15 November 2023
Palace Capital plc
(“Palace Capital” or the “Company”)
Interim Results for the six months ended 30 September 2023
FOCUSED ON MAXIMISING CASH RETURNS TO SHAREHOLDERS
Palace Capital (LSE: PCA) announces its unaudited results for the six months ended 30 September 2023.
Steven Owen, Executive Chairman, commented:
“We continue to make good progress in achieving disposals at values ahead of book enabling us to further reduce debt and leverage as we deliver on our strategy of maximising cash returns to shareholders. Proactive balance sheet management ensures Palace Capital is in a strong financial position, with net debt currently at £7.7 million and leverage at 6.5%, both having been reduced since the period end. This provides the Company with the flexibility and optionality regarding the timing of future disposals and other strategic initiatives, including various options for returning capital to shareholders. The results below reflect the disposals strategy.
“At an operational level, the Company continues to make good progress with its asset management activities notwithstanding the difficult and uncertain conditions in financial and property markets.
“Since July 2022, we have returned £21.9 million of capital to shareholders through share buybacks. It is expected that further progress regarding disposals and options for returning capital, including a potential tender offer, will be announced in a Trading Update during the first quarter of 2024.”
| Income Statement metrics | Six months to 30 Sept 2023 | Six months to 30 Sept 2022 | Change |
| Adjusted profit before tax | £2.3m | £3.5m | -34.3% |
| Adjusted earnings per share | 5.5p | 7.9p | -30.4% |
| EPRA earnings | £2.2m | £2.1m | +4.8% |
| IFRS loss before tax | (£0.2m) | (£12.4m) | |
| Basic earnings per share | (0.4p) | (27.4p) | |
| Dividends | |||
| Total dividend paid per share | 7.5p | 7.0p | +7.1% |
| Balance Sheet and operational metrics | 30 Sept 2023 | 31 March 2023 | Change |
| EPRA NTA per share | 294p | 296p | -0.7% |
| Net asset value | £110.0m | £128.5m | -14.4% |
| Like-for-like portfolio valuation decrease | (4.4%) | (18.6%) | |
| EPRA occupancy rate | 87.6% | 87.7% | |
| Debt | |||
| Loan to value | 9% | 31% | |
| Total drawn debt | £20.2m | £64.3m | -68.6% |
| Average cost of debt | 5.4% | 5.8% | -40bps |
| Average debt maturity | 1.6 years | 2.0 years |
Financial highlights
· Adjusted profit before tax of £2.3 million (September 2022: £3.5 million) reflecting the reduction in income following disposals
· IFRS loss before tax for the period of £0.2 million (September 2022: £12.4 million loss) primarily due to the valuation deficit of £5.6 million offset by the profit on property disposals of £3.5 million
· Adjusted EPS of 5.5 pence (September 2022: 7.9 pence)
· 7.5 pence per share of dividends paid, an increase of 7.1% (September 2022: 7.0p)
· Completed £15.2 million of share buybacks in the period, an 8.0 pence per share accretion to EPRA NTA
· EPRA NTA per share of 294 pence reduced by 0.7% (March 2023: 296 pence) and IFRS net assets of £110.0 million (March 2023: £128.5 million)
· Investment property portfolio valuation reduced by 4.4% on a like-for-like basis
· Portfolio ERV growth over the half year was 2.6% on a like-for-like basis
· LTV of 9% at 30 September 2023 (March 2023: 31%), which has reduced further post period-end to 6.5%
· Gross debt reduced by £44.1m or 68.6% in the period to £20.2 million (March 2023: £64.3 million). Gross debt reduced by a further £6.2 million post period-end to £14.0 million
Operational highlights
· In the period to 30 September 2023, sale of 12 investment properties for £66.9 million, 7% ahead of the 31 March 2023 book value
· Post period end, a further three investment properties have been sold for £6.4 million, bringing the total sales year to date to £73.3 million, 6% ahead of the March 2023 book value
· Apartment sales at Hudson Quarter, York, have been slower, reflecting the wider housing market but continue to progress. A further six apartments have been sold since 31 March 2023 for a total of £2.6 million, with aggregate proceeds of the 109 units sold totalling £40.1 million. Since 30 September two units are under offer for £1.2 million, leaving 16 units remaining
· Portfolio WAULT resilient at 4.9 years (March 2023 4.8 years)
· An additional £1.1 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 3% ahead of the 31 March 2023 ERVs. Annualised net rental income lost from lease expiries and breaks totalled £0.5 million resulting in a net additional annualised increase of £0.6 million from active asset management activity. Net rental income lost following disposals totalled £4.2 million per annum resulting in a net loss in annualised net rental income of £3.6 million
· Rent collection for the first half of the financial year was 99% (31 March 2023: 99%)
· EPRA occupancy remains stable at 87.6% (31 March 2023: 87.7%)
· Total Property Return of 2.4%, outperforming the MSCI UK Quarterly Property Index benchmark performance of -0.5%.
Palace Capital plc
Steven Owen, Executive Chairman
info@palacecapitalplc.com
Financial PR
FTI Consulting
Dido Laurimore / Giles Barrie
Tel: +44 (0)20 3727 1000
palacecapital@fticonsulting.com