RNS announcement

Palace Capital plc (Palace Capital" or the "Group")

 

Final results for the year ended 31 January 2011

 

27 July 2011

 

In the year ended 31 January 2011, the Group made a consolidated loss of £28,291 (2010: £50,840).

 

On 30 July 2010 a 29.9% interest in Palace Capital was acquired by Mr Stanley Davis, Mr Andrew Perloff, Mr Neil Sinclair, Mrs Pamela Sinclair and London Active Management Limited, a company controlled by Pamela and Neil Sinclair.

 

On 30 July 2010, the Company disposed of its 50% interest in Grafton Insurance Services Limited resulting in a profit of £40,096 and changed its name from Leo Insurance Services plc to Palace Capital plc.

 

The disposal of Grafton constituted a fundamental change of business by the Company pursuant to Rule 15 of the AIM Rules and was also subject to the provisions of section 190 of the 2006 Act. Accordingly, in accordance with the AIM Rules and the 2006 Act, the Company sent a circular to Shareholders setting out the reasons for, and principal terms of, the Disposal, and also details of the Group's Investing Policy following completion and to seek Shareholders' approval for the Disposal and the proposed Investing Policy. Both were approved at the 2010 General Meeting.

 

The Investing Policy is for Palace Capital to seek to make property related acquisitions or investments which may include:

 

(i)         freehold or long leasehold property or asset-backed businesses owning freehold or long leasehold property;

 

(ii)         property related businesses which manage asset-backed businesses;

 

(iii)        investment, in partnership with others, in distressed properties where the Company proposes to manage the asset(s) for a fee and participate in any potential upside;

 

(iv)        private property companies; and

 

(v)         property services businesses where the majority of the income is effectively recurring, such as property management, rating and utility brokerage.

 

There is no maximum exposure limit to any single investment nor restriction on gearing or cross holdings. The nature of the returns to Shareholders are dependent on the assets acquired. After an acquisition has been made, it is expected that returns to Shareholders will be initially in the form of capital appreciation, but the Board will consider the payment of dividends if and when Palace Capital has sufficient cash resources and retained reserves. The Board considers that this is an appropriate time in the property and economic cycles to implement this strategy.

 

In accordance with AIM Rule 40 the Company is obligated to implement the Investing Policy by 30 July 2011 and if it does not do so by this time the Company's Ordinary Shares will be suspended from trading on AIM. The Board continue to review potential opportunities available to them and will announce any developments to Shareholders as soon as possible.

 

The Directors have continued to provide financial support to the Company during the year. In order to keep operating costs of the Company to a minimum each of the members of the Board agreed not to receive any salary or fee until the Company has completed its first acquisition.

 

 

Stanley Harold Davis

Chairman

27 July 2011

 

 

Enquiries:

 

Palace Capital plc

Neil Sinclair, Managing Director

Tel: 44 (0)20 7722 7603

 

Fairfax I.S. PLC

Katy Birkin/Ewan Leggat

Tel: 44 (0)20 7598 5368

 

Lehmann Communications plc

Ronel Lehmann

Tel:  44 (0) 20 7266 3020

 

 

 

Consolidated statement of comprehensive income

For the year ended 31 January 2011

 

	Note	2011	2010
		£	£
Turnover	2	-	-
Cost of sales		-	-
Gross profit		-	-
Administrative expenses		(116,753)	(79,051)
Operating loss		(116,753)	(79,051)
Share of results of joint venture - post tax	5	28,416	34,061
Profit on disposal of joint venture	6	40,146	-
Loss before interest		(48,191)	(44,990)
Other interest receivable and similar income		19,900	-
Finance costs		-	(5,850)
Loss before taxation		(28,291)	(50,840)
Tax payable on profit on ordinary activities	3	-	-
Loss after taxation for the year		(28,291)	(50,840)
Other comprehensive income for the year		-	-
Total comprehensive income for the year		(28,291)	(50,840)
Attributable to:
Equity holders of the parent		(28,291)	(50,840)
LOSS PER ORDINARY SHARE Basic and diluted		(0.4p)	(0.7p)

 

All results in the current and preceding financial year derive from continuing operations.

 

 

 

Consolidated statement of financial position

For the year ended 31 January 2011

 

	Note	2011	2010
		£	£
Non current assets
Interests in joint ventures	5	-	20,237
		-	20,237
Current assets
Other receivables		8,430	14,960
Cash at bank and in hand		7,148	3,480
		15,578	18,440
Total assets		15,578	38,677
Current liabilities
Trade and other payables		(74,837)	(69,645)
Redeemable preference shares	7	(65,000)	(65,000)
Creditors: amounts falling due within one year		(139,837)	(134,645)
Net current liabilities		(124,259)	(116,205)
Net liabilities		(124,259)	(95,968)
Capital and reserves
Called up share capital		72,160	72,160
Share premium account		5,761	5,761
Profit and loss account		(202,180)	(173,889)
Shareholders' funds - equity interests		(124,259)	(95,968)

 

These financial statements were approved by the Board of Directors and authorised for issue on 26 July 2011 and are signed on its behalf by:

 

Stanley Davis

Director

 

 

Consolidated statement of changes in equity

For the year ended 31 January 2011

 

 

	Attributable to the owners of the parent
	Share capital £	Share premium £	Retained loss £	Total equity £
At 31 January 2009	72,160	5,761	(123,049)	(45,128)
Loss for the year	-	-	(50,840)	(50,840)
Total comprehensive income	-	-	(50,840)	(95,968)
At 31 January 2010	72,160	5,761	(173,889)	(95,968)
Loss for the year	-	-	(28,291)	(28,291)
Total comprehensive income	-	-	(28,291)	(28,291)
At 31 January 2011	72,160	5,761	(202,180)	(124,259)

