Half-year Results

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."

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

Financial PR

FTI Consulting

Dido Laurimore / Giles Barrie

EXECUTIVE CHAIRMAN'S STATEMENT

Update on delivery of strategic objectives

At our Full Year results announced in June, it was noted that the year ahead was likely to be further affected by continuing macroeconomic and geo-political uncertainty although the inflation outlook in the UK was expected to improve. Increased interest rates continue to adversely impact the commercial property market in relation to general investment activity, although the Company has had an active first half, disposing of £66.9 million of investment properties at 7% above the 31 March 2023 valuation. This includes the office building in Maidenhead sold after the Trading Update of 26 July 2023 for £9.0 million, 9.7% ahead of the March 2023 valuation.

Since 30 September 2023, three investment properties have been sold for £6.4 million, 2% above the March 2023 valuation: the long leasehold interest of a residential block at HQ York for £1.5 million; Bank House, Leeds, for £2.65 million: and Princeton House, Farnborough, for £2.28 million. These take total investment property sales in the year to date to £73.3 million, which is 6% above the March 2023 valuation.

Unsurprisingly, activity in relation to residential sales at Hudson Quarter, York, has been more muted with a further six apartment sales completed during the half year period for £2.6 million and since 30 September two units are under offer for £1.2 million, leaving 16 units remaining.

Total investment properties sold since the change of strategy in July 2022 amount to £84.4 million or £94.5 million including residential apartments.

Operationally, the business remains robust. The team has been proactive in implementing asset management plans to increase income and reduce void costs with lettings, renewals and rent reviews on average 3% ahead of the 31 March 2023 estimated rental values. During the first half, 14 lease events comprising five new lettings, three lease renewals and six rent reviews were completed across 129,000 sq ft of space providing £0.8 million of additional annualised income. Including the associated reduction in non-recoverable property costs of £0.3 million, an additional £1.1 million of annualised net rental income was created during the first half.

There were two key lettings during the period:

Firstly, at 2 St James' Gate, Newcastle, where Orega, a premium, flexible, serviced office workspace provider, entered into a 15 year management agreement to take the second and third floors totalling 22,500 sq ft of the seven storey, 82,500 sq ft building. Following a comprehensive refurbishment, which is currently underway, the operation is expected to open shortly, providing c.400 workstations. This letting significantly increased the occupancy at the property, taking it from 65% as at 31 March 2023 to 88% as at 30 September 2023 and, together with the letting to Softcat plc in December 2022, are the first two major lettings at St James' Gate since the property was acquired in 2017.

Secondly, at Broad Street Plaza, Halifax, where Calderdale and Huddersfield NHS Foundation Trust entered into a new 15 year lease and took an additional 6,000 sq ft unit increasing their occupation to over 27,000 sq ft. The new rent on the combined space is over £14 psf and is 41% higher than the March 2023 ERV. The NHS now accounts for over 16% of the net income from the property and we believe that the letting was the key reason why the property increased in value as at September 2023 compared with March 2023.

In terms of managing our own costs, Palace Capital continues to reduce its level of administrative expenses in line with its strategy, with measures implemented in the period saving £0.5 million and £0.9 million in the year to date. This includes reducing headcount and relocating its head office to a smaller office in Victoria, London on expiry of its current lease term on 1 December 2023. Annual occupancy costs of the Company's new premises will be £0.25 million lower than those of its former offices in Bury Street, SW1.

During the half year period, the Company purchased 6.2 million shares for £15.2 million, contributing an additional 8.0 pence to EPRA NTA. Since July 2022, cash returned to shareholders through the share buyback programmes to date totals £21.9 million.

Overview of results

The Group's adjusted profit before tax reduced to £2.3 million (September 2022: £3.5 million) as a result of income lost through disposals. Investment property sales during the half year period totalled £66.9 million, which realised a profit of £3.4 million (September 2022: £0.9 million). Trading profits from the sale of residential units realised a profit of £0.1 million (September 2022: £0.1 million).

The whole portfolio was independently valued by CBRE as at 30 September 2023 at £124.5 million, a reduction of 4.4% on a like-for-like basis. The valuation deficit of £5.6 million equates to 13.5 pence per share.

The investment portfolio (excluding residential properties held as trading properties) was valued at £115.2 million and a net initial yield (NIY) of 8.1%. Within the investment portfolio the office and leisure assets, which comprise 84% of the portfolio, were valued at NIYs of 7.4% and 11.0% respectively.

