate companies.
EPRA EPS and EPRA Diluted EPS
EPRA Earnings is a measure of operational performance and represents the net
income generated from the operational activities. It is intended to provide an
indicator of the underlying income performance generated from the leasing and
management of the property portfolio. EPRA earnings are calculated taking the
profit after tax excluding investment property revaluations and gains and
losses on disposals, changes in fair value of financial instruments and
one-off finance termination costs. EPRA earnings is calculated on the basis of
the weighted average basic number of shares in line with IFRS earnings as the
dividends to which they give rise accrue to current Shareholders.
Adjusted profit before tax and Adjusted EPS
The Group also reports an adjusted earnings measure which is based on
recurring earnings before tax and the weighted average basic number of shares.
This is the basis on which the Directors consider dividend cover. This takes
EPRA earnings as the starting point and then adds back tax and any other fair
value movements or one-off items that were included in EPRA earnings. This
includes share-based payments being a non-cash expense, as well as payments to
former Directors and Staff, and the Short Term Incentive Plan provision
('STIP'), which are one-off exceptional items. The STIP was excluded from
adjusted earnings as the provision is deemed not to be in the ordinary course
of business and the performance criteria of the plan is based on the selling
of assets. The plan was designed to be back end loaded in terms of paying out
in order to be aligned with shareholders' interests and is therefore deemed to
be an exceptional item as it does not reflect earnings from trading in the
portfolio as it is capital in nature. The corporation tax charge (excluding
deferred tax movements, being a non-cash expense) is deducted in order to
calculate the adjusted earnings per share, if the charge is in relation to
recurring earnings.
The EPRA and adjusted earnings per share for the period are calculated based
upon the following information:
2025 2024
£'000 £'000
Profit/(loss) after tax for the year 1,422 (9,362)
Adjustments:
Loss on revaluation of investment property portfolio 2,868 15,383
Profit on disposal of investment properties (1,502) (2,298)
Impairment of trading properties 61 -
Trading profit (202) (181)
Debt termination costs 35 459
EPRA earnings for the year 2,682 4,001
Payments to former Directors (including associated costs) 175 611
Share-based payments 57 137
Short term incentive plan provision (including associated costs) 644 640
Adjusted profit after tax for the year 3,558 5,389
Tax excluding deferred tax on EPRA adjustments and capital gain charged (25) 46
Adjusted profit before tax for the year 3,533 5,435
EPRA and adjusted earnings per ordinary share
EPRA Basic 8.6p 10.1p
EPRA Diluted 8.6p 10.1p
Adjusted EPS 11.3p 13.8p
7. Net asset value per share
The Group has adopted the EPRA NAV measures which came into effect for
accounting periods starting 1 January 2020. EPRA issued best practice
recommendations (BPR) for financial guidelines on its definitions of NAV
measures. The 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 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.
As at 31 March 2025
EPRA NTA EPRA NRV EPRA NDV
£'000 £'000 £'000
Net assets attributable to Shareholders 72,504 72,504 72,504
Include:
Fair value adjustment of trading properties - - -
Real estate transfer tax - 3,254 -
Fair value of fixed interest rate debt - - -
Exclude:
Deferred tax on latent capital gains and capital allowances 32 32 -
EPRA NAV 72,536 75,790 72,504
Number of ordinary shares issued for diluted and EPRA net assets per share 28,892,535 28,892,535 28,892,535
EPRA NAV per share 251p 262p 251p
The adjustments made to get to the EPRA NAV measures above are as follows:
Real estate transfer tax: Gross value of property portfolio as provided in the
Valuation Certificate (i.e. the value prior to any deduction of purchasers'
costs).
Fair value of fixed interest rate debt: Difference between any financial
liability and asset held on the balance sheet of the Group and the fair value
of that financial liability or asset.
Deferred tax on latent capital gains and capital allowances: Exclude the
deferred tax as per IFRS balance sheet in respect of the difference between
the fair value and the tax book value of investment property, development
property held for investment, intangible assets, or other non-current
investments as this would only become payable if the assets were sold.
As at 31 March 2024
EPRA NTA EPRA NRV EPRA NDV
£'000 £'000 £'000
Net assets attributable to Shareholders 97,774 97,774 97,774
Include:
Fair value adjustment of trading properties 449 449 449
Real estate transfer tax - 5,294 -
Fair value of fixed interest rate debt - - 606
Exclude:
Deferred tax on latent capital gains and capital allowances 57 57 -
EPRA NAV 98,280 103,574 98,829
Number of ordinary shares issued for diluted and EPRA net assets per share 37,554,525 37,554,525 37,554,525
EPRA NAV per share 262p 276p 263p
2025 2024
No of shares No of shares
Number of ordinary shares issued at the end of the year (excluding treasury 28,892,535 37,554,525
shares)
Dilutive effect of share options - -
Number of ordinary shares issued for diluted and EPRA net assets per share 28,892,535 37,554,525
Net assets per ordinary share
Basic 251p 260p
Diluted 251p 260p
EPRA NTA 251p 262p
8. Dividends
Payment date Dividend 2025 2024
per share £'000 £'000
2025
Interim dividend 27 December 2024 3.75 1,083 -
Interim dividend 25 October 2024 3.75 1,083 -
7.50 2,166 -
2024
Final dividend 25 August 2024 3.75 1,084 -
Interim dividend 19 April 2024 3.75 1,408 -
Interim dividend 29 December 2023 3.75 - 1,409
Interim dividend 13 October 2023 3.75 - 1,408
15.00 2,492 2,817
2023
Final dividend 04 August 2023 3.75 - 1,583
Interim dividend 14 April 2023 3.25 - 1,645
7.00 - 3,228
Dividends reported in the Group Statement of Changes in Equity 4,658 6,045
2025 2024
£'000 £'000
July 2025 interim dividend in respect of year end 31 March 2025: 3.75p (2024 1,083 1,408
final dividend: 3.75p)
April 2025 interim dividend in respect of year end 31 March 2025: 3.75p (2024 1,083 1,408
interim dividend: 3.75p)
2,166 2,816
Final dividends on ordinary shares are subject to approval at the Annual
General Meeting. Such dividends are not recognised as a liability as at 31
March 2025.
