Palace Capital Regulatory News (PCA)

Palace Capital Plc

(Formerly Leo Insurance Services PLC)

Interim results for the six months ended 31 July 2010

CHAIRMAN'S STATEMENT

This is my first opportunity to communicate with you since my appointment as Chairman on 30 July last. On that date your Managing Director, Neil Sinclair, Andrew Perloff and I completed the acquisition of 29.9% of the ordinary share capital of this company when the name was changed from Leo Insurance Services plc to Palace Capital plc subsequent to a General Meeting.

In the half year to 31 July 2010, the Group made a consolidated profit of £564 (loss of £26,330) with earnings per share of 0.01p. There is no dividend.

On 30 July 2010 the Company sold its investment in Grafton Insurance Services Ltd a brokerage specialising in property assurance where the main asset was its long term contract with Safeland plc.

The holders of the preference shares have waived all rights to dividends accrued prior to 31 July 2010.

A new investing policy was approved to generate shareholder value through making property related investments in property backed businesses, distressed properties, private property companies and property services businesses.

We are looking at a number of opportunities and I will be in touch with you hopefully in the near future as shareholder approval will be required in respect of any suitable acquisition. The Company must make a relevant acquisition or implement its Investing Policy by 30 July 2011, otherwise trading in the Company's shares on AIM will be suspended in accordance with AIM Rule 40. If following suspension of the Ordinary Shares in accordance with AIM Rule 40, the Ordinary Shares have not been readmitted to trading within six months, the admission of the Ordinary Shares to trading on AIM will be cancelled

As noted in Note 1 to the Interim Financial Information, the directors have agreed to continue to support the Company and, if and when necessary, will provide funds on an interest free basis. Arbuthnot Securities Limited, the Company's nominated adviser, considers that the terms of the transaction are fair and reasonable in so far as the Company's shareholders are concerned.

Stanley Davis

Chairman

25th October 2010

CONSOLIDATED INCOME STATEMENT

for the six months ended 31 July 2010

CONSOLIDATED BALANCE SHEET

31 July 2010

CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 31 July 2010

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 31 July 2010

NOTES TO THE INTERIM FINANCIAL INFORMATION

for the six months ended 31 July 2010

1 BASIS OF PREPARATION

The financial information contained in this interim report does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The figures for the period ended 31 January 2010 have been extracted from the audited statutory accounts. The interim results, which have not been audited or reviewed by the company's auditors, 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 also collectively referred to as "IFRS".

The accounting policies and methods of computations used are consistent with those used in the Group Annual Report for the year ended 31 January 2010 and are expected to be used in the Group Annual Report for the year ended 31 January 2011.

Statutory accounts for the year ended 31 January 2010 were prepared and filed with the Registrar of Companies and received an unqualified audit report.

The interim report was approved by the Board of Directors on 25th October 2010.

As at 31 July 2010, the Group had net current liabilities of £95,404. Included within current liabilities are redeemable preference shares of £65,000 and included within non-current liabilities are loan notes of £60,000. These amounts are due to directors of the company Stanley Davis and Neil Sinclair or entities controlled by them and Andrew Perloff, who have given undertakings to the group that these amounts will only be payable when there are adequate cash resources within the group so that the group can continue to meet its liabilities as they fall due for the foreseeable future. In addition, the directors will continue to support the company and if and when necessary will provide funds on an interest free basis. With these undertakings, and after considering the group's cash flow forecasts, the directors have prepared these interim results on the going concern basis.

Copies of this statement are available to the public for collection at the company's Registered Office at 41 Chalton Street, London, NW1 1JD and on the Company's website, www.palacecapitalplc.com.

2 PROFIT/(LOSS) per share

The profit/(loss) per share for the period is calculated based upon the following information:

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