TIDMPNS
RNS Number : 5938X
Panther Securities PLC
30 April 2019
Panther Securities P.L.C.
("the Company" or "the Group")
Final results for the year ended 31 December 2018
CHAIRMAN'S STATEMENT
I am pleased to be able to present our accounts for the year
ended 31 December 2018 which show a profit before tax of
GBP8,700,000 compared to GBP24,791,000 for the previous year. Both
these figures were substantially affected by non-cash adjustments
to our property portfolio valuation. Last year there was an uplift
of GBP16,776,000 whilst this year there was a downward movement of
GBP6,396,000 in the property portfolio valuation. There is no doubt
that a degree of uncertainty has affected property values and the
uncertainty created is due to the debacle in the retail environment
whereby many household names have failed or attempted to
restructure via CVAs (Company Voluntary Arrangements) and even some
profitable companies are asking for rent reductions because of
their anticipated loss of turnover and therefore profits.
This is mainly due to government neglecting to adjust property
taxes in the light of retail shopping patterns. The 'goose that
laid the golden eggs' for the government's spendthrift ways is now
in intensive care whilst they are too preoccupied elsewhere, in a
shambles of their own making, to care about addressing this
issue.
However, our Group's good judgement or no doubt an element of
good luck, has led to a more financially secure position than many
property companies. How, you may ask? Our shareholders will know
because I repeat myself until boredom sets in that we have a wide
spread of properties throughout the country in many different
locations, size and various types of property, quality of tenants,
mainly occupied, with tenants who generally pay their rents. Our
rents cover all our costs, predominately interest charges but also
vacancy and management costs as well as excessive taxes.
Within our portfolio there are many of what I would call
'opportunity properties'. This is where a change of circumstances
would attract a much bigger profit than would occur through the
vicissitudes of the normal investment market, i.e. planning
permission for change of use, new lettings, development, or special
purchasers such as tenants/adjoining owners etc.
Over the last two years we have been successful in crystallising
some of these situations. In the year ended 31 December 2017 as
well as our usual business, we also exchanged contracts for a
delayed sale on a Croydon residential upper part and also our
Holloway Head site which was sold for approximately GBP11,000,000,
with both finally completing in 2018.
There has been an unusual amount of activity with regard to
sales in this accounting period. With all of the larger sales we
have kept shareholders abreast with appropriate Stock Exchange
announcements, but I mention them again later.
This year we sold nine small to medium sized properties, but
more importantly, due to their size, where the angle (some may say
an Angel!) of opportunity arose - Holloway Head, Birmingham, St
Nicholas House, Sutton and Wimbledon Studios which had proceeds
totalling about GBP37,000,000. Total net sales proceeds were
GBP40,790,000 in 2018.
This was not theoretical valuations or contractual promises but
actual cash received. These large sales were all well in excess of
the latest independent valuations and considerably higher than
their historic cost. This was achieved with the loss of only
GBP1,400,000 per annum rent, i.e. less than 3.8% return, and thus
the Group is now in a sounder financial position than ever
previously.
The rents receivable during the year ended 31 December 2018 were
GBP13,607,000 compared to GBP12,946,000 in the previous year and
they are holding up well with the income from disposals being
replaced by the income from some of our more recent
acquisitions.
Disposals
Margate
In January 2018 we sold 34 Marine Terrace, Margate for
GBP450,000, compared to book value of GBP250,000.
In February 2018, the following three properties were sold at
auction. Stonehouse, Gloucester, 19 Queen Street, Ramsgate and High
Street, Dudley.
Stonehouse - Gloucester
MRG Systems Ltd ("MRG") a former subsidiary, occupied our
freehold office at The Mill at Stonehouse, Gloucester. This former
mill of 15,000 sq ft had been let to MRG at GBP93,000 p.a. The
letting assisted them in being independent before the employee and
management buyout last year, which showed GBP900,000, a very good
profit on original cost.
Ramsgate
19 Queen Street, Ramsgate, a freehold shop investment producing
rental income of GBP12,000 p.a. sold for GBP147,000, a small profit
on book value.
Dudley
High Street, Dudley, a large, freehold long term vacant shop and
upper part in very poor condition held for development realised
GBP276,000 which was considerably in excess of its previous book
value.
Stockport
In March 2018 we sold Grove House, Stockport, a vacant freehold
shop and office building, an investment we had held for many years
during most of which time it had produced a good rental return for
us. Despite the building being in good condition, a developer
purchased it to convert to residential units. We received
GBP900,000 which was well above the previous book value.
Croydon
In March 2018, after a long delay, we finally completed the sale
of the vacant upper parts of 49/61 High Street, Croydon for
GBP800,000, just above its book value, and leaves us with the
ground floor let to Sainsbury's PLC and Princess Alice Hospice
which produces circa GBP108,000 p.a. This property is in central
Croydon's main shopping centre area.
Wimbledon Studios
In July 2018 we simultaneously exchanged and completed on the
sale of our freehold investment in Wimbledon Studios in Deer Park
Road, SW19 for GBP18,800,000. This was sold to a nominee of the
Scottish Widows Property Authorised Contractual Scheme.
The studios were built in 1970 and provide internal
accommodation of circa 140,000 square foot over circa 4.5 acres. It
has a long history as studios and many household name productions
took place there, including 'The Bill' for over 30 years, 'The Iron
Lady', 'I'm a celebrity...get me out of here', and several popular
music videos. This property had a book value of GBP13,550,000 as at
31 December 2017 and was originally purchased vacant, including
stock, equipment and fixed assets for circa GBP4,750,000 (plus
stamp duty) in September 2010.
Being an entrepreneurial organisation the Group initially
attempted to run its own film studio in this property. Although
well run by an enthusiastic management team, the cut throat
competition and constant need for investment in improved
technological equipment in the industry made it unviable thus it
was not a successful venture.
We quickly found new tenants, Marjan Television Network Ltd, who
took occupation in November 2014 at a rent of GBP1,050,000 p.a. We
spent about GBP1,000,000 upgrading the property, mainly on the
roof, and the tenants spent a significant amount on internal works
and equipment bringing it up to a state of the art, modern
functioning television and film studio for satellite broadcasting
to foreign countries.
This was a very interesting and ultimately rewarding
transaction.
Holloway Head, Birmingham
Despite exchanging contracts for sale in June 2017, the
completion of the sale of the Group's development site in Holloway
Head, Birmingham was finally completed on 31 August 2018, which was
considerably after the initial agreed completion date.
A payment of GBP850,000 was received in 2017 but due to the
uncertain nature of the transaction the full anticipated
(non-received) proceeds were not included in the 2017 accounts. A
GBP400,000 additional deposit was received in May 2018, a third
deposit of GBP500,000 was received in August 2018 and finally we
received GBP9,520,000 on 31 August 2018 giving us a total received
for the site of GBP11,270,000.
Sale of St Nicholas House, Sutton
In April 2018 we exchanged contracts to sell the joint
freehold/long leasehold interest in St Nicholas House and it was
completed on 7 September 2018. Surrey Motors Limited, formed in
1919, has a long and interesting history, and was acquired by us in
1987 and is a wholly owned subsidiary of Panther Securities PLC.