The ERVs used by the valuers were, on the whole portfolio, 2.6% higher on a like-for-like basis than as at 31 March 2023. Within the portfolio the ERV growth for the office and leisure assets was 2.1% and 5.1% respectively.

EPRA NTA decreased by 2.0 pence per share or 0.7% to 294 pence (March 2023: 296 pence) during the period, principally as a result of the revaluation deficit of £5.6 million or 13.5 pence per share offset by the 8.0 pence per share share buyback accretion and the profit from the disposal of investment properties, which contributed 8.2 pence per share. The excess of dividends paid per share over adjusted earnings per share was -2.0 pence per share and other items, principally the denominator effect of the reduced number of shares at period end compared with the average for the period, was -2.7 pence per share.

The Group's balance sheet remains strong with cash reserves of £8.9 million as at 30 September 2023. Gross debt reduced by 68.6% in the period to £20.2 million (March 2023: £64.3 million), which has resulted in the loan to value ratio reducing to 9% (March 2023: 31%). Since the half year end, gross debt has reduced by a further £6.2 million and proforma LTV has reduced to 6.5%.

Directorate Change

Today, the Company has announced further progress in the delivery of its strategy to focus on maximising cash returns to shareholders. In light of this, Matthew Simpson, CFO and the Board have agreed that now is the right time for Matthew to step down as a Director and from the Board. The Company's financial circumstances (including cancellation of bank facilities and reduced portfolio size) mean that the CFO role is significantly reduced and therefore no longer requires the level of expertise and skillset that Matthew contributes.

Matthew's CFO report is contained within this Half Year Report below.

Going forward, the financial operations of the Company will be managed by the Financial Controller and Financial Planning Analyst with operational oversight by myself as Executive Chairman and by the Audit and Risk Committee on behalf of the Board. After a short handover, Matthew will leave the Company at the end of this month.

Matthew leaves with the Board's best wishes and gratitude for his eight years with the Company, latterly as CFO and prior to that as Financial Controller. He has supported the Board in reshaping the Company over the last sixteen months including returning cash to shareholders and reducing bank debt.

Dividend

The Group increased its paid dividends by 7.1% to 7.5 pence per share (September 2022: 7.0 pence per share) in relation to the period ended 30 September 2023. The Company has declared an interim dividend of 3.75 pence per share which will be paid on 29 December 2023 as a Property Income Distribution (PID). The record date will be 24 November 2023.

As previously reported, the dividend policy is that the current level of dividend is expected to be maintained and paid from adjusted profits including trading profits. As the portfolio has been significantly repositioned and cash returned to shareholders in the last 12 months, if this level of dividend cannot be achieved then, as a minimum, the dividend payment is expected to be set at the Property Income Distribution (PID) level.

AGM update

In line with best practice recommendations, the Company provides an update on communication with shareholders on issues where there were significant votes against a resolution at the AGM. In relation to the votes for the resolution seeking approval of my own re-election, 77% of votes cast at the AGM were in favour of the resolution. Mark Davies, Senior Independent Director contacted a major shareholder who had voted against the resolution. That shareholder subsequently confirmed that this had been an administrative error and that they had intended to vote in favour of the resolution, as they had done with all of the other resolutions proposed. Had this been correctly cast, the votes in favour of the resolution would have been 91% instead of the 77% recorded.

We continue to communicate with our major shareholders on significant issues affecting the Company and welcome constructive dialogue.

General Meeting

The Company has successfully used share buybacks as one method of returning capital to shareholders. Accordingly, further authority is sought for the Company to acquire its own shares, having fully utilised the authority for the market purchase of its own shares previously provided by shareholders at the AGM held on 26 July 2023. The Company will hold a General Meeting to consider this resolution with the General Meeting being held in person at the offices of CMS Cameron McKenna Nabarro Olswang LLP, Cannon Place, 78 Cannon Street, London EC4N 6AF at 1.00 p.m. on Monday 4 December 2023. The number of shares subject to the proposal is 5,634,044 shares representing approximately 15% of the issued ordinary share capital of the Company as at 14 November 2023. Full details are contained in the Notice of General Meeting which will shortly be available on the Company's website www.palacecapitalplc.com. The Company is utilising the authority provided by shareholders at the 2023 AGM to hold a general meeting on a shorter timescale of 14 clear days' notice to provide the Company with the appropriate flexibility, which is considered by the Directors to be in the best interests of the Company.

