REG - Palace Capital PLC - Interim Results
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RNS Number : 8457H Palace Capital PLC 11 June 2026
11 June 2026
Palace Capital plc
("Palace Capital" or the "Company")
Interim Results for the six months ended 31 March 2026
Palace Capital (LSE: PCA) announces its unaudited results for the six months
ended 31 March 2026.
Christian Kappelhoff-Wulff, Non-Executive Chairman, commented:
"These Interim Results are the first set of results since Valentin Pierburg
and I joined the Board on 23 January 2026.
We would like to take this opportunity to express our sincere gratitude for
the level of support we have received from a significant number of
institutional and retail shareholders throughout the month of January 2026 in
particular, and the continuing level of support received since.
Since joining the Board, we have acted swiftly and taken several steps that we
believe will protect shareholder value. We are working rigorously to deliver
the best possible outcome for shareholders.
While the portfolio valuation as at 31 March 2026 (published on 16 April 2026)
was equally painful and disappointing, we believe the valuation is a more
realistic reflection of the realisable value of the assets.
A number of shareholders have asked us to examine in detail the conduct of the
previous Board. We continue to work on this task and will update shareholders
as soon as practicable.
Separately today, we have published a circular convening a General Meeting to
be held on 29 June 2026 to approve the resolution required to authorise the
use of the Company's share buyback authority. We believe utilising that
on-market buyback authority to be the most efficient means of returning
capital to shareholders at the current time."
Income statement metrics Six months to Six months to Change
31 March 2026 31 March 2025
Adjusted (loss)/profit before tax £(0.1)m £1.5m (104)%
Adjusted earnings per share (0.3)p 5.1p (105)%
IFRS (loss)/profit before tax £(5.4)m £2.3m
Basic earnings per share (26.7)p 8.2p
Dividends per share 7.5p 7.5p
Balance Sheet and operational metrics 31 March 30 September 2025 Change
2026
NAV per share 210p 244p (14)%
Cash returned to shareholders (including costs) £- £21.2m
Net asset value £42.5m £49.4m (14)%
Like-for-like portfolio valuation (decrease)/increase (16.0)% 0.8%
Total accounting return (6-month) (10.9)% 0.2%
Total shareholder return* (14.6)% 5.9%
Cash £12.8m £4.6m
*For the six months to the balance sheet date, this is unannualised and
assumes reinvestment of dividends.
Financial highlights
• Adjusted loss before tax for the period was £0.1 million (six months to 31
March 2025: £1.5 million profit), primarily reflecting a reduction in income
following asset disposals, which led to a £0.7 million decline in gross
rental income. In addition, there was no dilapidations income recognised in
the current period, equating to a further £0.4 million reduction in revenue
versus the prior period. Interest income also decreased by £0.3 million,
driven by lower average cash balances over the period.
• The Group's cash balance of £12.8 million at the period end largely reflects
proceeds from the sale of the Halifax investment property, completed in
February 2026.
• IFRS loss before tax for the period of £5.4 million (March 2025: £2.3
million profit) predominantly due to the fair value loss on investment
properties of £5.5 million (March 2025: £0.4 million gain), impairment loss
on trading properties contributed a further £0.5 million (March 2025: £0.1
million).
• Dividends paid of 7.5 pence per share in the period (six months to March 2025:
7.5 pence).
• NAV per share decreased by 14% to 210 pence (September 2025: 244 pence)
principally from fair value losses on investment properties and impairment of
trading properties equivalent to 29.6 pence per share alongside the
distribution of dividends in excess of the Group's adjusted earnings.
• Total property portfolio valuation decreased by 16% on a like-for-like basis
compared to September 2025, with the largest decrease seen by the leisure
asset in Northampton falling c.25% (£3.2 million) and the office portfolio
declining c.11%, namely accounted for by the office at St James's Gate,
Newcastle.
• Cash of £12.8 million as at 31 March 2026 (September 2025: £4.6 million),
following receipt of the disposal proceeds from Unit 3A, St James' Gate,
Newcastle and the investment property in Halifax.
• Administrative expenses in the half year were £1.1 million. Within this line
item were expenses in relation to former directors and staff amounting to
£0.3 million. The recurring administrative expenses are expected to stabilise
below c.£0.8 million on an annualised basis.
• The Company has distributable reserves of £6.9 million and its ability to
return cash to shareholders is currently limited to that amount. The Board has
determined that the best use of these reserves is to utilise the existing
share buyback authority in full and therefore the Board has not declared a
dividend at this time.
Operational highlights
• Sale of Broad Street Plaza, Halifax in February 2026 for £9.9 million, a 8.7%
premium to is prior valuation.
• Sale of unit 3A St. James' Gate, Newcastle for £0.6 million.
• At St James' Gate, Newcastle, shortly following the period end the
comprehensive refurbishment of two vacant floors has reached completion. This
has created Grade A refurbished space while improving the building's EPC
rating to a 'B'.
Palace Capital plc
Christian Kappelhoff-Wulff, Non-Executive Chairman
info@palacecapitalplc.com
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 period. 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.
NON-EXECUTIVE CHAIRMAN'S STATEMENT
During the period, the Company completed the sale of its investment property
Broad Street Plaza, Halifax for £9.9 million at a 14.9% net initial yield.