Its sole asset was the freehold of St Nicholas House, Sutton, a
building of approximately 140,000 sq ft gross accommodation. The
basement and ground floor are used for retail/ancillary storage and
parking. The nine upper floors are offices.
The building was originally constructed in the early 1960s with
the offices pre let to the Crown Agents (a quasi-government
organisation), who originally took a 99 year lease at a ground rent
which had proportionate rental reviews every 21 years. This lease
had an option to extend for 25 years (on the same terms), but
ignoring the option it had approximately 44 years unexpired at a
low ground rent and thus our tenant's lease had significant
value.
Towards the middle of 2016 the Crown Agents approached us
indicating that they wanted to vacate and dispose of their interest
in the building. It was agreed that the Company and the Crown
Agents should offer for sale our joint interests which would enable
the freehold of the site to be offered with vacant possession at an
early date, giving the property/site development possibilities and
thus an increased 'marriage' value.
After a marketing campaign by the agents, Carter Jonas, a number
of offers were received and in April 2018 the Company exchanged
contracts to sell the joint freehold/long leasehold interest to
Saint Nicholas House Ltd, a newly formed company, with a delayed
completion of three months. The total consideration receivable for
the joint freehold/long leasehold interest in St Nicholas House was
GBP12,750,000. Our share of the gross sale price proceeds amounts
to approximately GBP7,837,500, compared to its December 2017 book
figure of GBP5,540,000.
Following completion, the Company no longer receives the
GBP320,000 p.a. rental income on this investment property.
Ramsgate (Developments)
In July 2018 we submitted 81, 83 and 85 High Street, Ramsgate
for sale by auction. This property, which we had owned for many
years, was a cleared site on which we had received planning
permission for 14 flats. The sale achieved GBP286,000 which I
considered to be at the lower end of expectations, but as this site
had been troublesome and occupied an enormous amount of management
time, it was felt that a local developer may be better dealing with
the matter.
The adjoining property, 79 High Street, Ramsgate, a four storey
building in need of refurbishment and with permission for
conversion to a number of units failed to sell at the same auction
but was sold post auction at GBP180,000 a few months later which
was only slightly less than the reserve price. This unit made a
good profit on cost.
Mutley Plain, Plymouth
This freehold property had been purchased as an investment some
years ago but the retail position declined substantially and after
the tenant vacated, it was vacant for a few years and thus was sold
in November 2018 for GBP175,000 which I am sad to say was a loss of
GBP43,000 on book value.
Acquisitions
Palmers Department Stores, Great Yarmouth & Lowestoft
In November 2018 we purchased the freeholds of two department
stores and leased them back to Palmers Limited, who have been
trading from them, or in the local area, for over 100 years.
Great Yarmouth
This store is situated in the main shopping square and contains
about 57,000 sq ft of useable space. It also owns about 90 spaces,
being half of the council run car park immediately behind the
store, from which it derives a substantial income.
The store is based at 37-39 Market Place, Great Yarmouth. This
was purchased at a cost of GBP1,500,000 (excluding acquisition
costs, stamp duty and legal costs) and was subject to a leaseback
at GBP132,500 p.a.
Lowestoft
The store is based at 66-76 (even numbers) London Road North,
Lowestoft. This was purchased at a cost of GBP850,000 (excluding
acquisition costs, stamp duty and legal costs) and is subject to a
leaseback at GBP75,000 p.a. This property contains about 19,000 sq
ft located in the prime pedestrianised shopping position in the
town, with many well-known multiple traders adjoining and
nearby.
Both the Lowestoft and Great Yarmouth properties are let on
three year leases with a tenant's option for a further three years
at a revised rent. These were both family owned department stores
that have been trading in the area for over 100 years.
The properties meet the Group's criteria in that there is good
short-term income and substantial property value, and we feel that
in the medium to long-term we can realise strong growth, if
necessary, via potential alternative uses.
Since we completed our purchases, JE Beale PLC a 100% subsidiary
of Beales Ltd (both referred to as "Beales"), has taken assignment
on both leases. Beales were previously in discussions with Palmers,
but broke off discussions when the current management buyout of
Beales was being arranged and picked up these discussions again at
a later stage and completed the assignment.
We believe that the assignment is beneficial for the Panther
Group as we obtained better security in that we retained Palmers
liability and in addition have the added protection of Beales.
There is also a possibility that Beales will aim to trade from
these premises for longer than the existing lease term. Included in
the Progress Report below is an update on Beales.
Debenhams Store, Dumfries
On 30 November 2018, we completed the purchase of a freehold
leased to Debenhams in Dumfries for GBP1,100,000. The property is
relatively modern and contains 46,000 sq ft, with 15,000 sq ft of
this being on the ground floor in a prime pedestrianised position.
The rental income is GBP350,000 pa with a lease that expires in
2037 with no breaks.
Given Debenhams have gone into pre-pack administration and if
they were to vacate we believe we could divide up the property
relatively easily and re-let, and still receive a high yield.
Progress Report
Beales Ltd
Beales Ltd ("Beales") was previously owned by Portnard Ltd,
which owns 47% of Panther Securities PLC. In October 2018, Beales
was sold to its management and now has additional backing from a
private equity house. This did not change the trading or commercial
relationship between Beales and the Panther Group.
Beales had circa GBP1 million of rental arrears with our group,
mainly relating to its company voluntary arrangement (CVA) period,
which it had not managed to catch up on.
Subsequently we agreed with the new owners a strategy for Beales
to deal with the arrears by April 2019, after incorporating a
discount on these historic arrears. The 2018 year end rental
arrears provision covers the loss that we have taken on the
discount.
Since the management takeover and refinancing we have received
significant amounts towards the arrears. Accordingly, they have
qualified for the agreed discount (a lot of this was received post
year-end).
Maldon
In our interim accounts we stated that we had agreed a
substantial letting on our industrial building in Maldon. We
completed a three year lease at a rental of GBP650,000 p.a. from
November 2018, and still have some vacant space available which has
the potential to yield further rent when let.
As a reminder, we refurbished this unit with the surrender
payments for dilapidations, which included carrying out roof works
for GBP315,000. In total we have spent circa GBP600,000 on this
property since our tenant vacated. This property was previously let
for GBP500,000 p.a., and we received GBP1,950,000 to accept a
surrender in March 2017 in lieu of dilapidations and loss of future
rental.
This is useful additional income following our recent
disposals.
Swindon
Following discussions with the Council, we have literally gone
back to the drawing board and our architects are currently
redesigning the scheme to produce a building of only seven or eight
storeys in height with lower building costs. The Council has also
agreed in principle to adjust some of their requirements so that
the smaller scheme with only 50/60 flats plus four or five
retail/restaurant units on the ground floor will not only be an
attractive visual asset to the community but also now viable.
Finance
In July 2018 we paid down our revolving facility loan of
GBP15,000,000, which can be redrawn.
At the date of signing these accounts we had circa GBP15,500,000
(see Consolidated Statement of Financial Positions for details as
some of the cash is restricted to property purchases) in the bank
as well as GBP15,000,000 that can be redrawn as above. We still
have written into our facility agreement a possible GBP10,000,000
loan extension which requires credit approval.
Some of the above funds will be utilised to pay corporation tax,
VAT and for other working capital purposes. Even after these costs
and cash requirements we presently have circa GBP42,000,000 of
funds available for investment opportunities.