9. Property portfolio
Freehold Leasehold Total
investment properties investment properties investment properties
£'000 £'000 £'000
At 31 March 2023 163,978 12,526 176,504
Additions - refurbishments 1,544 - 1,544
Loss on revaluation of investment properties (15,383) - (15,383)
Disposals (76,294) (12,526) (88,820)
At 31 March 2024 73,845 - 73,845
Additions - refurbishments 175 - 175
Loss on revaluation of investment properties (2,868) - (2,868)
Transfer to assets held for sale (9,412) - (9,412)
Disposals (28,377) - (28,377)
At 31 March 2025 33,363 - 33,363
Total investment properties Trading properties Assets held for sale Total property portfolio
£'000 £'000 £'000 £'000
At 1 April 2023 176,504 11,055 - 187,559
Additions - refurbishments 1,544 - - 1,544
Additions - trading property - 90 - 90
Loss on revaluation of properties (15,383) - - (15,383)
Disposals (88,820) (3,019) - (91,839)
At 1 April 2024 73,845 8,126 - 81,971
Additions - refurbishments 175 - - 175
Additions - trading property - 63 - 63
Loss on revaluation of properties (2,868) - - (2,868)
Transfer to assets held for sale (9,412) - 9,412 -
Impairment of trading properties - (61) - (61)
Disposals (28,377) (3,788) - (32,165)
At 31 March 2025 33,363 4,340 9,412 47,115
The property portfolio has been independently valued at fair value. The
valuations have been prepared in accordance with the RICS Valuation - Global
Standards July 2017 ("the Red Book") and incorporate the recommendations of
the International Valuation Standards and the RICS valuation - Professional
Standards UK January 2014 (Revised April 2015) which are consistent with the
principles set out in IFRS 13. At 31 March 2025, the Group's freehold
properties were externally valued by CBRE, a Royal Institution of Chartered
Surveyors ("RICS") registered independent valuer.
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.
In addition to the loss on revaluation of investment properties included in
the table above, realised gains of £1,502,000 (2024: £2,298,000) relating to
investment properties disposed of during the year were recognised in profit or
loss.
The Group developed a mixed-use scheme at Hudson Quarter, York. Part of the
scheme consists of commercial units which the Group holds for leasing or has
let. As a result of achieving practical completion in April 2021, the
commercial element of the scheme is classified as investment properties.
A reconciliation of the valuations carried out by the independent valuers to
the carrying values shown in the Statement of Financial Position was as
follows:
2025 2024
£'000 £'000
Property portfolio valuation 53,235 88,670
Less trading properties at lower of cost and net realisable value (4,340) (8,126)
Less lease incentive balance included in accrued income on investment (5,657) (6,250)
properties
Less assets held for sale (9,412) -
Less lease incentive balance included in accrued income on assets held for (463) -
sale
Less fair value uplift on trading properties - (449)
Carrying value of investment properties 33,363 73,845
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 CBRE, 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 judgement and market observations. Each property is considered a
separate asset, based on its unique nature, characteristics and the risks of
the property. Only one investment property in the property portfolio was
valued on a residual basis.
The Head of Investment, 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 & Risk Committee, which considers it as part of its overall
responsibilities.
The 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
investment portfolio has been derived from capitalising the future estimated
net income receipts at capitalisation rates reflected by recent arm's length
sales transactions. The residential assets reflect the trading properties held
at 31 March 2025 as the Group's entire property portfolio was valued.
Significant unobservable inputs
31 March 2025 Office Leisure Residential Total
Fair value of property portfolio 30,670,000 18,225,000 4,340,000 53,235,000
Area (sq ft) 206,851 277,101 n/a 483,952
Gross Estimated Rental Value 4,147,659 2,973,438 n/a 7,121,097
Net Initial Yield
Minimum 4.8% 13.2% n/a 4.8%
Maximum 10.3% 14.2% n/a 14.2%
Weighted average 7.0% 13.8% n/a 9.6%
Reversionary Yield
Minimum 9.0% 12.3% n/a 9.0%
Maximum 16.2% 17.5% n/a 17.5%
Weighted average 12.7% 15.5% n/a 13.5%
Equivalent Yield
Minimum 8.8% 12.2% n/a 8.8%
Maximum 12.7% 16.0% n/a 16.0%
Weighted average 10.6% 13.7% n/a 12.2%
Significant unobservable inputs
31 March 2024 Office Leisure Retail Residential Total
Fair value of property portfolio 55,035,000 21,550,000 3,510,000 8,575,000 88,670,000
Area (sq ft) 374,129 304,319 27,019 n/a 705,467
Gross Estimated Rental Value 6,897,920 3,367,812 346,000 n/a 10,611,732
Net Initial Yield
Minimum 2.8% 13.2% 8.5% n/a 2.8%
Maximum 12.3% 13.7% 8.5% n/a 13.7%
Weighted average 5.4% 13.4% 8.5% n/a 8.0%
Reversionary Yield
Minimum 9.1% 10.7% 8.3% n/a 8.3%
Maximum 15.2% 19.3% 8.3% n/a 19.3%
Weighted average 11.8% 15.0% 8.3% n/a 13.0%
Equivalent Yield
Minimum 8.6% 12.4% 8.4% n/a 8.4%
Maximum 11.8% 13.2% 8.4% n/a 13.2%
Weighted average 9.7% 12.8% 8.4% n/a 11.7%
The "other" sector includes Residential, Retail and Retail Warehousing
sectors.
The following descriptions and definitions relate to valuation techniques and
key unobservable inputs made in determining fair values:
Market comparable method
Under the market comparable method (or market comparable approach), a
property's fair value is estimated based on comparable transactions in the
market.
Unobservable input: estimated rental value
The rent at which space could be let in the market conditions prevailing at
the date of valuation (range: £516,751 to £1,928,634 per annum).
Rental values are dependent on a number of variables in relation to the
Group's property. These include: size, location, tenant, covenant strength and
terms of the lease.
Unobservable input: net initial yield
The net initial yield is defined as the initial gross income as a percentage
of the market value (or purchase price as appropriate) plus standard costs of
purchase.
Sensitivities of measurement of significant unobservable inputs
As set out within accounting estimates and judgements above, the Group's
property Portfolio Valuation is open to judgements inherently subjective by
nature.
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
-5% in passing +5% in passing +0.25% in net -0.25% in net
rent (£m) rent (£m) initial yield (£m) initial yield (£m)
(Decrease)/increase in the fair value of investment properties as at 31 March (2.43) 2.46 (1.23) 1.33
2025
(Decrease)/increase in the fair value of investment properties as at 31 March (4.00) 4.00 (2.53) 2.70
2024
Assets held for sale
2025 2024
£'000 £'000
Assets held for sale 9,875 -
9,875 -
Assets held for sale consist of the commercial offices of Hudson Quarter,
York. In accordance with the Group's accounting policy, these properties are
classified as held for sale at 31 March 2025. The office has been valued by
CBRE based on based on information provided by the Group such as current
rents, terms and conditions of lease agreements, service charges and capital
expenditure. The valuation has been held in the financial statements at a
lower of their carrying value immediately prior to being classified as held
for sale and fair value less costs to sell.