The sale price was 8.7% ahead of the September 2025 valuation. The Company
also completed on the sale of unit 3A, St James' Gate, Newcastle for £0.6
million.
The Company remains debt free and the entire portfolio is unencumbered. The
net cash position as at 31 March 2026 was £12.8 million.
Post period end, a further dividend of 3.75 pence per share for a total of
£0.76 million was paid to shareholders on 21 April 2026. Additionally, the
Company completed two share buybacks as announced on 21 April 2026 and 24
April 2026 for a total of 700,000 shares at a cost of c.£1.2 million.
Upon joining the Board, the Directors acted swiftly to identify and implement
cost saving measures at both the head office level and on an individual
property basis. In the interim results to 30 September 2025, it was noted that
recurring administrative costs were expected to stabilise at c.£0.7 million;
however, it appears that at least some of the necessary steps to achieve costs
broadly in line with this level were yet to be actioned. Following the cost
reduction measures the Board has taken, the current run rate for the Company's
administrative costs is less than £0.8 million annualised and the Directors
will continue to proactively seek out further opportunities to reduce
spending.
Share buyback and dividend
Following the dividend paid to shareholders on 21 April 2026 and the
completion of the two share buybacks in April 2026, the Company's
distributable reserves (at Palace Capital plc level) reduced to £6.9 million
(unaudited).
Utilising the share buyback authority of 3,633,880 shares, if approved by
shareholders at the General Meeting, will likely consume most of the Company's
remaining distributable reserves.
The Board believes that it is in the best interests of shareholders to
prioritise the share buyback over a further dividend at this point in time.
Dividends paid in relation to the 12 months ended 31 March 2026 already exceed
the Group's unaudited property rental business profits and therefore its
obligations under the REIT regime. Furthermore, dividends paid are in excess
of the Group's unaudited adjusted earnings for this period.
The Board will consider reintroducing dividends after the share buyback has
completed.
Christian Kappelhoff-Wulff
Non-Executive Chairman
10 June 2026
OPERATIONAL REVIEW
Portfolio overview
As at 31 March 2026, the portfolio consisted of five properties (Sept 2025:
six) comprising by value 59% office, 30% leisure and 11% residential, which
were independently valued by CBRE at £31.3 million, a like-for-like decrease
of 16% on the September 2025 valuation.
The value of the three office assets fell by 11%, with St James' Gate,
Newcastle accounting for most of the valuation deficit.
The value of the remaining leisure asset, Sol, Northampton has fallen by 25%
from £12.8 million as at 30 September 2025 to £9.6 million as at 31 March
2026. While the valuation decrease is significant, it is worth noting that
Sol, Northampton was valued at £9.7 million as at 31 March 2025.
The value as at 31 March 2026 of the remaining eight residential properties at
Hudson Quarter, York is £2.95 million, which is a 13% reduction on a
like-for-like basis.
Hudson Quarter, York
As at 31 March 2026 there were eight apartments at Hudson Quarter, York, which
together with the associated parking, were valued at £3.1 million (the Group
also owns the freehold interest of the developed site, valued at £0.3
million). Of these eight apartments, three were under offer at the valuation
date for net proceeds broadly in line with the valuation (two of these sales
have since completed on 1 April 2026 and 10 June 2026).
While the activity seen in the first quarter of 2026 suggests that interest in
the scheme continues, recent geopolitical events have driven up UK gilt
yields. Resulting higher mortgage rates have made buyers increasingly cautious
and price sensitive.
City of York Council recently applied a "long term empty premium" of 200% to
the council tax on the unsold apartments. Furnishing the unsold apartments
would permit City of York Council to apply a premium of "only" 100%. This
would result in a council tax saving of c.£5,000 per apartment on average and
could improve the marketability of these unsold flats.
Sol, Northampton
An increasing number of leisure asset transactions over the past year has
driven investor interest, given the arbitrage opportunity between initial
yields and cost of capital. The sector however is facing a complex environment
driven by cautious consumer spending, persistent inflation, rising operating
costs and fiscal policy changes. These challenges impacted pricing with yields
moving out on secondary assets.
Taking into account recent transactional activity in the sector and the sale
of Broad Street Plaza, Halifax (sold at a 14.9% net initial yield), the
valuers have moved out the initial and equivalent yields to 16.2% and 17.5%
respectively (from 11.4% and 12.7% as at 30 September 2025).
During the period, two units were let in Sol, Northampton. These lettings will
contribute to the reduction of non-recoverable property costs going forward.
We have recently undertaken a line-by-line audit of the buildings operational
costs and identified savings in excess of £50,000 / year. These savings are
being implemented at present and further opportunities to increase the net
operating income of the building are being actively explored.
Separately, the Company continues to implement the key recommendations of the
fire strategy review.
The WAULT to expiry was 10.9 years (10.5 years to break) as at 31 March 2026.
St James' Gate, Newcastle
The office market in Newcastle is highly competitive and dominated by
higher-grade offices in the CBD with enhanced ESG credentials. Corporate
occupiers continue to prioritise a "flight to quality" and the obsolescence of
older stock is becoming more pronounced.
