RNS announcement

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

 

 

 

 

Palace Capital plc

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 January 2013

 

	Note	2013	2012
		£	£
Non-current assets
Goodwill		5,910	5,910
Investment properties		2,015,000	2,015,000
Tangible fixed assets		447	805
		2,021,357	2,021,715
Current assets
Trade and other receivables		29,483	46,848
Cash at bank and in hand		38,696	145,378
		68,179	192,226
Total Assets		2,089,536	2,213,941
Current liabilities
Trade and other payables		(140,507)	(122,079)
Redeemable preference shares	9	(65,000)	(65,000)
Creditors: amounts falling due within one year		(205,507)	(187,079)
Net current (liabilities)/assets		(137,328)	5,147
Non-current liabilities
Borrowings	10	(1,762,374)	(1,757,485)
Net assets		121,655	269,377
Capital and reserves
Called up share capital		315,938	315,938
Share premium account		110,395	110,395
Convertible loan notes - equity		27,934	27,934
Share based payments		13,333	3,333
Profit and loss account		(345,945)	(188,223)
Equity - attributable to the owners of the parent		121,655	269,377

 

 

Palace Capital plc

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 January 2013

 

 

	Share Capital	Share Premium	Share based payments	Convertible loan notes  equity	Retained losses	Total equity
	£	£	£	£	£	£
At 31 January 2011	72,160	5,761	-	-	(202,180)	(124,259)
Profit for the year	-	-	-	-	13,957	13,957
Issue of ordinary share capital	243,778	104,634	-	-	-	348,412
Issue of convertible loan notes	-	-	-	27,934	-	27,934
Share based payments	-	-	3,333	-	-	3,333
Total comprehensive income	243,778	104,634	3,333	27,934	13,957	393,636
At 31 January 2012	315,938	110,395	3,333	27,934	(188,223)	269,377
Loss for the year	-	-	-	-	(157,722)	(157,722)
Share based payments	-	-	10,000	-	-	10,000
Total comprehensive income	-	-	10,000	-	(157,722)	(147,722)
At 31 January 2013	315,938	110,395	13,333	27,934	(345,945)	121,655

 

 

For the purpose of preparing the consolidated financial statement of the Group, the share capital represents the nominal value of the issued share capital of Palace Capital. Share premium represents the excess over nominal value of the fair value consideration received for equity shares net of expenses of the share issue.

 

Share based payments reserve comprises the fair value of options and performance share rights recognised as an expense. Upon exercise of options or performance share rights, any proceeds received are credited to share capital. The share-based payment reserve remains as a separate component of equity.

 

The convertible loan note equity reserve represents the difference between the proceeds from issuing the convertible loan notes and the fair value assigned to the liability component at the date of issue.

 

 

Palace Capital plc

CONSOLIDATED STATEMENT OF CASH FLOWS 
For the year ended 31 January 2013

 

 

	Note	2013	2012
		£	£
OPERATING ACTIVITIES Net cash outflow from operating activities	2	(7,304)	(158,000)
Interest received		105	27
Interest paid		(99,599)	(17,361)
		(99,494)	(17,334)
TAXATION
Corporation tax paid		-	(28,148)
INVESTING ACTIVITIES
Payments to acquire subsidiary undertaking		-	(1,783,395)
Adjustments to / (payments to acquire) fixed assets		135	(805)
Net cash flow from investing activities		135	(1,784,200)
FINANCING ACTIVITIES
Loans provided by directors		-	577,500
Bank loans (repaid) / received		(19)	1,200,000
Issue of new share capital		-	348,412
Net cash flow from financing activities		(19)	2,125,912
NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS		(106,682)	138,230
Cash and cash equivalents at beginning of the year		145,378	7,148
Cash and cash equivalents at the end of the year		38,696	145,378

 

 

 

 

Palace Capital plc

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 31 January 2013

 

 

 

BASIS OF ACCOUNTING

 

These financial statements are for Palace Capital Plc ("the Company") and its subsidiary undertakings.

The Company is quoted on the AIM market of the London Stock Exchange and is domiciled and registered in England and Wales and incorporated under the Companies Act 1985.  The address of its registered office is First floor, 41 Chalton Street, London, NW1 1JD.

BASIS OF PREPARATION

The Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006.  These financial statements are for the year 1 February 2012 to 31 January 2013 and are presented in pounds sterling ("GBP")

The financial statements have been prepared under the historical cost basis, as modified by valuing financial assets and financial liabilities at fair value through the Statement of Comprehensive Income. The principal accounting policies adopted are set out below.