Assets held for sale includes £463,000 of lease incentives which will be
released on sale of the asset. Since year end the asset was sold for
£10,000,000.
10. Trading property
Total
£'000
At 1 April 2023 11,055
Costs capitalised 90
Disposal of trading properties (3,019)
At 1 April 2024 8,126
Costs capitalised 63
Impairment of trading properties (61)
Disposal of trading properties (3,788)
At 31 March 2025 4,340
The Group developed a large mixed-use scheme at Hudson Quarter, York. Part of
the approved scheme consists of residential units which the Group is in the
process of selling. As a result, the residential element of the scheme is
classified as trading property.
11. Property, plant and equipment
Right of use asset
£'000
At 1 April 2023 658
Additions 57
Written off during the year (32)
At 1 April 2024 683
Additions -
Written off during the year -
At 31 March 2025 683
Depreciation
At 1 April 2023 526
Provided during the year 119
At 1 April 2024 645
Provided during the year 38
At 31 March 2025 683
Net book value at 31 March 2025 -
Net book value at 31 March 2024 38
12. Trade and other receivables
2025 2024
£'000 £'000
Current
Gross amounts receivable from tenants 1,883 1,979
Less: expected credit loss provision (1,066) (653)
Net amount receivable from tenants 817 1,326
Other taxes 38 165
Other debtors 425 904
Accrued income 636 625
Prepayments 285 332
2,201 3,352
Non-current
Accrued income 5,021 5,625
5,021 5,625
Total trade and other receivables 7,222 8,977
As at 31 March 2025 the lifetime expected credit loss provision for trade
receivables and contract assets is as follows:
More than 30 days More than 60 days More than 90 days Total
Current past due past due past due £'000
£'000 £'000 £'000 £'000
Expected loss rate 17% 12% 100% 95%
Gross carrying amount 915 9 49 910 1,883
Loss provision 154 1 49 862 1,066
Changes to credit risk management
Impairment calculations have been carried out on trade receivables using the
IFRS 9 simplified approach, using 12 months of historic rental payment
information, and adjusting risk profiles based on forward-looking information.
In addition, the Group has reviewed its register of tenants at higher risk,
particularly in the leisure and retail sectors, those in administration or CVA
and the top 20 tenants by size with the remaining tenants considered on a
sector by sector basis.
Concentration of credit risk
The credit risk in respect of trade receivables is not concentrated as the
Group operates in many different sectors and locations around the UK, and has
a wide range of tenants from a broad spectrum of business sectors. 76% of the
ECL provision relates to tenants in the leisure sector.
How forward looking information was incorporated
In calculating the ECL provision, the Group used forward looking information
when assessing the risk profiles of each tenant, most notably around the
assessment over the likelihood of tenants having the ability to pay rent as
demanded, as well as the likelihood of rent deferrals and rent frees being
offered to tenants.
Key sources of estimation uncertainty
The Group's risk profile rates form a key part when calculating the ECL
provision. Default rates were applied to each tenant based on the ageing of
the outstanding receivable. Tenants were classified as either low (default
range of 0.5% - 8%), medium (default range of 20% - 50%), high (default range
of 65% - 80%), or extremely high risk (set default range of 100%), with
default rates applied to each risk profile. These rates have been calculated
by using historic and forward-looking information and is inherently
subjective.
A sensitivity analysis performed to determine the impact on the Group
Statement of Comprehensive Income from a 10% increase in each of the risk
profile rates would result in a decrease in profit by £94,000.
The Group does not hold any material collateral as security.
As at 31 March 2024 the lifetime expected credit loss provision for trade
receivables and contract assets was as follows:
More than More than More than
Current 30 days 60 days 90 days Total
£'000 past due past due past due £'000
£'000 £'000 £'000
Expected loss rate 9% 4% 4% 58%
Gross carrying amount 603 287 76 1,013 1,979
Loss provision 53 13 3 584 653
Movement in the expected credit loss provision was as follows:
2025 2024
£'000 £'000
Brought forward 653 653
Provisions released (66) (146)
Provisions increased 480 146
1,066 653
13. Cash and cash equivalents
All of the Group's cash and cash equivalents at 31 March 2025 and 31 March
2024 are in sterling.
2025 2024
£'000 £'000
Cash and cash equivalents 22,222 19,766
The Directors consider that the carrying amount of cash and cash equivalents
approximates to their fair value.
14. Trade and other payables
2025 2024
£'000 £'000
Trade payables 86 50
Other taxes 918 480
Other payables 763 1,138
Deferred rental income 1,206 1,694
Accruals 304 704
3,277 4,066
The deferred rental income in the year ended 31 March 2024 of £1,694,000 was
recognised as income in the year to 31 March 2025.
The Directors consider that the carrying amount of trade and other payables
measured at amortised cost approximates to their fair value.
15. Borrowings
2025 2024
£'000 £'000
Current liabilities
Bank loans - 318
Unamortised lending costs - -
- 318
Non-current liabilities
Bank loans - 7,993
Unamortised lending costs - (60)
- 7,933
Total borrowings
Bank loans - 8,311
Unamortised lending costs - (60)
- 8,251
The maturity profile of the Group's debt was as follows:
2025 2024
£'000 £'000
Within one year - 318
From one to two years - 318
From two to five years - 7,675
- 8,311
Facility and arrangement fees
As at 31 March 2024
Secured Borrowings All in cost Maturity date Total Facility Unused loan facilities Facility drawn Unamortised facility fees Loan Balance
£'000 £'000 £'000 £'000 £'000
Scottish Widows 2.90% July 2026 8,311 - 8,311 (60) 8,251
8,311 - 8,311 (60) 8,251
During the year, the Group repaid the debt facility with Scottish Widows in
full. The balance at 31 March 2024 was £8,311,000.
The fair value of borrowings held at amortised cost at 31 March 2025 was £Nil
(2024: £8,857,000). The difference in the fair value and carrying value of
borrowings reflects the valuation of the fixed rate debt being higher than its
carrying value. This is a level 2 fair value valuation of the fixed rate debt
and was determined by an independent third party. The valuation is based on a
net present value of the difference between the contracted rate and the
valuation rate when applied to the projected balances for the period from the
reporting date to the contracted expiry date.