The Grade A refurbishment of the two vacant floors at 2 St James' Gate (at a
cost of £1.49 million) has now completed. This has delivered a "best in
class" sustainable workspace with all-electric VRF air conditioning, a
contemporary look and feel, exposed ceiling services and LED intelligent
lighting. As a result, the building has now achieved an EPC "B" rating. A
successful letting of these two floors will need to be achieved before
contemplating a sale of the asset.
Equally, while occupancy continues to increase under the management agreement
with Orega (70% in May 2026) an even higher (and sustained) occupancy is
required for the Company to receive the base rent envisaged under the
management agreement.
Unit 3A was sold for £0.6 million and Unit 3C is on the market for £0.375
million following a strip out of the previous tenant's alterations putting it
back to 'shell and core'.
The March 2026 valuation of 2 St James' Gate was £8.45 million. This
valuation includes a provision made by the valuers for capital expenditure in
2027, should tenants not renew leases.
Imperial Court and House, Leamington Spa
The Company went under offer on Imperial Court and House, Leamington Spa in
December 2025. We discovered that during the organised sale process the
Company had received multiple bids and the sale being pursued was not at the
highest bid received. Additionally, after having gone under offer, a further
unsolicited offer was received from a new party at a significantly higher
price. As a result of this, we decided to take a step back to make sure that
we achieved the best possible outcome.
In addition, we became aware of a possibility to monetise the separate plot of
land owned on Williams Street. The Company is currently exploring this and
other asset management initiatives.
The Forum, Exeter
The Forum, Exeter was marketed for sale in November 2025 and received a high
level of interest before going under offer in February 2026.
A condition of the sale is vacant possession and we continue to make progress
with tenants to achieve this outcome.
Unfortunately, as there is uncertainty in relation to the planning approval
process required, there is a high degree of risk with regards to the expected
completion.
FINANCIAL REVIEW
The Group reported an adjusted loss before tax of £0.1 million for the six
months to 31 March 2026 (six months to 31 March 2025: £1.5 million profit).
This primarily reflects income foregone following disposals, alongside lower
receipts from dilapidations and reduced interest income on cash deposits,
partly offset by a decline in recurring administrative expenses.
NAV per share decreased by 14% to 210 pence (September 2025: 244 pence)
principally due to the fair value loss on investment properties, impairment of
trading properties and distribution of uncovered dividends.
The summary of the Group's financial results is as follows:
Income Statement Summary
6 months to 6 months to
31 March 2026 31 March 2025
Gross property income £2.0m £3.1m
Property operating expenses £(1.2)m £(0.9)m
Expected Credit Loss provision £(0.1)m £(0.1)m
Net rental income £0.7m £2.1m
Recurring administrative expenditure £(0.8)m £(1.0)m
Finance income £0.1m £0.4m
Adjusted (loss)/profit before tax £(0.1)m £1.5m
Tax - -
Adjusted (loss)/profit after tax £(0.1)m £1.5m
Payments to former Directors and staff (including associated costs) £(0.3)m £(0.1)m
Short term incentive plan charge (including associated costs) - £(0.4)m
(Loss)/profit on revaluations £(6.0)m £0.3m
Trading profit - £0.1m
Profit on disposal of investment properties £0.9m £1.0m
IFRS (loss)/profit after tax £(5.4)m £2.4m
Net rental income in the period reduced to £0.7 million (March 2025: £2.1
million) largely due to income lost through disposals. In the period to March
2025, the Group also received dilapidation income of £0.4 million (March
2026: nil).
In the half year to March 2026, additional property operating expenses were
incurred due to increased vacancy while properties were prepared for vacant
possession sale or refurbishments were taking place.
Recurring administrative expenditure reduced by £0.2 million, with the Group
progressing towards stabilised administrative costs below £0.8 million
annualised.
During the period, finance income reduced to £0.1 million (March 2025: £0.4
million) owing to the reduced cash position following the tender offer before
the start of the current period. Of the £12.8 million cash held by the group
at 31 March 2026, the majority reflects the sale proceeds of investment
properties sold in February 2026.
NAV Movement
NAV decreased by 34.2 pence per share or 14% to 210 pence (September 2025: 244
pence) during the period principally due to the fair value losses on the
revaluation of investment property and impairment of trading properties
contributing a loss of 29.6 pence per share. Furthermore, distribution of
dividends equating to 7.5 pence per share were uncovered by adjusted earnings
and profits made on disposal of investment properties.
Profits made on sale of investment properties contributed £0.9 million (4.6
pence per share) to NAV.
£m No. of shares (diluted) Pence per share
NAV as at 30 September 2025 49.4 20,224,775 244.3p
Profit on sale of investment properties 0.9 4.6p
Adjusted earnings before tax (0.1) (0.3)p
Loss on revaluation of investment property (5.5) (27.4)p
Cash dividends paid (1.5) (7.5)p
Fair value adj. of trading properties (0.4) (2.2)p
Payments to former directors and staff (including associated costs) (0.3) (1.3)p
Other movements* (0.0) (0.1p)
NAV at 31 March 2026 42.5 20,224,775 210.1p
*Other movements relate to deferred tax and trading property losses.
Financing
The Group had no outstanding debt during the period and all assets are
unencumbered (September 2025: gross debt £nil).