One of our current interest rate swaps ends in 2021. We entered
into a further swap on GBP25,000,000 nominal value, which commences
in 2021, and will result in Panther having an interest rate saving
of GBP625,000 p.a. in loan interest costs, compared to our current
financing structure. This swap has a 10-year term.
Dividends
The Directors are recommending a final dividend for the year
ended 31 December 2018 of 6p per share. This will be payable on 5
September 2019 to shareholders on the register at the close of
business on 9 August 2019 (ex-dividend on 8 August 2019).
The Group has made unprecedented returns over the last two
calendar years and we are pleased to have shared this with our
shareholders being 27p per share (6p final dividend recommended
above, 15p special and 6p interim) for the year ended 31 December
2018 and 22p per share (7p final, 10p special and 5p interim) for
the year ended 31 December 2017.
Future Prospects
We had a very good trading year ended 31 December 2018. I expect
our prospects for the near future will be positive, but growing our
rental income will be more difficult than in the past but we have
the potential to add value to our portfolio.
Finally I would like to thank our small but dedicated team of
staff, growing team of financial advisers, legal advisers, agents
and accountants for all their hard work during the past year, which
has been extremely busy and even more demanding than usual. Special
thanks are also extended to our tenants, especially the retail
traders, most of whom pay their rents and excessively high and
unfair business rates.
Andrew S Perloff
CHAIRMAN
30 April 2019
CHAIRMAN'S RAMBLINGS
Many years ago when I was an office boy at a West End estate
agent, one of my daily duties was the filing of Extel cards. These
cards contained information on all quoted companies and having
little else to do I studied them with the zeal of a Talmudic
scholar. Within about six months I was aware of much information on
all of these companies.
Through a friend who worked at a stockbroker's office, I started
buying penny shares - GBP25 worth of Burma Mines at 6d a share or
GBP50 of British Tar Products at 1/3d a share. Despite my newly
acquired/extensive knowledge, I chose my shares either by an
appealing name or low share price - I then bought them (by ordering
on the phone) and was sent a buying contract which I would settle
within a couple of weeks.
Oh! How times have changed! Nowadays, before I can buy shares,
my broker (whom I have dealt with for over 40 years) has to have a
plethora of regularly reviewed information about me/the company and
my buying order has to have the money in their account before I can
make the purchase. This is what they call progress!
As time went on my purchases became larger and I became
interested who other larger co-investing shareholders might be. I
began to visit Companies House in City Road where, for a small fee,
the file on any particular company could be obtained. A veritable
wealth of information could be found here.
In the ensuing years most companies began to employ registrars
who retained the information on shareholders and ownership changes
etc. These details could be requested and would usually arrive with
a small fee statement.
Progress continued unabated and it is now possible to receive
information by email. The speed and convenience of this is however
offset by the forms that must be completed before the information
is forthcoming requesting why you want the information and of
course a much higher fee must be paid before anything can be
dispatched.
To illustrate this point, I contacted Panther Securities'
registrar who had been used by us for well over 40 years, such a
long relationship counted for nothing as their forms had to be
completed and the bill paid before we could receive the documents
on any new company I was interested in.
THUS NO TRUST
Our registrars have merged and been taken over several times
during our long relationship but I do not recall once writing to
the Directors' for their passport details or utility bills!
Banks must constantly update our personal and financial
information despite lengthy relationships. The provenance of large
deposits are questioned, cheques bounced for the most minor reasons
and usually by someone on the opposite side of the world.
We are faced with the same situation with solicitors, auction
houses and organisations that we have had long relationships with
over many, many years. They are forced to go through these
procedures due to bureaucratic humbug and stupidity.
Recently, my wife noticed a credit card was missing and assumed
it had been mislaid. Nevertheless, it was reported as probably
misplaced but in the meantime we asked if a watch could be put into
place to flag up any unusual use. When the card didn't reappear it
was reported accordingly so a replacement could be issued. We were
then told that it had been used on a gambling website in Bucharest,
Romania. All bets were for comparatively small sums but it had been
used 36 times! My wife has never placed a bet in her life let alone
online, the card being mainly used for groceries, so even a one
chip Romanian computer should have seen how suspicious this usage
was and suspended the card account.
THUS NO COMPETENCE
It would seem that greater technological advances often create
greater opportunities for criminals and thus I often long for
bygone times.
TRUSTING TRADER!
After our successful takeover in 1972 of Levers Optical Company
(now Panther Securities PLC), I was summoned to the Stock Exchange
Building by the Takeover Panel. Rather troubled by this I, together
with my solicitor and brokers to the offer, met with the Takeover
Panel who consisted of eight or nine officials situated on the
25(th) floor.
It soon became apparent that they were concerned with insider
dealing. It appeared that a resident of Glasgow, possibly an
optician whose name ended in Stein, Berg or McCohen had bought 500
shares just before our Bid Announcement. For a company that had few
stock market dealings it appeared suspicious to them.
I was extensively interrogated but questions were easily dealt
with as I had never been to Glasgow or indeed Scotland, knew no one
from the region except one board member to whom I suggested they
talk, even though he was unaware of our intentions.
The inquisition ended amicably enough but I wondered why so much
effort had been put into such a minor matter which had resulted in
a mere GBP250 profit for someone.
Leaving the Stock Exchange Building, which adjoined the Bank of
England building and also the Royal Exchange, I wandered around the
area, eventually coming across an old fashioned jewellery shop in
the perimeter of the Royal Exchange. Feeling happy with my
exoneration and with Christmas looming, I entered the shop to ask
about two items that had caught my eye. I had got married a few
months before and was interested in buying a Christmas present for
my new wife.
The proprietor was very helpful, describing the pieces in
detail, one an 18 carat gold bracelet laced with rubies and the
second a gold necklace and earrings set with amethysts in the
original Victorian case, and told me each was GBP200. I thought my
then wife would be happy with either item but my dilemma, I
explained to the owner, was that I couldn't make up my mind. He
smiled understandingly and told me to take both and let her choose.
I could return one item when a decision had been reached along with
a cheque for the other. I was astonished! I had no cheque book or
even enough cash for a small deposit. I was, however, delighted to
take up his suggestion and he wrapped them beautifully adding that
he hoped she would like one of them. We exchanged business cards
and I left. As simply as that!
My wife's eyes lit up when I showed her. She declared they were
magnificent and loved them both. I was young and slightly naïve but
despite my pleasant surprise at her response, a cheque for GBP400
was duly sent to the jeweller who had trusted an unknown young man
who had walked in from the street. Maybe the old man was wise
enough to know what was likely to happen but in any event he was
doubly repaid by his TRUST in me.
Time moves on and in 1984 I came across a small ad in the
Financial Times for the sale of a controlling shareholding in a
small public company. Shell companies had special attractions at
that time. When I received the details it appeared that the vendor
had rescued the company from receivership and wanted to capitalize
on his efforts. The company, A Brown & Sons, had been formed in
1860 and was a pioneer of printing, specializing in books for the
many new schools that were being created in late Victorian time
after the first Education Act. In 1928 the company built a large
state of the art printing factory in Hull and what now remained of
the freehold estate was its major asset together with another
freehold of a former large manor house called Great Stukeley Manor.