16. Gearing and loan to value ratio
The calculation of gearing is based on the following calculations of net
assets and net (cash)/debt:
2025 2024
£000 £'000
EPRA net asset value (note 7) 72,536 98,280
Borrowings (net of unamortised issue costs) - 8,251
Lease liabilities for investment properties - -
Cash and cash equivalents (22,222) (19,766)
Net cash (22,222) (11,515)
NAV gearing Nil Nil
The calculation of bank loan to property value is calculated as follows:
2025 2024
£000 £'000
Fair value of investment properties 39,020 80,095
Fair value of assets held for sale 9,875 -
Fair value of trading properties 4,340 8,575
Fair value of property portfolio 53,235 88,670
Borrowings - 8,311
Cash at bank (22,222) (19,766)
Net cash (22,222) (11,455)
Loan to value ratio Nil Nil
17. Reconciliation of liabilities to cash flows from financing activities
Bank borrowings
£'000
Balance at 1 April 2023 63,674
Cash flows from financing activities:
Bank borrowings repaid (56,022)
Loan arrangement fees paid (73)
Non-cash movements:
Amortisation of loan arrangement fees 213
Debt termination costs 459
Balance at 1 April 2024 8,251
Cash flows from financing activities:
Bank borrowings repaid (8,311)
Non-cash movements:
Amortisation of loan arrangement fees 25
Debt termination costs 35
Balance at 31 March 2025 -
18. Leases
Operating lease receipts in respect of rents on investment properties are
receivable as follows:
2025 2024
£'000 £'000
Within one year 5,129 7,610
From one to two years 4,971 7,802
From two to three years 4,654 7,385
From three to four years 4,360 5,849
From four to five years 4,166 4,741
From five to 25 years 25,762 30,580
49,042 63,967
Lease liabilities are classified as follows:
2025 2024
£'000 £'000
Lease liabilities for right of use asset - 39
- 39
Lease obligations in respect of rents payable on right of use assets were
payable as follows:
2025 2024
Lease Present value of lease Present value
payments payments of lease
£'000 Interest £'000 payments
£'000 £'000
Within one year - - - 39
The net carrying amount of the leasehold properties is shown in note 9.
The Group has over 40 leases granted to its tenants. These vary depending on
the individual tenant and the respective property and demise and vary
considerably from short-term leases of less than one 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.
19. Share capital
2025 2024
Authorised, issued and fully paid share capital is as follows: £'000 £'000
28,892,535 ordinary shares of 10p each (2024: 37,560,295) 2,889 3,756
2,889 3,756
Reconciliation of movement in ordinary share capital 2025 2024
£'000 £'000
At start of year 3,756 4,639
Treasury shares cancelled in the year (867) (883)
At end of year 2,889 3,756
Movement in ordinary authorised share capital Number of ordinary shares purchased and cancelled Total number of shares
As at 31 March 2023 46,388,515
27 March 2024 (8,828,220)
As at 31 March 2024 37,560,295
17 July 2024 (8,667,760)
As at 31 March 2025 28,892,535
Movement in treasury shares Number of ordinary Total
shares purchased and cancelled number
of shares
As at 31 March 2024 -
Shares repurchased and transferred to Treasury 16 July 2024 8,667,760
Cancellation of treasury shares 17 July 2024 (8,667,760)
As at 31 March 2025 -
Total number of shares excluding the number of shares held in treasury at 31 28,892,535
March 2025
Year ended 31 March 2025
On 16 July 2024, 8,667,760 shares were purchased by the Group on the open
market and transferred into treasury reserves.
On 17 July 2024, 8,667,760 shares were cancelled by the Group.
Shares held in Employee Benefit Trust
2025 2024
Authorised, issued and fully paid share capital is as follows: No. of No. of
shares shares
Brought forward 5,770 1,914
Shares exercised under deferred bonus share scheme - (13,521)
Shares exercised under employee LTIP scheme - (42,440)
Shares purchased by EBT - 59,817
Shares sold from EBT (5,770) -
At end of year - 5,770
Share options: 2025 2024
Reconciliation of movement in outstanding share options No. of No. of
options options
At start of year 169,287 537,877
LTIPs exercised in the year - (68,612)
Lapsed in the year (169,287) (290,147)
Deferred bonus share options exercised - (9,831)
At end of year - 169,287
As at 31 March 2025, the Company had the following outstanding unexpired
options:
Description of unexpired share options 2025 2024
Weighted average Weighted average
No. of option price No. of option price
options Options
Employee benefit plan - 0p 169,287 0p
Deferred bonus share scheme issued - 0p - 0p
Total - 0p 169,287 0p
Exercisable - 0p - 0p
Not exercisable - 0p 169,287 0p
The weighted average remaining contractual life of share options at 31 March
2024 was 0.6 years.
20. Share-based payments
Employee benefit plan
The following table illustrates the number and weighted average exercise
prices of, and movements in, share options during the period:
Number of Exercise Average Grant Vesting
options price share price at date date
date of
exercise
Outstanding at 31 March 2023 537,877 0p
Deferred bonus share options exercised (9,831) 0p 254.5p 18 August 2022 18 August 2023
Exercised during the year (LTIP 2020) (68,612) 0p 226.5p 14 October 2020 14 October 2023
Lapsed in the year (LTIP 2020) (236,175) 0p
Lapsed in the year (LTIP 2021) (53,972) 0p
Outstanding at 31 March 2024 169,287 0p
Lapsed in the year (LTIP 2021) (169,287) 0p
Outstanding at 31 March 2025 - 0p
LTIP 2021
The options are awarded to employees on achievements against targets on two
separate measures over the three-year period. For directors, the options are
subject to a two-year holding period following vesting. Half the options will
be awarded based on the first target and half based on the achievement of the
second.
Total property return growth is calculated as Total Property Return of the
Company over the Performance Period beginning on 31 March 2021 and ending on
31 March 2024, using the Total Property Return ("TPR") as calculated by MSCI
for the Group as compared with the TPR for the MSCI IPD Index (the
"Comparator") over the same period. The TPR for the Group and the Comparator
will be its percentage increase over the three-year Performance Period.
Total Shareholder return (TSR) measures the total Shareholder return (price
rise plus dividends) over the period from 16 November 2021 to 15 November
2024. The percentage of the TSR metric will be adjusted downwards according to
the Company's share price discount to net asset value at the time of vesting.
Share Price Discount will be calculated with reference to the closing share
price on 15 November 2024 and EPRA Net Tangible Assets as at 30 September
2024. The base price is £2.44 per share which was the market price at the
grant date.