At 31 March 2026 the Group had cash of £12.8 million (September 2025: £4.6
million).
STATEMENT OF PRINCIPAL RISKS
We consider there has been no material changes to the Company's principal
risks, as set out in the Annual Report and Accounts for the year ended 31
March 2025 and summarised below.
MARKET CYCLE ECONOMIC AND POLITICAL CAPITAL STRUCTURE AND LIQUIDITY PORTFOLIO STRATEGY
Risk description Risk description Risk description
Failure to react appropriately to changing market conditions and adapt our An inappropriate level of gearing or failure to comply with debt covenants or An inappropriate investment strategy that is not aligned to overall corporate
corporate strategy could negatively impact shareholder returns. A downturn manage re-financing events could put pressure on cash resources and lead to a purpose objectives, economic conditions, or tenant demand may result in lower
in the market could reduce the appetite in the investment market, leading to funding shortfall for operational activities. investment returns.
lower valuations and affecting our disposal strategy and ability to return
capital to shareholders. Increasing costs of borrowing and increasing interest rates could affect the
Group's ability to borrow.
Uncertainty in the UK economic landscape, global supply chain issues,
inflation and interest rates 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.
ASSET MANAGEMENT VALUATION TENANT DEMAND AND DEFAULT
Risk description Risk description Risk description
Failure to implement asset business plans and elevated risks associated with Decreasing capital and rental values could impact the Group's portfolio Failure to adapt to changing occupier demands and/or poor tenant covenants may
refurbishment could lead to longer void periods, higher arrears and overall valuation leading to lower returns. Higher cost of debt can lead to property result in us losing significant tenants, which could materially impact income,
investment performance, adversely impacting returns and cashflows. yields to be pushed out and valuations to fall as a result. Increasing gilt capital values and profit. Rising inflation, interest rates and living costs
yields, can leave property investment less attractive unless the desired could impact tenant businesses, such as the leisure industry, as demand falls
return can be achieved. for discretionary spending.
BUSINESS CONTINUITY PEOPLE CLIMATE CHANGE
AND CYBER SECURITY
Risk description Risk description Risk description
Business disruption as a result of physical damage to buildings, Government An inability to attract or retain staff with the right skills and experience Longer term failure to anticipate and prepare for transition and physical
policy and measures implemented in response to pandemics, cyber attacks or may result in significant underperformance or impact the overall effectiveness risks associated with climate change including increasing policy and
other operational or IT failures or unforeseen events may impact income and of our operations. Health and Safety of staff and others including tenants compliance risks associated with existing and emerging environmental
profits. both physically and mentally and providing a safe and healthy environment in legislation could lead to increased costs and the Group's assets becoming
our properties is of utmost importance. Failure to do so could lead to staff obsolete or unable to attract occupiers or purchasers.
and tenant ill health, litigation and regulatory issues, negative media and
market sentiment against the Company.
REGULATORY AND TAX
Risk description
Non-compliance with the legal and regulatory requirements of a public real
estate company, including the REIT regime, could result in convictions or
fines and negatively impact reputation.
Statement of Directors' Responsibilities
The Directors confirm that the condensed set of consolidated financial
statements have been prepared in accordance with UK-adopted International
Accounting Standard 34, 'Interim Financial Reporting' and that the interim
management report includes a fair review of the information required by DTR
4.2.7 and DTR 4.2.8, namely:
• an indication of important events that have occurred
during the six months and their impact on the condensed interim financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial period; and
• material related-party transactions in the six months
period and any material changes in the related-party transactions described in
the last annual report.
The Directors of Palace Capital plc are listed on the Company website
www.palacecapitalplc.com
By order of the Board
Christian Kappelhoff-Wulff
Non-Executive Chairman
10 June 2026
Palace Capital plc
Condensed consolidated statement of comprehensive income
For the six months ended 31 March 2026
Notes Unaudited Unaudited Unaudited Audited
6 months to Year to 6 months to Year to
31 March 31 March 31 March 31 March
2026 2026 2025 2025
£000 £000 £000 £000
Revenue 3 3,550 7,597 5,128 13,245
Cost of sales 4 (2,792) (5,532) (2,838) (7,868)
Movement in expected credit loss (122) (122) (98) (353)
Net property income 636 1,943 2,192 5,024
Administrative expenses (1,074) (3,137) (1,500) (2,889)
Operating (loss)/profit before gains and losses on property assets (438) (1,194) 692 2,135
Profit on disposal of investment properties 940 1,195 1,002 1,502
(Loss)/gain on revaluation of investment properties 9 (5,542) (5,184) 373 (2,868)
Impairment of trading properties 9 (450) (516) (61) (61)
Operating (loss)/profit (5,490) (5,699) 2,006 708
Finance income 75 564 362 850
Finance expense - - 9 (126)
Debt termination costs - (5) (35) (35)
(Loss)/profit before taxation (5,415) (5,140) 2,342 1,397
Taxation 5 6 6 25 25
(Loss)/profit after taxation for the period and total comprehensive (5,409) (5,134) 2,367 1,422
(loss)/profit attributable to owners of the Parent
Basic (and diluted) earnings per ordinary share 6 (26.7)p (21.4)p 8.2p 4.5p
The accompanying notes form an integral part of these condensed consolidated
interim financial statements.