Outlook

The commercial property market remains challenging but the disposals in the current financial year to date represent a further significant step forward in reducing debt and leverage and demonstrate continued progress in our strategy of maximising cash returns to shareholders. The Company is in a strong financial position and its current low leverage of 6.5% provides it with the flexibility and optionality regarding the timing of further disposals and other strategic initiatives, including various options for returning capital to shareholders.

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.

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.

Steven Owen

Executive Chairman

CHIEF FINANCIAL OFFICER'S REPORT

Financial Overview

The Company's adjusted profit before tax reduced by 34.3% to £2.3 million (September 2022: £3.5 million) and EPRA NTA per share by 0.7% to 294 pence (March 2023: 296 pence). Against a backdrop of economic uncertainty, Palace Capital continued to deliver at an operational level, by reducing gross debt in a rising interest rate environment and making continued progress in reducing administration costs. In line with the strategy of returning capital to shareholders, the Company has increased the dividend paid by 7.1% in the period compared with the previous half year and completed £15.2 million of share buybacks in the period, which was accretive to EPRA NTA by 8.0 pence per share. The summary of the Company's financial results are as follows:

Income Statement Summary

Net property income in the period reduced to £5.4 million (September 2022: £7.3 million) as result of the twelve investment property disposals in the period, which were 7% ahead of the 31 March 2023 book value. Property operating expenses have risen by £0.2 million as a result of inflationary pressures on service charge and insurance costs on our void units. Rent collection has remained consistently high at 99% throughout the period.

The Company has continued to reduce its cost base, with annualised cost savings of £0.5 million in the period and £0.9 million in the year to date. As a result of cost savings implemented in the prior year of £1.4 million, total savings for FY23 and FY24 to date are £2.3 million. Recurring administrative costs reduced by 15% to £1.7 million (September 2022: £2.0 million) for the period

Finance costs have reduced by 11.1% or £0.2 million to £1.6 million (September 2022: £1.8 million) following the significant reduction in our debt in the period, despite the increases in Bank of England base rates.

EPRA NTA Movement

EPRA NTA decreased by 2 pence per share or 0.7% to 294 pence (March 2023: 296 pence) during the period. The revaluation deficit of £5.6 million or 13.5 pence per share reduced EPRA NTA as a result of a 4.4% like-for-like reduction in the property portfolio. This was offset by the £15.2 million of shares purchased through the share buyback programme in the period, which was accretive by 8.0 pence per share, and the profit from the disposal of investment properties which contributed 8.2 pence per share. These disposals were 7% ahead of the 31 March 2023 book value.

Adjusted earnings before tax of £2.3 million increased EPRA NTA by 5.5 pence per share, this was offset by the dividends paid in the period of 7.5 pence per share. Hudson Quarter trading profit (net of fair value adjustment to trading properties) increased EPRA NTA by 0.1 pence per share, whilst other movements contributed to a reduction of 2.8 pence per share.

*Other movements include debt termination costs, shares purchased by EBT, the denominator effect of the reduced number of shares at period end compared with the average for the period and the effect of rounding.

FINANCING

The Company has made further significant progress in reducing its drawn debt which has been reduced by £44.1 million, or 68.6% to £20.2 million (March 2023: £64.2 million). This includes the repayment of the Santander and Lloyds debt facilities, which had drawn debt at 31 March 2023 of £11.8 million and £6.8 million respectively. The repayment of these two facilities enabled the release from charge of £34.0 million of property, giving the Group further flexibility and optionality regarding the timing of the sales of such properties.

The Company prioritises the efficient use of its capital, and the £44.1 million reduction in debt has resulted in an LTV of 9% at 30 September 2023 (March 2023: 31%) and reduced our average cost of debt to 5.4% (March 2023: 5.8%). The Company has remained compliant with all covenants on its bank facilities in the period.

At 30 September 2023 cash and net debt was £8.9 million (March 2023: £5.5 million) and £11.3 million (March 2023: £58.8 million) respectively, with the disposal proceeds from Hudson Quarter residential sales continuing to enhance cash reserves, as this cash is unfettered and free from bank debt.

Since 30 September 2023, the Company has repaid a further £6.2 million of drawn debt, resulting in a net debt of £7.7 million and an LTV of 6.5%. This includes the full repayment of the NatWest term loan and the cancellation of the undrawn Revolving Credit Facility of £20.0 million.