Annualised TSR over the TSR performance period Vesting % TPR equivalent total over performance period Vesting %
<5% 0 <0.5% 0
Equal to 5% 20 Equal to 0.5% 20
Between 5% and 9% 20-100 Between 0.5% and 2.5% 20-100
Equal to 9% 100 Equal to 2.5% 100
The fair value of grants was measured at the grant date using a
Black−Scholes pricing model for the TPR tranche and using a Monte Carlo
pricing model for the TSR tranche, taking into account the terms and
conditions upon which the instruments were granted. The services received and
a liability to pay for those services are recognised over the expected vesting
period. The main assumptions of both the Black−Scholes and Monte Carlo
pricing models are as follows:
Monte Carlo TSR Black-Scholes PV
Tranche Tranche
Grant date 16 November 2021 16 November 2021
Share price £2.44 £2.44
Exercise price 0p 0p
Term 5 years 5 years
Expected volatility 38.03% 38.03%
Expected dividend yield 0.00% 0.00%
Risk free rate 0.59% 0.59%
Time to vest (years) 3.0 3.0
Expected forfeiture p.a. 0% 0%
Fair value per option £1.28 £2.44
The expense recognised for employee share-based payment received during the
period is shown in the following table:
2025 2024
£'000 £'000
LTIP 2020 - 51
LTIP 2021 57 86
Total expense arising from share-based payment transactions 57 137
21. Related party transactions
Dividend payments made to Directors amounted to £Nil (2024: £2,306) during
the year. See note 4 for further details of key management remuneration.
22. Capital commitments
The obligation for capital expenditure relating to the enhancement of
investment properties entered into by the Group amounted to £2,352,984 (2024:
£176,608).
23. Post balance sheet events
On 11 April 2025, the Group completed on the disposal of Hudson Quarter, York,
for a total consideration of £10.0m.
24. Financial risk management
The Group's principal financial liabilities are loans. The Group has rent and
other receivables, trade and other payables and cash and short-term deposits
that arise directly from its operations. The Group is exposed to market risk
(including real estate risk), credit risk and liquidity risk.
The Group's senior management oversee the management of these risks, and the
Board of Directors has overall responsibility for the determination of the
Group's risk management objectives and policies and it sets policies that seek
to reduce risk as far as possible without unduly affecting the Group's
competitiveness and flexibility. Further details regarding these policies are
set out below:
The Group manages its capital structure, and makes adjustments to it, in the
light of changes in economic conditions.
To maintain or adjust the capital structure, the Group may adjust the dividend
payment to Shareholders, return capital to Shareholders or issue new shares.
Capital risk management
The Group considers its capital to comprise its share capital, share premium,
other reserves, capital reduction reserves and retained earnings which
amounted to £72,504,000 (2024: £97,774,000). The Group's capital management
objectives are to safeguard the entity's ability to continue as a going
concern, so that it can continue to provide returns for Shareholders and
benefits for other stakeholders and to provide an adequate return to
Shareholders by pricing its services commensurately with the level of risk.
Within the subsidiaries of the Group, the business has covenanted to maintain
a specified leverage ratio and a net interest expense coverage ratio, all the
terms of which have been adhered to during the year.
Market risk
Market risk arises from the Group's use of interest bearing, and tradable
instruments. It is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in interest rates
(interest rate risk) or other market factors.
Interest rate risk
The interest rate exposure profile of the Group's financial assets and
liabilities as at 31 March 2025 and 31 March 2024 were:
Nil rate Floating rate assets
assets and £'000 Total
liabilities £'000
£'000
As at 31 March 2025
Trade and other receivables 1,242 - 1,242
Cash and cash equivalents - 22,222 22,222
Trade and other payables (2,361) - (2,361)
(1,119) 22,222 21,103
Nil rate Floating rate assets Fixed rate
assets and £'000 liability Total
liabilities £'000 £'000
£'000
As at 31 March 2024
Trade and other receivables 2,230 - - 2,230
Cash and cash equivalents - 19,766 - 19,766
Trade and other payables (2,457) - - (2,457)
Bank borrowings - - (8,251) (8,251)
Lease liabilities - - (39) (39)
(227) 19,766 (8,290) 11,249
The Group has loans amounting to £Nil (2024: £Nil) which have interest
payable at rates linked to the SONIA interest rates or bank base rates. A
change in SONIA will have no impact.
The Directors regularly review the Group's position with regard to interest
rates in order to minimise its risk.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group.
The Group has its cash held on deposit with two large banks in the United
Kingdom. At 31 March 2025 the cash balances of the Group were £22,222,000
(2024: £19,766,000). The concentration of credit risk held with Barclays Bank
plc, the largest of these banks, was £21,859,000 (2024: £19,262,000).
Credit risk also results from the possibility of a tenant in the Group's
property portfolio defaulting on a lease. The largest tenant by contractual
income amounts to 20.7% (2024: 14.8%) of the Group's anticipated income. The
Directors assess a tenant's creditworthiness prior to granting leases and
employ professional firms of property management consultants to manage the
portfolio to ensure that tenants debts are collected promptly and the
Directors in conjunction with the property managers take appropriate actions
when payment is not made on time.
The carrying amount of financial assets (excluding cash balances) recorded in
the financial statements, net of any allowances for losses, represents the
Group's maximum exposure to credit risk without taking account of the value of
any collateral obtained. The carrying amount of these assets at 31 March 2025
was £1,242,000 (2024: £2,230,000). The details of the provision for expected
credit loss are shown in note 12.
Liquidity risk management
The Group's policy is to hold cash and obtain loan facilities at a level
sufficient to ensure that the Group has available funds to meet its
medium-term capital and funding obligations. The Group holds cash to enable
the Group to manage its liquidity risk.
The Group monitors its risk to a shortage of funds using a monthly working
capital model. This process considers the maturity of both the Group's
financial investments and financial assets (e.g. accounts receivable, other
financial assets) and projected cash flows from operations.
The tables below summarise the maturity profile of the Group's financial
liabilities based on contractual undiscounted payments:
On demand 0-1 years 1-2 years Total
£'000 £'000 £'000 £'000
As at 31 March 2025
Trade and other payables 1,152 - 1,209 2,361
1,152 - 1,209 2,361
On demand 0-1 years 1-2 years 2-5 years Total
£'000 £'000 £'000 £,000 £'000
As at 31 March 2024
Interest bearing loans - 550 541 7,735 8,826
Trade and other payables 1,892 - - 565 2,457
1,892 550 541 8,300 11,283
Company Statement of Financial Position
as at 31 March 2025
Note 2025 2024
£000 £'000
Fixed assets
Investments in subsidiaries 2 86,317 94,382
86,317 94,382
Current assets
Trade and other receivables 3 27,000 30,602
Cash at bank and in hand 21,180 11,483
48,180 42,085
Total assets 134,497 136,467
Current liabilities
Creditors: amounts falling due within one year 4 (87,286) (63,616)
Net current liabilities (39,106) (21,531)
Non-current liabilities
Short term incentive plan provision (1,209) (565)
Total assets less current liabilities 46,002 72,286
Equity
Called up share capital 5 2,889 3,756
Treasury shares - -
Merger reserve 3,503 3,503
Capital redemption reserve 2,090 1,223
Capital reduction reserve 63,182 89,931
Accumulated losses (25,662) (26,127)
Equity - attributable to the owners of the Parent 46,002 72,286
The Company has taken advantage of the exemption allowed under section 408 of
the Companies Act 2006 and has not presented its own Statement of
Comprehensive Income in these financial statements. The Company's profit after
tax for the year was £408,000 (2024: £8,671,000 loss).