Palace Capital plc
Condensed consolidated statement of financial position
For the six months ended 31 March 2026
Notes Unaudited Unaudited Audited
31 March 30 September 31 March
2026 2025 2025
£000 £000 £000
Non-current assets
Investment properties 9 18,230 33,799 33,363
Trade and other receivables 11 5,722 7,112 5,021
23,952 40,911 38,384
Current assets
Assets held for sale 9 3,670 - 9,875
Trading property 9,10 3,065 3,955 4,340
Trade and other receivables 11 1,382 2,676 2,201
Cash and cash equivalents 12 12,781 4,645 22,222
20,898 11,276 38,638
Total assets 44,850 52,187 77,022
Current liabilities
Trade and other payables 13 (2,334) (2,739) (3,277)
Creditors: amounts falling due within one year (2,334) (2,739) (3,277)
Net current assets 18,564 8,537 35,361
Non-current liabilities
Short term incentive plan provision - - (1,209)
Deferred tax liability (25) (31) (32)
Net Assets 42,491 49,417 72,504
Equity
Called up share capital 14 2,022 2,022 2,889
Merger reserve 3,503 3,503 3,503
Capital redemption reserve 2,957 2,957 2,090
Capital reduction reserve 38,303 39,820 63,182
(Accumulated losses)/retained earnings (4,294) 1,115 840
Equity shareholders' funds 42,491 49,417 72,504
Basic (and diluted) NAV per ordinary share 7 210p 244p 251p
The accompanying notes form an integral part of these condensed consolidated
interim financial statements.
The condensed consolidated interim financial statements were approved by the
Board of Directors on 10 June 2026.
The accompanying notes form an integral part of these condensed consolidated
interim financial statements.
Palace Capital plc
Condensed consolidated statement of changes in equity
For the six months ended 31 March 2026
Treasury Shares
Share Reserve Other (Accumulated Losses)/ Retained Earnings Total
Capital £000 Reserves Capital Reduction Reserve £000 equity
£000 £000 £000 £000
As 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 - - - - 57 57
Dividends paid - - - (4,658) - (4,658)
Tender offer - (22,091) - - - (22,091)
Cancellation of treasury shares (867) 22,091 867 (22,091) - -
As at 31 March 2025 (Audited) 2,889 - 5,593 63,182 840 72,504
Total comprehensive profit for the period - - - - 275 275
Dividends paid - - - (2,167) - (2,167)
Tender offer - (21,195) - - - (21,195)
Cancellation of treasury shares (867) 21,195 867 (21,195) - -
As at 30 September 2025 (Unaudited) 2,022 - 6,460 39,820 1,115 49,417
Total comprehensive loss for the period - - - - (5,409) (5,409)
Dividends paid - - - (1,517) - (1,517)
As at 31 March 2026 (Unaudited) 2,022 - 6,460 38,303 (4,294) 42,491
The accompanying notes form an integral part of these condensed consolidated
interim financial statements.
Palace Capital plc
Condensed consolidated statement of cash flows
For the six months ended 31 March 2026
Unaudited Unaudited Unaudited Audited
6 months to Year to 6 months to Year to
Notes 31 March 31 March 31 March 31 March
2026 2026 2025 2025
£000 £000 £000 £000
Operating activities
(Loss)/profit before taxation (5,415) (5,140) 2,342 1,397
Finance income (75) (564) (362) (850)
Finance expense - - (9) 126
Loss/(gain) on revaluation of investment property portfolio 9 5,542 5,184 (373) 2,868
Profit on disposal of investment properties (940) (1,195) (1,002) (1,502)
Impairment of trading properties 9 450 516 61 61
Debt termination costs - 5 35 35
Amortisation of right of use asset - - 9 38
Share-based payment - - 28 57
Decrease/(increase) in trade and other receivables 1,499 (1,066) 1,285 500
(Decrease) in trade and other payables (407) (2,156) (61) (149)
Decrease in trading property 440 816 1,171 3,725
Net cash generated from/(used in) operations 1,094 (3,600) 3,124 6,306
Interest received 75 564 362 850
Interest and other finances charges paid - - 18 (102)
Net cash flows from/(used in) operating activities 1,169 (3,036) 3,504 7,054
Investing activities
Capital expenditure on refurbishment of investment property (1,946) (1,796) (64) (175)
Proceeds from disposal of investment properties 10,430 20,275 7,812 30,637
Net cash flow generated from investing activities 8,484 18,479 7,748 30,462
Financing activities
Bank loan repaid - (5) (8,152) (8,311)
Dividends paid 8 (1,517) (3,684) (2,166) (4,658)
Tender offer - (21,195) - (22,091)
Net cash flow used in financing activities (1,517) (24,884) (10,318) (35,060)
Net increase/(decrease) in cash 8,136 (9,441) 934 2,456
Opening cash and cash equivalents 12 4,645 22,222 21,288 19,766
Closing cash and cash equivalents 12 12,781 12,781 22,222 22,222
Palace Capital plc
Notes to the condensed consolidated financial
statements
For the six months ended 31 March 2026
1 General information
These financial statements are for Palace Capital plc ("the Company") and its
subsidiary undertakings (together "the Group").