This property, located near Huntingdon, was now divided into eight
flats and a club on the ground floor.
The manor house was very imposing and stood in about four acres.
Only the top floor was occupied by a controlled tenant - the other
flats and premises being in poor but reparable condition.
During our inspection with the vendor I thought it would be
advisable to see the top floor flat as it would give us some idea
of the condition of the roof. He informed us that the tenant was
however likely to be out and when I asked about his relationship
with the tenant I was emphatically told "Oh yes, we have an
excellent relationship".
We reached the top floor and I knocked tentatively on the door
to see if the tenant was indeed at home. Through the closed door I
heard movement then a voice shouted clearly and loudly "**** ORF!!!
You're not coming in here and that ******* of a landlord knows
why"!!! We left all agreeing that there was some work to do to
improve that landlord and tenant relationship.
Nevertheless, we agreed a price for the shares and arranged for
the vendor to visit our office to complete the deal. The remaining
150 or so shareholders shortly afterwards received an offer from
our solicitor for their shares at the same price we had paid per
share.
We subsequently visited the freehold factory in Hull. Having
seen the deeds we knew that about half of the original factory had
been sold off, but the remainder was providing its income on
makeshift agreements.
The factory had been divided up in an extremely amateurish
manner, obviously by the vendor, and I, who was considered by all
who knew me as being the second worst DIY workman in the world
(Malcolm Bloch being the worst), was relegated by one position.
The partitions, where they existed, were made of hardboard,
orange box wood, sometimes nailed together but also stuck with
tape, many of which did not even reach the ceiling. Other divisions
were marked by chalk lines on the floor. Wires and plugs were
attached with sticky tape and the fuse boards dated from 1928. Old
machinery was scattered throughout, some of which was still in use
by the tenants. It was the building that time and health &
safety forgot but rents were cheap, no one told us to "**** ORF"
(which was nice) and we were asked pleasantly if some of the leaks
in the roof could be fixed.
The dire condition of the building had been factored into our
purchase price and no value was placed on the shell company for its
potential utilization.
After being appointed to the board we soon arranged a GBP500,000
bank facility for investment and trading purposes. The business did
so well over the following two or three years that we were
approached by a business friend with an offer to buy 29.9% (the
maximum you could buy without making an outright expensive bid for
the entire company) but who also wanted to have management
control.
We had first come across this friend nearly 20 years earlier
when we sold him a freehold vacant triple shop and upper part in
Atlantic Road, Brixton for GBP25,000 which we had only recently
purchased for GBP15,000. We were delighted with this quick sale and
he was even more delighted when about six months later he sold it
at auction for GBP50,000. He then became our friend for the rest of
his life, discussing possible deals, purchases and sales with us on
a regular basis. He was an extremely pleasant and entrepreneurial
type of dealer, often working in different ways from most property
dealers/developers.
We discussed the properties A Brown owned, and agreed values
with him and converted this into a price per share, which was by
now quoted by Harvard Securities on their recently created and
successful securities exchange.
Without going into great detail he told us what he intended to
do and agreed to buy 29.9% of the total equity. We agreed to retain
about 25% of equity and let him have full board control and stay
invested for any uplift in the share price he generated.
Shortly after this, he came to our office with a bank draft made
out to us for about GBP300,000. We prepared all the paperwork to
transfer the 29.9% shareholding and then realised the shares had
been kept securely in a bank vault and we would need at least a few
days to retrieve them. He then left us to pay in the bank draft
with only our verbal promise that we would deliver the share
certificates to him as soon as possible.
This showed an AMAZING DEGREE OF TRUST!
We were happy to retain a big shareholding and let him loose on
the company as the 30% cash sale was double our original total
investment cost and any extra share sales at a later date would
produce pure profits.
There is much more to the saga of A Brown but the essence of
this story is TRUST.
Our friend trusted us to do what we promised and we trusted him
to do well.
During my long career there have been many times I have agreed a
deal with a simple handshake showing mutual TRUST.
TRUST IS VITAL IN ALL ASPECTS OF LIFE.
Politics especially so:-
Tim Farron, although a Liberal Democrat (most policies of which
I do not support), is however a hardworking and dedicated
Constituency MP, who of late has been remorseless in chasing
Ministers about the unfairness of the retail business taxes that
affect his large but much rural constituency. He recently asked
Jake Berry MP (the Parliamentary Under Secretary of State for the
Northern Powerhouse & Local Growth - I often believe the bigger
the title the more useless is the incumbent). However, the question
was:-
"The Government's plans for a puny 2% digital tax on mega online
firms that avoid paying their fair share is an insult to shops on
the high street in towns such as Grange, Windermere and Kendal.
Will he support higher taxes on tax dodgers, which would raise
enough money to slash business rates for our town centres and help
to save our high streets?"
The answer received was:-
"The government have been clear that online taxation in retail
needs to be done as part of an international agreement, but we have
also been clear that, if we cannot get such an agreement, we will
come forward with our own 2% tax on online retail to ensure that we
can continue, as we did in the last Budget, to give relief to those
retailing on our high streets. This year, we have already slashed a
third off the business rates of shops with a rateable value of
under GBP51,000."
I did not believe that to be the correct answer and checked with
our rating expert. I was, of course, correct in my fears. There
were so many exceptions on uses allowed etc that although
substantially correct if the use of the word "shops" is taken in
its literal legal sense. But there are hundreds of exceptions and,
in particular, vacant shops (i.e., an attack on landlords who have
lost their tenant, probably because of the policy of excessive
property taxation).
I instantly realised this must be a solicitor's answer so I
researched further which proved Jake Berry was a former solicitor,
one of about 118 solicitors in the House of Commons, about 18% of
the MPs as there are about 120,000 qualified lawyers in the whole
country, about 0.002% of the population they are thus grossly
over-represented in our legislatory organisation, about 900
times.
There is thus an overwhelming reason to make complicated laws
that only the legal profession can understand thus they bring in
new laws that obviously benefit their profession hugely, i.e.,
contingent compensation liability claims, encouraging people to
make claims, many of which are either patently false or obviously
exaggerated. They also create huge areas of potential claim, by way
of new deliberately complicated laws - in total only the lawyers'
benefit.
Shakespeare's play, Henry VI part 2, which I believe was about
the uprising of Henry VI - has a famous line spoken by one of the
uprising- not surprisingly Dick the Butcher, i.e., a trader "The
first thing we do, let's kill all the lawyers", this said in the
context of making the country a better place for all the population
to live in. Thus my thoughts are not new, in fact over 400 years
old.
Perhaps half of the legal MPs should retire so that we can have
some butchers, bakers, builders, department store owners,
manufacturers, farmers and bankers who actually understand how the
country works.
As usual I have rambled on a bit but the main point is that
solicitors are able, by careful choice of words, to disseminate in
a way to obscure and confuse the true effect on the population of
their laws and policies. It takes a long time for this to be
understood by the general population who then simplify the previous
presentations and just call it lies.
Currently most people do not TRUST the politicians or their
statements and thus take little notice of their promises and
announced expectations and form opinions from what they experience
in their lives experienced outside of the Westminster bubble.
How nice it would be if we had politicians who we could
trust!