GOING CONCERN

 

The Group made a loss of £157,722 for the year ended 31 January 2013 (2012: profit of £13,957) and had net current liabilities of £137,328 (2012: net current assets of £5,147).

 

The directors have reviewed forecast and budgets for the coming year, which have been drawn up with appropriate regard for the current economic environment and the particular circumstances in which the Group operates. These were prepared with reference to historical and current industry knowledge, taking into account future strategy of the Group.

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities as they fall due.  As the Group has net current liabilities as at 31 January 2013, the Group has obtained confirmation from its directors that they will continue to provide financial support to the Group to ensure it can meet its liabilities as they fall due. 

As a result of these considerations, at the time of approving the financial statements, the directors consider that the Company and the Group have sufficient resources to continue in operational existence for the foreseeable future. It is appropriate to adopt the going concern basis in the preparation of the financial statements. 

 

As with all business forecasts, the directors' statement cannot guarantee that the going concern basis will remain appropriate given the inherent uncertainty about the future events.

 

1          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 principal activity of the Group was to invest in entities operating within the property sector.

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.

 

Geographical segments

 

The following tables present revenue regarding the group's geographical segments for the years ended 31 January 2013 and 31 January 2012.

 

Year ended 31 January 2013	United Kingdom	Total
	£	£
Rents received from investment properties	199,785	199,785
	199,785	199,785

 

Year ended 31 January 2012	United Kingdom	Total
	£	£
Rents received from investment properties	54,400	54,400
	54,400	54,400

 

2          Reconciliation of OPERATING PROFIT

Reconciliation of operating profit/(loss) to cash outflows from operating activities

	2013	2012
	£	£
(Loss)/profit before taxation	(144,688)	13,384
Finance income	(105)	(27)
Finance costs	113,733	44,863
Gains on revaluation of investment property portfolio	-	(197,500)
Depreciation	223	-
Share based payments	10,000	3,333
Decrease/(increase)  in receivables	6,190	(15,493)
Increase / (decrease) in payables	7,343	(6,560)
Net cash outflow from continuing operating activities	(7,304)	(158,000)

 

3          OTHER INTEREST RECEIVABLE AND SIMILAR INCOME

	2013	2012
	£	£
Bank interest received	105	27
	105	27

 

4          Interest payable AND SIMILAR CHARGES

	2013	2012
	£	£
Interest on bank loans	72,486	23,514
Interest on other loans	35,397	15,499
Preference share dividend payable	5,850	5,850
	113,733	44,863

The holders of the preference shares waived all rights to unpaid dividends up to 31 January 2011.

 

5           PROFIT/(LOSS) FOR THE PERIOD

The Group's profit/(loss) for the period is state after charging the following:

	2013	2012
	£	£
Auditor's remuneration:
Fees payable to the auditor for the audit of the company's annual accounts	14,500	14,500
Fees payable to the auditor and its related entities for other services: Corporate advisory services	-	38,100
	14,500	52,600

 

Amounts payable to Crowe Clark Whitehill LLP and its related entities in respect of audit and non-audit services are disclosed in the table above.

 

6          TAXATION

	2013	2012
	£	£
Current income tax charge	15,937	(573)
Over provided in prior year	(2,903)
Deferred tax	-	-
Tax charge/(credit)	13,034	(573)

 

		2013		2012
		£		£
(Loss)/profit on ordinary activities before tax		(144,688)		13,384
Based on profit for the year:
Tax at 24.3% (2012: 26.3%)	(35,159)		3,520
Effect of:
Expenses not deductible for tax purposes	9,527		16,487
Over provision in prior year	(2,903)		-
Gains on revaluation of investment property portfolio	-		(51,943)
Other adjustments	4,766		8,017
Losses not utilised	36,803		24,492
Tax charges for the year	13,034		573

 

At 31 January 2013, the Group had tax losses of £740,665 (2012: £515,752) available to carry forward to future periods. A deferred tax asset of £177,760 (2012: £134,095) has not been recognised in the financial statements due to the uncertainty as to the timing of future taxable profits.