The Company's shares are admitted to trading on the Main Market of the London
Stock Exchange. The Company is domiciled and registered in England and Wales
and incorporated under the Companies Act 2006. The address of its registered
office is 201 Temple Chambers, 3-7 Temple Avenue, London, EC4Y 0DT.
The nature of the Company's operations and its principal activities are that
of property investment in the UK.
Basis of preparation
The condensed consolidated financial information included in this half yearly
report has been prepared in accordance with the UK-adopted IAS 34 "Interim
Financial Reporting". The current period information presented in this
document is unaudited and does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006.
The interim results have been prepared in accordance with applicable
UK-adopted International Accounting Standards (IAS) and International
Financial Reporting Standards (IFRS). These standards are collectively
referred to as "IFRS".
The accounting policies and methods of computations used are consistent with
those as reported in the Group's Annual Report for the year ended 31 March
2025 and are expected to be used in the Group's Annual Report for the period
ended 30 September 2026.
The financial information for the year ended 31 March 2025 presented in these
unaudited condensed Group interim financial statements does not constitute the
Company's statutory accounts for that period but has been derived from them.
The Report and Accounts for the year ended 31 March 2025 were audited and have
been filed with the Registrar of Companies. The Independent Auditor's Report
on the Report and Accounts for the year ended 31 March 2025 was unqualified
and did not contain statements under s498(2) or (3) of the Companies Act 2006.
The financial information for the six-month periods ended 31 March 2025, 30
September 2025 and 31 March 2026 are unaudited and have not been subject to a
review in accordance with International Standard on Review Engagements 2410,
Review of Interim Financial Information performed by the Independent Auditor
of the Entity, issued by the Auditing Practices Board.
The interim report was approved by the Board of Directors on 10 June 2026.
Copies of this statement are available to the public on the Company's website,
www.palacecapitalplc.com.
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, rental income, disposals of investment and trading
properties, committed capital and other expenditure, share buybacks and
dividend distributions. The financial position of the Group, its cash flows
and liquidity position are described in these financial statements.
As at 31 March 2026 the Group had £12.8 million of unrestricted cash and cash
equivalents and a property portfolio valued at £31.3 million. The Directors
have reviewed the forecasts for the Group over the 12 months from the date of
signing this report.
The Directors have a reasonable expectation that the Group has adequate
resources to continue in operation for at least 12 months from the date of
approval of the financial statements. Accordingly, they continue to adopt the
going concern basis in preparing the Interim Report.
2 Segmental reporting
During the period, the Group operated in one business segment, being property
investment in the UK and as such no further information is provided.
3 Revenue
Unaudited Unaudited Unaudited Audited
6 months to Year to 6 months to Year to
31 March 31 March 31 March 31 March
2026 2026 2025 2025
£000 £000 £000 £000
Gross rental income 2,018 4,237 2,728 6,450
Dilapidations and other property related income 25 172 410 479
Gross property income 2,043 4,409 3,138 6,929
Trading property income 409 777 1,261 3,990
Service charge income 1,098 2,411 729 2,326
Total revenue 3,550 7,597 5,128 13,245
4 Cost of sales
Unaudited Unaudited Unaudited Audited
6 months to Year to 6 months to Year to
31 March 31 March 31 March 31 March
2026 2026 2025 2025
£000 £000 £000 £000
Void costs 879 1,306 837 1,436
Legal, lettings and consultancy costs 361 984 75 318
Property operating expenses 1,240 2,290 912 1,754
Trading property costs of sales 454 831 1,197 3,788
Service charge expense 1,098 2,411 729 2,326
Total cost of sales 2,792 5,532 2,838 7,868
5 Taxation
Unaudited Unaudited Unaudited Audited
6 months to Year to 6 months to Year to
31 March 31 March 31 March 31 March
2026 2026 2025 2025
£000 £000 £000 £000
Deferred tax (6) (6) (25) (25)
Tax credit (6) (6) (25) (25)
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.
6 Earnings per share
Basic earnings per share and diluted earnings per share have been calculated
on profit/(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 period (see table below).
Unaudited Unaudited Unaudited Audited
6 months to Year to 6 months to Year to
31 March 31 March 31 March 31 March
2026 2026 2025 2025
£000 £000 £000 £000
(Loss)/profit after tax attributable to ordinary Shareholders for the year (5,409) (5,134) 2,367 1,422
Unaudited Unaudited Unaudited Audited
6 months to Year to 6 months to Year to
31 March 31 March 31 March 31 March
2026 2026 2025 2025
£000 £000 £000 £000
Weighted average number of shares for basic earnings per share 20,224,775 23,984,762 28,887,209 31,325,057
Dilutive effect of share options - - - -
Weighted average number of shares for diluted earnings per share 20,224,775 23,984,762 28,887,209 31,325,057
Basic (and diluted) earnings per ordinary share (26.7)p (21.4)p 8.2p 4.5p
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. This includes an adjusted earnings measure which is based on the
recurring earnings before tax, this is the basis on which the Directors
consider dividend cover. This figure represents the net income generated from
operational activities after excluding investment property revaluations and
gains and losses on disposals, changes in fair value of financial instruments
and one off costs (including finance termination costs, 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 is 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 to calculate the adjusted
earnings per share, if the charge is in relation to recurring earnings.).