Yours
Andrew S Perloff
CHAIRMAN
30 April 2019
GROUP STRATEGIC REPORT
About the Group
Panther Securities PLC ("the Company" or "the Group") is a
property investment company quoted on the AIM market (AIM). Prior
to 31 December 2013 the Company was fully listed and included in
the FTSE fledgling index. It was first fully listed as a public
company in 1934. The Group owns and manages over 850 individual
property units within approximately 145 separately designated
buildings over the mainland United Kingdom. The Group specialises
in property investing and managing of good secondary retail,
industrial units and offices, and also owns and manages many
residential flats in several town centre locations.
Strategic objective
The primary objective of the Group is to maximise long-term
returns for our shareholders by stable growth in net asset value
and dividend per share, from a consistent and sustainable rental
income stream.
Progress indicators
Progress will be measured mainly through financial results, and
the Board considers the business successful if it can increase
shareholder return and asset value in the long-term, whilst keeping
acceptable levels of risk by ensuring gearing covenants are well
maintained.
Key Ratios and measures
2018**** 2017 2016 2015
Gross Profit Margin (gross
profit/ turnover) 71% 71% 77% 73%
Gearing (debt*/(debt* + equity)) 39% 45% 49% 48%
Interest Cover** 4.17 times 2.37 times 1.66 times 1.65 times
Finance cost rate (finance
costs/ average borrowings
for the year) 6.6% 6.4% 6.6% 6.6%
Yield (rents investment properties/
average market value investment
properties) 7.7% 7.1% 7.7% 7.5%
Net assets value per share 532p 516p 407p 428p
Earnings/ (loss) per share
- continuing 39.9p 120.2p (5.5)p 38.7p
Dividend per share 27.0p*** 22.0p*** 12.0p 22p***
Investment property acquisitions GBP3.9m GBP8.9m GBP5.0m GBP2.2m
Investment property disposal GBP40.8m GBP2.2m GBP5.8m GBP4.0m
proceeds
* Debt in short and long term loans, excluding any liability on
financial derivatives
**Profit before taxation excluding interest, less movement on
investment properties and on financial instruments and impairments,
divided by interest
*** Includes 15p (2017:10p) per share special dividend
**** IFRS 9 and 15 have only been reflected in 2018 and the
prior year figure not restated.
Business Review
2018 has been one of the most successful years for the Group for
disposals, generating GBP40.8m proceeds and GBP11.8m of profit or
being 40% above book value. With the additional funds, the Group
chose to de-gear (this facility can be re-drawn) as well as pay a
large special dividend. The Group also reinvested some of the
proceeds, GBP2m into equities (which are relatively liquid) and
purchased GBP3.9m of investment properties.
Even with the disposals, including Wimbledon with the loss of
GBP1.05m annual rents, we expect our rental income to be slightly
higher in 2019 (than 2018) due to acquisitions late in 2018 (where
we haven't seen a full years benefit) and due to a significant
letting in Maldon (circa GBP0.65m pa) at the year end.
The Income Statement also shows lower 'other income', mainly due
to the large surrender premium on Maldon in the prior year (not
spent on refurbishing the unit) of circa GBP1.4m and also a large
GBP0.4m fee to extend our Birmingham completion date (not
repeated).
The administration costs and costs of sales have crept up as we
see more costs associated with running the portfolio, in particular
there are heavier costs on our recent shopping centre acquisitions
compared to the disposals, such as St Nicholas House and Wimbledon
which had little costs of management associated with them. We have
also seen an increase in bad debt charge in the year due to the
worsening of the market - our charge was 5.8% of turnover compared
to 4.1% in the prior year.
The Group recognised a loss in value following the directors'
year end valuation, showing a reduction in value of GBP6.4m
(compared to a GBP16.8 million uplift in 2017 following an external
valuation).
The interest rate swaps also recovered helping the overall
profitability for the year by GBP0.9m (2017: improvement of
GBP1.85m). This improvement is after taking account of our new
financial derivative which is currently sitting at a mark to market
loss (as expected).
Going forward
At the end of 2017 we stated that "we are looking to sell
properties where we can achieve a high return or they are non-core
to save up a "cash pile", as we expect uncertain times in the near
to medium term and as an entrepreneurial company expect to fair
well." This is exactly what we did and we are incredibly pleased
that we have put ourselves into such a strong position heading into
more uncertain economic times. The outcome exceeded our
expectations.
With our existing finance and cash funds we would be
disappointed if we did not pick up a few good investments in 2019,
however these have to be carefully selected as a lot of the risks
perceived by the average property investor are real.
Even though there are uncertainties going forward which may
affect property prices in the short term, we are protected by our
portfolio's diversity, experienced management team, ability to
adapt and by having access to funds to benefit from
opportunities.
Financing
The Group had previously entered into a GBP75 million club loan
facility (GBP60 million term and GBP15 million revolving), which
was renewed on 19 April 2016 with a five-year term. As mentioned
earlier we de-geared, by repaying GBP15m of our facility that can
be redrawn. We also had at the year-end GBP20m of cash funds
(GBP14.44m restricted to property purchases). The loan was also
drafted with the option of increasing our facilities by a further
GBP10 million (subject to banks' approval), which may be useful if
an exceptional deal came our way.
At the Statement of Financial Position date the Group had GBP20m
of cash funds, GBP15m available facility and a further GBP10m
included in our loan agreement but requiring credit approval.
The Group has not offered a scrip dividend option for its latest
dividends and has no plans for the current proposed dividend to
provide shareholders with this option.
Financial derivative
We have seen an improvement (of a non-cash nature) in our long
term liability on derivative financial instruments of GBP0.89 m
(2017: GBP1.85m fair value gain). Following this gain the total
derivative financial liability on our Consolidated Statement of
Financial Position is GBP25.5m (2017: GBP26.4m).
These financial instruments (shown in note 28 of our statutory
accounts) are interest rate swaps that were entered into to remove
the cash flow risk of interest rates increasing by fixing our
interest costs. We have seen that in uncertain economic times there
can be large swings in the accounting valuations. Small movements
in the expectation of future interest rates can have a significant
impact on their fair value; this is partly due to their long dated
nature.
These contracts were entered into in 2008 when long term
interest rates were significantly higher. In a hypothetical world
if we could fix our interest at current rates and term we would
have much lower interest costs. Of course we cannot undo these
contracts that were entered into historically, without a
significant financial cost, but for accounting purposes these
financial instruments are compared to current market rates, with
the additional liability compared to the market rates, as shown on
our Statement of Financial Position.
In 2018 the Company entered into a new 10 year fixed interest
rate swap agreement, with a GBP25,000,000 nominal value which
commences on 1 December 2021. The swap's interest rate is 2.131%
which will come into existence when the Company's current
GBP25,000,000 swap with a rate of 4.63% ends, resulting in an
annual saving of circa GBP625,000.
By entering this transaction, the Company will have certainty
that its interest costs from December 2021 will be significantly
lower compared to its current costs.
Financial Risk Management
The Company and Group operations expose it to a variety of
financial risks, the main two being the effects of changes in
credit risk of tenants and interest rate movement exposure on
borrowings. The Company and Group have in place a risk management
programme that seeks to limit the adverse effects on the financial
performance of the Company and Group by monitoring and managing
levels of debt finance and the related finance costs. The Company
and Group also use interest rate swaps to protect against adverse
interest rate movements with no hedge accounting applied.