The financial statements were approved by the Board of Directors and
authorised for issue on 4 June 2025 and are signed on its behalf by:
STEVEN OWEN
Executive Chairman
Company Statement of Changes in Equity
as at 31 March 2025
Share Treasury Other Capital Reduction Reserve (Accumulated Losses) Total
Capital Share Reserves £'000 £'000 Equity
£'000 Reserve £'000 £'000
£'000
At 31 March 2023 4,639 (7,343) 3,843 118,477 (17,320) 102,296
Total comprehensive loss for the year - - - - (8,671) (8,671)
Transactions with Equity Holders
Share-based payments - - - - 137 137
Exercise of share options - 161 - - (273) (112)
Dividends - - - (6,045) - (6,045)
Share buyback - (15,179) - - - (15,179)
Shares purchased by employee benefits trust - (140) - - - (140)
Cancellation of treasury shares (883) 22,501 883 (22,501) - -
At 31 March 2024 3,756 - 4,726 89,931 (26,127) 72,286
Total comprehensive profit for the year - - - - 408 408
Transactions with Equity Holders
Share-based payments - - - - 57 57
Dividends - - - (4,658) - (4,658)
Share buyback - (22,091) - - - (22,091)
Cancellation of treasury shares (867) 22,091 867 (22,091) - -
At 31 March 2025 2,889 - 5,593 63,182 (25,662) 46,002
Treasury shares represents the consideration paid for shares bought back on
the open market. On 17 July 2024 all shares held in Treasury were cancelled.
Other reserves comprise the merger reserve and the capital redemption reserve.
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 nominal value of cancelled
preference share capital redeemed.
The capital reduction reserve represents distributable profits generated as a
result of the share premium reduction.
Notes to the Company Financial Statements
Accounting policies
Palace Capital plc is a company incorporated in England and Wales under the
Companies Act. The address of the registered office is given on the contents
page and the nature of the Group's operations and its principal activities are
set out in the Strategic Report. The financial statements of the Company have
been prepared in accordance with FRS 102, the Financial Reporting Standard
applicable in the United Kingdom and the Republic of Ireland.
The preparation of financial statements in compliance with FRS 102 requires
the use of certain critical accounting estimates. It also requires Company's
management to exercise judgement in applying the Company's accounting policies
(as detailed below). The Statement of Financial Position heading relating to
the Company's investments and property, plant and equipment is in accordance
with the balance sheet formats of the Companies Act 2006. Assets are
classified in accordance with the definitions of fixed and current assets in
the Companies Act instead of the presentation requirements of IAS 1
Presentation of Financial Statements
Dividends revenue
Revenue is recognised when the Company's right to receive payment is
established, which is generally when Shareholders of the paying company
approve the payment of the dividend.
Valuation of investments
Investments in subsidiaries are measured at cost less accumulated impairment.
Where merger relief is applicable, the cost of the investment in a subsidiary
undertaking is measured at the nominal value of the shares issued together
with the fair value of any additional consideration paid.
Current taxation
Current tax assets and liabilities for the current and prior periods are
measured at the amount expected to be recovered from or paid to the tax
authorities. The tax rates and the tax laws used to compute the amount are
those that are enacted or substantively enacted, by the balance sheet date.
Deferred taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax balances are recognised in respect of timing differences that
have originated but not reversed on the balance sheet date. Deferred tax
liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised.
Deferred tax balances are not recognised in respect of permanent differences
between the fair value of assets acquired and the future tax deductions
available for them and the differences between the fair values of liabilities
acquired and the amount that will be assessed for tax.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in profit or loss, except when it relates to items charged
or credited directly to other comprehensive income, in which case the deferred
tax is also dealt with in other comprehensive income.
Trade and other receivables
Trade and other receivables and intercompany receivables are recognised and
carried at the original transaction value. A provision for impairment is
established where there is objective evidence that the Company will not be
able to collect all amounts due according to the original terms of the
receivables concerned.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments issued by the Company are
classified according to the substance of the contractual arrangements entered
into and the definitions of a financial liability and an equity instrument. An
equity instrument is any contract that evidences a residual interest in the
assets of the Company after deducting all of its liabilities. The accounting
policies adopted for specific financial liabilities and equity instruments are
set out below:
Trade payables
Trade payables are initially measured at fair value and are subsequently
measured at amortised cost, using the effective interest rate method.
Equity instruments
Equity instruments issued by the Company are recorded at the fair value of
proceeds received, net of direct issue costs.
Parent company disclosure exemptions
In preparing the separate financial statements of the Parent Company,
advantage has been taken of the following disclosure exemptions available in
FRS 102:
no cash flow statement has been presented for the Parent Company;
disclosures in respect of the Parent Company's financial instruments have not
been presented as equivalent disclosures have been provided in respect of the
Group as a whole;
disclosures in respect of the Parent Company's share-based payment
arrangements have not been presented as equivalent disclosures have been
provided in respect of the Group as a whole; and
disclosure has been given for the aggregate remuneration of the key management
personnel of the Parent Company as their remuneration is included in the
totals for the Group as a whole.
Judgements in applying accounting policies and key sources of estimation
uncertainty
Investments and loans to subsidiary undertakings (see note 2)
The most critical estimates, assumptions and judgements relate to the
determination of carrying value of unlisted investments in the Company's
subsidiary undertakings and the carrying value of the loans that the Company
has made to them. The nature, facts and circumstance of the investment or loan
are taken into account in assessing whether there are any indications of
impairment.
Provisions provided in the year reflect the reduction in net asset value of
subsidiaries for the year ended 31 March 2025. The carrying value of the
subsidiaries represents the net asset value (NAV) of the subsidiary as at 31
March 2025. The NAV of the subsidiaries are affected by the fair value of the
Group's investment property.
1. Profit for the financial period
The Company has taken advantage of section 408 of the Companies Act 2006 and
consequently a profit and loss account for the Company alone has not been
presented.
2. Investments in subsidiaries
Cost: Investments
in subsidiaries
£'000
At 1 April 2023 180,956
Additions 8,851
Disposals (12,521)
At 1 April 2024 177,286
Additions -
Disposals (10,766)
At 31 March 2025 166,520
Provision for impairment:
At 1 April 2023 76,226
Provided during the year 8,341
Disposals (1,663)
At 1 April 2024 82,904
Provided during the year 1,242
Reversal of impairment (2,082)
Disposals (1,861)
At 31 March 2025 80,203
Net book value at 31 March 2025 86,317
Net book value at 31 March 2024 94,382
During the year a subsidiary, Palace Capital (Manchester) Limited, was
disposed of which resulted in a reversal of an impairment previously
recognised of £1,861,000.