Set out below is a table showing the movement in drawn debt during the year:

£m

At 30 September 2023 we held £8.4 million of fixed rate debt (March 2023: £8.6 million) which was 42% of overall drawn debt (March 2023: 13%), as shown in the table below:

DEBT AT 30 SEPTEMBER 2023

Following the repayment of the NatWest facility the percentage of fixed rate debt has increased to 60% from 42%.

The Company's key debt metrics are summarised in the table below:

DEBT METRICS

Matthew Simpson

CHIEF FINANCIAL OFFICER

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 2023 and summarised below. However, several risks continue to be elevated as a result of the ongoing economic outlook for the UK.

This includes increased risks relating to Market Cycle, Economic and Political, Liquidity and Valuation through increased economic uncertainty, higher interest rates, inflation and energy costs which may negatively impact revenues and costs for our tenants, for the commercial property market and the Company. We are working with our tenants, banks and other stakeholders to mitigate these risks.

Statement of Directors' Responsibilities

The Directors confirm that the condensed set of consolidated financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union 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 first 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 year; and

The Directors of Palace Capital plc are listed on the Company website www.palacecapitalplc.com

By order of the Board

Phil Higgins

Company Secretary

Palace Capital plc

Condensed consolidated statement of comprehensive income

For the six months ended 30 September 2023

The condensed consolidated interim financial statements were approved by the Board of Directors on 14 November 2023.

Palace Capital plc

Condensed consolidated statement of changes in equity

For the six months ended 30 September 2023

Palace Capital plc

Notes to the condensed consolidated financial statements

For the six months ended 30 September 2023

1 General information

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 Fora Victoria, 6-8 Greencoat Place, London, SW1P 1PL.

Basis of preparation

The condensed consolidated financial information included in this half yearly report has been prepared in accordance with the IAS 34 "Interim Financial Reporting", as adopted by the European Union. 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 International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). 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 2023 and are expected to be used in the Group's Annual Report for the year ended 31 March 2024.

The financial information for the year ended 31 March 2023 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 2023 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 2023 was unqualified and did not contain statements under s498(2) or (3) of the Companies Act 2006. The financial information for the periods ended 30 September 2022 and 30 September 2023 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 14 November 2023.

Copies of this statement are available to the public for collection at the Company's Registered Office at Fora Victoria, 6-8 Greencoat Place, London, SW1P 1PL and 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 uncertainties around the economic climate brought on by rising inflation and rising interest rates. In this assessment, the Directors considered the impact on the Group's cash resources, borrowing facilities (including impact on bank covenants), rental income, disposals of investment and trading properties, committed capital and dividend distributions. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in these financial statements.

As at 30 September 2023 the Group had £8.9m of unrestricted cash and cash equivalents, a low gearing level of 9% and a fair value property portfolio of £124.5m. The Directors have reviewed the forecasts for the Group taking into account the impact of rising inflation and rising interest rates on trading over the 12 months from the date of signing this report.

The Directors have a reasonable expectation that the Group have 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

3 Revenue

As a result of the Company's conversion to a REIT on 1 August 2019, the Group is no longer required to pay UK corporation tax in respect of property rental income and capital gains relating to its property rental business.

6 Earnings per share

Basic earnings per share and diluted earnings per share have been calculated on profit 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 year (see table below).

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. These include a number of European Public Real Estate Association ("EPRA") measures, prepared in accordance with the EPRA Best Practice Recommendations reporting framework the latest update of which was issued in November 2019. The Group reports a number of these measures (detailed in the glossary of terms) because the Directors consider them to improve the transparency and relevance of our published results as well as the comparability with other listed European real estate companies.

EPRA Earnings is a measure of operational performance and represents the net income generated from the operational activities. It is intended to provide an indicator of the underlying income performance generated from the leasing and management of the property portfolio. EPRA earnings are calculated taking the profit after tax excluding investment property revaluations and gains and losses on disposals, changes in fair value of financial instruments and one-off finance termination costs. EPRA earnings is calculated on the basis of the basic number of shares in line with IFRS earnings as the dividends to which they give rise accrue to current Shareholders.