Mark-to-market valuations on our financial instruments have been
erratic due to current low market interest rates and due to their
long term nature. These large mark-to-market movements are shown
within the Income Statement.
However, the actual cash outlay effect is nil when considered
alongside the term loan, as the instruments have been used to fix
the risk of further cash outlays due to interest rate rises or can
be considered as a method of locking in returns (difference between
rent yield and interest paid at a fixed rate).
Given the size of the Company and Group, the Directors have not
delegated the responsibility of monitoring financial risk
management to a sub-committee of the Board. The policies set by the
Board of Directors are implemented by the Company and Group's
finance department.
Credit risk
The Company and Group have implemented policies that require
appropriate credit checks on potential tenants before lettings are
agreed. In many cases a deposit is requested unless the tenant can
provide a strong personal or other guarantee. The amount of
exposure to any individual counterparty is subject to a limit,
which is reassessed annually by the Board.
Exposure is reduced significantly due to the Group having a
large spread of tenants who operate in different industries.
Price risk
The Company and Group are exposed to price risk due to normal
inflationary increases in the purchase price of the goods and
services it purchases in the UK. The exposure of the Company and
Group to inflation is low due to the low cost base of the Group and
natural hedge we have from owning "real" assets. Price risk on
income is protected by the rent review clauses contained within our
tenancy agreements and often secured by medium or long-term
leases.
Liquidity risk
The Company and Group actively manage liquidity by maintaining a
long-term finance facility, strong relationships with many banks
and holding cash reserves. This ensures that the Company and Group
have sufficient available funds for operations and planned
expansion or the ability to arrange such.
Interest rate risk
The Company and Group have both interest bearing assets and
interest bearing liabilities. Interest bearing assets consist of
cash balances which earn interest at fixed rate when placed on
deposit. The Company and Group have a policy of only borrowing debt
to finance the purchase of cash generating assets (or assets with
the potential to generate cash). The Directors revisit the
appropriateness of this policy annually.
Principal risks and uncertainties of the Group
The successful management of risk is something the Board takes
very seriously as it is essential for the Group to achieve
long-term growth in rental income, profitability and value. The
Group invests in long term assets and seeks a suitable balance
between minimising or avoiding risk and gaining from strategic
opportunities.
The Group's principal risks and uncertainties are all very much
connected as market strength will affect property values, as well
as rental terms and the Group's finance, or term loan, whose
security is derived primarily from the property assets of the
business. The financial health of the Group is checked against
covenants that measure the value of the property, as a proportion
of the loan, as well as income tests. The two measures of the
Group's finances are to check if the Group can support the interest
costs (income tests) and also the ability to repay (valuation
covenants).
The Group has a successful strategy to deal with these risks,
primarily its long lasting business model and strong management.
This meant the business had little or no issues during the 2008
financial crisis, which some commentators say was the worst
financial crisis since the Great Depression of the 1930s.
Market risk
If we want to buy, sell or let properties there is a market that
governs the prices or rents achieved. A property company can get
caught out if it borrows too heavily on property at the wrong time
in the market, affecting its loan covenants. If loan covenants are
broken, the Company may have to sell properties at non-optimum
times (or worse) which could decrease shareholder value. Property
markets are very cyclical and we in effect have three strategies to
deal with or mitigate the risk, but also take advantage of this
opportunity:
1) Strong, experienced management means when the market is
strong we look to dispose of assets and when it is weak we try and
source bargains i.e. an emergent strategy also called an
entrepreneurial approach.
2) The Group has a diversified property portfolio, and maintains
a spread of sectors over, retail, industrial, office and
residential. The other diversification is having a spread
regionally, of the different classes of property over the UK. Often
in a cycle not all sectors or locations are affected evenly,
meaning that one or more sectors could be performing stronger,
maybe even booming, whilst others are struggling. The strong
investment sectors provide the Group with opportunities that can be
used to support slower sectors through sales or income.
3) We invest in good secondary property, which tends to be lower
value/cost, meaning we can be better diversified than is possible
with the equivalent funds invested in prime property. There are not
many property companies of our size who have over 850 individual
units over 145 buildings/ locations. Secondary property also, very
importantly, is much higher yielding which generally means the
investment generates better interest cover and its value is less
sensitive to market changes in rent or loss of tenants.
Property risk
As mentioned above we invest in most sectors in the market to
assist with diversification. Many commentators consider the retail
sector to be in period of severe flux, considerably affected by
changing consumer habits such as internet shopping as well as a
preference for experiences over products. Of the Group's investment
portfolio, retail makes up the largest sector being circa 60 to 65%
by income generation. However the retail sector is affected to
lesser degrees in what we would describe as neighbourhood parades,
as opposed to traditional shopping high streets. The large part of
our retail portfolio is in these neighbourhood parades, meaning we
are less affected by consumer habits and even benefit from some of
the changes. Neighbourhood parades provide more leisure, services
and convenience retail.
For example, we have undertaken a few lettings to local or
smaller store formats, to big supermarket chains, which would not
have taken place many years ago. Block policy is another key
mitigating force within our property risks. Block policy means we
tend to buy a block rather than one off properties, giving us more
scope to change or get substantial planning if our type of asset is
no longer lettable. The obvious example is turning redundant
regional offices into residential. Also by having a row of shops,
we can increase or reduce the size of retail units to meet the
current requirements of retailers.
Finance risk
The final principal risk, which ties together the other
principal risks and uncertainties, is that if there are severe
adverse market or property risks then these will ultimately affect
our financing, making our lender either force the Group to sell
assets at non-optimal times, or take possession of the Group's
assets. We describe the above factors in terms of management,
business model and diversification to help mitigate against
property and market risks which as a consequence mitigate our
finance risk.
The main mitigating factor is to maintain conservative levels of
borrowing, or headroom to absorb downward movements in either
valuation or income cover. The other key mitigating factor, is to
maintain strong, honest and open relationships with our lenders,
and good relationships with their key competitors. This means that
if issues arise, there will be enough goodwill for the Group to
stay in control and for the issues to resolve themselves, and
hopefully save the situation. As a Group we also hold uncharged
properties and cash resources, which can be used to rectify any
breaches of covenants.
Given the size of the Company and Group, the Directors have not
delegated the responsibility of monitoring financial risk
management and the effectiveness of the Company's risk management
and related control systems to a sub-committee of the Board.
Other non-financial risks
The Directors consider that the following are potentially
material non-financial risks.
Risk Impact Action taken to mitigate
Reputation Ability to raise capital/ Act honourably, invest
deal flow reduced well and be prudent.
Regulatory changes Transactional and holding Seek high returns to cover
costs increase additional costs.
Lobby Government -"Ramblings".
Use advisers when necessary.
People related Loss of key employees/ Maintain market level remuneration
issues low morale/ inadequate packages, flexible working
skills and training. Strong succession
planning and recruitment.
Suitable working environment.
Computer failure Loss of data, debtor External IT consultants,
history backups, offsite copies.
Latest virus and internet
software.
Asset management Wrong asset mix, asset Draw on wealth of experience
illiquidity, hold cash to ensure balance between
income producing and development
opportunities. Continued
spread of tenancies and
geographical location.
