24 November 2022
Palace Capital plc
(“Palace Capital” or the “Company”)
Interim Results for the six months ended 30 September 2022
CONTINUED DELIVERY OF STRATEGIC OBJECTIVES
Palace Capital (LSE: PCA), the Main Market listed property company, announces its unaudited results for the six months ended 30 September 2022.
Steven Owen, Interim Executive Chairman commented:
” At an operational level, the Company continues to make steady progress with its asset management activities, as well as reducing its level of gross debt and its cost base.
“In our October trading update we announced that we have decided to pause the timing of material property disposals for the time being due to significant volatility and uncertainty and this remains the case. However, we are continuing to successfully sell small, individual assets which lend themselves better to private buyers and special purchasers , the proceeds of which have been used to further reduce gross debt from that reported at the half year end .
“Although we are hopeful of stability returning, the commercial property market continues to be adversely affected both in terms of investment activity and in the downward re-pricing of assets as evidenced by recently reported results and indices. During this challenging period our priority remains to actively manage the portfolio and further reduce gross debt through selective sales of smaller properties. Our relatively low gearing gives the Company flexibility to determine when the appropriate time is to resume significant disposals. This is a matter that is kept under constant review as the Board strives to maximise cash returns to shareholders whilst remaining mindful of consolidation in the Real Estate sector.”
| Income Statement metrics | Six months to 30 Sept 2022 | Six months to 30 Sept 2021 |
| Adjusted profit before tax | £3.5m | £4.0m |
| Adjusted earnings per share | 7.9p | 8.7p |
| IFRS (loss)/profit before tax | (£12.4m) | £8.0m |
| Basic earnings per share | (27.4p) | 17.4p |
| Dividends | ||
| Total dividend paid per share | 7.0p | 5.5p |
| Balance Sheet and operational metrics | 30 Sept 2022 | 31 March 2022 |
| EPRA NTA per share | 356p | 390p |
| Net asset value | £155.7m | £177.2m |
| Like-for-like portfolio valuation (decrease)/increase | (6.5%) | 3.9% |
| EPRA occupancy rate | 88.9% | 88.5% |
| Debt | ||
| L oan to value | 32% | 28% |
| T otal drawn debt | £88.7m | £101.8m |
| A verage cost of debt | 3.9% | 3.2% |
| A verage debt maturity | 2.8 years | 1.9 years |
Financial highlights
· Adjusted profit before tax of £3.5 million (September 2021: £4.0 million) reflecting higher borrowing costs
· IFRS loss before tax for the period of £12.4 million (September 2021 £8.0 million profit) primarily due to the valuation deficit of £15.6 million
· Adjusted EPS of 7.9 pence (September 2021: 8.7 pence)
· Dividends paid up 27.3% to 7.0 pence per share (September 2021: 5.5p)
· Completed a £6.0 million share buyback programme in July 2022, a 7.0 pence per share accretion to EPRA NTA
· EPRA NTA per share of 356 pence reduced by 8.7% (March 2022: 390 pence) and IFRS net assets of £155.7 million (March 2022: £177.2 million) reflecting an outward yield shift. Excluding Bank House, Leeds, EPRA NTA per share reduced by 6.1%
· Investment property portfolio valuation reduced by 6.5% on a like-for-like basis under the inaugural valuation undertaken by CBRE or 4.6% excluding the deficit of £5.0 million on Bank House, Leeds
· Portfolio ERV growth over the half year was 3.6% on a like-for-like basis, 7.1% for the industrial portfolio
· LTV of 32% (March 2022: 28%)
· Gross debt reduced by 12.9% in the period to £ 88.7 million (March 2022: £ 101.8 million). Gross debt reduced by a further £5.4 million post period-end to £83.3 million.
· The weighted average maturity of debt facilities is 2.8 years with the earliest facility not due to expire until March 2024
· Annualised administration cost savings of over £1.2 million following the Board changes and the relocation of the Company’s head office, together with other, continuing cost reduction measures. The annualised cost savings of £1.2 million represent 26% of FY22 administration expenses and 16% of FY22 EPRA earnings
Operational highlights
· During the first half, the Company disposed of four investment properties for £4.8 million, 25% ahead of the 31 March 2022 book value
· Since the half year end a further two investment properties have been sold for £4.1 million bringing the total sold year to date to £8.9 million, 22% ahead of the 31 March 2022 book value
· Apartment sales at Hudson Quarter, York have continued to progress, despite the uncertain economic backdrop. A further 13 apartments have been sold since 31 March 2022 for a total of £5.7 million, with aggregate proceeds of the 93 units sold totalling £33.1 million. Additionally, 10 units are under offer to the value of £4.4 million, leaving 24 units remaining. During the first half 9 apartments were sold for £3.9 million.
· WAULT for the portfolio has remained resilient at 4.8 years (March 2022 4.7 years)
· An additional £0.9 million of annualised net rental income was created during the half year through leasing and review activity and the associated reduction in non-recoverable property costs which was, on average 12%, ahead of the 31 March 2022 ERVs . Annualised net rental income lost from lease expiries and breaks totalled £0.4 million resulting in a net additional annualised increase of £0.5 million from active asset management activity. Net rental income lost from disposals totalled £0.3 million per annum resulting in a net gain in annualised net rental income of £0.2 million
· Rent collection for the first half of the financial year was 99% (31 March 2022: 98%)
· EPRA occupancy remains stable at 88.9% (31 March 2022: 88.5%)
Audio Webcast
The Company will hold an audio webcast for analysts and investors at 9.00 am today which will be available via the link below. An on demand recording will also be available from this link following the meeting and via the Company’s website www.palacecapitalplc.com .
Palace Capital plc
Steven Owen, Interim Executive Chairman / Matthew Simpson, Chief Financial Officer
Tel. +44 (0)20 3301 8330
Financial PR
FTI Consulting
Dido Laurimore / Giles Barrie
Tel: +44 (0)20 3727 1000
palacecapital@fticonsulting.com