The Group also reports an adjusted earnings measure which is based on recurring earnings before tax and the basic number of shares. This is the basis on which the Directors consider dividend cover. This takes EPRA earnings as the starting point and then adds back tax and any other fair value movements or one-off items that were included in EPRA earnings. This includes share-based payments being a non-cash expense, as well as payments to former Directors, which is a one-off exceptional item. The corporation tax charge (excluding deferred tax movements, being a non-cash expense) is deducted in order 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:

7 Net asset value per share

The Company has adopted the new EPRA NAV measures which came into effect for accounting periods starting 1 January 2020. EPRA issued new best practice recommendations (BPR) for financial guidelines on its definitions of NAV measures. The new NAV measures as outlined in the BPR are EPRA net tangible assets (NTA), EPRA net reinvestment value (NRV) and EPRA net disposal value (NDV). The Company has adopted these new guidelines and applies them in the 30 September 2023 Interim Report.

The Company considered EPRA Net Tangible Assets (NTA) to be the most relevant NAV measure for the Company and we are now reporting this as our primary NAV measure, replacing our previously reported EPRA NAV and EPRA NNNAV per share metrics. EPRA NTA excludes the intangible assets and the cumulative fair value adjustments for debt-related derivatives which are unlikely to be realised.

Proposed dividend

2024 Q1 interim dividend: 3.75p per share paid on 13 October 2023.

2024 Q2 interim dividend: 3.75p per share payable on 29 December 2023.

9 Property Portfolio

At 30 September 2023, the Company'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:

Investment properties with a carrying value of £64,970,000 (31 March 2023: £162,420,000) are subject to a first charge to secure the Group's bank loans amounting to £20,238,000 (31 March 2023: £64,333,000). Trading properties with a carrying value of £8,713,000 (31 March 2023: £11,055,000) are not secured to the Group's bank loans and are therefore uncharged.

Valuation process - investment properties

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 Company's financial and property management systems and is subject to the Group's overall control environment.

The Head of Investment 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 Company's investment properties are:

• The amount and timing of future income streams;
• Anticipated maintenance costs and other landlord's liabilities;
• An appropriate yield; and
• For investment properties under construction: gross development value, estimated cost to complete and an appropriate developer's margin.

Valuation technique - standing investment properties

10 Trading property

Total £000

The Group has developed a large mixed-use scheme at Hudson Quarter, York. Part of the approved scheme consisted of residential units which the Group held for sale. As a result, the residential element of the scheme was classified as trading property.

11 Trade and other receivables

The maturity profile of the Group's debt was as follows

During the period, the Company repaid the Lloyds loan in full on 31st May 2023. The Group also repaid the Santander loan in full on 4th August 2023.

As at 31 March 2023 (audited)

At 30 September 2023, the Company has unused loan facilities amounting to £20,000,000 (31 March 2023: £20,000,000). A facility fee is charged on this balance at a rate of 1.05% p.a. and is payable quarterly. This facility is secured on the investment properties held by Property Investment Holdings Limited, Palace Capital (Properties) Limited and Palace Capital (Leeds) Limited as part of the NatWest loan.

Post period end, the NatWest term loan was fully repaid and the undrawn Revolving Credit Facility of £20,000,000 cancelled.

15 Derivatives financial instruments

The Company adopts a policy of entering into derivative financial instruments with banks to provide an economic hedge to its interest rate risks and ensure its exposure to interest rate fluctuations is mitigated.

At 30 September 2023, the Company has no derivative financial instruments as they all matured in the prior financial year. The Company continues to monitor swap rates on an on-going basis.

Details of the interest rate swaps the Company has entered can be found in the table below.

16 Share capital

Authorised, issued and fully paid share capital is as follows:

17 Post balance sheet events

On 13 October 2023, Palace Capital completed the disposal of the Ground Floor, Victoria at Hudson Quarter, York for a total consideration of £1.5 million. The property was not charged to any loan facility.

On 20 October 2023, the Company completed the disposal of Bank House, Leeds for a total consideration of £2.65 million. The property was charged against the loan facility with NatWest plc and as a result, £2.5 million of the total consideration was used to repay the loan facility on 23 October 2023.

On 6 November 2023, the Company completed the disposal of Princeton House, Farnborough for a total consideration of £2.28 million. The Property was charged against the loan facility with NatWest plc and, as a result, £0.9 million of the total consideration was used to repay the loan facility on 9 November 2023.

On 9 November 2023, the Company fully repaid the remaining loan facility with NatWest plc of £2.5 million, and cancelled the undrawn Revolving Credit Facility of £20.0 million.