Prepare business for the
economic cycles.
---------------------------- -------------------------------------
The Group Strategic Report set out on the above pages also
includes the Chairman's Statement shown earlier in these accounts
and was approved and authorised for issue by the Board and signed
on its behalf by:
S. J. Peters
Company Secretary
Unicorn House
Station Close
Potters Bar
Hertfordshire EN6 1TL
30 April 2019
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2018
Notes 31 December 31 December
2018 2017
GBP'000 GBP'000
Revenue 13,607 12,946
Cost of sales (3,947) (3,779)
Gross profit 9,660 9,167
Other income 457 1,905
Administrative expenses (1,819) (1,568)
Bad debt expense (796) (537)
----------------- -----------------
Operating profit 7,502 8,967
Profit on disposal of investment properties 11,750 1,071
Movement in fair value of investment
properties 4 (6,396) 16,776
----------------- -----------------
12,856 26,814
Finance costs - bank loan interest (2,526) (2,302)
Finance costs - swap interest (2,533) (2,726)
Investment income 24 27
Loss on disposal of fixed assets (41) -
Profit realised on the profit on the
disposal of available for sale investments - 1,128
Profit realised on the disposal of
investments 34 -
Fair value gain on derivative financial
liabilities 5 886 1,850
----------------- -----------------
Profit before income tax 8,700 24,791
Income tax expense (1,653) (3,490)
Profit for the year 7,047 21,301
================= =================
Loss for the period from discontinued
operations - (59)
----------------- -----------------
Profit for the year 7,047 21,242
================= =================
Discontinued operations attributable
to:
Equity holders of the parent - (52)
Non-controlling interest - (7)
----------------- -----------------
Loss for the year - (59)
================= =================
Continuing operations attributable
to:
Equity holders of the parent 7,047 21,301
Profit for the year 7,047 21,301
================= =================
Earnings per share
Basic and diluted - continuing operations 3 39.9p 120.2p
Basic and diluted - discontinued operations 3 - (0.3p)
================= =================
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2018
31 December 31 December
2018 2017
GBP'000 GBP'000
Profit for the year 7,047 21,242
----------- -----------
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss
Movement in fair value of available
for sale investments taken to equity - 279
Realised fair value on disposal of available
for sale investments previously taken
to equity - (269)
Deferred tax relating to movement in
fair value of
available for sale investments taken
to equity - (53)
Realised tax relating to disposal of
investments previously taken to equity - 51
Items that will not be reclassified
subsequently to profit or loss
Movement in fair value of investments
taken to equity (197) -
Deferred tax relating to movement in
fair value of
investments taken to equity 34 -
Other comprehensive (loss)/ income for
the year, net of tax (163) 8
Total comprehensive income for the year 6,884 21,250
=========== ===========
Attributable to:
Equity holders of the parent 6,884 21,257
Non-controlling interest - (7)
6,884 21,250
=========== ===========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Company number 00293147
As at 31 December 2018
Notes 31 December 31 December
2018 2017
ASSETS GBP'000 GBP'000
Non-current assets
Plant and equipment - 54
Investment properties 4 170,236 201,825
Deferred tax asset 1,811 -
Investments 1,850 17
173,897 201,896
----------- -----------
Current assets
Stock properties 448 448
Trade and other receivables 4,896 3,677
Cash and cash equivalents (restricted) 14,436 -
Cash and cash equivalents 5,614 5,941
25,394 10,066
----------- -----------
Total assets 199,291 211,962
=========== ===========
EQUITY AND LIABILITIES
Capital and reserves
Share capital 4,437 4,437
Share premium account 5,491 5,491
Treasury shares (213) (213)
Capital redemption reserve 604 604
Retained earnings 83,710 80,893
Total equity 94,029 91,212
Non-current liabilities
Long-term borrowings 58,864 74,270
Derivative financial liability 5 25,514 26,400
Deferred tax liabilities - 1,183
Obligations under finance leases 7,510 7,552
----------- -----------
91,888 109,405
----------- -----------
Current liabilities
Trade and other payables 10,192 10,945
Short-term borrowings 1,071 159
Current tax payable 2,111 241
----------- -----------
13,374 11,345
----------- -----------
Total liabilities 105,262 120,750
----------- -----------
Total equity and liabilities 199,291 211,962
=========== ===========
The accounts were approved by the Board of Directors and
authorised for issue on 30 April 2019. They were signed on its
behalf by:
A.S. Perloff
Chairman
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2018
Share Share Treasury Capital Retained Total
capital Premium shares redemption earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January
2017 4,437 5,491 - 604 61,747 72,279
Total comprehensive
income - - - - 21,257 21,257
Treasury shares
purchased - - (213) - - (213)
Dividends - - - - (2,111) (2,111)
Balance at 1 January
2018 4,437 5,491 (213) 604 80,893 91,212
Total comprehensive
income - - - - 6,884 6,884
Dividends - - - - (4,067) (4,067)
-------- -------- --------- ----------- --------- --------
Balance at 31
December 2018 4,437 5,491 (213) 604 83,710 94,029
======== ======== ========= =========== ========= ========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2018
31 December 31 December
2018 2017
GBP'000 GBP'000
Cash flows from operating activities
Operating profit 7,502 8,967
Depreciation charges for the year 13 9
Decrease in stock properties - 124
Rent paid treated as interest (571) (528)
Profit before working capital change 6,944 8,572
(Increase)/ decrease in receivables (1,219) 302
(Decrease)/ increase in payables (319) 293
----------- -----------
Cash generated from operations 5,406 9,167
Interest paid (4,375) (4,324)
Income tax paid (2,743) (1,194)
----------- -----------
Net cash (used in)/generated from continuing
operating activities (1,712) 3,649
----------- -----------
Net cash (used in) discontinued operating
activities - (35)
----------- -----------
Cash flows from investing activities
Purchase of plant and equipment - (10)
Purchase of investment properties (3,894) (8,870)
Purchase of investments** (2,271) -
Corporate disposal (net of cash sold) - (12)
Proceeds from sale of investment property 40,790 2,239
Proceeds from sale of available for
sale investments** - 2,046
Proceeds from sale of investments** 275 -
Dividend income received 5 21
Interest income received 19 6
----------- -----------
Net cash generated from / (used in)
investing activities 34,924 (4,580)
----------- -----------
Cash flows from financing activities
Repayments of loans (15,161) (159)
Loan arrangement fees and associated
costs (375) -
Purchase of own shares - (213)
Draw down of loan 500 4,503
Dividends paid (4,067) (2,111)
----------- -----------
Net cash (used in) / generated from
financing activities (19,103) 2,020
----------- -----------
Net increase in cash and cash equivalents 14,109 1,054
Cash and cash equivalents at the beginning
of year* 5,941 4,887
----------- -----------
Cash and cash equivalents at the end
of year* 20,050 5,941
=========== ===========
* Of this balance GBP14,436,000 (2017: GBPnil) is restricted by
the Group's lenders i.e. it can only be used for purchase of
investment property.
** Shares in listed and/or unlisted companies.
NOTES:
1. General information
While the financial information included in this preliminary
announcement has been prepared in accordance with International
Financial Reporting Standards (IFRSs), this announcement does not
itself contain sufficient information to comply with IFRSs. The
Group has also published full financial statements that comply with
IFRSs available on its website and are to be circulated
shortly.