 

 

Consolidated statement of cash flows

For the year ended 31 January 2011

 

	Note	2011	2010
		£	£
Operating activities Net cash outflow from operating activities		(145,081)	(84,948)
Investing activities
Disposal of joint venture	6	88,749	-
Dividend received from joint venture undertaking		-	33,000
Net cash flow from investing activities		88,749	33,000
Financing activities
Payments to acquire investments in subsidiary undertaking		-	-
Issue of loan note		60,000	-
Net cash flow from financing activities		60,000	-
Net increase/(decrease) in cash and cash equivalents		3,668	(51,948)
Cash and cash equivalents at beginning of the year		3,480	55,428
Cash and cash equivalents at the end of the year		7,148	3,480

 

 

Notes to the Financial Information

For the year ended 31 January 2011

 

1.         Status of Financial Information

 

The Group and Company financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS, as adopted by the European Union and Companies Act 2006.

 

The Board has reviewed the accounting policies set out in the Financial Statements and considers them to be the most appropriate to the Group's business activities.

 

The directors do not propose a dividend in respect of the year ended 31 January 2011 (2010: nil).

 

This announcement for the year ended 31 January 2011 was approved and authorised for issue by the board of directors on 26 July 2011.

 

The financial information set out in this announcement does not constitute the statutory financial statements of the Group but was derived from them. The current auditors (Crowe Clark Whitehill LLP) have reported on the financial statements for the year ended 31 January 2011; their report was unqualified.

 

The annual report for the year ended 31 January 2011, which will contain the financial statements for the year ended to 31 January 2011 and the notice of Annual General Meeting, have been posted to shareholders and will also be available on the Company's website www.palacecapitalplc.com 

 

2.         Segmental Reporting

 

For the purpose of IFRS 8, the chief operating decision maker ("CODM") takes the form of the Board of Directors. The Directors opinion of the business of the group is as follows.

 

The Group currently operates solely in the United Kingdom.  On 30 July 2010 it discontinued its previous operating segment, the provision of Insurance Services, through its joint venture undertaking, Grafton Insurance Services Limited. Further details are disclosed in note 19.  The principal activity of the Group up to 30 July 2010 was to invest in entities operating within the insurance sector. Since the sale of its 50% interest in Grafton Insurance Services Group Limited the Group has been actively seeking other investment opportunities.

Based on the above considerations, there is considered to be one reportable segment. The internal and external reporting is on a consolidated basis with transactions between group companies eliminated on consolidation. Therefore the financial information of the single segment is the same as that set out in the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of financial position and cashflows.

 

3.         Taxation

 

There was no tax charge for either the current or preceding year due to current and prior year tax losses.

 

		2011		2010
		£		£
Loss on ordinary activities before tax		(28,291)		(50,840)
Based on profit for the year:
Tax at 28% (2010: 28%)	(7,921)		(14,235)
Effect of:
Expenses not deductible for tax purposes	-		1,638
Income not deductable for tax purposes	(5,572)		-
Losses not utilised	32,690		22,134
Impact of joint venture profit disclosed net of tax	(19,197)		(9,537)
Tax charge for the period	-		-

Factors that may affect future tax charges:

At 31 January 2011, the group had tax losses of £501,998 (2010: £385,248) available to carry forward to future periods. A deferred tax asset of £140,559 (2010: £107,869) has not been recognised in the financial statements due to the uncertainty as to the timing of future taxable profits.

 

4.         Loss per ordinary share

 

The calculation of loss per ordinary share is based on the following losses and number of shares:

 

	2011	2010
	£	£
Loss for the year	(28,291)	(50,840)

 

Weighted average number of shares for basic and diluted loss per share	7,215,956	7,215,956

 

In accordance with IAS 38 there is a loss for the year, there is no dilutive effect from share options and therefore no difference between the basic and diluted loss per share.

 

5.         Interest in joint venture

 

The group's share of the joint venture's results up to 30 July 2010 (date of disposal) are set out below.

 

	2011	2010
	£	£
Revenue	90,485	117,438
Operating profit	39,467	43,113
Financial income	-	2
Profit before tax	39,467	43,115
Tax	(11,051)	(9,054)
Profit after tax	28,416	34,061

 

6.         Profit on disposal of joint venture

 

On 30 July 2010 the company sold its 50 per cent investment in Grafton Insurance Services Limited, a joint venture via the ownership of 100% of the "B" ordinary shares for a cash consideration of £88,749. The principal activity of the joint venture is that of a property insurance broker.  The profits on disposal arose as follows.

 

	2011	2010
	£	£

 

Proceeds	88,749
Less interest in joint venture at 30 July 2010	(48,653)
Profit on disposal	40,096
Interest in joint venture at 1 February	20,237	19,176
Share of profit for the year	28,416	34,061
Dividends	-	(33,000)
Interest in joint venture at 30 July	48,653	20,237

 

7.         Redeemable preference shares

 

The 65,000 £1 redeemable preference shares provide for a fixed cumulative dividend at a rate of 9% per annum which accrues on a daily basis. The preference shares can be redeemed by the company at any time on seven days written notice. The preference shares do not confer a right to attend, speak or vote at any general meeting of the company. On 30 July 2010, the holders of the preference shares waived the right to receive past dividends on these preference shares. Included in accruals and deferred income are accrued preference dividends of £nil (2010: £19,900) as all rights to a dividend for the financial year under review were waived.

 

8.         Post balance sheet events

 

On 31 March, Stanley Davis made a non-interest bearing loan to the Company of the sum of £20,000. This is repayable when the Company has sufficient cash resources to make this payment.