The Group comprises a number of companies; all subsidiaries included within
these financial statements are noted below:
Subsidiary undertaking: Class of share held % shareholding Principal activity
Palace Capital (Leeds) Limited Ordinary 100 Property Investments
Palace Capital (Northampton) Limited Ordinary 100 Property Investments
Palace Capital (Properties) Limited Ordinary 100 Property Investments
Palace Capital (Developments) Limited Ordinary 100 Property Investments
Palace Capital (Halifax) Limited Ordinary 100 Property Investments
Palace Capital (Signal) Limited Ordinary 100 Property Investments
Property Investment Holdings Limited Ordinary 100 Property Investments
Palace Capital (Dartford) Limited Ordinary 100 Property Management
Palace Capital (Newcastle) Limited Ordinary 100 Property Investments
Palace Capital (York) Limited Ordinary 100 Property Investments
Associated Company:
Clubcourt Limited* Ordinary 40 Property Management
* Held indirectly
The results of the associated companies are immaterial to the Group.
The registered addresses for the subsidiaries across the Group are consistent
based on their country of incorporation and are as follows: Thomas House, 84
Eccleston Square, London, SW1V 1PX
On 17 April 2024 the 21.4% holding in HBP Services Limited was transferred
following the sale of Sandringham House, Harlow.
On 22 July 2024 the 100% holding in Palace Capital (Manchester) Limited was
disposed of.
3. Trade And Other Receivables
2025 2024
£,000 £'000
Amounts owed by subsidiary undertakings 25,460 28,581
Trade debtors 1,148 1,582
Other debtors 43 39
Accrued interest on amounts owed by subsidiary undertakings 275 309
Prepayments 74 91
27,000 30,602
Trade debtors represent amounts owed from subsidiary undertakings in relation
to management charges.
All amounts that fall due for repayment within one year and are presented
within current assets as required by the Companies Act. The amounts owed by
subsidiary undertakings are repayable on demand with no fixed repayment date,
although it is noted that a significant proportion of the amounts may not be
sought for repayment within one year depending on activity in the subsidiary
undertakings.
A loan amounting to £4,705,009 remains outstanding at 31 March 2025 (2024:
£8,761,009) from Palace Capital (Developments) Limited. No interest is
charged on this loan. This loan is repayable on demand.
A loan amounting to £2,726,552 remains outstanding at 31 March 2025 (2024:
£142,417) from Palace Capital (Halifax) Limited. No interest is charged on
this loan. This loan is repayable on demand.
A loan amounting to £6,936,713 remains outstanding at 31 March 2025 (2024:
£7,363,467) from Palace Capital (Northampton) Limited. No interest is charged
on this loan. This loan is repayable on demand.
A loan amounting to £Nil remains outstanding at 31 March 2025 (2024: £Nil)
from Palace Capital (Manchester) Limited. No interest is charged on this loan.
This loan was repaid as part of the disposal of the holding in Palace Capital
(Manchester) Limited.
A loan amounting to £11,091,265 remains outstanding at 31 March 2025 (2024:
£12,313,905) from Palace Capital (Newcastle) Limited. No interest is charged
on this loan. This loan is repayable on demand.
4. Creditors: amounts falling due within one year
2025 2024
£,000 £'000
Trade creditors 38 123
Amount owed to subsidiary undertaking 86,769 62,824
Other taxes 177 246
Accruals and deferred income 302 423
87,286 63,616
A loan amounting to £43,643,348 remains outstanding at 31 March 2025 (2024:
£30,280,243) to Palace Capital (Signal) Limited. No interest is charged on
this loan. This loan is repayable on demand.
A loan amounting to £17,892,314 remains outstanding at 31 March 2025 (2024:
£11,280,188) to Property Investment Holdings Limited. No interest is charged
on this loan. This loan is repayable on demand.
A loan amounting to £78,205 remains outstanding at 31 March 2025 (2024:
£76,508) to Palace Capital (York) Limited. No interest is charged on this
loan. This loan is repayable on demand.
A loan amounting to £2,538,767 remains outstanding at 31 March 2025 (2024:
£2,601,593) to Palace Capital (Leeds) Limited. No interest is charged on this
loan. This loan is repayable on demand.
A loan amounting to £22,616,423 remains outstanding at 31 March 2025 (2024:
£18,585,423) to Palace Capital (Properties) Limited. No interest is charged
on this loan. This loan is repayable on demand.
5. Share capital
The details of the Company's share capital are provided in note 19 of the
notes to the Consolidated Financial Statements.
6. Leases
Operating lease payments in respect of rents on leasehold properties occupied
by the Company are payable as follows:
2025 2024
£'000 £'000
Within one year 40 40
40 40
7. Post balance sheet events
There are no post balance sheet events.
Officers and Professional Advisors
Directors
Steven Owen Executive Chairman
Mark Davies Independent
Non-Executive Director
Secretary
Phil Higgins
Registered office
Thomas House
84 Eccleston Square
London
SW1V 1PX
Registered number
05332938 (England and Wales)
Auditor
BDO LLP
55 Baker Street London W1U 7EU
Registrar
Equiniti Limited Aspect House Spencer Road West Sussex BN99 6DA
Broker
Numis Securities Limited
45 Gresham Street London EC2V 7BF
Glossary
Adjusted EPS: Is adjusted profit before tax less corporation tax charge on
recurring earnings (excluding deferred tax movements) divided by the average
basic number of shares in the period.
Adjusted profit before tax: Is the IFRS profit before taxation excluding
investment property revaluations, gains/losses on disposals, acquisition
costs, fair value movement in derivatives, share-based payments and
exceptional items.
Balance sheet gearing: Is the balance sheet net debt divided by IFRS net
assets.
Dividend cover: Is the Adjusted profit before tax plus trading profit divided
by dividends paid in the period, expressed as a percentage.
Employee Benefit Trust (EBT): the Employee Benefit Trust, administrator of the
Company's share plans.
Expected credit loss (ECL): In accordance with IFRS 9, the risk of
recoverability of our rental arrears are assessed. This is done using a
probability weighted estimate of credit losses, being the difference between
the cash flows that are due in accordance with the contract and the cash flows
that the Group expects to receive.
EPRA: Is the European Public Real Estate Association.
EPRA cost ratio (including direct vacancy costs): Is a proportionally
consolidated measure of the ratio of net overheads and operating expenses
against gross rental income (with both amounts excluding ground rents
payable). Net overheads and operating expenses relate to all administrative
and operating expenses, net of any service fees, recharges or other income
specifically intended to cover overhead and property expenses.