The financial information set out in the announcement does not
constitute the Company's statutory accounts for the years ended 31
December 2018 or 2017. The financial information for the year ended
31 December 2017 is derived from the statutory accounts for that
year, which were prepared under IFRSs, and which have been
delivered to the Registrar of Companies. The auditor's report on
those accounts was unqualified, did not contain a statement under
either Section 498(2) or Section 498(3) of the Companies Act 2006
and did not include references to any matters to which the auditors
drew attention by way of emphasis.
The financial information for the year ended 31 December 2018 is
derived from the audited statutory accounts for the year ended 31
December 2018 on which the auditors have given an unqualified
report, that did not contain a statement under section 498(2) or
498(3) of the Companies Act 2006 and did not include references to
any matters to which the auditors drew attention by way of
emphasis. The statutory accounts will be delivered to the Registrar
of Companies following the Company's annual general meeting.
The accounting policies adopted in the preparation of this
preliminary announcement are consistent with those set out in the
latest Group Annual financial statements. There is no material
seasonality associated with the Group's activities.
Going concern
The Group is strongly capitalised, has considerable liquidity
together with a number of long term contracts with its customers
many of which are household names. The Group also has strong
diversity in terms of customer spread, investment location and
property sector.
The Directors believe the Group is very well placed to manage
its business risks successfully and have a good expectation that
both the Company and the Group have adequate resources to continue
their operations. For these reasons they continue to adopt the
going concern basis in preparing the financial statements.
Disposal of MRG Systems Limited
In December 2017 the Group entered into a sale agreement to
dispose of MRG Systems Limited, a 75% owned subsidiary. The
disposal was effected in order to generate cash flow for the
Group's other businesses. The disposal was completed on 21 December
2017, on which date, control of MRG passed to the acquirer.
In 2017, the results of subsidiaries disposed of are included
within the Income Statement, as Profit/ (loss) from discontinued
operations, to the effective date of disposal. Prior year balances
have been restated to present the performance of these discontinued
operations within this single line.
2. Dividends
Amounts recognised as distributions to equity holders in the
period:
2018 2017
GBP'000 GBP'000
Special dividend for the year ended 1,768 -
31 December 2017 of 10p per share
Final dividend for the year ended
31 December 2017 of 7p per share
(2016: 9p per share) 1,238 1,227
Interim dividend for the year ended
31 December 2018 of 6p per share
(2017: 5p per share) 1,061 884
4,067 2,111
========= =========
The Directors recommend a payment of a final dividend, for the
year ended 31 December 2018 of 6p per share (2017 - 7p), following
the interim dividend paid on 29 November 2018 of 6p per share and a
special dividend paid on 17 January 2019 of 15p per share. The
final dividend of 6p per share will be payable on 5 September 2019
to shareholders on the register at the close of business on 09
August 2019 (Ex dividend on 08 August 2019).
The full ordinary dividend for the year ended 31 December 2018
is anticipated to be 27p per share, being the 6p interim per share
paid, the 15p special dividend per share and the recommended final
dividend of 6p per share.
3. Earnings/(loss) per ordinary share (basic and diluted)
The calculation of profit per ordinary share is based on the
profit, after excluding non-controlling interests, being a profit
of GBP7,047,000 (2017 - GBP21,301,000) and on 17,683,469 ordinary
shares being the weighted average number of ordinary shares in
issue during the year excluding treasury shares (2017 -
17,715,199). There are no potential ordinary shares in existence.
The Company holds 63,460 (2017 - 63,460) ordinary shares in
treasury.
4. Investment property
Investment
properties
GBP'000
Fair value
At 1 January 2017 176,489
Additions 8,870
Disposals (1,320)
Transferred from stock properties 164
Fair value adjustment on property held on operating
leases 846
Revaluation increase 16,776
At 1 January 2018 201,825
Additions 3,894
Disposals (29,040)
Fair value adjustment on property held on operating
leases (47)
Revaluation increase (6,396)
At 31 December 2018 170,236
==============
Carrying amount
At 31 December 2018
170,236
==============
At 31 December 2017
201,825
==============
5. Derivative financial instruments
The main risks arising from the Group's financial instruments
are those related to interest rate movements. Whilst there are no
formal procedures for managing exposure to interest rate
fluctuations, the Board continually reviews the situation and makes
decisions accordingly. Hence, the Company will, as far as possible,
enter into fixed interest rate swap arrangements. The purpose of
such transactions is to manage the interest rate risks arising from
the Group's operations and its sources of finance.
2018 2017
Bank loans GBP'000 GBP'000
Interest is charged as to: Rate Rate
Fixed/ Hedged
HSBC Bank plc* 35,000 7.01% 35,000 7.01%
HSBC Bank plc** 25,000 6.58% 25,000 6.58%
Unamortised loan arrangement fees (322) (489)
Floating element
HSBC Bank plc - 14,501
Shawbrook Bank Ltd 257 417
------- -------
59,935 74,429
======= =======
Bank loans totalling GBP60,000,000 (2017 - GBP60,000,000) are
fixed using interest rate swaps removing the Group's exposure to
fair value interest rate risk. Other borrowings are arranged at
floating rates, thus exposing the Group to cash flow interest rate
risk.
Financial instruments for Group and Company
The derivative financial assets and liabilities are designated
as held for trading.
Hedged Average Duration 2018 2017
amount rate of contract Fair value Fair value
remaining
GBP'000 'years' GBP'000 GBP'000
Derivative Financial
Liability
Interest rate swap 35,000 5.06% 19.69 (21,482) (22,831)
Interest rate swap 25,000 4.63% 2.92 (2,517) (3,569)
Interest rate swap 25,000 2.13% 10.00 (1,515) -
(25,514) (26,400)
============ ============
Net fair value gain on derivative financial
assets 886 1,850
============ ============
* Fixed rate came into effect on 1 September 2008. Rate includes
1.95% margin. The contract includes mutual breaks, the first
potential one was on 23 November 2014 (and every 5 years
thereafter).
** This arrangement came into effect on 1 December 2011 when
HSBC exercised an option to enter the Group into this interest swap
arrangement. The rate shown includes a 1.95% margin. This contract
includes a mutual break on the fifth anniversary and its duration
is until 1 December 2021.
6. Events after the reporting date
In March 2019, we exchanged to sell our freehold property in
Victoria Street, Wolverhampton development site with a completion
date set for the end of July 2019 for GBP710,000 with a
non-refundable deposit collected of GBP85,200 received at
exchange.
7. Copies of the full set of Report and Accounts
Copies of the Company's report and accounts for the year ended
31 December 2018 will be posted to shareholders shortly, will also
be available from the Company's registered office at Unicorn House,
Station Close, Potters Bar, Hertfordshire, EN6 1TL and will be
available for download on the Group's website
www.pantherplc.com.
Panther Securities PLC +44 (0) 1707 667 300
Andrew Perloff, Chairman
Simon Peters, Finance Director
Allenby Capital Limited +44 (0) 20 3328 5656
David Worlidge
Alex Brearley
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR URRURKAASOAR
(END) Dow Jones Newswires
April 30, 2019 08:11 ET (12:11 GMT)
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