 

7          EARNINGS PER SHARE

The calculation of earnings per ordinary share is based on the following profits/(losses) and number of shares:

	2013	2012
	£	£
Profit/(loss) for the year	(157,722)	13,957

 

Weighted average number of shares for basic profit/(loss) per share	31,593,733	15,297,356
Weighted average number of shares for diluted profit/(loss) per share	50,753,106	21,648,819
EARNINGS PER ORDINARY SHARE; Basic	(0.50)p	0.09p
Diluted	(0.50)p	0.06p

 

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

 

8          CASH AND CASH EQUIVALENTS

 

All of the group's cash and cash equivalents at 31 January 2013 and 31 January 2012 are in sterling and held at floating interest rates.

	2013	2012
	£	£
Cash and cash equivalents	38,696	145,378

The Directors consider that the carrying amount of cash and cash equivalents approximates to their fair value.

 

 

9          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.  Included in accruals and deferred income are accrued preference dividends of £11,700 (2012: £5,850).

 

10        BORROWINGS

			2013	2012
			£	£
Convertible loan notes (note 20)			284,893	279,985
Loan notes			277,500	277,500
Bank loans			1,199,981	1,200,000
			1,762,374	1,757,485

 

The bank loan amounting to £1,199,981 (2012: £1,200,000) is secured on the investment properties.  Interest is charged at a rate of 5% above the 1 month Libor rate with a minimum rate of 6% and is payable monthly.  The loan is repayable on 30 September 2014.

 

The loan notes amounting to £277,500 (2012; £277,500) were provided by Stanley Davis, a director of the company, at an interest rate of 5% above the 1 month Libor rate fixed for each interest period.  The interest accrued during the period amounted to £16,696 (2012: £5,428).  The loan is repayable on 3 October 2015.

 

The convertible loan notes of £300,000 (2012: £300,000) were provided by a pension scheme of which Stanley Davis is a beneficiary at an interest rate of 4%.  The liability component of this loan amounted to £284893, (2012 - £279,985) (see note 20).The interest accrued during the period amounted to £12,033 (2012 - £3,912).  The loan is repayable on 3 October 2015 but can be converted to ordinary shares at any time at an exercise price of 2.25p per share. 

 

11        RELATED PARTY TRANSACTIONS

Stanley Davis, owns £32,500 (2012: £32,500) of the redeemable preference shares disclosed in note 13. 

Convertible loan notes amounting to £31,500 (2012: £31,500),disclosed in note 15, are payable to Stanley Davis, £2,000 (2012: £2,000) are payable to Neil Sinclair and £2,000 (2012: £2,000) are payable to London Active Management, a company controlled by Pamela & Neil Sinclair.  No interest is payable on these loan notes.

A further convertible loan note amount of £300,000 (2012: £300,000) was provided by a pension scheme in which Stanley Davis is a beneficiary.  Accrued interest on this loan amounted to £7,068 (2012: £3,912).

 

Included in other loans payable after more than one year are convertible loan notes amounting to £277,500  (2012: £277,500) provided by Stanley Davis, a director of the company.  Accrued interest on this loan amounted to £10,013 (2012: £5,428). 

 

Accounting services amounting to £nil (2012: £3,000) have been provided to the Group by Stanley Davis Group Limited, a company where Stanley Davis is a director.

 

12        CONVERTIBLE LOAN NOTES

Loan notes amounting to £300,000 are convertible at the option of the loan note holder into ordinary shares of the Company at any time between the date of issue of the loan notes and their maturity date of 3 October 2015 at 2.25p per share. The effective rate of interest used to calculate the interest charged on the loan notes to the income statement was 6%. If the loan notes have not been converted, they will be redeemed on their maturity date at par.  Interest of 4% per annum will be paid quarterly up until that date.

In addition, there were convertible loan notes amounting to £60,000 which are convertible at a rate of 2.25p per share, at the option of the loan note holders and at any time prior to redemption.  No interest is payable on the loan notes. There were no transaction costs incurred on the issue of these loan notes.  The proceeds from the issue of the convertible loan notes have been split between the liability element and an equity component, representing the fair value of the embedded option to convert the liability into equity of the Group as follows:

	Note 1		Note 2
	2013 £	2012  £		2013 £	2012 £
Convertible loan notes issued	300,000	300,000		60,000	60,000
Equity component	(21,197)	(21,197)		(6,737)	(6,737)
Liability component at date of issue	278,803	278,803		53,263	53,263
Interest charged	22,002	5,094		6,737	4,977
Interest payable	(15,912)	(3,912)		-	-
	284,893	279,985		60,000	58,240