EPRA cost ratio (excluding direct vacancy costs): Is the ratio calculated
above, but with direct vacancy costs removed from the net overheads and
operating expenses balance.
EPRA diluted EPS: Is EPRA earnings divided by the average diluted number of
shares in the period.
EPRA earnings: Is the IFRS profit after taxation excluding investment property
revaluations, gains/losses on disposals and changes in fair value of financial
derivatives.
EPRA EPS: Is EPRA earnings divided by the average basic number of shares in
the period.
EPRA net assets (EPRA NAV): Are the balance sheet net assets according to the
definitions of the various NAV measures defined in the EPRA Best Practice
Recommendations that came into effect for accounting periods starting 1
January 2020.
EPRA net tangible assets (EPRA NTA): Is the NAV adjusted to reflect the fair
value of trading properties and to exclude deferred taxation and derivatives.
EPRA NTA per share: Is EPRA NTA divided by the diluted number of shares at the
period end.
EPRA occupancy rate: Is the ERV of occupied space divided by ERV of the whole
portfolio, excluding developments and residential property.
EPRA topped-up net initial yield: Is the current annualised rent, net of
costs, topped up for contracted uplifts, where these are not in lieu of rental
growth, expressed as a percentage of capital value.
EPRA vacancy rate: Is the ERV of vacant space divided by ERV of the whole
portfolio, excluding developments and residential property.
Equivalent yield: Is the net weighted average return a property will produce
based upon the timing of the income received. In accordance with usual
practice, the equivalent yields (as determined by the external valuers) assume
rent received annually in arrears.
Estimated rental value (ERV): Is the external valuers' opinion as to the open
market rent which, on the date of valuation, could reasonably be expected to
be obtained on a new letting or rent review of a property.
IAS/IFRS: Is the International Financial Reporting Standards issued by the
International Accounting Standards Board and adopted by the UK.
Investment Property Databank (IPD): A wholly-owned subsidiary of MSCI
producing an independent benchmark of property returns and the Group's
portfolio returns.
Key Performance Indicators (KPIs): Are the most critical metrics that measure
the success of specific activities used to meet business goals - measured
against a specific target or benchmark, adding context to each activity being
measured.
Like-for-like net rental income: Is the change in net rental income on
properties owned throughout the current and previous periods under review.
This growth rate includes revenue recognition and lease accounting adjustments
but excludes properties held for development in either period, properties with
guaranteed rent reviews, asset management determinations and surrender
premiums.
Like-for-like valuation: Is the change in the fair value of properties owned
throughout the entire year.
This excludes properties acquired during the year and disposed of during the
year, but includes capital expenditure spent on the properties.
Loan to value (LTV): Is the ratio of principal value of gross debt less cash,
short-term deposits and liquid investments to the aggregate fair value of
properties and investments.
MSCI Inc. (MSCI IPD): Is a company that produces independent benchmarks of
property returns. The Group measures its performance against both the Central
London Offices Index and the UK All Property Index.
Net asset value (NAV) per share: Is the equity attributable to owners of the
Group divided by the number of ordinary shares in issue at the period end.
Net initial yield (NIY): Is the current annualised rent, net of costs,
expressed as a percentage of capital value, after adding notional purchaser's
costs.
Net rental income: Is the rental income receivable in the period after payment
of net property outgoings. Net rental income will differ from annualised net
rents and passing rent due to the effects of income from rent reviews, net
property outgoings and accounting adjustments for fixed and minimum contracted
rent reviews and lease incentives.
Net reversionary yield (NRY): Is the anticipated yield, which the initial
yield will rise to once the rent reaches the estimated rental value.
Passing rent: Is the gross rent, less any ground rent payable under head
leases.
Peer Group: A selection of small/medium sized property companies within the
listed real estate sector with a diversified portfolio.
Proforma: A method of calculating financial results using certain projections
or presumptions.
Property Portfolio: The total fair value of all investment properties and
trading properties as determined by the independent valuer, CBRE.
Portfolio Valuation: The value of the Company's property portfolio, including
all investment and trading properties as valued by our independent valuer,
CBRE.
Property Income Distribution (PID): A dividend received by a Shareholder of
the principal company in respect of profits and gains of the Property Rental
Business of the UK resident members of the REIT Group or in respect of the
profits or gains of a non-UK resident member of the REIT Group.
Real Estate Investment Trust (REIT): A UK Real Estate Investment Trust must be
a company listed on a recognised stock exchange with at least three-quarters
of its profits and assets derived from a qualifying property rental business.
Income and capital gains from the property rental business are exempt from tax
but the REIT is required to distribute at least 90% of those profits to
Shareholders. Tax is payable on profits from non-qualifying activities of the
residual business.
SONIA: Is the Sterling Overnight Index Average, the interest rate charged by
one bank to another for lending money.
Tenant (or lease) incentives: Are any incentives offered to occupiers to enter
into a lease. Typically the incentive will be an initial rent free period, or
a cash contribution to fit-out or similar costs. Under accounting rules the
value of lease incentives given to tenants is amortised through the Income
Statement on a straight-line basis to the lease expiry.
Total Accounting Return (TAR): Is the increase or decrease in EPRA NAV per
share plus dividends paid in the year, and this can be expressed as a
percentage of EPRA NAV per share at the beginning of the period.
Total Expense Ratio: Is calculated as total administrative costs for the year
divided by total asset value in the year.
Total Property Return (TPR): Total property return is a performance measure
calculated by the MSCI IPD and defined in the MSCI Global Methodology
Standards for Real Estate Investment as "the percentage value change plus net
income accrual, relative to the capital employed".
Total Shareholder Return (TSR): Is calculated as the movement in the share
price for the period plus dividends paid in the year, divided by opening share
price
Weighted average debt maturity: Is measured in years when each tranche of
Group debt is multiplied by the remaining period to its maturity and the
result is divided by total Group debt in issue at the period end.
Weighted average interest rate: Is the loan interest per annum at the period
end, divided by total debt in issue at the period end.
Weighted average unexpired lease term (WAULT): Is the average lease term
remaining to first break, or expiry, across the portfolio weighted by rental
income. This is also disclosed assuming all break clauses are exercised at the
earliest date, as stated.
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. END FR BIGDLUUGDGUSRecent news on Palace Capital
See all newsREG - Palace Capital PLC - Annual Report and Notice of Annual General Meeting
AnnouncementREG - Palace Capital PLC - Preliminary Results for year ended 31 March 2025
AnnouncementREG - Palace Capital PLC - TRADING AND STRATEGY UPDATE
AnnouncementREG - Palace Capital PLC - Holding(s) in Company
AnnouncementREG - Palace Capital PLC - DISPOSALS, DEBT AND CASH UPDATE
Announcement