The earnings per ordinary share for the period is calculated based upon the
following information:
Unaudited Unaudited Unaudited Audited
6 months to Year to 6 months to Year to
31 March 31 March 31 March 31 March
2026 2026 2025 2025
£000 £000 £000 £000
(Loss)/profit after tax attributable to ordinary shareholders for the period (5,409) (5,134) 2,367 1,422
Adjustments:
Loss/(gain) on revaluation of investment property portfolio 5,542 5,184 (373) 2,868
Profit on disposal of investment properties (940) (1,195) (1,002) (1,502)
Impairment of trading properties 450 516 61 61
Trading loss/(profit) 46 55 (64) (202)
Debt termination costs - 5 35 35
Expenses in relation to former Directors & Staff (including associated 265 576 60 175
costs)
Share-based payments - - 28 57
Short term incentive plan provision (including associated costs) - 1,018 379 644
Adjusted (loss)/profit after tax for the period (46) 1,025 1,491 3,558
Deferred tax (6) (6) (25) (25)
Adjusted (loss)/profit before tax for the period (52) 1,019 1,466 3,533
Basic (and diluted) adjusted EPS (0.3)p 4.2p 5.1p 11.3p
7 Net asset value per share
Unaudited Unaudited Audited
31 March 30 September 2025 31 March
2026 2025
Number of ordinary shares issued at the end of the period 20,224,775 20,224,775 28,892,535
Dilutive effect of share options - - -
Number of diluted ordinary shares for diluted net assets per share 20,224,775 20,224,775 28,892,535
Net assets attributable to shareholders (£000) 42,491 49,417 72,504
Basic (and diluted) NAV per share 210p 244p 251p
8 Dividends
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 March 30 September 31 March
2026 2025 2025
Payment Date £000 £000 £000
Ordinary dividends paid
2024 Interim dividend: 3.75p per share 19 April 2024 - - 1,408
2024 Final dividend: 3.75p per share 25 August 2024 - - 1,084
2025 Interim dividend: 3.75p per share 25 October 2024 - - 1,083
2025 Interim dividend: 3.75p per share 27 December 2024 - - 1,083
2025 Interim dividend: 3.75p per share 22 April 2025 - 1,083 -
2025 Final dividend: 3.75p per share 14 July 2025 - 1,084 -
2026 Interim dividend: 3.75p per share 24 October 2025 758 - -
2026 Interim dividend: 3.75p per share 30 January 2026 758 - -
1,517 2,167 4,658
On 19 March 2026 an interim dividend of 3.75p per share was announced, this
was paid on 21 April 2026.
9 Property Portfolio
Total investment properties
£000
At 1 April 2024 73,845
Additions - refurbishments 175
Loss on revaluation of investment properties (2,868)
Transfer to assets held for sale (9,412)
Disposals (28,377)
At 31 March 2025 (Audited) 33,363
Additions - refurbishments 78
Gain on revaluation of investment properties 358
Disposals -
At 30 September 2025 (Unaudited) 33,799
Additions - refurbishments 1,946
Loss on revaluation of investment properties (5,542)
Transfer to assets held for sale (3,660)
Disposals (8,313)
At 31 March 2026 (Unaudited) 18,230
Investment properties Trading properties Assets held for sale Total property portfolio
£000 £000 £000 £000
At 1 April 2024 73,845 8,126 - 81,971
Additions - refurbishments 175 - - 175
Additions - trading properties - 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 (Audited) 33,363 4,340 9,412 47,115
Additions - refurbishments 78 - - 78
Additions - trading properties - 57 - 57
Gain on revaluation of properties 358 - - 358
Impairment of trading properties - (66) - (66)
Disposals - (376) (9,412) (9,788)
At 30 September 2025 (Unaudited) 33,799 3,955 - 37,754
Additions - refurbishments 1,946 - - 1,946
Additions - trading properties - 15 - 15
Loss on revaluation of properties (5,542) - - (5,542)
Transfer to assets held for sale (3,660) - 3,660 -
Impairment of trading properties - (450) - (450)
Disposals (8,313) (455) - (8,768)
At 31 March 2026 (Unaudited) 18,230 3,065 3,660 24,955
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.
The valuer in forming its opinion makes a series of assumptions, which are
typically market related, such as net initial yields and expected rental
values, and are based on the valuer's professional judgement. The valuer has
sufficient current local and national knowledge of the particular property
markets involved and has the skills and understanding to undertake the
valuations competently.
At 31 March 2026, the Group's property portfolio was externally valued by
CBRE, a Royal Institution of Chartered Surveyors ("RICS") registered
independent valuer. A reconciliation of the valuations carried out by the
external valuer to the carrying values shown in the balance sheet was as
follows:
Unaudited Unaudited Audited
31 March 30 September 31 March
2026 2025 2025
£000 £000 £000
Property portfolio valuation 31,305 45,535 53,235
Less trading properties at lower of cost and net realisable value (3,065) (3,955) (4,340)
Less lease incentive balance in accrued income (6,340) (7,781) (5,657)
Less assets held for sale (3,660) - (9,412)
Less lease incentive balance included in accrued income on assets held for (10) - (463)
sale
Carrying value of investment properties 18,230 33,799 33,363
Valuation process
The valuation reports produced by the independent valuers are based on
information provided by the Group such as current rents, terms and conditions
of lease agreements, service charges and capital expenditure. This information
is derived from the Group's financial and property management systems and is
subject to the Group's overall control environment.
In addition, the valuation reports are based on assumptions and valuation
models used by the independent valuers. The assumptions are typically market
related, such as yields and discount rates, and are based on their
professional judgment and market observations. Each property is considered a
separate asset, based on its unique nature, characteristics and the risks of
the property.
The Head of Property is responsible for the valuation process, verifies all
major inputs to the external valuation reports, assesses the individual
property valuation changes from the prior year valuation report and holds
discussions with the independent valuers. When this process is complete, the
valuation report is recommended to the Audit Committee, which considers it as
part of its overall responsibilities.
The key assumptions made in the valuation of the Group's investment properties
are:
• The amount and timing of future income streams;
• Anticipated maintenance costs and other landlord's liabilities; and
• An appropriate yield
Valuation technique
The valuations reflect the tenancy data supplied by the group along with
associated revenue costs and capital expenditure. The fair value of the
commercial investment portfolio has been derived from capitalising the future
estimated net income receipts at capitalisation rates reflected by recent
arm's length sales transactions.
Assets held for sale
Unaudited Unaudited Audited
31 March 30 September 31 March
2026 2025 2025
£000 £000 £000
Assets held for sale 3,670 - 9,875
Assets held for sale consist of the commercial offices of Hudson Quarter, York
as at 31 March 2025 and the commercial office at The Forum, Exeter as at 31
March 2026. In accordance with the Group's accounting policy, these properties
are classified as held for sale. The offices had been valued by CBRE based on
information provided by the Group such as current rents, terms and conditions
of lease agreements, service charges and capital expenditure. Assets held for
sale as at 31 March 2026 included £10,000 (31 March 2025: £463,000) of lease
incentives which are released on the sale of the asset.
10 Trading property
Total
£000
At 1 April 2024 8,126
Costs capitalised 63
Impairment of trading properties (61)
Disposal of trading properties (3,788)
At 31 March 2025 (Audited) 4,340
Costs capitalised 57
Impairment of trading properties (66)
Disposal of trading properties (376)
At 30 September 2025 (Unaudited) 3,955
Costs capitalised 15
Impairment of trading properties (450)
Disposal of trading properties (455)
At 31 March 2026 (Unaudited) 3,065
The Group developed a large mixed-use scheme at Hudson Quarter, York. Part of
the approved scheme consisted 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 Trade and other receivables
Unaudited Unaudited Audited
31 March 30 September 31 March
2026 2025 2025
£000 £000 £000
Current
Trade receivables 82 1,049 817
Prepayments and accrued income 780 854 921
Other taxes 36 - 38
Other debtors 484 773 425
1,382 2,676 2,201
Non-current
Accrued income 5,722 7,112 5,021
5,722 7,112 5,021
Total trade and other receivables 7,104 9,788 7,222
12 Cash and cash equivalents
Unaudited Unaudited Audited
31 March 30 September 31 March
2026 2025 2025
£000 £000 £000
Cash and cash equivalents 12,781 4,645 22,222
13 Trade and other payables
Unaudited Unaudited Audited
31 March 30 September 31 March
2026 2025 2025
£000 £000 £000
Current
Trade payables 20 19 86
Accruals 497 370 304
Deferred rental income 661 1,075 1,206
Other taxes - 222 918
Other payables 1,156 1,053 763
2,334 2,739 3,277
14 Share capital
Authorised, issued and fully paid share capital is as follows:
Unaudited Unaudited Audited
31 March 30 September 31 March
2026 2025 2025
Share capital - £000 2,022 2,022 2,889
Ordinary 10p shares 20,224,775 20,224,775 28,892,535
Share capital - number of shares in issue 20,224,775 20,224,775 28,892,535
Movement in ordinary authorised share capital is as follows: Total number of shares
As at 31 March 2025 (Audited) 28,892,535
Shares repurchased 2 September 2025 (8,667,760)
As at 30 September 2025 (Unaudited) 20,224,775
As at 31 March 2026 (Unaudited) 20,224,775
No shares are held in Treasury.
15 Post balance sheet events
On 17 April 2026, the Company announced a share buyback programme of up to
400,000 ordinary shares. On 20 April 2026, 400,000 ordinary shares were
purchased at a volume-weighted average price paid per share of 173.00 pence,
these shares were held in treasury.
On 23 April 2026, the Company announced a further share buyback programme of
up to 300,000 ordinary shares. On 23 April 2026, 300,000 ordinary shares were
purchased at a volume-weighted average price paid per share of 169.75 pence,
these shares were held in treasury.
On 10 June 2026, the 700,000 ordinary shares held in treasury were cancelled,
following this cancellation the Company had 19,524,775 ordinary shares of 10
pence each in issue.
On 1 April 2026, the Group completed the sale of one of the residential
apartments in York, held as trading property. On 10 June 2026, the Group
completed the sale of one further apartment. Both sales were broadly in line
with the valuation as at 31 March 2026.
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